Is ZS's EPS growth sustainable beyond Q3 2025?

Zscaler's EPS growth appears to be sustainable beyond Q3 2025, based on several key points:

1. Consistent Financial Performance: Zscaler has demonstrated strong financial performance, with revenue growth of 23.4% year-over-year to reach $647.9 million in Q2 FY2025. The company's gross profit margin stands at 77.86%, indicating operational efficiency.
2. Growth Drivers: The company's growth is bolstered by its zero-trust security protocol and emerging products such as Data Protection, Zero Trust for Branch, and AI Analytics. These products are gaining significant traction and contributing to expanding market share.
3. Market Positioning: Zscaler's core offerings, including Zscaler Internet Access (ZIA) and Zscaler Private Access (ZPA), continue to drive growth, but it is the emerging products that are growing at twice the rate of core offerings. This diversification in revenue streams suggests a strong foundation for sustained growth.
4. Strategic Initiatives: The company's "Zero Trust Everywhere" campaign aims to drive platform adoption, which is a positive indicator for future growth.
5. Technical Analysis: Analysts have identified a bullish pennant formation for ZS stock, which often precedes a breakout, signaling potential for further price increase.
6. Analyst Confidence: Analysts have provided a consensus EPS estimate of $3.07 for the full fiscal year, representing a change of -3.76% from the prior year, but this does not necessarily indicate a decline in growth sustainability. Additionally, the average one-year price target from analysts is $242.93/share, suggesting confidence in the stock's future performance.
7. Market Conditions: Despite macroeconomic concerns and a trade war, the cybersecurity sector remains relatively resilient, and Zscaler's position as a leader in AI-driven cybersecurity is advantageous.

In conclusion, Zscaler's strong financial performance, strategic product positioning, and positive analyst sentiment all point to a likelihood of sustainable EPS growth beyond Q3 2025.