Zscaler’s Q4 Earnings Outperformance: A Momentum-Driven Play in the Evolving Cloud Security Landscape

The global cloud security market is undergoing a seismic shift, driven by escalating cyber threats, regulatory pressures, and the relentless adoption of hybrid cloud architectures. Against this backdrop, Zscaler Inc. (ZS) has emerged as a standout performer, leveraging its cloud-native security platform to outpace both competitors and broader industry trends. The company’s Q4 2025 earnings report, released on September 3, 2025, underscores its momentum-driven growth trajectory, with revenue, earnings, and forward guidance all exceeding expectations.

Q4 2025: Beating Expectations on All Fronts

Zscaler’s Q4 FY2025 results were nothing short of stellar. The company reported GAAP revenue of $719.2 million, a 21.3% year-over-year increase from $592.9 million in Q4 2024 and well above its guidance range of $705–$707 million [1]. Non-GAAP earnings per share (EPS) reached $0.89, surpassing the guided range of $0.79–$0.80 and reflecting a 23.6% YoY growth [1]. Annual Recurring Revenue (ARR) surged to $3.02 billion, a 22% YoY increase, while calculated billings grew 32% to $1.2 billion, signaling robust customer retention and expansion [1].

These figures highlight Zscaler’s ability to capitalize on the cloud security boom. According to a report by Precedence Research, the global cloud security market is projected to grow at a CAGR of 12.87% from 2025 to 2034, expanding from $40.81 billion to $121.04 billion [1]. Zscaler’s 21.3% YoY revenue growth outpaces this industry-wide acceleration, a testament to its market leadership and product differentiation.

Strategic Innovations Fuel Competitive Edge

Zscaler’s outperformance is not merely a function of macro trends but a result of deliberate strategic investments. The company has aggressively integrated AI and machine learning into its offerings, launching innovations such as AI Guardrails for Public and Private apps and AI/ML-powered URL categorization [1]. These tools address emerging threats like AI-generated phishing attacks and zero-day exploits, which are becoming increasingly prevalent as enterprises deepen their reliance on cloud infrastructure.

Furthermore, Zscaler’s acquisition of Red Canary in 2024 has bolstered its threat intelligence capabilities, enabling real-time detection and automated response to sophisticated cyberattacks [1]. This move aligns with broader industry shifts toward proactive, AI-driven security frameworks. As noted in a Grand View Research analysis, the solution segment of the cloud security market—encompassing tools like cloud access security brokers (CASBs) and identity and access management (IAM)—dominated 67% of revenue in 2024, driven by the need for granular control in complex cloud environments [1]. Zscaler’s platform, which operates entirely in the cloud, is uniquely positioned to meet these demands.

Forward Guidance: Confidence in Sustained Momentum

Zscaler’s forward guidance for FY2026 reinforces its optimism. The company projects Q1 2026 revenue between $772 million and $774 million, with non-GAAP EPS of $0.85–$0.86 [1]. For the full fiscal year, it anticipates revenue of $3.265–$3.284 billion and non-GAAP EPS of $3.64–$3.68 [1]. These figures imply a conservative 10–11% YoY revenue growth for FY2026, a rate that, while slightly below Q4’s 21.3% surge, still outpaces the projected 12.87% CAGR for the broader market [1].

The guidance also reflects Zscaler’s confidence in its ability to monetize its AI-driven innovations. With calculated billings growing 32% YoY in Q4 2025 [1], the company is demonstrating strong cross-selling and upselling capabilities, a critical factor in sustaining high-margin growth.

Risks and Considerations

While Zscaler’s trajectory is compelling, investors must remain cognizant of risks. The company reported a GAAP net loss of $17.6 million in Q4 2025, a slight increase from $14.9 million in Q4 2024 [1], underscoring the challenges of maintaining profitability amid aggressive R&D and sales investments. Additionally, the cloud security market is highly competitive, with players like Palo Alto Networks and CrowdStrike vying for market share. However, Zscaler’s cloud-native architecture and AI-first approach provide a durable moat, particularly as enterprises prioritize scalability and agility in their security strategies.

Conclusion: A Compelling Case for Momentum Investors

Zscaler’s Q4 2025 results and forward guidance paint a clear picture of a company riding the crest of a transformative industry wave. Its ability to outperform both its own guidance and broader market growth rates, coupled with strategic AI-driven innovations, positions it as a prime candidate for momentum-driven investors. As the cloud security market expands, Zscaler’s focus on proactive threat mitigation and seamless integration with hybrid cloud environments will likely cement its leadership. For those seeking exposure to the next phase of digital transformation, Zscaler offers a compelling, albeit not without risks, opportunity.

Source:
[1] Zscaler Reports Fourth Quarter and Fiscal 2025 Financial Results [https://ir.zscaler.com/news-releases/news-release-details/zscaler-reports-fourth-quarter-and-fiscal-2025-financial-results]
[2] Cloud Security Market Size to Hit USD 121.04 Billion by 2034 [https://www.precedenceresearch.com/cloud-security-market]
[3] Cloud Security Market Size And Share | Industry Report [https://www.grandviewresearch.com/industry-analysis/cloud-security-market]