Market Overview - U.S. stock futures rose on Wednesday following Tuesday's gains, with major benchmark indices showing positive movement [1] - The three-day winning streak occurs in a holiday-shortened week, with markets closed on Thursday and open until 1:00 p.m. ET on Friday [1] - Traders are pricing in an 84.9% likelihood of a Federal Reserve interest rate cut in December, influenced by dovish central bank guidance [2] Stock Performance - Dell Technologies Inc. (NYSE:DELL) increased by 4.94% after reporting mixed Q3 results and raising its full-year revenue outlook to $111.2 billion to $112.2 billion, up from $105 billion to $109 billion [7] - HP Inc. (NYSE:HPQ) fell by 5.67% despite better-than-expected Q4 earnings, due to announced layoffs and weak forward guidance [7] - Autodesk Inc. (NASDAQ:ADSK) rose by 7% after beating Q3 earnings and revenue expectations, guiding for full-year revenue of $7.15 billion to $7.17 billion and adjusted earnings of $10.18 to $10.25 per share [7] - Zscaler Inc. (NASDAQ:ZS) dropped 7.15% despite beating analyst estimates and raising its fiscal 2026 outlook [14] - Uber Technologies Inc. (NYSE:UBER) was up 0.73% after launching Level 4 fully driverless Robotaxi operations in Abu Dhabi [14] Sector Performance - Communication services, health care, and consumer discretionary sectors recorded the largest gains on Tuesday, contributing to the positive performance of the S&P 500 [9] - The Nasdaq Composite rose by 0.67%, S&P 500 by 0.91%, Dow Jones by 1.43%, and Russell 2000 by 2.14% [10] Economic Indicators - Initial jobless claims data for the week ending Nov. 22 and September's durable-goods orders data will be released on Wednesday [15]

Core Insights - Zscaler reported better-than-expected Q1 results for fiscal year 2026, with a non-GAAP EPS of $0.96, exceeding market expectations by $0.10 [1] - Revenue reached $788.1 million, a 26% year-over-year increase, surpassing expectations by $14.3 million [1] - Annual recurring revenue (ARR) hit $3.204 billion, also reflecting a 26% year-over-year growth, indicating strong execution in the zero-trust security market and expansion of AI security products [1] Financial Performance - Revenue growth accelerated from 21% in the previous quarter to 26% [1] - New ARR was $189 million, a decrease from $198 million in the previous quarter, which may exert pressure on after-hours stock prices despite solid fundamentals [1] - Zscaler projects full-year revenue between $3.282 billion and $3.31 billion [1] Stock Market Reaction - Zscaler's stock fell over 7% in pre-market trading following the earnings report [1] - The closing price on November 25 was $289.73, with a pre-market price of $268.64 on November 26 [2] - The stock experienced a trading volume of 3.3195 million shares, with a market capitalization of approximately $46.204 billion [2]

Group 1 - The article does not provide any specific content or key points related to a company or industry [1]

Core Insights - Zscaler's stock price initially increased by 3.35% to $290 following the release of strong results, but later erased these gains due to a mild forward estimate [1] Company Performance - The company reported strong results, indicating robust performance in its operations [1] - Despite the strong results, the forward estimate was described as mild, which may have contributed to the stock's decline [1] Market Reaction - The stock's initial rise was followed by a retreat, suggesting market volatility and investor sentiment influenced by future expectations [1]

Core Insights - Zscaler reported revenue of $788.11 million for the quarter ended October 2025, marking a year-over-year increase of 25.5% and exceeding the Zacks Consensus Estimate by 1.91% [1] - The company's EPS for the same period was $0.96, up from $0.77 a year ago, representing a surprise of 12.94% over the consensus estimate of $0.85 [1] Financial Performance Metrics - Remaining Performance Obligations stood at $5.93 billion, surpassing the average estimate of $5.65 billion from three analysts [4] - The Dollar-Based Net Retention Rate was reported at 115%, slightly above the average estimate of 114.1% from three analysts [4] - Revenue from Direct Customers reached $122.1 million, significantly exceeding the average estimate of $92.97 million from two analysts, reflecting a year-over-year increase of 75.5% [4] - Revenue from Channel Partners was $666.01 million, which fell short of the average estimate of $680.24 million from two analysts, but still represented a year-over-year growth of 19.3% [4] Stock Performance - Zscaler's shares have declined by 14.1% over the past month, compared to a decrease of 1.2% in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Core Insights - Zscaler exceeded Wall Street expectations for quarterly revenue and profit, indicating strong market performance [1] Company Performance - The company's revenue growth was driven by robust demand for its cloud and artificial intelligence security solutions [1]

Core Insights - Zscaler reported quarterly earnings of $0.96 per share, exceeding the Zacks Consensus Estimate of $0.85 per share, and showing an increase from $0.77 per share a year ago, resulting in an earnings surprise of +12.94% [1] - The company achieved revenues of $788.11 million for the quarter ended October 2025, surpassing the Zacks Consensus Estimate by 1.91% and up from $627.96 million year-over-year [2] - Zscaler's stock has increased approximately 55.4% since the beginning of the year, significantly outperforming the S&P 500's gain of 14% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.88 on revenues of $794.38 million, and for the current fiscal year, it is $3.66 on revenues of $3.27 billion [7] - The estimate revisions trend for Zscaler was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The Security industry, to which Zscaler belongs, is currently ranked in the top 11% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

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Financial Data and Key Metrics Changes - The company reported a strong start to fiscal year 2026, with annual recurring revenue (ARR) growth accelerating to 26% year-over-year and remaining performance obligation (RPO) growth accelerating to 35% [7][23] - Q1 revenue was $788 million, growing 26% year-over-year and 10% sequentially, exceeding the high end of guidance [23] - The gross margin was reported at 79.9%, down from 80.6% in the same quarter last year, influenced by new product introductions [24] - Free cash flow margin for Q1 was 52%, with cash and short-term investments totaling $3.3 billion [25] Business Line Data and Key Metrics Changes - ARR from the three growth pillars—AI Security, Zero Trust Everywhere, and Data Security Everywhere—accelerated in the quarter [7][23] - AI Security pillar grew over 80% year-over-year, exceeding the FY 2026 target of $400 million ARR three quarters early [8] - Data Security Everywhere ARR accelerated to approximately $450 million [19] Market Data and Key Metrics Changes - Geographically, the Americas accounted for 58% of revenue, EMEA for 27%, and APJ for 15% [23] - The company closed Q1 with 698 customers generating over $1 million in ARR and 3,754 customers exceeding $100,000 in ARR [24] Company Strategy and Development Direction - The company aims to exceed $10 billion in ARR, leveraging its leadership in Zero Trust security and comprehensive AI Security offerings [22] - The introduction of the Z-Flex program is driving meaningful upsells and reducing sales cycles, generating over $175 million in total contract value (TCV) [20][21] - The company is focusing on expanding its Zero Trust Everywhere initiative, having secured over 450 enterprises, surpassing its goal three quarters ahead of schedule [16] Management's Comments on Operating Environment and Future Outlook - Management noted that while IT budgets remain tight, there is less pressure on cybersecurity spending, with strong interest in Zero Trust Security and AI Security [65] - The company is optimistic about the future, citing strong demand for its solutions and a robust pipeline [66] Other Important Information - The company announced the transition of its Investor Relations leader, with Kim Watkins joining in early December [4] - The integration of Red Canary is progressing well, with the majority of the pipeline coming from existing Zscaler customers [48] Q&A Session Summary Question: About Zero Trust Branch and its future acceleration - Management indicated that the technology for Zero Trust Branch is in great shape, with significant demand from customers, and sees a big opportunity for growth [31] Question: Regarding the growth of the $2 billion ARR segment - Management confirmed that a significant part of the remaining $2 billion is from ZIA and ZPA, which are growing well, but the core business will grow at a slower rate than the overall business [40][42] Question: Performance of Red Canary and its integration - Management stated that the integration of Red Canary is going well, with its contribution trending slightly better than previous guidance, although it is not material to overall business [48][49] Question: Breakdown of revenue strength - Management highlighted that all three growth pillars—Zero Trust Everywhere, AI Security, and Data Security—are growing well and accelerating [53] Question: Competitive landscape and core business performance - Management noted that the competitive landscape has not changed significantly, with Zscaler's brand becoming stronger among large enterprises [58] Question: Customer spending priorities for 2026 - Management observed that while IT budgets are tight, there is strong interest in Zero Trust and AI Security, which are driving pipeline creation [65] Question: Trends in the SASE market - Management expressed confidence in their position within the Zero Trust market, stating that their expansion is driven by new functionalities [71] Question: Organic net new ARR in the quarter - Management indicated that organic growth in Q1 was consistent with Q4 and exceeded internal expectations [78][79] Question: Synergies between Red Canary and data security portfolio - Management discussed the integration strategy, emphasizing the potential for enhanced threat detection and governance capabilities [119]

Financial Data and Key Metrics Changes - The company reported a strong start to fiscal Q1 2026, with annual recurring revenue (ARR) growth accelerating to 26% year-over-year and remaining performance obligation (RPO) growth accelerating to 35% [7][23] - Q1 revenue reached $788 million, growing 26% year-over-year and 10% sequentially, exceeding the high end of guidance [23] - The gross margin for Q1 was 79.9%, down from 80.6% in the same quarter last year, influenced by new product introductions [24] - Operating margin was 21.8%, with a free cash flow margin of 52% [25] Business Line Data and Key Metrics Changes - ARR from the three growth pillars—AI Security, Zero Trust Everywhere, and Data Security Everywhere—accelerated in Q1 [7][23] - AI Security pillar grew over 80% year-over-year, exceeding the FY26 target of $400 million ARR three quarters early [8][15] - Data Security Everywhere ARR accelerated to approximately $450 million [19] Market Data and Key Metrics Changes - Geographically, the Americas accounted for 58% of revenue, EMEA for 27%, and APJ for 15% [23] - The company closed Q1 with 698 customers generating over $1 million in ARR and 3,754 customers exceeding $100,000 in ARR [24] Company Strategy and Development Direction - The company aims to exceed $10 billion in ARR, leveraging its leadership in Zero Trust security and comprehensive AI security offerings [22] - The introduction of the Zflex program is driving meaningful upsells and reducing sales cycles, generating over $175 million in total contract value (TCV) [20][21] - The company is focusing on expanding its Zero Trust Everywhere initiative, having secured over 450 enterprises, surpassing its goal three quarters ahead of schedule [16] Management's Comments on Operating Environment and Future Outlook - Management noted that while IT budgets remain tight, there is less pressure on cybersecurity spending, with strong interest in Zero Trust and AI Security solutions [65] - The company is optimistic about the future, expecting AI Security ARR to surpass $500 million by the end of fiscal 2026 [15][21] Other Important Information - The company announced the transition of Ashwin Kesireddy to a new role as Product Manager of AI Security, with Kim Watkins joining as the new head of Investor Relations [4][27] - The integration of Red Canary is progressing well, with its contribution trending slightly better than previous guidance, although it is not expected to be material to overall business [48][116] Q&A Session Summary Question: About Zero Trust Branch and its future acceleration - Management indicated that the technology for Zero Trust Branch is in great shape, with significant demand from customers, and they see a big opportunity for growth [30][32] Question: Regarding the growth of the $2 billion ARR segment - Management confirmed that a significant part of the remaining $2 billion is from ZIA and ZPA, which are growing well, but the core business will grow at a slower rate than the overall business [40][42] Question: Performance of Red Canary and its integration - Management stated that the integration of Red Canary is going well, with its go-to-market team uncovering opportunities within Zscaler's customer base [48][116] Question: Insights on revenue strength and core business performance - Management highlighted that all three growth pillars are accelerating, contributing to strong overall performance, and they are seeing organic growth consistent with previous quarters [54][56] Question: Competitive landscape and customer priorities - Management noted that the competitive landscape has not changed significantly, with Zscaler's brand becoming stronger and customers prioritizing Zero Trust and AI Security solutions [58][66] Question: Trends in the SASE market - Management emphasized that Zscaler remains strong in the Zero Trust market, differentiating itself from other vendors claiming to offer SASE solutions [70][72] Question: Organic net new ARR in the quarter - Management confirmed that organic growth in Q1 was consistent with Q4, exceeding internal expectations [78][116] Question: Synergies between Red Canary and data security portfolio - Management discussed the integration strategy, highlighting opportunities for remediation and governance within the data security portfolio [119]