Live: Will Zscaler Crush Q3 Earnings Tonight and Continue Its May Rally?

Beyond tonight’s $1.01 consensus EPS estimates, Wall Street is laser-focused on Q4 guidance and an FY26 raise.

Analysts model a $223.39 average price target with 39 buy ratings vs. 9 holds, implying tolerance for a beat-and-raise but little patience for a reiteration.

Management’s pattern is conservative sandbagging, so an unchanged FY26 ARR band of $3.730B–$3.745B would read as bearish. The bullish bar: Q4 revenue guide pushing toward $850M, FY26 EPS lifted above $4.02, and organic ARR re-accelerating past 21%.

Investors also want clarity on billings, FCF margin, and Red Canary integration costs. With shares at $190.70, guidance, more than the beat itself, will dictate the after-hours move.

With Zscaler (NASDAQ:ZS | ZS Price Prediction) trading at $190.19 into tonight’s call, here are some top questions analysts will likely have for the company:

Top 5 Analyst Questions

• Organic ARR growth trajectory ex-Red Canary versus the 21% Q2 baseline.
• Zscaler AI Protect monetization and token-based pricing share of new ACV (last reported just over 25%).
• Z-Flex TCV momentum after Q2’s $290 million.
• Path to $5B ARR and Zero Trust Everywhere customer count beyond 550.
• FedRAMP High pipeline and $1M+ deal cadence.

Key Topics & Buzzwords

• Listen for: “Rule-of-62,” “agentic AI,” “MCP requests,” “calculated billings,” and updated free cash flow margin against the 26.5%-27% FY26 target.

Red Flags

• Net new ARR decelerating, Red Canary churn commentary, widening GAAP loss, or sales productivity slippage. With 8 insider sales and net selling direction, hedged language on H2 seasonality would sting.

Historical Earnings Day Reactions: The Beat-But-Sell Pattern

Across 11 past earnings releases, Zscaler has averaged a -3.04% day-of move, with beats specifically resulting in an average -4.91% move.

Surprise magnitude has shown no predictive power: the largest beat (Q4 2024, 27.54%) triggered a -18.67% drop, while Q3 2025 delivered a +9.79% gain on a smaller beat.

Initial reactions frequently reverse. Beats average +1.86% one week later, and Q2 2026 fell -12.17% before recovering +11.61% within five sessions.

With shares already up 27.84% in a month, expectations are high heading into tonight’s results.

Why Guidance Will Drive the Reaction

Zscaler (NASDAQ:ZS) has a clear sandbagging pattern: revenue beats of 1.6%-2.1% and EPS beats of 10.8%-12.6% over the last four quarters. The beat is largely priced in. Guidance is what moves the stock.

Management’s standing Q3 framework calls for revenue of $834M-$836M and non-GAAP EPS of $1.00-$1.01, with full-year ARR at $3.730B–$3.745B.

Bullish scenario: FY26 ARR lifted above $3.75B, Q4 revenue guide above ~$870M, and operating margin guidance north of 22%.

Bearish scenario: A merely reiterated outlook, organic ARR growth slipping below 21%, or margin compression from Red Canary integration. After Q1, an in-line guide sank shares -13.03% despite a beat. Investors want billings, organic ARR, and FCF margin lifted, not held.

Bull Case

• Zscaler (NASDAQ:ZS) has posted four straight double-digit EPS beats (10.77%-12.56% surprises), with Q2 ARR hitting $3.36B, up 25%.
• CEO Jay Chaudhry cites nearly 1 trillion AI transactions processed in 2025 and 2x-3x ARR lift on Zero Trust Everywhere adoption.
• RPO reached $6.1B, up 31%, signaling forward visibility.
• Shares already rallied 27.84% over the past month.

Bear Case

• Organic ARR growth excluding Red Canary was just 21%, well below the headline.
• Q3 revenue guide of 23% growth implies deceleration.
• Every recent beat triggered a same-day decline, averaging -4.91%.
• Insiders sold across the C-suite in March with zero purchases, and GAAP net income remains -$34.31M.

Zscaler has now beaten estimates in eight straight quarters, but tonight’s report carries more weight than a standard beat-or-raise setup.

Investors are now focused on whether the company can sustain strong organic ARR growth, expand margins, and continue proving that its platform consolidation strategy is working at scale.

The bigger question is whether management can keep rebuilding confidence after the stock’s sharp recovery rally in May. Another guidance increase from CEO Jay Chaudhry would reinforce the idea that enterprise security spending remains healthy despite macro concerns.