tech
Zscaler tanks 31% for worst day ever on 'prudent' guidance, sales shakeup
Zscaler has shed half its value over the last year.
TL;DR
- Zscaler's stock dropped more than 30%, marking its worst day on record.
- The decline followed the issuance of underwhelming guidance for fiscal year 2027, projecting 16% to 17% annual recurring revenue growth, below estimates.
- The company reported better-than-expected fiscal third-quarter results, with adjusted earnings of $1.08 per share on $850 million in revenue.
- Zscaler cited the loss of two sales leaders and a 'prudent approach' to guidance amidst these transitions.
- Increased capital expenditures are expected in fiscal year 2027 due to memory crunch, spiking prices, and costs.
- Investor sentiment towards software and cybersecurity stocks has soured due to AI concerns and potential business model disruptions.
- Evercore ISI downgraded Zscaler shares to 'in line' from 'outperform' and lowered its price target.