Cybersecurity firm Zscaler's shares fall on dour annual forecasts

Zscaler shares tumbled 15.2% in premarket trading on Wednesday following the cybersecurity firm's downbeat annual forecasts.

The forecast comes after peers Palo Alto Networks and SentinelOne boosted expectations with strong annual revenue forecasts as CrowdStrike's customers reevaluated their options in the aftermath of a global IT outage.

Zscaler was on track to shed more than $4 billion from its market valuation of $29.2 billion, if premarket losses hold.


The company expects full-year revenue in the range of $2.60 billion to $2.62 billion, while analysts' estimated $2.63 billion, according to LSEG data.

"Contracted billings, a significant and growing portion of total billings, are projected to grow 7% in 1H2025, reflecting the impact of past macro challenges that have led to a historically lower growth rate in the first half," Rosenblatt Securities analyst Catharine Trebnick said in a note.

At least five brokerages cut their price targets on the stock with the median at $220, down from $224 in August.

Zscaler on Tuesday also forecast full-year adjusted net income of $2.81 to $2.87 per share, compared with estimates of $3.33.

Still, analysts at Bernstein said that demand could pick up for Zscaler, pointing to increasing "sales effectiveness".