Zscaler slides as lower free-cash-flow outlook outweighs upbeat Q3 results

Zscaler (ZS) is down 17.1% today. Here is some analysis on what might have caused this price movement.

Analysis: The drop appears tied to a sharper-than-expected reduction in full-year free cash flow margin guidance, which overshadowed solid Q3 growth and raised revenue/ARR outlook. Investors likely reacted to higher planned capital expenditures and the near-term cash-flow tradeoff implied by that spending.

Details:

Zscaler cut its full-year fiscal 2026 free cash flow margin outlook to about 22.8%–23.3%, down from its prior expectation of 26.5%–27%, citing capex moving to the high single-digits as a percent of revenue.

In its Q3 FY2026 update, the company said revenue grew 25% year over year to $850.5 million and ARR rose 25% to $3.525 billion, while free cash flow margin in the quarter was 16% (down from 18% a year earlier).

The company described pulling forward some planned investments into Q4, contributing to higher capex versus prior expectations.

Despite the cash-flow guidance cut, Zscaler raised full-year fiscal 2026 outlook for key operating metrics such as revenue and profitability.

Sources:

Zscaler Investor Relations, SEC, Investing.com

Disclaimer: This price movement analysis was generated with the help of AI. Please double-check the information provided for mistakes.

$ZS Insider Trading Activity

$ZS insiders have traded $ZS stock on the open market 18 times in the past 6 months. Of those trades, 0 have been purchases and 18 have been sales.

Here’s a breakdown of recent trading of $ZS stock by insiders over the last 6 months:

ROBERT SCHLOSSMAN (Chief Legal Officer) has made 0 purchases and 3 sales selling 7,696 shares for an estimated $1,613,040.
MICHAEL J. RICH (CRO and President of WW Sales) has made 0 purchases and 2 sales selling 7,247 shares for an estimated $1,439,157.
ADAM GELLER (Chief Product Officer) has made 0 purchases and 4 sales selling 7,259 shares for an estimated $1,406,640.
RAJ JUDGE (EVP, Corp. Strategy & Ventures) has made 0 purchases and 2 sales selling 5,926 shares for an estimated $1,183,160.
KEVIN RUBIN (Chief Financial Officer) has made 0 purchases and 2 sales selling 4,985 shares for an estimated $1,025,785.
JAGTAR SINGH CHAUDHRY (CEO & Chairman) has made 0 purchases and 2 sales selling 4,784 shares for an estimated $960,166.
JAMES A BEER has made 0 purchases and 2 sales selling 830 shares for an estimated $175,222.
ANDREW WILLIAM FRASER BROWN sold 5,000 shares for an estimated $0

To track insider transactions, check out Quiver Quantitative's insider trading dashboard. You can access data on insider stock transactions through the Quiver Quantitative API insider transaction endpoint.

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$ZS Hedge Fund Activity

We have seen 376 institutional investors add shares of $ZS stock to their portfolio, and 612 decrease their positions in their most recent quarter.

Here are some of the largest recent moves:

FMR LLC removed 2,339,184 shares (-51.6%) from their portfolio in Q1 2026, for an estimated $328,164,123
FEDERATED HERMES, INC. removed 1,074,482 shares (-89.2%) from their portfolio in Q1 2026, for an estimated $150,739,079
T. ROWE PRICE INVESTMENT MANAGEMENT, INC. removed 999,599 shares (-44.3%) from their portfolio in Q4 2025, for an estimated $224,829,807
TWO SIGMA INVESTMENTS, LP added 974,678 shares (+483.9%) to their portfolio in Q1 2026, for an estimated $136,737,576
FIRST TRUST ADVISORS LP added 935,781 shares (+36.2%) to their portfolio in Q1 2026, for an estimated $131,280,716
D. E. SHAW & CO., INC. removed 872,732 shares (-70.6%) from their portfolio in Q4 2025, for an estimated $196,294,881
PRICE T ROWE ASSOCIATES INC /MD/ removed 823,148 shares (-32.0%) from their portfolio in Q1 2026, for an estimated $115,479,432

To track hedge funds' stock portfolios, check out Quiver Quantitative's institutional holdings dashboard. You can access data on hedge funds moves and 13F filings through the Quiver Quantitative API 13F endpoint.

$ZS Analyst Ratings

Wall Street analysts have issued reports on $ZS in the last several months. We have seen 4 firms issue buy ratings on the stock, and 0 firms issue sell ratings.

Here are some recent analyst ratings:

Macquarie issued a "Outperform" rating on 02/27/2026
Citigroup issued a "Buy" rating on 01/13/2026
Keybanc issued a "Overweight" rating on 01/12/2026
RBC Capital issued a "Outperform" rating on 01/05/2026

To track analyst ratings and price targets for $ZS, check out Quiver Quantitative's $ZS forecast page.

$ZS Price Targets

Multiple analysts have issued price targets for $ZS recently. We have seen 25 analysts offer price targets for $ZS in the last 6 months, with a median target of $225.0.

Here are some recent targets:

Richard Poland from Wells Fargo set a target price of $210.0 on 05/21/2026
Catharine Trebnick from Rosenblatt set a target price of $223.0 on 05/21/2026
Erik Suppiger from B. Riley Securities set a target price of $225.0 on 05/18/2026
Eric Heath from Keybanc set a target price of $190.0 on 05/18/2026
Rustam Kanga from Citizens set a target price of $210.0 on 05/01/2026
Hamza Fodderwala from Morgan Stanley set a target price of $155.0 on 04/22/2026
Ittai Kidron from Oppenheimer set a target price of $250.0 on 03/10/2026

This article is not financial advice. See Quiver Quantitative's disclaimers for more information. Note that there may be inaccuracies due to mistakes in ticker-mapping, and other anomalies.