Zscaler Q3 Earnings Beat Estimates, Revenue Up 25%

Cisco Systems has added Quantum XChange's post quantum cryptography solution to the Cisco Networking App Marketplace, offering quantum safe key management that plugs directly into Cisco networking equipment. The company said this is the first FIPS validated post quantum cryptography product available through its marketplace. The integration lines up with Cisco's push to embed more security functions inside the network itself and with its focus on secure AI infrastructure, including projects such as the Bell Canada sovereign AI platform for regulated workloads. The key proof point going forward is customer adoption of Cisco's quantum safe and AI security offerings, particularly in government and regulated sectors, with upcoming quarterly reports and customer case studies as the places to watch for references to quantum resistant deployments on existing Cisco hardware and to new deals tied to sovereign or high sensitivity AI projects.

Zscaler announced a new partnership with IBM and Red Hat to help secure private applications during active vulnerability windows. The collaboration combines Zscaler's Autonomous Application Shield with IBM and Red Hat remediation tools to deliver application-specific protections, while Lightwell supplies validated open source fixes. The joint solution targets real-time safeguards against exploitation attempts, including those using AI-powered and opportunistic attack methods. Zscaler, a US software provider with a market cap of $32.9b, runs a cloud-based security platform that inspects traffic and enforces access rules for enterprises worldwide. The company said the key markers ahead are early access adoption of Autonomous Application Shield with Lightwell by large enterprises and any contribution to annual recurring revenue tied to application shielding and AI-driven response.

Samart Telcoms Public Company Limited, or SAMTEL, announced that Secure Info Company Limited, or SCI, an indirectly held subsidiary through Samart Comtech Company Limited with a 99.99% stake, signed a purchase agreement for equipment and devices for the project to establish a cyber operations center and data backup center, known as the Digital Resilience Center, or DRC, at the SMART PARK Industrial Estate office of the Industrial Estate Authority of Thailand, or IEAT, on September 29, 2026. The total project value is 146.20 million baht, including value-added tax. Delivery is scheduled for completion by April 27, 2027, with payment terms divided into five installments based on completed work progress.

Stifel raised its price target on Zscaler Inc to $235 from $200 on Tuesday and maintained its Buy rating, citing the cybersecurity firm's first analyst day since 2021. At the event, Zscaler management outlined its strategy, broader product lineup, go-to-market priorities and mid-term financial model, and made a strong case for both securing AI and using AI to improve security, the analysts said. The biggest surprise was a fiscal 2031 annual recurring revenue target: Zscaler gave a base case of more than $8 billion in ARR, a 17% compound annual growth rate, and an upside case of $10 billion, or 22% growth, on AI tailwinds. Stifel said the base case looked achievable and was in line with fiscal 2027 guidance, while the upside case would require a reacceleration in growth that the brokerage said was possible but not something it was underwriting yet. Profitability targets were largely in line with expectations, with Zscaler guiding to a fiscal 2031 operating margin of 27% to 30% and a free cash flow margin of 29% to 32%, and management reaffirmed its first-quarter and full-year fiscal 2027 targets, which the analysts called a positive after the recent change in chief revenue officer. Stifel said Zscaler may have set a higher bar with the $10 billion target, but it left the event more positive on the company's market opportunity, which management pegged at $220 billion.

Zscaler reaffirmed its first-quarter and full-year fiscal 2027 financial guidance and outlined a path to $8 billion to $10 billion in annual recurring revenue by fiscal 2031 during its annual Analyst/Investor Day event. In an SEC filing and accompanying press release, the cloud security platform maintained its first-quarter revenue forecast of $935 million to $939 million and non-GAAP earnings per share of $1.15 to $1.16, alongside full-year fiscal 2027 revenue between $3.908 billion and $3.938 billion. The company also reiterated its full-year annual recurring revenue guidance of $4.396 billion to $4.426 billion, representing 16.6% to 17.4% expansion. Chief Executive Officer Jay Chaudhry described agentic AI as the most significant opportunity in the company's history, noting that expanding beyond user security into branch, cloud, and AI agents widened Zscaler's addressable market to $220 billion, with data security annual recurring revenue already topping $400 million. Shares jumped 4.9% in the pre-market session before cooling to $209.76, up 3.9% from the previous close, as the S&P 500 and Nasdaq Composite touched all-time highs.

The First Trust Cybersecurity ETF (CIBR) reached an all-time high on Monday as the tech-heavy Nasdaq Composite (^IXIC) notched a fresh record, with the fund's main holdings CrowdStrike (CRWD), Palo Alto Networks (PANW), and Fortinet (FTNT) all sitting near all-time highs after surging 132%, 131% and 97%, respectively. Rubrix (RBRK), F5 (FFIV), and Cloudflare (NET) also sit near record highs after a strong rally this year. Alarm bells from leadership at Anthropic and OpenAI prompted a rally in cybersecurity stocks last month, and the surge in AI agent usage and the popularity of Meta's (META) Muse have also highlighted the need for the industry. "Agents going rogue is the biggest risk today," Jay Chaudhury, CEO of Zscaler, told Yahoo Finance's Brian Sozzi on Monday, adding that a hijacked or rogue agent on a corporate network is far more dangerous because it works at machine speed. Morgan Stanley analysts, who have Overweight recommendations on Palo Alto Networks, CrowdStrike, and Okta (OKTA), expect corporate spending on cybersecurity software to grow by 23% annually through 2028, potentially accelerating to 33% annually if major cyberattacks spur new government mandates.