Zscaler Inc. (NASDAQ:ZS) shares added more than 8% on Friday as the cybersecurity firm delivered a beat and raise for the fiscal third quarter of 2025.
The company now expects full-year revenue in the range of $2.659 billion to $2.661 billion, up from the prior guidance of $2.640 billion to $2.654 billion.
Earnings per share (EPS) are forecast in the range of $3.18 to $3.19 from the previous range of $3.04 to $3.09.
Zscaler also raised its free cash flow margin guidance to 25.5% to 26% from 24.5% to 25%.
For fiscal Q3, the three-month period ending April 30, revenue was up 23% at $678 million, above estimates of $666.4 million.
EPS grew to $0.84 from $0.71 in the year-ago quarter, surpassing estimates of $0.76.
Deferred revenue, a measure of contracted future revenue, was up 26% year-over-year at $1.985 billion.
Analysts at Wedbush raised their price target on ‘Outperform’-rated Zscaler to $300 from $240 following its earnings report, describing it as “another breakout moment for the cybersecurity stalwart.”
They highlighted strong demand for Zscaler's Zero Trust and AI-driven security solutions, a combination that continues to resonate strongly with customers in an increasingly security-conscious enterprise environment.
Wedbush pointed out the particularly strong performance in new logo acquisition, where 59% of Zero Trust customers were new, and new logo annual contract value grew 40% year-over-year.
The firm also emphasized Zscaler's 23% growth in customers with more than $1 million in annual recurring revenue, attributing this to the success of the company’s new account-centric go-to-market model, which has improved both cross-sell and upsell opportunities.
“We continue to believe that Zscaler is a top name in this space to own as this cloud cybersecurity shift further accelerates,” they wrote.
They added that their increased price target reflects increased confidence in the Zscaler zero trust growth story over the coming year.
Shares of Zscaler added 8.3% at about $272 late morning on Friday.