Zscaler Lower Preliminary FY27 ARR Outlook Brings Organic Growth Drivers Back into Focus

Goldman Sachs maintains a Neutral rating on Zscaler but slashed its price target to $179 following a disappointing preliminary FY27 ARR outlook of 16-17%. The report cites SASE market maturity and internal go-to-market disruptions as primary reasons for the tempered growth profile.

Key Takeaways

• 1.Zscaler introduced a preliminary FY27 ARR growth outlook of 16-17%, which is significantly below the Street consensus of ~21%.
• 2.Management transitions and acquisition accounting related to Red Canary are contributing to a more tempered growth outlook for the upcoming fiscal years.
• 3.The SASE product cycle is reaching maturity, particularly in the large enterprise segment (10K+ employees), pushing Zscaler to compete more in the mid-market segment.

Table of Contents

• Zscaler (ZS)
• EPS Recap
• Valuation and Risks
• Disclosure Appendix
• Ratings, coverage universe and related definitions
• General disclosures

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