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Significant one-day 30%+ drop after subdued FY2027 ARR guidance and modest quarterly revenue outlook; downgrade from a major analyst firm compounds headwinds; suggests a shift from execution optimism to fundamental growth risk.
What happened, with direct paths to the underlying reporting
Zscaler posted a Q3 beat on earnings and revenue but issued guidance for 2027 ARR growth of 16–17%, below Street expectations. The quarterly results included leadership turnover and higher capex, contributing to a >30% stock drop. Management remains confident in cybersecurity demand and AI-related opportunities, though investors will scrutinize ARR trajectory and cost structure over the next several quarters.
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