When Zscaler Inc. (ZS) reports first-quarter fiscal 2026 earnings on November 25, investors will be watching a story with two competing plotlines: can the company stabilize its operational metrics while simultaneously chasing ambitious innovation bets?

What Management Promised

After operating at the "Rule of 50" last fiscal year—a benchmark where revenue growth plus profit margin equals 50%—Zscaler's management has laid out specific expectations for the quarter ahead.

Revenue guidance sits between $772 million and $774 million, translating to about 23% year-over-year growth. But the number everyone's really watching is gross margin, which management expects to recover to 80%. That's meaningful because margins dipped in Q4 after a one-time, hardware-intensive government deal temporarily squeezed profitability.

CEO Jay Chaudhry continues highlighting three massive growth drivers—AI Security, Zero Trust Everywhere, and Data Security Everywhere. These initiatives recently crossed $1 billion in combined Annual Recurring Revenue, which isn't nothing.

Then there's the Red Canary acquisition, which management expects will add $95 million in ARR over the full fiscal year.

Why Analysts Are Optimistic

Wall Street sentiment leans positive. Cantor Fitzgerald recently bumped its price target to $365, pointing to encouraging market checks and strong conviction around the Secure Access Service Edge opportunity. The firm also likes the potential synergies from integrating Red Canary into Zscaler's platform.

The bull case essentially boils down to this: Zscaler is well-positioned in growing markets, and the recent margin hiccup was a temporary blip rather than a structural problem.