Shares in Zscaler Inc. rose more than 3% in late trading today after the cloud security company reported better-than-expected earnings and revenue for its fiscal third quarter of 2025 and raised its outlook.

For the quarter ended April 30, Zscaler reported adjusted earnings per share of 84 cents, up from 71 cents in the same quarter of the previous year, on revenue of $678 million, up 23% year-over-year. Both figures were ahead of the 76 cents per share and revenue of $666.4 million expected by analysts.

Zscaler ended the quarter with approximately $2.9 billion in annual recurring revenue, up 23% year-over-year, with “new growth categories” annual recurring revenue hitting $1 billion. Total contract value also exceeded $1 billion in the quarter, a record third-quarter high for the company.

Business highlights in the quarter included the March launch of Asset Exposure Management, a service that expands Zscaler’s Exposure Management solution to provide a unified platform for managing asset risks, prioritization and quantification. The service assists with risk assessments and improves the overall security posture of Zscaler’s clients.

April highlights included Zscaler rolling out Client Connector version 4.7 for Windows, an update that delivered improved stability and performance. Also new the same month were new Digital Experience modules that offer an enhanced user experience monitoring and diagnostics.

While coming after the end of the quarter, Zscaler announced earlier this week that it had entered a definitive agreement to acquire Red Canary Inc., a managed detection and response startup, for an undisclosed price.

“We delivered outstanding Q3 results as an increasing number of customers adopt our expanding Zero Trust Exchange platform,” Chief Executive Jay Chaudhry (pictured) said in the company’s earnings release. “We enable customers to realize Zero Trust Everywhere while lowering operational cost and complexity.”

For its fiscal fourth quarter, Zscaler expects adjusted earnings per share of 79 to 80 cents on revenue of $705 million to $707 million. For the full year, the company expects adjusted earnings per share of $3.18 to $3.19 on revenue of $2.659 billion to $2.661 billion.

Deepen Desai, chief security officer and executive vice president of cyber and AI engineering at Zscaler, recently spoke with theCUBE, SiliconANGLE Media’s livestreaming studio, where he discussed how Zscaler champions artificial intelligence-powered threat detection “in the context of fighting fire with fire.”

Photo: Zscaler