Zscaler delivered fiscal second-quarter results that exceeded Wall Street expectations, reporting adjusted earnings per share of $1.01 versus the $0.89 consensus estimate. Revenue climbed to $815.8 million, surpassing analysts' projections of $798.32 million. The cybersecurity company's strong performance was driven by robust demand for AI security offerings.

For the third quarter, Zscaler projects adjusted EPS of $1.00 to $1.01, ahead of the $0.95 consensus, with revenue guidance of $834 million to $836 million topping expectations of $831.9 million. The company raised its full-year outlook, now forecasting adjusted EPS of $3.99 to $4.02 compared to the $3.82 consensus, with annual revenue projected at $3.309 billion to $3.322 billion.

Despite the upbeat results, Zscaler shares fell 6% in extended trading. CFO Kevin Rubin noted the company is operating above the Rule-of-40 benchmark, indicating strong balance between growth and profitability. CEO Jay Chaudhry attributed the demand to organizations accelerating AI adoption seeking to secure AI-driven workflows. The disconnect between strong fundamentals and share price decline suggests investors may be pricing in heightened competition or broader market concerns about cybersecurity valuations.