Zscaler and Ciena report earnings beats amid AI demand

Zscaler and Ciena reported quarterly earnings that exceeded analyst expectations, yet the companies saw divergent market reactions. Zscaler reported fiscal Q4 revenue of approximately $898.2 million, a 25% year-over-year increase, and adjusted earnings per share of $1.19, beating the $1.09 estimate. The company noted that AI-driven cybersecurity risks are driving demand for its zero-trust solutions. Despite the beat, Zscaler's stock experienced volatility, partly due to a decline in free cash flow margins caused by increased capital expenditures.

Ciena also reported strong results, with revenue surging 37% year-over-year to $1.67 billion and non-GAAP earnings more than tripling. However, Ciena's stock fell roughly 10% following the report. Investors appeared concerned by potential margin compression, as the company guided for a gross profit margin of approximately 45%. Additionally, Ciena faces supply constraints for specialized optical components and memory, leading to a projected backlog of $10 billion by the end of the year.