In a surprising turn of events, Zscaler (NASDAQ: ZS) witnessed a significant stock collapse during morning trading on Wednesday, with share prices down by 17.8% as of 12:04 p.m. ET. This steep decline occurred despite the cybersecurity company surpassing analysts' expectations in its fiscal fourth-quarter report released the previous day.

The market had anticipated Zscaler to report adjusted earnings of $0.69 per share on sales of $567.9 million for the quarter. However, the company delivered even stronger results, with profits reaching $0.88 per share and sales hitting $592.9 million. This marked an impressive 30% surge in sales, and both billings and deferred revenue rose by 27% and 32%, respectively.

Zscaler's CEO, Jay Chaudhry, expressed satisfaction with the company's performance, stating that they had exceeded the high end of their guidance across all metrics. He also highlighted the progress made toward achieving true GAAP profitability, as the company successfully reduced its GAAP losses to $0.10 per share in the fourth quarter and $0.39 per share for the full fiscal year 2024, compared to $1.40 per share in fiscal 2023.

However, despite these positive developments, investors seem to be more concerned about Zscaler's future prospects. The company's guidance for fiscal Q1 2025 and fiscal year 2025 fell short of Wall Street analysts' consensus forecasts. Zscaler expects non-GAAP profits of approximately $0.62 for the first quarter of fiscal 2025 and $2.84 for the whole fiscal year, with sales growth projected at 20%.

This conservative guidance is a cause of worry for investors, as it implies that Zscaler's path to GAAP profitability may be further delayed. Analysts had already been cautioning that the company might not achieve GAAP profitability before 2027, and the underwhelming non-GAAP guidance reinforces this concern.

The disappointing guidance, coupled with a slowdown in sales growth, appears to justify the sell-off witnessed on Wednesday. As a result, many investors are now questioning whether Zscaler remains a viable investment.

Before making any investment decisions, it is worth considering that Zscaler did not make the list of "10 best stocks to buy now" recently identified by The Motley Fool Stock Advisor analyst team. This is a notable omission considering the track record of the stocks that have made the list, which have produced significant returns over the years.

Ultimately, while Zscaler's fiscal fourth-quarter performance and profit beat are commendable, the concerns surrounding future growth and profitability have impacted investor sentiment. As the market adjusts to the company's latest developments, only time will tell how Zscaler rebounds from this setback and navigates its way towards sustained success.

Disclaimer: Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Zscaler. The Motley Fool has a disclosure policy.