In a surprising turn of events, Zscaler, a leading cybersecurity company, witnessed a sharp decline in its stock price, dropping by more than 17%. This development comes despite the company surpassing analysts' expectations for its fiscal fourth quarter earnings report. However, it appears that investors are more focused on Zscaler's growth forecast for fiscal 2025, which indicates a potential slowdown.

Zscaler's quarterly earnings report showed impressive performance, with sales soaring by 30%. Additionally, billings rose by 27% and deferred revenue increased by 32%. The company also managed to beat non-GAAP earnings estimates and significantly reduced its GAAP losses compared to the previous year. However, it still reported a quarterly GAAP loss amounting to $0.10 per share, and a yearly GAAP loss of $0.39 per share.

CEO Jay Chaudhry expressed his satisfaction with the results, stating that they exceeded the company's guidance across all metrics. Zscaler also made noteworthy strides towards achieving true GAAP profitability. However, analysts remain skeptical about the company's ability to sustain its growth momentum and reach profitability.

Zscaler's guidance for fiscal Q1 2025 came as a disappointment to investors. The company expects to report non-GAAP profits of approximately $0.62 per share, with sales growth projected at 20%. This outlook fell short of Wall Street analysts' consensus forecast, which predicted non-GAAP earnings of $0.73 per share. Similarly, Zscaler's guidance for fiscal 2025 non-GAAP earnings of $2.84 per share was below the expected $3.33 per share.

Analysts had already raised concerns about Zscaler's path to achieving GAAP profitability, projecting it to be unlikely before 2027. The weaker-than-expected non-GAAP guidance further suggests that the company's journey towards GAAP profitability may be delayed even further.

Given Zscaler's decelerating sales growth and underwhelming earnings guidance, the significant drop in the stock price seems justified. Investors may be questioning the company's ability to maintain its growth trajectory and ultimately achieve profitability.

It remains to be seen how Zscaler will address investors' concerns and regain market confidence. As the cybersecurity industry continues to evolve and grow, Zscaler will need to navigate challenges and adapt to changing market conditions in order to secure its long-term success.

Disclaimer: The author of this article does not hold any positions in the mentioned stocks. The Motley Fool has positions in and recommends Zscaler. The Motley Fool maintains a disclosure policy.