Zscaler Inc. (ZS) experienced a significant pre-market plunge of 8.82% on Friday, following the release of its second-quarter fiscal 2026 financial results.

The cloud security firm reported a wider net loss of $34.3 million for the quarter ended January 31, compared to a loss of $7.7 million a year earlier. The company attributed the increased loss to higher spending on sales, marketing, and research and development in a competitive market. While Zscaler's revenue of $815.8 million and adjusted earnings per share of $1.01 both exceeded analyst estimates, the company lowered its full-year revenue outlook, which overshadowed the quarterly beat.

Following the earnings report, multiple Wall Street analysts revised their price targets downward for Zscaler. JP Morgan cut its target to $250 from $267, TD Cowen reduced its target to $220 from $260, Piper Sandler lowered its target to $185 from $260, Jefferies cut to $200 from $250, and Berenberg reduced its target to $320 from $390. These analyst actions contributed to the negative sentiment driving the stock lower in pre-market trading.