We review the results from Zscaler (ZS) and Workday (WDAY) and predict which stock is more likely to outperform over the next 10 years. Who ya got? Asit Sharma, David Meier, and Tim Beyers: - Review last week’s results from Zscaler and Workday. - Predict which of the two will outperform more over the next 10 years. - Tackle investors’ pressing Mindset questions. Have a Mindset question you’d want answered on a future show? Reach out to Tim at [email protected]. Don’t wait! Be sure to get to your local bookstore and pick up a copy of David’s Gardner’s new book — Rule Breaker Investing: How to Pick the Best Stocks of the Future and Build Lasting Wealth. It’s on shelves now; get it before it’s gone! Companies discussed: ZS, WDAY Host: Tim Beyers Guests: Asit Sharma, David Meier Producer: Anand Chokkavelu Engineer: Dan Boyd Disclosure: Advertisements are sponsored content and provided for informational purposes only. The Motley Fool and its affiliates (collectively, “TMF”) do not endorse, recommend, or verify the accuracy or completeness of the statements made within advertisements. TMF is not involved in the offer, sale, or solicitation of any securities advertised herein and makes no representations regarding the suitability, or risks associated with any investment opportunity presented. Investors should conduct their own due diligence and consult with legal, tax, and financial advisors before making any investment decisions. TMF assumes no responsibility for any losses or damages arising from this advertisement. We’re committed to transparency: All personal opinions in advertisements from Fools are their own. The product advertised in this episode was loaned to TMF and was returned after a test period or the product advertised in this episode was purchased by TMF. Advertiser has paid for the sponsorship of this episode. Learn more about your ad choices. Visit megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices
Full Episode
Who's beating the market now? We've got ideas. You're listening to Motley Fool Money. Welcome, Fools! I'm your host, Tim Beyers, and with me are longtime Fools, Austin Sharma and David Meyer. Fellas, how are we doing? Both fully caffeinated, good weekends?
Doing good. I'm only half caffeinated right now.
Dave, you got just a few seconds. Quaff it down. You got to get fully caffeinated before we roll. I'm on it.
Half caffeinated is better than uncaffeinated. Let's just say that. All right. Today, we'll be talking about fiscal Q1 2026 earnings from Zscaler and Q3 2026 earnings from Workday, tickers ZS and WDAY, and predicting which of these two will be the better performer over the next decade. We'll also tackle some mindset questions and a potential new feature we're calling Mindset Monday.
We are going to ask for your feedback. We want to know if you want more mindset content. But we start with earnings, and let's quickly review what we saw last week starting with Zscaler. We had some good numbers, and I want you both to react to these. So Zscaler said they exceeded their expectations on both the top and bottom line. They say they blew past what they call rule of 78.
They're just making stuff up here. There's a rule of 40 number that is very common, which is growth compared to margins. If the growth is materially above 40 over the margin, that's a good sign for the company. They say, forget about 40, we're at 78. I think that's a little nonsensical, but revenue did grow 26% year-over-year. Annual recurring revenue was up 26% year-over-year.
Their backlog now is $3.2 billion in annual recurring revenue, $1 billion of that are some very high-growth initiatives, including what they are calling AI security. They say their AI security ARR surpassed their fiscal year 2026 target of $400 million three-quarters early, and now they are anticipating they'll hit half a billion before fiscal 2026. More AI,
more need for security, zero trust, lots of companies in the market for this, 450 enterprises. Dave, let me start with you here. Would you make it these Zscaler results and does anything give you pause?
Nothing gives me pause. This is a company that, in my opinion, is doing very well. They're in a market that needs its technology prowess, that needs its products. We always have to remember, in the cybersecurity market,
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