Zscaler dropped about 4.5% today to US$169.80, even though the latest quarter delivered exactly what long term cybersecurity investors tend to look for. Revenue reached about US$898 million and annual recurring revenue climbed to US$3.8b. The stock had run up roughly 30% over the past three months, so this pullback reflects expectations resetting more than a broken story.

The real headline is margin power. Zscaler posted an about 24.3% non GAAP operating margin and a free cash flow margin of about 23% for the year. That profitability profile will shape how investors think about the next few years, not just this week’s price move.

Is Zscaler a genuine bargain on 8.3x P/S and a share price about 34.5% below the stated DCF fair value, or…