What happened

Shares of Zscaler (ZS -2.57%), the provider of cloud-based software for cybersecurity, jumped 20.1% on Monday as of 11:11 a.m. ET after the company previewed strong third-quarter earnings earlier in the morning.

Almost immediately, the enthusiasm for Zscaler spread to other cybersecurity providers. CrowdStrike Holdings (CRWD -0.12%) was gaining 5.6% at that time, and Cloudflare (NET 0.06%) and Okta (OKTA -0.45%) were up 4.1% each.

So what

Of these three cybersecurity stocks, only one had significant news today: Cloudflare announced it is partnering with IT infrastructure company Kyndryl (KD -0.51%) to provide services to the latter's customers.  

But Cloudflare isn't outperforming CrowdStrike or Okta shares today, and in fact is being outperformed by CrowdStrike, which had no specific news. This all suggests that CrowdStrike, Cloudflare, and Okta are all reacting instead to the news out of Zscaler. So what did Zscaler have to say today?

Its CEO Jay Chaudhry said, "Preliminary third-quarter results exceeded the high end of our guidance range." Chaudhry added that billings look likely to be up 38% or 39% over the year-ago third quarter, revenue should range from $415 million to $419 million (versus the $397 million previously expected), and revenue for the full fiscal year will approach $1.6 billion.  

Now what

That all sounds pretty great for Zscaler, and implies healthy growth for the cybersecurity sector in general. If I could inject a bit of caution, however, it's worth pointing out that Zscaler also said it expects to lose at least $55 million in this current fiscal quarter, even as it reports adjusted profit of $60 million to $64 million.

While management is forecasting a full-year profit of $220 million, that figure is also adjusted. And that means there's no promise of actual positive earnings as calculated according to generally accepted accounting principles (GAAP) this year from Zscaler.

Indeed, according to estimates collated by S&P Global Market Intelligence, Wall Street isn't expecting Zscaler to turn GAAP profitable before 2027 at the earliest. That year is the best guess for profitability at Cloudflare and Okta as well, and analysts think CrowdStrike will turn the corner in 2026.

The good news is that, while GAAP profitability remains a long way off for Zscaler, Cloudflare, Okta, and CrowdStrike, all four are at least generating positive free cash flow (FCF). Of these four, CrowdStrike remains the cheapest when valued on its FCF, trading for 43 times trailing FCF at present, with Zscaler in second place at a 51 multiple, and Cloudflare and Okta trailing far behind -- both valued at triple-digit multiples to trailing FCF.

The fact that CrowdStrike is also the closest to GAAP profitability tells me that out of this bunch, it's probably your best stock for making a profit in cybersecurity.