ARR climbed 25% to $3,771M
Annual recurring revenue reached $3,771 million as of July 31, 2026, up from $3,015 million a year earlier, indicating continued subscription momentum.
Source: 10-K Item 7 MD&A
Computed from published fixed rules, not a model's judgement — though one input, the count of high-severity risks, comes from the AI analysis below.
Not investment advice and not a price target: it scores the quarter's fundamentals, not the stock. Full methodology →
AI Takeaway
Zscaler's fiscal 2026 was defined by continued strong top-line expansion, with revenue growing over 25% and the customer base expanding 16% year over year. Management attributed the revenue increase primarily to deeper adoption by existing customers and new customer acquisition. The tension in the period was profitability: gross margin held steady, but GAAP operating loss widened as investments in R&D and stock-based compensation outpaced revenue gains.
Revenue
$3.35B
+25.42% YoY
EPS (Diluted)
-$0.39
-44.44% YoY
Gross Margin
76.8%
-0.1 pts YoY
Operating Income
-$133.27M
-3.74% YoY
Filed · Source: SEC EDGAR 10-K filing · Audit Opinion: Unqualified (Source: Report of Independent Registered Public Accounting Firm)
Next ZS earnings expected
Source: SEC XBRL
Zscaler (ZS) reported FY2026 revenue of $3.35B, up 25.4% year over year. Operating margin was -4.0%, against -4.8% a year earlier. Operating cash flow was $1.13B, up 16.2% year over year.
Last 4 quarters: 4 beats
| Quarter | Actual EPS (USD) | Consensus (USD) | Result |
|---|---|---|---|
| Sep 2026 | 1.19 | 1.12 | Beat +6.5% |
| Jun 2026 | 1.08 | 1.04 | Beat +4.0% |
| Mar 2026 | 1.01 | 0.92 | Beat +9.3% |
| Dec 2025 | 0.96 | 0.89 | Beat +8.4% |
Compiled by AI from 10-K Item 7 of this filing
Annual recurring revenue reached $3,771 million as of July 31, 2026, up from $3,015 million a year earlier, indicating continued subscription momentum.
Source: 10-K Item 7 MD&A
Customer count grew to approximately 11,000 from 9,400, driven by both acquisition and organic growth; over 40% of the Forbes Global 2000 are now customers.
Source: 10-K Item 7 MD&A
Of the $679.4M revenue increase, $474.6M came from existing customers adding users and subscriptions, while $204.8M came from new customers.
Source: 10-K Item 7 MD&A
Non-GAAP operating margin expanded to 23% from 22% and non-GAAP gross margin held at 80%, while GAAP operating margin remained negative.
Source: 10-K Item 7 MD&A
Free cash flow was $779.1M, but free cash flow margin fell to 23% from 27% due to higher capital expenditures and capitalized software.
Source: 10-K Item 7 MD&A
Compiled by AI from 10-K Item 1A of this filing · 4 high, 1 medium, 0 low
Zscaler has incurred net losses every year since inception, including a $63.2M net loss in FY2026, and expects continued annual net losses for the foreseeable future. The company's strategy prioritizes long-term growth, which may prevent achieving or sustaining profitability at levels expected by investors.
Source: 10-K Item 1A Risk Factors
The company faces competition from established network and security vendors, new cloud-based entrants, and large AI/hyperscale providers, many with greater resources. Competitive pressures could lead to price reductions, lower revenue and margins, and loss of market share.
Source: 10-K Item 1A Risk Factors
Zscaler derives most of its revenue through channel partners, with its top five partners and affiliates representing 31% of revenue in FY2026. Partners are generally non-exclusive and can cease reselling Zscaler with limited notice, which could materially harm sales.
Source: 10-K Item 1A Risk Factors
Any interruption or delay in delivering Zscaler's cloud services would negatively impact customers who depend on continuous availability for internet access. The platform is complex and may contain defects or vulnerabilities that could cause outages.
Source: 10-K Item 1A Risk Factors
Actual or perceived failure of the cloud platform to block malware or prevent a security breach could damage Zscaler's reputation and reduce demand. A breach of its internal networks or customer data could also make its solution appear insecure.
Source: 10-K Item 1A Risk Factors
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue $B | 3.35 $B | 2.67 $B | +25.42% |
Cost of Revenue $M | 777.63 $M | 618.18 $M | +25.79% |
Gross Profit $B | 2.57 $B | 2.05 $B | +25.30% |
Operating Income $M | -133.27 $M | -128.46 $M | -3.74% |
Net Income $M | -63.18 $M | -41.48 $M | -52.32% |
EPS (Basic) $ | -0.39 $ | -0.27 $ | -44.44% |
EPS (Diluted) $ | -0.39 $ | -0.27 $ | -44.44% |
R&D Expense $M | 903.40 $M | 672.49 $M | +34.34% |
Answers draw on this SEC filing and the data on this page
In Q3 FY2026, ZS delivered strong revenue growth of $850.5M (+25.4% YoY) and slightly improved gross and operating margins, but remained unprofitable with a wider net loss and sharply lower cash balances due largely to heavy year-to-date investing outflows.
ZS reported a significant revenue increase in Q2 FY2026, but faced widening net losses due to rising costs and R&D expenses.