AI Takeaway
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.
Revenue
$850.48M
++25.43% YoY
EPS (Basic)
$-0.09
-200.00% YoY
Gross Margin
77.3%
++0.35% YoY
Operating Income
$-29.64M
-16.64% YoY
Filed · Analysis updated · Source: SEC EDGAR 10-Q filing
Revenue rose to $850.5M in Q3 FY2026, up 25.4% YoY from $678.0M, indicating continued top-line expansion despite the company still posting losses. Gross profit increased 26.0% YoY to $657.8M, slightly outpacing revenue growth.
Source: Source: 10-Q Item 1, p.N/A
Gross margin was 77.3% in Q3 FY2026 versus 77.0% a year earlier, a modest improvement of about 0.4 percentage points. This suggests ZS maintained pricing power or cost discipline even as cost of revenue increased 23.5% YoY to $192.7M.
Source: Source: 10-Q Item 1, p.N/A
R&D expense increased 36.8% YoY to $232.3M, materially faster than revenue growth of 25.4%. That higher investment likely contributed to continued operating losses, with operating income at -$29.6M versus -$25.4M in the prior year period.
Source: Source: 10-Q Item 1, p.N/A
2 more insights available
Upgrade to unlockZS grew revenue 25.4% YoY to $850.5M in Q3 FY2026, but net income was still negative at -$13.9M, compared with -$4.1M a year earlier. This shows that even with strong scale, the company remains exposed to execution risk in turning growth into sustainable earnings.
Source: Source: 10-Q Item 1, p.N/A
Unlock 4 more detailed risk analysis
Upgrade to unlockReported EPS of $1.08 versus the $1.04 analyst consensus — a +4.0% beat for Q3 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $850.48M | $678.03M | +25.43% |
Cost of Revenue | $192.65M | $155.98M | +23.51% |
Gross Profit | $657.82M | $522.06M | +26.01% |
Operating Income | $-29.64M | $-25.41M | -16.64% |
Net Income | $-13.88M | $-4.13M | -236.56% |
EPS (Basic) | $-0.09 | $-0.03 | -200.00% |
EPS (Diluted) | $-0.09 | $-0.03 | -200.00% |
R&D Expense | $232.28M | $169.76M | +36.83% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $7.1B | $5.34B | +32.93% |
Current Assets | $4.65B | $3.92B | +18.87% |
Total Liabilities | $4.73B | $3.53B | +33.86% |
Current Liabilities | $2.5B | $3.17B | -21.07% |
Stockholders' Equity | $2.37B | $1.8B | +31.12% |
Cash & Equivalents | $982.11M | $1.99B | -50.67% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash FlowYTD | $850.37M | $721.85M | +17.80% |
Investing Cash FlowYTD | $-2.28B | $-179.44M | -1171.61% |
Financing Cash FlowYTD | $24.5M | $25.4M | -3.55% |
D&AYTD | $105.61M | $74.1M | +42.52% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Gross Margin | 77.3% | 77.0% | +0.35% |
Operating Margin | -3.5% | -3.7% | +0.26% |
Net Margin | -1.6% | — | — |
ROE | -0.6% | — | — |
ROA | -0.2% | — | — |
Current Ratio | $1.861 | — | — |
Debt to Equity | $1.999 | — | — |
ZS reported revenue of $850.5M in Q3 FY2026, up 25.4% from $678.0M in the prior-year period. Gross profit grew slightly faster, rising 26.0% to $657.8M, while gross margin improved to 77.3%.
No. ZS reported operating income of -$29.6M and net income of -$13.9M in Q3 FY2026. EPS was -$0.09, compared with -$0.03 in the prior-year period, so the bottom line worsened year over year.
The main positives were strong revenue growth of 25.4% YoY, gross margin of 77.3%, and year-to-date operating cash flow of $850.4M, up 17.8%. The main negatives were the wider net loss, R&D expense growth of 36.8% YoY, and a 50.7% decline in cash and equivalents to $982.1M.
Cash and equivalents fell to $982.1M from $1.99B a year earlier. Based on the provided financial data, the biggest visible factor was year-to-date investing cash flow of -$2.28B, far larger than the -$179.4M outflow in the prior-year comparable period, although the exact use of cash is not available from the filing text provided.
ZS appears to have adequate short-term liquidity, with a current ratio of 1.86 and year-to-date operating cash flow of $850.4M. However, leverage remains meaningful at 2.00x debt to equity, profitability is still negative, and the cash balance has declined significantly, so the financial profile is mixed.