Zscaler Reports 25% Fourth-Quarter Revenue Growth to $898 Million

Zscaler, Inc. (ZS ) reported revenue of $898.2 million for its fiscal fourth quarter ended July 31, 2026, up 25% year over year, according to financial results released by the cloud security company on September 3, 2026. Annual recurring revenue also grew 25% year over year to $3,771 million, of which $246 million was net new ARR added during the quarter.

GAAP loss from operations in the quarter was $15.5 million, or 2% of revenue, compared with a loss of $32.2 million, or 4% of revenue, in the fourth quarter of fiscal 2025. Non-GAAP income from operations reached $218.4 million, or 24% of revenue, which the company described as a record, compared with $158.9 million, or 22% of revenue, a year earlier. GAAP net loss narrowed to $3.4 million, or $0.02 per diluted share, from $17.6 million, or $0.11 per diluted share, in the prior-year quarter. Non-GAAP net income was $198.2 million, or $1.19 per diluted share, compared with $146.7 million, or $0.89 per share.

Deferred revenue grew 19% year over year to $2,926 million as of July 31, 2026. Zscaler defines ARR as the next 12 months of revenue from subscription contracts as of the measurement date, assuming that any contract expiring during that period will be renewed under existing terms. The company noted there is no comparable GAAP measure for ARR and that it has not reconciled the ARR data to any GAAP measure.

“AI represents one of the most significant opportunities in Zscaler’s history. By connecting users, workloads, branches, and now agents directly to the applications they need without placing them on the network, we are uniquely equipped to help companies both combat the threats created by agentic AI and securely deploy AI agents and models,” said Jay Chaudhry, CEO, Chairman and Founder of Zscaler.

“We delivered a strong fourth quarter, with revenue and ARR both growing 25% year over year, net new ARR growing 24%, and non-GAAP operating margin reaching a record 24%,” said Kevin Rubin, chief financial officer of Zscaler. He attributed the quarter’s performance to broadening growth beyond users, citing a strong contribution from non-seat-based solutions, continued Z-Flex momentum, record large-deal activity, and improving sales productivity.

Full-Year Results and Cash Flow

For the full fiscal year ended July 31, 2026, revenue grew 25% year over year to $3,353 million. GAAP loss from operations was $133.3 million, or 4% of revenue, compared with $128.5 million, or 5% of revenue, in fiscal 2025. Non-GAAP income from operations was $767.1 million, or 23% of revenue, compared with $580.1 million, or 22% of revenue, the prior year. GAAP net loss was $63.2 million, or $0.39 per diluted share, compared with $41.5 million, or $0.27 per diluted share, in fiscal 2025. Non-GAAP net income was $704.2 million, or $4.21 per diluted share, compared with $534.8 million, or $3.28 per share.

Cash provided by operations in the fourth quarter was $279.3 million, or 31% of revenue, compared with $250.6 million, or 35% of revenue, a year earlier. Free cash flow was $60.8 million, or 7% of revenue, down from $171.9 million, or 24% of revenue, in the fourth quarter of fiscal 2025, reflecting capital expenditures and capitalized internal-use software of $218.5 million versus $78.7 million a year earlier. For the full year, operating cash flow was $1,130 million, or 34% of revenue, and free cash flow was $779.1 million, or 23% of revenue, compared with $726.7 million, or 27% of revenue, in fiscal 2025.

As of July 31, 2026, Zscaler held $928.4 million in cash and cash equivalents and $2,545.8 million in short-term investments, against $2,389.0 million and $1,183.4 million, respectively, a year earlier. Total assets stood at $7,866.7 million, and convertible senior notes on the balance sheet totaled $1,696.4 million. Payments for business acquisitions, net of cash acquired, were $918.1 million for fiscal 2026.

The Red Canary acquisition shaped both the reported figures and the investing section of the cash flow statement. Zscaler completed the deal on August 1, 2025, announcing that Red Canary would initially operate as a separate business unit within Zscaler under the brand “Red Canary, a Zscaler company.” Excluding Red Canary, which contributed ARR of $141 million, fourth-quarter ARR grew 20% to $3,630 million and net new ARR grew 17%. Full-year revenue excluding Red Canary grew 20% to $3,209 million.

Zscaler’s non-GAAP measures exclude stock-based compensation expense and related employer payroll taxes, amortization of acquired intangible assets, restructuring and other charges, acquisition-related expenses, and amortization of debt issuance costs. Fourth-quarter GAAP results included $215.2 million of stock-based compensation and related payroll taxes, $12.3 million of intangible amortization, $5.5 million of restructuring and other charges, and $0.9 million of acquisition-related expenses.

Beginning in fiscal 2026, the company adopted a long-term projected non-GAAP tax rate of 21%, reduced from the 23% rate applied to all prior periods. Zscaler said the adjustment aligns with the enactment of the One Big Beautiful Bill Act and applies prospectively, adding that it will continue to assess the rate, which could change with the evolving global tax environment, significant changes in geographic earnings mix, or other changes to strategy or business operations.

Fiscal 2027 Outlook

For the first quarter of fiscal 2027, Zscaler expects revenue of $935 million to $939 million, representing approximately 19% year-over-year growth, non-GAAP gross margin of approximately 80%, non-GAAP income from operations of $215 million to $217 million for a 23% operating margin, and non-GAAP net income per share of approximately $1.15 to $1.16, assuming approximately 170 million fully diluted shares outstanding and a 21% non-GAAP tax rate.

For the full fiscal year 2027, the company expects ARR of $4.396 billion to $4.426 billion, growth of approximately 16.6% to 17.4%, and revenue of approximately $3.908 billion to $3.938 billion, growth of 16.6% to 17.5%. It also guided to non-GAAP gross margin of approximately 80%, non-GAAP income from operations of $924 million to $932 million, non-GAAP net income per share of $4.86 to $4.90 assuming approximately 173 million fully diluted shares, and free cash flow margin of approximately 23.0% to 23.5%. The company said it has not reconciled its non-GAAP income from operations and non-GAAP net income per share guidance to the most directly comparable GAAP measures because certain excluded items are out of its control or cannot be reasonably predicted.

Zscaler scheduled a conference call for analysts and investors to discuss the results and outlook for September 3, 2026, at 1:30 p.m. Pacific time, with a webcast available through its investor relations website.