Zscaler Announces Strong Second - Quarter Fiscal 2026 Results ; Raises Fiscal 2026 ARR Guidance to 24 %

itnewsonline.com · Feb 27, 2026 · Collected from GDELT

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Zscaler Announces Strong Second-Quarter Fiscal 2026 Results; Raises Fiscal 2026 ARR Guidance to 24% GlobeNewswire2026-02-26 Exceeds high-end of second-quarter guidance on revenue and profitability metrics Second Quarter Highlights Revenue grew 26% year-over-year to $815.8 millionAnnual Recurring Revenue ("ARR") grew 25% year-over-year to $3,359 millionOperating cash flow grew 14% year-over-year to $204.1 millionFree cash flow grew 18% year-over-year to $169.1 million SAN JOSE, Calif., Feb. 26, 2026 (GLOBE NEWSWIRE) -- Zscaler, Inc. (Nasdaq: ZS), the leader in cloud security, today announced financial results for its second quarter of fiscal year 2026, ended January 31, 2026. "We believe Zscaler is the cybersecurity platform for the AI age - our in-line Zero Trust platform is uniquely architected to secure the unprecedented speed and scale of AI and agentic workflows. Organizations racing to adopt AI are looking to us to provide the security solution they trust, and we're just scratching the surface of this massive future growth opportunity," said Jay Chaudhry, CEO, Chairman and Founder of Zscaler. "We continue to see robust demand across all three of our growth pillars: AI Security, Zero Trust Everywhere, and Data Security, giving us a highly durable runway for long-term growth." "We delivered strong second quarter fiscal 2026 results. ARR grew 25%, or 21% excluding the contribution from the Red Canary acquisition, while profitability reached an all-time high with non-GAAP operating margin over 22%," said Kevin Rubin, chief financial officer of Zscaler. "Our innovation, combined with disciplined execution, enabled us to operate at a Rule-of-62 fiscal year-to-date, significantly outperforming the Rule-of-40 benchmark." Second Quarter Fiscal 2026 Financial Highlights Revenue: $815.8 million, an increase of 26% year-over-year.ARR: ARR grew 25% year-over-year to $3,359 million, of which $155.5 million was net new ARR during the second quarter of fiscal 2026. ARR grew 21% to $3,245 million and net new ARR grew 7% excluding Red Canary ARR of $114.0 million.Income (loss) from operations: GAAP loss from operations was $51.8 million, or 6% of revenue, compared to $40.1 million, or 6% of revenue, in the second quarter of fiscal 2025. Non-GAAP income from operations was $181.0 million, or 22% of revenue, compared to $140.5 million, or 22% of revenue, in the second quarter of fiscal 2025.Net income (loss): GAAP net loss was $34.3 million, compared to $7.7 million in the second quarter of fiscal 2025. Non-GAAP net income was $168.7 million, compared to $127.1 million in the second quarter of fiscal 2025.Net income (loss) per share, diluted: GAAP net loss per share was $0.21, compared to $0.05 in the second quarter of fiscal 2025. Non-GAAP net income per share was $1.01, compared to $0.78 in the second quarter of fiscal 2025.Cash flow: Cash provided by operations was $204.1 million, or 25% of revenue, compared to $179.4 million, or 27% of revenue, in the second quarter of fiscal 2025. Free cash flow was $169.1 million, or 21% of revenue, compared to $143.4 million, or 22% of revenue, in the second quarter of fiscal 2025.Deferred revenue: $2,355.4 million as of January 31, 2026, an increase of 25% year-over-year.Cash, cash equivalents and short-term investments: $3,512.8 million as of January 31, 2026, a decrease of $59.7 million from July 31, 2025. During the first quarter of fiscal 2026, we closed the acquisitions of Red Canary Inc. ("Red Canary") and SPLXAI Inc. ("SPLX") for an aggregate purchase price consideration of $692.0 million. Recent Business Highlights Acquired SquareX Holdings, Inc. ("SquareX") to advance Zero Trust browser security for the AI era by enabling organizations to embed lightweight security extensions directly into standard browsers, like Google Chrome and Microsoft Edge, effectively securing unmanaged and BYOD devices. By combining these capabilities with the Zscaler platform, IT leaders can replace costly, vulnerable legacy tools like VPNs and VDIs with precise access policies for SaaS and private applications without sacrificing user productivity.Announced our comprehensive AI security innovations, Zscaler AI Protect, to secure the full spectrum of enterprise AI implementations, providing end-to-end visibility and governance. The Zscaler AI Protect solutions enable organizations to discover and manage their shadow AI footprint, offering capabilities like AI Asset Management, AI Access Security, and AI Red Teaming to proactively perform continuous testing against vulnerabilities.Appointed Sunil Frida as Chief Marketing Officer to drive global growth and strengthen Zscaler's brand leadership. Frida brings extensive experience in scaling global technology organizations and will spearhead marketing strategies to accelerate the adoption of Zscaler's Zero Trust and AI-powered solutions.Appointed Dr. Swamy Kocherlakota as EVP of Agentic AI Security Engineering to lead the development of defenses against autonomous AI threats. His leadership focuses on building advanced capabilities within the Zero Trust Exchange platform to secure agentic AI, helping ensure that autonomous agents can be governed, monitored, and secured as distinct identities.Received a 2025 AWS Partner Award, recognizing Zscaler as the AWS Marketplace Partner of the Year. This award highlights Zscaler's exceptional growth and leadership within the AWS ecosystem, validating its ability to help joint customers securely accelerate cloud and AI transformations through the AWS Marketplace.Published the ThreatLabz 2026 AI Threat Report, revealing a 91% year-over-year surge in enterprise AI usage. Customer AI activity has sprawled across more than 3,400 applications, quadrupling in the last 12 months alone. Data transfers to AI/ML applications increased by 93%, underscoring the urgent need for Zero Trust controls as AI becomes a high-volume conduit for sensitive data.Selected as an early adoption partner for the Microsoft Entra Agent ID ecosystem, integrating the Zero Trust Exchange platform to secure autonomous AI agents. This collaboration extends Zero Trust principles to non-human identities, helping to ensure that autonomous AI agents are governed with the same rigor as human users.Expanded global infrastructure with a new data center in Kuala Lumpur, Malaysia, to support growing demand in Southeast Asia. This facility delivers lower latency and supports local data residency needs, aligning with Malaysia's "National Critical Information Infrastructure" priorities while ensuring high-performance access for AI and cloud workloads. Financial Outlook For the third quarter of fiscal 2026, the company expects: Revenue of $834 million to $836 million, growth of 23%.Non-GAAP income from operations of $187 million to $189 million, growth of 28 to 29%.Non-GAAP net income per share of approximately $1.00 to $1.01, assuming approximately 167 million fully diluted shares outstanding and a non-GAAP tax rate of 21%. This represents growth of 19 to 20%. For the full year of fiscal 2026, the company expects: Annual Recurring Revenue of $3.730 billion to $3.745 billion, growth of 24%, up from previous guidance of $3.698 billion to $3.718 billion, or growth of 23%.Revenue of approximately $3.309 billion to $3.322 billion, growth of 24%, up from prior guidance of $3.282 billion to $3.301 billion, or growth of 23%.Non-GAAP income from operations of $742 million to $748 million, growth of 28 to 29%, up from prior guidance of $732 million to $740 million, or growth of 26 to 28%.Non-GAAP net income per share of $3.99 to $4.02, growth of 22 to 23%. This assumes approximately 169 million fully diluted shares outstanding and a non-GAAP tax rate of 21%. This is up from previous guidance for non-GAAP net income per share of $3.78 to $3.82 million, or growth of 15 to 16%. Change in Non-GAAP Measures Presentation Effective August 1, 2025, the beginning of our first quarter of fiscal 2026, we have adopted a long-term projected non-GAAP tax rate of 21%, reduced from the previous rate of 23%. This adjustment aligns with the enactment of the One Big Beautiful Bill Act. The revised tax rate will apply prospectively. We will continue to assess the appropriate non-GAAP tax rate on a regular basis, which could be subject to changes for a variety of reasons, including the rapidly evolving global tax environment, significant changes in our geographic earnings mix, or other changes to our strategy or business operations. These statements are forward-looking and actual results may differ materially. Refer to the Forward-Looking Statements safe harbor below for information on the factors that could cause our actual results to differ materially from these forward-looking statements. Guidance for non-GAAP income from operations and non-GAAP net income per share exclude, as applicable, stock-based compensation expense and related employer payroll taxes, amortization expense of acquired intangible assets and amortization of debt issuance costs. We have not reconciled our expectations of non-GAAP income from operations and non-GAAP net income per share to their most directly comparable GAAP measures because certain items are out of our control or cannot be reasonably predicted. For those reasons, we are also unable to address the probable significance of the unavailable information, the variability of which may have a significant impact on future results. Accordingly, a reconciliation for the guidance for non-GAAP income from operations and non-GAAP net income per share is not available without unreasonable effort. For further information regarding why we believe that these non-GAAP measures provide useful information to investors, the specific manner in which management uses these measures, and some of the limitations associated with the use of these measures, please refer to the "Explanation of Non-GAAP Financial Measures" section of this press release. Conference Call and Webcast Info