Zscaler Q4 2026 earnings: revenue and profit beat as AI-driven security demand grows
Zscaler topped Wall Street's profit and revenue targets for its fiscal Q4 2026, with sales up 25% and record adjusted operating margins, while issuing solid growth guidance for fiscal 2027.
| Q4 2026 | Reported | Expected | Surprise |
|---|---|---|---|
| EPS | $1.19 | $1.12 | +6.5% |
| Revenue | $898.2M | $903.7M | -0.6% |
Key takeaways
- Zscaler beat expectations on both profit and sales: adjusted earnings per share came in ahead of the average analyst estimate, and revenue grew 25% from a year earlier to about $898 million, topping forecasts.
- Annual recurring revenue (ARR), a measure of the value of ongoing subscription contracts, rose 25% year over year to about $3.77 billion, with $246 million added in the quarter alone — a sign that new and renewed customer contracts kept accelerating.
- Profitability on an adjusted (non-GAAP) basis hit a record, with operating income reaching about 24% of revenue versus 22% a year ago, showing the company converting more of its fast growth into profit even as it keeps investing.
- On a strict accounting (GAAP) basis the company is still narrowly unprofitable over the trailing year — largely because of non-cash stock-based compensation, a common gap for fast-growing software firms — but it posted a small GAAP net loss of $3.4 million for the quarter, much narrower than the $17.6 million loss a year earlier.
- High gross margins (roughly 77% over the trailing year) reflect the low incremental cost of delivering cloud-based security software once it’s built, leaving more revenue available to fund sales, R&D and eventually profit growth.
- For fiscal 2027, Zscaler guided to revenue of roughly $3.91–3.94 billion (about 17% growth), adjusted earnings per share of $4.86–$4.90, and free cash flow margin of about 23–23.5%, pointing to continued double-digit growth alongside improving cash generation.
- CEO Jay Chaudhry said he’s “very bullish” on the company’s newly launched Zero Trust security offering built for AI agents, calling it an early-stage but fast-growing business he expects to accelerate further in coming years as companies adopt AI agents and need to secure them.
- Shares rose on the report, marking a reversal after the stock had dropped sharply in May 2026 when the company gave cautious near-term guidance following a sales team reorganization.
Q4 2026 in context
| Metric | Jul 2026 | Jul 2025 | Change |
|---|---|---|---|
| Revenue | $898M | $719M | +24.9% |
| Net income | -$3M | -$18M | +80.8% |
| Free cash flow | $79M | $191M | -58.3% |
| Gross margin | 76.7% | 76.1% | +0.7 pts |
| Operating margin | -1.7% | -4.5% | +2.8 pts |
| Net margin | -0.4% | -2.4% | +2.1 pts |
Figures for the quarter ended Jul 2026 and the quarter ended Jul 2025, as reported to the SEC. Fourth-quarter flows are derived as the fiscal year minus its first three quarters.
How the stock took it
Zscaler Inc closed at $172.73 on Sep 2, 2026, the last session before the report, and at $169.80 on Sep 4, 2026, the first session after it — -1.7% across the report.
Closes from the market's daily record. Each figure spans the report date — from the last session that closed before it to the first that closed after — because a company may report before the open or after the close.
Fundamentals
| Metric | Value | Period |
|---|---|---|
| Gross margin | 76.7% | Trailing 12 months |
| Operating margin | -4.7% | Trailing 12 months |
| Net profit margin | -2.4% | Trailing 12 months |
| Pretax margin | -1.1% | Trailing 12 months |
| EPS | -$0.49 | Trailing 12 months |
| Revenue growth (YoY) | 24.6% | Trailing 12 months |
| Return on equity | -3.7% | Trailing 12 months |
Sources: company report · CNBC