Zscaler Q4 Fiscal 2026 Earnings: Revenue Beats $898.2 Million

Quick Verdict

Zscaler reported fiscal Q4 2026 non-GAAP EPS of $1.19 and revenue of $898.2 million, exceeding consensus estimates of $1.09 and $877 million, respectively. These results were part of Zscaler’s strong Q4 Fiscal 2026 Earnings performance. Revenue and ARR each grew 25% year over year. Despite the beat and above-consensus guidance, shares fell in the following session as investors focused on slower FY2027 growth.

About Zscaler

Zscaler, Inc. (NASDAQ: ZS) is a San Jose, California-headquartered cloud-security company founded in 2007 by Chairman and CEO Jay Chaudhry. The company provides its Zero Trust Exchange platform, a cloud-native security architecture that connects users, devices, workloads, branches, and increasingly AI agents directly to authorized applications without routing them through a traditional corporate network. Its platform is positioned across Zero Trust SASE, data protection, security operations, and security for AI.

Zscaler says its platform supports thousands of customers through more than 200 public data centers globally and thousands of private edge sites. The company’s fiscal 2026 results reinforce the scale of its subscription-led model: annual recurring revenue reached $3.771 billion as of July 31, 2026, while deferred revenue rose 19% to $2.926 billion. Zscaler did not report a dividend in the results release, and its GAAP bottom line remained negative because of stock-based compensation, acquisition-related items, and other adjustments; on a non-GAAP basis, however, it produced $198.2 million in quarterly net income.

Top Financial Highlights

1. Q4 FY2026 revenue increased 25% year over year to $898.2 million, up from $719.2 million in Q4 FY2025.
2. Full-year FY2026 revenue rose 25% to $3.353 billion, compared with $2.673 billion in fiscal 2025.
3. Q4 non-GAAP diluted EPS reached $1.19, compared with $0.89 a year earlier and above the $1.09 analyst consensus.
4. GAAP diluted loss per share narrowed to $0.02, from a GAAP loss of $0.11 in Q4 FY2025.
5. GAAP net loss improved to $3.4 million, versus a loss of $17.6 million in the prior-year quarter
6. Non-GAAP net income rose to $198.2 million, from $146.7 million a year earlier.
7. ARR increased 25% to $3.771 billion, including $246 million in Q4 net-new ARR.
8. Excluding the Red Canary acquisition’s $141 million ARR contribution, ARR grew 20% to $3.630 billion and net-new ARR grew 17%. This distinguishes reported growth from organic underlying expansion.
9. Non-GAAP gross margin was 80%, compared with 79% in Q4 FY2025; GAAP gross margin was 77%, versus 76%.
10. Non-GAAP operating income climbed to $218.4 million, producing a record 24% operating margin, compared with $158.9 million and 22% in the prior-year quarter.
11. GAAP operating loss narrowed to $15.5 million, from $32.2 million.
12. Operating cash flow totaled $279.3 million, or 31% of quarterly revenue, versus $250.6 million a year ago.
13. Free cash flow was $60.8 million, or 7% of revenue, down from $171.9 million, primarily because capex and capitalized internal-use software increased to $218.5 million from $78.7 million.
14. Cash and cash equivalents stood at $928.4 million at July 31, 2026; combined with short-term investments of $2.546 billion, liquid cash and investments were about $3.474 billion.
15. First-quarter FY2027 guidance calls for revenue of $935 million–$939 million, non-GAAP EPS of $1.15–$1.16, approximately 80% non-GAAP gross margin, and a 23% non-GAAP operating margin.
16. Full-year FY2027 guidance calls for revenue of $3.908 billion–$3.938 billion, ARR of $4.396 billion–$4.426 billion, non-GAAP EPS of $4.86–$4.90, and free-cash-flow margin of 23.0%–23.5%.

A Record Quarter for Zscaler Sets Up a Cooler FY27 Guide

(Source: tikr.com)

• The table summarizes Zscaler’s Q4 FY2026 earnings performance, comparing actual results for the quarter ended July 31, 2026 with Street estimates, the prior-year quarter, and the previous quarter.
• Revenue reached $0.90 billion, exceeding the Street estimate of $0.88 billion by 2.35%. Revenue increased 24.88% year over year and 5.61% quarter over quarter, compared with $0.72 billion in Q4 FY2025 and $0.85 billion in the previous quarter.
• EBITDA came in at $0.26 billion, above the expected $0.24 billion, representing a 7.35% beat. EBITDA increased 38.20% YoY and 11.76% QoQ. The EBITDA margin improved to 29.10%, up 280 basis points YoY and 160 basis points QoQ.
• EBIT reached $0.22 billion, exceeding the Street estimate of $0.21 billion by 5.33%. EBIT increased 37.49% YoY and 11.53% QoQ, while the EBIT margin expanded to 24.32%, representing an improvement of 223 basis points YoY.
• Net income was $0.20 billion, compared with the consensus estimate of $0.18 billion, resulting in an 8.29% beat. Net income increased 35.08% YoY and 11.42% QoQ.
• Adjusted EPS was particularly strong at $1.19, versus the Street estimate of $1.09, representing a 9.18% beat. Adjusted EPS increased 33.71% YoY and 10.19% QoQ.
• On a GAAP basis, EPS remained negative at -$0.02, although this was better than the expected -$0.06, the prior-year -$0.11, and the previous quarter’s -$0.09.
• Overall, the table indicates strong Q4 FY2026 operating performance, with Zscaler exceeding analyst expectations across revenue, EBITDA, EBIT, net income, and adjusted EPS, while also delivering meaningful year-over-year margin expansion.

Beat or Miss?

The quarter was a clear numerical beat across earnings, revenue, ARR, and near-term guidance. The central investor debate was not Q4 execution but the deceleration implied by the FY2027 revenue and ARR outlook, particularly after a fiscal 2026 period that benefited in part from the acquired Red Canary ARR contribution.

What Leadership Is Saying

“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.” — Jay Chaudhry, CEO, Chairman and Founder

“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%.” — Kevin Rubin, Chief Financial Officer

Management’s message combines two themes: continued demand for Zero Trust cloud security and a strategic effort to make AI security a material next-stage growth vector. Chaudhry emphasized the addressable opportunity around securing AI agents and models, while Rubin highlighted margin expansion, large-deal activity, sales productivity, Z-Flex momentum, and greater contribution from non-seat-based solutions.

Historical Performance

The earnings profile shows operating leverage on an adjusted basis: revenue increased nearly 25%, while non-GAAP operating income grew about 38%, lifting the non-GAAP operating margin to 24% from 22%. Conversely, quarterly free cash flow fell sharply because Zscaler substantially increased infrastructure and internal-use software investment, which management disclosed as $218.5 million of capex and internal-use software in Q4.

Competitor Context

A true “Q4 FY2026 versus Q4 FY2025” competitor table is not directly comparable because cybersecurity peers report on different fiscal calendars and have distinct business models. The table below therefore uses the most relevant comparison: Zscaler’s own year-over-year performance against strategic reference points cited in current coverage.

For article-quality competitor benchmarking, do not present peer revenue, net income, or operating-expense figures as directly comparable without aligning fiscal periods, GAAP/non-GAAP bases, and business mix. Palo Alto Networks, CrowdStrike, Cloudflare, and Netskope are relevant strategic comparators, but their quarterly reporting dates and revenue definitions differ materially from Zscaler’s subscription-centric model.

How the Market Reacted?

The initial headline was positive: Zscaler exceeded Wall Street estimates for Q4 adjusted EPS, revenue, and ARR, while its Q1 FY2027 revenue and EPS outlook also topped consensus forecasts. However, the stock fell in the subsequent session despite the earnings beat. Investors appeared more concerned about the company’s full-year FY2027 forecast, which implies 16.6%–17.5% revenue growth versus 25% revenue growth in FY2026, and about the contrast between Zscaler’s share-price performance and stronger gains among some cybersecurity peers.