Zscaler Delivers Solid Start To FY26
Zscaler reported its fiscal second-quarter results after the market closed on February 25, 2026, providing a clear read on early momentum for the year. In live earnings: complete zscaler, the company posted revenue of $815.8 million, topping the Street’s $799 million midpoint and signaling robust demand for its cloud security platform.
The company also showed strength in annualized recurring revenue (ARR), with ARR arriving at $3.359 billion and net new ARR of $155.5 million. Free cash flow and margins remained a focal point for investors as Zscaler balances growth with profitability on the way to scale.
Metrics In Focus
- Revenue: $815.8 million
- ARR: $3.359 billion
- Net New ARR: $155.5 million
- Non-GAAP EPS: $1.01
- Free Cash Flow: $169.1 million
- Free Cash Flow Margin: 21%
- Cash: $3.5 billion
Analysts had expected a mid- to high-700s in quarterly revenue, with guidance at similar levels. Zscaler outpaced those estimates with both top-line strength and earnings that exceeded forecasts, reinforcing confidence that the company can compound at scale while funding growth initiatives.
Guidance For FY26
Zscaler raised its FY26 outlook, signaling a continued push into larger deals and longer-term contracts. The company now targets ARR growth around 24% and revenue growth around 24% for the year, while Non-GAAP earnings per share are guided to roughly $3.99 to $4.02.
Management emphasized that the upgrade reflects stronger onboarding of customers and higher renewal rates. The plan includes continued investment in product development and go-to-market capabilities to sustain a multi-year expansion trajectory.
Management Perspective
CEO Jay Chaudhry stressed the breadth of demand and the company’s ability to capture new business across industries. 'The pipeline remains robust, and the security fabric we’ve built is deeply embedded in customers’ digital journeys,' he said during the post-earnings call. (Note: quotes presented in this article are paraphrased for clarity, while the sentiment reflects management commentary.)
Other executives highlighted improving free cash flow generation and a disciplined approach to spending as the company scales. They pointed to a 21% FCF margin as evidence that growth and profitability can move in tandem over time.
Historical Context And Market Context
In prior quarters, Zscaler has flagged mid-to-high single-digit ARR growth rates and strong customer retention, with executives noting a history of expanding contract value over time. The latest print reinforces a trajectory where the company can balance aggressive growth investments with margin discipline.
Analysts and investors are eyeing how Zscaler’s platform strategy translates into longer-term profitability, especially as cybersecurity budgets remain a priority for enterprises navigating digital transformations. In the current market environment, software names with high growth and improving cash flow are in focus as investors weigh risk against potential gains.
Investor Reaction And What It Means
After the print, Zscaler shares moved higher in after-hours trading, reflecting skepticism about growth quality giveback risk but relief that the company delivered on both revenue and EPS expectations. The reaction underscores how investors are balancing near-term volatility with the prospect of sustained ARR expansion and durable cash flow generation.
For traders, the key takeaway is the company’s ability to monetize its customer base through expanding usage and multi-year agreements, which can help stabilize revenue visibility in a market where some software names have faced mixed growth signals.
Risks And Strategic Considerations
- Competition remains intense, with cybersecurity peers pushing product differentiation and pricing pressure.
- Macro uncertainty could slow IT budgets, impacting renewal rates and the pace of ARR growth.
- Execution risk around international expansion and cross-sell opportunities across larger customer bases.
- Foreign exchange and supply chain dynamics could influence margins in future quarters.
Bottom Line
The latest quarterly results position Zscaler as a growth story with a clearer path to profitability. The combination of solid revenue, robust ARR, and an upgraded FY26 framework suggests the firm can sustain a disciplined expansion, even as it continues investing in product development and go-to-market capacity. For investors watching live earnings: complete zscaler coverage, the print provides concrete data to assess the company’s velocity and its ability to compound earnings as it scales.
Closing Thoughts
As markets digest the quarter, analysts will revisit market share dynamics, customer expansion, and the durability of Zscaler’s free cash flow trajectory. The company’s focus on security at scale aligns with evolving enterprise needs as cloud adoption deepens. With guidance pointing to continued growth and margins stabilizing, the path ahead for Zscaler looks constructive for the rest of 2026 and into 2027.
Discussion