Revenue grows 26% year-over-year to $788.1 million
Annual Recurring Revenue ("ARR") grows 26% year-over-year to $3,204 million
Deferred revenue grows 32% year-over-year to $2,351.3 million
GAAP net loss of $11.6 million compared to GAAP net loss of $12.1 million on a year-over-year basis
Non-GAAP net income of $159.5 million compared to non-GAAP net income of $124.3 million on a year-over-year basis
SAN JOSE, Calif., Nov. 25, 2025 (GLOBE NEWSWIRE) -- Zscaler, Inc. (NASDAQ:ZS), the leader in cloud security, today announced financial results for its first quarter of fiscal year 2026, ended October 31, 2025.
"Our outstanding Q1 results demonstrate the strong demand we are experiencing for our Zero Trust and AI Security platform. With over $3.2B in Annual Recurring Revenue, growing over 25% year-over-year, and Rule-of-78 performance, I'm very pleased to share that an increasing number of customers are relying on our platform for better security, lower operational costs and reduced IT complexity," said Jay Chaudhry, Chairman and CEO of Zscaler. "Zero Trust security is the linchpin for AI-Security, and Zscaler pioneered Zero Trust security with our cloud-native switchboard architecture. By integrating the recently acquired SPLX technology with our comprehensive AI Security offerings, we are expanding our best-in-class AI Security solutions to solve emerging security challenges."
First Quarter Fiscal 2026 Financial Highlights
Revenue: $788.1 million, an increase of 26% year-over-year.
Income (loss) from operations: GAAP loss from operations was $36.4 million, or 5% of revenue, compared to $30.7 million, or 5% of revenue, in the first quarter of fiscal 2025. Non-GAAP income from operations was $171.9 million, or 22% of revenue, compared to $134.1 million, or 21% of revenue, in the first quarter of fiscal 2025.
Net income (loss): GAAP net loss was $11.6 million, compared to $12.1 million in the first quarter of fiscal 2025. Non-GAAP net income was $159.5 million, compared to $124.3 million in the first quarter of fiscal 2025.
Net income (loss) per share, diluted: GAAP net loss per share was $0.07, compared to $0.08 in the first quarter of fiscal 2025. Non-GAAP net income per share was $0.96, compared to $0.77 in the first quarter of fiscal 2025.
Cash flows: Cash provided by operations was $448.3 million, or 57% of revenue, compared to $331.3 million, or 53% of revenue, in the first quarter of fiscal 2025. Free cash flow was $413.3 million, or 52% of revenue, compared to $291.9 million, or 46% of revenue, in the first quarter of fiscal 2025.
Deferred revenue: $2,351.3 million as of October 31, 2025, an increase of 32% year-over-year.
Cash, cash equivalents and short-term investments: $3,321.3 million as of October 31, 2025, a decrease of $251.1 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
Announced the acquisition of AI security pioneer SPLX, to secure the entire enterprise AI lifecycle on a single platform. This acquisition will extend the Zero Trust Exchange platform with critical capabilities like shift-left AI asset discovery and automated red teaming, enabling customers to safely accelerate their AI initiatives.
Launched new Zscaler Digital Experience™ (ZDX™) innovations, introducing end-to-end visibility, multipath visualization for Zscaler Managed Monitoring, and device scoring and remediation. These advancements provide IT teams with unprecedented end-to-end visibility to proactively remediate performance issues, directly improving employee productivity and reducing operational costs.
Published the ThreatLabz 2025 Mobile, IoT, and OT Threat Report, which revealed a significant escalation in mobile and IoT threats, including a 67% increase in Android malware transactions and a 40% increase in IoT attacks targeting critical infrastructure. These insights, derived from Zscaler's global cloud's unique visibility into encrypted traffic, enable us to deliver superior, AI-powered protection that protects customers from these advanced attacks.
Launched FedRAMP Moderate authorized data centers outside of the U.S., located in London and Paris. This strategic expansion enables U.S. federal agencies and their partners to securely accelerate global missions while meeting critical data residency requirements.
Surpassed $1B of software sales through the AWS Marketplace to date. Zscaler has six AWS Competencies, including the AI Security specialization, and the collaboration enables customers to quickly purchase and deploy proven Zscaler zero trust solutions through the marketplace.
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.
Financial Outlook
For the second quarter of fiscal 2026, we expect:
Revenue of $797 million to $799 million
Non-GAAP income from operations of $172 million to $174 million
Non-GAAP net income per share of approximately $0.89 to $0.90, assuming approximately 170 million fully diluted shares outstanding and a non-GAAP tax rate of 21%
For the full year of fiscal 2026, we expect:
Annual Recurring Revenue of $3.698 billion to $3.718 billion
Revenue of approximately $3.282 billion to $3.301 billion
Non-GAAP income from operations of $732 million to $740 million
Non-GAAP net income per share of $3.78 to $3.82, assuming approximately 170.5 million fully diluted shares outstanding and a non-GAAP tax rate of 21%
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 Information
Zscaler will host a conference call for analysts and investors to discuss its first quarter of fiscal 2026 and outlook for its second quarter of fiscal 2026 and full year fiscal 2026 today at 1:30 p.m. Pacific time (4:30 p.m. Eastern time).
Date:
Tuesday, November 25, 2025
Time:
1:30 p.m. PT
Webcast:
https://ir.zscaler.com
Dial-in:
To join by phone, register at the following link: (https://register-conf.media-server.com/register/BIdcc69f15ccf64edda9bdf6b79b312163). After registering, you will be provided with a dial-in number and a personal PIN that you will need to join the call.
Upcoming Conferences
Second quarter of fiscal 2026 investor conference participation schedule:
UBS Global Technology and AI Conference in ScottsdaleWednesday, December 3, 2025
Barclays 23rd Annual Global Tech Conference in San FranciscoThursday, December 11, 2025
28th Annual Needham Growth Conference in New YorkWednesday, January 14, 2026
Sessions that offer a webcast will be available on the Investor Relations section of the Zscaler website at https://ir.zscaler.com/
Forward-Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties, including, but not limited to, statements regarding our future financial and operating performance, including our financial outlook for the second quarter of fiscal 2026 and full year fiscal 2026, and the expected impact of the acquisitions of Red Canary™ and SPLX. There are a significant number of factors that could cause actual results to differ materially from statements made in this press release, including but not limited to: macroeconomic influences and instability, geopolitical events, operations and financial results and the economy in general; risks related to the use of AI in our platform; our ability to identify and effectively implement the necessary changes to address execution challenges; risks associated with managing our rapid growth, including fluctuations from period to period; our limited experience with new products and subscriptions and support introductions and the risks associated with new products and subscription and support offerings, including the discovery of software bugs; our ability to attract and retain new customers; the failure to timely develop and achieve market acceptance of new products and subscriptions as well as existing products and subscription and support; rapidly evolving technological developments in the market for network security products and subscription and support offerings and our ability to remain competitive; length of sales cycles; useful lives of our assets and other estimates; and general market, political, economic and business conditions.
Additional risks and uncertainties that could affect our financial results are included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" set forth from time to time in our filings and reports with the Securities and Exchange Commission ("SEC"), including our Annual Report on Form 10-K for the fiscal year ended July 31, 2025 filed on September 11, 2025, as well as future filings and reports by us, copies of which are available on our website at ir.zscaler.com and on the SEC's website at www.sec.gov. You should not rely on these forward-looking statements, as actual outcomes and results may differ materially from those contemplated by these forward-looking statements as a result of such risks and uncertainties. Additional information will also be set forth in other filings that we make with the SEC from time to time. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we do not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.
Use of Non-GAAP Financial Information
We believe that the presentation of non-GAAP financial information provides important supplemental information to management and investors regarding financial and business trends relating to our financial condition and results of operations. 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.
About Zscaler
Zscaler (NASDAQ:ZS) accelerates digital transformation so customers can be more agile, efficient, resilient, and secure. The Zscaler Zero Trust Exchange™ platform protects thousands of customers from cyberattacks and data loss by securely connecting users, devices, and applications in any location. Distributed across more than 160 data centers globally, the SASE-based Zero Trust Exchange is the world's largest in-line cloud security platform.
Zscaler™ and the other trademarks listed at https://www.zscaler.com/legal/trademarks are either (i) registered trademarks or service marks or (ii) trademarks or service marks of Zscaler, Inc. in the United States and/or other countries. Any other trademarks are the properties of their respective owners.
Investor Relations Contacts
Ashwin Kesireddy VP of Product and GTM, AI-Security(415)
Pavel RaddaMedia Relations
ZSCALER, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
October 31,
2025
2024
Revenue
$
788,112
$
627,955
Cost of revenue(1) (2) (3)
184,753
141,462
Gross profit
603,359
486,493
Operating expenses:
Sales and marketing(1) (2) (3)
373,562
306,087
Research and development(1) (2) (3)
200,498
154,254
General and administrative(1) (4)
65,661
56,819
Total operating expenses
639,721
517,160
Loss from operations
(36,362
)
(30,667
)
Interest income
33,154
30,048
Interest expense(5)
(2,127
)
(3,143
)
Other expense, net
(3,039
)
(652
)
Loss before income taxes
(8,374
)
(4,414
)
Provision for income taxes
3,241
7,637
Net loss
$
(11,615
)
$
(12,051
)
Net loss per share, basic and diluted
$
(0.07
)
$
(0.08
)
Weighted-average shares used in computing net loss per share, basic and diluted
158,596
152,557
(1) Includes stock-based compensation expense and related payroll taxes:
Cost of revenue
$
19,982
$
15,793
Sales and marketing
71,568
64,866
Research and development
75,236
58,865
General and administrative
26,975
21,050
Total
$
193,761
$
160,574
(2) Includes amortization expense of acquired intangible assets:
Cost of revenue
$
5,692
$
3,675
Sales and marketing
2,941
425
Research and development
—
140
Total
$
8,633
$
4,240
(3) Includes restructuring and other charges:
Cost of revenue
$
750
$
—
Sales and marketing
2,809
—
Research and development
1,182
—
Total
$
4,741
$
—
(4)Includes acquisition-related expenses:
$
1,083
$
—
(5)Includes amortization of debt issuance costs
$
2,038
$
981
ZSCALER, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
October 31,
July 31,
2025
2025
Assets
Current assets:
Cash and cash equivalents
$
1,338,195
$
2,389,023
Short-term investments
1,983,077
1,183,386
Accounts receivable, net
530,487
992,181
Deferred contract acquisition costs
182,563
180,819
Prepaid expenses and other current assets
171,639
148,881
Total current assets
4,205,961
4,894,290
Property and equipment, net
542,255
543,377
Operating lease right-of-use assets
127,457
