Revenue grew 25% year-over-year to $850.5 million
Annual Recurring Revenue (ARR) grew 25% year-over-year to $3,525 million
Operating cash flow of $198.0 million, compared to $211.1 million a year ago
Free cash flow of $136.0 million, compared to $119.5 million a year ago, grew 14% year-over-year
SAN JOSE, California, May 26, 2026 (GLOBE NEWSWIRE) -- Zscaler, Inc. (NASDAQ:ZS), the leader in cloud security, today announced financial results for its third quarter of fiscal year 2026, ended April 30, 2026.
"Zscaler is ideally positioned as the cybersecurity platform for the AI era. Our differentiated Zero Trust SASE architecture, which hides applications from attackers and eliminates lateral movement, has never been more essential in securing against threats exposed by frontier models and compromised AI agents," said Jay Chaudhry, CEO, Chairman and Founder of Zscaler. "Our results demonstrate that our approach is resonating as we attract new customers and expand with our existing customers, and we see ample runway for long-term growth."
"We delivered strong Q3 fiscal 2026 results with record profitability. ARR grew 25%, or 21%, excluding the contribution from the Red Canary acquisition, and non-GAAP operating margin reached an all-time high of 23%," said Kevin Rubin, chief financial officer of Zscaler. "Looking ahead, we remain focused on driving profitable growth across multiple vectors, including product innovation, go-to-market, and customer expansion."
Third Quarter Fiscal 2026 Financial Highlights
Revenue: Grew 25% year-over-year to $850.5 million.
ARR: Grew 25% year-over-year to $3,525 million, of which $166 million was net new ARR during the third quarter of fiscal 2026. Excluding the acquisition of Red Canary, which contributed ARR of $127 million, ARR grew 21% to $3,398 million and net new ARR grew 14%.
Income (loss) from operations: GAAP loss from operations was $29.6 million, or 3% of revenue, compared to a loss of $25.4 million, or 4% of revenue, in the third quarter of fiscal 2025. Non-GAAP income from operations was $195.8 million, or 23% of revenue, compared to $146.7 million, or 22% of revenue, in the third quarter of fiscal 2025.
Net income (loss): GAAP net loss was $13.9 million, compared to $4.1 million in the third quarter of fiscal 2025. Non-GAAP net income was $177.9 million, compared to $136.8 million in the third quarter of fiscal 2025.
Net income (loss) per share, diluted: GAAP net loss per share was $0.09, compared to $0.03 in the third quarter of fiscal 2025. Non-GAAP net income per share was $1.08, compared to $0.84 in the third quarter of fiscal 2025.
Cash flow: Cash provided by operations was $198.0 million, or 23% of revenue, compared to $211.1 million, or 31% of revenue, in the third quarter of fiscal 2025. Free cash flow was $136.0 million, or 16% of revenue, compared to $119.5 million, or 18% of revenue, in the third quarter of fiscal 2025.
Deferred revenue: $2,477.2 million as of April 30, 2026, grew 25% year-over-year.
Recent Business Highlights
Announced the intent to acquire Symmetry Systems, which would combine Zscaler's Zero Trust ExchangeTM platform and Symmetry Systems' access graph technology to govern AI agent communication at scale. Symmetry Systems' access graph maps how human and non-human identities, applications, and data connect across the enterprise.
Joined Anthropic's Project Glasswing to revolutionize AI-driven defense, gaining access to the Claude Mythos Preview model. Zscaler integrated this frontier AI model into its secure software development lifecycle (SDLC) to rapidly identify and remediate vulnerabilities within the Zero Trust Exchange platform.
Partnered with OpenAI via DayBreak, the evolution of the Trusted Access for Cyber (TAC) program, integrating the specialized GPT 5.5-Cyber model and Codex Security into Zscaler's internal multi-agent security architecture. This partnership enables Zscaler to embed Security-as-a-Service throughout its SDLC workflows, accelerating vulnerability detection, triaging, and patching, while further enhancing its AI Red Teaming suite and Red Canary Managed Detection and Response capabilities to counter AI-based attacks.
Launched Project AI-Guardian, combining Zscaler's advanced AI security platform with global system integrator (GSI) consulting expertise to help enterprises navigate the complexities of the AI-driven landscape. This strategic collaboration is expected to enable organizations to accelerate AI initiatives while helping to maintain robust protection, regulatory compliance, and total visibility over their data.
Won the 2026 Google Cloud Partner of the Year Award for Security in the Application category, recognizing Zscaler's industry-leading approach to protecting modern applications, and its continued commitment to delivering seamless, secure integrations within the Google Cloud ecosystem.
Achieved Provisional Authorization at Impact Level 5 (IL5) from the Department of War (DoW) for Zscaler Internet AccessTM. This public sector milestone enables U.S. warfighters, national security systems, defense agencies and mission partners to operate at mission speed while securely managing highly sensitive and unclassified workloads with a cloud-native Zero Trust architecture built for the demands of modern warfare.
Significantly expanded global sovereignty on the Zero Trust Exchange platform, allowing global enterprises and government entities to maintain precise control over their digital assets and privacy, while complying with local laws. This expansion helps customers meet increasingly stringent global compliance and localized regulatory requirements without sacrificing security posture.
Partnered with Singtel Singapore to bring Zero Trust security to cellular internet of things (IoT) and operational technology (OT) across Southeast Asia. By leveraging Zscaler Cellular, the partnership enables enterprises to seamlessly and securely connect their highly distributed IoT and OT infrastructure directly to the Zero Trust Exchange.
Launched the India AI & Cyber Threat Research Center in partnership with Bharti Airtel at the India AI Impact Summit to promote cyber resilience and secure AI adoption for critical infrastructure and government. The joint initiative will produce comprehensive threat intelligence research targeting Indian infrastructure, recommend proactive cyber defense strategies, and educate organizations on evolving cyber threats confronting AI adoption. Center partners will develop new cybersecurity curriculum with local educational institutions to prepare India's next generation of cyber professionals. Additional organizations will affiliate with the Research Center in the coming months.
Change in Non-GAAP Measures Presentation
Effective August 1, 2025, the beginning of our 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 fourth quarter of fiscal 2026, the company expects:
Revenue of $875 million to $878 million, growth of approximately 22%.
Non-GAAP gross margin of approximately 80%.
Non-GAAP income from operations of $206 million to $208 million, growth of 30 to 31%.
Non-GAAP net income per share of approximately $1.08 to $1.09, assuming approximately 168 million fully diluted shares outstanding and a non-GAAP tax rate of 21%. This represents growth of 21 to 22%.
For the full year of fiscal 2026, the company expects:
Annual Recurring Revenue of $3.740 billion to $3.749 billion, growth of approximately 24%, up from previous guidance of $3.730 billion to $3.745 billion, or growth of 24%.
Revenue of approximately $3.3295 billion to $3.3325 billion, growth of 24.6 to 24.7%, up from prior guidance of $3.309 billion to $3.322 billion, or growth of 24%.
Non-GAAP income from operations of $755 million to $757 million, growth of approximately 30%, up from prior guidance of $742 million to $748 million, or growth of 28 to 29%.
Non-GAAP net income per share of $4.10 to $4.11, growth of 25%. This assumes approximately 168 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 $3.99 to $4.02 million, or growth of 22 to 23%.
Free cash flow margin of approximately 22.8 to 23.3%, down from our prior expectation of 26.5 to 27%, reflecting capex in the high single-digits as a percent of revenue.
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 third quarter of fiscal 2026 and outlook for its fourth 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, May 26, 2026
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/BI08b44d6462ad4047b150db602b995c9a). 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
Fourth quarter of fiscal 2026 investor conference participation schedule:
Baird Global Consumer, Technology & Services Conference, Tuesday, June 2, 2026
Bank of America Global Technology Conference, Wednesday, June 3, 2026
FBN Virtual Technology Conference, Monday, June 15, 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 fourth quarter of fiscal 2026 and full year fiscal 2026. 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 subscription 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 subscription 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 Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2026 filed on February 26, 2026 and 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) is a pioneer and global leader in zero trust security. The world's largest businesses, critical infrastructure organizations, and government agencies rely on Zscaler to secure users, branches, applications, data & devices, and to accelerate digital transformation initiatives. Distributed across more than 160 data centers globally, the Zscaler Zero Trust Exchange™ platform combined with advanced AI combats billions of cyber threats and policy violations every day and unlocks productivity gains for modern enterprises by reducing costs and complexity.
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
Kim Watkins SVP, Investor Relations & Strategic Finance[email protected]
Pavel RaddaMedia Relations Contact[email protected]
ZSCALER, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
Nine Months Ended
April 30,
April 30,
2026
2025
2026
2025
Revenue
$
850,475
$
678,034
$
2,454,338
$
1,953,889
Cost of revenue (1) (2) (3)
192,652
155,978
568,665
445,938
Gross profit
657,823
522,056
1,885,673
1,507,951
Operating expenses:
Sales and marketing (1) (2) (3)
371,941
314,605
1,114,449
928,564
Research and development (1) (2) (3)
232,281
169,765
661,916
494,879
General and administrative (1) (4)
83,241
63,097
227,083
180,726
Total operating expenses
687,463
547,467
2,003,448
1,604,169
Loss from operations
(29,640
)
(25,411
)
(117,775
)
(96,218
)
Interest income
34,043
31,263
101,090
92,189
Interest expense (5)
(2,700
)
(1,966
)
(9,048
)
(7,448
)
Other income (expense), net
(4,074
)
677
(6,310
)
(4,911
)
Income (loss) before income taxes
(2,371
)
4,563
(32,043
)
(16,388
)
Provision for income taxes (6)
11,512
8,688
27,767
7,512
Net loss
$
(13,883
)
$
(4,125
)
$
(59,810
)
$
(23,900
)
Net loss per share, basic and diluted
$
(0.09
)
$
(0.03
)
$
(0.37
)
$
(0.16
)
Weighted-average shares used in computing net loss per share, basic and diluted
160,741
154,909
159,662
153,699
(1) Includes stock-based compensation expense and related payroll taxes:
Cost of revenue
$
21,629
$
18,262
$
64,491
$
51,674
Sales and marketing
72,206
63,937
225,421
198,782
Research and development
88,779
63,753
248,704
188,514
General and administrative
29,652
21,857
87,824
65,769
Total
$
212,266
$
167,809
$
626,440
$
504,739
(2) Includes amortization expense of acquired intangible assets:
Cost of revenue
$
7,243
$
3,830
$
19,852
$
11,320
Sales and marketing
4,198
425
11,336
1,275
Research and development
—
—
—
145
Total
$
11,441
$
4,255
$
31,188
$
12,740
(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:
$
1,782
$
—
$
4,077
$
—
(5) Includes amortization of debt issuance costs:
$
2,043
$
984
$
6,121
$
2,947
(6) During the three and nine months ended April 30, 2025, we recognized a tax benefit of $0.2 million and $17.4 million, respectively, attributable to the release of the valuation allowance on United Kingdom (U.K.) deferred tax assets.
ZSCALER, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
April 30,
July 31,
2026
2025
Assets
Current assets:
Cash and cash equivalents
$
982,112
