Summary
Zscaler closed fiscal 2026 with fourth quarter revenue of $898.2 million, up 24.9% from the prior-year quarter. Revenue for the full year reached $3.35 billion, up 25.4%. ARR ended the year at $3,771 million, up 25% year over year, with $246 million of net new ARR added in the quarter. The Red Canary acquisition contributed $141 million of ARR. Excluding it, ARR grew 20% to $3,630 million, and net new ARR grew 17%. The customer count stands at roughly 11,000 as of July 31, 2026, up from 9,400 a year earlier, and more than 40% of the Forbes Global 2000 are customers. Management pointed to non-seat-based solutions, Z-Flex momentum, record large-deal activity and improving sales productivity as drivers behind the quarter.
Gross profit was $689.2 million in the quarter, up 26.0%, and gross margin was 76.7%, up from 76.1%. GAAP loss from operations narrowed to $15.5 million from $32.2 million, and operating margin improved to -1.7% from -4.5%. The GAAP net loss narrowed to $3.4 million from $17.6 million. The full year picture is weaker on the bottom line. GAAP loss from operations widened to $133.3 million, and the net loss widened to $63.2 million. Diluted GAAP loss per share was $0.39, down from $0.27. On a non-GAAP basis, income from operations was $218.4 million, a record 24% of revenue, against $158.9 million, or 22% of revenue, a year earlier. Non-GAAP net income was $198.2 million and non-GAAP diluted earnings per share was $1.19, versus $146.7 million and $0.89.
Cash from operations was $279.3 million in the quarter, up 11.4%, and $1.13 billion for the full year, up 16.2%. Capital expenditures were $199.8 million in the quarter, up 232.8%, and $277.3 million for the full year, up 68.8%, as the company expanded its infrastructure. Free cash flow, which Zscaler defines as operating cash flow less purchases of property, equipment and other assets and capitalized internal-use software, was $60.8 million, or 7% of revenue, compared with $171.9 million, or 24% of revenue, in the prior-year quarter. Full year free cash flow was $779.1 million, or 23% of revenue, versus $726.7 million, or 27% of revenue, a year earlier. Current deferred revenue rose 20.7% to $2.48 billion. Remaining performance obligations grew 27.4% to $7.37 billion.
Guidance for the first quarter of fiscal 2027 includes a non-GAAP gross margin of approximately 80%, non-GAAP income from operations of $215 million to $217 million at a 23% operating margin, and non-GAAP net income per share of approximately $1.15 to $1.16 on roughly 170 million fully diluted shares. For the full fiscal year 2027, the company guided to ARR of $4.396 billion to $4.426 billion, non-GAAP income from operations of $924 million to $932 million, non-GAAP net income per share of $4.86 to $4.90 on about 173 million fully diluted shares, and a free cash flow margin of approximately 23.0% to 23.5%. Both periods assume a 21% non-GAAP tax rate, reduced from 23%, a change the company tied to the One Big Beautiful Bill Act. The per-share guidance excludes stock-based compensation, acquisition amortization and related items and has not been reconciled to GAAP.
The risk list is specific. Zscaler said macroeconomic and geopolitical uncertainty can push customers to scrutinize larger deals and require multiple approvals before signing. The company also flagged risks tied to its use of AI, the timing of new product introductions, sales cycle length, competition and the challenge of managing rapid growth. On taxes, management said there is a reasonable possibility it will release a significant portion of its U.S. valuation allowance within the next 12 months, which would lower income tax expense in the period recorded. The company has generated losses since inception and expects to keep incurring operating losses while it funds infrastructure, possible acquisitions and repayment of its 2028 convertible notes. Sales and marketing remains the largest operating expense category, and the company expects that to continue.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2026 | Q3 FY2026 | QoQ | Q4 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $898.2M | $850.5M | +5.6% | $719.2M | +24.9% |
| Gross profit | $689.2M | $657.8M | +4.8% | $547.0M | +26.0% |
| Gross margin | 76.7% | 77.3% | -0.6 pp | 76.0% | +0.7 pp |
| Research & development | $241.5M | $232.3M | +4.0% | $177.6M | +36.0% |
| Sales & marketing | $381.4M | $371.9M | +2.5% | $330.6M | +15.4% |
| General & administrative | $81.9M | $83.2M | -1.7% | $71.0M | +15.3% |
| Total operating expenses | $704.7M | $687.5M | +2.5% | $579.2M | +21.7% |
| Operating income (loss) | -$15.5M | -$29.6M | +47.7% | -$32.2M | +52.0% |
| Operating margin | -1.7% | -3.5% | +1.8 pp | -4.5% | +2.8 pp |
| Net income (loss) | -$3.4M | -$13.9M | +75.7% | -$17.6M | +80.8% |
| Net margin | -0.4% | -1.6% | +1.3 pp | -2.4% | +2.1 pp |
| Diluted EPS | -$0.39 | -$0.09 | -$0.30 | -$0.27 | -$0.12 |
| Customers | 11,000 | 9,400 | +17.0% | 9,400 | +17.0% |
Risks
The filing adds new and expanded language that AI technologies may lower barriers to entry for large AI providers and hyperscalers and enable faster development of alternative security solutions. It also warns that AI-enabled vulnerability tools are surfacing 'a substantially greater volume of vulnerabilities requiring remediation than in the past,' and that patching, regression testing and re-validation may reduce engineering capacity available for new feature development.
Sales through the top five channel partners and their affiliates, in aggregate, represented 31% of revenue for fiscal 2026, up from 28% for fiscal 2025 and 25% for fiscal 2024. Channel agreements are generally non-exclusive and partners may cease marketing or reselling the platform with limited or no notice and without penalty.
The filing discloses that two sales leaders recently departed the Company and that the Company has experienced, and may in the future experience, significant change in senior management. It also states recruiting, hiring and retaining employees with cybersecurity and AI/ML expertise has become increasingly difficult, and that a large percentage of the sales and marketing team is new to the Company.
The filing and MD&A both highlight that challenging and uncertain macroeconomic conditions have produced increased scrutiny and a longer approval process for initial purchases by new customers, particularly larger transactions, and note the sales cycle for large organizations and government entities is long and unpredictable. U.S. SEC-reported revenue rose 25% year to date fiscal 2026 while year-to-date operating loss widened, indicating costs are growing alongside the lengthening sales effort.
New disclosure notes that California legislation beginning January 1, 2027 will subject certain SaaS transactions to sales and use tax, potentially increasing the price of services to California customers and the Company's own costs as a purchaser of third-party SaaS. The filing also cites EU Data Act rights allowing customers to cancel subscriptions without cause on 30 to 60 days notice, and continued OECD Pillar Two monitoring with potential impact beginning fiscal 2027.
The Company issued $1,725 million aggregate principal amount of 0.0% Convertible Senior Notes due 2028, which is a substantial increase in leverage relative to prior periods, and interest expense rose 24% for fiscal 2026. The filing also flags counterparty risk on the $196.8 million capped call transactions if any Option Counterparty defaults.
Capital expenditures rose 68.8% year to date fiscal 2026 versus the prior-year year-to-date period, and net cash used in investing activities was $2,652.7 million for fiscal 2026, including $918.1 million for business acquisitions and $350.5 million of capital expenditures. MD&A states the Company expects to continue to invest significantly in growth rather than optimizing for profitability or cash flows.
The Company has incurred net losses in all annual periods since inception, with a net loss of $63.2 million for fiscal 2026 versus $41.5 million for fiscal 2025, and an accumulated deficit of $1,252.7 million as of July 31, 2026. MD&A states the Company expects to continue to incur operating losses.
SaaS KPIs
All quarters →Free Cash Flow Margin
Free Cash Flow
Non-GAAP Operating Margin
Non-GAAP Gross Margin
Total Customers
Deferred Revenue
Summary, forecast, risks and KPIs are extracted from Zscaler, Inc.'s SEC filings for Q4 FY2026 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 6, 2026.