Zscaler (ZS) Morgan Stanley Technology, Media & Telecom Conference 2026 summary

Business performance and growth

• Achieved 25% ARR growth in fiscal Q2, with a record number of $1 million deals and strong performance from the Z-Flex flexible buying program, totaling $290 million in bookings for the quarter and $650 million since launch.

• Raised full-year ARR targets, with net new ARR expectations consistent with year-to-date performance and a positive outlook for the second half.

• Non-seat-based ARR reached 25% of new bookings, driven by AI security and data security modules, with expectations for continued growth in this area.

• Three main growth pillars—Zero Trust, data security, and AI security—now exceed $1 billion in combined ARR and are growing faster than the overall business.

• Data security ARR is close to $500 million, positioning it as a leading segment within the company.

Product innovation and AI security

• Launched AI Protect, an integrated solution covering visibility, secure access, vulnerability assessment, and governance for AI applications.

• AI agents are seen as a new security challenge, with policy engines needed to control agent access and prevent abuse.

• AI security products, including red teaming and guardrails, are token-based and expected to drive future ARR growth.

• Integration of Red Canary’s agentic SecOps technology is progressing, aiming to disrupt the SecOps market with AI-driven solutions.

• Recent acquisitions, such as SquareX for browser security and Airgap Networks for Zero Trust devices, fill strategic gaps and enhance the platform.

Market positioning and competitive landscape

• Maintains strong leadership in large enterprise SASE, with competition decreasing in this segment and a focus on ROI and AI security for customers.

• Zero Trust adoption is expanding from users to workloads, branches, and now AI agents, eliminating traditional network security approaches.

• SASE adoption is broadening, but Zero Trust is emphasized as the core differentiator, with 45% of Fortune 500 and 40% of Global 2000 as customers.

• Significant upsell and new logo opportunities remain, with enterprise customers tripling ARR over four years.

• Go-to-market transformation has improved sales productivity, pipeline conversion, and channel partner contributions, especially with GSIs.