Zscaler (ZS) Q1 2026 earnings summary

Executive summary

• Q1/Fiscal Q1 2026 revenue grew 26% year-over-year to $788M, with ARR up 26% to $3.2B and RPO up 35%, exceeding guidance.

• AI Security ARR surpassed $400M three quarters ahead of FY26 target, with Data Security ARR at ~$450M and Zero Trust Everywhere exceeding 450 enterprise customers.

• Major acquisitions of Red Canary and SPLXAI for $692M enhanced AI-driven security and Zero Trust capabilities.

• Net loss narrowed to $11.6M (GAAP), while non-GAAP net income rose to $159.5M.

• Surpassed $1B in AWS Marketplace sales, highlighting strong channel momentum.

Financial highlights

• Q1 revenue: $788M–$788.1M, up 26% year-over-year; ARR: $3.2B+; RPO: $5.9B, up 35%.

• Gross margin: 79.9%–80% (non-GAAP); operating margin: 21.8%–22% (non-GAAP); free cash flow margin: 52%.

• Free cash flow: $413.3M; cash and equivalents: $3.3B+ at quarter end.

• Non-GAAP net income per share: $0.96; GAAP net loss per share: $0.07.

Outlook and guidance

• Q2 revenue expected at $797M–$799M (23% year-over-year growth); gross margin ~80%; EPS $0.89–$0.90.

• FY26 guidance: ARR $3.698B–$3.718B (22.7%–23.3% growth); revenue $3.282B–$3.301B (22.8%–23.5% growth); EPS $3.78–$3.82; free cash flow margin 26.0%–26.5%.

• Adopted a lower non-GAAP tax rate of 21% effective August 2025.