Zscaler (ZS) Q2 2026 earnings summary

Executive summary

• Achieved strong Q2 2026 results with 26% revenue growth to $816 million and 25% ARR growth to $3.359 billion year-over-year, driven by robust demand across AI security, Zero Trust Everywhere, and Data Security Everywhere pillars.

• Increased guidance for the second half and full year of fiscal 2026, reflecting confidence in pipeline and execution.

• AI security solutions, including AI Protect and agentic operations, are seeing rapid adoption and are positioned as key growth drivers.

• Z-Flex program is driving meaningful upsell, shorter sales cycles, and greater forward visibility, with over $290 million in TCV in Q2.

• Non-GAAP operating margin reached an all-time high of 22%, with non-GAAP net income per share up to $1.01 from $0.78 year-over-year.

Financial highlights

• Q2 revenue reached $816 million, up 26% year-over-year and 4% sequentially, exceeding guidance.

• Net new ARR was $156 million, up 19% year-over-year; total ARR reached $3.359 billion, up 25%.

• Free cash flow margin was 20.7% for Q2; operating cash flow was $204 million, up 14% year-over-year.

• Non-GAAP operating income was $181 million, up 29% year-over-year; non-GAAP operating margin improved to 22.2%.

• Ended Q2 with $3.5 billion in cash and equivalents and $1.7 billion in debt.

Outlook and guidance

• Q3 2026 revenue expected at $834–$836 million (23% year-over-year growth); gross margin ~80%.

• Full-year 2026 ARR guidance raised to $3.730–$3.745 billion (24% year-over-year growth).

• Full-year revenue guidance of $3.309–$3.322 billion (23.8–24.3% growth); operating profit of $742–$748 million (28–29% growth).

• Free cash flow margin expected at 26.5–27% for the year.

• Full-year FY26 non-GAAP net income per share guidance raised to $3.99–$4.02 (22–23% growth).