Zscaler, Inc. Q1 FY26 Results — Earnings Call Analysis
Published 29 May 2026 | Software | Market Cap: ₹21.0K Cr
- Strong ARR growth expected with fiscal 2026 ARR guidance of $3.73-$3.745 billion, a 24% YoY increase. - Full-year fiscal 2026 revenue expected between $3.09 billion and $3.322 billion, reflecting 23.8% to 24.3% year-over-year growth.
From Zscaler, Inc.'s Q1 FY26 earnings-call transcript · updated 29 May 2026.
Price
₹130.04
Market Cap
₹21.0K Cr
P/E Ratio
40.2
Revenue Rank
Margin Rank
How does Zscaler, Inc. rank in Software?
Compare Zscaler, Inc. against every Software company this quarter on revenue, margins and earnings-call signals.
📊 Revenue & Sales Performance
Rank 2- →Strong ARR growth expected with fiscal 2026 ARR guidance of $3.73-$3.745 billion, a 24% YoY increase.
- →Net new ARR growth excluding Red Canary projected at approximately 9.5% for fiscal 2026.
- →Red Canary FY26 ARR expected at ~$130 million, up from prior $95 million guidance, with increasing net new ARR in H2.
- →Continued acceleration in net new ARR growth seen (10% in H1 FY26 vs 1% last year).
- →Z-Flex deals driving record pipeline conversion, large deal wins, and double-digit sales productivity growth.
- →Expanded adoption of Zero Trust Everywhere having 2-3x ARR uplift per customer, with 550 customers now vs 130 a year ago.
- →Non-seat-based metered usage solutions (e.g., AI agents) growing rapidly, representing over 25% of new Annual Contract Value (ACV).
- →Strong pipeline for H2 FY26 with seasonal strength expected.
- →Growth fueled by multi-module upsells, AI security expansion, and data security platform adoption.
📈 Profitability & Margins
Rank 3- →Full-year fiscal 2026 revenue expected between $3.09 billion and $3.322 billion, reflecting 23.8% to 24.3% year-over-year growth.
- →Operating profit projected at $742 million to $748 million, up approximately 28% to 29% year-over-year.
- →Earnings per share anticipated between $3.99 and $4.02, assuming a 21% tax rate and approximately 169 million fully diluted shares.
- →Q3 revenue guidance of $834 million to $836 million, about 23% year-over-year growth.
- →Q3 operating profit projected at $187 million to $189 million, with operating margin between 22.4% and 22.6%.
- →Free cash flow margin expected between 26.5% and 27%, supported by disciplined CapEx.
- →Confidence in accelerating net new ARR growth and strong pipeline for the second half of fiscal 2026.
- →Continued improvement in sales productivity and record pipeline conversion expected to drive growth.
🏗️ Capital Expenditure Plans
Yes- →Current CapEx was $18 million in Q2, representing 2% of revenue.
- →Free cash flow margin in Q2 was 20.7%, down from 22.1% last year, due to cash collection timing.
- →CapEx is expected to stay in the mid-single digits as a percentage of revenue for fiscal 2026.
- →Recent increases in memory, storage, and processor prices could impact future equipment purchases for data centers and Zero Trust Branch appliances.
- →The company is monitoring costs and may adjust customer pricing if needed due to these supply chain cost pressures.
- →Strategic investments include acquisitions like SquareX (browser-based Zero Trust capabilities) and Red Canary (technology and talent acquisition for AI security).
💰 Fundraising & Capital Structure
No information- →The transcript does not mention any current or future plans for fundraising through debt or equity.
- →The company ended the quarter with $3.5 billion in cash, cash equivalents, and short-term investments.
- →They also have $1.7 billion of debt outstanding.
- →There is no indication of new debt issuance or equity offering planned in the near term.
- →Focus appears to be on driving profitable growth and strong cash generation rather than raising additional capital.
📋 Order Book & Pipeline
Yes- →Remaining Performance Obligation (RPO) stands at approximately $6.1 billion, growing about 31% year-over-year.
- →Approximately 47% of the RPO is classified as current RPO.
- →In Q2, Z-Flex generated over $290 million in Total Contract Value (TCV), up more than 65% quarter-over-quarter.
- →Since launching a year ago, Z-Flex deals have delivered about $650 million in TCV with an average 4-year term, reflecting strong long-term customer commitments.
- →The company closed a record number of deals exceeding $1 million in ARR in Q2, indicating robust pipeline conversion and quality.
- →The sales transformation and introduction of flexible deal structures like Z-Flex are driving meaningful upsells, shorter sales cycles, and greater revenue visibility.
Key Metrics
Revenue
Margin
Capex
Fundraise
Order Book
Frequently Asked Questions
What were Zscaler, Inc. Q1 FY26 results?
- Strong ARR growth expected with fiscal 2026 ARR guidance of $3.73-$3.745 billion, a 24% YoY increase. - Full-year fiscal 2026 revenue expected between $3.09 billion and $3.322 billion, reflecting 23.8% to 24.3% year-over-year growth.
What is Zscaler, Inc. share price analysis?
Zscaler, Inc. currently shows a moderate growth signal based on ranking data. The stock trades at a P/E of 40.2 with a market cap of $21,029. Investors should review the full earnings analysis for detailed insights.
Is Zscaler, Inc. planning capital expenditure?
- Current CapEx was $18 million in Q2, representing 2% of revenue.
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This analysis is AI-generated based on publicly available earnings data and concall transcripts. This is not investment advice. Please consult a SEBI-registered advisor before making investment decisions.