Zscaler, Inc.

- 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.

- 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).

- 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.

- 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.

- 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.