Zscaler Q4 Earnings Call Highlights

Zscaler NASDAQ: ZS reported fourth-quarter fiscal 2026 revenue of $898 million, up 25% from a year earlier and 6% sequentially, as the cybersecurity company cited continued demand for its zero-trust platform, data security offerings and AI-related products. Non-GAAP operating income rose 37% year over year to $218 million, while non-GAAP operating margin reached a record 24.3%, up 220 basis points. For the full fiscal year, revenue increased 25% to $3.4 billion, and the company generated $779 million in free cash flow, representing a 23% free-cash-flow margin. Chairman and CEO Jay Chaudhry said on the company’s earnings call, “We delivered a strong finish to the fiscal year with 25% ARR growth and a non-GAAP operating margin of 24%.” Total annual recurring revenue, or ARR, reached $3.8 billion at the end of the quarter, up 25% year over year. Total net new ARR was $246 million, an increase of 24%. Excluding the contribution from Red Canary, which Zscaler acquired during fiscal 2026, net new ARR was $232 million and grew 17% year over year. CFO Kevin Rubin said the company’s net new ARR growth, excluding Red Canary, accelerated from 7% in fiscal 2025 to 10% in the first half of fiscal 2026 and 17% in the fourth quarter. Red Canary exited the quarter with $141 million in ARR. Zscaler also reported record activity for new annual contract value deals above $1 million. The number of customers producing more than $10 million in ARR nearly doubled year over year, Rubin said. The company ended the quarter with: 785 customers generating more than $1 million in ARR, up 18% year over year. 4,182 customers generating more than $100,000 in ARR, up 20% year over year. More than 950 “Zero Trust Everywhere” enterprise customers, compared with more than 700 in the prior quarter and more than 350 at the end of fiscal 2025. Remaining performance obligations totaled about $7.4 billion, up approximately 27%, with roughly 45% classified as current RPO. Management positioned AI security as a growing source of demand for the company’s platform. Chaudhry said organizations are seeking to protect AI models, agents, applications and data as more autonomous AI systems are deployed. The company said Security for AI bookings increased more than 50% sequentially in the fourth quarter, following what it described as a strong third quarter. In addition, Rubin said the Security for AI pipeline rose 75% sequentially.