Zscaler Beats Q2 Estimates and Raises Full-Year Guidance on Strong AI Security Demand
ZS is trading near its 52-week low of $141.56 (9.7% above the low) on elevated volume (2.5× avg).
Summary
Zscaler announced strong second-quarter fiscal 2026 results, surpassing revenue and profitability guidance, and raised its full-year fiscal 2026 outlook for ARR, revenue, non-GAAP operating income, and non-GAAP EPS.
Key Events · Earnings and Guidance · ZS
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Strong Q2 Fiscal 2026 Financial Performance
Revenue grew 26% year-over-year to $815.8 million, and Annual Recurring Revenue (ARR) increased 25% year-over-year to $3,359 million. Non-GAAP diluted net income per share was $1.01, compared to $0.78 in the prior year.
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Raised Full-Year Fiscal 2026 Guidance
The company increased its full-year fiscal 2026 guidance for ARR to $3.730 billion - $3.745 billion (24% growth), revenue to $3.309 billion - $3.322 billion (24% growth), non-GAAP operating income to $742 million - $748 million (28-29% growth), and non-GAAP diluted EPS to $3.99 - $4.02 (22-23% growth).
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Strategic Focus on AI Security and Acquisitions
Zscaler highlighted robust demand across AI Security, Zero Trust Everywhere, and Data Security, and announced the acquisition of SquareX Holdings, Inc. to enhance Zero Trust browser security for the AI era. This follows prior acquisitions of Red Canary and SPLXAI Inc. for an aggregate of $692.0 million.
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Strong Cash Flow Generation
Cash provided by operations increased 14% year-over-year to $204.1 million, and free cash flow grew 18% year-over-year to $169.1 million, demonstrating healthy operational efficiency.
Analysis · ZS · Technology
Zscaler reported robust second-quarter fiscal 2026 results, exceeding revenue and profitability expectations, and significantly raised its full-year fiscal 2026 guidance across all key financial metrics including Annual Recurring Revenue (ARR), total revenue, non-GAAP operating income, and non-GAAP diluted EPS. This strong performance, driven by increasing demand for AI security and Zero Trust solutions, indicates solid execution and a positive outlook for the company's growth trajectory. The strategic acquisitions and focus on AI-powered security position Zscaler favorably in a rapidly evolving cybersecurity landscape, suggesting continued momentum.
At the time of this filing, ZS was trading at $155.35 on NASDAQ in the Technology sector, with a market capitalization of approximately $26.7B. The 52-week trading range was $141.56 to $336.99. This filing was assessed with positive market sentiment and an importance score of 9 out of 10.