Zscaler Q1 Earnings Surpass Estimates, Revenues Increase Y/Y

Zscaler, Inc. ZS reported first-quarter fiscal 2026 non-GAAP earnings of 96 cents per share, which beat the Zacks Consensus Estimate by 12.94%. Moreover, the bottom line increased 23.6% year over year, driven by higher revenues and efficient cost management.

ZS’ earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 12.3%.

Zscaler’s first-quarter fiscal 2026 revenues of $788.1 million topped the Zacks Consensus Estimate by 1.91% and exceeded management’s guidance of $772-$774 million. The top line grew 26% year over year, demonstrating the company’s strong market position, fueled by heightened customer commitments to the Zero Trust Exchange platform and a growing demand for its artificial intelligence (AI)-based solutions.

Zscaler’s Q1 in Detail

Region-wise, the Americas accounted for 58% of revenues, while the EMEA contributed 27%. The Asia Pacific and Japan made up the remaining 15%.

Remaining Performance Obligations (“RPO”), representing Zscaler’s committed non-cancelable future revenues, were $5.9 billion as of Oct. 31, which increased 35% year over year. The current RPO is approximately 47% of the total RPO.

In the fiscal first quarter, ZS added multiple large customers across all its offerings, including ZIA, ZPA and ZDX. At the end of the quarter, the company had 698 customers with $1 million or higher annualized recurring revenues (ARR). Zscaler’s customer count for ARR of more than $100,000 reached 3,754 at the end of the first quarter.

The non-GAAP gross profit increased 24.5% year over year to $630 million. However, the non-GAAP gross margin contracted 100 basis points (bps) on a year-over-year basis to 80%.

The non-GAAP operating income was $172 million compared with the year-ago quarter’s $90 million. The non-GAAP operating margin expanded 100 basis points year over year to 22%.

Zscaler’s Balance Sheet & Cash Flow

As of Oct. 31, 2025, Zscaler had $3.32 billion in cash, cash equivalents and short-term investments compared with $3.57 billion as of July 31, 2025.

The company generated operating and free cash flows of $448.3 million and $413.3 million, respectively, during the first quarter.

Zscaler Raises Guidance for FY26

Buoyed by a strong first-quarter performance, Zscaler raised guidance for fiscal 2026. The company now forecasts revenues in the range of $3.282-$3.301 billion, up from the earlier projection of $3.265-$3.284 billion. The Zacks Consensus Estimate for fiscal 2026 revenues is pegged at $3.27 billion, suggesting growth of 22.3% from fiscal 2025.

Non-GAAP earnings per share for fiscal 2026 are now expected in the band of $3.78-$3.82, up from $3.64-$3.68 anticipated previously. The consensus mark for fiscal 2026 earnings is pegged at $3.66, which has remained unchanged over the past 60 days.

The company also initiated guidance for the second quarter of fiscal 2026. For the second quarter, Zscaler projects revenues between $797 million and $799 million. The Zacks Consensus Estimate for second-quarter fiscal 2026 revenues is pegged at $794.38 million, implying growth of 22.6% year over year.

Non-GAAP earnings per share are projected between 89 cents and 90 cents. The Zacks Consensus Estimate is pegged at 88 cents. The estimate has remained unchanged over the past 60 days.

Zscaler’s Zacks Rank and Stocks to Consider

Currently, ZS carries a Zacks Rank #3 (Hold).

Cirrus Logic CRUS, FormFactor FORM and Marvell Technology MRVL are some better-ranked stocks that investors can consider from the broader Zacks Computer and Technology sector. Cirrus Logic, FormFactor and Marvell Technology each carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Cirrus Logic’s fiscal 2026 earnings has been revised upward by 6.6% to $7.58 per share over the past 30 days and suggests a year-over-year increase of 0.5%. Cirrus Logic shares have jumped 27.8% year to date.

The Zacks Consensus Estimate for FormFactor’s 2025 earnings has moved upward by 2 cents to $1.17 per share in the past seven days, indicating a 1.7% year-over-year jump. FormFactor shares have soared 20.9% year to date.

The Zacks Consensus Estimate for Marvell Technology’s fiscal 2026 earnings has been revised upward by 3 cents to $2.83 per share over the past 30 days, suggesting a year-over-year increase of 80.3%. Marvell Technology shares have plunged 24.9% year to date.

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