Zscaler Q2 Earnings Surpass Estimates, Revenues Increase Y/Y

Zscaler, Inc. ZS reported second-quarter fiscal 2026 non-GAAP earnings of $1.01 per share, which beat the Zacks Consensus Estimate by 12.94%. The bottom line increased 29.5% year over year, driven by higher revenues and efficient cost management.

Zscaler’s second-quarter fiscal 2026 revenues of $815.8 million topped the Zacks Consensus Estimate by 2.22% and exceeded management’s guidance of $797-$799 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 Q2 in Detail

Region-wise, the Americas accounted for 57% of revenues, while the EMEA contributed 28%. The Asia Pacific and Japan made up the remaining 15%.

Zscaler, Inc. Price, Consensus and EPS Surprise

Zscaler, Inc. price-consensus-eps-surprise-chart | Zscaler, Inc. Quote

Remaining Performance Obligations (RPO), representing Zscaler’s committed non-cancelable future revenues, were $6.1 billion as of Jan. 31, which increased 31% year over year. The current RPO is approximately 47% of the total RPO.

In the fiscal second quarter, ZS added multiple large customers across all its offerings, including ZIA, ZPA and ZDX. At the end of the quarter, the company had 728 customers with $1 million or higher annualized recurring revenues (ARR). Zscaler’s customer count for ARR of more than $100,000 reached 3,886 at the end of the second quarter.

The non-GAAP gross profit increased 25.6% year over year to $654 million. The non-GAAP gross margin remained flat on a year-over-year basis at 80%.

The non-GAAP operating income was $181 million compared with the year-ago quarter’s $140.5 million. The non-GAAP operating margin remained flat on a year-over-year basis at 22%.

Zscaler’s Balance Sheet & Cash Flow

As of Jan. 31, 2026, Zscaler had $3.5 billion in cash, cash equivalents and short-term investments compared with $3.32 billion as of Oct. 31, 2025.

The company generated operating and free cash flows of $204 million and $169 million, respectively, during the fiscal second quarter. In the first half of fiscal 2026, it generated operating cash flow and free cash flow of $652 million and $582 million, respectively.

Zscaler Raises Guidance for FY26

Buoyed by a strong second-quarter performance, Zscaler raised guidance for fiscal 2026. The company now forecasts revenues in the range of $3.309-$3.322 billion, up from the earlier projection of $3.282-$3.301 billion. The Zacks Consensus Estimate for fiscal 2026 revenues is pegged at $3.29 billion, suggesting growth of 23.2% from fiscal 2025.

Non-GAAP earnings per share for fiscal 2026 are now expected in the band of $3.99-$4.02, up from $3.78-$3.82 anticipated previously. The consensus mark for fiscal 2026 earnings is pegged at $3.83, which has been revised upward by 2 cents over the past 30 days.

The company also initiated guidance for the third quarter of fiscal 2026. For the third quarter, Zscaler projects revenues between $834 million and $836 million. The Zacks Consensus Estimate for third-quarter fiscal 2026 revenues is pegged at $830.7 million, implying growth of 22.5% year over year.

Non-GAAP earnings per share are projected between $1.00 and $1.01. The Zacks Consensus Estimate is pegged at 94 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 #4 (Sell).

Analog Devices ADI, Amphenol APH and Monolithic Power Systems MPWR are some better-ranked stocks that investors can consider in the Zacks Computer and Technology sector. Analog Devices, Amphenol and Monolithic Power Systems carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Analog Devices’ fiscal 2026 earnings has moved upward by 4.9% over the past seven days to $11.10 per share, calling for an increase of 42.5% year over year. Analog Devices shares have climbed 58% in trailing 12 months.

The Zacks Consensus Estimate for Amphenol’s full-year 2026 earnings is pegged at $4.32 per share, revised upward by 2 cents over the past 30 days and suggests a year-over-year jump of 29.3%. Amphenol shares have soared 126.2% over the past year.

The Zacks Consensus Estimate for Monolithic Power Systems’ fiscal 2026 earnings has been revised upward to $21.63 per share from $21.07 over the past 30 days. Monolithic Power Systems shares have surged 93.9% over the past year.

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This article originally published on Zacks Investment Research (zacks.com).

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