Zscaler (ZS) · Software
Zscaler Q3 FY2026 earnings: summary, key numbers & outlook
Results filed 26 May 2026 · Quarter ended 30 Apr 2026
Press release ↗Investor relations ↗
Summaries and transcripts are machine-generated and can contain errors.
In brief
Zscaler's third-quarter revenue grew 25% year-over-year to $850.5 million and ARR grew 25% year-over-year to $3,525 million, with non-GAAP operating margin at a record 23%.
Zscaler grew revenue 25% year-over-year to $850.5 million in the third quarter of fiscal 2026. Annual recurring revenue (ARR) also grew 25% to $3,525 million, but that includes the Red Canary acquisition. Excluding Red Canary, ARR grew 21%. Non-GAAP operating margin hit a record 23%. The company still reported a GAAP net loss of $13.9 million. Operating cash flow was $198.0 million, down from $211.1 million a year ago.
For the fourth quarter, management expects revenue of $875 million to $878 million and non-GAAP net income per share of approximately $1.08 to $1.09. It raised full-year revenue, operating income and EPS guidance. The tension is cash: the full-year free cash flow margin outlook fell to approximately 22.8 to 23.3% from 26.5 to 27%, reflecting capex in the high single-digits as a percent of revenue. Much of the ARR growth also comes from an acquisition.
Key numbers
- Revenue · GAAP
- $850.5 million
- Net loss · GAAP
- $13.9 million
- Net loss per share, diluted · GAAP
- $0.09
- Non-GAAP net income per share, diluted · non-GAAP
- $1.08
- Non-GAAP income from operations · non-GAAP
- $195.8 million
- Non-GAAP operating margin · non-GAAP
- 23%
- Operating cash flow · GAAP
- $198.0 million
- Free cash flow · non-GAAP
- $136.0 million
up 25% from a year ago
net loss, compared to $4.1 million a year ago
net loss per share, compared to $0.03 a year ago
compared to $0.84 a year ago
compared to $146.7 million a year ago
an all-time high
compared to $211.1 million a year ago
up 14% from a year ago
| Segment or metric | Value | Change |
|---|---|---|
| Annual Recurring Revenue (ARR) | $3,525 million | up 25% from a year ago |
| Net new ARR | $166 million | |
| ARR excluding Red Canary | $3,398 million | up 21% |
| Deferred revenue | $2,477.2 million | up 25% year-over-year |
Where each number comes from
- Revenue: “Revenue grew 25% year-over-year to $850.5 million •Annual Recurring Revenue (ARR) grew 25% year-over-year to $3,525 million”
- Net loss: “GAAP net loss was $13.9 million, compared to $4.1 million in the third quarter of fiscal 2025.”
- Net loss per share, diluted: “GAAP net loss per share was $0.09, compared to $0.03 in the third quarter of fiscal 2025.”
- Non-GAAP net income per share, diluted: “Non-GAAP net income per share was $1.08, compared to $0.84 in the third quarter of fiscal 2025.”
- Non-GAAP income from operations: “Non-GAAP income from operations was $195.8 million, or 23% of revenue, compared to $146.7 million, or 22% of revenue, in the third quarter of fiscal 2025.”
- Non-GAAP operating margin: “ARR grew 25%, or 21%, excluding the contribution from the Red Canary acquisition, and non-GAAP operating margin reached an all-time high of 23%”
- Operating cash flow: “Cash provided by operations was $198.0 million, or 23% of revenue, compared to $211.1 million, or 31% of revenue, in the third quarter of fiscal 2025.”
- Free cash flow: “Free cash flow was $136.0 million, or 16% of revenue, compared to $119.5 million, or 18% of revenue, in the third quarter of fiscal 2025.”
- Annual Recurring Revenue (ARR): “Revenue grew 25% year-over-year to $850.5 million •Annual Recurring Revenue (ARR) grew 25% year-over-year to $3,525 million”
- Net new ARR: “of which $166 million was net new ARR during the third quarter of fiscal 2026.”
- ARR excluding Red Canary: “ARR grew 21% to $3,398 million and net new ARR grew 14%.”
- Deferred revenue: “Deferred revenue: $2,477.2 million as of April 30, 2026, grew 25% year-over-year.”
Copied from the press release ↗ and other documents in the SEC filing ↗. A figure is published only if its sentence is in the filing.
| From the filing | Q3 FY2026 | vs year ago | vs last quarter |
|---|---|---|---|
| Revenue | $850.5M | +25.4% | +4.3% |
| Operating income | -$29.6M | −16.6% | +42.8% |
| Net income | -$13.9M | −236.6% | +59.5% |
| Diluted EPS | -$0.09 | −200.0% | +57.1% |
| Free cash flow | $155.6M | +12.0% | −16.5% |
| Gross margin | 77.3% | +0.3 pts | +0.7 pts |
| Operating margin | -3.5% | +0.2 pts | +2.8 pts |
Calculated by code from XBRL, not by the model.
Outlook
| Metric | Period | Outlook |
|---|---|---|
| Revenue | fourth quarter of fiscal 2026 | $875 million to $878 million |
| Non-GAAP gross margin | fourth quarter of fiscal 2026 | approximately 80% |
| Non-GAAP income from operations | fourth quarter of fiscal 2026 | $206 million to $208 million |
| Non-GAAP net income per share | fourth quarter of fiscal 2026 | $1.08 to $1.09 |
| Annual Recurring Revenue | fiscal 2026 | $3.740 billion to $3.749 billion |
| Revenue | fiscal 2026 | $3.3295 billion to $3.3325 billion |
| Non-GAAP income from operations | fiscal 2026 | $755 million to $757 million |
| Non-GAAP net income per share | fiscal 2026 | $4.10 to $4.11 |
| Free cash flow margin | fiscal 2026 | 22.8 to 23.3% |
| Non-GAAP tax rate | fiscal 2026 | 21% |
Key takeaways
Revenue and ARR both grew 25%
Revenue grew 25% year-over-year to $850.5 million and ARR grew 25% to $3,525 million.
Red Canary flatters ARR growth
Excluding the acquisition of Red Canary, which contributed ARR of $127 million, ARR grew 21% to $3,398 million and net new ARR grew 14%.
Non-GAAP operating margin hit a record
Non-GAAP income from operations was $195.8 million, or 23% of revenue, compared to 22% a year ago, while the GAAP loss from operations was $29.6 million.
Full-year guidance raised on revenue and EPS
Revenue guidance rose to approximately $3.3295 billion to $3.3325 billion, and non-GAAP net income per share to $4.10 to $4.11 from $3.99 to $4.02.
Free cash flow margin outlook cut sharply
Full-year free cash flow margin is now approximately 22.8 to 23.3%, down from 26.5 to 27%, reflecting capex in the high single-digits as a percent of revenue.
Charts
Fourth quarter worked out from the annual figure.
Data
| Q1 FY25 | $628.0M |
| Q2 FY25 | $647.9M |
| Q3 FY25 | $678.0M |
| Q4 FY25 | $719.2M * |
| Q1 FY26 | $788.1M |
| Q2 FY26 | $815.8M |
| Q3 FY26 | $850.5M |
| Q4 FY26 | $898.2M * |
Data
| Q1 FY25 | -$0.08 |
| Q2 FY25 | -$0.05 |
| Q3 FY25 | -$0.03 |
| Q1 FY26 | -$0.07 |
| Q2 FY26 | -$0.21 |
| Q3 FY26 | -$0.09 |
Fourth-quarter EPS appears once the press release is read; filings report it only for the full year.
Data
| Q1 FY25 | -4.9% |
| Q2 FY25 | -6.2% |
| Q3 FY25 | -3.7% |
| Q4 FY25 | -4.5% |
| Q1 FY26 | -4.6% |
| Q2 FY26 | -6.3% |
| Q3 FY26 | -3.5% |
| Q4 FY26 | -1.7% |
Data
| Q1 FY25 | $314.3M |
| Q2 FY25 | $164.4M |
| Q3 FY25 | $138.9M |
| Q4 FY25 | $190.6M |
| Q1 FY26 | $431.0M |
| Q2 FY26 | $186.3M |
| Q3 FY26 | $155.6M |
| Q4 FY26 | $79.4M |
Operating cash flow minus capital expenditure, from cash flow statements.
Questions
How did Zscaler perform in Q3 fiscal 2026?
Revenue grew 25% year-over-year to $850.5 million and ARR grew 25% to $3,525 million. Non-GAAP operating margin reached a record 23%, while the GAAP net loss was $13.9 million.
How much of Zscaler's ARR growth came from the Red Canary acquisition?
Red Canary contributed ARR of $127 million. Excluding it, ARR grew 21% to $3,398 million and net new ARR grew 14%.
What is Zscaler guiding for the fourth quarter?
Management expects revenue of $875 million to $878 million, non-GAAP income from operations of $206 million to $208 million, and non-GAAP net income per share of approximately $1.08 to $1.09.
Did Zscaler change its full-year fiscal 2026 outlook?
Yes. It raised revenue guidance to approximately $3.3295 billion to $3.3325 billion and non-GAAP EPS to $4.10 to $4.11. It lowered the free cash flow margin outlook to approximately 22.8 to 23.3% from 26.5 to 27%.
How did cash flow look this quarter?
Operating cash flow was $198.0 million versus $211.1 million a year ago. Free cash flow was $136.0 million versus $119.5 million, up 14%.
Documents
SEC filing