# Zscaler (ZS) Q3 FY2026 earnings

Results filed 2026-05-26 for the quarter ended 2026-04-30. Source page: https://earnings.opennash.com/companies/zs/2026-q3/
Press release and exhibits: https://www.sec.gov/Archives/edgar/data/1713683/000171368326000095/0001713683-26-000095-index.htm
> 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

| Metric | Value | Change | Basis |
| --- | --- | --- | --- |
| Revenue | $850.5 million | up 25% from a year ago | GAAP |
| Net loss | $13.9 million | net loss, compared to $4.1 million a year ago | GAAP |
| Net loss per share, diluted | $0.09 | net loss per share, compared to $0.03 a year ago | GAAP |
| Non-GAAP net income per share, diluted | $1.08 | compared to $0.84 a year ago | non-GAAP |
| Non-GAAP income from operations | $195.8 million | compared to $146.7 million a year ago | non-GAAP |
| Non-GAAP operating margin | 23% | an all-time high | non-GAAP |
| Operating cash flow | $198.0 million | compared to $211.1 million a year ago | GAAP |
| Free cash flow | $136.0 million | up 14% from a year ago | non-GAAP |
| Annual Recurring Revenue (ARR) | $3,525 million | up 25% from a year ago |  |

## Segments and operating metrics

| Name | 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 |

## 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

1. **Revenue and ARR both grew 25%** Revenue grew 25% year-over-year to $850.5 million and ARR grew 25% to $3,525 million.
2. **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%.
3. **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.
4. **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.
5. **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.

## 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%.