01—Abstract
Summary
Summary of the 10-K filed September 3, 2026. Cited figures are marked; the original filing is the authoritative source.
Zscaler, Inc. (ZS) reported fiscal 2026 (year ended July 31, 2026) revenue of $3,352.5 milliona, up from $2,673.1 million in fiscal 2025 and $2,167.8 million in fiscal 2024, with a net loss of $63.2 million compared with $41.5 million in fiscal 2025 and $57.7 million in fiscal 2024.
Revenue growth was 25% in fiscal 2026, driven primarily by additional subscriptions from existing customers ($474.6 millionb of the increase) and new customers ($204.8 million). GAAP gross margin was 77%, and GAAP operating margin was (4)%, while non-GAAP operating margin was 23%. Free cash flow was $779.1 million, or 23% of revenue, and net cash from operating activities was $1,129.7 million.
Annual recurring revenue was $3,771 millionc as of July 31, 2026, versus $3,015 million a year earlier, and the company had approximately 11,000 customers. The company spent heavily on growth and acquisitions during the year. It acquired Red Canary, Symmetry Systems, SquareX and SPLXAI, with payments for business acquisitions of $918.1 million in fiscal 2026.
Stock-based compensation expense was $821.9 milliond, and research and development expense rose to $903.4 million. Cash, cash equivalents and short-term investments totaled $3,474.2 million at year end, against $1,725.0 million of 0.0% convertible senior notes due July 2028 with a fair value of $1,601.8 million. The company disclosed that on September 1, 2026 it committed to a workforce reduction of approximately 3%, with non-recurring charges of about $30.0 million to $33.0 million, mostly in the first half of fiscal 2027.
Remaining performance obligations were $7,365.4 million, with 45% expected to be recognized over the next 12 months. Channel partners generated 85% of revenue in fiscal 2026. The company also noted a full valuation allowance against U.S. federal and state deferred tax assets, with a reasonable possibility of releasing a significant portion within the next 12 months, which could reduce income tax expense.
02—Key points
Key Highlights
- Revenue of $3,352.5 million in fiscal 2026, up 25% from $2,673.1 million in fiscal 2025.
- Net loss narrowed to $63.2 million from $41.5 million? No: net loss widened to $63.2 million from $41.5 million in fiscal 2025, while GAAP operating loss was $133.3 million.
- Non-GAAP operating income of $767.1 million (23% margin) and free cash flow of $779.1 million (23% margin).
- ARR of $3,771 million as of July 31, 2026, versus $3,015 million a year earlier; customers grew to approximately 11,000 from 9,400.
- Four acquisitions in fiscal 2026 (Red Canary, Symmetry Systems, SquareX, SPLXAI) with $918.1 million of cash paid for business acquisitions.
- Remaining performance obligations of $7,365.4 million, with 45% expected to be recognized within 12 months.
- Subsequent event: on September 1, 2026, a plan to reduce worldwide headcount by about 3%, with charges of $30.0 million to $33.0 million.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2026, Zscaler lost $0.02.
- Revenue$3.35B100.0%
- Cost of revenue−$777.6M23.2%
- Gross profit$2.57B76.8%
- Operating costs−$2.71B80.8%
- Operating income−$133.3M4.0%
- Interest, other & tax$70.1M2.1%
- Net income−$63.2M1.9%
04—Financials
Financial Highlights
Figures from 10-KFY2026filed September 3, 2026Financial Statements
FY2026 against FY2025
| Line item | FY2026FY2025 | Change |
|---|---|---|
| Revenue | $3.35B$2.67B | +25.4% |
| Cost of Revenue | $777.63M$618.18M | +25.8% |
| Gross Profit | $2.57B$2.05B | +25.3% |
| R&D Expenses | $903.40M$672.49M | +34.3% |
| Operating Expenses | $2.71B$2.18B | +24.0% |
| Operating Income | -$133.27M-$128.46M | −3.7% |
| Net Income | -$63.18M-$41.48M | −52.3% |
| EPS (Basic) | $-0.39$-0.27 | −44.4% |
| EPS (Diluted) | $-0.39$-0.27 | −44.4% |
| Shares Outstanding (Basic) | 160.22M154.40M | +3.8% |
| Shares Outstanding (Diluted) | 160.22M154.40M | +3.8% |
05—Questions
Frequently Asked Questions
How fast did Zscaler's revenue grow in fiscal 2026?
Revenue rose 25% to $3,352.5 million in fiscal 2026 from $2,673.1 million in fiscal 2025. Of the $679.4 million increase, $474.6 million came from additional subscriptions to existing customers and $204.8 million from new customers.
Is Zscaler profitable?
Not on a GAAP basis. The company reported a net loss of $63.2 million in fiscal 2026 and a GAAP loss from operations of $133.3 million, though non-GAAP income from operations was $767.1 million, a 23% margin.
How much cash does Zscaler have and what debt does it carry?
Cash, cash equivalents and short-term investments totaled $3,474.2 million as of July 31, 2026. The company's 0.0% Convertible Senior Notes due 2028 had a principal amount of $1,725.0 million and a fair value of $1,601.8 million at year end, and the company says its cash is sufficient for at least the next 12 months.
What restructuring did Zscaler announce after year end?
On September 1, 2026, Zscaler committed to a plan to reduce its worldwide headcount by approximately 3% to free capacity for AI and growth initiatives, with non-recurring charges of approximately $30.0 million to $33.0 million, mostly recognized in the first half of fiscal 2027.
How concentrated is Zscaler's sales channel?
Channel partners generated 85% of fiscal 2026 revenue, up from 88% in fiscal 2025 and 91% in fiscal 2024 when the percentages are read as declines. Sales through the top five channel partners represented 31% of revenue in fiscal 2026.
06—Continue