01—Abstract
Summary
Summary of the 10-Q filed May 26, 2026. Cited figures are marked; the original filing is the authoritative source.
Zscaler, Inc. reported revenue of $850.5 milliona for the three months ended April 30, 2026, up from $678.0 million a year earlier, and $2,454.3 million for the nine months, up from $1,953.9 million.
Gross margin held at 77% in both periods. The company posted a net loss of $13.9 millionb for the quarter, compared with a net loss of $4.1 million a year earlier, and a net loss of $59.8 million for the nine months, compared with $23.9 million. Operating expenses rose sharply, led by research and development (up 37% in the quarter) and sales and marketing (up 18%).
Non-GAAP income from operations was $195.8 millionc for the quarter, or 23% of revenue, per the filing's reconciliation. Cash, cash equivalents and short-term investments totaled $3,539.1 million as of April 30, 2026. Net cash provided by operating activities was $850.4 million for the nine months, and free cash flow was $718.4 million.
Acquisitions drove a large share of the balance sheet change: goodwill rose to $1,094.4 milliond from $417.7 million, mainly from the Red Canary, SquareX and SPLX acquisitions. Deferred revenue was $2,477.2 million, and remaining performance obligations totaled $6,459.3 million, with 46% expected to be recognized over the next 12 months. The company's convertible senior notes due 2028, with a principal of $1,725.0 million, are classified as noncurrent.
Annualized recurring revenue (ARR) was $3,525 million as of April 30, 2026, compared with $2,817 million a year earlier. On May 19, 2026, the company agreed to acquire Symmetry Systems, Inc. for total consideration of $175.0 million, with closing expected in the fourth quarter of fiscal 2026.
02—Key points
Key Highlights
- Quarterly revenue of $850.5 million rose 25% year over year, driven primarily by additional subscriptions from existing customers, which contributed $102.7 million of the increase.
- Quarterly net loss widened to $13.9 million from $4.1 million, with GAAP loss from operations of $29.6 million compared with $25.4 million a year earlier.
- Research and development expenses increased 37% to $232.3 million for the quarter, and sales and marketing expenses increased 18% to $371.9 million.
- ARR reached $3,525 million as of April 30, 2026, up from $2,817 million a year earlier.
- Cash, cash equivalents and short-term investments totaled $3,539.1 million, and nine-month free cash flow was $718.4 million.
- Goodwill increased to $1,094.4 million from $417.7 million following acquisitions, including Red Canary for $651.4 million of cash consideration and SquareX for $112.8 million.
- A definitive agreement to acquire Symmetry Systems, Inc. for $175.0 million was signed on May 19, 2026, with closing expected in the fourth quarter of fiscal 2026.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q3 FY2026, Zscaler lost $0.02.
- Revenue$850.5M100.0%
- Cost of revenue−$192.7M22.7%
- Gross profit$657.8M77.3%
- Operating costs−$687.5M80.8%
- Operating income−$29.6M3.5%
- Interest, other & tax$15.8M1.9%
- Net income−$13.9M1.6%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2026filed May 26, 2026Financial Statements
Q3 FY2026 against Q3 FY2025
| Line item | Q3 FY2026Q3 FY2025 | Change |
|---|---|---|
| Revenue | $850.48M$678.03M | +25.4% |
| Cost of Revenue | $192.65M$155.98M | +23.5% |
| Gross Profit | $657.82M$522.06M | +26.0% |
| R&D Expenses | $232.28M$169.76M | +36.8% |
| Operating Expenses | $687.46M$547.47M | +25.6% |
| Operating Income | -$29.64M-$25.41M | −16.6% |
| Net Income | -$13.88M-$4.13M | −236.6% |
| EPS (Basic) | $-0.09$-0.03 | −200.0% |
| EPS (Diluted) | $-0.09$-0.03 | −200.0% |
| Shares Outstanding (Basic) | 160.74M154.91M | +3.8% |
| Shares Outstanding (Diluted) | 160.74M154.91M | +3.8% |
05—Questions
Frequently Asked Questions
How did Zscaler's revenue and profitability trend in the third quarter of fiscal 2026?
Revenue grew 25% to $850.5 million from $678.0 million. Gross margin was steady at 77%, but operating expenses grew faster than revenue, so the GAAP loss from operations widened slightly to $29.6 million. Non-GAAP income from operations was $195.8 million, or 23% of revenue.
What is the status of the 2028 convertible notes?
The company has $1,725.0 million of 0.0% convertible senior notes due July 15, 2028. The conversion conditions were not met during the quarter, so the notes are classified as noncurrent. The company can settle conversions in cash, shares, or a combination, and the carrying amount was $1,699.6 million with a fair value of $1,569.4 million.
What acquisitions affected the balance sheet this period?
The company completed the SquareX acquisition for $112.8 million in cash and the SPLX acquisition for $40.6 million in cash, both during the nine-month period, and recorded goodwill from them. The Red Canary acquisition, completed August 1, 2025, had total cash consideration of $651.4 million. A definitive agreement to acquire Symmetry Systems for $175.0 million was signed after the quarter ended.
How much cash and liquidity does Zscaler have, and is it sufficient?
As of April 30, 2026, cash, cash equivalents and short-term investments totaled $3,539.1 million. The company believes this, together with operating cash flow, is sufficient for working capital, capital expenditures and convertible note repayment requirements for at least the next 12 months. Deferred revenue was $2,477.2 million, of which $2,097.1 million is current.
What drove the increase in operating expenses?
Most of the increase came from employee-related costs, including stock-based compensation, tied to headcount growth. Research and development rose $62.5 million in the quarter, and sales and marketing rose $57.3 million, with higher sales commissions and facility and equipment costs contributing. Management expects operating expenses to continue increasing in absolute dollars.
06—Continue