01—Abstract
Summary
Summary of the 8-K filed September 3, 2026. Cited figures are marked; the original filing is the authoritative source.
Zscaler, Inc. (ZS) reported fourth quarter and fiscal 2026 results for the period ended July 31, 2026, in a press release furnished as Exhibit 99.1.
Revenue grew 25% year over year to $898.2 milliona in the fourth quarter and 25% to $3,353 million for the full year. Excluding the acquisition of Red Canary, which contributed ARR of $141 million, ARR grew 20% to $3,630 million, and net new ARR grew 17%. Fourth-quarter GAAP loss from operations narrowed to $15.5 million from $32.2 million a year earlier, while non-GAAP operating margin reached a record 24%.
Free cash flow fell to $60.8 millionb from $171.9 million, reflecting capital expenditures and capitalized internal-use software of $218.5 million, compared with $78.7 million in the prior-year quarter. The company also announced on September 1, 2026 a restructuring plan to reduce worldwide headcount by approximately 3%, reallocating resources to support its AI and growth initiatives. Management expects aggregate non-recurring charges of approximately $30.0 million to $33.0 million, primarily employee severance and benefit costs, with most recognized in the first half of fiscal 2027.
For fiscal 2027, Zscaler guided to revenue of approximately $3.908 billion to $3.938 billionc, ARR of $4.396 billion to $4.426 billion, and non-GAAP income from operations of $924 million to $932 million, with free cash flow margin of approximately 23.0% to 23.5%. The company also adopted a long-term non-GAAP tax rate of 21%, down from 23%, applied prospectively, which supports its non-GAAP net income per share guidance of $4.86 to $4.90.
02—Key points
Key Highlights
- Q4 FY26 revenue of $898.2 million, up 25% year over year; full-year revenue of $3,353 million, up 25%.
- ARR of $3,771 million, up 25% year over year, including $141 million from Red Canary; excluding Red Canary, ARR grew 20% to $3,630 million.
- Q4 non-GAAP operating margin of a record 24% ($218.4 million), versus 22% a year earlier; GAAP loss from operations was $15.5 million.
- Q4 free cash flow of $60.8 million (7% of revenue), down from $171.9 million, as capex and internal-use software rose to $218.5 million.
- Restructuring plan announced September 1, 2026: approximately 3% headcount reduction and $30.0 million to $33.0 million in non-recurring charges, mostly in the first half of fiscal 2027.
- FY27 guidance: revenue of $3.908 billion to $3.938 billion (16.6% to 17.5% growth) and non-GAAP operating income of $924 million to $932 million.
- Non-GAAP tax rate lowered to 21% from 23% on a prospective basis, which management ties to the One Big Beautiful Bill Act.
03—Questions
Frequently Asked Questions
What drove the revenue growth in the fourth quarter?
Management attributed growth to a broadening platform beyond users, including a strong contribution from non-seat-based solutions, continued Z-Flex momentum, record large-deal activity and improving sales productivity. Red Canary also contributed to ARR.
Why did free cash flow decline in the fourth quarter?
Capital expenditures and capitalized internal-use software totaled $218.5 million in Q4 FY26, compared with $78.7 million in Q4 FY25, which reduced free cash flow to $60.8 million from $171.9 million even though operating cash flow was $279.3 million.
What is the restructuring and how much will it cost?
On September 1, 2026, the company committed to a plan to reduce worldwide headcount by approximately 3% and reallocate resources to AI and growth initiatives. It expects aggregate non-recurring charges of approximately $30.0 million to $33.0 million, primarily severance and benefits, with most recognized in the first half of fiscal 2027.
What did Zscaler guide for fiscal 2027?
The company expects FY27 ARR of $4.396 billion to $4.426 billion, revenue of approximately $3.908 billion to $3.938 billion, non-GAAP income from operations of $924 million to $932 million, non-GAAP net income per share of $4.86 to $4.90, and a free cash flow margin of approximately 23.0% to 23.5%.
Why did the non-GAAP tax rate change, and how does it affect comparability?
Beginning in fiscal 2026, Zscaler adopted a long-term projected non-GAAP tax rate of 21%, down from 23%, aligning with the One Big Beautiful Bill Act. The change applies prospectively and prior periods were not restated, so non-GAAP net income and EPS comparisons with earlier periods are affected by the rate change.
04—Continue