Zscaler 2026 Q1 Earnings Revenue Surges 25.5%, Losses Narrow 3.6%

Zscaler (ZS) reported first-quarter fiscal 2026 earnings on November 25, 2025, with revenue and adjusted EPS exceeding estimates. The company raised full-year revenue guidance and maintained a cautious outlook on profitability.

Revenue

Zscaler’s total revenue surged 25.5% year-over-year to $788.11 million, driven by robust growth across its channel partners and direct customers. Channel partners contributed $666.01 million, reflecting a 19.3% year-over-year increase, while direct customer revenue rose 75.5% to $122.10 million. The performance underscores strong demand for the company’s cloud-native cybersecurity solutions.

Earnings/Net Income

The company narrowed its net loss to $11.62 million in Q1 2026, a 3.6% reduction from $12.05 million in Q1 2025. Adjusted EPS improved to $0.96, surpassing the $0.86 consensus estimate. While the EPS beat indicates progress, the company remains unprofitable, with a 10-year streak of quarterly losses.

Post-Earnings Price Action Review

A strategy of buying Zscaler shares after a revenue drop quarter-over-quarter on the earnings release date and holding for 30 days delivered a 141.09% return over three years, outperforming the 65.99% benchmark. The strategy’s 34.40% CAGR and 0.75 Sharpe ratio highlight its consistency, though the 0.00% maximum drawdown suggests minimal downside risk.

CEO Commentary

CEO Jay Chaudhry highlighted 26% year-over-year ARR growth and 35% RPO growth, emphasizing leadership in AI Security and Zero Trust solutions. Strategic priorities include expanding AI Security to exceed $500M ARR by FY26 and leveraging Zflex for flexible customer commitments.

Guidance

Zscaler provided Q2 2026 revenue guidance of $797M–$799M and full-year revenue of $3.28B–$3.30B. The company anticipates adjusted EPS of $3.78–$3.82 for FY2026, both above consensus estimates.

Additional News

Zscaler completed the $692M acquisitions of Red Canary and SPLXAI to bolster AI security capabilities. Insider selling activity totaled 54,802 shares in three months, raising concerns about future confidence. The company’s Altman Z-Score of 6.61 indicates strong financial health, but a beta of 1.2 reflects higher volatility compared to the market. Analysts remain cautiously optimistic, with a target price of $331.44.