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- **Rule of 78 performer**: 26% ARR growth + 52% FCF margin = 78, vs. industry Rule of 40. 
- **AI Security leader**: $0.5B ARR target by FY26, 80%+ YoY growth, 90B+ AI/ML txns/month. 
- **Zero Trust Everywhere adoption**: 450+ customers (3Q early), eliminating $M in legacy costs. 
- **Z-Flex success**: $175M TCV bookings (70% QoQ), enabling frictionless module expansion. 
- **FY26 guidance**: 23%+ revenue growth, $3.7B ARR, 26% FCF margin.

**【CEO Summary Section】**
- Q1 ARR grew 26% YoY to $3.2B, driven by acceleration in AI Security, Zero Trust Everywhere, and Data Security Everywhere. 
- AI Security ARR exceeded $400M target 3Q early, with $0.5B+ ARR expected by FY26 end. 
- Zero Trust Everywhere now has 450+ customers (3Q ahead of 390 target), eliminating legacy network/security products. 
- Data Security ARR reached ~$450M, with 8 modules consolidating point products. 
- Z-Flex program generated $175M TCV (70% QoQ growth), enabling flexible module swaps without new procurement cycles.

**【CFO Financial Commentary】**
- Q1 revenue $788M (+26% YoY), exceeding high end of guidance. 
- Gross margin 79.9%, operating margin 21.8% (vs. 21.4% last quarter). 
- Free cash flow margin 52%, with $3.3B cash on hand. 
- FY26 guidance: ARR $3.698B-$3.718B (+22.7%-23.3%), revenue $3.282B-$3.301B (+22.8%-23.5%). 
- Q2 guidance: Revenue $797M-$799M (+23% YoY), EPS $0.89-$0.90.

**【Q&A Highlights】**
- **Zero Trust Branch**: 450+ customers, ARR more than tripled in 1 deal. 4,400+ enterprise customers, only 10% penetrated. 
- **Competitive landscape**: Zscaler's platform differentiation (Zero Trust Everywhere + AI Security) outpaces legacy firewall vendors. 
- **Red Canary integration**: Slightly better than expected, but not material to overall results. 
- **SAP RISE migration**: Similar tailwind to Microsoft Exchange migration, driving Zero Trust Cloud adoption. 
- **Z-Flex impact**: 20% of bookings, longer-term visibility from multi-year commitments. 
- **AI Security trends**: 80%+ YoY growth, 90B+ AI/ML transactions/month, leading GenAI app visibility & guardrails.

Zscaler, Inc. (ZS) Q1 2026 Earnings Call Transcript

- **Revenue Milestone**: Exceeded $3B ARR, one of two pure-play SaaS security companies to achieve this. Q4 revenue up 21% YoY, FY25 revenue up 23% YoY.
- **AI Security Leadership**: Launched Zscaler AI Guard, with AI Security ARR expected to surpass $400M in FY26. AI/ML traffic on Zscaler's cloud grew 3,500% YoY.
- **Zero Trust Expansion**: 350 enterprises now use Zero Trust Everywhere, up from 0 in Q2 FY25. Q4 saw a 7-figure ACV deal for Zero Trust Branch, replacing legacy SD-WAN with 60% cost savings.
- **Data Security Growth**: Data Security ARR reached $425M, up 85% YoY. A 7-figure ACV deal consolidated multiple point products into Zscaler's platform.
- **FY26 Outlook**: ARR growth 21.9%-22.7%, gross margin target 80%, free cash flow margin 26%-26.5%. Red Canary contribution $95M, reflecting cautious assumptions on MDR retention.

**【CEO Summary Section】**
- **Revenue Growth**: Q4 revenue of $719M, up 21% YoY, exceeding guidance. Full-year revenue reached $2.7B, growing 23% YoY. ARR surpassed $3B, up 22% YoY, making Zscaler one of two pure-play SaaS security companies to achieve this milestone.
- **AI Security Innovation**: Launched Zscaler AI Guard and Gen AI security solutions, addressing emerging risks like model jailbreaking. AI Security ARR is expected to surpass $400M in FY26. AI/ML traffic on Zscaler's cloud increased 3,500% YoY.
- **Zero Trust Everywhere Expansion**: Secured 350 enterprises with Zero Trust Everywhere, exceeding 2/3 of the FY26 target. Q4 saw a 7-figure ACV deal for Zero Trust Branch, replacing legacy SD-WAN and firewalls with 60% cost savings. Zero Trust Cloud ARR growth accelerated, driven by AI workload security needs.
- **Data Security Momentum**: Data Security Everywhere ARR reached $425M, up 85% YoY. A 7-figure ACV deal with a Fortune 500 services firm consolidated multiple point products into Zscaler's platform.
- **Z-Flex Program Success**: Generated $100M in TCV bookings Q4, up 50% sequentially. A 5-year, 8-figure TCV deal with an energy customer expanded modules from 14 to 19, increasing ARR by over 100%.

**【CFO Financial Commentary】**
- **Financial Highlights**: Q4 gross margin 79.3%, temporarily below target due to a one-time private cloud deployment. Operating margin 22.1%, up 60bps YoY. Free cash flow margin 24%, with FY25 data center CapEx at 6% of revenue.
- **FY26 Guidance**: ARR $3.676B-$3.69B (21.9%-22.7% YoY growth). Revenue $3.265B-$3.284B (22%-23% YoY). Gross margin target 80%, operating profit $728M-$736M. EPS $3.64-$3.68. Free cash flow margin 26%-26.5%.
- **Red Canary Integration**: FY26 ARR contribution $95M, reflecting cautious assumptions on MDR business retention.

**【Q&A Key Highlights】**
- **Firewall Replacement Velocity**: Branch firewalls are first to go, with Zero Trust Branch adoption accelerating. Data center and virtual firewalls will follow, driven by AI workload security needs. Zscaler's Zero Trust Branch has seen 100%+ sequential growth in TCV bookings.
- **Z-Flex Program Impact**: Available to both new and existing customers, Z-Flex enables flexible module adoption and pricing. Q4 bookings growth validates its ability to drive larger, multi-year deals.
- **AI Security Demand**: Zscaler AI Guard in testing with large customers. Security for AI applications (e.g., model guardrails) and agentic operations (AI-powered SOC) are key growth areas.
- **Zero Trust Everywhere Adoption**: 350 enterprises now use all three pillars (Users, Branch, Cloud). A Global 2000 health care customer expanded Zero Trust Cloud to eliminate east-west firewalls, highlighting upsell opportunities.
- **Data Security Module Expansion**: Only 30% of data security customers use 3+ modules, leaving significant upsell potential. Zscaler's 8-module data security suite is one of the largest in the industry.

Zscaler (ZS)-2 Sep 25-2025 Q4 Earnings call transcript

- **Record Growth**: Q3 ARR hits $2.9B (23% YoY), RPO surpasses $4.9B
- **AI-Driven Innovation**: 50M users, 20PB/day data powers cutting-edge AI security
- **Flexible Scaling**: Z-Flex program generates $65M+ in Q3 bookings
- **Strategic Expansion**: $675M Red Canary acquisition to enhance MDR capabilities
- **Profitability**: 22% operating margin, 18% free cash flow margin
- **Emerging Products**: Zero Trust Branch (+70% YoY), SecOps (+120% YoY ACV), ZDX Copilot (+70% YoY bookings)


**【CEO Key Highlights】**
- **Revenue Milestones**: Q3 TCV bookings exceeded $1B, RPO reached $4.98B, and ARR hit $2.9B (23% YoY growth). 
- **Platform Scale**: Secures over 50M users, processed 100+ trillion transactions, blocked 60B threats, and enforced 5T policies in FY24.
- **AI Advantage**: Leverages 20PB/day of high-fidelity data to power AI solutions; Z-Flex program contributed $65M in Q3 bookings.
- **Product Growth**: 
  - Zero Trust Branch: 59% new logo customers, 70% YoY growth in ZDX Advanced Plus
  - Data Security: $350M ARR, 120% YoY growth in SecOps ACV
  - Agentic Ops: ZDX Copilot bookings up 70% YoY
- **Strategic Initiatives**: 
  - Cost Takeout Program saves customers 50%+ on legacy products
  - Z-Flex allows flexible scaling with no procurement cycles
  - Red Canary acquisition to expand MDR and threat intel capabilities

**【CFO Financial Summary】**
- **Revenue**: $678M (23% YoY), ARR $2.9B (23% YoY), Billings $785M (25% YoY)
- **Profitability**: 22% operating margin, 18% free cash flow margin
- **Balance Sheet**: $3B cash, $675M for Red Canary acquisition
- **FY25 Guidance**: 
  - Billings $3.18B-$3.19B (21-22% YoY)
  - Revenue $2.66B (23% YoY)
  - EPS $3.18-$3.19
  - Free cash flow margin 25.5-26%

**【Q&A Key Themes】**
- **Z-Flex Adoption**: Tested with large customers, 65% QoQ growth in bookings
- **Macro Environment**: Cybersecurity spending resilient, Zero Trust and AI security defensible
- **Red Canary Strategy**: Adds MDR and threat intel, 50% ARR retention post-integration
- **NRR Dynamics**: 114% trailing NRR, but focus on multi-year deals over short-term retention
- **Federal Growth**: 14/15 cabinet agencies engaged, but cautious execution


Zscaler, Inc. (ZS) Q3 2025 Earnings Call Transcript

- **Revenue & ARR Growth**: Q2 revenue up 23% YoY to $648M, ARR surpasses $2.7B (+23% YoY). Full year ARR target >$3B. 
- **Zero Trust Everywhere Expansion**: 130+ enterprises now Zero Trust Everywhere, 57% of branch bookings from new logos. Targeting 3x growth in 18 months. 
- **Data Protection Strength**: 40% YoY growth in net new ACV, 85% of $1M+ ARR customers use 2+ data protection modules. 
- **Profitability Milestones**: Operating margin 22%, free cash flow margin 22%. Rule of 45+ performance. 
- **Federal & GSI Breakthroughs**: 8-figure national government deal, GSIs driving 350%+ upsell in key accounts. 
- **AI Innovation**: ZDX Copilot bookings +45% QoQ, Agentic AI investments to accelerate security automation. 


**【CEO Summary Section】**
- **Revenue Growth**: Q2 revenue of $648M, up 23% YoY, driven by strong demand for Zero Trust solutions. ARR surpasses $2.7B, up 23% YoY. 
- **Zero Trust Everywhere Momentum**: 130+ enterprises now Zero Trust Everywhere, targeting 3x growth in 18 months. Zero Trust branch deals with new logos account for 57% of Q2 branch bookings. 
- **Profitability**: Operating margin expands to 22%, free cash flow margin 22%. Rule of 45+ performance positions Zscaler as a high-growth, scalable SaaS leader. 
- **Data Protection Growth**: 40% YoY growth in net new ACV, 85% of $1M+ ARR customers use 2+ data protection modules. Gen AI adoption driving demand for data loss prevention. 
- **Federal & GSI Expansion**: Secured an 8-figure deal with a national government. GSIs now embed Zscaler into their security transformation practices, driving 350%+ upsell in key accounts. 

**【CFO Financial Commentary】**
- **Topline Performance**: Q2 billings $743M (+18% YoY), unscheduled billings +25% YoY. Q3 revenue guidance $665-667M (20-21% YoY), full year $2.64-2.65B (22% YoY). 
- **Margin Management**: Gross margin 80.4%, operating expenses +19% YoY. Free cash flow margin expected 24.5-25% for FY25. 
- **Balance Sheet**: $2.9B cash, no debt. 620+ customers with >$1M ARR, 3,291 with >$100K ARR. 
- **Guidance Confidence**: Raised full year billings guidance to $3.15-3.17B (20-21% YoY), reflecting pipeline strength and sales productivity gains. 

**【Q&A Highlights】**
- **Sales Productivity**: Sequential improvement in Q2, driven by go-to-market execution. 25%+ new ACV growth, 65%+ upsell rate. 
- **Zero Trust Branch Adoption**: 57% of Q2 branch bookings from new logos. 130+ Zero Trust Everywhere customers, targeting 390+ by mid-2026. 
- **Federal Opportunity**: 14/15 U.S. cabinet agencies now Zscaler customers. 8-figure deal with national government validates Zero Trust for public sector. 
- **AI Integration**: ZDX Copilot bookings +45% QoQ. Hiring EVP of AI Innovations to accelerate Agentic AI adoption across platform. 
- **Competitive Positioning**: Differentiated by Zero Trust Exchange architecture, eliminating lateral threat movement. SASE vendors fall short on security simplicity. 


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