ZSCALER Posts 25% Q4 Revenue Growth, Guides FY27 to 17%
Fourth-quarter revenue rose 25% to $898.2 million and ARR reached $3.77 billion, but Zscaler's fiscal 2027 outlook implies a sharp slowdown.
Zscaler (ZS) reported fiscal fourth-quarter revenue of $898.2 million, up 25% year over year, and annual recurring revenue of $3,771 million, also up 25%, in results filed with the SEC on September 3, 2026. For the full fiscal year ended July 31, 2026, revenue grew 25% to $3,353 million. The company guided fiscal 2027 revenue to $3.908 billion to $3.938 billion, growth of just 16.6% to 17.5%.
Of the $246 million in net new ARR added during the quarter, a meaningful share came from acquisitions. Excluding Red Canary, which contributed $141 million of ARR, total ARR grew 20% to $3,630 million and net new ARR grew 17% rather than 24%. Full-year revenue excluding Red Canary grew 20% to $3,209 million.
Profitability improved on an adjusted basis. Non-GAAP income from operations was $218.4 million, a record 24% of revenue, against $158.9 million and 22% a year earlier. Non-GAAP net income per share came in at $1.19 versus $0.89. On a GAAP basis the company still lost $15.5 million from operations and $3.4 million in net income, narrower than the prior-year losses of $32.2 million and $17.6 million.
Cash generation was the softer line. Operating cash flow was $279.3 million, or 31% of revenue, but free cash flow fell to $60.8 million, just 7% of revenue, from $171.9 million and 24% a year ago. The swing reflects capital expenditure and internal-use software of $218.5 million in the quarter versus $78.7 million a year earlier. Deferred revenue grew 19% to $2,926 million.
For fiscal 2027 the company expects ARR of $4.396 billion to $4.426 billion, growth of roughly 16.6% to 17.4%, non-GAAP operating income of $924 million to $932 million, non-GAAP EPS of $4.86 to $4.90, and free cash flow margin of 23.0% to 23.5%. First-quarter revenue is guided to $935 million to $939 million, about 19% growth, with non-GAAP EPS of $1.15 to $1.16.
CFO Kevin Rubin cited strong contribution from non-seat-based solutions, continued Z-Flex momentum, record large-deal activity, and improving sales productivity. Founder and CEO Jay Chaudhry framed the opportunity around agentic AI, saying the company is uniquely equipped to help companies both combat the threats created by agentic AI and securely deploy AI agents and models.
Zscaler also changed its non-GAAP presentation, adopting a long-term projected non-GAAP tax rate of 21%, down from 23%, applied prospectively following the enactment of the One Big Beautiful Bill Act. The filing was categorized under results of operations and restructuring costs.
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