Zscaler Beats Q4 Estimates and Issues Strong FY27 Guidance as AI Demand Fuels 25% Revenue Growth

Zscaler reported fiscal fourth-quarter 2026 revenue of $898.2 million, topping the $877 million analyst estimate and marking 25% year-over-year growth. Adjusted EPS came in at $1.19, well above the $1.09 consensus and up 34% from a year earlier, while non-GAAP operating income of $218.4 million beat estimates of $207 million at a 24% margin. Annual recurring revenue reached $3.77 billion, also up 25% year over year, with net new ARR of $246 million rising 24%. CEO Jay Chaudhry credited strong results to non-seat-based solutions, continued Z-Flex momentum, record large-deal activity, and improving sales productivity, adding that the company's agentic security tool is gaining traction.

For fiscal year 2027, Zscaler guided revenue to $3.91 billion to $3.94 billion, roughly in line with the $3.9 billion consensus, while its adjusted EPS outlook of $4.86 to $4.90 exceeded the $4.60 estimate by a meaningful margin. Non-GAAP operating income guidance of $924 million to $932 million also cleared the $903 million estimate. For the first quarter of fiscal 2027, the company guided revenue of $935 million to $939 million against a $927 million estimate and adjusted EPS of $1.15 to $1.16 versus the $1.08 consensus. The company targets roughly 80% gross margin and free cash flow margin of 23% to 23.5% for the full year.

Zscaler reported a net GAAP loss of $3.37 million for the quarter and said it would restructure and cut approximately 3% of its workforce, reallocating resources toward AI and growth initiatives. Free cash flow of $60.8 million missed the $66.9 million estimate and fell 65% year over year. Deferred revenue grew 19% to $2.93 billion. Zscaler shares soared after hours following the results, with analysts noting the company had historically been penalized for conservative guidance, making the upbeat fiscal 2027 outlook a particularly important signal.