Zscaler Grew 25% in Its Fourth Quarter and Guided to About 17% for Next Year

Zscaler closed its fiscal year on July 31 and reported the results on September 3. Revenue for the fourth quarter was $898.2 million, up 25% from a year earlier. Revenue for the full fiscal year was $3,352.5 million, also up 25%. Excluding the contribution of its Red Canary acquisition, the company said full-year revenue was $3,209 million, or 20% growth.

The number that describes the next twelve months is smaller. The company guided fiscal 2027 revenue to a range of $3.908 billion to $3.938 billion, which it put at 16.6% to 17.5% growth. For the first quarter of fiscal 2027 it guided to $935 million to $939 million, about 19% growth.

The Quarter in Figures

• Q4 revenue: $898.2 million, up 25% year over year
• Full-year revenue: $3,352.5 million, up 25%; $3,209 million excluding Red Canary, up 20%
• Annual recurring revenue: $3,771 million, up 25%
• Q4 net new ARR: $246 million; $141 million excluding Red Canary
• Deferred revenue: $2,926 million, up 19%
• Q4 GAAP operating loss: $15.5 million, a negative 2% margin, against $32.2 million a year earlier
• Q4 non-GAAP operating income: $218.4 million, a 24% margin, against 22% a year earlier
• Q4 GAAP diluted EPS: negative $0.02; Q4 non-GAAP diluted EPS: $1.19
• Cash, equivalents and short-term investments: $3,474.2 million

Two Sets of Books, and the Gap Between Them

For fiscal 2026 the company reported a GAAP net loss of $63.2 million and non-GAAP net income of $704.2 million. That is a spread of $767 million between two descriptions of the same year. GAAP diluted loss per share was $0.39; non-GAAP diluted earnings per share were $4.21.

Non-GAAP figures in software reporting typically exclude stock-based compensation and related payroll taxes, amortization of acquired intangibles, and acquisition costs. Both sets of numbers are real; they answer different questions. The GAAP loss reflects the full economic cost of paying employees partly in equity. The non-GAAP figure reflects cash-basis operating performance excluding that cost. A reader deciding which to weight should note that the GAAP loss widened year over year, from $41.5 million to $63.2 million, while non-GAAP net income rose from $534.8 million to $704.2 million.

Operating Cash Flow and Free Cash Flow Diverged in the Quarter

Fourth-quarter cash flow from operations was $279.3 million, or 31% of revenue. Free cash flow in the same quarter was $60.8 million, or 7% of revenue. The gap of roughly $218 million is capital expenditure and capitalized costs recognized in the period. For the full year the two figures were $1,130 million (34% of revenue) and $779.1 million (23%), a narrower relationship. Fiscal 2027 free cash flow margin is guided to 23.0% to 23.5%.

We delivered a strong fourth quarter, with revenue and ARR both growing 25% year over year, net new ARR growing 24%, and non-GAAP operating margin reaching a record 24%. Our growth engine continues to broaden beyond users, with a strong contribution from non-seat-based solutions, continued Z-Flex momentum, record large-deal activity, and improving sales productivity.

Jay Chaudhry, the company's chief executive, chairman and founder, framed the year around artificial intelligence, saying AI represents one of the most significant opportunities in Zscaler's history and that the company is positioned to help customers both combat threats created by agentic AI and deploy AI agents and models securely.

What to Watch Next

The gap between 25% reported growth and 17% guided growth is the central fact of this report. Guidance ranges at software companies are typically set to be beatable, so the eventual figure may land above the top of the range. But the direction is set by arithmetic: as the revenue base grows past $3.3 billion, the same dollar of new business buys a smaller percentage. Non-GAAP operating income is guided to $924 million to $932 million, about 21% growth — faster than revenue, which implies further margin expansion.

This article reports figures disclosed by the company and does not constitute investment advice or a recommendation regarding any security.