TLDR
- Zscaler delivered Q1 fiscal 2026 earnings of $0.96 per share, topping the $0.86 analyst estimate, with revenue reaching $788.1 million
- The company raised full-year revenue outlook to $3.28-$3.30 billion and adjusted EPS guidance to $3.78-$3.82
- Annual Recurring Revenue grew 26% year-over-year to $3.2 billion with deferred revenue up 32% to $2.35 billion
- Despite beating estimates and raising guidance, shares dropped 9% to $266.90 in extended trading
- The stock has surged over 60% year-to-date, potentially setting high investor expectations
Zscaler shares slid 9% in after-hours trading Monday following first-quarter results that beat analyst forecasts. The cloud security provider’s earnings came in at $0.96 per share, well above the $0.86 consensus.
Revenue increased 26% year-over-year to $788.1 million, exceeding Wall Street’s $773.26 million projection. The selloff indicates investors may have priced in even stronger numbers.
CEO Jay Chaudhry emphasized customer demand in the quarterly announcement. “Our outstanding Q1 results demonstrate the strong demand we are experiencing for our Zero Trust and AI Security platform,” he noted.
The company’s Annual Recurring Revenue hit $3.2 billion, marking 26% growth from last year. Deferred revenue climbed 32% to $2.35 billion, up from 30% growth in the previous quarter.
Non-GAAP operating income reached $171.9 million, accounting for 22% of revenue. This compares to $134.1 million or 21% of revenue in the year-ago period.
Raised Outlook for Remainder of Fiscal Year
Zscaler provided optimistic guidance for the current quarter. The company forecasts Q2 revenue between $797 million and $799 million, beating the $796.1 million analyst consensus.
Second-quarter adjusted earnings are projected at $0.89 to $0.90 per share, aligning with Wall Street estimates. The company boosted its full-year fiscal 2026 projections across key financial metrics.
Full-year revenue guidance now ranges from $3.28 billion to $3.30 billion. The adjusted EPS outlook for fiscal 2026 stands at $3.78 to $3.82, surpassing previous analyst forecasts.
Annual Recurring Revenue guidance increased to between $3.698 billion and $3.718 billion for the full year. These upward revisions reflect management’s confidence in continued business momentum.
Platform Growth and Tax Changes
The company implemented a reduced adjusted tax rate of 21% starting in Q1. This drops from the previous 23% rate following passage of the “One Big Beautiful Bill Act.”
Chaudhry referenced recent acquisition activity in his statement. “By integrating the recently acquired SPLX technology with our comprehensive AI Security offerings, we are expanding our best-in-class AI Security solutions,” he explained.
The CEO highlighted that customers increasingly depend on the platform for multiple benefits. Companies use Zscaler for improved security, lower operational expenses and reduced IT complexity.
Shares fell to $266.90 in extended-session trading after the report. The stock’s 60% year-to-date gain may have created challenging expectations for the quarterly print.
Market sentiment trackers showed improved retail optimism following the results. Zero Trust and AI security offerings continue driving customer adoption across the enterprise market.
Chaudhry pointed out that Annual Recurring Revenue now exceeds $3.2 billion. This milestone underscores growing reliance on the company’s security platform.
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