Zscaler Q3 Earnings Surpass Estimates, Revenues Increase Y/Y

Zscaler, Inc.ZS posted third-quarter fiscal 2026 non-GAAP earnings of $1.08 per share, up 28.6% year over year. The figure beat the Zacks Consensus Estimate of $1.00 by 8%.

Zscaler’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 8.4%.

Revenues rose 25% year over year to $850.4 million, topping the Zacks Consensus Estimate of $834 million by 1.88% and exceeding management’s guidance of $834-$836 million. The quarter reflected continued demand for the company’s Zero Trust platform, supported by expanding customer commitments.

Zscaler’s Q3 in Detail

Zscaler’s third-quarter momentum was broad-based geographically. The Americas represented 56% of revenues in the quarter, up approximately 31% year over year, and delivered the strongest growth rate among regions. EMEA accounted for 28% of revenues, up approximately 16%, while Asia Pacific and Japan contributed 16%, rising about 23% 

                         Zscaler, Inc. Price, Consensus and EPS Surprise

Zscaler, Inc. price-consensus-eps-surprise-chart | Zscaler, Inc. Quote

The company also noted that roughly 46% of its remaining performance obligation was classified as current, underscoring near-term visibility tied to committed, non-cancelable future revenues.

Remaining Performance Obligations (“RPO”), representing Zscaler’s committed non-cancelable future revenues, were $6.5 billion as of April 30, which increased 30% year over year. Current RPO accounted for 46% of the total.

Enterprise traction continued to reflect in the customer mix. Zscaler ended the quarter with 748 customers generating more than $1 million of ARR, an 18% year-over-year increase. Customers generating more than $100,000 of ARR reached 4,003, up 19% from the prior-year period. Total ARR increased 25% year over year to $3.5 billion. 

The company mentioned that newer offerings delivered just over 30% of new ACV in the quarter, and the ARR tied to those offerings more than doubled from the year-ago period, supporting broader platform adoption. Management highlighted record $1 million-plus new ACV deals in the quarter, pointing to continued success in securing larger, multi-year engagements and expanding relationships across its Zero Trust Exchange offerings.

Profitability improved as operating discipline offset investment needs. Non-GAAP gross margin was 80.7% compared with 80.3% a year ago, reflecting the company’s high-margin subscription model.

Non-GAAP operating income increased 34% year over year to $195.8 million. The non-GAAP operating margin expanded 140 basis points to 23%, with management citing leverage in sales and marketing as a key contributor.

Zscaler’s Balance Sheet & Cash Flow

As of April 30, 2026, Zscaler had $3.5 billion in cash, cash equivalents and short-term investments compared with $3.5 billion as of Jan. 31, 2026, and $1.7 billion of debt. Management also pointed to higher capital expenditures as a factor in its updated cash flow outlook.

The company generated operating and free cash flows of $198 million and $136 million, respectively, during the fiscal third quarter.

Zscaler Raises Guidance for FY26

For the fourth quarter of fiscal 2026, Zscaler expects revenues of $875-$878 million. The Zacks Consensus Estimate for fourth-quarter fiscal 2026 revenues is pegged at 877.6 million, implying growth of 22% year over year.

Non-GAAP earnings per share are projected between $1.08 and $1.09. The Zacks Consensus Estimate is pegged at $1.03.The estimate has remained unchanged over the past 60 days.

For fiscal 2026, management forecasts its revenue outlook in the range of  $3.3295 billion to $3.3325 billion, reflecting year-over-year growth of 24.6% to 24.7%. The Zacks Consensus Estimate for fiscal 2026 revenues is pegged at $3.32 billion, suggesting growth of 24% from fiscal 2025.

Non-GAAP earnings per share for fiscal 2026 are now expected in the band of $4.10-$4.11. The consensus mark for fiscal 2026 earnings is pegged at $4.03, which has remained unchanged over the past 60 days.

Zscaler’s Zacks Rank and Stocks to Consider

Currently, ZS carries a Zacks Rank #3 (Hold).

Analog Devices ADI, Amphenol APH and Monolithic Power Systems MPWR are some better-ranked stocks that investors can consider in the Zacks Computer and Technology sector. Analog Devices, Amphenol and Monolithic Power Systems each carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Analog Devices’ fiscal 2026 earnings has moved upward by 8.4% over the past seven days to $12.06 per share, calling for an increase of 54.8% year over year. Analog Devices' shares have climbed 54.8% in the year-to-date period.

The Zacks Consensus Estimate for Amphenol’s 2026 earnings is pegged at $4.76 per share, revised upward by 47 cents over the past 30 days and suggests a year-over-year jump of 42.5%. Amphenol shares have increased 3.3% in the year-to-date period.

The Zacks Consensus Estimate for Monolithic Power Systems’ fiscal 2026 earnings has been revised upward to $24.05 per share from $21.64 over the past 30 days. Monolithic Power Systems shares have increased 83.5% in the year-to-date period.

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This article originally published on Zacks Investment Research (zacks.com).

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