Earnings call transcript: BrasilAgro narrows loss in Q4 2026 as crops rebound

Zscaler exceeded Wall Street's expectations with its Q4 2026 earnings report, reporting adjusted earnings per share of $1.19 and revenue of $898.2 million, surpassing analysts' forecasts of $1.09 a share and $877.0 million in revenue. The cybersecurity firm highlighted a 25% year-over-year revenue increase and a 25% year-over-year rise in annual recurring revenue (ARR).

Net new ARR grew at an accelerated pace of 17%, excluding Red Canary. Operating margin reached a record 24.3%, showcasing improved profitability. Management emphasized AI security as a key growth catalyst for the business. Zscaler concluded fiscal 2026 with a strong platform performance, including its Zero Trust SASE, data security, and Security for AI offerings.

The company's annual revenue reached $3.4 billion, up 25% from the previous year, and its free cash flow for the year amounted to $779 million, representing a 23% margin. Zscaler's customer base also expanded, with 785 customers generating over $1 million in ARR, a 18% increase from the prior year, and 4,182 customers with ARR over $100,000, a 20% increase.

The company's penetration among Fortune 500 companies reached 50%, up from 45% a year earlier. Revenue for the quarter was $898.2 million, up 25% year over year and 6% sequentially. Adjusted earnings per share were $1.19, surpassing the $1.09 forecast. Annual recurring revenue reached $3.8 billion, a 25% increase year over year.

Net new ARR grew by 24% year over year, with $232 million excluding Red Canary, also up 17%. Non-GAAP gross margin improved to 80.2%, up 90 basis points from the previous year. Non-GAAP operating income increased to $218 million, a $60 million rise or 37% year over year, and non-GAAP operating margin hit a record 24.3%, up 220 basis points and a quarterly record.

Operating cash flow was $279 million for the quarter, while free cash flow for fiscal 2026 was $779 million, equivalent to a 23% margin. The company's revenue for the full fiscal year 2026 was forecasted between $3.908 billion and $3.938 billion, with adjusted earnings per share expected to range between $4.86 and $4.90. Management anticipates continued strength from AI-related demand, Zero Trust Everywhere, and data security.

The launch of the Agentic SecOps solution on September 9, combining Zscaler's telemetry with Red Canary's managed detection and response, is also expected to drive growth. The company expects elevated capital spending due to high component costs. Zscaler's CEO, Jay Chaudhry, highlighted AI as "the largest tailwind we've ever seen" and stated that its platform can secure AI use while protecting against new threats created by AI agents.

CFO Kevin Rubin noted the continued acceleration in net new ARR growth and the company's record operating margin. He also mentioned that fiscal 2027 would reflect sales leadership transitions and the pace of adoption for new products.