Earnings call

Zscaler, Inc. Zscaler, Inc. · Q4 FY2026 call

Call heldSep 3, 2026
Time1:30 p.m. Pacific
CEOJay Chaudhry

What the CEO argued

Chaudhry framed the year as the moment AI stopped being a theme and became the demand driver: "AI is quickly becoming the largest tailwind we've ever seen." His argument ran from threat to architecture — frontier models find vulnerabilities faster than anyone can patch them, agents now act autonomously and sometimes badly, and the only durable answer is to make applications, models and data unreachable rather than to race the attacker. He put numbers behind adoption rather than sentiment: more than 950 Zero Trust Everywhere enterprises against over 350 a year earlier, Security for AI bookings up more than 50% sequentially, and over 750 billion transaction logs a day as the telemetry advantage he says makes an agent-native SecOps product possible — the Agentic SecOps solution built on Red Canary that launches on 9 September. Asked why a record-margin quarter comes with a 3% workforce cut, he called it rebalancing toward AI and sales capacity rather than retrenchment, and said the account-centric sales transformation that worried the Street last quarter is now showing in the highest quarterly productivity the company has recorded.

More from Jay Chaudhry

What they said

The tailwind, in his own framing
AI is quickly becoming the largest tailwind we've ever seen, driving demand for our Zero Trust Everywhere data security and Security for AI solutions.
Jay Chaudhry · Chairman, CEO and Founder, Zscaler
Why patching is no longer the defence
The time between vulnerabilities being discovered and exploited is also shrinking. You cannot win a patching race against AI.
Jay Chaudhry · Chairman, CEO and Founder, Zscaler
What hundreds of frontier-AI risk assessments found
Over 90% of organizations had AI applications, models, and other servers exposed to the internet, and more than one-third had known exploitable vulnerabilities.
Jay Chaudhry · Chairman, CEO and Founder, Zscaler
Whether Security for AI is selling yet
Security for AI bookings increased more than 50% sequentially in Q4 on top of a strong Q3.
Jay Chaudhry · Chairman, CEO and Founder, Zscaler
How fast Zero Trust Everywhere is compounding
We exited Q4 with more than 950 Zero Trust Everywhere enterprises versus over 700 in Q3 and over 350 at the end of fiscal 2025.
Jay Chaudhry · Chairman, CEO and Founder, Zscaler
The full-year scorecard, in one number
For full year fiscal 2026, revenue also grew 25%, and when combined with 23% free cash flow margin, our performance exceeded the rule of 40, landing at approximately 49%.
Kevin Rubin · CFO, Zscaler
How big Z-Flex actually got
In Q4, Z-Flex generated over $770 million in TCV, up more than 60% quarter-over-quarter. For fiscal 2026, Z-Flex customers saw an ARR uplift averaging nearly 30%. For fiscal 2026, Z-Flex generated more than $1.7 billion in TCV, underscoring customers' long-term commitment to Zscaler.
Kevin Rubin · CFO, Zscaler
How the FY2027 ARR guide is shaped across the year
For net new ARR seasonality, we expect approximately 37% of net new ARR in the first half of fiscal 2027, with 15% in Q1 fiscal 2027.
Kevin Rubin · CFO, Zscaler
What holds free cash flow margin flat while capex climbs
Free cash flow margin of approximately 23%-23.5%, reflecting CapEx not including internal use software in the low teens as a percentage of revenue. We expect free cash flow margin to be seasonally stronger in Q1 and Q4, reflecting timing of CapEx and cash collections.
Kevin Rubin · CFO, Zscaler
Whether the sales reorganisation has stabilised
Over the past few quarters, we have gone through transformation of our sales organization, where we expanded from opportunity-led sales to account-focused sales. The strong results of Q4 show that the transformation, the changes we have driven are working well.
Jay Chaudhry · Chairman, CEO and Founder, Zscaler
The go-to-market hole the guide assumes gets filled
we did have two sales leaders depart last quarter. One was a geo leader and the other was a vertical leader. We backfilled and internally promoted the vertical leader. Since then, a new leader has accepted the offer for the geo position. […] we expect that the leadership transition will play out in the first half of this fiscal, and that is reflected in our guidance.
Kevin Rubin · CFO, Zscaler
The retention rate the release does not print
NRR, although it is not a metric that we provide each and every quarter, it was consistent each quarter this year at 115%.
Kevin Rubin · CFO, Zscaler
What a 3% headcount cut is for, on a record-margin quarter
the reduction you pointed out, it's essentially rebalancing, reallocation of some of our resources with better leverage and also better investments in the AI area we are looking at.
Jay Chaudhry · Chairman, CEO and Founder, Zscaler
How much of the target market is still unsold
We have about 4,600 of 20,000 targeted companies, so there's a big opportunity just with new logos alone.
Kevin Rubin · CFO, Zscaler
What Red Canary contributes to the FY2027 guide
As it relates to Red Canary, we are not expecting any net new ARR contribution. All of that will show up in the integrated solution going forward.
Kevin Rubin · CFO, Zscaler
Red Canary churn, said plainly
We did see elevated churn in Red Canary's business in 2026. Despite that, we were able to continue to maintain its book of business
Kevin Rubin · CFO, Zscaler
Why the Red Canary integration is a SecOps bet on telemetry
This is resulting in over 750 billion transaction logs per day. That is a starting point of really good SecOps.
Jay Chaudhry · Chairman, CEO and Founder, Zscaler

In the order they were said. Pick a name to read only that speaker.

On the call

  • Kim Watkins — SVP, Investor Relations and Strategic Finance, Zscaler
  • Jay Chaudhry — Chairman, CEO and Founder, Zscaler
  • Kevin Rubin — CFO, Zscaler

About these quotes

Every passage above is quoted verbatim from Zscaler, Inc.'s Q4 FY2026 earnings call of Sep 3, 2026, checked against the recording's transcription word for word. Zscaler webcasts its earnings calls and keeps the recording and the accompanying shareholder letter on its own investor relations site. The passages here are quoted from that call rather than reproduced from it, and the call in full belongs to Zscaler. The transcription used for this capture carries no speaker labels of its own: attribution below follows the call's own handoffs — the investor relations host names the chief executive and the chief financial officer at the open, each prepared section ends by handing to the other by name, and each quoted answer follows a question addressed to that speaker. Passages whose speaker could not be established that way are not quoted. Figures spoken on a call are management's own and are checked against the release before they are used anywhere else on this site.