Short answer
Zscaler (ZS) filed its fiscal 2026 10-K annual report with the SEC on Sep 3, 2026. It reported revenue of $3.4B (+25.4% year over year) and net income of −$63M.
- Top risk flagged: Regulatory risk: EU Data Act enabling customer subscription cancellations on short notice, impacting renewal rates and deferred contract acquisition costs
FY2026 key financial metrics · XBRL
- Revenue
- $3.4B
- +25.4% YoY
- Net income
- −$63M
- −52.3% YoY
- Operating margin
- -4.0%
- +0.8 pp YoY
- Gross margin
- 76.8%
- −0.1 pp YoY
- EPS (diluted)
- −$0.39
- −44.4% YoY
- ROE
- -2.4%
- −0.1 pp YoY
- Operating cash flow
- $1.1B
- +16.2% YoY
Source: XBRL data from the Zscaler (ZS) FY2026 10-K on SEC EDGAR. USD.
Zscaler FY2026 10-K analysis
AI summary of each section, grounded in the filing text
Business Overview
- Core model: Cloud-native Zero Trust Exchange platform securing users, devices, workloads and AI agents in the AI era
- New emphasis on Security for AI, enabling governance, protection, and risk mitigation across AI applications, models and autonomous agents
- Strategic shift to integrated AI-driven security across entire zero trust architecture to combat AI-enabled cyberthreats and enable safe AI adoption
- Revenue growth to $3.35B in fiscal 2026, up 25% YoY; R&D spend up to $903.4M; expanded to 11,000 customers globally including 40% Forbes G2000
- Platform processes 750B daily transactions, leveraging AI and scale to deliver real-time inline threat detection and rapid policy updates across 185 countries
Management Discussion & Analysis
- Revenue $3,352.5M in fiscal 2026, up 25% YoY from $2,673.1M in fiscal 2025 (+$679.4M)
- Gross margin flat at 77% in fiscal 2026 vs 77% in fiscal 2025; cost of revenue up 26% to $777.6M
- Operating margin (4)% in fiscal 2026 vs (5)% in fiscal 2025; net loss widened to $63.2M from $41.5M
- Single segment company; best performer was subscription revenue growth adding $474.6M from existing customers; new customers added $204.8M
- Operating cash flow $1,129.7M, free cash flow $779.1M; capex $350.5M, acquisitions $918.1M; no stock buybacks, proceeds of $59.4M from ESPP and $4.0M from option exercises
- Management expects continued investments in sales/marketing and R&D; sufficient liquidity for 12+ months; macroeconomic uncertainty and AI-driven cyber threats are key risks
Risk Factors
- Regulatory risk: EU Data Act enabling customer subscription cancellations on short notice, impacting renewal rates and deferred contract acquisition costs
- Geopolitical exposure: 47% revenues international, with significant risks from Russia-Ukraine and Middle East conflicts affecting operations, supply, and cybersecurity threats
- Supply chain vulnerability: reliance on limited suppliers and sole-source components; geopolitical tensions (e.g., China-Taiwan conflict) threaten critical data center hardware availability
- Competitive disruption: major competitors and AI-armed entrants developing cloud and AI-based security solutions; hyperscalers and telecom providers expanding offerings
- Financial risk: net losses $63.2M FY26, $1.25B accumulated deficit, increased operating expenses, and $1.725B 0% convertible notes maturing in 2028 requiring substantial cash for repayment or conversion
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