Table of Contents
a. Key Points
AI security bookings crossed $100M.
Some go-to-market disruption from two sales leader departures.
Rough early look at fiscal year 2027 (much more later).
b. Demand
Beat revenue estimate by 1.8% & beat guidance by 1.9%.
Revenue growth was 31% Y/Y in the Americas, 16% in Europe + The Middle East, the 16% Y/Y in Asia Pacific + Japan (APJ).
Beat $148M net new ARR estimate by $18M.
Organic ARR growth ex-Red Canary was 21% Y/Y.
Net new ARR got a boost from an 8-figure federal government up-sell
24% Y/Y net new ARR growth was 14% ex-Red Canary.
Beat remaining performance obligation (RPO) estimate by 1.9%.
Set a new overall record for $1M annual contract value (ACV) deals signed in a quarter.
$1M+ APJ deals rose by 150% Y/Y.
Like so many other software companies, Zscaler is actively shifting from seat-based monetization to various forms of consumption-based product delivery. This quarter, 30% of its new ACV came from non-seat-based sources, and this bucket grew by 100% Y/Y. We’ve seen other companies disclose higher proportions than 30%, but still good progress.
c. Profits & Margins
Beat EBIT estimate by 4.1% & beat guidance by 4.1%
Sales and marketing leverage helped drive Y/Y margin expansion.
Beat FCF estimate by 4%. Higher CapEx weighed on FCF.
Beat $1.01 EPS estimate by $0.07.
d. Balance Sheet
$3.6B cash & equivalents.
$1.7B senior notes.
3.8% Y/Y dilution.
e. Guidance & Valuation
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