Financial Data and Key Metrics Changes - In Q1, annual recurring revenue (ARR) growth accelerated to 26% year over year, with ARR reaching over $3.2 billion [5][18] - Remaining performance obligation (RPO) grew approximately 35% year over year to $5.9 billion [19] - Q1 revenue was $788 million, growing 26% year over year and exceeding guidance [18] - Gross margin was 79.9%, slightly down from 80.6% in the previous year [19] - Operating margin was 21.8%, with a free cash flow margin of 52% [20] Business Line Data and Key Metrics Changes - AI Security pillar grew over 80% year over year, exceeding the FY26 target of $400 million ARR three quarters early [6][12] - Data Security Everywhere ARR accelerated to approximately $450 million [16] - Zero Trust Everywhere achieved over 450 enterprise customers, surpassing the goal set three quarters ahead of schedule [13] Market Data and Key Metrics Changes - The Americas accounted for 58% of revenue, EMEA for 27%, and APJ for 15% [18] - The company is one of only five enterprise SaaS companies with over $3 billion in ARR growing at over 25% [5] Company Strategy and Development Direction - The company focuses on three growth pillars: AI Security, Zero Trust Everywhere, and Data Security Everywhere, which are driving strong top-line performance [5][12] - The introduction of the Zflex program is aimed at providing customers with flexibility and driving upsells [16][53] - The company is positioned to exceed $10 billion in ARR by leveraging its leadership in Zero Trust security and comprehensive AI security offerings [18] Management's Comments on Operating Environment and Future Outlook - Management noted that while IT budgets remain tight, there is less pressure on cybersecurity spending, with strong interest in Zero Trust and AI Security solutions [32][34] - The company expects to continue investing aggressively to position itself for long-term growth and profitability [21] Other Important Information - The company announced a leadership transition in Investor Relations, with Kim Watkins joining to lead the team [3] - The acquisition of Red Canary is expected to enhance the company's threat intelligence capabilities [39] Q&A Session Summary Question: About Zero Trust Branch and its adoption - Management indicated that Zero Trust Branch technology is in great shape, with significant demand and a growing customer base [23][24] Question: Growth of the $2 billion ARR segment - Management confirmed that a significant portion of the $2 billion ARR comes from ZIA and ZPA, with a focus on transitioning customers to Zero Trust Everywhere [25][26] Question: Performance of Red Canary - Integration of Red Canary is progressing well, with contributions trending slightly better than previous guidance, though not material to overall business [27][28] Question: Drivers of revenue strength - Management highlighted that all three growth pillars are accelerating, contributing to strong overall performance [29][30] Question: Competitive landscape - The competitive landscape remains stable, with the company's brand recognition growing among large enterprises [31] Question: Customer spending priorities for 2026 - Customers are prioritizing Zero Trust Security and AI Security, with a focus on cost savings and improved cybersecurity [32][34] Question: Demand for Zero Trust Gateway - Management noted that Zero Trust Cloud simplifies deployments and reduces the need for traditional firewalls, enhancing customer buy-in [44][45] Question: SAP RISE migration opportunity - The migration to SAP RISE is expected to provide significant opportunities for the company, similar to past migrations like Microsoft Exchange to Office 365 [50][51] Question: Zflex program impact - Zflex is gaining traction, providing customers with flexibility and longer-term visibility on future ARR [52][53]

Market Overview - The trading day ended with the Dow Jones Industrial Average up more than 600 points, a 1.4% increase, and the S&P 500 rising over 60 points, or 0.9% [6] - The Nasdaq composite finished higher by about 0.7%, with small and mid-cap stocks, particularly the Russell 2000, outperforming, up 2% [7] - Overall, 426 names in the S&P 500 gained ground, while only 74 declined, indicating strong market breadth [8] Company Performance - Alphabet shares have seen a significant year-to-date gain of approximately 70%, outperforming many competitors [5] - Autodesk reported a third-quarter EPS of $2.67, beating expectations of $2.50, with net revenue of $1.85 billion, slightly above the forecast of $1.81 billion [11] - Workday's after-hours share price increased by about 7% after it raised its full-year subscription revenue forecast, projecting fourth-quarter subscription revenue of $2.36 billion, above the estimate of $2.35 billion [13] - NetApp shares surged by 4% in after-hours trading after the company boosted its fiscal year adjusted EPS forecast and reported third-quarter net revenue expectations of $1.77 billion, exceeding estimates [15] - Urban Outfitters saw a significant increase in share price, up 9% in regular trading and 16% in after-hours, with third-quarter comp retail segment sales up 8%, surpassing the 5% estimate [25] Sector Insights - The technology sector experienced mixed results, with Alphabet hitting an all-time high while Nvidia shares fell by 2.6% [9][20] - Retailers showed strong performance, with Abercrombie and Fitch gaining about 36-37% after raising its 2026 net sales and EPS guidance [17] - Dell raised its full-year adjusted EPS outlook to $9.92, up from $9.55, and increased revenue guidance to a range of $11.2 billion to $12.2 billion [22][24]

Group 1 - The Q3 earnings season for S&P 500 companies is showing positive results, with 95% of companies having reported by November 21, and an expected 13.4% increase in earnings per share [2] - This anticipated growth would represent the fourth consecutive quarter of double-digit earnings growth, accelerating from the 12% growth rate reported in Q2 [2] - Initial expectations for Q3 were lower, with analysts predicting only a 7.9% increase in earnings per share as of September 30 [3] Group 2 - Upcoming earnings reports from companies such as Abercrombie & Fitch, Dick's Sporting Goods, and Burlington Stores will provide insights into consumer sentiment and purchasing behavior [4] - Additional reports from technology and other sectors are expected from companies like Zoom, Dell, Workday, HP Inc., Deere, and Pony AI [4]

Core Viewpoint - Zscaler, Inc. reported strong first-quarter earnings, beating analyst estimates, but its stock price fell by 7.77% in after-hours trading despite positive financial results [1][5]. Financial Performance - Quarterly earnings were reported at 96 cents per share, surpassing the analyst estimate of 86 cents [2]. - Revenue for the quarter reached $788.1 million, exceeding the analyst estimate of $773.75 million [3]. - Deferred revenue stood at $2.35 billion as of October 31, 2025, reflecting a 32% year-over-year increase [3]. Business Growth - The company has over $3.2 billion in Annual Recurring Revenue, growing over 25% year-over-year [4]. - Zscaler's CEO highlighted strong demand for its Zero Trust and AI Security platform, indicating a trend towards better security and reduced operational costs for customers [3][4]. Future Outlook - Zscaler raised its fiscal 2026 adjusted EPS guidance to a range of $3.78 to $3.82, compared to the previous estimate of $3.68 [5]. - The fiscal revenue outlook was also increased to a range of $3.7 billion to $3.72 billion, up from the prior estimate of $3.28 billion [5].

Fiscal Q1 2026 Earnings Call November 2025 Safe Harbor Forward-Looking Statements Unless otherwise noted, all numbers presented will be on an adjusted, non-GAAP basis. Reconciliation of GAAP to non-GAAP financial measures is in the appendix of this presentation. This presentation has been prepared by Zscaler, Inc. ("Zscaler") for informational purposes only and not for any other purpose. Nothing contained in this presentation is, or should be construed as, a recommendation, promise or representation by the ...

Financial Performance - For the three months ended October 31, 2025, revenue was $788.1 million, a 26% increase from $628.0 million in the same period of 2024[121] - GAAP gross profit for the three months ended October 31, 2025, was $603.4 million, with a GAAP gross margin of 77%[139] - Non-GAAP income from operations for the three months ended October 31, 2025, was $171.9 million, resulting in a non-GAAP operating margin of 22%[141] - Annual Recurring Revenue (ARR) as of October 31, 2025, was $3,204 million, up from $2,553 million in 2024, indicating a strong growth in subscription contracts[145] - Free cash flow for the three months ended October 31, 2025, was $413,296 thousand, compared to $291,881 thousand in 2024, reflecting an increase of 42%[144] - The net loss for the three months ended October 31, 2025, was $11.6 million, adjusted for non-cash charges of $297.1 million, which included $188.6 million for stock-based compensation[190] Customer Growth - As of July 31, 2025, the company had over 9,400 customers, up from over 8,650 customers in 2024, representing a growth of approximately 8.6%[125] - The customer base grew by 14% from October 31, 2024, to October 31, 2025, contributing to the revenue increase[166] Operating Expenses - Operating expenses increased to $639,721 thousand in Q3 2025 from $517,160 thousand in Q3 2024, primarily driven by higher sales and marketing expenses[163] - Research and development expenses increased to $200,498 thousand in Q3 2025 from $154,254 thousand in Q3 2024, reflecting ongoing investment in product development[163] - Sales and marketing expenses increased by $67.5 million, or 22%, to $373.6 million, largely due to higher employee-related expenses and marketing costs[169] - General and administrative expenses grew by $8.8 million, or 16%, to $65.7 million, mainly from increased employee-related expenses[172] Cash Flow and Investments - Net cash provided by operating activities for the three months ended October 31, 2025, was $448.3 million, compared to $331.3 million for the same period in 2024, reflecting a year-over-year increase of 35.4%[190][191] - Net cash used in investing activities during the three months ended October 31, 2025, totaled $1,502.2 million, significantly higher than $201.7 million in the same period of 2024, primarily due to $896.4 million in short-term investments and $672.8 million for business acquisitions[192][193] - Net cash provided by financing activities was $3.1 million for the three months ended October 31, 2025, slightly up from $0.9 million in the same period of 2024, mainly from stock option exercises[194] Economic Environment and Future Outlook - The uncertain economic environment is leading to elongated approval processes for transactions, particularly for larger deals[122] - The company expects to continue incurring net losses as it invests in sales, marketing, and research and development[121] - The company expects gross profit to increase in absolute dollars and gross margin to improve slightly over the long term[152] Risk Management - The company has a foreign currency risk management program and uses foreign currency forward contracts to hedge a portion of its forecasted foreign currency-denominated expenses[203][205] - A hypothetical 100 basis point change in interest rates would have changed the fair value of the company's investments in available-for-sale securities by $27.9 million as of October 31, 2025[200] - The effect of a hypothetical 10% change in foreign currency exchange rates would not have a material impact on the company's financial statements for the three months ended October 31, 2025, and 2024[203] Other Financial Metrics - Interest income increased by $3.1 million, or 10%, to $33.2 million, attributed to a higher balance of cash equivalents and short-term investments[173] - Interest expense decreased by $1.0 million, or 32%, to $(2.1) million, primarily due to fair value hedge adjustments[174] - Other expense, net increased by $2.4 million, or 366%, to $(3.0) million, driven by fluctuations in foreign currency transactions[175] - Provision for income taxes decreased by $4.4 million, or 58%, to $3.2 million, mainly due to a tax benefit from the release of a portion of the U.S. valuation allowance[176] - As of October 31, 2025, cash, cash equivalents, and short-term investments totaled $3,321.3 million, supporting working capital and corporate purposes[182] - Deferred revenue amounted to $2,351.3 million, with $1,946.2 million expected to be recognized as revenue in the next 12 months[187] - The company issued $1,725.0 million in 2028 Notes in July 2025, which have a 0.0% interest rate, thus not exposing the company to economic interest rate risk[201][202] - Non-cash charges for the three months ended October 31, 2025, included $188.6 million for stock-based compensation and $48.1 million for amortization of deferred contract acquisition costs[190]

Exhibit 99.1 Zscaler Reports First Quarter Fiscal 2026 Financial Results First Quarter Highlights SAN JOSE, California - November 25, 2025 - Zscaler, Inc. (Nasdaq: ZS), the leader in cloud security, today announced financial results for its first quarter of fiscal year 2026, ended October 31, 2025. "Our outstanding Q1 results demonstrate the strong demand we are experiencing for our Zero Trust and AI Security platform. With over $3.2B in Annual Recurring Revenue, growing over 25% year-over-year, and Rule-of ...

Core Insights - Zscaler, Inc. reported strong financial results for Q1 FY2026, highlighting robust demand for its Zero Trust and AI Security platform, with Annual Recurring Revenue (ARR) exceeding $3.2 billion, growing over 25% year-over-year [3][6][8] - The company emphasizes the integration of recently acquired technologies to enhance its AI Security offerings, addressing emerging security challenges [3][6] Financial Performance - Revenue increased by 26% year-over-year to $788.1 million [6][7] - ARR grew by 26% year-over-year to $3.204 billion [6][7] - Deferred revenue rose by 32% year-over-year to $2.351 billion [6][7] - GAAP net loss was $11.6 million, an improvement from a loss of $12.1 million in the previous year [6][7] - Non-GAAP net income reached $159.5 million, compared to $124.3 million in the same quarter last year [6][7] Operational Highlights - Cash provided by operations was $448.3 million, representing 57% of revenue, up from 53% in the previous year [7][32] - Free cash flow was $413.3 million, or 52% of revenue, compared to 46% in the prior year [7][32] - The company completed acquisitions of Red Canary and SPLXAI for a total of $692 million, aimed at enhancing its AI security capabilities [6][7][14] Market Position and Strategy - Zscaler's Zero Trust Exchange platform is positioned as a leading solution in cloud security, with a focus on protecting enterprises from cyber threats [3][23] - The company launched new innovations in its Zscaler Digital Experience (ZDX) to improve visibility and performance for IT teams [6][7] - Zscaler has surpassed $1 billion in software sales through the AWS Marketplace, indicating strong market traction [14] Future Outlook - For Q2 FY2026, Zscaler expects revenue between $797 million and $799 million, with non-GAAP income from operations projected at $172 million to $174 million [15][10] - The full-year revenue guidance is set between $3.282 billion and $3.301 billion, with non-GAAP net income per share anticipated to be approximately $3.78 to $3.82 [15][10]

Core Viewpoint - Zscaler Inc. is experiencing a balance between stabilizing growth and aggressive innovation as it approaches its first-quarter fiscal 2026 earnings report on November 25 [1] Management's Forecast: Margins And Milestones - Zscaler projects revenue between $772 million and $774 million, indicating approximately 23% year-over-year growth [2] - The company aims to recover gross margins to 80% after a decline in the previous quarter due to a one-time, hardware-heavy government deployment [2] Growth Vectors and Acquisitions - CEO Jay Chaudhry highlights three major growth areas: AI Security, Zero Trust Everywhere, and Data Security Everywhere, which have collectively surpassed $1 billion in Annual Recurring Revenue (ARR) [3] - The acquisition of Red Canary is expected to contribute $95 million in ARR for the fiscal year [3] Market Sentiment and Strategic Positioning - Wall Street sentiment is largely positive, with Cantor Fitzgerald raising its price target to $365, driven by confidence in the Secure Access Service Edge (SASE) opportunity and anticipated synergies from the Red Canary acquisition [4]

Earnings Reports Overview - The current earnings season is nearing its end, with notable companies reporting during the holiday-shortened week [1] - Retail investors are particularly focused on earnings reports from major companies [1] Company-Specific Earnings Reports - WeRide Inc. (NASDAQ:WRD) and LexinFintech Holdings Ltd. (NASDAQ:LX) reported before the market opened on November 24, both showing better-than-expected results, leading to stock price increases [2] - Zoom Communications Inc. (NASDAQ:ZM) is expected to report third-quarter results after the market closes on November 24, with analysts predicting earnings of $1.44 per share and revenue of $1.21 billion [3] - Alibaba Group Holding Ltd. (NYSE:BABA) will release its Q2 earnings report before the market opens on November 25, with expectations of adjusted earnings of 81 cents per share and revenue of $34.43 billion [3] - Retailers Kohl's Corp. (NYSE:KSS) and Best Buy Co. Inc. (NYSE:BBY) are anticipated to provide insights into consumer behavior with their reports on November 25 [4] - Cleanspark Inc. (NASDAQ:CLSK), Dell Technologies Inc. (NYSE:DELL), and Zscaler Inc. (NASDAQ:ZS) are set to report after the market closes on November 25 [5] - Li Auto Inc. (NASDAQ:LI) and EHang Holdings Ltd. (NASDAQ:EH) will report their results before the market opens on November 26, alongside Deere & Co. (NYSE:DE), which has consistently beaten analyst expectations for 12 consecutive quarters [6] Market Schedule - U.S. stock markets will be closed on November 27 for the Thanksgiving holiday [8] - The stock market will have an early closure at 1 p.m. ET on November 28 [9]