Zscaler Q2 Earnings Surpass Estimates, Revenues Increase Y/Y

Core Insights - Zscaler, Inc. reported strong second-quarter fiscal 2026 results, with non-GAAP earnings of $1.01 per share, exceeding estimates by 12.94% and reflecting a year-over-year increase of 29.5% driven by revenue growth and cost management [1][9] - The company's revenues for the second quarter reached $815.8 million, surpassing estimates by 2.22% and management's guidance, marking a 26% year-over-year growth [2][9] - Zscaler raised its fiscal 2026 revenue guidance to a range of $3.309-$3.322 billion, up from the previous forecast, indicating a projected growth of 23.2% from fiscal 2025 [7] Financial Performance - Non-GAAP gross profit increased by 25.6% year over year to $654 million, with a stable gross margin of 80% [4] - Non-GAAP operating income rose to $181 million from $140.5 million in the previous year, maintaining an operating margin of 22% [5] - The company generated operating cash flow of $204 million and free cash flow of $169 million in the second quarter, with total cash and short-term investments amounting to $3.5 billion [6] Customer Metrics - Zscaler added multiple large customers, ending the quarter with 728 customers generating $1 million or more in annual recurring revenues (ARR) and 3,886 customers with ARR exceeding $100,000 [4] - Remaining Performance Obligations (RPO) reached $6.1 billion, reflecting a 31% year-over-year increase, with current RPO representing approximately 47% of total RPO [3] Future Guidance - For the third quarter of fiscal 2026, Zscaler projects revenues between $834 million and $836 million, indicating a year-over-year growth of 22.5% [10] - Non-GAAP earnings per share for the third quarter are expected to be between $1.00 and $1.01, compared to the Zacks Consensus Estimate of 94 cents [10]