Zscaler Q2 Earnings Call Highlights

Core Insights - Zscaler reported strong fiscal Q2 2026 results with a 25% year-over-year growth in annual recurring revenue (ARR) and raised guidance for the remainder of the year [3][5] - The company emphasized the impact of AI adoption on customer demand and security needs, highlighting significant growth in large deals and customer acquisitions [2][4] Financial Performance - Revenue for Q2 reached $816 million, reflecting a 26% year-over-year increase, exceeding guidance [5][18] - Total ARR grew to $3.4 billion, up 25% year-over-year, with net new ARR of $156 million, a 19% increase [2][5] - Non-GAAP gross margin was reported at 80.2%, with operating income of $181 million, up 29% year-over-year [16] Customer and Market Dynamics - The Americas accounted for 57% of revenue, with a 31% year-over-year increase, while EMEA and APJ regions saw revenue growth of 18% and 23% respectively [1] - Zscaler ended the quarter with 728 customers generating over $1 million in ARR, an 18% increase year-over-year [2] Product and Service Innovations - The company is shifting towards metered, non-seat usage solutions, contributing over a quarter of new annual contract value (ACV) in Q2, with ARR from these offerings growing more than 100% year-over-year [12] - Zscaler introduced AI Protect to manage AI assets and prevent data leaks, processing nearly 1 trillion AI transactions in 2025 [4][7] Strategic Acquisitions and Growth Initiatives - Zscaler completed the acquisition of SquareX to enhance its Zero Trust capabilities, focusing on securing access on unmanaged devices [14] - The company raised its ARR guidance for Red Canary to approximately $130 million for FY26, up from previous estimates [19] Future Outlook - For Q3, Zscaler guided revenue between $834 million and $836 million, projecting about 23% year-over-year growth [18] - Full-year fiscal 2026 guidance includes ARR of $3.730 billion to $3.745 billion, indicating about 24% growth [18]