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]

Core Viewpoint - Zscaler (ZS) shares experienced a rebound after eight consecutive sessions of losses, with a 1.8% increase to $279.88 on Monday, following a decline of over 7% in the previous six sessions [1] Company Performance - The stock has decreased by 6.7% year-to-date, contrasting with a 16% increase in the broader market [1]

Core Insights - The stock market experienced a bounce on Friday, but major indexes still recorded weekly losses, indicating ongoing volatility in the market [1] - Delayed retail sales data and earnings reports from Alibaba are significant events to watch in the upcoming Thanksgiving week [1] Group 1: Market Performance - The Dow Jones Industrial Average showed resilience, while the Nasdaq composite lagged but still rose by 0.9% on Friday [1] - Major indexes faced downward pressure due to disappointing earnings from Nvidia and a significant drop in Bitcoin [2] Group 2: Upcoming Events - Earnings from Alibaba and other companies like Zscaler are anticipated to influence market sentiment, with a focus on whether these earnings can reverse recent declines [4] - The Thanksgiving week is expected to be pivotal with key retail sales data and earnings reports scheduled [1][4]

Core Insights - Analysts project Zscaler (ZS) will report quarterly earnings of $0.85 per share, a 10.4% increase year over year, with revenues expected to reach $773.35 million, reflecting a 23.2% increase from the same quarter last year [1] Earnings Estimates - There has been a 2% upward revision in the consensus EPS estimate over the last 30 days, indicating analysts' reassessment of their initial forecasts [2] - Revisions to earnings projections are crucial for predicting investor behavior and are strongly correlated with short-term stock price performance [3] Revenue Breakdown - 'Revenues- Direct Customers' are projected to be $92.97 million, representing a 33.6% increase year over year [5] - 'Revenues- Channel Partners' are expected to reach $680.24 million, indicating a 21.8% year-over-year change [5] - Analysts forecast 'Billings' to be $615.21 million, up from $516.70 million reported in the same quarter last year [5] Key Metrics - The 'Dollar-Based Net Retention Rate' is anticipated to be 114.1%, slightly up from 114.0% a year ago [6] - 'Remaining Performance Obligations' are expected to total $5.65 billion, compared to $4.41 billion in the previous year [6] Stock Performance - Zscaler shares have decreased by 12.3% over the past month, contrasting with the Zacks S&P 500 composite's decline of 2.8% [6] - Zscaler holds a Zacks Rank 3 (Hold), suggesting it is expected to closely follow overall market performance in the near term [6]

Group 1 - The article discusses the upcoming earnings reports from major companies, particularly Dell Technologies and Alibaba, amidst a shortened trading week due to the Thanksgiving holiday [1] - Alibaba's stock experienced a significant decline on November 14, following allegations from the Financial Times that the company provided technical support to the Chinese military, as cited in a White House memo [1] - The article highlights concerns regarding profit margins for Dell and other computer manufacturers, indicating potential challenges in the sector [4] Group 2 - The stock market is currently facing a mixed performance, with the Dow Jones lagging behind other indices, while Nvidia's earnings and a jobs report are anticipated [4] - Dell Technologies received an upgrade in its Relative Strength (RS) rating, suggesting a positive outlook despite broader market concerns [4] - Other companies, such as IREN and Cipher Mining, are experiencing surges due to AI cloud deals with major players like Microsoft and Amazon Web Services, indicating a growing trend in the AI cloud sector [4]