Core Viewpoint - Zscaler reported strong fiscal first-quarter results with earnings and sales exceeding Wall Street expectations, yet the stock price declined due to high market expectations prior to the report [1][2][4]. Financial Performance - Zscaler earned an adjusted 96 cents per share for the quarter ending October 31, a 25% increase from the previous year, surpassing analyst expectations of 86 cents [2]. - Sales rose 26% to $788 million, exceeding analyst estimates of $773 million [2]. - For the current quarter, Zscaler guided for sales of $798 million, slightly above the analyst forecast of $796 million, with earnings per share guidance between 89 cents and 90 cents aligning with estimates [3]. Market Response - Despite positive quarterly performance, Zscaler's stock fell over 10% to $258.80, contributing to a 21% decline in November, although it remains up 44% year-to-date [4][8]. - Analysts expressed mixed sentiments; while some noted the results met buy-side expectations, others highlighted the need for clearer disclosures regarding the performance of the recently acquired Red Canary [6][7]. Competitive Landscape - Zscaler operates in the cloud-based cybersecurity sector, competing with companies like Palo Alto Networks, Cloudflare, and Fortinet [5]. - The company is recognized for its Secure Access Service Edge (SASE) offering, which is crucial for securing corporate networks [5]. Analyst Insights - Morgan Stanley's analyst noted that Zscaler's results were largely in line with expectations, expressing confidence in growth prospects despite minor concerns [6]. - Mizuho's analyst pointed out two unwelcome surprises: lower guidance for net new annual recurring revenue (ARR) and lack of specific contribution details from the Red Canary acquisition, leading to a price target reduction [7]. Stock Ratings - Zscaler's stock had an IBD Composite Rating of 91 out of 99, indicating strong growth potential, although the recent stock slide raises questions about future performance [8].

Core Insights - Zscaler, Inc. reported strong first-quarter fiscal 2026 results with non-GAAP earnings of 96 cents per share, exceeding estimates by 12.94% and showing a year-over-year increase of 23.6% driven by higher revenues and effective cost management [1][9] - The company's revenues for the first quarter reached $788.1 million, surpassing the Zacks Consensus Estimate by 1.91% and management's guidance, reflecting a 26% year-over-year growth [2][9] - Zscaler raised its fiscal 2026 revenue guidance to a range of $3.282-$3.301 billion, up from the previous forecast, indicating strong market demand and performance [7] Financial Performance - Non-GAAP gross profit increased by 24.5% year over year to $630 million, while the gross margin contracted by 100 basis points to 80% [5] - Non-GAAP operating income rose to $172 million from $90 million in the previous year, with the operating margin expanding by 100 basis points to 22% [5] - Remaining Performance Obligations (RPO) reached $5.9 billion, a 35% increase year over year, indicating strong future revenue commitments [3][9] Customer Growth - Zscaler added multiple large customers across its offerings, ending the quarter with 698 customers generating $1 million or more in annual recurring revenues (ARR) [4] - The total customer count for ARR exceeding $100,000 reached 3,754 by the end of the first quarter [4] Cash Flow and Balance Sheet - As of October 31, 2025, Zscaler had $3.32 billion in cash and short-term investments, down from $3.57 billion as of July 31, 2025 [6] - The company generated operating cash flow of $448.3 million and free cash flow of $413.3 million during the first quarter [6] Future Guidance - For the second quarter of fiscal 2026, Zscaler projects revenues between $797 million and $799 million, with non-GAAP earnings per share expected between 89 cents and 90 cents [10] - The Zacks Consensus Estimate for second-quarter revenues is $794.38 million, indicating a year-over-year growth of 22.6% [10]

Group 1 - The article does not provide any specific content or key points related to a company or industry [1]

Financial Data and Key Metrics Changes - The company reported a strong start to fiscal year 2026, with annual recurring revenue (ARR) growth accelerating to 26% year-over-year and remaining performance obligation (RPO) growth accelerating to 35% [7][23] - Q1 revenue was $788 million, growing 26% year-over-year and 10% sequentially, exceeding the high end of guidance [23] - The gross margin was reported at 79.9%, down from 80.6% in the same quarter last year, influenced by new product introductions [24] - Free cash flow margin for Q1 was 52%, with cash and short-term investments totaling $3.3 billion [25] Business Line Data and Key Metrics Changes - ARR from the three growth pillars—AI Security, Zero Trust Everywhere, and Data Security Everywhere—accelerated in the quarter [7][23] - AI Security pillar grew over 80% year-over-year, exceeding the FY 2026 target of $400 million ARR three quarters early [8] - Data Security Everywhere ARR accelerated to approximately $450 million [19] Market Data and Key Metrics Changes - Geographically, the Americas accounted for 58% of revenue, EMEA for 27%, and APJ for 15% [23] - The company closed Q1 with 698 customers generating over $1 million in ARR and 3,754 customers exceeding $100,000 in ARR [24] Company Strategy and Development Direction - The company aims to exceed $10 billion in ARR, leveraging its leadership in Zero Trust security and comprehensive AI Security offerings [22] - The introduction of the Z-Flex program is driving meaningful upsells and reducing sales cycles, generating over $175 million in total contract value (TCV) [20][21] - The company is focusing on expanding its Zero Trust Everywhere initiative, having secured over 450 enterprises, surpassing its goal three quarters ahead of schedule [16] 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 Security and AI Security [65] - The company is optimistic about the future, citing strong demand for its solutions and a robust pipeline [66] Other Important Information - The company announced the transition of its Investor Relations leader, with Kim Watkins joining in early December [4] - The integration of Red Canary is progressing well, with the majority of the pipeline coming from existing Zscaler customers [48] Q&A Session Summary Question: About Zero Trust Branch and its future acceleration - Management indicated that the technology for Zero Trust Branch is in great shape, with significant demand from customers, and sees a big opportunity for growth [31] Question: Regarding the growth of the $2 billion ARR segment - Management confirmed that a significant part of the remaining $2 billion is from ZIA and ZPA, which are growing well, but the core business will grow at a slower rate than the overall business [40][42] Question: Performance of Red Canary and its integration - Management stated that the integration of Red Canary is going well, with its contribution trending slightly better than previous guidance, although it is not material to overall business [48][49] Question: Breakdown of revenue strength - Management highlighted that all three growth pillars—Zero Trust Everywhere, AI Security, and Data Security—are growing well and accelerating [53] Question: Competitive landscape and core business performance - Management noted that the competitive landscape has not changed significantly, with Zscaler's brand becoming stronger among large enterprises [58] Question: Customer spending priorities for 2026 - Management observed that while IT budgets are tight, there is strong interest in Zero Trust and AI Security, which are driving pipeline creation [65] Question: Trends in the SASE market - Management expressed confidence in their position within the Zero Trust market, stating that their expansion is driven by new functionalities [71] Question: Organic net new ARR in the quarter - Management indicated that organic growth in Q1 was consistent with Q4 and exceeded internal expectations [78][79] Question: Synergies between Red Canary and data security portfolio - Management discussed the integration strategy, emphasizing the potential for enhanced threat detection and governance capabilities [119]

Financial Data and Key Metrics Changes - The company reported a strong start to fiscal Q1 2026, with annual recurring revenue (ARR) growth accelerating to 26% year-over-year and remaining performance obligation (RPO) growth accelerating to 35% [7][23] - Q1 revenue reached $788 million, growing 26% year-over-year and 10% sequentially, exceeding the high end of guidance [23] - The gross margin for Q1 was 79.9%, down from 80.6% in the same quarter last year, influenced by new product introductions [24] - Operating margin was 21.8%, with a free cash flow margin of 52% [25] Business Line Data and Key Metrics Changes - ARR from the three growth pillars—AI Security, Zero Trust Everywhere, and Data Security Everywhere—accelerated in Q1 [7][23] - AI Security pillar grew over 80% year-over-year, exceeding the FY26 target of $400 million ARR three quarters early [8][15] - Data Security Everywhere ARR accelerated to approximately $450 million [19] Market Data and Key Metrics Changes - Geographically, the Americas accounted for 58% of revenue, EMEA for 27%, and APJ for 15% [23] - The company closed Q1 with 698 customers generating over $1 million in ARR and 3,754 customers exceeding $100,000 in ARR [24] Company Strategy and Development Direction - The company aims to exceed $10 billion in ARR, leveraging its leadership in Zero Trust security and comprehensive AI security offerings [22] - The introduction of the Zflex program is driving meaningful upsells and reducing sales cycles, generating over $175 million in total contract value (TCV) [20][21] - The company is focusing on expanding its Zero Trust Everywhere initiative, having secured over 450 enterprises, surpassing its goal three quarters ahead of schedule [16] 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 [65] - The company is optimistic about the future, expecting AI Security ARR to surpass $500 million by the end of fiscal 2026 [15][21] Other Important Information - The company announced the transition of Ashwin Kesireddy to a new role as Product Manager of AI Security, with Kim Watkins joining as the new head of Investor Relations [4][27] - The integration of Red Canary is progressing well, with its contribution trending slightly better than previous guidance, although it is not expected to be material to overall business [48][116] Q&A Session Summary Question: About Zero Trust Branch and its future acceleration - Management indicated that the technology for Zero Trust Branch is in great shape, with significant demand from customers, and they see a big opportunity for growth [30][32] Question: Regarding the growth of the $2 billion ARR segment - Management confirmed that a significant part of the remaining $2 billion is from ZIA and ZPA, which are growing well, but the core business will grow at a slower rate than the overall business [40][42] Question: Performance of Red Canary and its integration - Management stated that the integration of Red Canary is going well, with its go-to-market team uncovering opportunities within Zscaler's customer base [48][116] Question: Insights on revenue strength and core business performance - Management highlighted that all three growth pillars are accelerating, contributing to strong overall performance, and they are seeing organic growth consistent with previous quarters [54][56] Question: Competitive landscape and customer priorities - Management noted that the competitive landscape has not changed significantly, with Zscaler's brand becoming stronger and customers prioritizing Zero Trust and AI Security solutions [58][66] Question: Trends in the SASE market - Management emphasized that Zscaler remains strong in the Zero Trust market, differentiating itself from other vendors claiming to offer SASE solutions [70][72] Question: Organic net new ARR in the quarter - Management confirmed that organic growth in Q1 was consistent with Q4, exceeding internal expectations [78][116] Question: Synergies between Red Canary and data security portfolio - Management discussed the integration strategy, highlighting opportunities for remediation and governance within the data security portfolio [119]

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]

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 ...

Core Insights - Netskope has expanded its U.S. Federal Advisory Board by adding three experienced leaders from the U.S. federal government to enhance its strategic guidance in serving federal organizations [1][3][4] Group 1: Advisory Board Composition - The new members include Ann Dunkin, Jeff Frazier, and Lt. Gen. (Ret.) Matthew "Jerry" Glavy, who bring extensive experience from the U.S. Department of Energy, FBI, and U.S. Marine Corps respectively [7] - The board aims to provide insights on critical infrastructure protection, civilian energy projects, and military technology, which will help refine Netskope's business direction [2][3] Group 2: Strategic Importance - The expansion of the advisory board underscores Netskope's commitment to addressing the unique cybersecurity challenges faced by U.S. federal agencies [3][5] - Netskope GovCloud has received FedRAMP authorization at Impact Level "High," offering federal agencies enhanced visibility and real-time data protection across various applications [5] Group 3: Leadership Statements - CEO Sanjay Beri expressed honor in adding respected government experts to the board, emphasizing their role in safeguarding critical infrastructure and data [4] - Jeff Frazier highlighted the importance of securing sensitive data and commended Netskope's proactive approach to government cybersecurity [5]

Core Insights - Palo Alto Networks and Cisco Systems are prominent players in the cybersecurity sector, with Palo Alto focusing on next-generation firewalls and cloud security, while Cisco emphasizes Threat Intelligence and Secure Access Service Edge (SASE) offerings [1][2] Industry Overview - The cybersecurity market is expected to grow at a CAGR of 12.45% from 2025 to 2030, driven by increasing complex attacks such as credential theft and social engineering [2] Palo Alto Networks Analysis - Palo Alto Networks is recognized as a leader in cybersecurity, providing comprehensive solutions for network and cloud security [4] - The company is experiencing significant growth in its SASE segment, with Annual Recurring Revenues (ARR) increasing by 34% year over year [6] - Next Generation Security (NGS) ARR grew 29% year over year, reaching $5.85 billion, driven by a platformization strategy [7] - The number of customers with over $5 million in NGS ARR rose to nearly 170, indicating deeper platform usage [8] - Palo Alto Networks has raised its long-term NGS ARR target to $20 billion by fiscal 2030, up from a previous target of $15 billion [9] Cisco Systems Analysis - Cisco Systems is making progress in its security business with new product offerings, but its security revenues dropped 2% year over year due to declining demand for older products [10][14] - The company has seen good customer adoption of its new security solutions, with almost 3,000 customers purchasing these products in the first quarter of fiscal 2026 [11] - Cisco's next-generation firewalls orders grew in the mid-teens range, but the overall security business remains weaker compared to its networking segment [13][15] Comparative Growth Outlook - Palo Alto Networks is projected to have a stronger growth profile, with fiscal 2026 revenues and EPS expected to increase by 13% and 13.2%, respectively [16] - In contrast, Cisco Systems' fiscal 2026 estimates indicate a more modest growth of 7.3% for both revenues and EPS [19] Price Performance and Valuation - Year-to-date, Palo Alto Networks shares have appreciated by 1.7%, while Cisco Systems shares have surged by 27.5% [21] - Cisco is trading at a forward sales multiple of 4.89X, compared to Palo Alto Networks' 12.61X, reflecting higher growth expectations for Palo Alto [23] Conclusion - Palo Alto Networks' leadership in cybersecurity provides strong revenue visibility, justifying its higher valuation compared to Cisco Systems [27] - Cisco Systems faces execution risks and a slower growth trajectory, suggesting a hold or wait strategy for investors [27][28]