Zscaler Reports Fourth Quarter and Fiscal 2025 Financial Results
Fourth Quarter Highlights
Revenue grows 21% year-over-year to $719.2 million
Annual Recurring Revenue ("ARR") grows 22% year-over-year to $3,015 million
Calculated billings grows 32% year-over-year to $1,202.3 million
Deferred revenue grows 30% year-over-year to $2,468.0 million
GAAP net loss of $17.6 million compared to GAAP net loss of $14.9 million on a year-over-year basis
Non-GAAP net income of $146.7 million compared to non-GAAP net income of $115.8 million on a year-over-year basis
SAN JOSE, Calif., Sept. 02, 2025 (GLOBE NEWSWIRE) -- Zscaler, Inc. (NASDAQ:ZS), the leader in cloud security, today announced financial results for its fiscal fourth quarter and fiscal year ended July 31, 2025.
"We had an outstanding Q4, in which we achieved a new milestone of more than $3 billion of Annual Recurring Revenue while achieving our highest ever operating margin for a quarter. We believe Zscaler's Zero Trust and AI security solutions are imperative in today's world and are driving robust demand," said Jay Chaudhry, Chairman and CEO of Zscaler. "We recently delivered AI Guardrails for Public and Private apps, and we are rapidly expanding our AI security portfolio to address the emerging risks of AI models and applications."
Fourth Quarter Fiscal 2025 Financial Highlights
Revenue: $719.2 million, an increase of 21% year-over-year.
Income (loss) from operations: GAAP loss from operations was $32.2 million, or 4% of revenue, compared to $27.0 million, or 5% of revenue, in the fourth quarter of fiscal 2024. Non-GAAP income from operations was $158.9 million, or 22% of revenue, compared to $127.5 million, or 22% of revenue, in the fourth quarter of fiscal 2024.
Net income (loss): GAAP net loss was $17.6 million, compared to $14.9 million in the fourth quarter of fiscal 2024. Non-GAAP net income was $146.7 million, compared to $115.8 million in the fourth quarter of fiscal 2024.
Net income (loss) per share, diluted: GAAP net loss per share, diluted, was $0.11, compared to $0.10 in the fourth quarter of fiscal 2024. Non-GAAP net income per share was $0.89, compared to $0.72 in the fourth quarter of fiscal 2024.
Cash flows: Cash provided by operations was $250.6 million, or 35% of revenue, compared to $203.6 million, or 34% of revenue, in the fourth quarter of fiscal 2024. Free cash flow was $171.9 million, or 24% of revenue, compared to $136.3 million, or 23% of revenue, in the fourth quarter of fiscal 2024.
Deferred revenue: $2,468.0 million as of July 31, 2025, an increase of 30% year-over-year.
Cash, cash equivalents and short-term investments: $3,572.4 million as of July 31, 2025, an increase of $1,162.8 million from July 31, 2024. In July 2025, we issued convertible senior notes due 2028 (the "2028 Notes") for an aggregate principal amount of $1,725.0 million and net cash proceeds of $1,700.0 million. We also fully repaid the convertible senior notes due 2025 (the "2025 Notes") by paying the principal amount of $1,150.0 million in cash and settling the premium amount by issuing 3.8 million new shares of our common stock.
Full Year Fiscal 2025 Financial Highlights
Revenue: $2,673.1 million, an increase of 23% year-over-year.
Income (loss) from operations: GAAP loss from operations was $128.5 million, or 5% of revenue, compared to $121.5 million, or 6% of revenue, in fiscal 2024. Non-GAAP income from operations was $580.1 million, or 22% of revenue, compared to $442.2 million, or 20% of revenue, in fiscal 2024.
Net income (loss): GAAP net loss was $41.5 million, compared to $57.7 million in fiscal 2024. Non-GAAP net income was $534.8 million, compared to $414.6 million in fiscal 2024.
Net income (loss) per share, diluted: GAAP net loss per share, diluted, was $0.27, compared to $0.39 in fiscal 2024. Non-GAAP net income per share was $3.28, compared to $2.60 in fiscal 2024.
Cash flows: Cash provided by operations was $972.5 million, or 36% of revenue, compared to $779.8 million, or 36% of revenue, in fiscal 2024. Free cash flow was $726.7 million, or 27% of revenue, compared to $585.0 million, or 27% of revenue, in fiscal 2024.
Recent Business Highlights
Acquired Red Canary to redefine Security Operations with agentic AI-driven threat intelligence and automation. The combination of Zscaler's unified Data Fabric for Security and Red Canary's proven MDR expertise will enhance cyber risk management for customers. This unified, AI-driven Security Operations Center (SOC) will empower businesses to mitigate cyber threats faster, with precision accuracy and automated remediation.
Launched AI-powered security innovations, including Zscaler AI Guard, to stop attacks, protect sensitive data, and ensure regulatory compliance, enabling businesses to adopt AI securely. As the leader in cloud security, Zscaler empowers enterprises to defend against evolving threats while driving safe, transformative AI innovation.
Published Zscaler's 2025 ThreatLabz Ransomware Report, which revealed a 146% surge in ransomware attacks, and 70% increase in public extortion cases, underscoring the need for a comprehensive Zero Trust Everywhere strategy to prevent lateral movement and safeguard sensitive data and applications.
Introduced Zscaler Cellular, the industry's first Zero Trust solution to secure IoT/OT connectivity using only a SIM card. This innovative solution eliminates VPNs while ensuring global, resilient communication. By isolating each device and routing all connections through the AI-powered Zscaler Zero Trust Exchange™, organizations can achieve a zero attack surface and unparalleled security for critical IoT/OT systems.
Introduced a new suite of advanced solutions to extend Zero Trust Everywhere, enabling businesses to secure data across branches, multi-cloud, and remote environments with seamless end-to-end segmentation and scalability. As the leader in cloud security, Zscaler empowers enterprises to modernize securely with unmatched Zero Trust capabilities.
Achieved the U.S. Department of Defense's CMMC Level 2 certification, reinforcing its leadership in delivering trusted, compliant Zero Trust cloud security solutions for government and defense contractors.
Became the first Independent Software Vendor (ISV) to earn AWS ISV Competencies in Healthcare, Education, and all subcategories of the relaunched Government Competency, demonstrating leadership in delivering secure, high-performance solutions for critical sectors meeting stringent mandates.
Published a new report utilizing Marsh McLennan's cyber losses dataset which found that Zero Trust architecture could cut cyber incident claims by 31%, potentially saving $465 billion annually by eliminating attack surfaces.
Financial Outlook
For the first quarter of fiscal 2026, we expect:
Revenue of $772 million to $774 million
Non-GAAP income from operations of $166 million to $168 million
Non-GAAP net income per share of approximately $0.85 to $0.86, assuming approximately 167 million fully diluted shares outstanding and a non-GAAP tax rate of 23%
For the full year fiscal 2026, we expect:
Annual Recurring Revenue of $3.676 billion to $3.698 billion
Revenue of approximately $3.265 billion to $3.284 billion
Non-GAAP income from operations of $728 million to $736 million
Non-GAAP net income per share of $3.64 to $3.68, assuming approximately 169 million fully diluted shares outstanding and a non-GAAP tax rate of 23%
These statements are forward-looking and actual results may differ materially. Refer to the Forward-Looking Statements safe harbor below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.
Guidance for non-GAAP income from operations and non-GAAP net income per share exclude, as applicable, stock-based compensation expense and related employer payroll taxes, amortization expense of acquired intangible assets and amortization of debt issuance costs. We have not reconciled our expectations of non-GAAP income from operations and non-GAAP net income per share to their most directly comparable GAAP measures because certain items are out of our control or cannot be reasonably predicted. For those reasons, we are also unable to address the probable significance of the unavailable information, the variability of which may have a significant impact on future results. Accordingly, a reconciliation for the guidance for non-GAAP income from operations and non-GAAP net income per share is not available without unreasonable effort. There is no GAAP measure that is comparable to ARR, so we have not reconciled the ARR data included to any GAAP measure.
For further information regarding why we believe that these non-GAAP measures provide useful information to investors, the specific manner in which management uses these measures, and some of the limitations associated with the use of these measures, please refer to the "Explanation of Non-GAAP Financial Measures" section of this press release.
Conference Call and Webcast Information
Zscaler will host a conference call for analysts and investors to discuss its fourth quarter of fiscal 2025 and outlook for its first quarter of fiscal 2026 and full year fiscal 2026 today at 1:30 p.m. Pacific time (4:30 p.m. Eastern time).
Date:
Tuesday, September 2, 2025
Time:
1:30 p.m. PT
Webcast:
https://ir.zscaler.com
Dial-in:
To join by phone, register at the following link: (https://register-conf.media-server.com/register/BI1e0d0fb2294743e291127fb1b1f2bf8f). After registering, you will be provided with a dial-in number and a personal PIN that you will need to join the call.
Upcoming Conferences
First quarter of fiscal 2026 investor conference participation schedule:
Citi 2025 Global TMT Conference in New YorkThursday, September 4, 2025
2025 Truist Securities Technology Symposium in New YorkThursday, September 4, 2025
Goldman Sachs Communacopia + Technology Conference 2025 in San FranciscoWednesday, September 10, 2025
Wolfe Research TMT Conference 2025 in San FranciscoWednesday, September 10, 2025
Sessions which offer a webcast will be available on the Investor Relations section of the Zscaler website at https://ir.zscaler.com/.
Forward-Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties, including, but not limited to, statements regarding our future financial and operating performance, including our financial outlook for the first quarter of fiscal 2026 and full year fiscal 2026, and the expected impact of the Red Canary acquisition. There are a significant number of factors that could cause actual results to differ materially from statements made in this press release, including but not limited to: macroeconomic influences and instability, geopolitical events, operations and financial results and the economy in general; risks related to the use of AI in our platform; our ability to identify and effectively implement the necessary changes to address execution challenges; risks associated with managing our rapid growth, including fluctuations from period to period; our limited experience with new products and subscriptions and support introductions and the risks associated with new products and subscription and support offerings, including the discovery of software bugs; our ability to attract and retain new customers; the failure to timely develop and achieve market acceptance of new products and subscriptions as well as existing products and subscription and support; rapidly evolving technological developments in the market for network security products and subscription and support offerings and our ability to remain competitive; length of sales cycles; useful lives of our assets and other estimates; and general market, political, economic and business conditions.
Additional risks and uncertainties that could affect our financial results are included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" set forth from time to time in our filings and reports with the Securities and Exchange Commission ("SEC"), including our Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2025, filed on May 29, 2025, as well as future filings and reports by us, copies of which are available on our website at ir.zscaler.com and on the SEC's website at www.sec.gov. You should not rely on these forward-looking statements, as actual outcomes and results may differ materially from those contemplated by these forward-looking statements as a result of such risks and uncertainties. Additional information will also be set forth in other filings that we make with the SEC from time to time. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we do not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.
Use of Non-GAAP Financial Information
We believe that the presentation of non-GAAP financial information provides important supplemental information to management and investors regarding financial and business trends relating to our financial condition and results of operations. For further information regarding why we believe that these non-GAAP measures provide useful information to investors, the specific manner in which management uses these measures, and some of the limitations associated with the use of these measures, please refer to the "Explanation of Non-GAAP Financial Measures" section of this press release.
About Zscaler
Zscaler (NASDAQ:ZS) accelerates digital transformation so customers can be more agile, efficient, resilient, and secure. The Zscaler Zero Trust Exchange™ platform protects thousands of customers from cyberattacks and data loss by securely connecting users, devices, and applications in any location. Distributed across more than 160 data centers globally, the SASE-based Zero Trust Exchange is the world's largest in-line cloud security platform.
Zscaler™ and the other trademarks listed at https://www.zscaler.com/legal/trademarks are either (i) registered trademarks or service marks or (ii) trademarks or service marks of Zscaler, Inc. in the United States and/or other countries. Any other trademarks are the properties of their respective owners.
Investor Relations Contacts
Ashwin Kesireddy VP, Investor Relations and Strategic Finance(415)
Pavel RaddaMedia Relations
ZSCALER, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
Year Ended
July 31,
July 31,
2025
2024
2025
2024
Revenue
$
719,226
$
592,868
$
2,673,115
$
2,167,771
Cost of revenue(1) (2) (3)
172,240
130,205
618,178
477,129
Gross profit
546,986
462,663
2,054,937
1,690,642
Operating expenses:
Sales and marketing(1) (2)
330,594
294,200
1,259,158
1,100,239
Research and development(1) (2) (3)
177,606
139,150
672,485
499,828
General and administrative(1) (4)
71,028
56,263
251,754
212,052
Total operating expenses
579,228
489,613
2,183,397
1,812,119
Loss from operations
(32,242
)
(26,950
)
(128,460
)
(121,477
)
Interest income
33,175
27,233
125,364
109,130
Interest expense(5)
(2,074
)
(3,604
)
(9,522
)
(13,132
)
Other expense, net
(762
)
(1,783
)
(5,673
)
(3,750
)
Loss before income taxes
(1,903
)
(5,104
)
(18,291
)
(29,229
)
Provision for income taxes
15,675
9,774
23,187
28,477
Net loss
$
(17,578
)
$
(14,878
)
$
(41,478
)
$
(57,706
)
Net loss per share, basic and diluted
$
(0.11
)
$
(0.10
)
$
(0.27
)
$
(0.39
)
Weighted-average shares used in computing net loss per share, basic and diluted
156,496
151,497
154,404
149,586
(1) Includes stock-based compensation expense and related payroll taxes:
Cost of revenue
$
19,324
$
13,890
$
70,998
$
52,766
Sales and marketing
60,780
60,584
259,562
230,597
Research and development
69,149
54,598
257,663
186,107
General and administrative
31,542
20,298
97,311
79,630
Total
$
180,795
$
149,370
$
685,534
$
549,100
(2) Includes amortization expense of acquired intangible assets:
Cost of revenue
$
3,655
$
4,483
$
14,975
$
12,879
Sales and marketing
425
501
1,700
1,232
Research and development
—
140
145
513
Total
$
4,080
$
5,124
$
16,820
$
14,624
(3) Includes restructuring and other charges:
Cost of revenue
$
138
$
—
$
138
$
—
Research and development
4,783
—
4,783
—
Total
$
4,921
$
—
$
4,921
$
—
(4) Includes acquisition-related expenses
$
1,316
$
—
$
1,316
$
—
(5) Includes amortization of debt issuance costs
$
1,346
$
980
$
4,293
$
3,914
ZSCALER, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
July 31,
July 31,
2025
2024
Assets
Current assets:
Cash and cash equivalents
$
2,389,023
$
1,423,080
Short-term investments
1,183,386
986,574
Accounts receivable, net
992,181
736,529
Deferred contract acquisition costs
180,819
148,873
Prepaid expenses and other current assets
148,881
101,561
Total current assets
4,894,290
3,396,617
Property and equipment, net
543,377
383,121
Operating lease right-of-use assets
