Q4 2025 Zscaler Inc Earnings Call Transcript
Key Points
- Zscaler Inc (ZS) reported a 21% year-over-year revenue growth for Q4 2025, exceeding their guidance.
- The company's annual recurring revenue (ARR) increased by 22% year-over-year, surpassing $3 billion.
- Zscaler Inc (ZS) achieved a record operating margin of over 22% for the quarter.
- The company is seeing strong demand for its AI security solutions, including AI Guard and GenAI security offerings.
- Zscaler Inc (ZS) has secured nearly 40% of the Global 2000 and over 45% of the Fortune 500 companies, highlighting its market penetration.
- The gross margin for Q4 was 79.3%, slightly below the historical target of 80% due to a one-time deployment of a large private cloud in a government customer's data center.
- Operating expenses increased by 16% year-over-year, reaching $411 million.
- The company anticipates net new ARR growth to be weighted towards the second half of fiscal '26, indicating potential seasonality in revenue recognition.
- Zscaler Inc (ZS) faces challenges in replacing traditional firewall appliances with its Zero Trust architecture, which may take longer than expected.
- The macroeconomic environment is assumed to remain unchanged, which could impact growth projections if conditions worsen.
Hello, and welcome to Zscaler fourth quarter 2025 earnings call. (Operator Instructions) I would now like to turn the conference over to Ashwin Kesireddy, Vice President of Investor Relations and Strategic Finance. Sir, you may begin.
Good afternoon, everyone, and welcome to the Zscaler fourth quarter fiscal year 2025 earnings conference call. On the call with me today are Jay Chaudhry, Chairman and CEO; and Kevin Rubin, CFO. Please note, we have posted our earnings release and a supplemental financial schedule to our Investor Relations website.
Unless otherwise noted, all numbers we talk about today will be on an adjusted non-GAAP basis. You will find the reconciliation of GAAP to the non-GAAP financial measures in our earnings release. I'd like to remind you that today's discussion will contain forward-looking statements, including but not limited to, the company's anticipated future revenue, annual recurring revenue, calculated billings, operating performance, gross margin, operating expenses,
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