Q3 2026 Zscaler Inc Earnings Call Transcript
Key Points
- Zscaler Inc (ZS) reported a strong Q3 with a 25% growth in annual recurring revenue (ARR) and a record non-GAAP operating margin of 23%.
- The company is leveraging AI to enhance its cybersecurity platform, positioning itself as a leader in the AI era with its Zero Trust SASE solution.
- Zscaler Inc (ZS) has expanded its Zero Trust platform to include AI agents, branches, and workloads, demonstrating its adaptability and forward-thinking approach.
- The company reported significant customer wins, including a seven-figure upsell deal with a Fortune 500 financial technology company and an eight-figure upsell with a federal agency.
- Zscaler Inc (ZS) is seeing strong growth in its cloud marketplace transactions, with approximately $900 million in total contract value (TCV) year-to-date, more than doubling year-over-year.
- Zscaler Inc (ZS) experienced sales leadership turnover, which could potentially disrupt short-term sales performance.
- The company is taking a cautious approach to guidance due to the sales leadership changes, indicating potential uncertainty in future performance.
- Growth in Europe slowed compared to other regions, highlighting potential regional execution challenges.
- The company anticipates higher capital expenditures in Q4 due to increased memory storage and processor prices, impacting free cash flow margins.
- Zscaler Inc (ZS) has tempered expectations for new logo growth, indicating challenges in expanding its customer base.
Thank you for standing by, and welcome to Zscaler's third quarter 2026 earnings conference call. (Operator Instructions)
I would now like to hand the call over to Kim Watkins, SVP of Investor Relations. Please, go ahead.
Good afternoon, and thank you for joining us today. Welcome to Zscaler's Third Quarter Fiscal 2026 Earnings Conference Call. On the call with me today are Jay Chaudhry, Chairman and CEO; and Kevin Rubin, CFO. Please note that we posted our earnings release, shareholder letter, 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 a reconciliation of GAAP to the non-GAAP financial measures in our earnings release.
Before we get started, 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,
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