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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听$14.9 million on a year-over-year basis
• Non-GAAP net income of $146.7 million compared to non-GAAP net income of听$115.8 million听on a year-over-year basis

SAN JOSE, Calif., Sept. 02, 2025 (GLOBE NEWSWIRE) -- Zscaler, Inc.听(Nasdaq: ZS), the leader in cloud security, today announced financial results for its fiscal fourth quarter and fiscal year ended July 31, 2025.

鈥淲e 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鈥檚 world and are driving robust demand,鈥� said Jay Chaudhry, Chairman and CEO of Zscaler. 鈥淲e 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.鈥�

Fourth Quarter Fiscal听2025听Financial Highlights

• Revenue:听$719.2 million, an increase of听21%听year-over-year.
• Income (loss) from operations: GAAP loss from operations was听$32.2 million, or听4%听of revenue, compared to $27.0 million, or听5%听of revenue,听in the听fourth quarter of fiscal听2024. Non-GAAP income from operations was听$158.9 million, or听22%听of revenue, compared to $127.5 million, or听22%听of revenue,听in the听fourth quarter of fiscal听2024.
• Net income (loss): GAAP net loss was听$17.6 million, compared to听$14.9 million听in the听fourth quarter of fiscal听2024. Non-GAAP net income was听$146.7 million, compared to $115.8 million听in the听fourth quarter of fiscal听2024.
• Net income (loss) per share, diluted: GAAP net loss per share, diluted, was听$0.11, compared to $0.10 in the听fourth quarter of fiscal听2024.听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听$250.6 million, or 35% of revenue, compared to $203.6 million, or 34% of revenue,听in the听fourth quarter of fiscal听2024. Free cash flow was $171.9 million, or听24%听of revenue, compared to $136.3 million, or 23% of revenue, in the听fourth听quarter of fiscal听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听as of听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听2025听Financial Highlights

• Revenue:听$2,673.1 million, an increase of听23%听year-over-year.
• Income (loss) from operations: GAAP loss from operations was听$128.5 million, or听5%听of revenue, compared to $121.5 million, or听6%听of revenue,听in fiscal听2024. Non-GAAP income from operations was听$580.1 million, or听22% of revenue, compared to $442.2 million, or听20%听of revenue,听in fiscal听2024.
• Net income (loss): GAAP net loss was $41.5 million, compared to $57.7 million听in fiscal听2024. Non-GAAP net income was $534.8 million, compared to $414.6 million听in fiscal听2024.
• Net income (loss) per share, diluted: GAAP net loss per share, diluted, was $0.27, compared to听$0.39听in fiscal听2024.听Non-GAAP net income per share was $3.28, compared to $2.60 in fiscal 2024.
• Cash flows: Cash provided by operations was听$972.5 million, or 36% of revenue, compared to $779.8 million, or 36% of revenue,听in fiscal听2024. Free cash flow was $726.7 million, or听27%听of revenue, compared to $585.0 million, or 27% of revenue, in fiscal听2024.
  

Recent Business Highlights

• Acquired Red Canary to redefine Security Operations with agentic AI-driven threat intelligence and automation. The combination of Zscaler鈥檚 unified Data Fabric for Security and Red Canary鈥檚 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鈥檚 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鈩�, 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听2026, we expect:

• Revenue of听$772 million to听$774 million
• Non-GAAP income from operations of听$166 million to $168 million
• Non-GAAP net income per share of听approximately $0.85 to $0.86, assuming听approximately 167 million fully diluted="/articles/share-count-and-dilution-basics" title="Read: Share Count and Dilution Basics: Understanding How Stock Ownership Changes" class="article-link" rel="noopener">diluted sharesf="/articles/float-vs-shares-outstanding" title="Read: Float vs Shares Outstanding: Understanding the Key Difference" class="article-link" rel="noopener">shares outstanding and a non-GAAP tax rate of 23%
  

For the full year fiscal听2026, we expect:

• Annual Recurring Revenue of $3.676 billion to听$3.698听billion
• Revenue of听approximately $3.265 billion to $3.284 billion
• Non-GAAP income from operations of听$728 million to听$736 million
• Non-GAAP net income per share of听$3.64 to $3.68, assuming approximately 169 million fully diluted="/articles/share-count-and-dilution-basics" title="Read: Share Count and Dilution Basics: Understanding How Stock Ownership Changes" class="article-link" rel="noopener">diluted sharesf="/articles/float-vs-shares-outstanding" title="Read: Float vs Shares Outstanding: Understanding the Key Difference" class="article-link" rel="noopener">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听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).

Upcoming Conferences

First quarter of fiscal 2026 investor conference participation schedule:

• Citi 2025 Global TMT Conference in New York
  Thursday, September 4, 2025

• 2025 Truist Securities Technology Symposium in New York
  Thursday, September 4, 2025

• Goldman Sachs Communacopia + Technology Conference 2025 in San Francisco
  Wednesday, September 10, 2025

• Wolfe Research TMT Conference 2025 in San Francisco
  Wednesday, September 10, 2025

Sessions which offer a webcast will be available on the Investor Relations section of the Zscaler website at .

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听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 鈥淩isk Factors鈥� and 鈥淢anagement鈥檚 Discussion and Analysis of Financial Condition and Results of Operations鈥� 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鈥檚 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 鈥淓xplanation of Non-GAAP Financial Measures鈥� 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鈩� 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鈥檚 largest in-line cloud security platform.

Zscaler鈩� and the other trademarks listed at 听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) 798-1475
听

Pavel Radda
Media Relations Contact
听

⁽¹⁾听Includes stock-based compensation expense and related payroll taxes:

⁽²⁾听Includes amortization expense of acquired intangible assets:

⁽³⁾ Includes restructuring and other charges:

___________

⁽¹⁾ Effective August 1, 2024, the beginning of our fiscal year ending July 31, 2025, we are using a long-term projected non-GAAP tax rate of 23% for the purpose of determining our non-GAAP net income and non-GAAP net income per share to provide better consistency across interim reporting periods in fiscal 2025 and beyond. Given the significant growth of our business and non-GAAP operating income, we believe this change is necessary to better reflect the performance of our business. We will continue to assess the appropriate non-GAAP tax rate on a regular basis, which could be subject to changes for a variety of reasons, including the rapidly evolving global tax environment, significant changes in our geographic earnings mix, or other changes to our strategy or business operations. Prior period amounts have been recast to reflect this change.

⁽²⁾ Consists of income tax adjustments related to our long-term non-GAAP effective tax rate of 23%.

⁽³⁾ The sum of the fully diluted earnings per share impact of individual reconciling items may not total to fully diluted non-GAAP net income per share due to the weighted-average shares used in computing the GAAP net loss per share differs from the weighted-average shares used in computing the non-GAAP net income per share, and due to rounding of the individual reconciling items. The GAAP net loss per share calculation uses a lower share count as it excludes potentially dilutive shares, which are included in calculating the non-GAAP net income per share.

⁽⁴⁾ We exclude the in-the-money portion of the convertible senior notes for non-GAAP weighted-average diluted shares as they are covered by our capped call transactions. Our outstanding capped call transactions are antidilutive under GAAP but are expected to mitigate the dilutive effect of the convertible senior notes, and therefore are included in the calculation of non-GAAP diluted shares outstanding. The capped calls have an antidilutive impact when the average stock price of our common stock in a given period is higher than their exercise price.

ZSCALER, INC.
Explanation of Non-GAAP Financial Measures

In addition to our results determined in accordance with generally accepted accounting principles in the United States of America ("GAAP"), we believe the following non-GAAP measures are useful in evaluating our operating performance. We use the following non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, non-GAAP financial information is presented for supplemental informational purposes only, as it has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. In particular, free cash flow is not a substitute for cash provided by operating activities. Additionally, the utility of free cash flow as a measure of our liquidity is further limited as it does not represent the total increase or decrease in our cash balance for a given period. In addition, other companies, including companies in our industry, may calculate similarly titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. A reconciliation of our historical non-GAAP financial measures to their most directly comparable financial measures stated in accordance with GAAP has been included in this press release. Investors are cautioned that there are a number of limitations associated with the use of non-GAAP financial measures and key metrics as analytical tools. Investors are encouraged to review these reconciliations, and not to rely on any single financial measure to evaluate our business.

Expenses Excluded from Non-GAAP Measures

Stock-based compensation expense is excluded primarily because it is a non-cash expense that management believes is not reflective of our ongoing operational performance. Employer payroll taxes related to stock-based compensation, which is a cash expense, are excluded because these are tied to the timing and size of the exercise or vesting of the underlying equity incentive awards and the price of our common stock at the time of vesting or exercise, which may vary from period to period independent of the operating performance of our business. Amortization expense of acquired intangible assets and amortization of debt issuance costs from the convertible senior notes are excluded because these are non-cash expenses and are not reflective of our ongoing operational performance. Acquisition-related expenses incurred with business acquisitions are excluded because these are not reflective of our ongoing operations. Restructuring and other charges includes severance and termination benefits in connection with a restructuring plan to streamline operations and to align people, roles and projects to our strategic priorities. These expenses are excluded because they fluctuate in amount and frequency and are not reflective of our core business operating performance.

Effective August 1, 2024, the beginning of our fiscal year ending July 31, 2025, we are using a long-term projected non-GAAP tax rate of 23% for the purpose of determining our non-GAAP net income and non-GAAP net income per share to provide better consistency across interim reporting periods. Given the significant growth of our business and non-GAAP operating income, we believe this change is necessary to better reflect the performance of our business. We will continue to assess the appropriate non-GAAP tax rate on a regular basis, which could be subject to changes for a variety of reasons, including the rapidly evolving global tax environment, significant changes in our geographic earnings mix, or other changes to our strategy or business operations. Prior period amounts have been recast to reflect this change.

Non-GAAP Financial Measures

Non-GAAP Gross Profit and Non-GAAP Gross Margin. We define non-GAAP gross profit as GAAP gross profit excluding stock-based compensation expense and related employer payroll taxes and amortization expense of acquired intangible assets. We define non-GAAP gross margin as non-GAAP gross profit as a percentage of revenue.

Non-GAAP Income from Operations and Non-GAAP Operating Margin. We define non-GAAP income from operations as GAAP loss from operations excluding stock-based compensation expense and related employer payroll taxes, amortization expense of acquired intangible assets, restructuring and other charges and acquisition-related expenses. We define non-GAAP operating margin as non-GAAP income from operations as a percentage of revenue.

Non-GAAP Net Income per Share, Diluted. We define non-GAAP net income as GAAP net loss excluding stock-based compensation expense and related employer payroll taxes, amortization expense of acquired intangible assets, restructuring and other charges, amortization of debt issuance costs, acquisition-related expenses and the non-GAAP provision for income taxes adjustment. We define non-GAAP net income per share, diluted, as non-GAAP net income plus the non-GAAP interest expense related to the convertible senior notes divided by the weighted-average diluted shares outstanding, which includes the effect of potentially diluted common stock equivalents outstanding during the period and the anti-dilutive impact of the capped call transactions entered into in connection with the convertible senior notes.

Calculated Billings. We define calculated billings as revenue plus the change in deferred revenue in a period. Calculated billings in any particular period aims to reflect amounts invoiced for subscriptions to access our cloud platform, together with related support services for our new and existing customers. We typically invoice our customers annually in advance, and to a lesser extent quarterly in advance, monthly in advance or multi-year in advance.

Annual Recurring Revenue ("ARR"). ARR refers to the next 12 months of revenue from subscription contracts as of the measurement date. To establish ARR for a customer, we assume that any contract expiring during the next 12 months will be renewed under the existing terms, excluding Red Canary's subscription contracts expiring in fiscal year 2026.

Free Cash Flow and Free Cash Flow Margin. We define free cash flow as net cash provided by operating activities less purchases of property, equipment and other assets and capitalized internal-use software. We define free cash flow margin as free cash flow divided by revenue. We believe that free cash flow and free cash flow margin are useful indicators of liquidity that provide information to management and investors about the amount of cash generated from our operations that, after the investments in property, equipment and other assets and capitalized internal-use software, can be used for strategic initiatives.