Live Earnings: Complete Zscaler (ZS) Coverage

What to Expect When Zscaler Reports

Here is Wall Street’s consensus snapshot (Yahoo Finance):

• Revenue: $798.92M (current quarter)
• EPS (Normalized): $0.90 (current quarter)
• FY Revenue: $3.3B (current year)
• FY EPS (Normalized): $3.82 (current year)

Management’s latest outlook from the most recent call:

• Q2 revenue: $797M to $799M
• Q2 EPS: $0.89 to $0.90
• FY26 revenue: $3.282B to $3.301B
• FY26 EPS: $3.78 to $3.82
• FY26 free cash flow margin: about 26.0% to 26.5%

Key Areas to Watch

1) AI Security durability and monetization breadth

Management said AI Security grew over 80% year over year, exceeded its FY26 $400M ARR target three quarters early, and is now expected to surpass $0.5B ARR by fiscal year-end. The key issue this quarter is mix and sustainability. Investors will want to hear whether demand is broadening from visibility into GenAI apps toward higher-value, in-line guardrails and runtime controls as more modules move into production workflows.

2) Zero Trust Everywhere expansion, especially branch and cloud

Zscaler said it has already surpassed 450 Zero Trust Everywhere enterprises, hitting a fiscal 2026 goal three quarters early. The near-term swing factors are how quickly core ZIA and ZPA customers migrate into broader platform bundles, and whether cloud modernization continues to convert into repeatable wins for Zero Trust Cloud.

3) Z-Flex as a growth accelerator and a visibility lever

Z-Flex generated over $175M in TCV and grew over 70% sequentially, with management arguing it reduces procurement friction and supports larger multi-module commitments. If Z-Flex keeps scaling, it can improve forward visibility and deepen platform penetration. Investors will watch how that translates into ARR conversion timing and renewals.

4) Margins and the newer product mix

Gross margin was 79.9% versus 80.6% a year ago, and management noted newer products are being optimized for faster go-to-market rather than peak margins in the near term. The market will focus on whether operating leverage can persist alongside these investments, especially as management points to margin expansion expectations later in the year.

Valuation

The valuation debate is still the same: can Zscaler sustain durable growth while keeping elite cash generation. Management positioned the business as a scaled platform compounding well above Rule of 40 thresholds, pointing to a quarter with strong growth and a 52% free cash flow margin. A premium setup holds if AI Security becomes a durable second growth engine and Zero Trust Everywhere continues converting the installed base into broader, stickier platform relationships.