Zscaler Reports Q4/FY26 Results, FY27 Outlook & 3% Workforce Restructuring

Executive Summary

On September 3, 2026, Zscaler, Inc. (NASDAQ: ZS) filed a Current Report on Form 8-K disclosing two key items:

1. Item 2.02 (Results of Operations and Financial Condition): Financial results for the fourth fiscal quarter and full fiscal year ended July 31, 2026, alongside fiscal 2027 guidance.
2. Item 2.05 (Costs Associated with Exit or Disposal Activities): A workforce restructuring plan committed to on September 1, 2026, targeting a ~3% reduction in global headcount to reallocate resources toward AI and core growth initiatives.

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Key Financial Highlights

Q4 FY2026 Highlights

• Revenue: $898.2 million, up 25% year-over-year.
• Annual Recurring Revenue (ARR): $3,771 million, up 25% YoY (or 20% organic growth excluding Red Canary ARR of $141 million).
• Net New ARR: $246 million in Q4.
• Operating Income:
  • GAAP Operating Loss: $(15.5) million (2% of revenue) vs. $(32.2) million in Q4 FY25.
  • Non-GAAP Operating Income: $218.4 million (record 24% operating margin) vs. $158.9 million in Q4 FY25.
• Net Income / EPS: Non-GAAP diluted EPS was $1.19 compared to $0.89 in Q4 FY25.
• Operating Cash Flow & FCF: Operating cash flow reached $279.3 million (31% of revenue); Free Cash Flow was $60.8 million (7% margin), impacted by $218.5 million in capital expenditures and internal-use software.

Full Year FY2026 Highlights

• Revenue: $3,353 million, up 25% YoY (20% organic growth to $3,209 million excluding Red Canary).
• Non-GAAP Operating Income: $767.1 million (23% operating margin).
• Non-GAAP EPS: $4.21 per share vs. $3.28 in FY25.
• Free Cash Flow: $779.1 million (23% FCF margin).

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Restructuring & Headcount Reduction (Item 2.05)

• Action Date: September 1, 2026.
• Scope: Reduction of worldwide headcount by approximately 3%.
• Strategic Rationale: Strategic reallocation of corporate resources to expand capacity and support Agentic SecOps, Security for AI, and next-generation growth initiatives.
• Financial Impact: Aggregate non-recurring charges estimated between $30.0 million and $33.0 million, primarily comprising employee severance and benefit costs.
• Timing: Majority of the restructuring charges will be recognized in the first half of fiscal 2027.

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Fiscal 2027 Financial Outlook

• Q1 FY2027 Guidance:
  • Revenue: $935M – $939M (~19% YoY growth)
  • Non-GAAP Operating Income: $215M – $217M (~23% margin)
  • Non-GAAP EPS: $1.15 – $1.16
• Full Year FY2027 Guidance:
  • Revenue: $3.908B – $3.938B (~16.6% – 17.5% YoY growth)
  • ARR: $4.396B – $4.426B (~16.6% – 17.4% YoY growth)
  • Non-GAAP Operating Income: $924M – $932M (~21% growth)
  • Non-GAAP EPS: $4.86 – $4.90
  • FCF Margin: Approximately 23.0% – 23.5%