Zscaler Revenue Jumps 21% in Fiscal Q4

Key Points

• Revenue rose 21% to $719.2 million, exceeding guidance and analyst expectations for Q4 FY2025.

• Annual Recurring Revenue (ARR) reached $3,015 million, up 22% year over year.

• Non-GAAP EPS came in at $0.89, well above the $0.79–$0.80 guidance range, reflecting strong profitability.

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Zscaler (NASDAQ:ZS), a cloud security specialist known for its Zero Trust Exchange platform, reported Q4 FY2025 results on September 2, 2025. The company delivered GAAP revenue of $719.2 million, surpassing both its own GAAP revenue guidance ($705 million to $707 million) and analyst expectations. Non-GAAP earnings per share (EPS) hit $0.89, also beating non-GAAP estimates of $0.79 to $0.80. Annual Recurring Revenue (ARR) crossed the $3.0 billion mark for the first time, supported by 23% revenue growth and 22% ARR growth year over year. Free cash flow of $171.9 million was up 26.1% year-over-year, while the non-GAAP operating margin remained stable at 22%. Despite these milestones, Zscaler continued to post a GAAP net loss for the quarter. Overall, the period showed strong business momentum, with robust customer adoption, product innovation in artificial intelligence (AI)-based security, and disciplined financial execution.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q3 2025 earnings report.

Understanding Zscaler’s Business and Recent Focus

Zscaler (NASDAQ:ZS) is a cybersecurity company that provides a cloud-based security platform, known as Zero Trust Exchange. Its core offering shifts security away from physical hardware and on-premises appliances to a cloud service that inspects all user and application traffic, no matter where users are located. The Zero Trust model means users and devices are never trusted by default -- every request for access to data or systems must be continually verified.

The company processes over 500 billion internet transactions per day, blocking more than 150 million threats. Zscaler has focused on relentless technological innovation, especially integrating artificial intelligence and machine learning into its products. Customer expansion, securing more large enterprises and government clients, and forming new channel partnerships have recently been major parts of its growth strategy. Key success factors include continuous product evolution and high customer retention.

Quarterly Highlights and Notable Developments

Zscaler delivered higher-than-expected GAAP revenue in Q4 FY2025, up 21% year over year and above the company's own forecast. ARR, which measures the annualized value of all active recurring revenue contracts, grew 22% year over year to $3,015 million. Calculated billings surged 32% year over year, an important metric tracking new and renewal contracts signed during the quarter, highlighting strong demand and successful upselling. Deferred revenue, a measure of contracted sales not yet recognized as revenue, reached $2.47 billion, up 30%.

Profitability trends were also encouraging. Non-GAAP EPS climbed 23.6% year over year, while non-GAAP operating margin remained steady despite a sharp increase in research and development (R&D) spending. Free cash flow (non-GAAP) rose to $171.9 million, a 26.1% year-over-year increase. The company reported a GAAP net loss of $17.6 million, slightly wider than the $14.9 million loss in Q4 FY2024, reflecting higher operating costs including significant stock-based compensation expenditures.

Product innovation remained central to the period’s developments. Zscaler launched new AI-powered security modules, including "AI Guardrails for Public and Private apps." This product is designed to protect and control the use of AI models and data across cloud and private environments, addressing risks from large language models and generative AI. The Zero Trust Exchange platform also received enhancements for securing branch locations, multi-cloud deployments, and devices in industrial environments (IoT/OT). These new releases signal the company’s focus on staying at the cutting edge of cybersecurity technology as customer needs evolve.

Strategic acquisitions and partnerships played a key role this quarter. This integration strengthens Zscaler’s position in security operations, data analytics, and managed services. The Red Canary team and technology are expected to support faster identification and mitigation of cyber threats for enterprise customers. Zscaler also achieved key certifications, such as the U.S. Department of Defense CMMC Level 2 and expanded competencies with Amazon Web Services, opening up new opportunities in the federal, healthcare, and education markets.

Outlook and Investor Focus Areas

Management provided forward guidance for both the next quarter and full fiscal year 2026. Zscaler expects Q1 FY2026 revenue of $772 million to $774 million. Non-GAAP operating income is projected between $166 million and $168 million, with non-GAAP EPS estimated at $0.85 to $0.86. For FY2026, the company guided for revenue between $3.265 billion and $3.284 billion, ARR of $3.676 billion to $3.698 billion, and non-GAAP EPS between $3.64 and $3.68.

Looking forward, investors should keep a close eye on profitability trends, as GAAP net losses and high stock-based compensation are expected to continue as the company scales. The Red Canary acquisition will also be important to watch, as Zscaler integrates new personnel and managed security products while managing any shifts in operating costs. With competition intensifying -- particularly from other vendors investing in AI-based cybersecurity, such as Rubrik and SentinelOne -- Zscaler's ability to deliver differentiated innovation and retain high-value customers will be critical.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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