Slide 1: Q2 Fiscal 2026 Shareholder Letter
Q2 Fiscal 2026 Shareholder Letter February 2026
Slide 2: Forward-Looking Statements
Forward-Looking Statements Unless otherwise noted, all numbers presented will be on an adjusted, non-GAAP basis. Reconciliation of GAAP to non-GAAP financial measures is in the appendix of this shareholder letter. This shareholder letter has been prepared by Zscaler, Inc. (“Zscaler”) for information
Slide 3: Strong Q2 results with revenue and operating income above guidance
Strong Q2 results with revenue and operating income above guidance1 Growth at scale with Customers increasing strong profitability commitments Revenue Growth Y/Y Annual Recurring Revenue ~26% ~$3.4B Strong growth across all geos ARR growth of 25% Y/Y Operating Margin Customer Commitments2 Operating
Slide 4: From Our CEO
From Our CEO Fellow Shareholders, We delivered strong Q2 results, and I couldn’t be more proud of the team’s execution. ARR grew 25%, reflecting continued strong demand for our platform. We are confident in our outlook for the second half of fiscal 2026, and as a result, we are increasing our guidan
Slide 5: Extending Zero Trust from User to AI Agents
Extending Zero Trust from User to AI Agents This is the opportunity for Zscaler’s industry-leading Zero Trust Exchange, which enables our customers to securely scale AI for the agentic era and beyond. Zscaler minimizes the attack surface and limits lateral movement with our unique Zero Trust archite
Slide 6: Uniquely positioned to secure AI workflows
Uniquely positioned to secure AI workflows Just like users, an organization’s AI agents are also becoming the weakest link in cybersecurity. Imagine a threat actor hijacking even one of an organization's AI agents, resulting in a serious breach. AI agents shift the threat landscape and operate auton
Slide 7: Architectural advantage driving demand
Architectural advantage driving demand Our Zero Trust Exchange is fundamentally different from competitive firewall-based security architecture that connects users or AI agents to a network and then allows them to roam free, dramatically increasing the risk of cyber breaches. We expect these advanta
Slide 8: Comprehensive Platform Solutions
Robust demand across all three growth pillars Turning back to the quarter, our results reflect robust demand across all three of our growth pillars: • AI-Security, • Zero Trust Everywhere, and • Data Security Everywhere. Comprehensive Platform Solutions AI Security AI-Protect Agentic Zero Trust Data
Slide 9: Comprehensive portfolio of AI-Security solutions
Comprehensive portfolio of AI-Security solutions I’ll start with AI-Security, which includes two product areas: AI Protect, our recently-introduced solution to secure the use of AI, and Agentic Operations. AI-Protect I’ll begin with AI-Protect which secures the full spectrum of enterprise AI adoptio
Slide 10: Growing demand for AI-Protect solutions
Growing demand for AI-Protect solutions While our Zscaler AI-Protect solution is new, we see demand rapidly accelerating including landing new logos, representing a massive future growth opportunity. Fortune 500 • This customer expanded its use of our Semiconductor platform to include AI Protect and
Slide 11: Driving innovation in Agentic Operations
Driving innovation in Agentic Operations The second product area of our AI Security is Agentic Operations, which includes our Agentic SecOps and Agentic IT Ops solutions. • We are significantly advancing our Agentic SecOps capabilities by integrating Red Canary's agent framework with the deep securi
Slide 12: Strong upsell momentum within Zero Trust Everywhere
Strong upsell momentum within Zero Trust Everywhere Our next growth pillar is Zero Trust Everywhere, which includes revenue from customers who are more broadly adopting our Zero Trust architecture by purchasing all of the following: Zero Trust Users, Zero Trust Branch, and Zero Trust Cloud. • We pio
Slide 13: Zero Trust Branch
Zero Trust Branch • In Q2, 45% of the total customers who bought our Zero Trust Branch solution were new logos, demonstrating that Zero Trust Branch is helping us grow our new logos. • This is also clear proof that for better cyber protection, customers want each branch to become like an internet ca
Slide 14: Zero Trust Cloud
Zero Trust Cloud • Another important part of our Zero Trust Everywhere solution is Zero Trust Cloud, which reduces cost and operational complexity by eliminating virtual firewalls in data center and cloud environments, and can be deployed in 10 minutes. We are seeing tremendous momentum for Zero Tru
Slide 15: Enterprise traction driving Data Security Everywhere
Enterprise traction driving Data Security Everywhere • Our third growth pillar is Data Security Everywhere which has eight modules, providing data discovery, data classification, posture management, and data loss prevention. • We are seeing significant traction driven by enterprises consolidating th
Slide 16: Strategic partnerships with GSI partners aiding growth
Strategic partnerships with GSI partners aiding growth • We are continuing to expand and deepen our relationships with Global System Integrators, or GSIs, who position the Zscaler platform to reduce cost and complexity by replacing legacy point products while creating service opportunities for them.
Slide 17: We believe Zscaler is incredibly well-positioned to secure the AI era
We believe Zscaler is incredibly well-positioned to secure the AI era. As the number of agents expands, the unique Zero Trust architecture becomes even more crucial—minimizing attack surfaces and limiting lateral movement by enabling direct, one-to-one communication. In summary: • Our growth opportu
Slide 18: Rule of 62
From Our CFO We delivered strong Q2 26 results, exceeding our targets while investing with discipline. With 26% revenue growth and a 36% free cash flow margin, we achieved Rule of 62 performance in the first half of the year, placing us among the elite companies that consistently outperform the Rule
Slide 19: Strong net new ARR with (and without) Red Canary
Strong net new ARR1 with (and without) Red Canary • Our Q2 26 net new ARR was $156 million, up 19%, bringing total ARR to $3.4 billion, up 25% year-over-year. Net new ARR benefited from strength in large deals and volume of deals. In particular, the Americas closed twice the number of $1 million dol
Slide 20: Organic growth remains healthy
Organic growth remains healthy • This quarter our Zero Trust Internet Access, or ZIA, and Zero Trust Private Access, or ZPA, ARR remained healthy, and grew in the mid-teens. • We have steadily expanded our Zero Trust platform beyond users to protect branches, workloads, AI applications, and now AI a
Slide 21: Robust deal momentum drives revenue
Robust deal momentum drives revenue • Revenue of $816 million, grew 26% year-over-year and 4% sequentially, exceeding the high end of our guidance. • We closed Q2 with 728 customers generating over $1 million ARR and 3,886 customers exceeding $100,000 ARR, both growing 18% year- over-year. • We also
Slide 22: Improved sales productivity driven by record pipeline conversion for a Q2
Improved sales productivity driven by record pipeline conversion for a Q2 • We are pleased with the strong execution in our account-centric sales motion, which is strengthening our position as a long-term strategic partner and driving deeper customer adoption over time. • In Q2, we again delivered d
Slide 23: Z-Flex Deal Wins in Q2
Z-Flex Deal Wins in Q2 Finance & • The customer nearly tripled its annual Insurance spend, by expanding its module Company adoption across 11 existing modules Upsell, 5-year, 8- and adopting 5 new modules, figure deal win including our AI security solution. Fortune 500 • This customer purchased 11 m
Slide 24: M&A integration and performance
M&A integration and performance Turning to M&A, I’d like to start with some color on our recent acquisitions. • On February 5th, we closed the acquisition of SquareX which extends our Zero Trust capabilities into any browser, enabling organizations to leverage standard browsers like Chrome and Edge
Slide 25: Strong operating metrics and free cash flow
Strong operating metrics and free cash flow • Non-GAAP gross margin was 80.2% compared to 80.4% a year ago. • Non-GAAP operating income of $181 million grew $41 million or 29%, as compared to $140 million last year. Non-GAAP operating margin of 22.2% increased 50 basis points year-over-year, reflect
Slide 26: Raise FY26 Revenue and ARR Guide
Raise FY26 Revenue and ARR Guide1 Let me provide our guidance for Q3 and full-year fiscal 2026. As a reminder, these numbers are all on a non-GAAP basis. • For the second half of FY26, we expect approximately 40% of total net new ARR to be recognized in Q3. • FY26 ARR guidance implies net new ARR gr
Slide 27: Kevin Rubin
I’d like to spend a minute addressing the recent increase in memory, storage, and processor prices and availability. So far, we haven’t seen a meaningful impact to our operations. However, it could become a factor in the future, as we purchase equipment for our data centers and Zero Trust Branch app
Slide 28: Other key business and financial metrics
Other key business and financial metrics $100K+ ARR Customers2 $1M+ ARR Customers2 18% CAGR 21% CAGR 728 3,886 698 3,754 664 3,494 619 633 3,281 3,357 564 584 3,087 3,154 2,919 522 Q3 24 Q4 24 Q1 25 Q2 25 Q3 25 Q4 25 Q1 26 Q2 26 Q3 24 Q4 24 Q1 25 Q2 25 Q3 25 Q4 25 Q1 26 Q2 26 Annual Recurring Revenu
Slide 29: Other key business and financial metrics
Other key business and financial metrics Gross Profit & Margin 81% 80% 80% Key factors • Gross margins $654 were in-line with $521 our guidance and $424 long-term targets Q2 24 Q2 25 Q2 26 Gross Profit Gross Margin Operating Profit & Margin 22% 22% 20% Key factors • Leverage in our financial model •
Slide 30: Financial Appendix
Financial Appendix 2025 Zscaler, Inc. All rights reserved
Slide 31: Explanation of Non-GAAP Financial Measures
Explanation of Non-GAAP Financial Measures In addition to our results determined in accordance with generally accepted accounting principles in the United States of America (“GAAP”), we believe that the presentation of non-GAAP financial information provides important supplemental information to man
Slide 32: Definitions of Non-GAAP Financial Measures
Definitions of Non-GAAP Financial Measures Non-GAAP Gross Profit and Non-GAAP Gross Margin. We define non-GAAP gross profit as GAAP gross profit excluding stock-based compensation expense and related employer payroll taxes, and amortization expense of acquired intangible assets. We define non-GAAP g
Slide 33: Appendix A
Appendix A ($ in thousands, except percentages) Gross Profit & Margin Q2 26 Q2 25 Q2 24 GAAP gross profit $ 624,491 $ 499,402 $ 407,800 Add: Stock-based compensation expense 22,880 17,619 13,434 and related payroll taxes Amortization expense of acquired 6,917 3,815 2,717 intangible assets Non-GAAP g
Slide 34: Appendix A (cont.)
Appendix A (cont.) ($ in thousands, except percentages) Non-GAAP Net Income and Non-GAAP Q2 26 Net Income per Share, Diluted Q2 25 Q2 24 GAAP net loss $ (34,312) $ (7,724) $ (28,469) Add: GAAP provision for (benefit from) income 13,014 (8,813) 7,964 taxes GAAP income before income taxes (21,298) (16
Slide 35: Appendix A (cont.)
Appendix A (cont.) ($ in thousands, except percentages) Free Cash Flow & Margin YTD Q2 26 Q2 26 Q2 25 Q2 24 Net cash provided by $ 652,353 $ 204,073 $ 179,433 $ 142,069 operating activities Less: Purchases of property, (35,066) (17,755) (15,018) (30,894) equipment and other assets Capitalized intern
Slide 36: Glossary
Glossary Product/Solution Description One of Zscaler’s three growth pillars. Includes AI-Protect and AI-Security Agentic Operations. Leverages AI to provides solutions for IT Operations and Security Agentic Operations Operations. Includes Agentic IT Ops and Agentic SecOps. Accelerates the identifica
Slide 37: Glossary
Glossary Product/Solution Description Leverages AI-powered insights and 24/7 monitoring to resolve performance. It includes ZDX Copilot, which enables IT teams to ZDX Advanced Plus instantly troubleshoot and optimize digital experiences through natural language queries, and will leverage agents to a
Slide 38: Glossary
Glossary AI-Protect: AI Asset Management AI Asset Management AI Inventory AI Data Security 1 Discover AI Models, 3 Map AI overreach into Agents and Services data and close risks AI Data AI Governance Control AI Supply Responsible AI 2 Chain 4 Prioritize and mitigate and assess readiness LLM risks Wi
Slide 39: Glossary
Glossary AI Protect: Red Teaming Support broad range of Variety of Red Library of simulated AI Dev Environments Teaming tests attacks Security 5,000+ attacks Context Leakage Context Leakage DataExfiltration Data Exfiltration RAG Poisoning RAG Poisoning Jailbreak Jailbreak Jailbreak Safety Bias Priva