Zscaler Inc (NASDAQ:ZS) Q1 FY2026 Earnings: Profit Beat Overshadowed by Revenue Miss and Weak Guidance

Zscaler Inc (NASDAQ:ZS), a leader in cloud-based internet security, announced its first quarter fiscal 2026 financial results, delivering a performance characterized by strong underlying growth overshadowed by a significant market sell-off. The company surpassed earnings expectations but narrowly missed on revenue, a combination that has left investors weighing robust profitability against concerns over top-line momentum.

Earnings and Revenue Versus Estimates

The company's results for the quarter ended October 31, 2025, present a mixed financial picture. While profitability was notably strong, the revenue figure came in slightly below what market watchers had anticipated.

• Non-GAAP Earnings Per Share (EPS): Reported at $0.96, significantly beating the analyst consensus estimate of $0.89.
• Revenue: Reported at $788.1 million, falling just short of the estimated $797.0 million. Despite the miss, this still represents a 26% year-over-year increase.

The standout performance in EPS, which beat estimates by over 11%, highlights the company's ability to translate sales into profit efficiently. However, in a market that often prizes top-line growth above all else for cloud-centric firms, the revenue miss appears to have been the dominant factor in the subsequent investor reaction.

Market Reaction and Price Action

The market's response to the earnings report was decisively negative. Following the announcement, Zscaler's stock experienced a sharp decline in after-hours trading, dropping over 7.5%. This sell-off extends a period of weakness for the stock, which is down approximately 12% over the past month. The immediate price action suggests that investors were more focused on the revenue shortfall than the impressive earnings beat, indicating potential concerns about the company's growth trajectory or competitive positioning in the near term.

Forward-Looking Guidance and Analyst Expectations

For the upcoming second quarter of fiscal 2026, Zscaler provided revenue guidance of approximately $798 million. This outlook sits slightly below the current analyst consensus estimate of $820.1 million. The company's own forecast being more conservative than the market's expectation likely contributed to the negative sentiment, as it may signal to investors that management anticipates continued headwinds or a slower growth pace in the immediate future.

Press Release Summary

The core announcement from Zscaler centered on the publication of its Q1 FY2026 results. The key takeaways from the press release are the demonstration of sustained, high-level revenue growth and a significant expansion in profitability. The 26% year-over-year revenue increase to $788.1 million underscores the continued strong demand for its cloud security platform. The substantial earnings beat further emphasizes the company's improving operational leverage and ability to manage costs effectively, even as it invests in growth.

For a detailed breakdown of historical earnings, future estimates, and analyst projections, you can review the data here: Zscaler Earnings and Estimates.

Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation, or an offer or solicitation to buy or sell any securities. The information presented should not be used as the sole basis for any investment decisions.