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Investing.com -- Zscaler Inc (NASDAQ:ZS) reported better-than-expected first-quarter fiscal 2026 results on Monday, with both earnings and revenue surpassing analyst estimates, but shares tumbled 9% in after-hours trading as investors appeared to expect even stronger performance.
The cloud security leader posted adjusted earnings per share of $0.96, exceeding the analyst consensus of $0.86, while revenue jumped 26% YoY to $788.1 million, topping estimates of $773.26 million. Despite the beat and upbeat guidance, investors sent the stock lower, suggesting the market had anticipated even stronger results from the cybersecurity firm.
"Our outstanding Q1 results demonstrate the strong demand we are experiencing for our Zero Trust and AI Security platform," said Jay Chaudhry, Chairman and CEO of Zscaler. "With over $3.2B in Annual Recurring Revenue, growing over 25% year-over-year, I’m very pleased to share that an increasing number of customers are relying on our platform for better security, lower operational costs and reduced IT complexity."
The company’s Annual Recurring Revenue grew 26% YoY to $3.2 billion, while deferred revenue increased 32% YoY to $2.35 billion. Non-GAAP income from operations reached $171.9 million, representing 22% of revenue, compared to $134.1 million, or 21% of revenue, in the same period last year.
For the second quarter, Zscaler expects revenue between $797 million and $799 million, above the consensus estimate of $796.1 million, and adjusted EPS of $0.89 to $0.90, in line with analyst expectations. The company also raised its full-year fiscal 2026 outlook, projecting revenue of $3.28 billion to $3.30 billion and adjusted EPS of $3.78 to $3.82, both exceeding consensus estimates.
During the quarter, Zscaler completed the acquisitions of Red Canary Inc. and SPLXAI Inc. for a combined $692 million, expanding its AI security capabilities to secure the entire enterprise AI lifecycle on a single platform.