| Factor | Score | Distribution | Value | Avg | Rank |
|---|---|---|---|---|---|
Valuation | 23 | — | 17.6x | Bottom tier | |
Growth | 84 | 25.4% | 7.1% | Top tier | |
Quality | 50 | -4.5% | 4.5% | Around median | |
Safety | 57 | 60.7x | 2.6x | Around median | |
Capital Return | 45 | — | 2.15% | Around median | |
Momentum | 51 | -35.4% | 2.3% | Around median | |
Sentiment | 63 | 27 | 3 | Around median |
Estimates — analyst targets and a simplified DCF, not investment advice.
Ten ratios that matter, each compared against its sector median and average — so you can see whether a number is rich or cheap relative to peers in the same sector.
Zscaler provides a cloud-based cybersecurity platform centered on the Zero Trust Exchange, connecting users, workloads, branches, devices, and intelligent agents to authorized applications without placing them on a traditional network that permits lateral movement. The company generates revenue from solutions including Zero Trust SASE, Zero Trust Cloud, Zero Trust Branch, data security, and Security for AI, alongside the Z-Flex model, which gives customers multi-year commitments and flexibility to activate or swap modules. Its monetization model is expanding from user-based licenses to metered consumption; non-seat-based solutions contributed approximately 30% of new and expansion annual contract value in the fourth quarter and throughout fiscal 2026, and their annual recurring revenue grew by more than 100% year over year.
In the fourth quarter of fiscal 2026, revenue reached $898.2 million, up 25% year over year and 6% sequentially, while GAAP gross profit was $689.2 million, equivalent to a gross margin of approximately 76.7%, and net loss was $3.4 million. On a non-GAAP basis, gross margin was 80.2% and operating margin reached a record 24.3%, with operating income of $218 million and adjusted earnings per share of $1.19. Quarterly revenue was distributed across the Americas at 57%, with growth of approximately 30%; EMEA at 27%, with growth of approximately 17%; and APJ at 16%, with growth of 23%.
In fiscal 2026, Zscaler generated revenue of $3.4 billion and GAAP gross profit of $2.6 billion, but recorded a net loss of $63.2 million and earnings per share of negative $0.39. Annual recurring revenue reached $3.8 billion, growing 25%, and remaining performance obligations were approximately $7.4 billion, growing approximately 27%, while free cash flow margin reached 23% versus 27% in the prior year. Red Canary contributed $144 million to fiscal 2026 revenue, while the company’s revenue excluding it was $3.2 billion and grew 20% year over year.
The analyst consensus rates ZS as a “Buy,” with an average price target of $198.27 and a wide range between $150 and $230; the average is below the 52-week high of $336.99, reflecting a significant revaluation compared with the top of the range. No positive price-to-earnings ratio is available because of the fiscal 2026 net loss of $63.2 million and negative earnings per share of $0.39, while September 3, 2026 data showed a price-to-sales multiple of 8.58 times. The valuation therefore depends heavily on continued annual recurring revenue growth and the conversion of adjusted margins and cash flows into GAAP profitability, at a time when fiscal 2027 guidance points to slower growth than in fiscal 2026.
Figures in the text are as of 2026-09-05; the live price is shown at the top of the page.
Management links growth opportunities to three areas: Security for AI, Zero Trust Everywhere, and data security. In the fourth quarter of fiscal 2026, Security for AI bookings increased by more than 50% sequentially, and its opportunity pipeline rose 75%, while 70% of its deals included data security. The number of Zero Trust Everywhere organizations also exceeded 950, compared with more than 350 at the end of fiscal 2025. Fiscal 2027 guidance targets revenue between $3.908 billion and $3.938 billion and annual recurring revenue between $4.396 billion and $4.426 billion.
Under GAAP, the company did not achieve a net profit in fiscal 2026; it recorded a loss of $63.2 million and earnings per share of negative $0.39. However, in the fourth quarter of fiscal 2026, it achieved a record adjusted operating margin of 24.3% and adjusted operating income of $218 million. Free cash flow margin was 23% in fiscal 2026, equivalent to free cash flow of $779 million. The key issue is the extent to which this adjusted profitability and cash flow can translate into sustainable GAAP profits.
The company presents artificial intelligence as a source of demand for protecting models, applications, and agents, as well as a source of faster and more autonomous cyber threats. According to risk assessments conducted by the company before the September 3, 2026 call, more than 90% of the assessed organizations had applications, models, or artificial intelligence servers exposed to the internet, and more than one-third had known exploitable vulnerabilities. Zscaler’s portfolio includes Zero Trust Exchange for Agents, Endpoint AI Security, and Security for AI, with the first two in early access during the fourth quarter of fiscal 2026. The company also won seven-figure expansions with a Fortune 500 transportation customer and a Fortune 500 semiconductor customer to secure artificial intelligence usage.
Automated analysis for informational purposes only — not investment advice.
Z-Flex allows customers to sign multi-year commitments and activate or swap modules without starting a new procurement cycle each time. In the fourth quarter of fiscal 2026, the program generated more than $770 million in total contract value, an increase of more than 60% sequentially. During fiscal 2026, its contract value exceeded $1.7 billion, and its customers achieved an average increase of approximately 30% in annual recurring revenue. Examples included a deal that increased a services customer’s spending by approximately 90% and another deal that increased a retail and wholesale customer’s spending by 140%.
Zscaler acquired Red Canary to obtain its technology and more than ten years of expertise in managed detection and response and integrate them into Agentic SecOps. Red Canary exited the fourth quarter of fiscal 2026 with annual recurring revenue of $141 million and contributed $144 million to fiscal-year revenue. However, its business experienced high customer churn during fiscal 2026, and management expects the higher churn rates typical of this type of business to continue. The company does not expect standalone net new annual recurring revenue from Red Canary in fiscal 2027; instead, future contributions will appear within the integrated solution.
Both fourth-quarter revenue and annual recurring revenue grew 25%, but fiscal 2027 guidance targets growth between 16.6% and 17.5% for revenue and between 16.6% and 17.4% for annual recurring revenue. Management factored in the time required for transitions among some sales leaders and the pace of adoption of the integrated Agentic SecOps solution, with a clearer contribution expected in the second half. Red Canary will also not add net new annual recurring revenue independently, and churn rates in managed detection and response businesses remain higher than Zscaler’s core rates. Continued acceleration therefore requires new customer growth, expansion within accounts, and conversion of the AI security opportunity pipeline into actual contracts.
