Zscaler printed 25%. The FY27 guide is the real SSE story.
Official results for the quarter ended July 31, 2026: revenue $898.2 million, up 25% year over year. ARR $3,771 million, up 25%, with $246 million of net new ARR in the quarter. Excluding Red Canary — which contributed $141 million of ARR — ARR grew 20% to $3,630 million and net new ARR grew 17%. That organic print is the cleaner underwrite. The headline 25% still includes the acquired ARR.
Margins and cash tell two different quarters. Non-GAAP income from operations was $218.4 million, a record 24% of revenue. GAAP loss from operations was $15.5 million. GAAP net loss was $3.4 million. Non-GAAP net income was $198.2 million, or $1.19 per diluted share. Cash from operations was $279.3 million, or 31% of revenue. Free cash flow was $60.8 million, or 7% of revenue — versus $171.9 million, or 24%, a year earlier — reflecting capex and internal-use software of $218.5 million versus $78.7 million. Deferred revenue grew 19% to $2,926 million. FCF compression is capex math, not a demand collapse. Still write it down.
Full-year FY26: revenue $3,353 million, up 25%. Ex-Red Canary revenue $3,209 million, up 20%. Non-GAAP income from operations $767.1 million, or 23% of revenue. Free cash flow $779.1 million, or 23%. GAAP net loss $63.2 million. The year looks like a scaled SSE platform that still grows mid-twenties on a reported basis and low-twenties organically.
Now the guide. FY27 ARR $4.396 billion to $4.426 billion — roughly 16.6% to 17.4% growth. FY27 revenue $3.908 billion to $3.938 billion — 16.6% to 17.5%. Non-GAAP income from operations $924 million to $932 million. Free cash flow margin about 23.0% to 23.5%. Q1 FY27 revenue $935 million to $939 million, about 19% year over year. Twenty-five percent printed. Seventeen percent guided. That gap is the SSE underwrite for platforms at this scale.
Restructuring sits in the same 8-K tape: on September 1, Zscaler committed to cut worldwide headcount by approximately 3%, with aggregate non-recurring charges of about $30.0 million to $33.0 million — mostly severance and benefits — majority recognized in the first half of FY27, to reallocate capacity toward AI and growth initiatives. Margin expansion and a 3% cut in the same filing is not a contradiction. It is capital reallocation.
Narrative from the release, not an ARR split: CEO Jay Chaudhry frames Zero Trust plus Security for AI / agents as the growth avenue — connecting users, workloads, branches, and now agents without putting them on the network. CFO Kevin Rubin cites non-seat-based solutions, Z-Flex momentum, record large-deal activity, and sales productivity. The press release did not print a Security for AI revenue line. Treat AI and Z-Flex as the story management wants FY27 to prove — then wait for attach to show up in the organic ARR print.
POV: platform winners still decelerate. That is not failure. That is math. Ex-Red Canary 20% organic ARR is the cleaner Q4. Ask whether Z-Flex, non-seat, and Security for AI attach offset seat deceleration; attach percentages are Undisclosed. Underwrite sheet: Q4 rev $898.2M (+25%); ARR $3,771M (+25%); net new $246M; ex-Red Canary ARR $3,630M (+20%), net new +17%; Red Canary $141M ARR; non-GAAP ops $218.4M / 24%; GAAP ops loss $15.5M; GAAP NI loss $3.4M; non-GAAP NI $198.2M / $1.19; CFO $279.3M (31%); FCF $60.8M (7%); deferred $2,926M (+19%); FY26 rev $3,353M; FY27 guide as above; ~3% headcount / $30–33M charges. Sources: the IR release and 8-K. The deceleration is the story. Prove the offsets in FY27. Beat the quarter. Underwrite the guide.