Zscaler Inc (NASDAQ:ZS) stock fell 9.88% (As on November 26, 11:22:22 AM UTC-4, Source: Google Finance) after the company reported better-than-expected first-quarter fiscal 2026 results, with both earnings and revenue surpassing analyst estimates, but shares tumbled in after-hours trading as investors appeared to expect even stronger performance. 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. 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. Cash provided by operations was $448.3 million, or 57% of revenue, compared to $331.3 million, or 53% of revenue, in the first quarter of fiscal 2025. Free cash flow was $413.3 million, or 52% of revenue, compared to $291.9 million, or 46% of revenue, in the first quarter of fiscal 2025. Cash, cash equivalents and short-term investments were $3,321.3 million as of October 31, 2025, a decrease of $251.1 million from July 31, 2025.

Moreover, the company has surpassed $1B of software sales through the AWS Marketplace to date. Zscaler has six AWS Competencies, including the AI Security specialization, and the collaboration enables customers to quickly purchase and deploy proven Zscaler zero trust solutions through the marketplace. The company has launched FedRAMP Moderate authorized data centers outside of the U.S., located in London and Paris. This strategic expansion enables U.S. federal agencies and their partners to securely accelerate global missions while meeting critical data residency requirements.

ZS in the first-quarter fiscal 2026 has reported the adjusted earnings per share of 96 cents, beating the analysts’ estimates for the adjusted earnings per share of 86 cents. The company had reported the adjusted revenue growth of 26 percent to $788.1 million in the first-quarter fiscal 2026, beating the analysts’ estimates for revenue of $773.26 million.

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.