Zscaler reported strong financial results for the third quarter of fiscal year 2026, highlighting continued rapid growth as demand for AI-driven cybersecurity solutions accelerates worldwide.

The cloud security company announced that quarterly revenue climbed 25% year-over-year to $850.5 million, while Annual Recurring Revenue (ARR) also increased 25%, reaching $3.53 billion. Company executives said the performance reflects growing customer demand for advanced cybersecurity protection in the era of artificial intelligence.

CEO and founder Jay Chaudhry said Zscaler’s Zero Trust security architecture is becoming increasingly important as businesses face evolving threats tied to AI systems and sophisticated cyberattacks.

“Zscaler is ideally positioned as the cybersecurity platform for the AI era,” Chaudhry said, adding that the company continues attracting new customers while expanding relationships with existing enterprise clients.

The company also reported record profitability during the quarter. Non-GAAP operating income rose to $195.8 million, representing 23% of revenue — the highest operating margin in the company’s history.

Chief Financial Officer Kevin Rubin said the results demonstrate Zscaler’s ability to balance rapid expansion with disciplined financial management.

“We remain focused on driving profitable growth through innovation, customer expansion, and continued investment in our platform,” Rubin said.

Zscaler’s growth was also supported by its acquisition of cybersecurity firm Red Canary, which contributed additional recurring revenue during the quarter. Even excluding the acquisition, the company still posted more than 20% ARR growth.

Cash flow performance remained strong as well. Operating cash flow totaled $198 million during the quarter, while free cash flow increased 14% year-over-year to $136 million.

Deferred revenue — a closely watched metric for subscription-based software companies — rose 25% to $2.48 billion, signaling continued long-term customer commitments.

Despite posting a small GAAP operating loss tied largely to stock compensation and acquisition-related expenses, Zscaler reported strong adjusted earnings. Non-GAAP net income reached $177.9 million, compared to $136.8 million during the same quarter last year.

The strong earnings report further reinforces investor optimism surrounding cybersecurity companies benefiting from the rapid expansion of artificial intelligence, cloud computing, and enterprise digital transformation initiatives.

As cyber threats grow increasingly sophisticated, analysts say companies like Zscaler are positioned to play a major role in securing AI infrastructure, corporate networks, and cloud-based systems for years to come.