Zscaler (ZS) Q2 2025 earnings summary

Executive summary

• Q2 revenue grew 23% year-over-year to $648 million, exceeding guidance, with billings and ARR also up 23% year-over-year to over $2.7 billion.

• Operating profit rose 36% year-over-year, with operating margin improving to 22% and free cash flow margin reaching a Q2 record of 22%.

• Large customer momentum continued, with $1M+ ARR customers up 25% year-over-year and 620 customers now above this threshold.

• The Zero Trust Everywhere initiative is gaining traction, with over 130 enterprises adopting it and a mandate to triple this figure in 18 months.

• AI-powered security and analytics products saw strong demand, with ZDX Advanced Plus bookings up over 45% year-over-year.

Financial highlights

• Revenue: $648 million, up 23% year-over-year and 3% sequentially.

• ARR: Over $2.7 billion, up 23% year-over-year.

• Billings: $743 million, up 18% year-over-year; unbilled billings grew over 25%.

• Gross margin: 80.4%, slightly down from 80.8% a year ago.

• Operating profit: $140 million (22% margin), EPS $0.78, up 24% year-over-year.

• Free cash flow margin: 22%.

• Cash, equivalents, and short-term investments: $2.88 billion.

Outlook and guidance

• Q3 revenue expected between $665–$667 million, up 20–21% year-over-year.

• Q3 operating profit expected at $140–$142 million; EPS $0.75–$0.76.

• Full-year revenue guidance: $2.64–$2.654 billion, up ~22% year-over-year.

• Full-year billings: $3.153–$3.168 billion, up 20–21% year-over-year.

• Full-year operating profit: $562–$572 million; EPS $3.04–$3.09.

• Free cash flow margin expected at 24.5–25%.