Zscaler (ZS) Q3 2025 earnings summary

Executive summary

• Achieved record Q3 with revenue of $678 million, up 23% year-over-year, and TCV bookings over $1 billion, reflecting strong demand and sales productivity.

• Annual Recurring Revenue (ARR) reached $2.9 billion, up 23% year-over-year for the third consecutive quarter, with a target to surpass $3 billion by next quarter.

• Platform now secures over 50 million users, processes 100 trillion transactions annually, and is recognized as a leader in Gartner's SSE Magic Quadrant for over a decade.

• Announced acquisition of Red Canary for $675 million in cash and equity, expected to close in Q1 FY26, to enhance AI-driven security operations and MDR capabilities.

• Free cash flow for the nine months was $554.8 million (28% margin), with strong operating cash flow and continued investment in R&D, sales, and platform expansion.

Financial highlights

• Q3 revenue was $678 million, up 23% year-over-year; calculated billings reached $785 million, up 25% year-over-year.

• Non-GAAP gross margin was 80.3%; GAAP gross margin was 77%; operating margin was approximately 22%.

• Free cash flow margin was 18% for Q3; cash and equivalents totaled $3 billion at quarter end.

• Net loss for Q3 FY25 was $4.1 million, compared to net income of $19.1 million in Q3 FY24.

• Deferred revenue at April 30, 2025 was $1.99 billion, with 85% classified as current.

Outlook and guidance

• Q4 FY25 revenue expected between $705 million and $707 million, up ~19% year-over-year.

• Full-year FY25 revenue guidance raised to $2.659–$2.661 billion, up ~23% year-over-year.

• Full-year billings guidance increased to $3.184–$3.189 billion, up 21–22% year-over-year.

• Operating profit for the year expected at $573–$575 million; EPS at $3.18–$3.19.

• Free cash flow margin for the year projected at 25.5–26%.