Zscaler’s Q2 Earnings Call: Our Top 5 Analyst Questions

September 09, 2025 at 01:30 AM EDT

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Zscaler’s Q2 performance was characterized by strong revenue growth and operational execution, with management attributing the results to robust demand for its expanding cloud security platform. CEO Jay Chaudhry cited accelerating adoption of Zscaler’s AI-powered security solutions and the Zero Trust Everywhere platform across large enterprise customers. He highlighted the company’s success in winning multi-year, large-scale contracts, particularly in sectors seeking to eliminate legacy firewalls and streamline security operations.

Is now the time to buy ZS? Find out in our full research report (it’s free).

Zscaler (ZS) Q2 CY2025 Highlights:

Revenue: $719.2 million vs analyst estimates of $707.7 million (21.3% year-on-year growth, 1.6% beat)
Adjusted EPS: $0.89 vs analyst estimates of $0.80 (11% beat)
Adjusted Operating Income: $158.9 million vs analyst estimates of $153.2 million (22.1% margin, 3.7% beat)
Revenue Guidance for Q3 CY2025 is $773 million at the midpoint, above analyst estimates of $751.2 million
Adjusted EPS guidance for the upcoming financial year 2026 is $3.66 at the midpoint, in line with analyst estimates
Operating Margin: -4.5%, in line with the same quarter last year
Annual Recurring Revenue: $3.02 billion vs analyst estimates of $3.04 billion (21.9% year-on-year growth, 0.7% miss)
Billings: $1.20 billion at quarter end, up 32% year on year
Market Capitalization: $43.84 billion

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Zscaler’s Q2 Earnings Call

Saket Kalia (Barclays) asked about the pace at which SASE and zero trust solutions are replacing legacy firewall appliances. CEO Jay Chaudhry explained that branch firewalls are being eliminated first, with increased adoption of Zero Trust branch, while data center and virtual firewalls will follow over time.
Brad Zelnick (Deutsche Bank) inquired about the Z Flex program’s impact on sales strategy. Chaudhry described Z Flex as a flexible approach enabling larger deals, and noted that it is being expanded to more customers and partners.
Meta Marshall (Morgan Stanley) questioned where customers first focus with AI security products. Chaudhry responded that customers initially secure usage of public AI, followed by private models, and are showing strong early interest in agent-to-agent zero trust solutions.
Joshua Tilton (Wolfe Research) probed the outlook for net new annual recurring revenue (ARR) growth excluding Red Canary. CFO Kevin Rubin guided to high single-digit organic net new ARR growth for the upcoming period.
Andrew Nowinski (Wells Fargo) asked about cross-selling between data security and Zero Trust Everywhere solutions. Chaudhry highlighted growing customer adoption of both product sets and significant opportunity for further module expansion.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be watching (1) the pace of adoption for AI Guard and agentic security modules, (2) expansion of Zero Trust Everywhere deployments, especially in retail and large branch environments, and (3) progress integrating Red Canary’s technology and specialist go-to-market teams. We will also monitor execution on the Z Flex program as a driver of multi-module deals and retention.

Zscaler currently trades at $281.90, up from $274.61 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).

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Zscaler’s Q2 Earnings Call: Our Top 5 Analyst Questions

Zscaler (ZS) Q2 CY2025 Highlights:

Our Top 5 Analyst Questions From Zscaler’s Q2 Earnings Call

Catalysts in Upcoming Quarters

The Best Stocks for High-Quality Investors

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