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Earning Preview: Zscaler Inc. Q2 revenue is expected to increase by 25.69%, and institutional views are predominantly bullishAbstract
Zscaler Inc. will report fiscal Q2 2026 results on February 26, 2026 Post Market; investors look for accelerating top-line growth with improving profitability while closely monitoring margins and segment momentum.Market Forecast
Consensus tracking indicates Zscaler Inc. is expected to deliver revenue of 798.80 million, up 25.69% year over year, with adjusted EPS of 0.90, up 29.56% year over year, and EBIT of 173.83 million, up 35.96% year over year. No formal guidance for gross profit margin or net margin has been provided in the current-quarter forecasts; last quarter’s baseline margin levels will frame expectations for stability or incremental leverage.The main business continues to be partner-led sales, supported by strong execution with channel partners that generated the bulk of revenue last quarter and an active direct-sales motion expected to support broader platform adoption. The most promising segment remains the channel partner route, which delivered 666.01 million last quarter, with overall revenue rising 25.51% year over year as the company sustained momentum across its core offerings and expanded customer spend.
Last Quarter Review
Zscaler Inc. reported fiscal Q1 2026 (quarter ended October 31, 2025) revenue of 788.11 million, a gross profit margin of 76.66%, GAAP net profit attributable to the parent company of -11.62 million, a net profit margin of -1.47%, and adjusted EPS of 0.96, up 24.68% year over year. On a sequential basis, net profit improved by 33.92%.A key highlight was the broad-based beat versus internal and external markers: revenue exceeded estimates by 14.37 million and adjusted EPS beat by 0.10, while EBIT of 171.86 million surpassed forecasts, reflecting healthy operating leverage. The main business mix showcased channel partners contributing 666.01 million and direct customers contributing 122.10 million, with overall revenue up 25.51% year over year and high gross margin underpinning scalable economics.
Current Quarter Outlook
Main business momentum and revenue trajectory
Zscaler Inc.’s partner-led sales motion remains the principal engine of revenue scale going into fiscal Q2 2026. The company’s last quarter revenue of 788.11 million grew 25.51% year over year, and the current quarter forecast calls for 798.80 million, a 25.69% year-over-year increase, indicating underlying demand resilience and continuity in enterprise adoption. The continuation of high gross margin at 76.66% in the prior quarter sets a constructive baseline for operating leverage, with EBIT projected to grow 35.96% year over year to 173.83 million and adjusted EPS to rise 29.56% year over year to 0.90. These trends imply that Zscaler Inc. is translating top-line expansion into better profitability despite a GAAP net loss last quarter, aided by disciplined expense management and scale benefits in delivery and support.The revenue mix signals that channel partners are likely to remain pivotal in the distribution structure and deal flow. Last quarter’s partner-led revenue of 666.01 million illustrates the breadth of indirect engagement and co-selling motions. Direct customer revenue of 122.10 million provides proof of continued direct attach across the installed base, and it complements channel scale. The overarching framework is the pursuit of larger enterprise contracts and expansions across existing accounts, with the mix of new logos and seat expansions sustaining growth consistency. With EBIT strength and robust adjusted EPS projections, the quarter’s core focus will be whether revenue meets or exceeds the 798.80 million projection while margins remain stable or improve.
Operationally, investors will evaluate the relationship between revenue growth and operating efficiency, particularly in sales and marketing productivity and R&D investment pacing. The prior quarter’s surprise in revenue and EPS suggests the company managed both demand capture and cost discipline effectively. Market attention will center on whether that execution can repeat and whether sequential momentum in net profit persists. While the net profit margin remained negative in Q1, the trajectory of EBIT and adjusted EPS implies that the path to improved GAAP profitability in future periods is credible if revenue scale continues and cost structures remain balanced.
Most promising business driver: partner-led expansion and adjacent capability uplift
Within the company’s business mix, the partner-led route is set up as the most influential near-term growth lever. The last quarter’s 666.01 million from channel partners demonstrates the sustained breadth of this motion, enabling reach across a wide customer landscape and supporting repeatability in deal execution. With overall revenue growth of 25.51% year over year last quarter and the current quarter’s forecasted 25.69% year-over-year growth, the backdrop is supportive for partner ecosystems to maintain or expand deal cycles across renewals, enhancements, and cross-sell.An additional business driver is the company’s enhancement of browser-focused protections through its recently closed SquareX acquisition on February 6, 2026. This brings zero trust browser security capabilities, enabling organizations to embed lightweight extensions into any browser to enhance protection and simplify deployment. While revenue contribution from the acquisition in fiscal Q2 may be limited due to timing, it has near-term potential to aid platform differentiation and multiproduct attach, setting up incremental monetization opportunities in subsequent quarters. Investors will watch for early indicators such as reference wins, attach rates in new deals, and qualitative commentary on customer interest.
The combination of channel reach and added adjacent capability creates room for broader seat expansion and new modules in existing accounts. Historically, expansion within accounts can deliver favorable unit economics, and given high gross margin levels, incremental contributions from additional capabilities tend to leverage operating costs. The quarter’s question is whether these drivers manifest in measurable progress—via revenue outperformance against the 798.80 million forecast or improved profitability metrics beyond EPS and EBIT expectations. If attach motion improves quickly, it can add constructive bias to near-term guidance quality and forward-looking commentary, reinforcing a stable demand curve.
Key stock-price catalysts in fiscal Q2 2026
The most visible catalyst for Zscaler Inc.’s stock this quarter is the relationship between reported revenue growth and adjusted EPS trajectory. The market expects revenue growth of 25.69% year over year alongside adjusted EPS of 0.90, up 29.56% year over year, which collectively signal operating leverage. If delivered or exceeded, this mix supports constructive sentiment, particularly given last quarter’s beats and robust gross margin. Conversely, underperformance on the revenue line would be read as a signal of slower enterprise adoption or timing deferrals, and the EPS outcome would be contextualized against cost discipline and the pace of investment in go-to-market and product development.Margin commentary will be the second catalyst. Last quarter’s gross margin of 76.66% provides a benchmark for efficiency in delivery, and the net margin at -1.47% highlights that GAAP profitability remains a work-in-progress even as adjusted metrics strengthen. Investors will focus on signals such as expense ratios, EBIT progression, and the potential for near-term reductions in GAAP losses. Since EBIT is forecast at 173.83 million, up 35.96% year over year, a beat here would reinforce the thesis of improving operating leverage across scale.
A third catalyst is qualitative commentary related to product uptake and ecosystem breadth, including the integration of the zero trust browser security capability via SquareX. While this is not expected to be a major revenue driver immediately, early traction—or visible attach in partner motions—can influence sentiment and forward estimates. Analyst stance and target changes in the weeks around the print also matter; RBC Capital Markets recently reaffirmed an Outperform rating while recalibrating the price target due to valuation and pacing factors, and Mizuho’s upgrade to Outperform underscores ongoing constructive institutional views. The balance of these inputs will frame investor expectations around fiscal Q3 guidance and full-year positioning, making revenue quality, EPS momentum, and commentary on capability-driven expansion the primary determinants of stock reaction.
Analyst Opinions
The balance of recent institutional commentary between January 1, 2026 and February 19, 2026 is predominantly bullish. Mizuho upgraded Zscaler Inc. to Outperform, citing confidence in the company’s platform and execution; the report highlighted an average rating of buy and a median price target around 330.45. RBC Capital Markets, while lowering the price target to 290 on January 5, 2026 and subsequently to 250 on February 11, 2026, maintained an Outperform rating in both instances, signaling continued constructive expectations despite recalibrated valuation assumptions. MT Newswires reported on February 11, 2026 that Zscaler Inc. had an average rating of buy and a mean price target of 316.74 among polled analysts, indicating broad support across the coverage universe within the period.The prevailing majority view aligns on sustained top-line expansion paired with improved profitability metrics. From a modeling perspective, institutional analysts appear to accept a scenario where revenue growth near the mid-20s percent year-over-year and high gross margin can translate into healthy adjusted EPS and EBIT growth, even if GAAP net profit remains negative in the near term. This is consistent with the current quarter’s EPS estimate of 0.90 and EBIT estimate of 173.83 million, each implying operating leverage that, if achieved, can support future upward revisions or, at a minimum, maintain confidence in the full-year trajectory.
In their notes, bullish analysts emphasize the strength of Zscaler Inc.’s multi-product platform and the value proposition that underpins customer expansions and renewed commitments, while acknowledging valuation considerations via selective target reductions amid market-wide multiple resets. The maintenance and upgrade of ratings, alongside a robust average price target reported during the period, frame a consensus that is constructive heading into the print. Should Zscaler Inc. report revenue at or above 798.80 million and deliver adjusted EPS of at least 0.90, the majority of buy-rated coverage would likely view the quarter as validating the growth thesis. The key watchpoints these analysts identify for the call include revenue outperformance relative to the 25.69% year-over-year forecast, operational signals around margin stability, and qualitative updates on new capability uptake such as the recent zero trust browser security addition.
In summary, the institutional stance since January 1, 2026 is overwhelmingly favorable: upgrades and reiterated buy/outperform ratings outweigh target reductions, and the narrative centers on high-quality revenue growth and improving adjusted profitability. With consensus expecting a 25.69% year-over-year revenue increase and a 29.56% year-over-year rise in adjusted EPS for fiscal Q2 2026, the majority view is that execution against these metrics will support the stock’s setup and guidance credibility in the near term.
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