Zscaler (ZS) · Q2 2026 results and valuation

At 20.0% growth a year (3-year revenue growth), the model's fair value is $259.37 a share — the stock trades 25% below it. Today's price assumes 16.0% growth a year.

1. Guidance

   CapEx is expected to remain elevated during fiscal '27 due to higher component pricing, especially memory.

   Source quote

   “We expect CapEx to remain elevated during fiscal '27 due to higher component pricing, especially memory.”

2. Guidance

   Free cash flow margin is expected to be seasonally stronger in Q1 and Q4 due to the timing of CapEx and cash collections.

   Source quote

   “We expect free cash flow margin to be seasonally stronger in Q1 and Q4, reflecting timing of CapEx and cash collections.”

3. Fading

   Management plans to focus more on specific teams to acquire new logos and pursue upsells to increase engagement opportunities.

   Source quote

   “I think we feel pretty good about the opportunities to engage and We're going to make sure we do some more focus on those teams to get new logos in addition to working on upsell. This will probably make a difference.”

Script and answers carried a similar tone, so the script's message held up under questioning.

Sentences that drove the tone

“Our growth engine continues to broaden beyond users with increasing contribution from non-seat-based solutions, continued Z-Flex momentum, record large deal activity and improved sales productivity.”

“This performance reflects the strength of our business model, disciplined execution and our ability to deliver durable growth with expanding profitability while continuing to invest in the significant market opportunity...”

“We are confident in our ability to continue to drive profitable growth across multiple vectors, including product innovation, go-to-market and customer expansion and creating value for our shareholders.”