Zscaler and Ambarella Face Earnings Challenges Amid Strong Revenue Growth
San Jose, Wednesday, 26 November 2025.
Zscaler reported a Q1 2026 GAAP net loss of $11.6M, despite a 26% revenue increase. Ambarella also faced earnings challenges, highlighting tech sector pressures.
Zscaler’s Financial Performance: A Mixed Bag
Zscaler, Inc. (Nasdaq: ZS) unveiled its fiscal Q1 2026 financial results on November 25, 2025, reporting a GAAP net loss of $11.6 million. This figure represents a slight improvement from the $12.1 million loss recorded in the previous year, reflecting a narrowing of losses amid significant revenue growth. The company’s revenue surged by 26% year-over-year, reaching $788.1 million. This growth underscores the strong market demand for Zscaler’s Zero Trust and AI Security platform, as highlighted by its CEO, Jay Chaudhry [1][2].
Revenue and Strategic Acquisitions
Zscaler’s revenue increase was accompanied by a robust growth in its Annual Recurring Revenue (ARR), which also rose by 26% to $3.204 billion. This reflects the company’s strategic focus on recurring subscription models, which provide a stable revenue base in uncertain economic times. Furthermore, the company’s deferred revenue grew by 32% to $2.351 billion, illustrating the strength of future revenue commitments. During this quarter, Zscaler completed the acquisitions of Red Canary Inc. and SPLXAI Inc. for a combined $692 million, a move aimed at bolstering its security offerings [1][2].
Ambarella’s Earnings Report and Market Impact
In parallel, Ambarella, Inc. reported its third-quarter financial results, highlighting challenges similar to those faced by Zscaler. The company detailed its gross margin and net income figures, which reflect the broader difficulties within the tech sector. Ambarella’s performance has been influenced by economic headwinds that have impacted its profitability, similar to other players in the industry. These reports from Zscaler and Ambarella shed light on the competitive and challenging landscape that tech companies are navigating, particularly in the face of tightening margins and increased market pressures [3][4].
Outlook and Future Projections
Looking ahead, Zscaler has provided optimistic guidance for the fiscal year 2026, predicting revenue of $3.282 billion to $3.301 billion and non-GAAP net income per share of $3.78 to $3.82. For Q2 2026, the company anticipates revenue between $797 million and $799 million. This positive outlook suggests that Zscaler is poised to continue capitalizing on its market position, despite the reported losses. The strategic acquisitions and innovations in their product offerings are expected to play a critical role in this trajectory [1][5].