ZS' Zero Trust Everywhere drives bigger deals as customers reach 550 at the end of Q2'26 from 130 in the year-ago quarter.
Zscaler Inc.’s ZS Zero Trust Everywhere strategy is emerging as one of the company’s biggest long-term growth drivers. The initiative expands Zscaler’s security platform beyond users and devices to branch offices, cloud workloads and connected applications. As enterprises move away from traditional firewall-based systems, demand for cloud-native Zero Trust security is rising rapidly.
Quarterly numbers reflect the impressive trend. In the second quarter of fiscal 2026, the number of Zero Trust Everywhere customers surpassed 550, up sharply from 130 in the prior-year period. Management believes these customers can eventually generate two to three times higher annual recurring revenues (ARR) compared with traditional deployments.
The strategy is also helping Zscaler win larger deals. Products like Zero Trust Branch and Zero Trust Cloud are gaining traction as companies look to simplify network security and reduce hardware costs. Enterprises increasingly prefer unified platforms that can secure users, workloads and branches through one architecture. This trend is creating strong cross-selling opportunities for Zscaler.
Financial performance reflects this momentum. In the second quarter of fiscal 2026, revenues rose 26% year over year to $815.8 million, while ARR increased 25% to $3.36 billion. Remaining performance obligations (RPO) climbed 31% to around $6.1 billion, signaling strong future demand.
Zero Trust Everywhere could become a major growth engine for Zscaler. As organizations modernize security infrastructure and adopt AI-driven workflows, the company’s cloud-native approach may help drive larger contracts, stronger customer retention and durable long-term revenue growth. The Zacks Consensus Estimate for fiscal 2026 indicates revenues and RPO will increase 24% and 22%, respectively, year over year.
Palo Alto Networks $PANW, Inc. PANW and Cloudflare, Inc. NET are two important competitors challenging Zscaler in the growing Zero Trust security market.
Palo Alto Networks has been aggressively building its Prisma Access platform to help enterprises secure users, applications and cloud workloads through a unified system. The company is also integrating AI-driven security tools and expanding platform consolidation efforts. Its broad customer base and strong enterprise relationships make it a major rival in large cloud security deals.
Zero Trust directly anchors Palo Alto Networks’ Next-Generation Security (“NGS”) and platform offerings. While the company does not isolate "Zero Trust" as a standalone revenue line item, it is a primary driver behind PANW’s NGS ARR, which surged 33% year over year to $6.33 billion in the second quarter of fiscal 2026.
Cloudflare is another fast-growing player in Zero Trust networking. Through its Cloudflare One platform, the company offers secure internet access, application protection and network security services. Cloudflare’s global network infrastructure and focus on performance give it an advantage in delivering fast and scalable cloud-based security solutions.
Cloudflare's Zero Trust and Secure Access Service Edge offerings are instrumental in driving massive enterprise wins. For example, in the first quarter of 2026, a Fortune 500 aerospace company signed a three-year $5 million contract for its Zero Trust products like Access, Gateway and Browser Isolation.
Shares of Zscaler have plunged 30.6% over the past year compared to the Zacks Security industry’s rise of 13.7%.
Image Source: Zacks Investment Research
From a valuation standpoint, ZS trades at a forward price-to-sales ratio of 7.32, significantly below the industry’s average of 13.95.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Zscaler’s fiscal 2026 and 2027 earnings implies a year-over-year increase of 22.9% and 13%, respectively. Estimates for fiscal 2026 and 2027 have remained unchanged over the past 60 days.
Image Source: Zacks Investment Research
Zscaler currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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