Zscaler (ZS)
NASDAQ:ZS
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Zscaler
(NASDAQ:ZS)
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Rating:61Neutral
Price Target:
$133.00
▼(-1.25% Downside)
Action:Downgraded
Date:05/28/26
The score is driven primarily by strong fundamental cash generation and scaling revenue with high gross margins, reinforced by a generally constructive earnings call and profitable non-GAAP outlook. Offsetting these positives are weak technical positioning (below major moving averages), GAAP unprofitability reflected in the negative P/E, and guidance/capex factors pointing to slower growth and near-term free-cash-flow pressure.
Positive Factors
Recurring subscription ARR momentum
Sustained ARR growth of 25% with strong net new ARR demonstrates durable demand for subscription security. Large ACV deals and expanding base confer high revenue visibility and predictable renewal/expansion dynamics that support multi-quarter stability in cash flows and customer stickiness.
Negative Factors
Persistent GAAP unprofitability
Despite improving margins and cash flow, GAAP net income and operating profit remain negative, indicating the company has not yet converted scale into accounting profitability. This creates ongoing execution risk and sensitivity to margin pressures or higher opex that could delay durable GAAP earnings.
Read all positive and negative factors
Positive Factors
Negative Factors
Recurring subscription ARR momentum
Sustained ARR growth of 25% with strong net new ARR demonstrates durable demand for subscription security. Large ACV deals and expanding base confer high revenue visibility and predictable renewal/expansion dynamics that support multi-quarter stability in cash flows and customer stickiness.
Read all positive factors
Zscaler Key Performance Indicators (KPIs)
Any
Revenue by Geography
Breaks down revenue across different regions, revealing where Zscaler is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Breaks down revenue across different regions, revealing where Zscaler is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Data provided by:
The Fly
The FlyZscaler (ZS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$29.68B
Dividend YieldN/A
Average Volume (3M)3.01M
Price to Earnings (P/E)―
Beta (1Y)1.49
Revenue Growth24.61%
EPS Growth-91.58%
CountryUS
Employees7,348
SectorTechnology
Sector Strength88
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)-0.48
Shares Outstanding161,709,520
10 Day Avg. Volume3,760,418
30 Day Avg. Volume3,013,250
Financial Highlights & Ratios
PEG Ratio34.55
Price to Book (P/B)24.51
Price to Sales (P/S)16.49
P/FCF Ratio60.67
Enterprise Value/Market Cap1.01
Enterprise Value/Revenue9.45
Enterprise Value/Gross Profit12.32
Enterprise Value/Ebitda434.09
Forecast
1Y Price Target
$196.39Price Target Upside45.82% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering36
EPS Forecast (FY)4.01
Revenue Forecast (FY)$3.32B
Zscaler Business Overview & Revenue Model
Company Description
Zscaler, Inc. operates as a cloud security company worldwide. The company provides Zscaler Internet Access solution that provides users, servers, operational technology, Internet of Things device secure access to externally managed applications, i...
How the Company Makes Money
Zscaler primarily makes money by selling subscriptions to its cloud security platform. Revenue is generated largely from recurring subscription contracts (typically sold to enterprises and other organizations) that grant customers access to specif...
Zscaler Earnings Call Summary
Earnings Call Date:May 26, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:Sep 08, 2026
Earnings Call Sentiment Positive
The call conveyed strong operating performance and clear product and commercial momentum — ARR and revenue both grew 25% YoY, operating margin hit a record 23%, cloud marketplace and AI/security offerings showed accelerating traction, and cash and RPO remain robust. Management, however, took a cautious tone on near-term growth due to recent sales leadership turnover, supply-chain driven CapEx pressure (pull-forward purchases) that compresses quarterly free cash flow, and an early FY27 outlook implying a deceleration to mid-teens growth. Overall the tone is confident about long-term AI-driven opportunity and platform differentiation, while prudent on short-term guide and investments.Positive Updates
Strong ARR Growth
Total ARR reached $3.5B, up 25% year-over-year; Q3 net new ARR was $166M, up 24% YoY (or $153M net new ARR excluding Red Canary, up 14% YoY).
Negative Updates
Guidance Prudence and Deceleration Signals
Q4 revenue guide of $875M–$878M implies ~22% YoY growth (below current quarter 25%); full-year ARR guidance $3.74B–$3.75B (~24% YoY) and preliminary FY27 outlook for ARR and revenue growth of 16%–17%, signaling a deceleration vs FY26.
Read all updates
Q3-2026 Updates
Positive
Negative
Strong ARR Growth
Total ARR reached $3.5B, up 25% year-over-year; Q3 net new ARR was $166M, up 24% YoY (or $153M net new ARR excluding Red Canary, up 14% YoY).
Read all positive updates
Company Guidance
Guidance for Q4 FY26 and the full year was detailed: Q4 revenue is expected at $875–878M (≈22% YoY), non‑GAAP gross margin ~80%, operating profit $206–208M (company said roughly a 30%–31% YoY improvement), net other income ≈$24.5M, and EPS $1.08–1.09 (assumes 21% tax rate and 168M diluted shares). For full‑year FY26 the company targets ARR of $3.74–3.75B (≈24% YoY) — implying organic net new ARR growth (ex‑Red Canary) of ~9.5% — revenue $3.33–3.34B (≈24.6%–24.7% YoY), operating profit $755–757M (≈30% YoY), EPS $4.10–4.11 (21% tax, 168M shares), and free cash flow margin ~22.8%–23.3% (down from prior expectations due to higher CapEx). Red Canary is expected to contribute ≈$137M ARR and ≈$137M revenue in FY26 (up from prior guidances) with ~$10M net new ARR in Q4. The company flagged higher near‑term CapEx (Q3 CapEx was $42M or 5% of revenue; FY26 CapEx now expected in the high‑single‑digits % of revenue with Q4 activity pulled forward) and said FY27 CapEx could rise up to ~200 basis points versus FY26, while giving an early look for FY27 of total ARR and revenue growth of about 16%–17%.Zscaler Financial Statement Overview
Summary
Income Statement
68
Positive
Balance Sheet
64
Positive
Cash Flow
86
Very Positive
| Breakdown | TTM | Jul 2025 | Jul 2024 | Jul 2023 | Jul 2022 | Jul 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 3.17B | 2.67B | 2.17B | 1.62B | 1.09B | 673.10M |
| Gross Profit | 2.43B | 2.05B | 1.69B | 1.25B | 847.63M | 522.46M |
| EBITDA | 69.08M | 112.41M | 64.79M | -76.72M | -183.43M | -105.80M |
| Net Income | -77.39M | -41.48M | -57.71M | -202.34M | -390.28M | -262.03M |
Balance Sheet | ||||||
| Total Assets | 7.10B | 6.42B | 4.70B | 3.61B | 2.83B | 2.26B |
| Cash, Cash Equivalents and Short-Term Investments | 3.54B | 3.57B | 2.41B | 2.10B | 1.73B | 1.50B |
| Total Debt | 1.86B | 1.80B | 1.24B | 1.21B | 1.05B | 964.61M |
| Total Liabilities | 4.73B | 4.62B | 3.43B | 2.88B | 2.26B | 1.73B |
| Stockholders Equity | 2.37B | 1.80B | 1.27B | 725.11M | 573.30M | 528.89M |
Cash Flow | ||||||
| Free Cash Flow | 1.02B | 726.69M | 584.95M | 333.62M | 231.33M | 143.74M |
| Operating Cash Flow | 1.10B | 972.45M | 779.85M | 462.34M | 321.91M | 202.04M |
| Investing Cash Flow | -2.53B | -427.02M | -683.18M | -259.34M | 374.06M | -109.67M |
| Financing Cash Flow | 419.61M | 420.51M | 64.21M | 45.99M | 41.34M | 41.67M |
Zscaler Technical Analysis
Negative
134.68
Price Trends
144.43
Negative
164.38
Negative
222.92
Negative
Market Momentum
6.52
Positive
37.26
Neutral
61.91
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ZS, the sentiment is Negative. The current price of 134.68 is below the 20-day moving average (MA) of 154.18, below the 50-day MA of 144.43, and below the 200-day MA of 222.92, indicating a bearish trend. The MACD of 6.52 indicates Positive momentum. The RSI at 37.26 is Neutral, neither overbought nor oversold. The STOCH value of 61.91 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ZS.
Zscaler Risk Analysis
Zscaler disclosed 59 risk factors in its most recent earnings report. Zscaler reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Zscaler Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $98.15B | 28.24 | 155.65% | ― | 15.75% | 6.24% | |
79 Outperform | $209.51B | 71.18 | 15.49% | ― | 15.43% | -2.40% | |
73 Outperform | $170.93B | -686.05 | -4.15% | ― | 21.71% | -908.90% | |
70 Outperform | $16.45B | 59.44 | 3.45% | ― | 11.84% | 730.76% | |
62 Neutral | $76.89B | -793.39 | -6.23% | ― | 31.55% | -4.50% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
61 Neutral | $29.68B | -378.26 | -3.48% | ― | 24.61% | -91.58% |
* Technology Sector Average
ZS
Zscaler
126.41
-127.24
-50.16%
FTNT
Fortinet
127.93
23.42
22.41%
PANW
Palo Alto Networks
248.47
60.67
32.31%
OKTA
Okta
89.50
-15.72
-14.94%
CRWD
CrowdStrike Holdings
645.36
176.53
37.65%
NET
Cloudflare
209.22
47.24
29.16%
Zscaler Corporate Events
Business Operations and StrategyExecutive/Board Changes
Zscaler Executive Strategy Leader Resigns from Board Role
Neutral
Apr 16, 2026
Zscaler, Inc. reported that Raj Judge, its executive vice president of corporate strategy, informed the company of his resignation on April 15, 2026, and stepped down as a corporate officer and board member effective that same day. His employment ...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.