Zscaler (ZS) AI Stock Analysis

• Market Cap: $44.56B
• Dividend Yield: N/A
• Average Volume (3M): 2.00M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.81
• Revenue Growth: 25.46%
• EPS Growth: 49.20%
• Country: US
• Employees: 7,348
• Sector: Technology
• Sector Strength: 92
• Industry: Software - Infrastructure
• EPS (TTM): 0.84
• Shares Outstanding: 155,695,680
• 10 Day Avg. Volume: 1,476,530
• 30 Day Avg. Volume: 2,004,361
• PEG Ratio: 7.09
• Price to Book (P/B): 24.86
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 61.74
• Enterprise Value/Market Cap: 0.99
• Enterprise Value/Revenue: 4.69
• Enterprise Value/Gross Profit: 22.44
• Enterprise Value/Ebitda: 118.41
• 1Y Price Target: $315.00
• Price Target Upside: 10.07% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 37

• Rating: 72 Outperform
• Price Target: $333.00 ▲(16.36%Upside)

Zscaler's strong revenue growth and efficient cash flow management are major positives, supported by a robust earnings call indicating optimistic future potential. However, the overbought technical indicators and high valuation without profitability pose risks. Investors should weigh the growth trajectory against current valuation concerns.

Positive Factors

Business Expansion

Zscaler is well-positioned to deliver $5B in ARR with strong growth in both core and emerging products.

Financial Performance

Zscaler's intrinsic 'hard-dollar' optimization advantage supports over 20% compounding topline growth despite macroeconomic challenges.

Product Strategy

Zscaler's product strategy aggressively pushes into lucrative but hyper-competitive SecOps, powered by an assertive data security/AI-first stance.

Negative Factors

Leadership Transition

The leadership transition is viewed as manageable and non-thesis-altering, due to the depth in Zscaler's technical and product leadership bench.

Market Competition

Sustained SIEM/SOC wallet capture as a relatively slower market entrant will require a mindshare lift, which presents a challenge.

Market Valuation

Despite its rally, Zscaler trades below high-growth peers, suggesting potential value as it continues to show strong GTM productivity and federal business performance.

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, including software-as-a-service (SaaS) applications and Internet destinations; and Zscaler Private Access solution, which is designed to provide access to managed applications hosted internally in data centers, and private or public clouds. It also offers Zscaler Digital Experience that measures end-to-end user experience across business applications, as well as provides an easy to understand digital experience score for each user, application, and location within an enterprise. In addition, the company provides workload segmentation solutions comprising Zscaler Cloud Security Posture Management that identifies and remediates application misconfigurations in SaaS, infrastructure as a service, and platform as a service to reduce risk and ensure compliance with industry and organizational benchmarks; and Zscaler Cloud Workload Segmentation, which is designed to secure application-to-application communications inside public clouds and data centers to stop lateral threat movement, as well as prevents application compromise and reduces the risk of data breaches. Its platform modules include Zscaler Central Authority, Zscaler Enforcement Node, and Zscaler Log Servers. It serves customers in airlines and transportation, conglomerates, consumer goods and retail, financial services, healthcare, manufacturing, media and communications, public sector and education, technology, and telecommunications services industries. The company was formerly known as SafeChannel, Inc., and changed its name to Zscaler, Inc. in August 2008. Zscaler, Inc. was incorporated in 2007 and is headquartered in San Jose, California.

How the Company Makes Money

Zscaler generates revenue primarily through the sale of subscriptions to its cloud-based security services. The company's revenue model is based on a recurring subscription fee, which provides customers with access to its comprehensive suite of cybersecurity solutions. Zscaler's key revenue streams include its Zscaler Internet Access (ZIA) and Zscaler Private Access (ZPA) services. ZIA acts as a secure internet gateway, protecting users from threats on the internet, while ZPA provides secure access to internal applications without the need for a traditional VPN. Additionally, Zscaler benefits from significant partnerships with technology vendors, system integrators, and managed service providers, which help to drive sales and expand its market presence. The company's focus on innovation and customer satisfaction also contributes to its ability to maintain and grow its revenue base in a competitive cybersecurity landscape.

Zscaler Financial Statement Overview

Summary

Zscaler demonstrates strong revenue growth and efficient cash flow management, with a robust balance sheet. However, persistent net losses and negative return on equity remain concerns, reflecting ongoing challenges in achieving profitability.

Income Statement

Zscaler has shown strong revenue growth with a Revenue Growth Rate of 17.49% TTM compared to the previous year. The Gross Profit Margin is robust at 77.38% TTM, indicating effective cost management in production. However, the company is still operating at a loss, with a negative Net Profit Margin of -1.52% TTM and a negative EBIT Margin of -4.84% TTM, highlighting ongoing challenges in achieving profitability.

Balance Sheet

The company maintains a stable financial structure with a Debt-to-Equity Ratio of 0.68 TTM, indicating a balanced use of debt in financing. The Equity Ratio is high at 33.79% TTM, reflecting strong equity compared to total assets. However, the Return on Equity remains negative at -2.15% TTM, due to net losses, which is a concern for investors seeking profitability.

Cash Flow

Zscaler has demonstrated impressive cash flow management with a Free Cash Flow Growth Rate of 24.88% TTM, and a strong Operating Cash Flow to Net Income Ratio of -23.86 TTM, which shows solid cash flow generation from operations despite net losses. The Free Cash Flow to Net Income Ratio is also robust at -18.84 TTM, indicating the company's ability to generate cash from operations.

Breakdown	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Income Statement
Total Revenue	2.17B	1.62B	1.09B	673.10M	431.27M
Gross Profit	1.69B	1.25B	848.66M	522.78M	335.54M
EBITDA	64.79M	-76.72M	-277.58M	-167.36M	-86.83M
Net Income	-57.71M	-202.34M	-390.28M	-262.03M	-115.12M
Balance Sheet
Total Assets	4.70B	3.61B	2.83B	2.26B	1.83B
Cash, Cash Equivalents and Short-Term Investments	2.41B	2.10B	1.73B	1.50B	1.37B
Total Debt	1.24B	1.21B	1.05B	964.61M	905.24M
Total Liabilities	3.43B	2.88B	2.26B	1.73B	1.35B
Stockholders Equity	1.27B	725.11M	573.30M	528.89M	484.83M
Cash Flow
Free Cash Flow	584.95M	333.62M	231.33M	143.74M	27.51M
Operating Cash Flow	779.85M	462.34M	321.91M	202.04M	79.32M
Investing Cash Flow	-683.18M	-259.34M	374.06M	-109.67M	-1.04B
Financing Cash Flow	64.21M	45.99M	41.34M	41.67M	1.02B

Zscaler Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 286.18
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ZS, the sentiment is Positive. The current price of 286.18 is below the 20-day moving average (MA) of 296.78, below the 50-day MA of 290.03, and above the 200-day MA of 222.85, indicating a neutral trend. The MACD of -2.37 indicates Positive momentum. The RSI at 46.25 is Neutral, neither overbought nor oversold. The STOCH value of 46.72 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ZS.

Zscaler Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CHKP	74 Outperform	$23.85B	29.07	30.92%	―	6.40%	6.49%
FTNT	74 Outperform	$80.23B	43.14	205.91%	―	13.83%	58.13%
PANW	74 Outperform	$135.54B	116.32	21.16%	―	13.91%	-50.96%
CRWD	74 Outperform	$116.63B	721.64	-5.76%	―	25.94%	-226.80%
ZS	72 Outperform	$44.56B	―	-2.68%	―	25.46%	49.20%
CYBR	66 Neutral	$19.05B	1,777.39	-5.36%	―	35.12%	-191.84%
Sector *	57 Neutral	HK$14.36B	5.83	-5.77%	4.76%	9.65%	-43.80%

Zscaler Corporate Events

Zscaler Issues $1.725 Billion Convertible Notes

On July 3, 2025, Zscaler, Inc. issued $1.725 billion in 0.00% Convertible Senior Notes due 2028, with net proceeds expected to be approximately $1.70 billion. The funds will be used for capped call transactions and general corporate purposes, including potential acquisitions. The notes are convertible under specific conditions and are subject to customary terms and covenants. Additionally, capped call transactions were entered to mitigate potential stock dilution upon note conversion.

The most recent analyst rating on (ZS) stock is a Buy with a $220.00 price target. To see the full list of analyst forecasts on Zscaler stock, see the ZS Stock Forecast page.

Zscaler Announces CTO Departure Effective July 2025

On June 23, 2025, Zscaler, Inc. announced the upcoming departure of its Chief Technology Officer, Syam Nair, effective July 4, 2025. This change in leadership may impact the company’s operations as Mr. Nair is expected to receive benefits under the company’s severance policy, highlighting a significant transition within the company’s executive team.

The most recent analyst rating on (ZS) stock is a Buy with a $210.00 price target. To see the full list of analyst forecasts on Zscaler stock, see the ZS Stock Forecast page.

Zscaler Announces Transition Agreement for Retiring CFO

On June 9, 2025, Zscaler, Inc. announced a Transition Agreement with its retiring CFO, Remo Canessa, to ensure a smooth transition to a new CFO by December 31, 2025. During this period, Mr. Canessa will maintain his current salary and benefits, and upon completion, he will receive a lump sum payment and accelerated vesting of restricted stock units, highlighting the company’s commitment to a seamless leadership transition.

The most recent analyst rating on (ZS) stock is a Buy with a $210.00 price target. To see the full list of analyst forecasts on Zscaler stock, see the ZS Stock Forecast page.

Zscaler Appoints Kevin Rubin as New CFO

On May 29, 2025, Zscaler announced the appointment of Kevin Rubin as the new Chief Financial Officer, effective May 26, 2025, succeeding Remo Canessa. Rubin’s extensive experience in finance leadership roles at high-growth companies is expected to bolster Zscaler’s strategic financial management. Concurrently, Zscaler reported its third-quarter fiscal 2025 financial results, highlighting a 23% year-over-year revenue growth to $678 million and a non-GAAP net income increase to $136.8 million. The company continues to expand its Zero Trust Exchange platform, addressing the growing demand for AI security solutions and maintaining its leadership position in the cloud security market.

The most recent analyst rating on (ZS) stock is a Buy with a $210.00 price target. To see the full list of analyst forecasts on Zscaler stock, see the ZS Stock Forecast page.

Zscaler Appoints Raj Judge to Board of Directors

On May 20, 2025, Zscaler expanded its Board of Directors from eight to nine members, appointing Raj Judge as a Class III director and Executive Vice President of Corporate Strategy and Ventures. Judge, with over 25 years of experience in tech legal and venture capital, will lead Zscaler’s growth strategy and business development initiatives, aiming to drive the company to $5 billion in annual recurring revenue. His appointment underscores Zscaler’s commitment to advancing its corporate strategy and long-term vision, with expectations to accelerate innovation and broaden the company’s platform for its customers.

The most recent analyst rating on (ZS) stock is a Buy with a $265.00 price target. To see the full list of analyst forecasts on Zscaler stock, see the ZS Stock Forecast page.