Zscaler (ZS) AI Stock Analysis

• Market Cap: $47.18B
• Dividend Yield: N/A
• Average Volume (3M): 2.83M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.82
• Revenue Growth: 25.46%
• EPS Growth: 49.20%
• Country: US
• Employees: 7,348
• Sector: Technology
• Sector Strength: 82
• Industry: Software - Infrastructure
• EPS (TTM): 0.84
• Shares Outstanding: 155,695,680
• 10 Day Avg. Volume: 3,686,139
• 30 Day Avg. Volume: 2,834,197
• PEG Ratio: 6.44
• Price to Book (P/B): 21.06
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 45.86
• Enterprise Value/Market Cap: 0.56
• Enterprise Value/Revenue: 2.82
• Enterprise Value/Gross Profit: 13.52
• Enterprise Value/Ebitda: 71.34
• 1Y Price Target: $302.51
• Price Target Upside: 1.52% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 38

• Rating: 74 Outperform
• Price Target: $328.00 ▲(10.08%Upside)

Zscaler's strong financial performance and positive earnings call sentiment contribute significantly to its overall score. Technical indicators suggest strong momentum but caution due to overbought conditions. The valuation score reflects challenges due to unprofitability, while recent corporate appointments are expected to support strategic growth.

Positive Factors

Acquisitions

Zscaler's recent acquisition of Red Canary will allow expansion into SoC categories of managed detection and response, or MDR, and threat intelligence.

Financial Performance

Zscaler delivered a strong quarter with results ahead of both analyst and consensus expectations across the board.

Product Innovation

Zscaler announced a number of capabilities centered on AI and extending Zero Trust Everywhere.

Negative Factors

Operational Costs

The increase in cost of goods sold year-over-year was primarily driven by higher data center and equipment-related costs for hosting and operating the cloud platform.

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 impressive revenue growth and strong gross margins, indicative of its competitive position in the software industry. Despite improvements, profitability remains a challenge with negative net income. The company's balance sheet is healthy, marked by manageable leverage and strong equity. Cash flow generation is a strong point, with positive free cash flow trends supporting future growth opportunities.

Income Statement

Zscaler has shown robust revenue growth with a TTM increase of 11.7% compared to the previous year. The company maintains a high gross profit margin of 77.7% in the TTM, indicative of strong operational efficiency. However, the net profit margin remains negative at -0.6%, reflecting ongoing challenges with profitability. Both EBIT and EBITDA margins have improved, yet they still indicate operational losses.

Balance Sheet

The balance sheet reflects a solid equity position with a debt-to-equity ratio of 0.77, suggesting manageable leverage compared to industry norms. The equity ratio stands at 32.1%, indicating a strong capital structure. Return on equity remains negative due to net losses, pointing to profitability challenges.

Cash Flow

Zscaler's cash flow performance is strong, with a significant free cash flow growth rate of 31.7% in the TTM. The operating cash flow to net income ratio is robust, highlighting efficient cash generation relative to accounting profits. Free cash flow significantly exceeds net income, reflecting prudent capital management.

Breakdown
TTM	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Income Statement		Total Revenue
2.55B	2.17B	1.62B	1.09B	673.10M	431.27M
	Gross Profit
1.97B	1.69B	1.25B	848.66M	522.78M	335.54M
	EBIT
-123.17M	-121.48M	-234.62M	-327.43M	-207.81M	-113.96M
	EBITDA
99.95M	64.79M	-76.72M	-277.58M	-167.36M	-86.83M
	Net Income Common Stockholders
-38.78M	-57.71M	-202.34M	-390.28M	-262.03M	-115.12M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
2.71B	2.41B	2.10B	1.73B	1.50B	1.37B
	Total Assets
4.71B	4.70B	3.61B	2.83B	2.26B	1.83B
	Total Debt
1.24B	1.24B	1.21B	1.05B	964.61M	905.24M
	Net Debt
-316.31M	-185.12M	-51.66M	32.51M	688.71M	763.39M
	Total Liabilities
3.28B	3.43B	2.88B	2.26B	1.73B	1.35B
	Stockholders Equity
1.43B	1.27B	725.11M	573.30M	528.89M	484.83M
Cash Flow		Free Cash Flow
730.54M	584.95M	333.62M	231.33M	143.74M	27.51M
	Operating Cash Flow
925.41M	779.85M	462.34M	321.91M	202.04M	79.32M
	Investing Cash Flow
-253.63M	-683.18M	-259.34M	374.06M	-109.67M	-1.04B
	Financing Cash Flow
59.91M	64.21M	45.99M	41.34M	41.67M	1.02B

Zscaler Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 297.97
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

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 297.97 is above the 20-day moving average (MA) of 268.58, above the 50-day MA of 233.14, and above the 200-day MA of 202.80, indicating a bullish trend. The MACD of 19.57 indicates Negative momentum. The RSI at 79.25 is Negative, neither overbought nor oversold. The STOCH value of 88.84 is Negative, 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	82 Outperform	$25.30B	30.08	30.92%	―	6.40%	6.49%
PANW	81 Outperform	$130.66B	112.13	21.16%	―	13.91%	-50.96%
FTNT	80 Outperform	$80.32B	42.02	205.91%	―	13.83%	58.13%
CRWD	79 Outperform	$116.56B	721.64	-5.76%	―	25.94%	-226.80%
ZS	74 Outperform	$47.18B	―	-2.68%	―	25.46%	49.20%
CYBR	73 Outperform	$19.92B	1,777.39	-5.36%	―	35.12%	-191.84%
Sector *	62 Neutral	$11.90B	10.64	-7.50%	2.90%	7.41%	-8.19%

Zscaler Corporate Events

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.