Zscaler (ZS) AI Stock Analysis

• Market Cap: $40.11B
• Dividend Yield: N/A
• Average Volume (3M): 1.65M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.64
• Revenue Growth: 23.24%
• EPS Growth: -8.83%
• Country: US
• Employees: 7,348
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Infrastructure
• EPS (TTM): 0.96
• Shares Outstanding: 159,471,200
• 10 Day Avg. Volume: 2,482,078
• 30 Day Avg. Volume: 1,648,063
• PEG Ratio: 34.55
• Price to Book (P/B): 24.51
• Price to Sales (P/S): 16.49
• P/FCF Ratio: 60.32
• Enterprise Value/Market Cap: 1.27
• Enterprise Value/Revenue: 18.01
• Enterprise Value/Gross Profit: 23.49
• Enterprise Value/Ebitda: 414.21
• 1Y Price Target: $331.30
• Price Target Upside: 36.18% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 31
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 67 Neutral
• Price Target: $273.00 ▲(12.22% Upside)

Zscaler's overall stock score is driven by strong earnings call performance and financial growth, despite ongoing profitability challenges. Technical analysis indicates bearish momentum, and valuation metrics are hindered by net losses. The company's strategic initiatives and robust guidance provide a positive outlook, but market conditions and competitive pressures remain concerns.

Positive Factors

Revenue Growth

Consistent revenue growth indicates strong demand for Zscaler's cybersecurity solutions, enhancing its market position and financial stability.

Strategic Growth Initiatives

Strong growth in AI security reflects successful innovation and adaptation to market needs, positioning Zscaler as a leader in advanced cybersecurity solutions.

Cash Flow Generation

High free cash flow margin demonstrates efficient cash generation, providing financial flexibility for reinvestment and growth.

Negative Factors

Profitability Challenges

Operating at a net loss with negative profit margins indicates challenges in achieving profitability, which could impact long-term financial health.

Competitive Landscape

Intense competition may pressure Zscaler's market share and pricing power, affecting its ability to maintain growth and profitability.

Gross Margin Pressure

Declining gross margins could indicate increasing costs or pricing pressure, potentially impacting long-term profitability.

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 a subscription-based model for its cloud security services. Customers pay for access to Zscaler's platforms, which are available in various tiers based on the features and level of service required. The company has key revenue streams from both large enterprises and small to medium-sized businesses, which leverage its solutions for secure internet access and private application connectivity. Zscaler also benefits from long-term contracts and multi-year subscriptions that enhance recurring revenue. Significant partnerships with major technology providers and integrations with other security tools further contribute to its earnings, as they expand its market reach and enhance its service offerings.

Zscaler Financial Statement Overview

Summary

Zscaler demonstrates strong revenue and cash flow growth, with a robust gross profit margin of 76.68%. However, the company is still operating at a net loss, and the return on equity is negative, indicating challenges in achieving profitability. The balance sheet shows improved leverage management.

Income Statement

Zscaler's income statement shows strong revenue growth with a TTM increase of 5.99%. The gross profit margin remains robust at 76.68%, indicating efficient cost management. However, the company is still operating at a net loss, with a net profit margin of -1.45%, which suggests challenges in achieving profitability. The EBIT and EBITDA margins are improving but remain low, highlighting ongoing operational inefficiencies.

Balance Sheet

The balance sheet reflects a stable equity position with a debt-to-equity ratio of 0.93, showing improved leverage management. However, the return on equity is negative at -2.50%, indicating that the company is not generating positive returns for shareholders. The equity ratio is not provided, but the overall asset base is growing, which is a positive sign.

Cash Flow

Cash flow analysis reveals strong free cash flow growth of 15.18% TTM, demonstrating effective cash generation capabilities. The operating cash flow to net income ratio is 0.47, indicating solid cash flow relative to earnings. The free cash flow to net income ratio is high at 0.81, suggesting good cash conversion efficiency despite net losses.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	2.67B	2.17B	1.62B	1.09B	673.10M
Gross Profit	2.05B	1.69B	1.25B	847.63M	522.46M
EBITDA	112.41M	64.79M	-76.72M	-183.43M	-105.80M
Net Income	-41.48M	-57.71M	-202.34M	-390.28M	-262.03M
Balance Sheet
Total Assets	6.42B	4.70B	3.61B	2.83B	2.26B
Cash, Cash Equivalents and Short-Term Investments	3.57B	2.41B	2.10B	1.73B	1.50B
Total Debt	1.80B	1.24B	1.21B	1.05B	964.61M
Total Liabilities	4.62B	3.43B	2.88B	2.26B	1.73B
Stockholders Equity	1.80B	1.27B	725.11M	573.30M	528.89M
Cash Flow
Free Cash Flow	726.69M	584.95M	333.62M	231.33M	143.74M
Operating Cash Flow	972.45M	779.85M	462.34M	321.91M	202.04M
Investing Cash Flow	-427.02M	-683.18M	-259.34M	374.06M	-109.67M
Financing Cash Flow	420.51M	64.21M	45.99M	41.34M	41.67M

Zscaler Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 243.28
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Positive

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 243.28 is below the 20-day moving average (MA) of 298.16, below the 50-day MA of 303.46, and below the 200-day MA of 265.48, indicating a bearish trend. The MACD of -14.96 indicates Positive momentum. The RSI at 25.74 is Positive, neither overbought nor oversold. The STOCH value of 2.17 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ZS.

Zscaler Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FTNT	71 Outperform	$60.33B	33.40	228.04%	―	14.78%	22.52%
PANW	68 Neutral	$132.52B	120.59	15.33%	―	15.30%	-60.71%
ZS	67 Neutral	$40.11B	―	-2.41%	―	23.24%	-8.83%
CRWD	67 Neutral	$126.51B	―	-8.99%	―	23.46%	-270.07%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
OKTA	61 Neutral	$14.16B	94.72	2.61%	―	12.68%	―
NET	58 Neutral	$69.08B	―	-8.88%	―	28.06%	-7.44%

Zscaler Corporate Events

Zscaler Reports Strong Q1 Fiscal 2026 Results

Zscaler, Inc., a leading company in the cloud security sector, provides a Zero Trust Exchange platform that securely connects users, devices, and applications worldwide. In its first quarter of fiscal 2026, Zscaler reported a 26% year-over-year increase in revenue, reaching $788.1 million, and a similar growth in Annual Recurring Revenue to $3.204 billion. The company also achieved a non-GAAP net income of $159.5 million, up from $124.3 million the previous year, while maintaining a strong cash flow from operations. Key financial metrics highlighted include a 32% increase in deferred revenue and a robust free cash flow margin of 52%. Zscaler’s strategic initiatives included the acquisition of SPLXAI Inc., enhancing its AI security offerings, and launching new innovations in its Zscaler Digital Experience platform. Looking ahead, Zscaler’s management remains optimistic about continued growth, projecting revenue between $797 million and $799 million for the second quarter of fiscal 2026, with a focus on expanding its AI security capabilities and global presence.

Zscaler’s Earnings Call Highlights Robust Growth

Zscaler’s recent earnings call painted a picture of robust performance and promising growth, despite a few challenges. The company reported significant increases in revenue, annual recurring revenue (ARR), and the adoption of innovative technologies such as AI and Zero Trust. Although there was a slight dip in gross margin and higher churn in the newly acquired Red Canary segment, the overall sentiment was positive, reflecting strong business momentum.

Zscaler’s Strong Growth and Strategic Advances in Cloud Security

Zscaler, Inc. is a leading cloud security company that offers a Zero Trust Exchange platform to protect users, devices, and applications from cyber threats, operating in the cybersecurity industry with a focus on digital transformation and secure connectivity.