Zscaler (ZS) AI Stock Analysis

• Market Cap: $36.11B
• Dividend Yield: N/A
• Average Volume (3M): 2.03M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.61
• 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: 1,822,605
• 30 Day Avg. Volume: 2,030,522
• 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: 1.47
• Enterprise Value/Revenue: 18.71
• Enterprise Value/Gross Profit: 24.40
• Enterprise Value/Ebitda: 430.31
• 1Y Price Target: $330.66
• Price Target Upside: 43.09% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 30
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 60 Neutral
• Price Target: $255.00 ▲(10.35% Upside)

Zscaler's overall stock score reflects strong earnings call performance and robust revenue growth, offset by technical weakness and valuation challenges. The company's strategic initiatives in AI security and Zero Trust are promising, but profitability issues and competitive pressures remain significant concerns. The technical analysis suggests bearish momentum, while the valuation is unattractive due to negative earnings.

Positive Factors

Revenue Growth

Consistent ARR growth indicates strong demand for Zscaler's services, suggesting robust market position and potential for sustained revenue expansion.

Product Innovation

Strong growth in AI security reflects Zscaler's innovation and ability to meet evolving cybersecurity needs, enhancing competitive advantage.

Market Position

Early achievement of Zero Trust goals demonstrates Zscaler's leadership in cybersecurity, reinforcing its strategic market position.

Negative Factors

Profitability Challenges

Ongoing profitability issues may hinder Zscaler's ability to deliver shareholder value, affecting long-term financial sustainability.

Competitive Pressures

Intense competition from established players could pressure Zscaler's market share and pricing power, impacting growth prospects.

Gross Margin Pressure

Declining gross margins may indicate cost pressures or pricing challenges, potentially affecting profitability and financial health.

Zscaler Business Overview & Revenue Model

Company Description

Zscaler, Inc. is a leading cybersecurity company that specializes in cloud-based security solutions. Founded in 2008 and headquartered in San Jose, California, Zscaler operates primarily in the cybersecurity sector, providing services that enable secure access to applications and data over the internet. Its core products include Zscaler Internet Access (ZIA) and Zscaler Private Access (ZPA), which offer secure web gateway and zero trust network access solutions, respectively, designed to protect organizations from cyber threats while ensuring seamless connectivity for users regardless of their location.

How the Company Makes Money

Zscaler generates revenue primarily through a subscription-based model, offering its cloud security services on a recurring basis to businesses of all sizes. Key revenue streams include subscriptions for ZIA and ZPA, which are sold based on the number of users or the amount of data processed. Zscaler also benefits from upselling and cross-selling additional features and services to existing customers. Significant partnerships with major technology providers and integrators enhance its market reach and contribute to customer acquisition, while its focus on a zero trust security framework aligns with increasing demand for advanced cybersecurity solutions in a rapidly digitizing world.

Zscaler Financial Statement Overview

Summary

Zscaler demonstrates robust revenue growth and strong cash flow generation, which are positive indicators of its financial health. However, the company continues to face profitability challenges, as evidenced by negative net income and EBIT margins. While leverage has improved, the negative return on equity suggests that the company needs to enhance its profitability to deliver shareholder value.

Income Statement

Zscaler has shown consistent revenue growth, with a TTM growth rate of 5.99%. However, the company is still operating at a net loss, as indicated by a negative net profit margin of -1.45%. The gross profit margin remains strong at 76.68%, indicating efficient cost management. Despite improvements, the negative EBIT margin suggests challenges in achieving operational profitability.

Balance Sheet

The company's debt-to-equity ratio has improved to 0.93, reflecting better leverage management compared to previous years. However, the return on equity remains negative at -2.28%, indicating that the company is not currently generating positive returns for shareholders. The equity ratio is stable, suggesting a balanced asset structure.

Cash Flow

Zscaler's cash flow performance is strong, with a notable free cash flow growth rate of 16.71% in the TTM. The operating cash flow to net income ratio of 0.47 indicates healthy cash generation relative to net income, despite the latter being negative. The free cash flow to net income ratio of 0.81 further highlights the company's ability to generate cash.

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: 231.09
• 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 231.09 is below the 20-day moving average (MA) of 248.58, below the 50-day MA of 288.01, and below the 200-day MA of 267.96, indicating a bearish trend. The MACD of -17.12 indicates Positive momentum. The RSI at 29.04 is Positive, neither overbought nor oversold. The STOCH value of 13.73 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
PANW	73 Outperform	$127.86B	117.90	15.33%	―	15.30%	-60.71%
FTNT	71 Outperform	$59.03B	32.84	228.04%	―	14.78%	22.52%
OKTA	70 Neutral	$15.67B	82.84	2.96%	―	12.12%	―
CRWD	67 Neutral	$118.49B	-377.76	-8.88%	―	22.05%	-341.24%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
NET	61 Neutral	$67.05B	-651.75	-8.88%	―	28.06%	-7.44%
ZS	60 Neutral	$36.11B	-880.68	-2.41%	―	23.24%	-8.83%

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.