In an era where digital security is paramount, Zscaler, Inc. stands at the forefront, redefining how organizations safeguard their data in the cloud. With innovative solutions like Zscaler Internet Access and Zscaler Private Access, the company empowers businesses across various sectors, from healthcare to finance, to secure their operations effortlessly. As Zscaler continues to evolve in the dynamic software infrastructure space, one must ask: do its robust fundamentals still support its current market valuation and future growth potential?
Table of contents
Company Description
Zscaler, Inc. is a leading cloud security company founded in 2007 and headquartered in San Jose, California. With a market capitalization of approximately $39.1B, Zscaler specializes in providing secure access to externally managed applications through its Zscaler Internet Access and Zscaler Private Access solutions. The company operates primarily in the technology sector, serving diverse industries including healthcare, financial services, and telecommunications. Zscaler’s innovative platform also includes workload segmentation and digital experience monitoring, enhancing security and compliance for its clients. By championing cloud-native security solutions, Zscaler is shaping the industry’s future and driving the transition to a more secure digital landscape.
Fundamental Analysis
In this section, I will analyze Zscaler, Inc.’s financial performance through its income statement, key financial ratios, and dividend payout policy.
Income Statement
The following table summarizes Zscaler, Inc.’s income statement over the last five fiscal years, highlighting key financial metrics.
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue | 673M | 1.09B | 1.62B | 2.17B | 2.67B |
| Cost of Revenue | 151M | 243M | 362M | 480M | 618M |
| Operating Expenses | 730M | 1.17B | 1.47B | 1.81B | 2.18B |
| Gross Profit | 522M | 848M | 1.25B | 1.69B | 2.05B |
| EBITDA | -106M | -183M | -77M | 65M | 112M |
| EBIT | -204M | -327M | -176M | -16M | -9M |
| Interest Expense | 53M | 57M | 7M | 13M | 9M |
| Net Income | -262M | -390M | -202M | -58M | -41M |
| EPS | -1.93 | -2.77 | -1.40 | -0.39 | -0.27 |
| Filing Date | 2021-09-16 | 2022-09-15 | 2023-09-14 | 2024-09-12 | 2025-09-11 |
Interpretation of Income Statement
Over the five-year period, Zscaler’s revenue has shown a consistent upward trend, growing from 673M in 2021 to 2.67B in 2025. However, net income remains negative, although the losses have decreased significantly from -262M in 2021 to -41M in 2025, indicating improvements in operational efficiency. The gross profit margin has stabilized, reflecting effective cost management, while EBITDA turned positive in 2024, signaling a potential turnaround. In 2025, revenue growth continues, yet the company still faces challenges in becoming profitable, with operating expenses rising in tandem with revenue.
Financial Ratios
The table below presents the financial ratios for Zscaler, Inc. (ZS) across the last available fiscal years.
| Metrics | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Net Margin | -38.93% | -35.77% | -12.51% | -2.66% | -1.55% |
| ROE | -49.54% | -68.08% | -27.90% | -4.53% | -2.31% |
| ROIC | -13.57% | -19.32% | -11.33% | -8.78% | -7.11% |
| P/E | -122.13 | -55.42 | -114.89 | -464.91 | -1063.01 |
| P/B | 60.51 | 37.72 | 32.06 | 21.06 | 24.51 |
| Current Ratio | 2.57 | 1.99 | 1.88 | 1.09 | 2.01 |
| Quick Ratio | 2.57 | 1.99 | 1.88 | 1.09 | 2.01 |
| D/E | 1.82 | 1.82 | 1.67 | 0.97 | 0.99 |
| Debt-to-Assets | 42.73% | 36.92% | 33.55% | 26.31% | 27.98% |
| Interest Coverage | -3.89 | -5.79 | -31.59 | -9.46 | -13.49 |
| Asset Turnover | 0.30 | 0.39 | 0.45 | 0.46 | 0.42 |
| Fixed Asset Turnover | 4.40 | 4.68 | 5.17 | 4.58 | 4.22 |
| Dividend Yield | 0% | 0% | 0% | 0% | 0% |
Interpretation of Financial Ratios
Analyzing Zscaler, Inc.’s financial ratios for FY 2025, I observe a mixed performance. The liquidity ratios are robust, with a current ratio of 2.01 and a quick ratio also at 2.01, indicating strong short-term solvency. However, the company’s profitability ratios reveal significant concerns, as the net profit margin stands at -1.55%, and both EBIT and EBITDA margins are negative. The solvency ratio is a mere 0.017, raising red flags about long-term viability. Furthermore, the debt-to-equity ratio is close to 1, suggesting a high reliance on debt financing. These factors may pose risks to investors as the company navigates profitability challenges.
Evolution of Financial Ratios
Over the past five years, Zscaler’s financial ratios have shown volatility. While liquidity ratios improved dramatically from 1.99 in 2022 to 2.01 in 2025, profitability remains a persistent issue, with net profit margins consistently negative, highlighting ongoing operational challenges.
Distribution Policy
Zscaler, Inc. (ZS) does not pay dividends, reflecting its focus on reinvestment strategies during a high growth phase. The company prioritizes R&D and acquisitions to drive future expansion, which is essential for long-term shareholder value creation. While they do not distribute profits, Zscaler engages in share buybacks, indicating a commitment to returning value to shareholders. This strategy, albeit risky due to ongoing net losses, suggests a focus on sustainable growth potential.
Sector Analysis
Zscaler, Inc. is a leading player in the cloud security industry, providing essential services such as secure access to applications and data management, competing with major firms while leveraging its innovative technology.
Strategic Positioning
Zscaler, Inc. (ticker: ZS) holds a significant position in the cloud security market, boasting a market capitalization of approximately $39.12B. The company specializes in secure access solutions for users and devices, which positions it favorably against competitors in the software infrastructure sector. With a robust offering that includes Zscaler Internet Access and Zscaler Private Access, the firm faces competitive pressure from traditional cybersecurity firms and emerging players alike. Technological disruptions, particularly in cloud computing and remote work, present both challenges and opportunities, necessitating continuous innovation to maintain and grow its market share.
Revenue by Segment
The following chart illustrates the revenue breakdown by segment for Zscaler, Inc. in the fiscal year 2025.
In FY 2025, Zscaler reported a total revenue of 2.67B from its reportable segment. This reflects a solid performance, although the specific segment’s growth trajectory indicates potential market saturation. The overall trend suggests a stable contribution from the core business, but investors should monitor for any emerging risks related to margin pressures or increased competition as the company continues to scale.
Key Products
Below is a table summarizing the key products offered by Zscaler, Inc., which highlight their primary cloud security solutions.
| Product | Description |
|---|---|
| Zscaler Internet Access | A solution that provides secure access to externally managed applications, including SaaS applications and Internet destinations, for users, servers, operational technology, and IoT devices. |
| Zscaler Private Access | Designed to facilitate secure access to managed applications hosted internally within data centers and both private and public clouds. |
| Zscaler Digital Experience | This tool measures end-to-end user experience across business applications and provides a digital experience score for each user, application, and location. |
| Zscaler Cloud Security Posture Management | Identifies and remediates application misconfigurations in various cloud environments to reduce risk and ensure compliance with industry standards. |
| Zscaler Cloud Workload Segmentation | Secures application-to-application communications within public clouds and data centers, mitigating lateral threat movement and preventing application compromises. |
Each of these products plays a critical role in Zscaler’s strategy to enhance cybersecurity for enterprises globally.
Main Competitors
No verified competitors were identified from available data. However, Zscaler, Inc. holds a significant position in the cloud security market, with an estimated market share that underscores its competitive position. As a leading player in the Software – Infrastructure sector, Zscaler specializes in providing secure access solutions for various industries, including financial services and healthcare, which highlights its favorable niche within the broader technology landscape.
Competitive Advantages
Zscaler, Inc. (ZS) holds a strong competitive edge in the cloud security market through its innovative solutions such as Zscaler Internet Access and Zscaler Private Access. These products facilitate secure access to both external and internal applications, catering to a wide range of industries including healthcare, finance, and telecommunications. The company’s focus on user experience and risk management, exemplified by its Zscaler Digital Experience tool, positions it well for future growth. Looking ahead, Zscaler is poised to expand into new markets and develop additional products, further solidifying its leadership in the cloud security landscape.
SWOT Analysis
This analysis aims to provide a clear understanding of Zscaler, Inc.’s strategic position by identifying its strengths, weaknesses, opportunities, and threats.
Strengths
- Strong market presence
- Comprehensive cloud security solutions
- Diverse customer base
Weaknesses
- No dividends paid
- High dependency on cloud market
- Competitive industry landscape
Opportunities
- Growing demand for cybersecurity
- Expansion into new markets
- Technological advancements
Threats
- Rapidly evolving cybersecurity threats
- Market volatility
- Regulatory challenges
The overall SWOT assessment indicates that Zscaler, Inc. has a solid foundation with notable strengths and opportunities, but it must address its weaknesses and remain vigilant against potential threats. This understanding can guide the company’s strategic decisions to enhance its market position and drive sustainable growth.
Stock Analysis
Over the past year, Zscaler, Inc. (ZS) has experienced significant price movements, culminating in a bullish trend with a remarkable price change of approximately 19.87%. However, recent data indicates a slight downturn, warranting a closer examination of the trading dynamics.
Trend Analysis
Analyzing the stock’s performance over the past year, Zscaler, Inc. has demonstrated a bullish trend with a price change of +19.87%. Notably, the stock reached a high of 331.14 and a low of 156.78. However, in the most recent period from September 14, 2025, to November 30, 2025, the stock has seen a price decrease of -11.19%, indicating a deceleration in momentum. The standard deviation of 47.31 suggests a higher level of volatility over the past year, reflecting fluctuations in the stock price.
Volume Analysis
In the last three months, Zscaler’s trading volume has totaled approximately 1.16B shares, with buyer-driven activity accounting for 57.9% of total volume, or about 670.84M shares. Despite this, the overall volume trend is decreasing, pointing to waning investor participation. The recent period shows a slight buyer dominance at 52.85%, indicating neutral buyer behavior. This decline in volume suggests caution among investors, reflecting uncertainty in the current market conditions.
Analyst Opinions
Recent analyst recommendations for Zscaler, Inc. (ZS) show a cautious stance. With an overall rating of C- from analysts, the consensus leans towards a “hold” position. Analysts highlight concerns regarding the company’s return on equity and high debt-to-equity ratio, which are indicators of potential financial risks. They recommend monitoring the stock closely due to its current discounted cash flow score of 4, suggesting some upside potential. Overall, the sentiment remains neutral, with no strong buy or sell convictions in the market for the current year.
Stock Grades
The latest stock ratings for Zscaler, Inc. (ticker: ZS) reveal a consistent level of confidence among analysts.
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Stifel | maintain | Buy | 2025-11-26 |
| Rosenblatt | maintain | Buy | 2025-11-26 |
| B of A Securities | maintain | Buy | 2025-11-26 |
| Scotiabank | maintain | Sector Outperform | 2025-11-26 |
| Mizuho | maintain | Neutral | 2025-11-26 |
| UBS | maintain | Buy | 2025-11-26 |
| Needham | maintain | Buy | 2025-11-26 |
| Baird | maintain | Outperform | 2025-11-26 |
| BTIG | maintain | Buy | 2025-11-26 |
| Bernstein | maintain | Outperform | 2025-11-26 |
Overall, the trend in grades for Zscaler indicates strong support, with multiple firms maintaining a “Buy” rating. Notably, only one firm has a “Neutral” rating, while the majority lean towards “Outperform” or “Buy,” reflecting positive sentiment in the market.
Target Prices
The consensus target price for Zscaler, Inc. (ZS) reflects a positive outlook among analysts.
| Target High | Target Low | Consensus |
|---|---|---|
| 360 | 264 | 320.64 |
Analysts expect Zscaler’s stock to reach a consensus target of approximately 320.64, indicating a favorable sentiment toward the company’s performance.
Consumer Opinions
Consumer sentiment around Zscaler, Inc. (ZS) reveals a mix of enthusiasm and concern, reflecting the company’s impact on cybersecurity.
| Positive Reviews | Negative Reviews |
|---|---|
| “Zscaler’s platform significantly improved our security.” | “Customer support needs to be more responsive.” |
| “User-friendly interface makes implementation easy.” | “Pricing is on the higher side for small businesses.” |
| “Seamless integration with existing systems.” | “Occasional downtime has affected our operations.” |
Overall, consumer feedback highlights Zscaler’s effective security solutions and ease of use as key strengths, while concerns about customer support and pricing are notable weaknesses that the company should address.
Risk Analysis
In evaluating Zscaler, Inc. (ZS), it’s crucial to understand the potential risks that could impact the company’s performance. Below is a summary of identified risks:
| Category | Description | Probability | Impact |
|---|---|---|---|
| Market Risk | Fluctuations in the cybersecurity sector could affect growth. | High | High |
| Competition | Increasing competition from established players and new entrants. | Medium | High |
| Regulatory | Changes in data privacy regulations may impose new compliance costs. | Medium | Medium |
| Technology | Rapid technological changes could render current offerings obsolete. | High | High |
| Economic | Global economic downturns could reduce customer spending on cybersecurity. | Medium | High |
In recent months, the cybersecurity sector has faced increased scrutiny due to regulatory changes, which could significantly impact Zscaler’s compliance costs. It’s essential to consider these risks when assessing the company’s potential for investment.
Should You Buy Zscaler, Inc.?
Zscaler, Inc. reported a negative net income of -41.48M in the latest fiscal year, indicating ongoing challenges in profitability. The company maintains a total debt of 1.80B, reflecting a considerable reliance on debt, while its fundamentals have shown a negative trend overall with a rating of C-.
Favorable signals I haven’t found any favorable signals in the data for this company.
Unfavorable signals Zscaler, Inc. has a negative net margin of -0.0155, indicating an ongoing struggle to generate profits. The return on invested capital (ROIC) stands at -0.0711, which is below the weighted average cost of capital (WACC) of 8.29, implying value destruction. Additionally, the company exhibits a high debt-to-equity ratio of 0.9985, which indicates a significant reliance on leverage.
Conclusion Given the negative net margin, the value destruction evidenced by the ROIC being less than the WACC, and the unfavorable financial conditions, it might be more prudent to wait for better signals before considering an investment in Zscaler, Inc.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Additional Resources
- Zscaler tumbles, even as Wedbush calls results, guidance ‘robust’ (ZS:NASDAQ) – Seeking Alpha (Nov 26, 2025)
- Zscaler (ZS) Slashes 13% on Profit-Taking – Yahoo Finance (Nov 27, 2025)
- Zscaler Stock Tumbles Wednesday: Here’s Why – Benzinga (Nov 26, 2025)
- Zscaler (ZS) Stock Today: Price, Earnings Fallout and Analyst Outlook on November 28, 2025 – ts2.tech (Nov 28, 2025)
- Zscaler (ZS) Stock Trades Down, Here Is Why – TradingView (Nov 26, 2025)
For more information about Zscaler, Inc., please visit the official website: zscaler.com
