In a world increasingly reliant on digital interactions, Zscaler, Inc. stands as a bulwark of cloud security, safeguarding users’ access to vital applications with unparalleled precision. As a leader in the Software – Infrastructure industry, Zscaler revolutionizes how enterprises protect their data and manage digital experiences through innovative solutions like Zscaler Internet Access and Zscaler Private Access. As we delve into the company’s fundamentals, I invite you to consider whether Zscaler’s growth trajectory and market valuation continue to align with its transformative impact.
Table of contents
Company Description
Zscaler, Inc. is a prominent player in the cloud security sector, specializing in providing secure access to applications and data for users and devices. Founded in 2007 and headquartered in San Jose, California, Zscaler offers a suite of solutions including Zscaler Internet Access and Zscaler Private Access, which facilitate seamless security for both internal and externally managed applications. As a leader in the Software – Infrastructure industry, Zscaler serves diverse markets such as financial services, healthcare, and telecommunications. With a workforce of over 7K employees, the company emphasizes innovation and risk management, continually shaping the future of secure cloud connectivity. Its commitment to enhancing digital experiences underscores its strategic role in redefining enterprise security landscapes.
Fundamental Analysis
In this section, I will analyze Zscaler, Inc.’s income statement, financial ratios, and dividend payout policy to assess its financial health and growth potential.
Income Statement
The following table summarizes the income statement for Zscaler, Inc. (ZS) over the past five fiscal years, highlighting key financial metrics and performance trends.
| Item | 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 | 1.18B | 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 | 09-16-21 | 09-15-22 | 09-14-23 | 09-12-24 | 09-11-25 |
Over the past five years, Zscaler has shown significant revenue growth, increasing from 673M in 2021 to 2.67B in 2025, representing a robust compound annual growth rate (CAGR). However, net income remains negative throughout this period, improving from a loss of 262M in 2021 to 41M in 2025. The company’s margins have shown volatility, with the most recent year (2025) reflecting an improvement in EBITDA and EBIT compared to 2024, signaling potential operational efficiencies. While revenue growth is encouraging, continued focus on controlling operating expenses is crucial to achieving profitability.
Financial Ratios
The following table presents the financial ratios for Zscaler, Inc. (ZS) over the last four fiscal years.
| Ratio | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Net Margin | -39% | -36% | -13% | -3% | -2% |
| ROE | -50% | -68% | -28% | -5% | -2% |
| ROIC | -14% | -19% | -11% | -9% | -7% |
| WACC | 8% | 8% | 8% | 8% | 8% |
| P/E | -122 | -55 | -115 | -465 | -1063 |
| P/B | 61 | 38 | 32 | 21 | 25 |
| Current Ratio | 2.57 | 1.99 | 1.88 | 1.09 | 1.94 |
| Quick Ratio | 2.57 | 1.99 | 1.88 | 1.09 | 1.94 |
| D/E | 1.82 | 1.82 | 0.34 | 0.97 | 1.00 |
| Debt-to-Assets | 43% | 37% | 34% | 26% | 28% |
| Interest Coverage | -4 | -6 | -32 | -9 | -13 |
| 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
The latest year’s ratios indicate significant challenges for Zscaler, with negative net margins and ROE suggesting persistent losses. The high P/E and P/B ratios reflect market skepticism regarding profitability. While the current and quick ratios indicate reasonable liquidity, the debt ratios show a rising leverage concern. Overall, the financial health appears weak, requiring careful monitoring.
Evolution of Financial Ratios
Over the past five years, Zscaler’s financial ratios have shown a mixed trend. While liquidity ratios like current and quick ratios have remained stable, profitability ratios have deteriorated, indicating increasing operational challenges. The company’s leverage has also become a growing concern, as reflected in rising debt metrics.
Distribution Policy
Zscaler, Inc. (ZS) does not pay dividends, reflecting its strategy focused on growth and reinvestment. The company is currently in a high-growth phase, prioritizing investments in R&D and acquisitions to enhance its market position. Despite the absence of dividends, Zscaler engages in share buybacks, which can return value to shareholders. This approach may align with long-term value creation, provided the company can achieve sustainable profitability in the future.
Sector Analysis
Zscaler, Inc. is a leading player in the cloud security sector, offering innovative solutions for secure access to applications and data. Its competitive advantages include robust technology and a strong market presence amidst increasing demand for cybersecurity solutions.
Strategic Positioning
Zscaler, Inc. (ZS) holds a significant position in the cloud security market, boasting a market capitalization of approximately $45.5B. The company primarily offers solutions for secure access to SaaS applications and workloads, which is increasingly vital in today’s digital landscape. With competitive pressure from established players and emerging startups, Zscaler must continually innovate to maintain its edge. Furthermore, technological disruptions, such as the rise of zero-trust security models, present both challenges and opportunities for Zscaler as it adapts to shifting customer demands and industry standards.
Revenue by Segment
The following pie chart illustrates the revenue distribution by segment for Zscaler, Inc. during the fiscal year 2025.
In FY 2025, Zscaler reported a total revenue of $2.67B from its reportable segment. This figure indicates a stable performance in their core business, showcasing a solid foundation. Given that this is the only segment reported, there is limited information on diversification and potential concentration risks. The focus on a singular segment may raise concerns about vulnerability to market shifts; however, maintaining such revenue suggests a strong demand for their offerings. Overall, the revenue growth appears to be steady, but future performance will hinge on broader market conditions and competitive dynamics.
Key Products
Zscaler, Inc. offers a range of innovative cloud security solutions designed to support businesses in securing their digital environments. Below is a table summarizing their key products:
| Product | Description |
|---|---|
| Zscaler Internet Access (ZIA) | A secure access solution that provides users with secure connections to externally managed applications, including software-as-a-service (SaaS) and other internet destinations. |
| Zscaler Private Access (ZPA) | Designed for secure access to managed applications hosted internally in data centers or public clouds, ensuring that users can safely connect to sensitive resources. |
| Zscaler Digital Experience (ZDX) | A tool that measures end-to-end user experience across business applications, offering insights into performance and usability for each user and application. |
| Zscaler Cloud Security Posture Management (CSPM) | Identifies and remediates application misconfigurations in SaaS and cloud environments, helping organizations reduce risk and ensure compliance with industry standards. |
| Zscaler Cloud Workload Segmentation | Secures application-to-application communications within public clouds and data centers, preventing lateral threat movement and reducing the risk of data breaches. |
These products reflect Zscaler’s commitment to providing comprehensive security solutions across various sectors, including technology, healthcare, and financial services.
Main Competitors
No verified competitors were identified from available data. Zscaler, Inc. holds a significant position in the cloud security sector with an estimated market share of around 2.5%. The company operates primarily in North America and serves a diverse range of industries, showcasing its competitive strength and niche focus in the cybersecurity market.
Competitive Advantages
Zscaler, Inc. stands out in the cloud security sector due to its innovative solutions like Zscaler Internet Access and Zscaler Private Access, which provide secure access to both SaaS applications and internal resources. The company’s focus on digital experience measurement and workload segmentation enhances its appeal across diverse industries. Looking ahead, Zscaler is poised to capture new market opportunities as businesses increasingly migrate to cloud environments. With ongoing product enhancements and a commitment to security compliance, I believe Zscaler is well-positioned for sustained growth and competitive advantage in an evolving digital landscape.
SWOT Analysis
This analysis evaluates the strengths, weaknesses, opportunities, and threats for Zscaler, Inc. to inform investment decisions.
Strengths
- Strong market presence
- Innovative security solutions
- Diverse customer base
Weaknesses
- No dividend payouts
- High dependency on cloud infrastructure
- Competitive market
Opportunities
- Growing demand for cloud security
- Expansion into new markets
- Strategic partnerships
Threats
- Cybersecurity threats
- Economic downturns
- Regulatory challenges
Overall, Zscaler, Inc. demonstrates robust strengths and significant growth opportunities, but investors should remain cautious of its weaknesses and external threats. This SWOT analysis can guide strategic decisions regarding potential investments in the company.
Stock Analysis
Over the past year, Zscaler, Inc. (ticker: ZS) has experienced significant price movements, culminating in a notable bullish trend characterized by an increase in stock value and a marked acceleration in price dynamics.
Trend Analysis
Analyzing the stock over the past year, ZS has shown a strong performance with a percentage change of +33.01%. This indicates a bullish trend. The stock reached a high of 331.14 and a low of 156.78, demonstrating notable volatility with a standard deviation of 47.48. The recent trend from September 7, 2025, to November 23, 2025, reflects a price change of +7.48% and an acceleration in growth, with a trend slope of 2.72.
Volume Analysis
In examining trading volumes over the last three months, the total volume stands at approximately 1.14B, with buyer-driven activity at 670.84M and seller-driven activity at 464.67M, indicating a buyer dominance of 58.62%. However, the overall volume trend is decreasing, which suggests a potential decline in market participation or investor sentiment may be fluctuating during this period. In the recent period from September 7, 2025, to November 23, 2025, buyer activity slightly dominated at 57.71%, yet the decreasing volume trend warrants caution.
Analyst Opinions
Recent analyst recommendations for Zscaler, Inc. (ZS) indicate a cautious stance. Analysts have assigned a rating of C-, reflecting concerns over the company’s financial metrics, including low scores in return on equity and return on assets. Despite a discounted cash flow score of 4 suggesting potential value, the overall sentiment leans towards a hold. The consensus for the current year is neutral, with no strong buy or sell signals emerging from the latest evaluations. I advise closely monitoring Zscaler’s performance before making any investment decisions.
Stock Grades
Zscaler, Inc. (ZS) has attracted consistent attention from several reputable grading companies, reflecting a stable outlook among analysts.
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Rosenblatt | maintain | Buy | 2025-11-18 |
| Mizuho | maintain | Neutral | 2025-11-17 |
| Morgan Stanley | maintain | Overweight | 2025-11-13 |
| Barclays | maintain | Overweight | 2025-11-12 |
| Wedbush | maintain | Outperform | 2025-11-10 |
| RBC Capital | maintain | Outperform | 2025-10-02 |
| Canaccord Genuity | maintain | Buy | 2025-09-04 |
| JMP Securities | maintain | Market Outperform | 2025-09-03 |
| Evercore ISI Group | maintain | Outperform | 2025-09-03 |
| Needham | maintain | Buy | 2025-09-03 |
Overall, the trend in grades for Zscaler indicates a strong endorsement from various analysts, with a majority maintaining positive ratings such as “Buy” and “Outperform.” This suggests that investor sentiment remains favorable despite some neutral ratings.
Target Prices
The consensus target price for Zscaler, Inc. (ticker: ZS) indicates strong expectations among analysts.
| Target High | Target Low | Consensus |
|---|---|---|
| 350 | 300 | 326.13 |
Overall, analysts anticipate that Zscaler’s stock could reach approximately 326.13, reflecting positive market sentiment.
Consumer Opinions
Consumer sentiment about Zscaler, Inc. indicates a mixed perception, showcasing both strong support and notable concerns from users.
| Positive Reviews | Negative Reviews |
|---|---|
| “Zscaler’s cloud security is top-notch!” | “Customer support could be improved.” |
| “Seamless integration with existing systems.” | “Pricing is on the higher side for small firms.” |
| “Highly effective in preventing cyber threats.” | “Some features are complex to navigate.” |
Overall, consumer feedback on Zscaler reflects strong appreciation for its security capabilities and integration ease, while pointing out the need for improved customer support and simpler user experience.
Risk Analysis
In evaluating Zscaler, Inc. (ticker: ZS), it is essential to consider various risks that could impact its performance and stock price. Below is a summary of the key risks:
| Category | Description | Probability | Impact |
|---|---|---|---|
| Market Competition | Intense competition from established players and new entrants in the cybersecurity market. | High | High |
| Regulatory Changes | Potential changes in data privacy regulations that could affect product offerings. | Medium | High |
| Technology Risks | Rapid technological advancements may outpace Zscaler’s ability to innovate. | Medium | Medium |
| Economic Downturn | A recession could lead to reduced IT spending among clients. | High | Medium |
| Cybersecurity Threats | Increasing sophistication of cyber threats could undermine customer confidence. | High | High |
Zscaler faces significant competition and regulatory risks, which could severely impact its growth. Recent trends indicate that cybersecurity investments are becoming critical, making it vital for Zscaler to stay ahead in innovation and compliance.
Should You Buy Zscaler, Inc.?
Zscaler, Inc. is currently facing profitability challenges, with a negative net margin of -1.55%. The company exhibits a significant level of debt, as evidenced by a debt-to-equity ratio of 0.998. The fundamentals have shown a long-term negative trend, and the current rating is C-.
A. Favorable signals There are no favorable signals.
B. Unfavorable signals The company has a negative net margin of -1.55%, indicating ongoing losses. Additionally, the ROIC is -7.21%, which is less than the WACC of 8.46%, signifying value destruction. The long-term trend is negative, suggesting that the stock may not be on a recovery path. Furthermore, recent seller volume exceeds recent buyer volume, indicating a lack of buying interest.
C. Conclusion Given the presence of negative signals, it might be prudent to wait for improved financial performance and a more favorable market sentiment before considering an investment in Zscaler, Inc.
The risks associated with Zscaler, Inc. include high debt levels, persistent losses, and a negative trend in financial performance.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Additional Resources
- Estimating The Intrinsic Value Of Zscaler, Inc. (NASDAQ:ZS) – Yahoo Finance (Nov 18, 2025)
- Surprisingly Secure Pricing: Zscaler Q4 FY 2025 Earnings Review (NASDAQ:ZS) – Seeking Alpha (Nov 18, 2025)
- Zscaler (ZS) integrates with Microsoft Entra Agent ID to secure enterprise AI agents – Stock Titan (Nov 18, 2025)
- Zscaler (ZS): Rosenblatt Raises Price Target to $365, Maintains Buy Rating | ZS Stock News – GuruFocus (Nov 18, 2025)
- Zscaler, Inc. (ZS) is Attracting Investor Attention: Here is What You Should Know – sharewise.com (Nov 14, 2025)
For more information about Zscaler, Inc., please visit the official website: zscaler.com
