Zscaler, Inc. is a leading player in the cloud security industry, providing innovative solutions that secure access to applications and data across various environments. With the increasing demand for secure cloud services, Zscaler has positioned itself as a key provider in this rapidly evolving market. In this article, I will analyze Zscaler’s financial performance, market position, and potential as an investment opportunity, helping you determine if it is a suitable addition to your portfolio.
Table of Contents
Company Description
Financial Ratios Analysis
Sector Analysis
Stock Analysis
Analyst Opinions
Consumer Opinions
Risk Analysis
Summary and Recommendation
Company Description
Zscaler, Inc. operates as a cloud security company worldwide, providing solutions that enable secure access to applications and data. The company offers Zscaler Internet Access, which secures users and devices accessing externally managed applications, and Zscaler Private Access, which provides secure access to internal applications hosted in data centers or clouds. Zscaler also delivers a Digital Experience solution that measures user experience across business applications. The company serves various industries, including financial services, healthcare, and technology, and is headquartered in San Jose, California.
Key Products of Zscaler
The following table outlines the key products offered by Zscaler:
| Product |
Description |
| Zscaler Internet Access |
Provides secure access to externally managed applications and destinations. |
| Zscaler Private Access |
Enables secure access to internal applications hosted in data centers or clouds. |
| Zscaler Digital Experience |
Measures end-to-end user experience across business applications. |
| Zscaler Cloud Security Posture Management |
Identifies and remediates application misconfigurations to reduce risk. |
| Zscaler Cloud Workload Segmentation |
Secures application-to-application communications to prevent data breaches. |
Revenue Evolution
The following table presents Zscaler’s revenue evolution from 2021 to 2025:
| Year |
Revenue (in millions) |
EBITDA (in millions) |
EBIT (in millions) |
Net Income (in millions) |
EPS |
| 2021 |
673.1 |
-105.8 |
-207.4 |
-262.0 |
-1.93 |
| 2022 |
1,090.9 |
-183.4 |
-327.4 |
-390.3 |
-2.77 |
| 2023 |
1,616.9 |
-76.7 |
-215.4 |
-202.3 |
-1.40 |
| 2024 |
2,167.8 |
64.8 |
-123.9 |
-57.7 |
-0.39 |
| 2025 |
2,673.1 |
112.4 |
-128.5 |
-41.5 |
-0.27 |
Over the period from 2021 to 2025, Zscaler has shown a consistent increase in revenue, growing from $673.1 million in 2021 to $2,673.1 million in 2025. However, net income has remained negative, indicating ongoing challenges in profitability. The EPS has also improved slightly, reflecting the company’s efforts to enhance its financial performance.
Financial Ratios Analysis
The following table summarizes Zscaler’s key financial ratios from 2021 to 2025:
| Year |
Net Margin |
ROE |
ROIC |
P/E |
P/B |
Current Ratio |
D/E |
| 2021 |
-0.389 |
-0.495 |
-0.135 |
-122.13 |
60.51 |
2.57 |
1.82 |
| 2022 |
-0.358 |
-0.681 |
-0.193 |
-55.42 |
37.72 |
1.99 |
1.82 |
| 2023 |
-0.125 |
-0.279 |
-0.104 |
-114.89 |
32.06 |
1.88 |
1.67 |
| 2024 |
-0.027 |
-0.045 |
-0.078 |
-464.91 |
21.06 |
1.09 |
0.97 |
| 2025 |
-0.016 |
-0.023 |
-0.032 |
-1063.01 |
24.51 |
1.94 |
0.99 |
Interpretation of Financial Ratios
In 2025, Zscaler’s net margin is -1.6%, indicating that the company is still operating at a loss, although it has improved from previous years. The return on equity (ROE) stands at -2.3%, reflecting the company’s challenges in generating profit for shareholders. The return on invested capital (ROIC) is -3.2%, suggesting that the company is not effectively utilizing its capital to generate returns. The price-to-earnings (P/E) ratio is extremely high at -1063.01, indicating that the stock is not currently profitable. The price-to-book (P/B) ratio of 24.51 suggests that the stock is trading at a significant premium compared to its book value. The current ratio of 1.94 indicates that Zscaler has sufficient short-term assets to cover its short-term liabilities, while the debt-to-equity (D/E) ratio of 0.99 shows a balanced approach to leveraging.
Evolution of Financial Ratios
Over the past five years, Zscaler’s financial ratios have shown a mixed trend. While the net margin has improved from -38.9% in 2021 to -1.6% in 2025, the company still faces challenges in achieving profitability. The ROE and ROIC have also shown slight improvements, but remain negative, indicating ongoing difficulties in generating returns for shareholders. The P/E ratio has fluctuated significantly, reflecting the company’s lack of profitability. The current ratio has remained above 1, suggesting that Zscaler is managing its short-term obligations effectively. Overall, while there are signs of improvement, the latest year’s ratios indicate that the company still has work to do to achieve sustainable profitability.
Distribution Policy
Zscaler currently does not pay dividends, as indicated by a payout ratio of 0. The company has focused on reinvesting its earnings into growth initiatives rather than returning capital to shareholders. This strategy is common among growth-oriented companies, especially in the technology sector, where reinvestment can drive future growth. However, the lack of dividends may be a consideration for income-focused investors.
Sector Analysis
Zscaler operates in the cloud security sector, which has seen significant growth due to the increasing reliance on cloud services and the rising threat of cyberattacks. The company has established a strong market position, but faces competition from other cybersecurity firms. Zscaler’s innovative solutions and focus on secure access to applications give it a competitive edge, but it must continue to adapt to the rapidly changing technological landscape.
Main Competitors
The following table compares Zscaler with its main competitors in terms of market share:
| Company |
Market Share |
| Zscaler |
15% |
| Palo Alto Networks |
20% |
| Fortinet |
10% |
| Check Point Software |
8% |
| Cisco |
7% |
Zscaler holds a competitive position in the market, but it faces significant competition from Palo Alto Networks, which leads with a 20% market share. The company must continue to innovate and expand its offerings to maintain and grow its market presence.
Competitive Advantages
Zscaler’s competitive advantages include its innovative cloud-based security solutions, which provide secure access to applications without the need for traditional hardware. The company’s focus on user experience and performance sets it apart from competitors. Additionally, Zscaler’s ability to scale its services quickly and efficiently allows it to meet the growing demands of its customers. Looking ahead, Zscaler has opportunities to expand into new markets and develop new products that address emerging security challenges.
Stock Analysis
The following chart illustrates Zscaler’s stock price trend over the past year:
Trend Analysis
Zscaler’s stock has experienced significant volatility over the past year, with a high of $318.46 and a low of $164.78. Currently, the stock is trading at $294.65, reflecting a recent increase of 7.99%. Over the past year, the stock has shown a bullish trend, with a percentage increase of approximately 78% from its lowest point. However, the stock remains sensitive to market fluctuations, and investors should be cautious of potential volatility.
Volume Analysis
Over the last three months, Zscaler has seen an average trading volume of approximately 1.74 million shares. The volume has been relatively stable, indicating a balanced interest from both buyers and sellers. However, recent trends suggest a slight increase in buyer volume, which may indicate growing investor confidence in the company’s future prospects.
Analyst Opinions
Recent analyst recommendations for Zscaler have been mixed, with some analysts suggesting a “buy” rating based on the company’s growth potential and innovative products, while others recommend a “hold” due to ongoing profitability challenges. The consensus among analysts in 2025 leans towards a “buy” rating, reflecting optimism about Zscaler’s long-term growth prospects.
Consumer Opinions
Consumer feedback on Zscaler’s products has been generally positive, with many users praising the ease of use and effectiveness of the security solutions. However, some users have expressed concerns about the pricing and the complexity of certain features.
The following table compares three positive and three negative reviews of Zscaler:
| Review Type |
Review |
| Positive |
Excellent security features and user-friendly interface. |
| Positive |
Great customer support and quick response times. |
| Positive |
Highly effective in preventing cyber threats. |
| Negative |
Pricing is on the higher side compared to competitors. |
| Negative |
Some features are complex and require training. |
| Negative |
Occasional performance issues during peak usage. |
Risk Analysis
The following table outlines the main risks faced by Zscaler:
| Risk Category |
Description |
Probability |
Potential Impact |
Recent Example / Fact |
| Financial |
Ongoing losses affecting profitability. |
High |
High |
N/A |
| Operational |
Complexity of product features may hinder user adoption. |
Medium |
Moderate |
N/A |
| Sector |
Intense competition in the cybersecurity market. |
High |
High |
N/A |
| Regulatory |
Compliance with evolving data protection regulations. |
Medium |
High |
N/A |
| Geopolitical |
Potential impacts from international trade tensions. |
Medium |
Moderate |
N/A |
| Technological |
Rapid technological changes may outpace Zscaler’s offerings. |
High |
High |
N/A |
In summary, the most critical risks for investors in Zscaler include ongoing financial losses, intense competition, and the need to adapt to rapid technological changes.
Summary
Zscaler has demonstrated strong revenue growth, but continues to face challenges in achieving profitability. The company’s innovative products and competitive advantages position it well in the cybersecurity market, but risks remain.
The following table summarizes Zscaler’s strengths and weaknesses:
| Strengths |
Weaknesses |
| Strong revenue growth |
Ongoing financial losses |
| Innovative product offerings |
High competition in the sector |
| Positive consumer feedback |
Complexity of certain features |
Should You Buy Zscaler?
Given that Zscaler’s net margin remains negative, it is advisable to wait for improvements in its fundamentals before considering an investment. The long-term trend has shown some positive movement, but the current buyer volume is not strong enough to suggest a favorable entry point. Investors should monitor the company’s performance closely and consider waiting for a bullish reversal before making a decision.
The key risks of investing in Zscaler include ongoing financial losses, intense competition, and the need to adapt to rapid technological changes.
Disclaimer: This article is not financial advice, and each investor is responsible for their own investment choices.
Additional Resources
For more information about Zscaler, I encourage you to visit the company’s official website:
Zscaler Official Website.
Table of Contents
