Zscaler (ZS)
Market Price (4/16/2026): $133.39 | Market Cap: $21.3 BilSector: Industrials | Industry: Research & Consulting Services
Zscaler (ZS)
Market Price (4/16/2026): $133.39Market Cap: $21.3 BilSector: IndustrialsIndustry: Research & Consulting Services
Investment Highlights Why It Matters Detailed financial logic regarding cash flow yields vs trend-riding momentum.
Strong revenue growthRev Chg LTMRevenue Change % Last Twelve Months (LTM) is 24% Attractive cash flow generationCFO/Rev LTMCash Flow from Operations / Revenue (Sales), Last Twelve Months (LTM) is 37%, FCF/Rev LTMFree Cash Flow / Revenue (Sales), Last Twelve Months (LTM) is 29% Valuation becoming less expensiveP/S 6M Chg %Price/Sales change over 6 months. Declining P/S indicates valuation has become less expensive. is -58% Low stock price volatilityVol 12M is 44% Megatrend and thematic driversMegatrends include Cybersecurity, and Cloud Computing. Themes include Cloud Security, Network Security, Show more. | Weak multi-year price returns2Y Excs Rtn is -65%, 3Y Excs Rtn is -46% | Not profitable at operating income levelOp Inc LTMOperating Income, Last Twelve Months is -144 Mil, Op Mgn LTMOperating Margin = Operating Income / Revenue Reflects profitability before taxes and before impact of capital structure (interest payments). is -4.8% Significant share based compensationSBC/Rev LTMShare Based Compensation / Revenue (Sales), Last Twelve Months (LTM) is 25% Yield minus risk free rate is negativeERPEquity Risk Premium (ERP) = Total Yield - Risk Free Rate, Reflects the premium above risk free assets offered by the investment. is -4.3% Key risksZS key risks include [1] intense competition from established cybersecurity vendors and major cloud providers, Show more. |
| Strong revenue growthRev Chg LTMRevenue Change % Last Twelve Months (LTM) is 24% |
| Attractive cash flow generationCFO/Rev LTMCash Flow from Operations / Revenue (Sales), Last Twelve Months (LTM) is 37%, FCF/Rev LTMFree Cash Flow / Revenue (Sales), Last Twelve Months (LTM) is 29% |
| Valuation becoming less expensiveP/S 6M Chg %Price/Sales change over 6 months. Declining P/S indicates valuation has become less expensive. is -58% |
| Low stock price volatilityVol 12M is 44% |
| Megatrend and thematic driversMegatrends include Cybersecurity, and Cloud Computing. Themes include Cloud Security, Network Security, Show more. |
| Weak multi-year price returns2Y Excs Rtn is -65%, 3Y Excs Rtn is -46% |
| Not profitable at operating income levelOp Inc LTMOperating Income, Last Twelve Months is -144 Mil, Op Mgn LTMOperating Margin = Operating Income / Revenue Reflects profitability before taxes and before impact of capital structure (interest payments). is -4.8% |
| Significant share based compensationSBC/Rev LTMShare Based Compensation / Revenue (Sales), Last Twelve Months (LTM) is 25% |
| Yield minus risk free rate is negativeERPEquity Risk Premium (ERP) = Total Yield - Risk Free Rate, Reflects the premium above risk free assets offered by the investment. is -4.3% |
| Key risksZS key risks include [1] intense competition from established cybersecurity vendors and major cloud providers, Show more. |
Qualitative Assessment
AI Analysis | Feedback
1. Analyst Downgrade and Valuation Concerns.
On April 9, 2026, BTIG downgraded Zscaler from a Buy to a Neutral rating and removed its price target, signaling a "valuation reset rather than a fundamental collapse". The firm noted that Zscaler's forward P/E ratio of 30x and price-to-sales ratio of 7.39x remained elevated for a company reporting GAAP net losses, and highlighted market demands for cleaner profitability over raw growth.
2. Intensified Competitive Landscape.
BTIG's downgrade also stemmed from "meaningful increase in competition from multiple sources," specifically citing Cloudflare and Netskope as pressing threats. Netskope is seen as a credible challenger, pricing 25% to 30% below Zscaler for comparable functionality, while Cloudflare gains traction in larger deals at approximately half the price. Additionally, traditional firewall vendors like Fortinet and Check Point are enhancing their SASE upsell activities, further pressuring Zscaler's market expansion.
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Stock Movement Drivers
Fundamental Drivers
The -41.8% change in ZS stock from 12/31/2025 to 4/15/2026 was primarily driven by a -44.6% change in the company's P/S Multiple.| (LTM values as of) | 12312025 | 4152026 | Change |
|---|---|---|---|
| Stock Price ($) | 224.92 | 131.01 | -41.8% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 2,833 | 3,001 | 5.9% |
| P/S Multiple | 12.6 | 7.0 | -44.6% |
| Shares Outstanding (Mil) | 159 | 160 | -0.7% |
| Cumulative Contribution | -41.8% |
Market Drivers
12/31/2025 to 4/15/2026| Return | Correlation | |
|---|---|---|
| ZS | -41.8% | |
| Market (SPY) | -5.4% | 21.1% |
| Sector (XLI) | 10.4% | -9.4% |
Fundamental Drivers
The -56.3% change in ZS stock from 9/30/2025 to 4/15/2026 was primarily driven by a -60.3% change in the company's P/S Multiple.| (LTM values as of) | 9302025 | 4152026 | Change |
|---|---|---|---|
| Stock Price ($) | 299.66 | 131.01 | -56.3% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 2,673 | 3,001 | 12.3% |
| P/S Multiple | 17.5 | 7.0 | -60.3% |
| Shares Outstanding (Mil) | 157 | 160 | -2.0% |
| Cumulative Contribution | -56.3% |
Market Drivers
9/30/2025 to 4/15/2026| Return | Correlation | |
|---|---|---|
| ZS | -56.3% | |
| Market (SPY) | -2.9% | 28.3% |
| Sector (XLI) | 11.4% | 2.2% |
Fundamental Drivers
The -34.0% change in ZS stock from 3/31/2025 to 4/15/2026 was primarily driven by a -44.6% change in the company's P/S Multiple.| (LTM values as of) | 3312025 | 4152026 | Change |
|---|---|---|---|
| Stock Price ($) | 198.42 | 131.01 | -34.0% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 2,422 | 3,001 | 23.9% |
| P/S Multiple | 12.6 | 7.0 | -44.6% |
| Shares Outstanding (Mil) | 154 | 160 | -3.8% |
| Cumulative Contribution | -34.0% |
Market Drivers
3/31/2025 to 4/15/2026| Return | Correlation | |
|---|---|---|
| ZS | -34.0% | |
| Market (SPY) | 16.3% | 50.0% |
| Sector (XLI) | 32.0% | 33.2% |
Fundamental Drivers
The 12.1% change in ZS stock from 3/31/2023 to 4/15/2026 was primarily driven by a 122.6% change in the company's Total Revenues ($ Mil).| (LTM values as of) | 3312023 | 4152026 | Change |
|---|---|---|---|
| Stock Price ($) | 116.83 | 131.01 | 12.1% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 1,348 | 3,001 | 122.6% |
| P/S Multiple | 12.5 | 7.0 | -44.3% |
| Shares Outstanding (Mil) | 145 | 160 | -9.5% |
| Cumulative Contribution | 12.1% |
Market Drivers
3/31/2023 to 4/15/2026| Return | Correlation | |
|---|---|---|
| ZS | 12.1% | |
| Market (SPY) | 63.3% | 48.7% |
| Sector (XLI) | 76.4% | 33.7% |
Price Returns Compared
| 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | Total [1] | |
|---|---|---|---|---|---|---|---|
| Returns | |||||||
| ZS Return | 61% | -65% | 98% | -19% | 25% | -45% | -39% |
| Peers Return | 67% | -43% | 89% | 37% | 17% | -17% | 141% |
| S&P 500 Return | 27% | -19% | 24% | 23% | 16% | 2% | 85% |
Monthly Win Rates [3] | |||||||
| ZS Win Rate | 67% | 33% | 67% | 50% | 58% | 0% | |
| Peers Win Rate | 69% | 40% | 65% | 58% | 58% | 40% | |
| S&P 500 Win Rate | 75% | 42% | 67% | 75% | 67% | 50% | |
Max Drawdowns [4] | |||||||
| ZS Max Drawdown | -19% | -67% | -22% | -30% | -3% | -48% | |
| Peers Max Drawdown | -14% | -46% | -8% | -13% | -16% | -26% | |
| S&P 500 Max Drawdown | -1% | -25% | -1% | -2% | -15% | -7% | |
[1] Cumulative total returns since the beginning of 2021
[2] Peers: PANW, FTNT, NET, CRWD, NTSK. See ZS Returns vs. Peers.
[3] Win Rate = % of calendar months in which monthly returns were positive
[4] Max drawdown represents maximum peak-to-trough decline within a year
[5] 2026 data is for the year up to 4/15/2026 (YTD)
How Low Can It Go
| Event | ZS | S&P 500 |
|---|---|---|
| 2022 Inflation Shock | ||
| % Loss | -76.4% | -25.4% |
| % Gain to Breakeven | 323.9% | 34.1% |
| Time to Breakeven | Not Fully Recovered days | 464 days |
| 2020 Covid Pandemic | ||
| % Loss | -39.4% | -33.9% |
| % Gain to Breakeven | 65.0% | 51.3% |
| Time to Breakeven | 33 days | 148 days |
| 2018 Correction | ||
| % Loss | -53.8% | -19.8% |
| % Gain to Breakeven | 116.5% | 24.7% |
| Time to Breakeven | 220 days | 120 days |
Compare to PANW, FTNT, NET, CRWD, NTSK
In The Past
Zscaler's stock fell -76.4% during the 2022 Inflation Shock from a high on 11/19/2021. A -76.4% loss requires a 323.9% gain to breakeven.
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About Zscaler (ZS)
AI Analysis | Feedback
- Zscaler is like Cloudflare, but specifically focused on comprehensive enterprise network and application security from the cloud.
- Think of Zscaler as doing for corporate network security what Zoom did for corporate video conferencing: moving it from cumbersome on-premise solutions to a scalable, cloud-native service.
AI Analysis | Feedback
- Zscaler Internet Access (ZIA): Provides secure access for users and devices to external applications and the internet.
- Zscaler Private Access (ZPA): Enables secure access to internally hosted applications in data centers or clouds.
- Zscaler Digital Experience (ZDX): Monitors and scores end-to-end user experience for business applications.
- Zscaler Cloud Security Posture Management (CSPM): Identifies and remediates misconfigurations in cloud environments to ensure compliance and reduce risk.
- Zscaler Cloud Workload Segmentation (CWS): Secures application-to-application communication within clouds and data centers to prevent lateral threat movement.
AI Analysis | Feedback
Zscaler (ZS) sells its cloud security solutions primarily to other companies (B2B).
Based on the provided background information, specific names of Zscaler's major customer companies are not disclosed. However, the company serves a wide range of industries globally, indicating that its customer base consists of large enterprises and public sector organizations. The industries Zscaler serves include:
- Airlines and transportation
- Conglomerates
- Consumer goods and retail
- Financial services
- Healthcare
- Manufacturing
- Media and communications
- Public sector and education
- Technology
- Telecommunications services
AI Analysis | Feedback
nullAI Analysis | Feedback
```htmlJay Chaudhry
CEO, Chairman and Founder
Jay Chaudhry is an accomplished entrepreneur who founded Zscaler in 2007. Prior to Zscaler, he founded and led a series of successful cybersecurity companies, including SecureIT, which was acquired by VeriSign in 1998; CoreHarbor, acquired by USi/AT&T; CipherTrust, which merged with Secure Computing; and AirDefense, acquired by Motorola. He has a history of introducing visionary innovations to address the demand for securely enabling emerging technology trends in the cybersecurity sector. Chaudhry leverages over 25 years of security industry expertise from roles in engineering, sales, marketing, and management at organizations such as IBM, NCR, and Unisys.
Kevin Rubin
Chief Financial Officer
Kevin Rubin leads Zscaler's global financial strategy, operations, planning and analysis, and investor relations. He brings more than two decades of experience in leading finance organizations at high-growth public and private companies. Before joining Zscaler, Rubin served as CFO at BetterUp, and prior to that, he was CFO at Alteryx, where he guided the company through its successful IPO and oversaw strategic acquisitions, contributing to the growth of its Annual Recurring Revenue to $1 billion. His career also includes CFO roles at MSC Software, Pictage, DataDirect, and MRV Communications, and he began his career at Arthur Andersen.
Dr. Amit Sinha
President
Dr. Amit Sinha serves as President of Research and Development, Operations and Customer Service, and Chief Technology Officer at Zscaler. He is a key leader in the company's product strategy and technology development. Dr. Sinha holds a Ph.D. and an M.S. in electrical engineering and computer science from the Massachusetts Institute of Technology, and a B.Tech in electrical engineering from the Indian Institute of Technology, Delhi. He is recognized as a skilled entrepreneur and technology leader with a focus on driving research and development of disruptive technologies.
Dali Rajic
Chief Operating Officer
Dali Rajic is responsible for scaling Zscaler's global business operations, including lead-to-cash processes and customer engagement. He has nearly 25 years of experience in sales leadership and go-to-market strategies within cloud companies. Rajic holds an MBA in Financial and Strategic Management from Northwestern University and a Bachelor of Science in International Marketing from California State Polytechnic University, Pomona.
Mike Rich
Chief Revenue Officer and President of Global Sales
Mike Rich joined Zscaler to accelerate revenue growth and enhance sales execution. He has been instrumental in aggressively adding quota-carrying salespeople and delivering strong sales traction for the company.
AI Analysis | Feedback
The key risks to Zscaler's business include intense competition, challenges in achieving consistent GAAP profitability, and a high valuation susceptible to growth slowdowns.
- Intense Competition and Execution Risk: Zscaler operates in a highly competitive cybersecurity market. It faces significant competition from well-established incumbents such as Palo Alto Networks and Cisco, as well as agile challengers like Netskope and CrowdStrike. This intense competition can exert pressure on pricing, influence win rates, and impact Zscaler's ability to maintain or expand its market share.
- Challenges with GAAP Profitability: Despite demonstrating strong revenue growth, Zscaler has consistently reported net losses since its inception and is expected to continue incurring them in the foreseeable future. While the company shows improving non-GAAP profitability, it faces challenges with negative GAAP net margins. This ongoing path to GAAP profitability requires significant and sustained investment in research and development, as well as sales and marketing, which could further delay achieving positive GAAP earnings if growth decelerates.
- High Valuation and Sensitivity to Growth Slowdown: Zscaler's stock trades at a premium valuation compared to the broader market, based on its strong growth prospects. This elevated valuation means that the company's stock price is particularly sensitive to any indications of slowing revenue growth or shifts in investor sentiment away from high-growth technology stocks. Any perceived deceleration in growth could lead to a significant correction in its stock price.
AI Analysis | Feedback
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AI Analysis | Feedback
Zscaler (ZS) operates in a significant and expanding addressable market for its cloud security solutions. The company's Total Addressable Market (TAM) is estimated to be $96 billion globally. This represents an increase from a previous estimate of $72 billion.
The growth in Zscaler's addressable market is driven by accelerating demand for cloud-native cybersecurity and zero trust architectures. Zscaler's platform addresses three core segments: Users, Workloads, and IoT/OT, all powered by its Zero Trust Exchange.
For its main products, the $72 billion serviceable addressable market (SAM) was previously broken down into approximately $49 billion for users and $23 billion for workloads. Zscaler Internet Access (ZIA) provides secure access to externally managed applications and Internet destinations, while Zscaler Private Access (ZPA) offers secure access to managed applications hosted internally in data centers and private or public clouds.
AI Analysis | Feedback
Here are 3-5 expected drivers of future revenue growth for Zscaler (ZS) over the next 2-3 years:
- Continued Adoption and Expansion of the Zero Trust Everywhere Platform: Zscaler's core Zero Trust security platform is experiencing strong demand and customer adoption, particularly among large enterprises. The company exceeded its target for enterprises adopting "Zero Trust Everywhere" three quarters early, now securing nearly 40% of the Global 2000 and over 45% of the Fortune 500. This indicates ongoing growth through both new customer acquisition and deeper penetration within its existing significant customer base.
- Rapid Growth and Innovation in AI Security Solutions: Zscaler is making substantial investments and seeing significant traction in its AI security offerings, including "AI Guard" and "Gen AI security offerings." The Annual Recurring Revenue (ARR) from AI security surpassed its fiscal 2026 target three quarters early, exceeding $400 million, and is projected to surpass $500 million by fiscal year-end. Strategic acquisitions, such as SPLX, are also enhancing Zscaler's AI Security solutions.
- Acceleration of Data Security Everywhere: This represents another crucial growth pillar for Zscaler. The ARR from Data Security Everywhere has accelerated to approximately $450 million. This growth signifies increasing demand for Zscaler's solutions designed to secure application-to-application communications within public clouds and data centers, preventing lateral threat movement and reducing data breach risks.
- Success of the Z-Flex Program for Larger, Multi-Year Deals and Platform Expansion: Zscaler's Z-Flex program, which offers flexible licensing options, is demonstrating strong momentum. In Q1 2026, total contract value (TCV) bookings from this program exceeded $175 million, representing over 70% sequential growth. This program facilitates the adoption of multiple modules over time with predictable pricing, encouraging long-term commitments, strengthening customer relationships, and driving broader platform usage.
AI Analysis | Feedback
Capital Allocation Decisions for Zscaler (ZS) (Last 3-5 Years)
Zscaler, Inc. (ZS) has demonstrated specific capital allocation strategies over the last three to five years, primarily focusing on strategic acquisitions to enhance its cloud security offerings, managing share issuance, and consistent capital expenditures for infrastructure development.Share Repurchases
No significant dollar amount of share repurchases or authorized future share repurchases by Zscaler has been identified within the last 3-5 years through the available information.Share Issuance
Zscaler's shares outstanding have generally increased over the last few years. The annual shares outstanding were 147.2 million in fiscal year 2023, increasing to 152.49 million in fiscal year 2024, and 158.301 million in fiscal year 2025. For the quarter ending January 31, 2026, shares outstanding were reported as 160.57 million. A significant portion of this issuance is attributed to stock-based compensation, which totaled $220.4 million in Q2 2026.Inbound Investments
No information available regarding large strategic investments made in Zscaler by third-parties, such as strategic partners or private equity firms, within the specified timeframe.Outbound Investments
Zscaler has actively engaged in strategic acquisitions to bolster its cybersecurity capabilities:- In February 2026, Zscaler acquired SquareX to extend Zero Trust security into the browser for the AI era.
- In fiscal Q2 2026, Zscaler completed the acquisitions of Red Canary and SPLX, totaling $692.0 million.
- Other notable acquisitions include Avalor in March 2024 (predominantly cash with some equity) to advance AI innovations, Canonic Security in February 2023 (SaaS protection), ShiftRight in September 2022 (cloud security), and Smokescreen in May 2021 (Zero Trust Exchange). Cash from investing activities, which includes acquisitions, reached -$1.5 billion in Q4 2025 and an annual value of -$427.0 million for fiscal year 2025.
Capital Expenditures
Zscaler's capital expenditures have shown a consistent increase over the last few fiscal years:- Capital expenditures were $48.16 million in fiscal year 2021, $69.3 million in 2022, $97.2 million in 2023, and $144.6 million in 2024.
- For fiscal year 2025, capital expenditures were approximately $164.3 million. In Q2 2026, capital expenditures were $18.0 million.
- The primary focus of these capital expenditures has been on internal software development, data center build-out, and expanding its data center infrastructure.
- Expected capital expenditures for fiscal year 2026 are projected to be $142.6 million.
Latest Trefis Analyses
Trade Ideas
Select ideas related to ZS.
| Date | Ticker | Company | Category | Trade Strategy | 6M Fwd Rtn | 12M Fwd Rtn | 12M Max DD |
|---|---|---|---|---|---|---|---|
| 03312026 | PANW | Palo Alto Networks | Insider | Insider Buys | Low D/EStrong Insider BuyingCompanies with strong insider buying in the last 1 month, positive operating income and reasonable debt / market cap | 0.0% | 0.0% | 0.0% |
| 03312026 | NSP | Insperity | Insider | Insider Buys 45DStrong Insider BuyingCompanies with multiple insider buys in the last 45 days | 0.0% | 0.0% | 0.0% |
| 03312026 | TNC | Tennant | Insider | Insider Buys 45DStrong Insider BuyingCompanies with multiple insider buys in the last 45 days | 0.0% | 0.0% | 0.0% |
| 03272026 | ADP | Automatic Data Processing | Dip Buy | DB | FCFY OPMDip Buy with High FCF Yield and High MarginBuying dips for companies with high FCF yield and meaningfully high operating margin | 1.0% | 1.0% | 0.0% |
| 03272026 | HURN | Huron Consulting | Dip Buy | DB | FCFY OPMDip Buy with High FCF Yield and High MarginBuying dips for companies with high FCF yield and meaningfully high operating margin | 4.0% | 4.0% | 0.0% |
| 02062026 | ZS | Zscaler | Dip Buy | DB | CFO/Rev | Low D/EDip Buy with High Cash Flow MarginsBuying dips for companies with significant cash flows from operations and reasonable debt / market cap | -16.2% | -16.2% | -20.4% |
| 11302022 | ZS | Zscaler | Dip Buy | DB | CFO/Rev | Low D/EDip Buy with High Cash Flow MarginsBuying dips for companies with significant cash flows from operations and reasonable debt / market cap | 1.5% | 48.0% | -34.8% |
| 05312022 | ZS | Zscaler | Dip Buy | DB | CFO/Rev | Low D/EDip Buy with High Cash Flow MarginsBuying dips for companies with significant cash flows from operations and reasonable debt / market cap | -11.9% | -11.5% | -43.2% |
Research & Analysis
Invest in Strategies
Wealth Management
Peer Comparisons
| Peers to compare with: |
Financials
| Median | |
|---|---|
| Name | |
| Mkt Price | 147.56 |
| Mkt Cap | 63.0 |
| Rev LTM | 3,907 |
| Op Inc LTM | -176 |
| FCF LTM | 1,058 |
| FCF 3Y Avg | 1,079 |
| CFO LTM | 1,363 |
| CFO 3Y Avg | 1,387 |
Growth & Margins
| Median | |
|---|---|
| Name | |
| Rev Chg LTM | 22.8% |
| Rev Chg 3Y Avg | 29.1% |
| Rev Chg Q | 24.6% |
| QoQ Delta Rev Chg LTM | 5.7% |
| Op Inc Chg LTM | -38.6% |
| Op Inc Chg 3Y Avg | 13.6% |
| Op Mgn LTM | -5.5% |
| Op Mgn 3Y Avg | -3.2% |
| QoQ Delta Op Mgn LTM | -0.1% |
| CFO/Rev LTM | 35.3% |
| CFO/Rev 3Y Avg | 36.0% |
| FCF/Rev LTM | 27.5% |
| FCF/Rev 3Y Avg | 28.1% |
Valuation
| Median | |
|---|---|
| Name | |
| Mkt Cap | 63.0 |
| P/S | 10.2 |
| P/Op Inc | -75.4 |
| P/EBIT | -400.6 |
| P/E | -157.5 |
| P/CFO | 46.7 |
| Total Yield | -0.2% |
| Dividend Yield | 0.0% |
| FCF Yield 3Y Avg | 2.2% |
| D/E | 0.0 |
| Net D/E | -0.0 |
Returns
| Median | |
|---|---|
| Name | |
| 1M Rtn | -4.4% |
| 3M Rtn | -12.4% |
| 6M Rtn | -18.3% |
| 12M Rtn | -12.6% |
| 3Y Rtn | 44.4% |
| 1M Excs Rtn | -9.2% |
| 3M Excs Rtn | -13.9% |
| 6M Excs Rtn | -26.6% |
| 12M Excs Rtn | -41.5% |
| 3Y Excs Rtn | -23.3% |
Comparison Analyses
Price Behavior
| Market Price | $131.01 | |
| Market Cap ($ Bil) | 20.9 | |
| First Trading Date | 03/16/2018 | |
| Distance from 52W High | -61.0% | |
| 50 Days | 200 Days | |
| DMA Price | $152.83 | $243.78 |
| DMA Trend | down | down |
| Distance from DMA | -14.3% | -46.3% |
| 3M | 1YR | |
| Volatility | 63.9% | 44.0% |
| Downside Capture | 1.51 | 0.99 |
| Upside Capture | 87.10 | 88.97 |
| Correlation (SPY) | 20.5% | 30.4% |
| 1M | 2M | 3M | 6M | 1Y | 3Y | |
|---|---|---|---|---|---|---|
| Beta | -0.07 | 0.85 | 0.95 | 1.11 | 1.20 | 1.47 |
| Up Beta | -1.50 | -1.05 | -0.40 | 0.66 | 1.25 | 1.21 |
| Down Beta | -1.38 | -0.19 | 0.19 | 0.46 | 1.12 | 1.44 |
| Up Capture | 63% | 67% | 53% | 48% | 84% | 420% |
| Bmk +ve Days | 7 | 16 | 27 | 65 | 139 | 424 |
| Stock +ve Days | 12 | 19 | 27 | 58 | 129 | 402 |
| Down Capture | 64% | 211% | 218% | 188% | 129% | 111% |
| Bmk -ve Days | 12 | 23 | 33 | 58 | 110 | 323 |
| Stock -ve Days | 10 | 23 | 36 | 68 | 122 | 348 |
[1] Upside and downside betas calculated using positive and negative benchmark daily returns respectively
Based On 1-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with ZS | |
|---|---|---|---|---|
| ZS | -35.3% | 44.5% | -0.85 | - |
| Sector ETF (XLI) | 37.8% | 15.3% | 1.89 | 12.4% |
| Equity (SPY) | 22.0% | 12.9% | 1.36 | 33.0% |
| Gold (GLD) | 49.0% | 27.5% | 1.44 | -11.9% |
| Commodities (DBC) | 25.0% | 16.1% | 1.38 | -4.9% |
| Real Estate (VNQ) | 17.3% | 13.7% | 0.92 | 11.3% |
| Bitcoin (BTCUSD) | -10.4% | 42.6% | -0.14 | 24.4% |
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Based On 5-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with ZS | |
|---|---|---|---|---|
| ZS | -7.1% | 53.5% | 0.07 | - |
| Sector ETF (XLI) | 13.1% | 17.3% | 0.60 | 37.5% |
| Equity (SPY) | 10.9% | 17.0% | 0.50 | 54.4% |
| Gold (GLD) | 21.9% | 17.8% | 1.01 | 3.0% |
| Commodities (DBC) | 11.5% | 18.8% | 0.50 | 10.7% |
| Real Estate (VNQ) | 4.0% | 18.8% | 0.12 | 35.2% |
| Bitcoin (BTCUSD) | 5.1% | 56.5% | 0.31 | 28.5% |
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Based On 10-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with ZS | |
|---|---|---|---|---|
| ZS | 14.6% | 57.1% | 0.53 | - |
| Sector ETF (XLI) | 14.0% | 19.9% | 0.62 | 27.1% |
| Equity (SPY) | 13.8% | 17.9% | 0.67 | 43.4% |
| Gold (GLD) | 14.3% | 15.9% | 0.75 | 3.8% |
| Commodities (DBC) | 8.7% | 17.6% | 0.41 | 11.3% |
| Real Estate (VNQ) | 5.4% | 20.7% | 0.22 | 24.4% |
| Bitcoin (BTCUSD) | 67.8% | 66.9% | 1.07 | 17.3% |
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Returns Analyses
Earnings Returns History
Expand for More| Forward Returns | |||
|---|---|---|---|
| Earnings Date | 1D Returns | 5D Returns | 21D Returns |
| 2/26/2026 | -12.2% | -3.2% | -20.4% |
| 11/25/2025 | -13.0% | -16.5% | -21.5% |
| 9/2/2025 | -1.5% | 2.8% | 10.9% |
| 5/29/2025 | 9.8% | 19.8% | 25.0% |
| 3/5/2025 | 2.9% | 0.7% | -2.2% |
| 12/2/2024 | -4.7% | -1.1% | -12.9% |
| 9/3/2024 | -18.7% | -19.3% | -12.2% |
| 5/30/2024 | 8.5% | 14.2% | 26.8% |
| ... | |||
| SUMMARY STATS | |||
| # Positive | 11 | 11 | 11 |
| # Negative | 13 | 13 | 13 |
| Median Positive | 9.8% | 10.8% | 17.3% |
| Median Negative | -9.4% | -8.1% | -12.9% |
| Max Positive | 29.4% | 35.9% | 39.8% |
| Max Negative | -18.7% | -19.3% | -23.7% |
SEC Filings
Expand for More| Report Date | Filing Date | Filing |
|---|---|---|
| 01/31/2026 | 02/26/2026 | 10-Q |
| 10/31/2025 | 11/25/2025 | 10-Q |
| 07/31/2025 | 09/11/2025 | 10-K |
| 04/30/2025 | 05/29/2025 | 10-Q |
| 01/31/2025 | 03/10/2025 | 10-Q |
| 10/31/2024 | 12/05/2024 | 10-Q |
| 07/31/2024 | 09/12/2024 | 10-K |
| 04/30/2024 | 06/07/2024 | 10-Q |
| 01/31/2024 | 03/06/2024 | 10-Q |
| 10/31/2023 | 12/06/2023 | 10-Q |
| 07/31/2023 | 09/14/2023 | 10-K |
| 04/30/2023 | 06/07/2023 | 10-Q |
| 01/31/2023 | 03/08/2023 | 10-Q |
| 10/31/2022 | 12/07/2022 | 10-Q |
| 07/31/2022 | 09/15/2022 | 10-K |
| 04/30/2022 | 06/09/2022 | 10-Q |
Recent Forward Guidance [BETA]
Latest: Q2 2026 Earnings Reported 2/26/2026
| Forward Guidance | Guidance Change | ||||||
|---|---|---|---|---|---|---|---|
| Metric | Low | Mid | High | % Chg | % Delta | Change | Prior |
| Q3 2026 Revenue | 834.00 Mil | 835.00 Mil | 836.00 Mil | 4.6% | Higher New | Guidance: 798.00 Mil for Q2 2026 | |
| Q3 2026 Non-GAAP Income from Operations | 187.00 Mil | 188.00 Mil | 189.00 Mil | 8.7% | Higher New | Guidance: 173.00 Mil for Q2 2026 | |
| Q3 2026 Non-GAAP Net Income per share | 1 | 1 | 1.01 | 12.3% | Higher New | Guidance: 0.9 for Q2 2026 | |
| 2026 Annual Recurring Revenue | 3.73 Bil | 3.74 Bil | 3.75 Bil | 0.8% | Raised | Guidance: 3.71 Bil for 2026 | |
| 2026 Revenue | 3.31 Bil | 3.32 Bil | 3.32 Bil | 0.7% | Raised | Guidance: 3.29 Bil for 2026 | |
| 2026 Non-GAAP Income from Operations | 742.00 Mil | 745.00 Mil | 748.00 Mil | 1.2% | Raised | Guidance: 736.00 Mil for 2026 | |
| 2026 Non-GAAP Net Income per share | 3.99 | 4 | 4.02 | 5.4% | Raised | Guidance: 3.8 for 2026 | |
Prior: Q1 2026 Earnings Reported 11/25/2025
| Forward Guidance | Guidance Change | ||||||
|---|---|---|---|---|---|---|---|
| Metric | Low | Mid | High | % Chg | % Delta | Change | Prior |
| Q2 2026 Revenue | 797.00 Mil | 798.00 Mil | 799.00 Mil | ||||
| Q2 2026 Non-GAAP Income from Operations | 172.00 Mil | 173.00 Mil | 174.00 Mil | ||||
| Q2 2026 Non-GAAP Net Income per share | 0.89 | 0.9 | 0.9 | ||||
| 2026 Annual Recurring Revenue | 3.70 Bil | 3.71 Bil | 3.72 Bil | 0.6% | Raised | Guidance: 3.69 Bil for 2026 | |
| 2026 Revenue | 3.28 Bil | 3.29 Bil | 3.30 Bil | 0.5% | Raised | Guidance: 3.27 Bil for 2026 | |
| 2026 Non-GAAP Income from Operations | 732.00 Mil | 736.00 Mil | 740.00 Mil | 0.5% | Raised | Guidance: 732.00 Mil for 2026 | |
| 2026 Non-GAAP Net Income per share | 3.78 | 3.8 | 3.82 | 3.8% | Raised | Guidance: 3.66 for 2026 | |
Insider Activity
Expand for More| # | Owner | Title | Holding | Action | Filing Date | Price | Shares | Transacted Value | Value of Held Shares | Form |
|---|---|---|---|---|---|---|---|---|---|---|
| 1 | Beer, James A | Direct | Sell | 1022026 | 226.72 | 653 | 148,048 | 790,119 | Form | |
| 2 | Brown, Andrew William Fraser | Direct | Sell | 12292025 | 0.00 | 5,000 | Form | |||
| 3 | Schlossman, Robert | Chief Legal Officer | Direct | Sell | 12172025 | 230.82 | 3,084 | 711,847 | 17,773,548 | Form |
| 4 | Schlossman, Robert | Chief Legal Officer | Direct | Sell | 12172025 | 232.79 | 2,349 | 546,824 | 17,378,472 | Form |
| 5 | Rich, Michael J | CRO and President of WW Sales | Direct | Sell | 12172025 | 230.82 | 4,100 | 946,359 | 24,812,382 | Form |
ZS Trade Sentinel
UNDERWEIGHT (Score 3-4)
CONVICTION RATIONALE
The score is a 4 (UNDERWEIGHT) because the positive factors, such as a strong secular trend in cybersecurity and a healthy backlog (RPO), are fully offset by significant risks. The competitive moat is contested by formidable platform players like Palo Alto Networks, core organic growth is slowing, and the speculative valuation provides no margin of safety for any execution missteps. The risk/reward is balanced, making it an unattractive investment at the current price.
STOCK ARCHETYPE
Primary: High-Beta Compounder / Secondary: Transition / Profit PivotZscaler retains its high-growth DNA (ARR +25%) and valuation sensitivity, fitting the 'High-Beta Compounder' archetype. However, with decelerating organic growth and a clear management focus on operating leverage and FCF generation (FCF margin 21%), it is increasingly exhibiting traits of a 'Transition / Profit Pivot' story.
INVESTMENT THESIS
The primary long thesis is that Zscaler will successfully transition from a best-of-breed secure web gateway to the essential security platform for large enterprises adopting cloud and AI. This transition is driven by the architectural need for a purpose-built proxy to secure new, high-value workloads, which will sustain durable growth and drive significant operating margin expansion.
- Remaining Performance Obligations (RPO) growth of 31% is outpacing revenue growth of 25%, indicating a strong pipeline of future, contracted revenue.
- Growth in customers with >$1M in ARR remains strong at 18% YoY, demonstrating successful upselling and platform adoption within the largest, highest-value enterprises.
- Non-seat-based products, tied to workloads and AI security, now account for over 25% of new annual contract value and are growing over 100% YoY, signaling a successful expansion beyond the core user-protection business.
PRIMARY RISK
The primary friction is the commoditization of core Secure Service Edge (SSE) capabilities by large, integrated competitors, primarily Palo Alto Networks and Microsoft. As these rivals bundle 'good enough' security with their existing platforms, it creates significant pricing pressure and increases churn risk for Zscaler, forcing it to compete on platform value rather than just best-of-breed features.
- Organic ARR growth has decelerated to 21% (excluding the Red Canary acquisition), below the headline 25% rate, indicating a slowdown in the core business.
- Competitors like Palo Alto Networks are winning with a broad, integrated platform strategy that appeals to large enterprises looking to reduce vendor complexity.
- Microsoft is actively bundling its Entra SSE solutions with its valuable Microsoft 365 E5 licenses, creating a structural pricing and distribution challenge.
| KPI | Threshold | Rationale |
|---|---|---|
| Remaining Performance Obligations (RPO) Growth YoY | > Revenue Growth Rate (currently 25%) | This is the primary leading indicator of future revenue. If RPO growth falls below revenue growth, it signals a material slowdown in new business and a broken bull thesis. |
| Customers with >$1M ARR Growth YoY | >15% | This measures the success of the enterprise platform strategy. Deceleration here would indicate that large customers are opting for competitor platforms over Zscaler's. |
| Dollar-Based Net Retention Rate | >110% | A key indicator of customer satisfaction, upsell success, and churn. A drop below 110% would signal increasing competitive pressure and pricing erosion. |
Platform Bundling vs. Best-of-Breed Architecture
BULL VIEW
Zscaler's purpose-built platform will command premium pricing for essential enterprise AI and cloud security, evidenced by RPO growth of 31% outpacing revenue growth of 25%.
CORE TENSION
Can Zscaler's superior cloud-native architecture for AI and cloud workloads fend off 'good enough' security bundled by platform giants like Palo Alto Networks and Microsoft?
PREVAILING SENTIMENT
Organic ARR growth has decelerated to 21% (excluding the Red Canary acquisition), indicating a slowdown in the core business, supporting the bear stance currently.
BEAR VIEW
Core organic ARR growth is decelerating to 21%. Competitor bundling will commoditize core features, increase churn, and compress Zscaler's premium valuation multiple.
| Timeline | Event & Metric To Watch |
|---|---|
Late May 2026 | FY26 Q3 Earnings Call Watch: Organic ARR Growth Rate. Watch if it decelerates further from the 21% baseline reported in Q2. Also, any update on Dollar-Based Net Retention Rate. |
Late August / Early September 2026 | FY26 Q4 Earnings & FY27 Guidance Watch: Initial FY2027 revenue guidance. The key is whether management guides above or below the current consensus of ~20% YoY growth. |
July 2026 | Microsoft Inspire Conference Watch: Announcements of significant adoption metrics for Microsoft's Entra SSE suite or new bundling incentives within Microsoft 365 E5 licenses. |
Ongoing (May, June, July, Sep 2026) | Macro Environment: FOMC Meetings Watch: A sustained 10-Year Treasury Yield above 4.5% or hawkish commentary from the Federal Reserve, which could trigger a rotation out of high-multiple growth stocks. |
| Date | Event | Stock Impact |
|---|---|---|
Aug 01, 2025 | Acquisition of Red Canary Completed Details: Zscaler completed its acquisition of Red Canary to bolster its AI-driven security operations. The deal later contributed to concerns about customer churn. | Slight -1.9% pullback $285.56 -> $280.27 |
Sep 02, 2025 | Q4 FY2025 Earnings Report Details: Reported strong Q4 results, with non-GAAP EPS of $0.89 beating the $0.80 consensus. The company provided a strong initial outlook for fiscal 2026. | Muted (-0.9%) $277.05 -> $274.57 |
Sep 03, 2025 | Data Breach Acknowledged Details: Zscaler confirmed a data breach via a third-party vendor, Salesloft Drift, exposing customer contact info. The stock reaction was muted as core infrastructure was not compromised. | Muted (-0.9%) $270.58 -> $268.25 |
Nov 25, 2025 | Q1 FY2026 Earnings Report Details: Zscaler reported strong Q1 results, with EPS of $0.96 beating the $0.85 estimate. However, the stock sold off sharply on broader market tech valuation concerns. | Plummeted -13.0% $289.73 -> $251.97 |
Feb 26, 2026 | Q2 FY2026 Earnings & Guidance Details: Despite beating EPS estimates ($1.01 vs $0.90), the stock crashed. Cautious guidance and decelerating organic ARR growth to 21% spooked investors. | Plummeted -12.2% $167.36 -> $146.99 |
Position Sizing
1% - 3%
CONSERVATIVE
Stock is in an Explosive Volatility regime (4.17x S&P) with Spiking near-term fear. The Speculative valuation, Contested moat, and Neutral sentiment force a Conservative sizing to manage drawdown risk.
Diversification Alternatives
CRWD
SECTORUnlike ZS, CRWD is a dominant leader in endpoint security, a market less susceptible to the network-level platform bundling that threatens Zscaler's core business.
FTNT
SECTOROffers a differentiated, hardware-centric model that appeals to the 'Cost-Conscious IT Manager', providing a compelling total cost of ownership that contrasts with ZS's premium software.
Zscaler is transitioning from a best-of-breed secure web gateway provider to an essential Zero Trust platform for enterprise cloud and AI adoption, with its growth now tied to expanding Annual Recurring Revenue (ARR) through large enterprise platform deals.
Filter all news through the lens of durable, large-enterprise ARR growth and platform adoption versus point product competition.
Remaining Performance Obligations (RPO) growth outpacing revenue growth (latest was 31% vs 26% revenue growth); growth in customers with >$1M ARR accelerating above the overall rate (latest was 18%); major 'Zero Trust Everywhere' platform wins with Fortune 500 or Global 2000 customers.
Deceleration in RPO growth to below revenue growth; decline in dollar-based net retention rate (last reported at 114% for Q1 FY25, trend is a key focus); market share losses to Palo Alto Networks' Prisma Access or Netskope in large enterprise deals, as cited by Gartner or other third parties.
Quarterly fluctuations in billings, which management has noted can be variable; individual benchmark comparisons on specific threat detection capabilities; minor acquisitions (<$100M) of point solutions.
Repricing Catalyst
The market is repricing Zscaler based on its ability to become the core security platform for enterprise AI adoption. This includes securing AI application access and data, with management citing AI Security, Zero Trust, and Data Security as the three core growth pillars. Success is measured by the growth of non-seat-based ARR, which now accounts for over 25% of new annual contract value and is growing over 100% YoY.
Cloud Security Platform (Zero Trust Exchange)
$3.0B TTM (100% of Total) · 80.2% MarginWhat It Is
Core products include Zscaler Internet Access (ZIA) for secure web access, Zscaler Private Access (ZPA) to connect users to internal apps, and Zscaler Digital Experience (ZDX) for performance monitoring.
Who Pays & How
Enterprises, including nearly 40% of the Global 2000 and over 45% of the Fortune 500, pay subscription fees to secure their distributed workforce and cloud applications. This approach replaces costly and complex traditional network security (VPNs, firewalls), reducing risk by enforcing a 'Zero Trust' model where access is granted per-application instead of per-network, preventing lateral threat movement.
Competition
External Quote Links
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| FinViz |
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