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$ZS · NASDAQ

Zscaler, Inc.

🇺🇸 Technology Software - Infrastructure

$191.13

▲ 16.16%

Market Cap$31.1B

P/E (TTM)—

52W Range$114.62 – $336.99

Volume2.9M

Beta0.95

Key Statistics

Revenue$3.4B24.9%

Net Income$-63.2M

Gross Margin76.9%

Net Margin-1.9%

P/E Ratio—

Forward P/E34.05

PEG Ratio1.69

P/S Ratio9.3x

Financial Performance

EBITDA$43.9M

Free Cash Flow$1.1B

Operating Margin-1.0%

ROE-2.9%

Total Debt$1.9B

Total Cash$3.5B

Dividend Yield—

EPS (TTM)$-0.39

The Signal Report

PREMIUM

Moat Rating

🛡️ Wide Moat

★★★★☆

Switching Costs ●●●●○

Intangible Assets ●●●●○

Network Effect ●●●●○

Cost Advantage ●●●●●

Efficient Scale ●●●●●

Confidence: High

Fair Value

$207.18

+8.4% upside

Based on 44 analyst targets

🤖 Pulse AI Analysis

Zscaler presents a compelling investment case, trading at a significant discount to its historical valuation following recent growth resets, yet maintaining a 'Narrow' moat driven by its Zero Trust architecture and strong customer stickiness. Despite short-term growth deceleration concerns, the comp...

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Recent Performance & Catalysts

Latest Earnings Q3 FY2026 EPS of $1.08 beat estimates of $1.01, though guidance for FY2027 showed a growth deceleration.

Revenue Growth 25.4% (TTM)

Upcoming Catalysts:

Robust AI security revenue growth (80%+)
Strong free cash flow generation ($1.1B TTM)
Cloud-native Zero Trust architecture's competitive advantage
Gartner double-Leader designation

Core Strengths & Moat Sources

Switching Costs: 3/5 — Deep integration of Zscaler's cloud proxy and security services into enterprise networks creates moderate friction for customers to switch, securing recurring revenue streams.

Intangible Assets: 4/5 — Proprietary Zero Trust Exchange platform, global cloud infrastructure, and extensive threat intelligence are valuable intangible assets that differentiate Zscaler from competitors.

Network Effects: 3/5 — The global network processes vast amounts of traffic, improving threat detection for all users as more data is analyzed, creating a data network effect that enhances its security efficacy.

Cost Advantage: 2/5 — While its cloud-native architecture offers some operational efficiencies, significant R&D investments and sales expenditures are necessary in the highly competitive cybersecurity landscape, limiting a substantial cost advantage.

Efficient Scale: 2/5 — Zscaler is a leader in its niche and growing rapidly, but the broader cybersecurity market is highly fragmented and competitive with many well-funded players, which somewhat limits its ability to achieve truly efficient scale as a dominant player.

Main Risks

Growth deceleration concerns after soft guidance for FY2027 (16-17% ARR growth)
Intense competition in the cybersecurity market from legacy and emerging players
Dependency on sustained high R&D spending to maintain technological edge
Execution risk associated with sales leadership changes and market expansion

🐂 Bulls Say

The stock is significantly undervalued after a 31% single-session drop, presenting a buying opportunity.
Strong free cash flow ($1.1B TTM) provides financial flexibility and resilience.
Leading position in the growing Zero Trust and AI security markets, with AI revenue growing 80%+.
High gross margins (76.7%) indicate strong underlying unit economics.

🐻 Bears Say

Recent guidance indicates a significant deceleration in ARR growth, raising concerns about future revenue trajectories.
The cybersecurity market is highly competitive, and Zscaler may struggle to maintain its premium valuation.
Despite being cloud-native, R&D and sales costs remain high, impacting profitability (Operating Margin: -3.3%).
The company is not yet consistently profitable, reflected in a negative Net Income.

Financial Health

Zscaler maintains a solid financial position with $3.5B in cash, significantly outweighing its $1.9B in debt. Its robust free cash flow generation of $1.1B demonstrates strong operational efficiency, providing ample liquidity despite negative net income.

Analyst Note

Zscaler's current valuation appears attractive for long-term investors willing to overlook short-term growth headwinds, given its foundational role in cloud security and leadership in emerging AI applications.

Business Strategy & Outlook

Zscaler's strategy centers on extending its Zero Trust Exchange platform to provide comprehensive, cloud-native security across various enterprise environments. The company aims to capitalize on the increasing adoption of cloud services and remote workforces by offering a unified security architecture that eliminates traditional perimeter defenses and integrates advanced AI-driven threat detection capabilities.

P/E (TTM)

—

Forward P/E

34.05

PEG Ratio

1.69

Analyst Consensus

buy

Wall Street Consensus

buy

Mean Target$207.18+8.4%

High$250.00

Low$155.00

Strong Buy

Buy

Hold

Total Returns

1 Year-33.3%

5 Year-40.2%

10 Year+537.9%

Year to Date-13.6%

Company Profile

Zscaler, Inc. operates as a cloud security company worldwide. The company offers cyberthreat protection products, including Zero Trust SASE, a solution that securely connects workforces, AI agents, workloads, and IoT/OT devices to cloud apps and AI services; Zscaler Internet Access, which provides advanced threat protection, sandbox, and zero trust firewall; Zscaler Private Access solution that includes cyberthreat and data protection, application discovery, secure application access, application segmentation, application protection, and reduced attack surface; Zero Trust Browser, a solution that secures browser-based access to business applications for the extended workforce, including thir

SectorTechnology

IndustrySoftware - Infrastructure

Employees8,700

HeadquartersSan Jose, CA

ExchangeNasdaqGS

Websitehttps://www.zscaler.com

Income Statement

Total Revenues

Net Income