Start here if you're new
what it is
Zscaler sells cloud security software that decides who gets into your apps and who gets blocked before they cause trouble.
how it gets paid
Last year Zscaler made $2.7B in revenue. Zscaler Internet Access was the main engine at $1.21B, or 45% of sales.
why it's growing
Revenue grew 23.3% last year. The quarter worked because customers kept buying more cloud security.
what just happened
Zscaler posted $816M in quarterly revenue and $1.01 EPS, beating the $0.90 estimate by 12.22%.
At a glance
B++ balance sheet — above average — nothing keeping you up at night
40/100 earnings predictability — expect surprises
69.5x trailing p/e — you're paying up for this one
24.0% return on capital — every dollar works hard here
xvary composite: 51/100 — below average
What they do
Zscaler sells cloud security software that decides who gets into your apps and who gets blocked before they cause trouble.
Zero trust → nobody gets automatic access → so what: every login gets checked, which makes ripping Zscaler out of your stack painful. The company serves that through its Zero Trust Exchange and posted $2.7 billion in annual revenue, up 23.3% vs. prior year. You do not casually swap the system sitting between your employees and every app they use.
How they make money
$2.7B
annual revenue · their business grew +23.3% last year
Zscaler Internet Access
$1.21B
Zscaler Private Access
$0.86B
Platform modules and add-ons
$0.38B
Professional services and other
$0.25B
The products that matter
cloud security platform subscriptions
Zero Trust Exchange
$2.7B revenue · 100% of the business
it's the whole story: a $2.7B platform business that grew 23.3% last year. when investors buy ZS, they are not buying a portfolio. they are buying one core architecture and betting it keeps winning budget.
entire business
Key numbers
69.5x
trailing p/e
You are paying a luxury multiple for a company with a negative operating margin, so execution has to stay clean.
$2.7B
annual revenue
Scale matters in security. This is already a large platform, not a tiny startup story.
76.6%
gross margin
Gross margin → money left after delivering the service → so what: the software engine is strong before overhead hits.
24.0%
return on capital
Return on capital → profit produced from money invested → so what: the business still converts investment into attractive returns.
Financial health
B++
strength
- balance sheet grade B++ — above average financial health
- risk rank 3 — safer than 50% of stocks
- price stability 15 / 100
- long-term debt $1.7B (4% of capital)
- net profit margin 20.0% — keeps 20 cents of every dollar in revenue
- return on equity 46% — $0.46 profit for every $1 investors have put in
B++ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in ZS 3 years ago → it's now worth $20,380.
The index would have given you $13,920.
source: institutional data · total return
What just happened
beat estimates
Zscaler posted $816M in quarterly revenue and $1.01 EPS, beating the $0.90 estimate by 12.22%.
The quarter worked because customers kept buying more cloud security, and management raised fiscal 2026 ARR guidance to 24%. Gross margin stayed high at 80.2%, which shows pricing power is still intact.
$816M
revenue
$1.01
eps
80.2%
gross margin
the number that mattered
The 12.22% EPS beat mattered most because a stock at 69.5x earnings needs proof, not promises, every quarter.
-
zscaler has acquired splx, an ai security company.this was zscaler’s second major acquisition of 2025, following its $675 million purchase of red canary back in august.
-
splx contributes four main capabilities to zscaler’s zero trust exchange platform.ai asset discovery and risk assessment extends protections beyond public generative ai applications and cloud platforms to include internal ai models and workflows. automated ai red teaming and remediation uses cyberattack simulations to find risks and vulnerabilities and offer remediation recommendations in real time. ai runtime guardrails and prompt hardening expands existing protections to secure sensitive data and block malicious attacks between ai applications and large language models. ai governance and compliance enables organizations to shift from reactive defense to proactive protection, ensuring compliance within governance frameworks while mitigating risks to valuable ai investments.
-
zscaler has reported spectacular top-line results.
-
revenues have increased, thanks to the addition of new customers.
-
management has announced the launch of a new product.the zscaler digital experience will help enterprises monitor and fix hardware and software issues faster. also, the business has opened several new data centers outside of the u.s., located in london and paris.
source: company earnings report, 2026
Get this snapshot in your inbox
This page, delivered free — plus weekly updates when the numbers change. plain english, no spam.
weekly updates
earnings alerts
plain english
no spam
What could go wrong
the #1 risk is growth decelerating while the stock still trades like a hyper-growth security platform.
med
premium multiple compression
69.5x trailing earnings is a rich valuation for any software company. If revenue growth cools meaningfully from 23.3% while margins stay messy, investors can rerate the stock fast.
this is a multiple problem first. the business can still grow and the stock can still fall.
med
margin volatility after a loss-making quarter
The latest quarter printed a -4.2% net margin and a -$0.21 EPS loss, while the trailing 12-month net margin remains 18.4%. That gap is the debate.
if quarterly profitability does not snap back, the market stops treating the miss as temporary.
med
acquisition integration risk
Splx and the earlier $675M Red Canary deal may broaden the platform, but multiple acquisitions in one year can dilute focus if product integration lags.
the upside case assumes these deals deepen the moat. if they just add complexity, you paid growth-stock prices for overhead.
a stock priced for speed cannot afford both slower growth and unstable margins at the same time. that is the real combined risk picture here.
source: institutional data · regulatory filings · risk analysis
Pay attention to
earnings
next earnings report
june 4, 2026 is the next scheduled checkpoint. after a -$0.21 EPS quarter, investors will care less about headline buzz and more about whether profitability stabilizes.
metric
revenue growth holding above 20%
Annual revenue grew 23.3% last year. That is fast enough to support the story. A clear step down would make 69.5x trailing earnings much harder to defend.
risk
whether the quarterly loss was a one-off
The last quarter came in at -4.2% net margin versus an 18.4% trailing net margin. That spread is too wide to ignore. You want to see which number starts looking more normal from here.
trend
integration from the 2025 deal streak
Splx plus the earlier $675M Red Canary acquisition suggest a platform-expansion push. The trend to watch is whether those deals show up as a stronger product story rather than just a longer org chart.
Analyst rankings
short-term outlook
below average
momentum score 4 — analysts see weaker near-term performance odds than the broader market. in human-speak: they like the company more than the next few months of the stock.
risk profile
average
stability score 3 — roughly middle of the pack. not a bunker stock, not a blow-up profile.
chart momentum
top 5%
technical score 1 — the highest rating. the chart looks stronger than the headline multiple would suggest.
earnings predictability
40 / 100
predictability is low. that matters more when a stock already trades on high expectations.
source: institutional data
Institutional activity
institutions have been net buying for 3 consecutive quarters — 493 buyers vs. 361 sellers in 3q2025. total institutional holdings: 82.4M shares. net buying for 3 quarters.
source: institutional data
Price targets
3-5 year target range
$174
$387
$228
current price
$281
target midpoint · +23% from current · 3-5yr high: $515 (+125% · 23% ann'l return)
Want the deeper analysis?
The full deep dive: dcf model, scenario analysis, competitive moat breakdown, and quarterly tracking — everything on this page, taken further.
see plans from $5/moThe deep dive