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Zscaler
(NASDAQ:ZS)
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Rating:65Neutral
Price Target:
$217.00
▲(28.84% Upside)
Action:Reiterated
Date:10/06/26
ZS scores as moderately attractive: strong cash generation and improving operating profile support the fundamental case, reinforced by positive technical momentum (price above key moving averages and positive MACD). The main constraint is valuation/earnings quality (very negative P/E tied to ongoing GAAP losses), and guidance points to moderating growth with higher CapEx and restructuring, which tempers upside despite positive sentiment and solid FY27 profitability targets.
Positive Factors
Strong recurring revenue growth
Rapid growth in revenue and ARR demonstrates continued enterprise demand for Zscaler’s recurring cloud security platform. This expanding subscription base supports predictable revenue, creates opportunities for upselling, and provides a durable foundation for sustained growth over the next several quarters.
Negative Factors
GAAP profitability remains unproven
Persistent GAAP operating and net losses show that Zscaler has not yet fully converted its revenue scale into accounting profitability. Although improving EBITDA is encouraging, continued losses can constrain earnings quality and leave execution dependent on maintaining strong growth and cost discipline.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong recurring revenue growth
Rapid growth in revenue and ARR demonstrates continued enterprise demand for Zscaler’s recurring cloud security platform. This expanding subscription base supports predictable revenue, creates opportunities for upselling, and provides a durable foundation for sustained growth over the next several quarters.
Read all positive factors
Zscaler Key Performance Indicators (KPIs)
Any
Revenue by Geography
Breaks down revenue across regions, showing where Zscaler is strongest and where it may face local economic, regulatory, or competitive risks. Shifts in geographic mix can reveal new market opportunities or emerging weaknesses in key territories.
Breaks down revenue across regions, showing where Zscaler is strongest and where it may face local economic, regulatory, or competitive risks. Shifts in geographic mix can reveal new market opportunities or emerging weaknesses in key territories.
Data provided by:
The Fly
The FlyZscaler (ZS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$32.90B
Dividend YieldN/A
Average Volume (3M)3.30M
Price to Earnings (P/E)―
Beta (1Y)1.13
Revenue Growth25.42%
EPS Growth-47.39%
CountryUS
Employees8,700
SectorTechnology
Sector Strength88
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)-0.39
Shares Outstanding163,054,700
10 Day Avg. Volume2,792,170
30 Day Avg. Volume3,299,347
Financial Highlights & Ratios
PEG Ratio-8.72
Price to Book (P/B)9.32
Price to Sales (P/S)7.23
P/FCF Ratio28.42
Enterprise Value/Market Cap0.69
Enterprise Value/Revenue6.82
Enterprise Value/Gross Profit8.88
Enterprise Value/Ebitda122.52
Forecast
1Y Price Target
$235.90Price Target Upside40.07% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering33
EPS Forecast (FY)4.88
Revenue Forecast (FY)$3.93B
Zscaler Business Overview & Revenue Model
Company Description
Globally recognized, Zscaler, Inc. functions as a leading provider of cloud-based security solutions. Its core offerings include Zscaler Internet Access (ZIA), which ensures secure connectivity for a diverse range of entities – including users, se...
How the Company Makes Money
Zscaler primarily makes money by selling subscriptions to its cloud security platform. Revenue is largely generated through term-based SaaS contracts (typically annual or multi-year) where customers pay recurring fees to use specific Zscaler produ...
Zscaler Earnings Call Summary
Earnings Call Date:Sep 03, 2026
(Q4-2026)
| % Change Since: |
Next Earnings Date:Dec 01, 2026
Earnings Call Sentiment Positive
The call was strongly positive. Zscaler reported 25% revenue and ARR growth, accelerating organic net new ARR, record sales productivity, expanding enterprise adoption, strong Z-Flex activity, improving profitability and substantial momentum in AI security, data security and Zero Trust Everywhere. The main challenges were moderating fiscal 2027 growth guidance, elevated infrastructure costs and CapEx, lower free cash flow margin, workforce restructuring, sales leadership transitions and elevated Red Canary churn.Positive Updates
Strong Fiscal 2026 Finish
Q4 revenue and ARR each grew 25% year-over-year, net new ARR grew 24%, and non-GAAP operating margin reached a record 24.3%. Full-year revenue grew 25%, free cash flow margin was 23%, and the company exceeded the Rule of 40 at approximately 49%.
Negative Updates
Fiscal 2027 Growth Guidance Moderates
Fiscal 2027 ARR growth guidance is approximately 16.6% to 17.4%, and revenue growth guidance is 16.6% to 17.5%, below the 25% year-over-year growth reported for fiscal 2026.
Read all updates
Q4-2026 Updates
Positive
Negative
Strong Fiscal 2026 Finish
Q4 revenue and ARR each grew 25% year-over-year, net new ARR grew 24%, and non-GAAP operating margin reached a record 24.3%. Full-year revenue grew 25%, free cash flow margin was 23%, and the company exceeded the Rule of 40 at approximately 49%.
Read all positive updates
Company Guidance
For fiscal '27, Zscaler expects first-quarter revenue of $935 million to $939 million, approximately 19% year-over-year growth, gross margin of approximately 80%, operating profit of $215 million to $217 million, up approximately 25% to 26% year-over-year, representing a 23% operating margin, net other income of approximately $33 million and earnings per share of approximately $1.15 to $1.16 per share, assuming a 21% tax rate and 170 million fully diluted shares; for the full year, it expects ARR of $4.396 billion to $4.426 billion, or year-over-year growth of approximately 16.6% to 17.4%, approximately 37% of net new ARR in the first half with 15% in Q1 fiscal '27, revenue of $3.908 billion to $3.938 billion, reflecting year-over-year growth of 16.6% to 17.5%, gross margin of approximately 80%, operating profit of $924 million to $932 million, up approximately 21% year-over-year and equating to an operating margin of approximately 23.7%, net other income of approximately $140 million to $142 million, earnings per share of $4.86 to $4.90, assuming a 21% tax rate and approximately 173 million fully diluted shares, and free cash flow margin of approximately 23% to 23.5%, reflecting CapEx, not including internal use software in the low teens as a percentage of revenue; restructuring is expected to affect approximately 3% of employees and result in restructuring charges of approximately $30 million to $33 million, security for AI products are expected to scale in the second half of fiscal 2027, and Agentic SecOps should start contributing in the second half and then fiscal '28.Zscaler Financial Statement Overview
Summary
Income Statement
63
Positive
Balance Sheet
58
Neutral
Cash Flow
74
Positive
| Breakdown | Jul 2026 | Jul 2025 | Jul 2024 | Jul 2023 | Jul 2022 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 3.35B | 2.67B | 2.17B | 1.62B | 1.09B |
| Gross Profit | 2.57B | 2.05B | 1.69B | 1.25B | 847.63M |
| EBITDA | 186.56M | 112.41M | 64.79M | -76.72M | -183.43M |
| Net Income | -63.18M | -41.48M | -57.71M | -202.34M | -390.28M |
Balance Sheet | |||||
| Total Assets | 7.87B | 6.42B | 4.70B | 3.61B | 2.83B |
| Cash, Cash Equivalents and Short-Term Investments | 3.47B | 3.57B | 2.41B | 2.10B | 1.73B |
| Total Debt | 1.86B | 1.80B | 1.24B | 1.21B | 1.05B |
| Total Liabilities | 5.27B | 4.62B | 3.43B | 2.88B | 2.26B |
| Stockholders Equity | 2.60B | 1.80B | 1.27B | 725.11M | 573.30M |
Cash Flow | |||||
| Free Cash Flow | 852.35M | 726.69M | 584.95M | 333.62M | 231.33M |
| Operating Cash Flow | 1.13B | 972.45M | 779.85M | 462.34M | 321.91M |
| Investing Cash Flow | -2.65B | -427.02M | -683.18M | -259.34M | 374.06M |
| Financing Cash Flow | 62.41M | 420.51M | 64.21M | 45.99M | 41.34M |
Zscaler Technical Analysis
Positive
168.42
Price Trends
181.58
Positive
162.39
Positive
166.20
Positive
Market Momentum
7.25
Positive
63.64
Neutral
54.20
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ZS, the sentiment is Positive. The current price of 168.42 is below the 20-day moving average (MA) of 195.61, below the 50-day MA of 181.58, and above the 200-day MA of 166.20, indicating a bullish trend. The MACD of 7.25 indicates Positive momentum. The RSI at 63.64 is Neutral, neither overbought nor oversold. The STOCH value of 54.20 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ZS.
Zscaler Risk Analysis
Zscaler disclosed 59 risk factors in its most recent earnings report. Zscaler reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 1 New Risks
1.
Servicing our debt will require a significant amount of cash, which may impact our cash available for working capital, capital expenditures and other corporate purposes. Q1, 2025
Zscaler Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $135.10B | 66.88 | 187.95% | ― | 18.77% | 12.93% | |
78 Outperform | $38.16B | 129.39 | 4.26% | ― | 11.22% | 74.46% | |
72 Outperform | $13.23B | 13.33 | 36.43% | ― | 4.64% | 25.51% | |
70 Outperform | $332.73B | 912.85 | 1.68% | ― | 24.49% | -68.55% | |
66 Neutral | $128.01B | -608.85 | -13.86% | ― | 33.53% | -72.17% | |
65 Neutral | $32.90B | -544.23 | -2.76% | ― | 25.42% | -47.39% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
ZS
Zscaler
213.55
-100.34
-31.97%
CHKP
Check Point
130.31
-70.69
-35.17%
FTNT
Fortinet
189.28
102.82
118.92%
PANW
Palo Alto Networks
405.57
187.78
86.22%
OKTA
Okta
218.00
125.37
135.34%
NET
Cloudflare
342.97
122.97
55.90%
Zscaler Corporate Events
Business Operations and StrategyFinancial Disclosures
Zscaler Highlights AI-Era Strategy at 2026 Investor Day
Positive
Oct 6, 2026
On October 6, 2026, Zscaler hosted its 2026 Investor Day in New York City, using the event to underline its role as a cybersecurity platform for the AI era and to showcase its strategy, product innovation priorities and long-term growth drivers. E...
Business Operations and StrategyExecutive/Board Changes
Zscaler Promotes Ross Tackett to Chief Revenue Officer
Positive
Sep 24, 2026
On September 24, 2026, Zscaler announced that veteran sales leader Ross Tackett will be promoted to Chief Revenue Officer, effective October 1, 2026, succeeding Mike Rich, who is stepping down for personal reasons. Tackett, currently Head of World...
Business Operations and StrategyFinancial Disclosures
Zscaler restructures workforce to prioritize AI-driven growth
Positive
Sep 3, 2026
On September 1, 2026, Zscaler approved a restructuring plan to cut about 3% of its global workforce and redirect resources toward artificial intelligence and broader growth initiatives, expecting to incur $30 million to $33 million in non-recurrin...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.