Zscaler is a cloud security company that filters internet traffic and secures access to internal apps, like a high-tech toll booth for corporate data.
Revenue comes from subscription-based cloud security services, with gross margins around 77%. Despite strong margins, the company is not yet profitable, with net losses in recent years.
Zscaler's cloud-native architecture and global network of enforcement nodes create switching costs, but competitors like Palo Alto Networks and Cisco are pushing into cloud security, eroding its uniqueness.
Sell (sector percentile 6) — value C-, growth D-, profitability B-, momentum C-, revisions D. Updated daily, sector-relative, identical for every user.
Key events, in time order
KeyBanc reiterates constructive view on Zscaler, citing strong security spending, SASE leadership, and discounted valuation; PT raised from $185 to $210.
Company announces earnings release date, market awaits results
Bank of Nova Scotia cut ZS holdings by 33.2% in Q1
Saviynt reports $300M+ ARR, 80% booking growth, 96% retention; launches Zuma AI identity platform
Strategic partnership expands European footprint with sovereign cloud security
Technical weakness aligns with recent fraud probe and institutional repositioning
Two institutions' latest 13F filings show opposite position changes in ZS
Share decline plus law firm probe follows May 27 weak guidance and sales leadership disruptions
Multiple sources confirm Zscaler's removal from NASDAQ 100 effective tomorrow, impacting index fund rebalancing
Analyst sees AI security role, but PT cut sharply from prior $225
Q3 revenue and ARR both up 25% y/y, but shares fell over 31% in a single session
KeyBanc raises PT after checks show improved partner growth, stock up 8%
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KeyBanc is constructive on Zscaler, citing stronger security spending, SASE leadership, and a discounted valuation, raising its price target.
Main discussion
Different voices
BNP Paribas hiring data points to accelerating growth at several software names. Cadence $CDNS, Cloudflare $NET and Datadog $DDOG increased hiring in July, while Palo Alto $PANW, CrowdStrike $CRWD and Zscaler $ZS also picked up the pace.
KeyBanc is constructive on Zscaler $ZS despite mixed channel feedback. The firm sees upside from stronger security spending, SASE leadership, segmentation demand and a discounted valuation. PT raised to $210 from $185.
KeyBanc says security checks were strongest for $CRWD and positive for $PANW, while roughly 20% of organizations are already increasing cybersecurity spending post-Mythos. KeyBanc also raised price targets on $CRWD, $OKTA, $ZS, $NTSK and $RBRK as it rolled estimates forward to CY
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