Zscaler's Revenue Soars 23% to $2.67B, Net Losses Mount

Ticker: ZS · Form: 10-K · Filed: 2025-09-11T00:00:00.000Z

Sentiment: mixed

Topics: Cybersecurity, Cloud Security, Zero Trust, SaaS, AI, Net Loss, Revenue Growth

Related Tickers: ZS, CRWD, PANW, NET, OKTA

TL;DR

Zscaler's revenue growth is impressive, but mounting net losses mean investors should be wary of its path to profitability despite its strong market position in cloud security.

AI Summary

Zscaler, Inc. (ZS) reported significant revenue growth for fiscal year 2025, reaching $2,673.1 million, a 23% increase from $2,167.8 million in fiscal 2024. This follows a 34% growth from $1,617.0 million in fiscal 2023. Despite robust revenue expansion, the company experienced increasing net losses, with a net loss of $41.5 million in fiscal 2025, compared to $57.7 million in fiscal 2024 and $202.3 million in fiscal 2023. Zscaler's core business revolves around its Zero Trust Exchange platform, which provides cloud-native security solutions like Zscaler Internet Access (ZIA) and Zscaler Private Access (ZPA). The company is strategically focusing on four core solutions: Zero Trust Everywhere, Data Security Everywhere, Security for AI, and Agentic Operations, integrating advanced AI and machine learning capabilities to combat evolving cyber threats. Zscaler serves over 9,400 customers globally, including approximately 40% of the Forbes Global 2000 and over 45% of Fortune 500 companies, blocking over 225 million threats daily.

Why It Matters

Zscaler's continued revenue growth, reaching $2.67 billion in fiscal 2025, underscores the escalating demand for cloud-native cybersecurity solutions in a rapidly digitizing world. However, the widening net losses, despite strong top-line performance, signal potential concerns about profitability and operational efficiency for investors. For employees, Zscaler's focus on AI and Zero Trust principles positions it at the forefront of cybersecurity innovation, offering opportunities in a critical and evolving sector. Customers, including 40% of the Forbes Global 2000, benefit from Zscaler's platform blocking over 225 million threats daily, enhancing their digital transformation securely. In a competitive landscape with traditional firewall and VPN providers, Zscaler's Zero Trust + AI convergence aims to maintain its market leadership and address new threats posed by AI adoption.

Risk Assessment

Risk Level: medium — Zscaler reported a net loss of $41.5 million in fiscal 2025, an increase from $57.7 million in fiscal 2024 and $202.3 million in fiscal 2023, and expects to incur net losses for the foreseeable future. This consistent unprofitability, despite significant revenue growth, indicates a medium risk level as the company continues to prioritize growth over immediate earnings, which could impact investor sentiment and long-term financial stability.

Analyst Insight

Investors should closely monitor Zscaler's future earnings reports for signs of improved cost management and a clear path to profitability, rather than solely focusing on revenue growth. Consider the long-term implications of sustained net losses on valuation and competitive positioning in the cybersecurity market.

Financial Highlights

debt To Equity
Not Disclosed
revenue
$2,673.1 million
operating Margin
Not Disclosed
total Assets
Not Disclosed
total Debt
Not Disclosed
net Income
-$41.5 million
eps
Not Disclosed
gross Margin
Not Disclosed
cash Position
Not Disclosed
revenue Growth
+23%

Revenue Breakdown

SegmentRevenueGrowth
Subscription Revenue$2,673.1 million+23%

Key Numbers

Key Players & Entities

FAQ

What were Zscaler's key financial results for fiscal year 2025?

Zscaler reported revenue of $2,673.1 million for fiscal year 2025, representing a 23% increase from fiscal 2024. However, the company also incurred a net loss of $41.5 million in fiscal 2025.

How has Zscaler's revenue grown over the past three fiscal years?

Zscaler's revenue grew from $1,617.0 million in fiscal 2023 to $2,167.8 million in fiscal 2024 (34% growth), and further to $2,673.1 million in fiscal 2025 (23% growth).

What is Zscaler's strategic focus for its cloud platform?

Zscaler's platform, the Zero Trust Exchange, is evolving to focus on four core solutions: Zero Trust Everywhere, Data Security Everywhere, Security for AI, and Agentic Operations, integrating AI and ML capabilities.

What are the primary risks highlighted in Zscaler's 10-K filing?

A primary risk is the company's continued net losses, with $41.5 million in fiscal 2025, and the expectation to incur net losses for the foreseeable future, indicating challenges in achieving profitability.

How many customers does Zscaler serve, and what is their market reach?

Zscaler serves over 9,400 customers globally, including approximately 40% of the Forbes Global 2000 and over 45% of Fortune 500 companies, spanning various industries.

What is the Zscaler Zero Trust Exchange platform?

The Zscaler Zero Trust Exchange is a cloud-native platform that implements Zero Trust principles to securely connect users, devices, applications, and workloads, replacing traditional perimeter security approaches.

What is Zscaler Internet Access (ZIA) and what does it do?

ZIA provides secure access to externally managed applications and internet destinations, offering inline content inspection, firewall access controls, and advanced threat protection against ransomware and phishing.

How does Zscaler Private Access (ZPA) enhance security?

ZPA provides Zero Trust Network Access to internally managed applications, connecting users directly to authorized applications without exposing the network, thereby preventing lateral threat movement and reducing the attack surface.

What is Zscaler's approach to AI in its security platform?

Zscaler is pioneering the convergence of Zero Trust + AI, integrating AI and ML capabilities across its platform to quickly identify and block unknown threats, determine traffic risk, and enhance security operations.

What was the aggregate market value of Zscaler's common stock?

As of January 31, 2025, the aggregate market value of Zscaler's common stock held by non-affiliates was approximately $17.9 billion.

Risk Factors

Industry Context

Zscaler operates in the rapidly expanding cloud security market, driven by digital transformation, increasing remote workforces, and the adoption of AI. The competitive landscape includes established network security vendors, cloud infrastructure providers offering native security tools, and specialized cybersecurity startups. Key trends include the shift towards Zero Trust architectures, integrated security platforms, and AI-driven threat detection and response.

Regulatory Implications

Zscaler must navigate a complex web of global data privacy regulations, such as GDPR and CCPA, which impact how customer data is processed and protected. Compliance failures can lead to substantial fines and reputational damage. The evolving regulatory landscape around AI and cybersecurity also presents ongoing compliance challenges.

What Investors Should Do

  1. [object Object]
  2. [object Object]
  3. [object Object]
  4. [object Object]

Glossary

Zero Trust Exchange
Zscaler's cloud-native security platform that provides secure access to applications and data, regardless of user location or device. (This is the core offering of Zscaler, enabling its revenue growth and market position.)
SaaS
Software as a Service, a software distribution model where a third-party provider hosts applications and makes them available to customers over the Internet. (Zscaler's business model is built around providing security for SaaS applications and cloud infrastructure.)
AI
Artificial Intelligence, the simulation of human intelligence processes by machines, especially computer systems. (Zscaler is strategically focusing on integrating AI and ML to enhance its security solutions and combat new threats.)
ML
Machine Learning, a type of artificial intelligence that allows software applications to become more accurate at predicting outcomes without being explicitly programmed. (ML capabilities are crucial for Zscaler's ability to detect and block new threats across its customer base rapidly.)
Forbes Global 2000
A list published annually by Forbes magazine ranking the world's largest public companies. (Zscaler serves approximately 40% of these companies, indicating a strong penetration in the enterprise market.)
Fortune 500
A list published annually by Fortune magazine ranking the largest corporations in the United States by total revenue. (Zscaler serves over 45% of these companies, highlighting its significant customer base among major US corporations.)

Year-Over-Year Comparison

Zscaler reported a continued strong revenue growth of 23% in fiscal year 2025, reaching $2,673.1 million, albeit a deceleration from the 34% growth seen in fiscal year 2024. The company has successfully reduced its net loss from $57.7 million in fiscal 2024 to $41.5 million in fiscal 2025, indicating improving operational efficiency. No new significant risk factors were highlighted in the provided text, but the existing risks related to competition, technological evolution, and regulatory compliance remain pertinent.

Filing Stats: 4,336 words · 17 min read · ~14 pages · Grade level 17.2 · Accepted 2025-09-11 16:03:37

Key Financial Figures

Filing Documents

Business

Item 1. Business 3

Risk Factors

Item 1A. Risk Factors 20

Unresolved Staff Comments

Item 1B. Unresolved Staff Comments 58

Cybersecurity

Item 1C. Cybersecurity 58

Properties

Item 2. Properties 59

Legal Proceedings

Item 3. Legal Proceedings 59

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 59 PART II

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 60

Reserved

Item 6. Reserved 62

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 63

Quantitative and Qualitative Disclosures about Market Risk

Item 7A. Quantitative and Qualitative Disclosures about Market Risk 85

Financial Statements and Supplementary Data

Item 8. Financial Statements and Supplementary Data 86

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 139

Controls and Procedures

Item 9A. Controls and Procedures 139

Other Information

Item 9B. Other Information 140

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 140 PART III

Directors, Executive Officers and Corporate Governance

Item 10. Directors, Executive Officers and Corporate Governance 141

Executive Compensation

Item 11. Executive Compensation 141

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 141

Certain Relationships and Related Transactions and Director Independence

Item 13. Certain Relationships and Related Transactions and Director Independence 141

Principal Accountant Fees and Services

Item 14. Principal Accountant Fees and Services 141 PART IV

Exhibits, Financial Statement Schedules

Item 15. Exhibits, Financial Statement Schedules 142

Form 10-K Summary

Item 16. Form 10-K Summary 144

Signatures

Signatures Table of Contents SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding our financial outlook and market positioning. These forward-looking statements are made as of the date they were first issued and were based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. The words "believe," "may," "will," "potentially," "estimate," "continue," "anticipate," "intend," "could," "would," "project," "plan," "expect" and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements. These forward-looking statements include, but are not limited to, statements concerning the following: the impact of macroeconomic and geopolitical events, developments and conditions on our business; our future financial performance, including our expectations regarding our revenue, cost of revenue, gross profit or gross margin, operating expenses (including changes in sales and marketing, research and development and general and administrative expenses) and our ability to achieve, and maintain, future profitability; market acceptance of our cloud platform; the effects of increased competition in our markets and our ability to compete effectively; our ability to maintain the security and availability of our cloud platform; our ability to maintain and expand our customer base, including by attracting new customers; our ability to develop new solutions or enhancements to our existing solutions, including artificial intelligence and machine learning capabilities, and bring them to market in a timely manner; market acceptance of any new solutions or enhancements to our existing solutions; anticipated trends, growth rates and challenges in our business and in the m

Business

Item 1. Business Overview We enable our customers to succeed in a digital world where technology decisions not only impact growth and competitiveness, but also directly impact enterprise risk. We were incorporated in 2007, during the early stages of cloud adoption and mobility, based on a vision that the internet would become the new corporate network, as the cloud became the new data center. We correctly predicted that with rapid cloud adoption and increasing workforce mobility, traditional perimeter security approaches would fail to protect users and data, become prohibitively expensive and deliver poor user experience. Enterprises now rely on external software as a service, or SaaS, applications for critical business functions and have moved, or are moving, their internally managed applications to the public cloud infrastructure. As a result, users now expect to be able to seamlessly access applications and data, wherever they are hosted, from any device, anywhere in the world. The emergence and rapid adoption of artificial intelligence, or AI, is revolutionizing the transformational impact of cloud adoption and mobility. AI is fundamentally changing how organizations operate, creating new cybersecurity threats and IT challenges. Our cloud native, multitenant architecture is distributed across more than 160 public exchanges globally and thousands of private exchanges at the edge, which brings security and business policy close to users and devices in over 185 countries and provides fast, secure and reliable access. Each day, we block over 225 million threats and perform over 250,000 unique security updates. Our customers benefit from the cloud security effect of our ever-expanding ecosystem, enhanced by our advanced AI and ML capabilities, because once a new threat is detected, it can be blocked across our customer base within minutes. Many of the largest enterprises and government agencies in the world rely on our solutions to help them accelerate their mov

View on Read The Filing