Zscaler Soars: 23% Revenue Growth, $580M Operating Income in FY25

Ticker: ZS · Form: DEF 14A · Filed: 2025-11-21T00:00:00.000Z

Sentiment: bullish

Topics: Cloud Security, SaaS, Cybersecurity, Enterprise Software, Financial Performance, Corporate Governance, Executive Compensation

Related Tickers: ZS, PANW, CRWD, NET

TL;DR

**ZS is crushing it in cloud security, vote FOR their board and compensation plan because the numbers speak for themselves.**

AI Summary

Zscaler, Inc. (ZS) reported a strong fiscal year 2025, with revenue growing 23% year-over-year to $2.67 billion. Calculated billings, a key non-GAAP metric, increased 24% year-over-year to $3.25 billion, indicating robust future revenue streams. Non-GAAP income from operations saw a significant 31% year-over-year increase, reaching $580.1 million, demonstrating improved profitability. The company also expanded its large customer base, adding 664 enterprises with over $1 million in Annual Recurring Revenue (ARR), an 18% year-over-year growth. Strategic outlook emphasizes continued focus on growth, market share capture, and annual operating profitability in the emerging cloud security market, with executive compensation tied to aggressive growth targets and non-GAAP income from operations.

Why It Matters

Zscaler's robust 23% revenue growth and 31% non-GAAP operating income increase in fiscal 2025 signal strong execution in the competitive cloud security market, directly impacting investor confidence and stock valuation. The 18% growth in large enterprise customers (>$1M ARR) demonstrates Zscaler's ability to capture significant market share against rivals like Palo Alto Networks and CrowdStrike, securing long-term revenue stability. For employees, this growth trajectory suggests continued investment in innovation and potential career opportunities. Customers benefit from Zscaler's expanding platform, which is critical for securing cloud-based operations in an increasingly digital world.

Risk Assessment

Risk Level: low — The risk level is low given Zscaler's strong financial performance in fiscal 2025, including 23% revenue growth and a 31% increase in non-GAAP income from operations to $580.1 million. The company's ability to grow its large customer base by 18% (664 new enterprises with >$1M ARR) further mitigates risk by demonstrating consistent market penetration and customer retention in a critical sector.

Analyst Insight

Investors should consider Zscaler's consistent growth and profitability as a strong indicator of future performance in the expanding cloud security market. Vote 'FOR' the proposed directors and executive compensation, as the current strategy appears to be delivering significant shareholder value.

Financial Highlights

revenue
$2.67B
revenue Growth
+23%

Executive Compensation

NameTitleTotal Compensation
Jay ChaudhryChairman and Chief Executive Officer
David H. HenshallPresident and Chief Operating Officer
Brent R. CallinicosChief Financial Officer

Key Numbers

Key Players & Entities

FAQ

What were Zscaler's key financial achievements in fiscal year 2025?

Zscaler achieved significant financial milestones in fiscal year 2025, including a 23% year-over-year revenue growth to $2.67 billion and a 24% year-over-year increase in calculated billings to $3.25 billion. The company also reported a 31% year-over-year growth in non-GAAP income from operations, reaching $580.1 million.

Who are the Class II director nominees for Zscaler's 2025 Annual Meeting?

The Class II director nominees for Zscaler's 2025 Annual Meeting are Andrew Brown, Scott Darling, and David Schneider. If elected, they will each serve a three-year term until the 2028 annual meeting of stockholders.

What is Zscaler's board of directors' recommendation regarding the stockholder proposal to declassify the board?

Zscaler's board of directors recommends a vote "AGAINST" the non-binding stockholder proposal requesting the declassification of its board of directors, as stated in Proposal Five of the proxy statement.

How does Zscaler align executive compensation with company performance?

Zscaler aligns executive compensation with performance by focusing annual executive cash bonuses on achieving aggressive growth targets and non-GAAP income from operations. Long-term incentive equity compensation is tied to multi-year annual recurring revenue (ARR) growth targets, reflecting a pay-for-performance philosophy.

When and where will Zscaler's 2025 Annual Meeting of Stockholders be held?

Zscaler's 2025 Annual Meeting of Stockholders will be held on Monday, January 12, 2026, at 1:00 p.m. Pacific Time. It will be a completely virtual meeting conducted via live audio webcast at www.virtualshareholdermeeting.com/ZS2026.

What is the role of the board of directors in Zscaler's risk oversight?

The DEF 14A filing indicates that the board of directors plays a role in risk oversight, as detailed in the 'Role of the Board of Directors in Risk Oversight' section on page 19. This includes overseeing management in decision-making, operations, and policies related to the cloud, cybersecurity, and software industries.

What is Zscaler's stance on the frequency of future stockholder advisory votes on executive compensation?

Zscaler's board of directors recommends a vote for "ONE YEAR" as the frequency of future stockholder advisory votes to approve the compensation of its Named Executive Officers, as outlined in Proposal Four.

How many large enterprise customers did Zscaler add in fiscal year 2025?

In fiscal year 2025, Zscaler added 664 enterprises with over $1 million in Annual Recurring Revenue (ARR), representing an 18% year-over-year growth in its large customer base.

What is calculated billings and why is it important for Zscaler?

Calculated billings is a non-GAAP financial measure that Zscaler uses as a key metric to measure its periodic performance. It represents total revenue plus the change in deferred revenue in a period, indicating the total amount invoiced to customers and providing insight into future revenue recognition.

Who is the independent registered public accounting firm selected for Zscaler's fiscal year ending July 31, 2026?

PricewaterhouseCoopers LLP (PwC) has been selected as Zscaler's independent registered public accounting firm for its fiscal year ending July 31, 2026, and the board recommends stockholders ratify this selection.

Risk Factors

Industry Context

Zscaler operates in the rapidly expanding cloud security market, a sector characterized by continuous innovation and evolving threat landscapes. The company competes with a mix of established cybersecurity players, large cloud service providers, and emerging specialized vendors. Key industry trends include the increasing adoption of Zero Trust security models and the growing demand for integrated cloud-native security solutions.

Regulatory Implications

As a global provider of cloud security solutions, Zscaler must navigate a complex web of international data privacy regulations, such as GDPR and CCPA. Ensuring compliance with these evolving laws is critical to avoid significant penalties and maintain customer trust. The company's operations are also subject to cybersecurity regulations and reporting requirements.

What Investors Should Do

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Key Dates

Glossary

Calculated Billings
A non-GAAP financial measure representing total revenue plus the change in deferred revenue in a period. It is used to measure periodic performance. (Indicates future revenue streams and sales execution, showing a 24% year-over-year growth to $3.25 billion.)
Non-GAAP Income from Operations
A non-GAAP financial measure that excludes items like stock-based compensation, amortization of acquired intangibles, and acquisition-related expenses from GAAP loss from operations. (Provides a measure of operational profitability, showing a 31% year-over-year increase to $580.1 million.)
Annual Recurring Revenue (ARR)
The predictable revenue a company expects to receive on a recurring basis from its customers over a specific period. (A key metric for subscription-based businesses like Zscaler, with the company adding 664 enterprises with over $1 million in ARR.)
Named Executive Officers (NEOs)
The top executive officers of a company, typically including the CEO, CFO, and other key senior executives, whose compensation is disclosed in detail. (Their compensation is subject to shareholder advisory votes, with Zscaler seeking approval for their pay structure.)
Class II Directors
Directors who are part of a specific class within a staggered board structure, typically serving a three-year term. (Three Class II directors are up for election at the 2025 Annual Meeting, with their terms extending to 2028.)

Year-Over-Year Comparison

The DEF 14A for fiscal year 2025 indicates continued strong performance compared to the previous year. Revenue grew 23% year-over-year, and calculated billings increased by 24%, demonstrating sustained top-line momentum. Non-GAAP income from operations saw a significant 31% increase, highlighting improved profitability. The company also expanded its large customer base by 18% year-over-year. No new material risks appear to have emerged, but existing risks related to competition and operational reliance on cloud infrastructure remain prominent.

Filing Stats: 4,669 words · 19 min read · ~16 pages · Grade level 12.1 · Accepted 2025-11-21 16:03:09

Key Financial Figures

Filing Documents

EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION 35 Compensation Discussion and Analysis 35 Summary Compensation Table 61 CEO PAY RATIO DISCLOSURE 69 PAY VERSUS PERFORMANCE 70

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 75 RELATED PERSON TRANSACTIONS 77 QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING 79 OTHER MATTERS 87 Section 16(a) Beneficial Ownership Reporting Compliance 87 PROPOSALS OF STOCKHOLDERS FOR FISCAL 202 5 ANNUAL MEETING 88 APPENDIX A A-1 Proxy Summary This Proxy Statement and form of proxy are furnished in connection with the solicitation of proxies by our board of directors for use at our 2025 Annual Meeting of Stockholders and any postponements, adjournments or continuations thereof. The Annual Meeting will be held on January 12, 2026 at 1:00 p.m. Pacific Time, via live audio webcast at www.virtualshareholdermeeting.com/ZS2026 . The Notice of Internet Availability of Proxy Materials, or the Notice, containing instructions on how to access this Proxy Statement and our Annual Report on Form 10-K for the fiscal year ended July 31, 2025, or the Annual Report, is first being mailed on or about November 21, 2025 to all stockholders entitled to vote at the Annual Meeting. If you receive a Notice by mail, you will not receive a printed copy of the proxy materials in the mail unless you specifically request these materials. Ways to Vote Via the Internet By Telephone By Mail At the Annual Meeting Voting Matters and Recommendations Proposals Voting Recommendation Page 1 To elect three Class II directors from the nominees described in this Proxy Statement to hold office until the 2028 annual meeting of stockholders or until their successors are elected and qualified, subject to their earlier death, resignation or removal. "FOR" 25 2 To ratify the selection of PwC as our independent registered public accounting firm for our fiscal year ending July 31, 2026. "FOR" 26 3 To approve, on a non-binding advisory basis, the compensation of our Named Executive Officers. "FOR" 29 4 To approve, on a non-binding advisory basis, the frequency of future stockholder advisory votes to approve th

Executive Compensation Highlights

Executive Compensation Highlights Our pay practices align with our pay-for-performance philosophy and underscore our commitment to sound compensation and governance practices. We believe that as organizations continue to embrace cloud-based business solutions, they are still in the early stages of adopting the security and networking solutions, including our platform, that are necessary to secure and manage cloud-based operations. To be successful in this emerging market, we believe that delivering growth, capturing market share and delivering annual operating profitability are paramount. Since we strongly believe that establishing and meeting aggressive growth targets in both the short term and the long term is the best way to deliver sustained stockholder value in a highly competitive and emerging market, we focus our performance metrics for our annual executive cash bonuses on achieving growth in each fiscal year but also include performance metrics focused on non-GAAP income from operations. For our long-term incentive equity compensation, we focus our performance metrics on multi-year annual recurring revenue, or ARR, growth targets. Fiscal 2025 Financial Performance Fiscal 2025 was a strong year for us marked by significant achievement and growth across all of our key metrics. Fiscal 2025 highlights were as follows: Revenue Growth Calculated Billings Growth* Non-GAAP Income from Operations Growth in Large Customers 23% Y/Y 24% Y/Y 31% Y/Y 18% Y/Y $2.67B Revenue $3.25B Billings $580.1M +664 Enterprises (>$1M ARR) * Calculated billings is a non-GAAP financial measure that we believe is a key metric to measure our periodic performance. Calculated billings represents our total revenue plus the change in deferred revenue in a period. See Appendix A for the calculation of calculated billings. Non-GAAP income from operations is a financial measure that we believe is a key metric to measure our periodic performance. Non-GAAP income from operations repr

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