# Zscaler (ZS.US)

Canonical: https://gigainvestors.com/s/ZS

Analysis as of: 2026-10-16T07:33:22.533Z. Financial observations: FY2015–FY2026.

Listing currency: USD. Reporting currency: USD.

## Verdict

Not a wonderful business

Quality tests for Buy: not passed (profit record: fail; earnings resilience is evidence only). Published buy qualification: no.

Share price: $220.43 per share; close as of 2026-10-15.

## Checklist

### understandable: fail

- 0 revenue declines in the last 10 years (informational)

- more than 2 net loss years

- negative average operating margin

- operating margin variation exceeds 0.35

- Financial history: 10 years

- Years with declining revenue: 0

- Years with a net loss: 10

- Operating margin variation: 0.64×

Chart: Operating margin; fiscal year observations.

- FY2017: -0.28×

- FY2018: -0.14×

- FY2019: -0.07×

- FY2020: -0.22×

- FY2021: -0.31×

- FY2022: -0.30×

- FY2023: -0.13×

- FY2024: -0.06×

- FY2025: -0.05×

- FY2026: -0.04×

### moat: fail

- Years with nonpositive invested capital use equity plus debt and leases; positive earnings with no positive capital are shown above 100%.

- ROIC median below threshold

- ROIC worst years below threshold (more than 1 bad year allowed)

- ROIC, median of available years: -6.7%

- ROIC, second-lowest year: -16.0%

- Typical minus recent gross margin: 0.9 pp

- Typical gross margin (annual median): 77.7%

- Recent gross margin (lower of latest and 3-year median): 76.8%

- Years with nonpositive capital: 10

- Capital spending / revenue: 8.5%

- ROIC including acquisitions, ten-year median: -72.8%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2017: -37.9%

- FY2018: -7.6%

- FY2019: -5.7%

- FY2020: -5.4%

- FY2021: -11.0%

- FY2022: -16.0%

- FY2023: -8.8%

- FY2024: -3.9%

- FY2025: -2.8%

- FY2026: -2.4%

### economics: fail

- owner earnings cash conversion below threshold

- incremental invested capital return below threshold

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: -$769M

- Net income, five-year total: -$755M

- Return on incremental invested capital: -5.4%

- Working capital / revenue, annual change: -0.4 pp

- Working capital / revenue, change between three-year averages: -3.1 pp

- Working capital / revenue, final three-year average: 33.7%

Chart: Owner earnings · five years; fiscal year observations.

- FY2022: -$390M

- FY2023: -$202M

- FY2024: -$58M

- FY2025: -$56M

- FY2026: -$63M

### management: fail

- Historical market-dollar context (not the management verdict): 2018 to 2026 (8 years)

- buybacks unrelated to price (informational)

- ROIC first 3 years vs last 3 years: -7.6% vs -2.8%

- Per-share earnings: -0.53 to -0.39 (three-year endpoint medians)

- per-share value declined or ends nonpositive

- five-year and ten-year diluted share growth both above threshold

- Management verdict uses per-share economic progress: Yes

- Ordinary dilution, 10-year annual growth: 19.7%

- Ordinary dilution, 5-year annual growth: 3.4%

- Market cap gain: $20B

- Cumulative retained earnings: -$1.1B

- Diluted shares, 10-year annual growth: 19.7%

- Diluted shares, 5-year annual growth: 3.4%

- $1 test, starting fiscal year: FY2018

- $1 test, ending fiscal year: FY2026

- Per-share value change: $0.14

- Per-share value, starting three-year median: -$0.53

- Per-share value, ending three-year median: -$0.39

- Buybacks concentrated in cheaper years (correlation): -1.00

- Average buyback yield: 0.0%

- Buyback history: 2 years

- Debt-funded buybacks: No

- Acquisition spending: $1.4B

- Cumulative net income, 10 years: -$1.2B

- ROIC, first three-year median: -7.6%

- ROIC, last three-year median: -2.8%

Chart: Earnings per share; fiscal year observations.

- FY2017: -$0.34

- FY2018: -$0.53

- FY2019: -$0.23

- FY2020: -$0.89

- FY2021: -$1.93

- FY2022: -$2.77

- FY2023: -$1.40

- FY2024: -$0.39

- FY2025: -$0.27

- FY2026: -$0.39

### accounting: pass

- stock compensation exceeds 15% of operating cash flow

- Sloan accruals: -15.2%

- Receivables to sales index (DSRI): 0.92×

- Restructuring years, last five: 0

- Stock compensation / operating cash flow: 72.8%

- Earnings backed by cash: Yes

- Accounting red flags: 1

- Goodwill and intangibles / equity: 0.55×

Chart: Sloan accruals; fiscal year observations.

- FY2017: -16.1%

- FY2018: -11.4%

- FY2019: -14.3%

- FY2020: -10.6%

- FY2021: -20.6%

- FY2022: -25.1%

- FY2023: -18.4%

- FY2024: -17.8%

- FY2025: -15.8%

- FY2026: -15.2%

## Holders

- [Dennis Hong](https://gigainvestors.com/SP): tracked 13F investor; follow the investor page for holding quarter and amounts.

## Price story

Down 36% since Nov 2021 · "Zscaler’s AI Story Is Accelerating, Its Growth Guide Isn’t" (finance.yahoo.com, Sep 2026) · sales +25.4%

Story as of 2026-10-16T09:59:55.723Z; price observation 2026-10-15.

- 2025-05-30: Zscaler (NasdaqGS:ZS) Reports Sales Growth, Appoints New CFO, Updates Revenue Guidance ([finance.yahoo.com](https://finance.yahoo.com/news/zscaler-nasdaqgs-zs-reports-sales-172653603.html))

- 2025-06-30: Zscaler shares fall as company plans $1.5 billion convertible bond sale ([investing.com](https://www.investing.com/news/stock-market-news/zscaler-shares-fall-as-company-plans-15-billion-convertible-bond-sale-93CH-4116899))

- 2025-09-03: Zscaler Stock Rises After Earnings as AI Boosts Demand. What Impressed the Street. ([finance.yahoo.com](https://finance.yahoo.com/m/7e7e5bf3-47c7-3909-82f7-42252c3139d3/zscaler-stock-rises-after.html))

- 2025-11-25: Zscaler falls following Q1 financial results as operating losses continue ([seekingalpha.com](https://seekingalpha.com/news/4526039-zscaler-falls-following-q1-financial-results-as-operating-losses-continue?utm_source=feed_news_all&utm_medium=referral&feed_item_type=news))

- 2026-02-27: Zscaler Stock Falls On Q4 Earnings, Outlook For Key Sales Growth Metric ([finance.yahoo.com](https://finance.yahoo.com/m/33800aac-ca52-3d52-b799-6bb2d91b1ffe/zscaler-stock-falls-on-q4.html))

- 2026-08-14: Zscaler Increases CapEx: Can AI-Led Demand Justify Higher Spending? ([finance.yahoo.com](https://finance.yahoo.com/technology/ai/articles/zscaler-increases-capex-ai-led-145300536.html))

### Sales · FY2025–2026

sales +25.4%; source https://www.sec.gov/Archives/edgar/data/1713683/000171368326000157/zs-20260731.htm; observed 2026-09-03.

- FY2017: $126M 

- FY2018: $190M 

- FY2019: $303M 

- FY2020: $431M 

- FY2021: $673M 

- FY2022: $1.1B 

- FY2023: $1.6B 

- FY2024: $2.2B 

- FY2025: $2.7B 

- FY2026: $3.4B 

### Gross margin · FY2026

gross margin 76.8%; source https://www.sec.gov/Archives/edgar/data/1713683/000171368326000157/zs-20260731.htm; observed 2026-09-03.

- FY2017: 78.1% 

- FY2018: 80.1% 

- FY2019: 80.2% 

- FY2020: 77.5% 

- FY2021: 77.6% 

- FY2022: 77.7% 

- FY2023: 77.6% 

- FY2024: 77.9% 

- FY2025: 76.9% 

- FY2026: 76.8% 

## Owner memo

Memo as of 2026-10-16T08:06:05.509Z.

### How it makes money

Operates in software infrastructure; annual sales are USD 3.4 billion.

- Source: https://www.sec.gov/Archives/edgar/data/1713683/000171368326000157/zs-20260731.htm (filed 2026-09-03); FY2026: revenue 3352523000; grossProfit 2574894000; margin = grossProfit / revenue.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); ZS.US: Zscaler, Inc. operates as a cloud security company worldwide. The company offers cyberthreat protection products, including Zero Trust SASE, a solution that securely connects workforces, AI agents, workloads, and IoT/OT devices to cloud apps and AI services; Zscaler Internet Access, which provides advanced threat protection, sandbox, and zero trust firewall; Zscaler Private Access solution that includes cyberthreat and data protection, application discovery, secure application access, application segmentation, application protection, and reduced attack surface; Zero Trust Browser, a solution that secures browser-based access to business applications for the extended workforce, including third parties and partners; Zscaler Digital Experience, a solution that monitors end-user experience and helps organizations identify and resolve performance issues across their digital environment; Zero Trust Branch; and Zero Trust Cloud solutions. It also provides Security for AI solution to secure AI adoption across the full AI ecosystem; data security services, including AI-powered data classification and contextual insights, data loss prevention, Saas security, and data security posture management solution. In addition, the company offers Agentic Security Operations solution that enables enterprises to reduce cyber risk by using AI-powered automation; exposure management platform; deception; managed detection and response; agentic security operations center; and threat hunting solutions. It serves automotive, airlines and transportation, conglomerates, consumer goods and retail, energy, financial services, healthcare, insurance, manufacturing, media and communications, public sector and education, technology, and telecommunications services industries. The company was formerly known as SafeChannel, Inc. and changed its name to Zscaler, Inc. in August 2008. Zscaler, Inc. was incorporated in 2007 and is headquartered in San Jose, California.

### Why customers stay

Margins ranged from 76.8% to 77.9% during 2024–26; it lost 6.7% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-09-03); FY2024: grossProfit / revenue = 77.9%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-09-03); FY2025: grossProfit / revenue = 76.9%.

- Source: https://www.sec.gov/Archives/edgar/data/1713683/000171368326000157/zs-20260731.htm (filed 2026-09-03); FY2026: grossProfit / revenue = 76.8%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-09-03); 10-year return on capital observations [[2017,-0.37908456581521666],[2018,-0.07611074066289293],[2019,-0.05692563472669644],[2020,-0.05390722893213061],[2021,-0.1097039437562772],[2022,-0.15976861957403915],[2023,-0.08792919406692405],[2024,-0.038957093899167496],[2025,-0.02822237529996393],[2026,-0.02363693777734372]]; median -0.06651818769479469. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Can it raise prices

Kept about a 78% gross margin through 2022 cost inflation.

- Source: https://www.sec.gov/Archives/edgar/data/1713683/000171368326000157/zs-20260731.htm (filed 2026-09-03); Gross margin observations: [[2021,0.7761937305006685],[2022,0.7769669626177648],[2023,0.7758232773761992]]; range within 2 percentage points.

### Where the cash goes

Paid dividends in 1 of 10 years.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-09-03); Dividend observations: [[2017,0],[2018,0],[2019,0],[2020,1022212000],[2021,0],[2022,0],[2023,0],[2024,0],[2025,0],[2026,0]]. Zero only counted when supported by a complete cash-flow statement.

### Are managers owners

Insiders own 34.7% of the company.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); ZS.US SharesStats.PercentInsiders = 34.669 percentage points; cache date 2026-10-16.

### What the price says

The price is 10.5 times annual sales; cash earnings are negative.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-09-03); Closing price 220.43 USD; reporting-to-trading FX 1; FY2026 annual sales per share 20.924628165198882; price multiple 10.534476324248933. FY2026 cash earnings/share -0.3943290121645997. Closing-price date 2026-10-15.

## Monthly share-price history (USD per share)

- 2018-03: $28.07 per share

- 2018-04: $29.89 per share

- 2018-05: $26.26 per share

- 2018-06: $35.75 per share

- 2018-07: $35.31 per share

- 2018-08: $42.79 per share

- 2018-09: $40.78 per share

- 2018-10: $36.29 per share

- 2018-11: $39.26 per share

- 2018-12: $39.21 per share

- 2019-01: $48.37 per share

- 2019-02: $49.68 per share

- 2019-03: $70.93 per share

- 2019-04: $68.31 per share

- 2019-05: $68.63 per share

- 2019-06: $76.64 per share

- 2019-07: $84.27 per share

- 2019-08: $68.74 per share

- 2019-09: $47.26 per share

- 2019-10: $43.98 per share

- 2019-11: $52.13 per share

- 2019-12: $46.50 per share

- 2020-01: $56.09 per share

- 2020-02: $51.99 per share

- 2020-03: $60.86 per share

- 2020-04: $67.08 per share

- 2020-05: $98.09 per share

- 2020-06: $109.50 per share

- 2020-07: $129.85 per share

- 2020-08: $143.34 per share

- 2020-09: $140.69 per share

- 2020-10: $135.75 per share

- 2020-11: $155.75 per share

- 2020-12: $199.71 per share

- 2021-01: $199.70 per share

- 2021-02: $205.03 per share

- 2021-03: $171.67 per share

- 2021-04: $187.64 per share

- 2021-05: $194.20 per share

- 2021-06: $216.06 per share

- 2021-07: $235.91 per share

- 2021-08: $278.34 per share

- 2021-09: $262.22 per share

- 2021-10: $318.86 per share

- 2021-11: $346.97 per share

- 2021-12: $321.33 per share

- 2022-01: $257.11 per share

- 2022-02: $239.15 per share

- 2022-03: $241.28 per share

- 2022-04: $202.74 per share

- 2022-05: $153.09 per share

- 2022-06: $149.51 per share

- 2022-07: $155.06 per share

- 2022-08: $159.24 per share

- 2022-09: $164.37 per share

- 2022-10: $154.10 per share

- 2022-11: $133.45 per share

- 2022-12: $111.90 per share

- 2023-01: $124.16 per share

- 2023-02: $131.15 per share

- 2023-03: $116.83 per share

- 2023-04: $90.10 per share

- 2023-05: $135.48 per share

- 2023-06: $146.30 per share

- 2023-07: $160.38 per share

- 2023-08: $156.05 per share

- 2023-09: $155.59 per share

- 2023-10: $158.69 per share

- 2023-11: $197.53 per share

- 2023-12: $221.56 per share

- 2024-01: $235.67 per share

- 2024-02: $241.97 per share

- 2024-03: $192.63 per share

- 2024-04: $172.94 per share

- 2024-05: $169.96 per share

- 2024-06: $192.19 per share

- 2024-07: $179.35 per share

- 2024-08: $199.98 per share

- 2024-09: $170.94 per share

- 2024-10: $180.79 per share

- 2024-11: $206.59 per share

- 2024-12: $180.41 per share

- 2025-01: $202.59 per share

- 2025-02: $196.23 per share

- 2025-03: $198.42 per share

- 2025-04: $226.17 per share

- 2025-05: $275.70 per share

- 2025-06: $313.94 per share

- 2025-07: $285.56 per share

- 2025-08: $277.05 per share

- 2025-09: $299.66 per share

- 2025-10: $331.14 per share

- 2025-11: $251.50 per share

- 2025-12: $224.92 per share

- 2026-01: $200.01 per share

- 2026-02: $146.99 per share

- 2026-03: $140.29 per share

- 2026-04: $130.68 per share

- 2026-05: $139.73 per share

- 2026-06: $141.15 per share

- 2026-07: $151.20 per share

- 2026-08: $188.39 per share

- 2026-09: $199.42 per share

- 2026-10: $228.66 per share

## Annual estimated value (USD per share)

Historical values use today's bond yield for every fiscal year

Historical values use today's FX rate into trading currency for every fiscal year

Historical values use current restated fundamentals and current commodity classification; they are not point-in-time estimates

## Sources

[Original 10-K filing](https://www.sec.gov/Archives/edgar/data/1713683/000171368326000157/zs-20260731.htm); period 2026-07-31, filed 2026-09-03.

Estimates depend on assumptions and are not guarantees or investment advice. Underlying data remains subject to its source licenses; public reading does not grant bulk redistribution rights.