Zscaler, Inc. (NASDAQ: ZS)

Sector: Technology Industry: Software - Infrastructure CIK: 0001713683
Market Cap 34.78 Bn
P/B 17.54
P/E -847.38
P/S 12.27
ROIC (Qtr) -5.02
Div Yield % 0.00
Rev 1y % (Qtr) 25.50
Total Debt (Qtr) 1.83 Bn
Debt/Equity (Qtr) 0.93

About

Zscaler, Inc., often recognized by its ticker symbol ZS, operates in the cybersecurity industry, providing a comprehensive suite of cloud-based security solutions. The company's primary business activities involve offering cloud-based security solutions that enable organizations to securely connect users, devices, and applications over any network. Zscaler's operations span various countries and regions, with a focus on larger organizations across all major industries. Zscaler's revenue is generated through its primary products and services, including...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 1.09B provides robust 0.59x coverage of total debt 1.83B, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 1.34B provide 19.56x coverage of short-term debt 68.40M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 1.09B provides exceptional 128.07x coverage of interest expenses 8.51M, showing strong debt service capability.
  • Robust free cash flow of 848.11M exceeds capital expenditure of 241.29M by 3.51x, indicating strong organic growth funding capability.
  • Strong tangible asset base of 5.29B provides 2.89x coverage of total debt 1.83B, indicating robust asset backing and low credit risk.

Bear case

  • Operating cash flow of 1.09B barely covers its investment activities of (1.73B), with a coverage ratio of -0.63, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (1.73B) provide weak support for R&D spending of 718.73M, which is -2.40x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 1.34B provide limited coverage of acquisition spending of (673.61M), which is -1.99x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 1.09B provides insufficient coverage of deferred revenue obligations of 2.35B, which is 0.46x, raising concerns about future service delivery capabilities.
  • The company's operating cash flow of 1.09B shows concerning coverage of stock compensation expenses of 692.76M, with a 1.57 ratio indicating potential earnings quality issues.

Concentration Risk Benchmark Breakdown of Revenue (2025)

Concentration Risk Benchmark Breakdown of Revenue (2025)

Peer comparison

Companies in the Software - Infrastructure
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 MSFT Microsoft Corp 3,554.89 Bn 33.88 12.10 60.56 Bn
2 ORCL Oracle Corp 536.76 Bn 34.80 8.80 124.39 Bn
3 PLTR Palantir Technologies Inc. 412.18 Bn 376.30 105.79 0.24 Bn
4 PANW Palo Alto Networks Inc 127.64 Bn 114.25 13.36 0.35 Bn
5 CRWD CrowdStrike Holdings, Inc. 114.75 Bn -365.25 25.14 0.82 Bn
6 SNPS Synopsys Inc 84.31 Bn 63.28 11.95 14.29 Bn
7 NET Cloudflare, Inc. 64.21 Bn -623.20 31.89 3.50 Bn
8 FTNT Fortinet, Inc. 59.93 Bn 31.99 9.14 1.00 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 5.26 2.61
EV to Cash from Ops. EV/CFO 31.38 30.31
EV to Debt EV to Debt 18.64 17.39
EV to EBIT EV/EBIT -2,487.15 -9.38
EV to EBITDA EV/EBITDA 499.55 7.84
EV to Free Cash Flow [EV/FCF] EV/FCF 40.31 26.48
EV to Market Cap EV to Market Cap 0.98 0.36
EV to Revenue EV/Rev 12.07 -11.97
Price to Book Value [P/B] P/B 17.54 3.77
Price to Earnings [P/E] P/E -847.38 -10.73
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.00 -0.30
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 2.71
Dividend per Basic Share Div per Share (Qtr) 0.00 0.10
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 1.68
Interest Coverage Int. cover (Qtr) -1.62 -14.20
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -21.70 -408.01
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -13.87 226.39
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 -0.28
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -261.66 25.27
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 76.79 47.48
EBIT Growth (1y) % EBIT 1y % (Qtr) -447.18 20.13
EBT Growth (1y) % EBT 1y % (Qtr) -142.99 14.16
EPS Growth (1y) % EPS 1y % (Qtr) -8.33 67.50
FCF Growth (1y) % FCF 1y % (Qtr) 30.06 296.60
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 21.21 46.75
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.44 0.67
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.01
Cash Ratio Cash Ratio (Qtr) 0.58 1.22
Current Ratio Curr Ratio (Qtr) 1.82 2.59
Debt to Equity Ratio Debt/Equity (Qtr) 0.93 -0.96
Interest Cover Ratio Int Coverage (Qtr) -1.62 -14.20
Times Interest Earned Times Interest Earned (Qtr) -1.62 -14.20
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 6.70 -548.16
EBIT Margin % EBIT Margin % (Qtr) -0.49 -199.84
EBT Margin % EBT Margin % (Qtr) -0.79 -607.20
Gross Margin % Gross Margin % (Qtr) 76.70 51.88
Net Profit Margin % Net Margin % (Qtr) -1.40 -610.00