ZS
Zscaler, Inc.
Technology · Software - Infrastructure · United States · Stock
Score Breakdown
Scored for Aggressive Growth profile
Sub-scores are 0–20 each; Model Score is weighted by your selected investment goal. How it works →
Why Ranked Here
- The growth factor was the primary contributor to the composite score, reflecting 23.3% revenue growth and meaningful loss reduction year-over-year [growth.revenue.yoy][growth.net_income.yoy].
- Profitability and dividend factors both scored zero because all margin and return metrics are negative and no dividends are paid, which weighed significantly on the composite [profitability.net_margin_pct][dividend.none].
- The macro theme assignment to Cybersecurity did not translate into a positive score under the model's current methodology, further limiting the composite [theme.assigned].
Why Not Higher
- Zscaler has not achieved positive profitability on any key metric — net margin, operating margin, or return on assets — which prevented any profitability score contribution [profitability.net_margin_pct][profitability.operating_margin_pct][profitability.roa_pct].
- Persistent operating losses across all four recent quarters and the complete absence of dividends structurally limited the composite score [momentum.operating_income_quarterly][dividend.none].
Data Confidence
8 / 10
High — most data fields present
Why This Score
Grounded in figures from this company's SEC EDGAR filings — not a restatement of the score itself.
Revenue grew from FY2024's $2,167,771,000 to FY2025's $2,673,115,000, a gain of 23.3%. Over the same period, diluted EPS improved from -$0.39 in FY2024 to -$0.27 in FY2025, a 30.8% improvement, while net loss narrowed by 28.1%.
The model rewarded the combination of robust top-line expansion and meaningful loss reduction, reflecting accelerating progress toward profitability alongside sustained double-digit revenue growth.
In FY2025, Zscaler reported a net margin of -1.6%, an operating margin of -4.8%, and a return on assets of -0.6%, all of which remain in negative territory.
The model assigns no profitability credit when all key margin and return metrics are negative, as the company has not yet achieved the positive earnings thresholds the model requires for this component.
Filing evidence currently available does not support a more specific explanation for this factor.
Quarterly revenue showed consistent sequential growth across the last four reported quarters: $719,226,000 in 2025Q4, $788,112,000 in 2026Q1, $815,751,000 in 2026Q2, and $850,475,000 in 2026Q3. However, operating income remained negative throughout all four quarters (-$32,242,000, -$36,362,000, -$51,773,000, and -$29,640,000 respectively), with net income also negative in each period.
The model credited the steady upward revenue trajectory but tempered the score due to persistent operating and net losses across all four quarters, with operating losses deepening in 2026Q2 before partially recovering in 2026Q3.
Zscaler does not currently pay a dividend and has no mapped dividend history, making it a genuine non-payer rather than a case of missing data.
The model awards no dividend score to companies that do not distribute dividends, as this component specifically rewards income generation returned to shareholders.
Zscaler is assigned to the Cybersecurity macro theme.
While the Cybersecurity theme assignment reflects the company's core business focus, this assignment did not translate into a positive score under the model's current methodology for this component.
Research Summary
AI-generated analysis reflects data and conditions as of the report date shown above. Verify any specific figures through primary sources before acting on this analysis.
Zscaler delivered strong top-line growth of 23.3% year-over-year, with revenue rising from $2,167,771,000 in FY2024 to $2,673,115,000 in FY2025, while net losses narrowed by 28.1% and diluted EPS improved from -$0.39 to -$0.27 [growth.revenue.yoy][growth.net_income.yoy][growth.eps_diluted.yoy]. Despite this progress, the company remains unprofitable, posting a net margin of -1.6%, an operating margin of -4.8%, and a return on assets of -0.6% in FY2025 [profitability.net_margin_pct][profitability.operating_margin_pct][profitability.roa_pct]. Quarterly revenue has grown consistently across the last four reported periods, but operating losses persisted in every quarter [momentum.revenue_quarterly][momentum.operating_income_quarterly]. The absence of dividends and no positive macro theme score contribution, combined with ongoing losses, result in a composite score of 29.9/100 and a High risk rating.
Plain English
Zscaler is growing its revenue fast and losing less money each year, but it still isn't profitable — it spends more than it earns — and it doesn't pay dividends, which keeps its overall score low at 29.9 out of 100 with a High risk rating [growth.revenue.yoy][profitability.net_margin_pct][dividend.none].
Bull Case vs. Bear Case
Bull Case
- Revenue grew 23.3% year-over-year from $2,167,771,000 to $2,673,115,000, demonstrating sustained double-digit top-line expansion [growth.revenue.yoy].
- Net losses narrowed by 28.1% and diluted EPS improved from -$0.39 to -$0.27, signaling meaningful progress toward profitability [growth.net_income.yoy][growth.eps_diluted.yoy].
- Quarterly revenue has risen consistently across all four recent quarters — from $719,226,000 in 2025Q4 to $850,475,000 in 2026Q3 — reflecting durable business momentum [momentum.revenue_quarterly].
Bear Case
- All key profitability metrics remain negative in FY2025: net margin of -1.6%, operating margin of -4.8%, and return on assets of -0.6%, meaning the company has not yet crossed into profitable territory [profitability.net_margin_pct][profitability.operating_margin_pct][profitability.roa_pct].
- Operating losses persisted across every one of the last four reported quarters, with operating income at -$32,242,000, -$36,362,000, -$51,773,000, and -$29,640,000 respectively, and losses deepened notably in 2026Q2 [momentum.operating_income_quarterly].
- Zscaler pays no dividend and has no dividend history, providing no income return to shareholders [dividend.none].
What Could Change the Picture
Bullish Triggers
- A sustained trend of narrowing net losses — net income improved from -$57,706,000 in FY2024 to -$41,478,000 in FY2025 — could accelerate toward breakeven if revenue growth continues at its current pace [growth.net_income.yoy][growth.revenue.yoy].
- Consistent sequential quarterly revenue growth from $719,226,000 to $850,475,000 over four quarters suggests the business is scaling, which could eventually translate into operating leverage [momentum.revenue_quarterly].
Bearish Triggers
- Operating losses actually deepened in 2026Q2 to -$51,773,000 before partially recovering, suggesting the path to profitability is uneven and not guaranteed [momentum.operating_income_quarterly].
- With all profitability metrics — net margin, operating margin, and return on assets — still negative, any slowdown in revenue growth could make the loss trajectory worse rather than better [profitability.net_margin_pct][profitability.operating_margin_pct][profitability.roa_pct].
Risk Profile
High RiskOperating losses persisted across all four of the most recently reported quarters, with operating income ranging from -$29,640,000 to -$51,773,000, and net income also negative in each period, indicating ongoing cash consumption risk [momentum.operating_income_quarterly][momentum.net_income_quarterly]. The company holds total assets of $6,419,888,000 in FY2025, but the combination of negative margins and uneven quarterly loss trends supports the High risk rating [financial_health.total_assets][profitability.net_margin_pct].
This report is for educational and research purposes only. It does not constitute financial, investment, legal, or tax advice — always conduct your own due diligence before making investment decisions.