Core Viewpoint - The article discusses the recent performance of Cloudflare and Zscaler, two leading companies in the cloud security and infrastructure sectors, highlighting their stock price increases and the factors driving their growth in a favorable economic environment [3][5]. Group 1: Cloudflare - Cloudflare's stock has risen approximately 73% year-to-date, currently priced at $186.43, nearing its historical high of $221.64 from November 2021 [8][9]. - The increase in Cloudflare's stock price is attributed to the growing demand for network security and performance optimization solutions, as well as the company's strong position in cloud security and network infrastructure [11]. - Cloudflare's edge network can handle 57 million HTTP requests per second, and its customer base is expanding due to the acceleration of digital transformation across various industries [11]. - The market is particularly optimistic about Cloudflare's zero-trust security suite and AI inference tools, which enable businesses to run large language models closer to users [11]. - Future growth is expected to be supported by increasing network threats, accelerated global digital transformation, and ongoing innovations in AI security tools [11]. - Despite a high valuation with a projected price-to-sales ratio of 30.9, Cloudflare maintains a strong fundamental position and competitive advantages in AI and network security [13]. Group 2: Zscaler - Zscaler's stock has increased approximately 71% year-to-date, currently priced at $308.46, and is about 18% lower than its historical high of $376.11 from November 2021 [15][18]. - The surge in Zscaler's stock price is driven by enterprises moving away from traditional firewalls to AI-based zero-trust models, significantly increasing demand for its cloud-native security platform [17]. - Zscaler has formed strategic partnerships with major cloud service providers like Amazon AWS and Google Cloud, enhancing platform integration and competitive advantage [17]. - The company is also benefiting from stricter data protection regulations and the rising threat of ransomware, which present growth opportunities [20]. - Zscaler is actively investing in AI and machine learning technologies to enhance threat detection capabilities and is expanding its business in emerging markets [20]. - Both Cloudflare and Zscaler are capitalizing on the ongoing competition in the network security sector, although their current valuations are slightly high [22].

Core Insights - Zscaler has launched Zscaler Cellular, a Zero Trust solution for IoT and OT devices that utilizes a cellular SIM card for secure connectivity without the need for additional software or VPNs [1][2][5] - The solution provides resilient connectivity by allowing devices to connect to any cellular network globally while isolating each device to eliminate the attack surface [1][2] - Zscaler Cellular addresses the limitations of traditional security models, which are inadequate for the mobile and distributed nature of modern enterprises [2] Company Developments - Zscaler Cellular is set to be available globally in August 2025 and is already being utilized by organizations such as Sandvik and Maverick Transportation [5] - The company partners with leading telecommunications firms to enhance Zero Trust security for cellular-connected devices, ensuring scalable and seamless connectivity [4] - Zscaler's Zero Trust Exchange platform is designed to protect thousands of customers from cyber threats by securely connecting users, devices, and applications [6][7] Industry Context - The introduction of Zscaler Cellular represents a significant advancement in IoT and mobile security, addressing longstanding visibility and control gaps in enterprise environments [5] - The solution is positioned to facilitate secure digital transformation at scale, leveraging Zero Trust principles across global cellular networks [4]

Core Insights - CyberArk Software (CYBR) and Zscaler (ZS) are significant players in the cybersecurity sector, focusing on different aspects of security, with CyberArk specializing in privileged access management and identity security, while Zscaler excels in secure access service edge and cloud security [2] - The cybersecurity market is expected to grow at a CAGR of 12.63% from 2025 to 2030, driven by advanced attacks and the proliferation of AI [3] CyberArk Stock Analysis - CyberArk is witnessing a shift in identity security, with machine identities now outnumbering human identities at a ratio of over 80 to 1, up from 45 to 1 a year ago [5] - The company is innovating with AI-based products like Secure AI Agents and CORA AI, enhancing its identity security platform [6] - CyberArk's acquisitions of Zilla Security and Venafi have bolstered its expertise in identity governance and machine identity, contributing to recurring revenues and market share [7] - The Zacks Consensus Estimate predicts revenue growth rates of 31% for 2025 and 19% for 2026, with bottom line growth rates of 26.4% and 25% respectively [8] Zscaler Stock Analysis - Zscaler is implementing strategies such as Zero Trust Everywhere and agentic SecOps to leverage the growing cybersecurity market [11] - The company reported over 210 Zero Trust Everywhere enterprises in Q3 of fiscal 2025, marking a sequential growth of 60% [12] - Zscaler faces challenges with rising sales and marketing (S&M) and research and development (R&D) expenses, impacting near-term profitability [13] - The company's fiscal 2026 earnings are projected at $3.08, indicating a year-over-year decline of 3.5% [14] Performance and Valuation Comparison - Year-to-date, CyberArk shares have increased by 19.6%, while Zscaler shares have surged by 74.4% [16] - CyberArk is trading at a forward sales multiple of 13.6X, compared to Zscaler's 6.65X, reflecting higher growth expectations for CyberArk despite appearing pricier [17] Conclusion - CyberArk is positioned for robust growth through acquisitions and innovation in identity and AI security, while Zscaler is facing near-term challenges with rising operating expenses [18] - CyberArk holds a Zacks Rank 2 (Buy), indicating a stronger investment case compared to Zscaler, which has a Zacks Rank 3 (Hold) [19]

Core Insights - Zscaler (ZS) reported a 23% year-over-year revenue increase to $678 million for Q3 of fiscal 2025, but experienced a slight decline in non-GAAP gross margins to 80.3%, down from 81.4% a year ago, reflecting a 110-basis point contraction [1][11] Revenue and Growth - The company achieved a revenue growth of 24% and a free cash flow margin of 28% year-to-date, resulting in a combined score of 52%, known as the Rule of 52, marking the 21st consecutive quarter of exceeding the Rule of 40 benchmark [5][11] Margin Dynamics - The decline in gross margins is attributed to the rollout of new products aimed at quickly gaining market share rather than focusing on high margins initially. Management plans to improve margins once these products reach scale [2][6] - Zscaler's gross margin is projected to be 80% for Q4 of fiscal 2025, indicating a sequential decline of 30 basis points [6] Product Development - Recent introductions of fast-growing modules under categories like Zero Trust Everywhere and Data Security Everywhere are attracting large deals and expanding annual recurring revenue (ARR), although they are not yet margin-optimized [3][4] - The Z-Flex program, which offers flexible purchasing options, has contributed over $65 million in total contract value in Q3, but often bundles lower-margin modules, complicating near-term margin stability [4] Competitive Landscape - Competitors like CrowdStrike and Okta are also evolving their platforms to meet enterprise security demands, with CrowdStrike enhancing its identity security platform using AI solutions, and Okta focusing on identity and access management with AI for real-time detection of identity attacks [7][8] Valuation and Estimates - Zscaler's shares have increased by 74.4% year-to-date, outperforming the Security industry's growth of 22.1% [9] - The company trades at a forward price-to-sales ratio of 15.32X, higher than the industry average of 14.67X [12] - Earnings estimates for fiscal 2025 imply a year-over-year decline of 0.31%, while fiscal 2026 estimates suggest a growth of 12.01%, with upward revisions in the past 60 and 30 days respectively [15]

Core Viewpoint - Zscaler, Inc. is a leading player in the cybersecurity sector, but its high price-to-sales (P/S) multiple of 15.56X raises concerns about its valuation amid slowing growth rates [1][6]. Financial Performance - In Q3 FY25, Zscaler reported a year-over-year revenue growth of 22.6%, a decline from the 30% range in FY24 and 40% in FY23 [3][4]. - The revenue growth forecast for FY25 is expected to be around 22.7%, indicating a continued slowdown [4]. - The Zacks Consensus Estimate for Zscaler's FY25 earnings suggests a year-over-year decline of 0.31% [7]. Competitive Landscape - Zscaler faces increasing competition from established cybersecurity firms such as Palo Alto Networks, CyberArk, and CrowdStrike, which are investing heavily in innovative cybersecurity solutions [5][6]. - The company must maintain high spending on R&D to stay competitive and innovate in the market [5][6]. Growth Initiatives - Zscaler's New Growth Categories, which include Zero Trust Everywhere and Agentic Operations, reached approximately $1 billion in annual recurring revenues (ARR) [10]. - The company has successfully implemented its Zero Trust Exchange, gaining over 210 adoptions and achieving 60% quarter-over-quarter growth in Q3 FY25 [9]. - Zscaler's total ARR reached $2.9 billion in Q3 FY25 [10]. Strategic Partnerships and Innovations - Zscaler has launched new solutions like Asset Exposure Management and partnered with SAP to integrate its services within SAP's RISE framework [11]. - The company is enhancing its offerings with AI technologies through partnerships with NVIDIA and CrowdStrike [12]. Government Sector Expansion - Zscaler is expanding its GovCloud solutions and has enabled numerous government agencies to utilize its products, serving 14 out of 15 U.S. cabinet-level agencies [14][15]. - The inclusion in Amazon Web Services' Internet Control Message Protocol enhances Zscaler's accessibility to U.S. federal agencies [15]. Market Performance - Zscaler's share price has surged 74% year-to-date, outperforming the Zacks Security Industry and its peers [16].

Core Viewpoint - Zscaler, Inc. has announced a private offering of $1.5 billion in convertible senior notes due 2028, with an option for initial purchasers to buy an additional $225 million, expected to close on July 3, 2025 [1][3]. Group 1: Offering Details - The notes will be senior unsecured obligations with a maturity date of July 15, 2028, and will not bear regular interest [2]. - The initial conversion rate is set at 2.2752 shares per $1,000 principal amount, equating to a conversion price of approximately $439.52 per share, representing a 40% premium over the stock's closing price on June 30, 2025 [2]. - Zscaler estimates net proceeds from the offering to be around $1.48 billion, or approximately $1.70 billion if the additional notes option is fully exercised [3]. Group 2: Use of Proceeds - Zscaler plans to allocate $171 million of the net proceeds to cover costs associated with capped call transactions, with the remainder intended for general corporate purposes, including working capital and potential acquisitions [3]. Group 3: Capped Call Transactions - Zscaler has entered into capped call transactions to mitigate potential dilution from the notes, with an initial cap price of $784.85 per share, a 150% premium over the stock's closing price on June 30, 2025 [4]. - The capped call transactions are designed to reduce dilution upon conversion of the notes and offset any cash payments exceeding the principal amount of converted notes [4]. Group 4: Market Activity - The option counterparties may engage in purchasing Zscaler's common stock or entering into derivative transactions, which could influence the market price of the stock and the notes [5][6].

Core Insights - The article discusses several stocks that are expected to perform well in July, highlighting their momentum-driven price movements and positive outlooks for growth and cash flow [1] Group 1: Zscaler - Zscaler is noted as the most upgraded stock from Q1, with its cloud-native SaaS cybersecurity services aiding small and medium-sized businesses [1] - The company reported solid growth in the low 20% range, margin strength, and impressive guidance, prompting analysts to raise their forecasts [1][2] - The stock has seen a robust market response, with an approximately 85% gain from recent lows, indicating potential for further price increases [3][4] Group 2: Snowflake - Snowflake's FQ1 earnings report indicates strong business momentum and a sustained outlook for over 20% revenue growth [6][8] - Despite some downgrades, the overall analyst sentiment remains positive, leading to a solid Buy rating and rising consensus price target [7] - The stock is expected to break out of its long-term trading range, with a potential target near $350 by 2026 [8] Group 3: Dave & Buster's - Dave & Buster's is actively working on a business turnaround, with Q1 results showing sequential improvement and an optimistic outlook for growth and profitability [12][13] - Analysts have responded positively, with multiple price target increases following the FQ1 results, indicating a potential 25% gain [13] - The stock is approaching critical resistance levels, with expectations of reaching $40, which could trigger further inflows [14][15] Group 4: Oracle - Oracle has successfully transitioned into the cloud, with its cloud business thriving and expected to see substantial growth in 2026 [18][19] - The company is generating robust cash flow, which is being used for dividends and share buybacks [19] - Analyst trends are positive, with increased coverage and price target revisions suggesting potential for the stock to exceed $300 soon [20] Group 5: Advanced Micro Devices - Advanced Micro Devices is experiencing a rebound driven by AI, with expectations of nearly 40% top-line growth in Q2 [22][23] - The company is positioned for significant market share gains with the upcoming launch of the MI400 product [24] - Analysts have shown strong support through price target increases, indicating potential for a 40% upside [25]

Core Viewpoint - Zscaler, Inc. plans to offer $1.5 billion in convertible senior notes due 2028, with an option for initial purchasers to buy an additional $225 million, subject to market conditions [1][2]. Group 1: Offering Details - The notes will be senior unsecured obligations, maturing on July 15, 2028, and will accrue interest payable semiannually [2]. - The notes can be converted into cash, shares of Zscaler's common stock, or a combination of both at the company's discretion [2]. - The specific terms, including interest rate and conversion rate, will be determined at the time of pricing [2]. Group 2: Use of Proceeds - A portion of the net proceeds will be used to cover costs associated with capped call transactions, while the remainder will be allocated for general corporate purposes, including working capital and potential acquisitions [3]. Group 3: Capped Call Transactions - Zscaler expects to enter into capped call transactions to mitigate potential dilution of its common stock upon conversion of the notes [4]. - These transactions will cover the number of shares underlying the notes and are subject to anti-dilution adjustments [4]. - If the initial purchasers exercise their option for additional notes, Zscaler will enter into further capped call transactions [4]. Group 4: Market Impact - The option counterparties may engage in purchasing Zscaler's common stock or derivatives, which could influence the market price of the stock and the notes [5][6]. - This activity may affect the conversion ability of noteholders and the value of shares received upon conversion [6]. Group 5: Regulatory Compliance - The notes will be offered to qualified institutional buyers under Rule 144A of the Securities Act, and neither the notes nor the shares have been registered under the Securities Act [7].

Core Insights - Zscaler is expanding its Zero Trust Exchange with a new initiative called Zero Trust Everywhere, which extends Zero Trust security to Cloud workloads and Branches [1] Company Performance - In Q3 of fiscal 2025, Zscaler reported over 210 Zero Trust Everywhere enterprises, marking a sequential growth of 60% [2] - 59% of Zero Trust Branch buyers were new logo customers, indicating strong early demand [2] - Zscaler aims to exceed 390 customers by the end of fiscal 2026 [2] - The company launched Unified Appliance for Branch in Q3, simplifying branch infrastructure and eliminating the need for SD-WAN, Firewall, NAC, and legacy segmentation [2] Product Development - Zscaler secured a seven-figure annual contract with a financial services customer for Cloud workload protection [3] - New product launches include Zero Trust Gateway for Cloud Workloads, a cloud-native service on AWS that secures workload communications in under 10 minutes [3] - Zscaler introduced Microsegmentation for Cloud Workloads, providing granular host and process-level segmentation policies using AI-driven technology [4] Market Position - If adoption continues at this pace, Zero Trust Everywhere could become a foundational layer for Zscaler's future growth [5] - Zscaler's shares have surged 73% year to date, outperforming the Security industry's growth of 22.7% [9] Valuation and Earnings Estimates - Zscaler trades at a forward price-to-sales ratio of 15.34X, slightly above the industry average of 14.79X [12] - The Zacks Consensus Estimate for fiscal 2025 earnings implies a year-over-year decline of 0.31%, while fiscal 2026 earnings are expected to grow by 12.01% [15]

Core Insights - Three cybersecurity stocks have seen significant upgrades in the last 30 days, indicating a positive shift in market sentiment [1][10] Group 1: Okta (NASDAQ: OKTA) - Okta has received seven analyst upgrades in the past month, with a current price of $98.53 and a 12-month price forecast of $121.59, suggesting a potential upside of 23.4% [1][2] - The stock has outperformed the S&P 500, with a 25% increase in 2025 compared to the index's 3% return [2][3] - Following a 16% drop after its fiscal Q1 2026 earnings report, analysts believe the decline was unwarranted, with the lowest price target being $110, indicating moderate upside potential [3] Group 2: Rubrik (NYSE: RBRK) - Rubrik has garnered nine upgrades in the last 30 days, with a current price of $90.14 and a 12-month price forecast of $100.38, implying an 11.35% upside [4][5] - The average price target from recent updates is nearly $114, suggesting a potential upside of approximately 27% [5] - The company reported a 49% revenue increase last quarter and improved its adjusted operating margin from -50% to -7% year-over-year [6][7] Group 3: Zscaler (NASDAQ: ZS) - Zscaler has received 28 upgrades recently, making it the most upgraded stock, with a current price of $308.46 and a 12-month price forecast of $294.03, indicating a downside of 4.68% [8][9] - Despite the forecast suggesting a decline, the average updated price target is $329, implying a potential upside of around 6% [9] - The company achieved a 23% revenue growth last quarter, with billings rising by 25%, indicating potential for future revenue acceleration [9]