Core Insights - The article focuses on Zscaler, Inc. (NASDAQ: ZS) and its relevance in the context of the Global X Cybersecurity ETF (BUG) [1] Company Analysis - Zscaler is highlighted as a company of interest due to its growth potential and the value it delivers to stakeholders [1] - The analysis aims to project long-term investment opportunities associated with Zscaler [1] Industry Context - The article reflects a broader interest in the cybersecurity sector, particularly in relation to market trends and investment potential [1]

Core Insights - The article focuses on Zscaler, Inc. (NASDAQ: ZS) and its relevance in the context of the Global X Cybersecurity ETF (BUG) [1] Company Analysis - Zscaler is highlighted as a company of interest due to its growth potential and the value it delivers to stakeholders [1] - The analysis aims to project long-term investment opportunities associated with Zscaler [1] Industry Context - The article reflects a broader interest in the cybersecurity sector, particularly in relation to investment trends and market dynamics [1]

Core Viewpoint - Zscaler Inc. is highlighted as a strong long-term investment opportunity, with analysts at Truist Securities maintaining a 'Buy' rating and a price target of $350, driven by growth in its emerging business segment [1][2]. Group 1: Business Strategy and Growth - The management team emphasized the company's long-term platform strategy, focusing on the Zero Trust Branch Offering [2]. - The Z-Flex licensing model, introduced recently, has become a significant growth driver due to its commitment-based subscription model, contrasting with traditional consumption or enterprise models [2]. - In Q4 of fiscal 2025, the Z-Flex program achieved over $100 million in total contract value bookings, marking a 50% increase quarter-over-quarter [3]. Group 2: Financial Performance - Zscaler reported revenue of $719 million for the quarter, surpassing consensus estimates of $706.95 million, largely attributed to the growth from the Z-Flex program [3]. Group 3: Company Overview - Zscaler Inc. is a cloud-based cybersecurity firm that offers a Zero Trust Exchange platform, which replaces traditional network security with cloud-delivered services, enabling secure internet access and application connectivity for distributed workforces [4].

Company Overview - Okta is a $16 billion company focused on identity security, providing solutions for both human and non-human identity verifications, including secure processes for agentic AI [2] - The company has developed Okta AI, which integrates into its workforce and customer identity clouds, enhancing security and productivity while improving user experience [6] Financial Performance - Okta's fiscal 2Q26 report showed a revenue of $728 million, exceeding estimates by $16 million and growing 13% from fiscal 2Q25 [7] - The company predicts revenue for fiscal 3Q26 to be between $728 million and $730 million, above the Wall Street expectation of $723.1 million [7] Market Potential - The cybersecurity market is valued at approximately $270 billion and is expected to grow at a 12% CAGR from 2025 to 2028, with cybersecurity spending projected to grow 50% faster than overall software spending [4] - Okta's expansion into Identity Governance (OIG) and Privileged Access Management (PAM) presents significant upsell opportunities, with OIG already being a >$100 million ACV business [8] Analyst Insights - Morgan Stanley analyst Keith Weiss rates Okta shares as Overweight (Buy) with a price target of $123, indicating a 34% upside potential over the next 12 months [9] - The consensus rating for Okta shares is a Moderate Buy, with 19 Buy, 11 Hold, and 2 Sell recommendations [9] Competitive Landscape - Zscaler, another key player in cybersecurity, has grown into a ~$44 billion company, handling over 500 billion daily transactions and preventing over 9 billion daily incidents [12] - Zscaler's recent acquisition of Red Canary enhances its capabilities in exposure management and agentic AI threat management [13] Zscaler Financials - Zscaler's fiscal 4Q25 revenue reached $719.2 million, growing 21% year-over-year and exceeding forecasts by over $12 million [14] - The company's annual recurring revenue (ARR) increased by 22% year-over-year to $3.02 billion [14] Analyst Ratings for Zscaler - Weiss rates Zscaler as Overweight (Buy) with a price target of $320, suggesting a 12% upside potential [15] - The consensus rating for Zscaler is Strong Buy, with 30 Buy and 5 Hold recommendations [16]

Core Viewpoint - The performance of Zscaler's international operations is crucial for assessing its financial resilience and growth prospects in the interconnected global economy [1][2][10]. Revenue Performance - Zscaler's total revenue for the quarter reached $719.23 million, reflecting a 21.3% increase year-over-year [4]. - The revenue contributions from international markets are significant for understanding the company's overall performance [3]. International Revenue Breakdown - Other International contributed $25.52 million, accounting for 3.6% of total revenue, with a slight decrease of -0.25% compared to expectations [5]. - Asia Pacific generated $114.26 million, representing 15.9% of total revenue, exceeding projections by +3.38% [6]. - Europe, Middle East, and Africa contributed $210.82 million, making up 29.3% of total revenue, slightly below the consensus estimate by -0.17% [7]. Future Projections - Analysts project Zscaler's total revenue for the current fiscal quarter to be $773.36 million, a 23.2% increase year-over-year, with expected contributions from Other International (3.5%), Asia Pacific (15.2%), and Europe, Middle East, and Africa (28.6%) [8]. - For the entire year, total revenue is forecasted at $3.27 billion, a 22.3% improvement from the previous year, with regional contributions expected to be similar to quarterly projections [9]. Conclusion - The reliance on global markets presents both opportunities and challenges for Zscaler, making the analysis of international revenue trends essential for forecasting future performance [10].

Core Insights - Zscaler is experiencing significant growth in its agentic AI cybersecurity solutions, with annual recurring revenue (ARR) for agentic security operations increasing by 85% year over year and agentic AI operations growing by 58% last year [1] - The company's revenue for fiscal year 2025 rose by 23% to $2.7 billion, outpacing the growth of the zero-trust security market, which is projected to grow at an annual rate of nearly 17% through 2030 [2][3] - Zscaler's stock price has increased by 59% in 2025, indicating strong market performance compared to competitors like Nvidia, which has seen a 32% appreciation [3][4] Company Performance - Zscaler's remaining performance obligations (RPO) surged by 31% to $5.8 billion, more than double the revenue generated in the latest fiscal year, suggesting a robust long-term revenue pipeline [7][8] - Analysts expect Zscaler to deliver strong double-digit growth over the next three fiscal years, although at a slower pace compared to fiscal 2025 [9] - Recent upward revisions in consensus revenue estimates reflect the company's improving RPO and the growth potential in AI-focused cybersecurity niches [10] Market Position - The adoption of agentic AI in cybersecurity is expected to grow at a compound annual growth rate (CAGR) of 34% through 2033, potentially reaching $322 billion in annual revenue [6] - Zscaler's valuation at 16 times sales is considered attractive compared to Nvidia's price-to-sales ratio of 25, with expectations that Zscaler's growth will surpass Nvidia's in the coming years [11][12]

Key Points Investors were sure placing a lot of trust in the zero-trust cybersecurity solutions provider. This was helped by an analyst's price target raise the day before. 10 stocks we like better than Zscaler › Cybersecurity specialist Zscaler (NASDAQ: ZS) was a winner of a stock on Thursday, rising by nearly 3% in price. Investors were juiced by an analyst's recommendation upgrade, accompanied by a meaty price target raise. That sub-3% climb was more than sufficient to beat the S&P 500 (SNPINDEX: ...

Financial Performance and Losses - The company has incurred net losses of $202.3 million, $57.7 million, and $41.5 million for fiscal years 2023, 2024, and 2025 respectively, with an accumulated deficit of $1,189.6 million as of July 31, 2025[101]. - The company expects significant increases in operating expenses as it continues to hire personnel and expand operations, which may hinder its ability to achieve profitability[101]. - The company has experienced rapid growth in revenue and customer base, but this growth may not be sustainable, and future revenue growth rates are expected to decline[111]. - The company’s operating results may fluctuate significantly due to various factors, including market demand, customer retention, and the effectiveness of sales and marketing efforts[116]. - The company’s business strategy focuses on long-term growth, which may not align with short-term profitability expectations from analysts and shareholders[102]. - Adverse economic conditions and reduced IT security spending may significantly impact the company's revenue and profitability[198]. - The ongoing high levels of inflation could lead to increased costs, affecting employee compensation and overall expenses[199]. Competition and Market Dynamics - The company faces intense competition and must successfully convince IT decision makers of the advantages of its cloud platform over legacy systems to attract new customers[104]. - The competitive landscape for network security solutions is characterized by rapid technological changes and increasing competition from both established and emerging companies[121]. - Competitors may leverage their existing relationships and broader product offerings to gain market share, potentially impacting the company's revenue and growth[125]. - Maintaining brand reputation is critical for attracting new customers; increased marketing expenditures are anticipated as competition intensifies[145]. Customer Relationships and Retention - Customer retention is critical, as customers have no obligation to renew subscriptions, and factors such as customer satisfaction and economic conditions can impact renewal rates[107]. - High-quality customer support is essential for customer satisfaction and retention; any failure in this area could adversely affect business performance[155]. - The ability to maintain successful relationships with channel partners is critical for future revenue growth and overall business health[119]. Operational Risks and Challenges - The company operates over 160 public exchanges globally and thousands of private exchanges, making it vulnerable to service disruptions from various external factors[135]. - The company faces risks from potential breaches of its cloud platform, which could damage its reputation and financial results[136]. - Cybersecurity threats are increasing, particularly due to geopolitical factors, which may heighten the risk of attacks on the company's systems[139]. - Any service interruptions could significantly impact customer satisfaction and the company's financial condition[128]. - The company must continuously innovate and enhance its cloud platform to remain competitive and meet evolving customer needs[132]. International Operations and Workforce - Approximately 49% of the company's revenue in fiscal 2025 was derived from international customers, with similar figures of 50% in fiscal 2024 and fiscal 2023[164]. - As of July 31, 2025, 63% of the company's full-time employees were located outside the United States[164]. - 37% of the global workforce is based in India, primarily in R&D, finance, and operations[170]. - The company expects to continue expanding its international operations, but faces significant risks including political and economic uncertainties, and compliance with foreign laws[165]. - The company faces challenges in managing risks related to its India operations, including rising wage costs and competition for skilled professionals[172]. Financial Management and Funding - The company may need to raise additional funds for operations and investments, which could lead to dilution of stockholder value[173]. - The company issued $1,725 million in aggregate principal amount of 0.0% Convertible Senior Notes due 2028, which mature on July 15, 2028[240]. - The company does not intend to pay dividends in the foreseeable future, relying on stock price appreciation for investor returns[233]. - The market price of the company's common stock may be volatile, influenced by various factors including operating results and analyst coverage[230]. Regulatory and Compliance Issues - Regulatory compliance costs are rising due to evolving laws on privacy, data protection, and cybersecurity, which may affect operational costs and customer trust[210]. - The company is subject to various import and export controls that could impair its ability to compete internationally and may lead to penalties if not complied with[211]. - The company is subject to anti-corruption and anti-bribery laws, and noncompliance could result in significant fines and harm to its reputation[250]. Intellectual Property and Technology Risks - The company’s ability to protect and enforce its intellectual property rights is crucial for its competitive advantage, but existing protections may be limited or ineffective[195][196]. - The company may face challenges in maintaining rights to third-party technology integrated into its cloud platform, which could harm its service offerings[183]. - The evolving regulatory landscape for AI and ML may require the company to develop robust internal policies to ensure compliance and mitigate risks[182]. - The company incorporates open source software into its solutions, which may expose it to security vulnerabilities and potential litigation risks related to intellectual property claims[184][185]. Currency and Market Risks - Currency exchange rate fluctuations could negatively affect the company's operating results, despite most sales being in U.S. dollars[214]. - The company is exposed to counterparty default risks, which could result in significant losses if a counterparty fails to meet its obligations[218]. - Changes in international tax laws and regulations could lead to additional tax liabilities, impacting the company's profitability and cash flows[219]. Miscellaneous Risks - The company faces risks from natural disasters and geopolitical unrest, which could disrupt operations and adversely affect financial performance[249]. - The company relies on third parties for essential financial and operational services, and disruptions in these services could adversely affect business operations[261].

Upgrades Summary - DA Davidson upgraded Nvidia (NVDA) to Buy from Neutral with a price target of $210, increased from $195, due to anticipated growth in AI compute demand sustaining growth into next year and beyond [2] - Deutsche Bank upgraded Chewy (CHWY) to Buy from Hold with a price target of $45, up from $38, following the fiscal Q2 report, indicating improved buy-side expectations despite potential earnings estimate cuts due to growth investments in the second half of 2025 [2] - Seaport Research also upgraded Chewy to Buy from Neutral with a price target of $47 [2] - Barclays upgraded Thermo Fisher (TMO) to Overweight from Equal Weight with a price target of $550, raised from $490, citing attractive valuation levels on both absolute and relative bases [2] - Wolfe Research upgraded Bill (BILL) to Outperform from Peer Perform with a price target of $70, noting a 37% decline in shares year-to-date but better prospects into fiscal 2026 [2] - Freedom Capital upgraded Zscaler (ZS) to Buy from Hold with a price target of $320, increased from $280, based on strong fiscal Q4 results, growth momentum from the Red Canary acquisition, and higher long-term assumptions [2]

Core Viewpoint - Zscaler Inc. is highlighted as a top investment opportunity in the cybersecurity sector, with a recent price target increase from Canaccord Genuity reflecting strong market performance and growth potential [1][2]. Company Overview - Zscaler Inc. is a cloud-based cybersecurity firm that provides secure internet and application access through its Zero Trust Exchange platform, offering services such as cloud firewalls, data loss prevention, and zero-trust network access (ZTNA) [4]. Market Opportunity - The company is positioned to capitalize on a serviceable addressable market exceeding $100 billion, driven by increased spending per customer and favorable industry trends [3]. Industry Trends - Zscaler's growth is supported by several industry tailwinds, including cloud migration, security modernization, and the accelerated adoption of Zero Trust principles [3]. Recent Performance - The stock has experienced a significant rally, increasing by 72% year to date, prompting Canaccord Genuity to raise its price target to $340 from $320 [1][2].