The rapid advancement of AI is becoming a primary game-changer to accelerate cybersecurity innovations. To effectively manage IT operations and combat threats at scale, enterprises must fully harness their massive volumes of data to equip an offensive and proactive security posture. The new Zscaler ZDX Copilot, a first-ofits-kind digital experience monitoring copilot, with NVIDIA NeMo Guardrails, offers network, device, and application performance insights to enable simplified IT support and operations at s ...

Core Insights - Zscaler and Google partnership aims to enhance enterprise security by providing secure access to applications without relying on traditional VPNs, addressing the vulnerabilities associated with legacy security approaches [1][6][8] Group 1: Cybersecurity Challenges - 56% of organizations faced VPN-related cyberattacks in the past year, with 91% expressing concerns about VPNs compromising their IT security [1] - Traditional security measures like endpoint security agents and VDI are costly and complex, leading to poor user experiences [12] Group 2: Zscaler and Google Integration - Zscaler's integration with Google Workspace enhances data protection by preventing the exfiltration of sensitive data from applications like Gmail and Google Drive [2][6] - The collaboration allows organizations to apply Data Loss Prevention (DLP) capabilities and manage user access effectively [2][8] Group 3: Zero Trust Security Model - Google has pioneered zero trust access, enabling secure corporate resource access without VPNs, aligning with Zscaler's vision for a zero trust model [3][6] - The integration with Chrome Enterprise will provide advanced threat and data protection for hundreds of millions of enterprise users [6][7] Group 4: Security Operations Enhancement - Zscaler's security telemetry shared with Google Security Operations improves threat detection and response capabilities for organizations [13] - The integration allows for actionable data within Google Security Operations, streamlining investigations and enhancing security posture [13]

Core Viewpoint - Zscaler, a cloud-based security company, is experiencing a slowdown in growth and faces challenges in the current macroeconomic environment, leading to a potential stabilization or decline in its stock price over the next 12 months [2][8]. Company Performance - Zscaler's calculated billings grew at a compound annual growth rate (CAGR) of 51% from fiscal 2018 to fiscal 2023, while revenue rose at a CAGR of 53% [3]. - For the full year, Zscaler expects calculated billings to rise by 28% and revenue by 32%, with analysts projecting a 23% revenue growth for fiscal 2025 [4]. - Adjusted earnings per share (EPS) are expected to grow by 67%-68% for the full year, surpassing analysts' expectations of 64% growth, but only 13% growth is anticipated for fiscal 2025 [5]. Market Position and Challenges - Zscaler remains unprofitable on a GAAP basis since its IPO, with expectations of profitability not occurring until fiscal 2026 [6]. - The company has seen a stock decline of over 20% year-to-date, with insiders selling nearly 10 times as many shares as they bought in the past 12 months [7]. Growth Metrics - Zscaler's calculated billings growth year-over-year is projected to decrease from 40% in Q3 2023 to 30% in Q3 2024, while revenue growth is expected to decline from 46% to 32% in the same period [11]. - Despite the cooling growth, adjusted gross margin remained steady at 81%, and adjusted operating margin expanded by 7 percentage points to 20% due to tighter cost controls [11]. Valuation Concerns - Zscaler's stock is currently valued at 52 times its forward adjusted earnings and 10 times next year's sales, indicating limited upside potential at these levels [12].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _to_ Commission File Number: 001-38413 ZSCALER, INC. (Exact Name of Registrant as Specified in its Charter) Delaware (State or other jurisdiction of incorporation or organization) 26-1173892 (I.R.S. Employe ...

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Zscaler Investor Innovations Briefing - Zenith Live 2024 Wednesday, June 12, 2024 10:15 a.m. PT (1:15 p.m. ET) A live webcast and replay will be available on the Investor Relations section of the Zscaler website at https://ir.zscaler.com. Zscaler (NASDAQ:ZS) accelerates digital transformation so customers can be more agile, efficient, resilient, and secure. The Zscaler Zero Trust Exchange™ platform protects thousands of customers from cyberattacks and data loss by securely connecting users, devices, and app ...

Core Insights - Zscaler reported a significant outperformance in billings growth of 30% in the last quarter, exceeding expectations of 21% [3][5] - The company has a strong market position with 40% of Fortune 500 companies and over 30% of Global 2000 as customers, indicating robust demand for its Zero Trust SASE platform [4][10] - Zscaler is undergoing a transition in its go-to-market strategy, focusing on building leadership and hiring quota-carrying sales representatives [5][6] Financial Performance - Zscaler's Q3 performance exceeded consensus estimates by 8%, marking an outstanding quarter [5] - The company anticipates a headwind of 2% to 3% on billings growth for fiscal '25 due to higher-than-expected attrition and the transition in leadership [7][8] - Despite challenges, Zscaler remains optimistic about its market opportunities, particularly in upselling to existing customers and expanding its customer base [9][39] Market Positioning - Zscaler's Zero Trust architecture differentiates it from legacy firewall and VPN solutions, providing enhanced security without exposing assets to the internet [12][14] - The company does not see Microsoft as a significant competitor in the large enterprise space, focusing instead on its unique Zero Trust offerings [16] - Zscaler aims to penetrate the market further by transitioning from opportunity-based sales to account-based sales, similar to ServiceNow's approach [10][21] Product Development - Zscaler has expanded its platform to include workload protection and Zero Trust SD-WAN, enhancing its service offerings [11][25] - The recent acquisition of Airgap and Avalor is expected to strengthen Zscaler's capabilities in micro-segmentation and data security [26][41] - The company is focused on integrating its data security solutions across various channels, ensuring comprehensive protection for workloads and users [41][44] Competitive Landscape - Zscaler's competitive strategy emphasizes the importance of true Zero Trust security, contrasting with competitors that still rely on traditional firewall models [18][34] - The company is positioning itself to capture a larger share of the market by addressing the needs of large enterprises that understand the value of Zero Trust [29][30] - Zscaler's approach to SD-WAN integrates security into connectivity, setting it apart from competitors who view them as separate functions [20][21]

Key Points Company and Industry * **Company**: Zscaler, Inc. (NASDAQ:ZS) * **Industry**: Cybersecurity, specifically Zero Trust SASE (Secure Access Service Edge) Core Views and Arguments * **Outperformance in Q3**: Zscaler outperformed billings significantly in Q3, growing 30% compared to expectations of 21% [5]. * **Win Rates**: Zscaler maintains strong win rates in the market, with 40% of Fortune 500 companies and over 30% of Global 2000 using their platform [6]. * **Market Positioning**: Zscaler is well-positioned in the Zero Trust SASE market, with a focus on protecting workloads and expanding into areas like Zero Trust SD-WAN and data protection [10]. * **Competitive Landscape**: Zscaler differentiates itself from competitors like Fortinet and Cisco by offering true Zero Trust architecture and a broader platform [12]. * **SD-WAN Strategy**: Zscaler views SD-WAN as an important component of a single vendor SASE solution, focusing on Zero Trust SD-WAN to protect branch offices and workloads [20]. * **Product Evolution**: Zscaler has evolved from a Secure Web Gateway to a comprehensive security platform, including data protection, endpoint security, and cloud workload protection [23]. * **Zero Trust Adoption**: Zscaler targets large enterprises that understand the value of Zero Trust and are willing to invest in the right technologies [28]. * **Data Security**: Zscaler offers a range of data security solutions, including data loss prevention (DLP), cloud security posture management (CSPM), and data security posture management (DSPM) [37]. Other Important Points * **Transition**: Zscaler is currently going through a transition in its go-to-market strategy, led by new leadership from ServiceNow [6]. * **Billings Growth**: Zscaler expects a headwind of 2% to 3% on billings growth in fiscal '25 due to the transition and higher-than-expected attrition in Q3 [7]. * **Market Opportunity**: Zscaler has a significant opportunity to grow its customer base, with less than 20% penetration in the market for companies with over 2,000 employees [8]. * **Upsell Opportunities**: Zscaler has a 6x opportunity to upsell additional modules to existing customers, including Zscaler for users, Zero Trust SD-WAN, and data protection [8]. * **Cloud Protection**: Zscaler offers solutions for cloud workload protection, including internet access protection, data protection, and workload communications [37]. * **Technology Readiness**: Zscaler's approach to data security differs from traditional CNAPP vendors like Wiz and Palo Alto, focusing on a broader SASE framework [39]. * **Fiscal '25 Outlook**: Zscaler expects the market to remain scrutinized, but also expects growth in revenue and sales organization maturity [43].

Though they popped 15% in the immediate aftermath of last week's earnings, shares of Zscaler Inc. NASDAQ: ZS have been quickly retracing their steps. The fact they're only marginally above the level where they were trading going into last week's fiscal Q3 release will be frustrating for investors, especially as the results were good. Zscaler Today ZS Zscaler $168.00 -1.02 (-0.60%) 52-Week Range $131.59 ▼ $259.61 Key Points They're also taking definitive steps to maintain this momentum in the quarters ahead. ...

Parkev Tatevosian, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Zscaler. The Motley Fool has a disclosure policy. Parkev Tatevosian is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool. ...