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Zscaler Nears $3B ARR Goal: Can It Maintain the Momentum Through FY25?
ZscalerZscaler(US:ZS) ZACKS·2025-06-10 14:41

Core Insights - Zscaler (ZS) achieved $2.9 billion in annual recurring revenues (ARR) for Q3 fiscal 2025, marking a 23% year-over-year growth for the third consecutive quarter, with a target of reaching $3 billion ARR by the end of Q4 fiscal 2025 [1][10] Group 1: Growth Drivers - The Z-Flex purchasing program, launched in Q3, simplified procurement and generated $65 million in total contract value (TCV) bookings, with significant ARR increases from major clients [2] - Zscaler's strategic focus on three pillars—Zero Trust Everywhere, Data Security Everywhere, and Agentic Operations—contributes nearly $1 billion in ARR [3] Group 2: Customer Expansion - The Zero Trust Everywhere initiative saw a 60% increase in enterprise customers, growing from 130 to over 210, with a goal to reach over 390 by the end of fiscal 2026 [4] - Zscaler has 642 customers generating over $1 million in ARR and 3,363 customers with ARR exceeding $100,000, indicating strong retention and expansion within existing accounts [5] Group 3: Competitive Landscape - Competitors like CyberArk and SentinelOne are also experiencing growth, with CyberArk reporting $1.215 billion in ARR (50% year-over-year increase) and SentinelOne reaching $948 million in ARR (24% year-over-year increase) [6][7] Group 4: Stock Performance and Valuation - Zscaler's shares have increased by 66.3% year-to-date, outperforming the Zacks Security industry's growth of 22% [8] - The forward price-to-sales ratio for Zscaler is 15.21, slightly above the industry average of 14.77 [15]