Zscaler Announces Pricing of $1.5 Billion Offering of 0.00% Convertible Senior Notes Due 2028

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].