Zscaler, Inc. Reports 23% Revenue Growth in Q3 Fiscal 2025 Despite GAAP Net Loss

Zscaler's Q3 2025 revenue surged 23% to $678 million, despite a GAAP net loss of $4.1 million.

Quiver AI Summary

Zscaler, Inc. reported impressive financial results for its third quarter of fiscal year 2025, with revenue increasing by 23% year-over-year to $678.0 million and calculated billings rising 25% to $784.5 million. However, the company faced a GAAP net loss of $4.1 million compared to a profit of $19.1 million during the same period last year, while non-GAAP net income saw a rise from $113.0 million to $136.8 million. The deferred revenue also grew by 26%, reaching $1.985 billion. CEO Jay Chaudhry emphasized the growing adoption of their Zero Trust Exchange platform amidst increasing demand for AI security solutions. Recently, Zscaler announced key executive appointments, a definitive agreement to acquire Red Canary for managed detection and response services, and received recognition as a leader in the security market from Gartner and IDC. Additionally, the company introduced new offerings such as Asset Exposure Management, further enhancing its security services. The outlook for the fourth quarter forecasts revenue between $705 million and $707 million, along with anticipated non-GAAP income from operations of approximately $152 million to $154 million.

Potential Positives

• Revenue growth of 23% year-over-year to $678.0 million demonstrates strong demand for Zscaler's services.
• Calculated billings increased by 25% year-over-year to $784.5 million, indicating robust customer engagement and subscription growth.
• Deferred revenue rose by 26% year-over-year to $1,985.0 million, reflecting an expanding customer base and long-term revenue visibility.
• Zscaler's recognition as a Leader in the 2025 Gartner Magic Quadrant for Security Service Edge (SSE) underscores its competitive position in the industry.

Potential Negatives

• GAAP net loss of $4.1 million marks a significant shift from the GAAP net income of $19.1 million reported in the same quarter last year.
• GAAP loss from operations increased to $25.4 million, a notable drop from a loss of $3.0 million in the previous year's third quarter, indicating worsening operational efficiency.
• Free cash flow declined to 18% of revenue from 22% in the same quarter of the previous year, suggesting a decrease in cash generation relative to revenue growth.

FAQ

What were Zscaler's Q3 2025 revenue highlights?

Zscaler reported $678.0 million in revenue, marking a 23% year-over-year increase.

How did calculated billings perform in Q3 2025?

Calculated billings grew by 25% year-over-year, reaching $784.5 million.

What was Zscaler's net income for Q3 2025?

Zscaler experienced a GAAP net loss of $4.1 million compared to a GAAP net income of $19.1 million in Q3 2024.

Who were the recent executive appointments at Zscaler?

Kevin Rubin was appointed as CFO, and Raj Judge joined the Board of Directors as EVP of Corporate Strategy & Ventures.

What is Zscaler's financial outlook for the fourth quarter of fiscal 2025?

Zscaler expects revenue between $705 million and $707 million for Q4 fiscal 2025.

Disclaimer: This is an AI-generated summary of a press release distributed by GlobeNewswire. The model used to summarize this release may make mistakes. See the full release here.

$ZS Congressional Stock Trading

Members of Congress have traded $ZS stock 1 times in the past 6 months. Of those trades, 0 have been purchases and 1 have been sales.

Here’s a breakdown of recent trading of $ZS stock by members of Congress over the last 6 months:

• REPRESENTATIVE ROBERT BRESNAHAN sold up to $15,000 on 01/13.

To track congressional stock trading, check out Quiver Quantitative's congressional trading dashboard.

$ZS Insider Trading Activity

$ZS insiders have traded $ZS stock on the open market 40 times in the past 6 months. Of those trades, 0 have been purchases and 40 have been sales.

Here’s a breakdown of recent trading of $ZS stock by insiders over the last 6 months:

• AJAY MANGAL has made 0 purchases and 12 sales selling 190,480 shares for an estimated $38,228,210.
• SYAM NAIR (CTO) has made 0 purchases and 3 sales selling 35,982 shares for an estimated $8,642,063.
• ROBERT SCHLOSSMAN (Chief Legal Officer) has made 0 purchases and 16 sales selling 16,528 shares for an estimated $3,473,249.
• REMO CANESSA (Chief Financial Officer) has made 0 purchases and 4 sales selling 10,636 shares for an estimated $2,124,196.
• ANDREW WILLIAM FRASER BROWN sold 10,000 shares for an estimated $2,060,000
• MICHAEL J. RICH (CRO and President of WW Sales) has made 0 purchases and 2 sales selling 7,354 shares for an estimated $1,468,957.
• JAGTAR SINGH CHAUDHRY (CEO & Chairman) has made 0 purchases and 2 sales selling 5,018 shares for an estimated $1,002,674.

To track insider transactions, check out Quiver Quantitative's insider trading dashboard.

$ZS Hedge Fund Activity

We have seen 433 institutional investors add shares of $ZS stock to their portfolio, and 369 decrease their positions in their most recent quarter.

Here are some of the largest recent moves:

• T. ROWE PRICE INVESTMENT MANAGEMENT, INC. added 2,603,675 shares (+inf%) to their portfolio in Q1 2025, for an estimated $516,621,193
• MARSHALL WACE, LLP added 1,054,589 shares (+266.3%) to their portfolio in Q1 2025, for an estimated $209,251,549
• WELLINGTON MANAGEMENT GROUP LLP added 1,031,462 shares (+488.0%) to their portfolio in Q1 2025, for an estimated $204,662,690
• VIKING GLOBAL INVESTORS LP removed 914,969 shares (-100.0%) from their portfolio in Q1 2025, for an estimated $181,548,148
• POINT72 ASSET MANAGEMENT, L.P. removed 627,896 shares (-100.0%) from their portfolio in Q4 2024, for an estimated $113,278,717
• HSBC HOLDINGS PLC added 617,319 shares (+79.0%) to their portfolio in Q1 2025, for an estimated $122,488,435
• GOLDMAN SACHS GROUP INC added 568,183 shares (+22.9%) to their portfolio in Q1 2025, for an estimated $112,738,870

To track hedge funds' stock portfolios, check out Quiver Quantitative's institutional holdings dashboard.

$ZS Analyst Ratings

Wall Street analysts have issued reports on $ZS in the last several months. We have seen 11 firms issue buy ratings on the stock, and 0 firms issue sell ratings.

Here are some recent analyst ratings:

• Stephens issued a "Overweight" rating on 03/31/2025
• Scotiabank issued a "Outperform" rating on 03/06/2025
• BMO Capital issued a "Outperform" rating on 03/06/2025
• Wedbush issued a "Outperform" rating on 03/06/2025
• Bernstein issued a "Outperform" rating on 03/06/2025
• RBC Capital issued a "Outperform" rating on 03/06/2025
• BTIG issued a "Buy" rating on 03/06/2025

To track analyst ratings and price targets for $ZS, check out Quiver Quantitative's $ZS forecast page.

$ZS Price Targets

Multiple analysts have issued price targets for $ZS recently. We have seen 9 analysts offer price targets for $ZS in the last 6 months, with a median target of $242.0.

Here are some recent targets:

• Gregg Moskowitz from Mizuho Securities set a target price of $250.0 on 05/15/2025
• Taz Koujalgi from Roth Capital set a target price of $215.0 on 04/22/2025
• An analyst from Goldman Sachs set a target price of $207.0 on 03/06/2025
• An analyst from Scotiabank set a target price of $242.0 on 03/06/2025
• An analyst from BMO Capital set a target price of $233.0 on 03/06/2025
• An analyst from UBS set a target price of $260.0 on 03/06/2025
• An analyst from Robert W. Baird set a target price of $250.0 on 03/06/2025

Full Release

Third


Quarter Highlights

• 
  
  Revenue grows 23% year-over-year to $678.0 million
  
  


• 
  
  Calculated billings grows 25% year-over-year to $784.5 million
  
  


• 
  
  Deferred revenue grows 26%
  
  
  year-over-year to $1,985.0 million
  
  


• 
  
  GAAP net loss of $4.1 million compared to GAAP net income of $19.1 million on a year-over-year basis
  
  


• 
  
  Non-GAAP net income of $136.8 million compared to non-GAAP net income of $113.0 million on a year-over-year basis
  
  
  
  

SAN JOSE, Calif., May 29, 2025 (GLOBE NEWSWIRE) -- Zscaler, Inc. (Nasdaq: ZS), the leader in cloud security, today announced financial results for its third quarter of fiscal year 2025

,

ended April 30, 2025.

“We delivered outstanding Q3 results as an increasing number of customers adopt our expanding Zero Trust Exchange platform. We enable customers to realize Zero Trust Everywhere while lowering operational cost and complexity,” said Jay Chaudhry, Chairman and CEO of Zscaler. “The proliferation of AI in all aspects of business is increasing the need for our AI security. We empower customers to securely adopt both public GenAI apps and their own private AI apps, and we are increasing our investments in this area.”

Third


Quarter Fiscal


2025


Financial Highlights

• 
  
  Revenue:
  
  $678.0 million, an increase of 23% year-over-year.
  


• 
  
  Income (loss) from operations:
  
  GAAP loss from operations was $25.4 million, or 4% of revenue, compared to $3.0 million, or 1% of revenue, in the third quarter of fiscal 2024. Non-GAAP income from operations was $146.7 million, or 22% of revenue, compared to $121.8 million, or 22% of revenue, in the third quarter of fiscal 2024.
  


• 
  
  Net income (loss):
  
  GAAP net loss was $4.1 million, compared to GAAP net income of $19.1 million in the third quarter of fiscal 2024. Non-GAAP net income was $136.8 million, compared to $113.0 million in the third quarter of fiscal 2024.
  


• 
  
  Net income (loss) per share, diluted:
  
  GAAP net loss per share was $0.03, compared to GAAP net income per share of $0.12 in the third quarter of fiscal 2024. Non-GAAP net income per share was $0.84, compared to $0.71 in the third quarter of fiscal 2024.
  


• 
  
  Cash flows:
  
  Cash provided by operations was $211.1 million, or 31% of revenue, compared to $173.4 million, or 31% of revenue, in the third quarter of fiscal 2024. Free cash flow was $119.5 million, or 18% of revenue, compared to $123.1 million, or 22% of revenue, in the third quarter of fiscal 2024.
  


• 
  
  Deferred revenue:
  
  $1,985.0 million as of April 30, 2025, an increase of 26% year-over-year.
  


• 
  
  Cash, cash equivalents and short-term investments:
  
  $3,005.6 million as of April 30, 2025, an increase of $595.9 million from July 31, 2024.
  
  
  

Recent Business Highlights

• 
  Announced the appointment of Kevin Rubin as Chief Financial Officer. Rubin brings over two decades of experience leading finance organizations at high-growth public and private companies.
  
  
  


• 
  Announced the appointment of Raj Judge to the Board of Directors, and as EVP of Corporate Strategy & Ventures. Judge brings over 25 years of experience in the tech legal and venture capital space.
  
  
  


• 
  In May 2025, signed a definitive agreement to acquire Red Canary, a leading managed detection and response (MDR) vendor. By combining Zscaler’s high-volume and high-quality data with Red Canary's domain expertise in MDR, Zscaler will accelerate its vision to deliver AI-powered security operations.
  
  
  


• 
  Recognized as a Leader in the 2025 Gartner® Magic Quadrant™ for Security Service Edge (SSE) for the fourth year in a row.
  
  
  


• 
  Positioned as a Leader in the IDC MarketScape: Worldwide Data Loss Prevention (DLP) 2025 Vendor Assessment, which offers a comprehensive evaluation of nine companies in the competitive DLP space based on detailed analysis of vendor capabilities and performance and market trajectories.
  
  
  


• 
  Introduced Zscaler Asset Exposure Management, a critical foundation of the company’s broader Continuous Threat Exposure Management (CTEM) offerings. Asset Exposure Management provides organizations with a comprehensive and accurate inventory of their assets and their risk.
  
  
  


• 
  Zscaler’s ThreatLabz published several research reports, including the 2025 AI Security Report, the 2025 VPN Risk Report, and the 2025 Phishing Report.
  
  
  
  
  
  
  
  • 
    The 2025 AI Security Report found that enterprises’ usage of AI/ML tools increased by over 3,000% in the past year, reinforcing the need to deploy Zero Trust Everywhere to stay ahead of rapidly evolving cyberthreats.
    
    
    
  
  
  • 
    The 2025 VPN Risk Report found that 92% of organizations are concerned about ransomware attacks due to VPN vulnerabilities, and 81% of organizations are planning to implement a zero trust everywhere strategy.
    
    
    
  
  
  • 
    The 2025 Phishing Report found that attackers are using GenAI to launch targeted attacks against high-impact business functions like HR and finance, making a Zero Trust + AI defense strategy mission critical for organizations.
    
    
    
  
  
  
  


• 
  Announced T-Mobile modernized its infrastructure with Zscaler’s Zero Trust Exchange to provide Zero Trust security to its employees and team members whether they are in the office, at home or on the go.
  
  
  


• 
  Announced the inclusion of Zscaler solutions in the AWS Marketplace for the U.S. Intelligence Community (ICMP), a curated digital catalog from Amazon Web Services (AWS) that makes it easy to discover, purchase, and deploy software packages and applications from vendors that specialize in supporting government customers.
  
  
  

Change in Non-GAAP Measures Presentation

Effective August 1, 2024, the beginning of our fiscal year ending July 31, 2025, we are using a long-term projected non-GAAP tax rate of 23% for the purpose of determining our non-GAAP net income and non-GAAP net income per share to provide better consistency across interim reporting periods in fiscal 2025 and beyond. Given the significant growth of our business and non-GAAP operating income, we believe this change is necessary to better reflect the performance of our business. We will continue to assess the appropriate non-GAAP tax rate on a regular basis, which could be subject to changes for a variety of reasons, including the rapidly evolving global tax environment, significant changes in our geographic earnings mix, or other changes to our strategy or business operations. Prior period amounts have been recast to reflect this change.

Financial Outlook

For the fourth quarter of fiscal 2025, we expect:

• 
  Revenue of $705 million to $707 million
  


• 
  Non-GAAP income from operations of $152 million to $154 million
  


• 
  Non-GAAP net income per share of approximately $0.79 to $0.80, assuming approximately 164 million fully diluted shares outstanding and a non-GAAP tax rate of 23%
  
  
  

For the full year of fiscal 2025, we expect:

• 
  Revenue of approximately $2.659 billion to $2.661 billion
  


• 
  Calculated billings of $3.184 billion to $3.189 billion
  


• 
  Non-GAAP income from operations of $573 million to $575 million
  


• 
  Non-GAAP net income per share of $3.18 to $3.19, assuming approximately 163 million fully diluted shares outstanding and a non-GAAP tax rate of 23%
  

These statements are forward-looking and actual results may differ materially. Refer to the Forward-Looking Statements safe harbor below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.

Guidance for non-GAAP income from operations excludes stock-based compensation expense and related employer payroll taxes, amortization of debt issuance costs, and amortization expense of acquired intangible assets. We have not reconciled our expectations of non-GAAP income from operations and non-GAAP net income per share to their most directly comparable GAAP measures because certain items are out of our control or cannot be reasonably predicted. For those reasons, we are also unable to address the probable significance of the unavailable information, the variability of which may have a significant impact on future results. Accordingly, a reconciliation for the guidance for non-GAAP income from operations and non-GAAP net income per share is not available without unreasonable effort.

For further information regarding why we believe that these non-GAAP measures provide useful information to investors, the specific manner in which management uses these measures, and some of the limitations associated with the use of these measures, please refer to the "Explanation of Non-GAAP Financial Measures" section of this press release.

Conference Call and Webcast Information

Zscaler will host a conference call for analysts and investors to discuss its third quarter of fiscal 2025 and outlook for its fourth quarter of fiscal 2025 and full year fiscal 2025 today at 1:30 p.m. Pacific time (4:30 p.m. Eastern time).

Upcoming Conferences

Fourth quarter of fiscal 2025 investor conference participation schedule:

• 
  Bank of America 2025 Global Technology Conference in San Francisco
  
  
  Thursday, June 5, 2025
  

• 
  FBN 28th Semi-Annual Virtual Technology Conference (Virtual)
  
  
  Friday, June 6, 2025
  

• 
  2025 BMO Virtual Software Conference (Virtual)
  
  
  Monday, June 9, 2025
  

Sessions which offer a webcast will be available on the Investor Relations section of the Zscaler website at https://ir.zscaler.com/

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties, including, but not limited to, statements regarding our future financial and operating performance, including our financial outlook for the fourth quarter of fiscal 2025 and full year fiscal 2025. There are a significant number of factors that could cause actual results to differ materially from statements made in this press release, including but not limited to: macroeconomic influences and instability, geopolitical events, operations and financial results and the economy in general; risks related to the use of AI in our platform; our ability to identify and effectively implement the necessary changes to address execution challenges; risks associated with managing our rapid growth, including fluctuations from period to period; our limited experience with new products and subscriptions and support introductions and the risks associated with new products and subscription and support offerings, including the discovery of software bugs; our ability to attract and retain new customers; the failure to timely develop and achieve market acceptance of new products and subscriptions as well as existing products and subscription and support; rapidly evolving technological developments in the market for network security products and subscription and support offerings and our ability to remain competitive; length of sales cycles; useful lives of our assets and other estimates; and general market, political, economic and business conditions.

Additional risks and uncertainties that could affect our financial results are included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth from time to time in our filings and reports with the Securities and Exchange Commission ("SEC"), including our Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2025 filed on March 10, 2025 and our Annual Report on Form 10-K for the fiscal year ended July 31, 2024 filed on September 12, 2024, as well as future filings and reports by us, copies of which are available on our website at ir.zscaler.com and on the SEC’s website at www.sec.gov. You should not rely on these forward-looking statements, as actual outcomes and results may differ materially from those contemplated by these forward-looking statements as a result of such risks and uncertainties. Additional information will also be set forth in other filings that we make with the SEC from time to time. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we do not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.

Use of Non-GAAP Financial Information

We believe that the presentation of non-GAAP financial information provides important supplemental information to management and investors regarding financial and business trends relating to our financial condition and results of operations. For further information regarding why we believe that these non-GAAP measures provide useful information to investors, the specific manner in which management uses these measures, and some of the limitations associated with the use of these measures, please refer to the “Explanation of Non-GAAP Financial Measures” section of this press release.

About Zscaler

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 applications in any location. Distributed across more than 160 data centers globally, the SASE-based Zero Trust Exchange is the world’s largest in-line cloud security platform.

Zscaler™ and the other trademarks listed at https://www.zscaler.com/legal/trademarks are either (i) registered trademarks or service marks or (ii) trademarks or service marks of Zscaler, Inc. in the United States and/or other countries. Any other trademarks are the properties of their respective owners.

Investor Relations Contacts

Ashwin Kesireddy


VP, Investor Relations and Strategic Finance


(415) 798-1475


ir@zscaler.com

Natalia Wodecki


Media Relations Contact


press@zscaler.com