Zscaler stock (US98978V1035): investors weigh strong growth after latest earnings

Cloud-security specialist Zscaler impressed with solid fiscal Q2 2025 results and raised guidance, but the stock has been volatile as investors reassess valuation and growth prospects in a crowded cybersecurity market.

Zscaler delivered another quarter of solid double?digit growth with its fiscal second?quarter 2025 results and raised its full?year outlook, but the share price has been volatile as investors digest the implications for future growth, competition and valuation, according to company filings and financial news coverage published in March 2025. The stock remains a closely watched name in cloud security given its role in zero?trust network access and secure web gateways for large enterprises.

As of: 17.05.2026

By the editorial team – specialized in equity coverage.

At a glance

• Name: ZS
• Sector/industry: Cybersecurity / cloud security
• Headquarters/country: San Jose, United States
• Core markets: Enterprise and public-sector network security
• Key revenue drivers: Zero?trust security subscriptions, platform upselling
• Home exchange/listing venue: Nasdaq (ticker: ZS)
• Trading currency: USD

Zscaler Inc: core business model

Zscaler focuses on cloud?delivered security, replacing traditional hardware?based network protection with a multitenant platform that routes customer traffic through its own data centers and cloud points of presence. The company’s main idea is to connect users and devices directly to applications while enforcing security policies, instead of backhauling all traffic through corporate data centers, as was common with legacy firewalls and VPNs.

The business is predominantly subscription?based. Customers typically sign multi?year contracts for modules such as Zscaler Internet Access and Zscaler Private Access, and recognize revenue ratably over the term. This model tends to generate a high proportion of recurring revenue and visibility, but it also requires continuous investment in sales capacity and cloud infrastructure to maintain growth and service quality.

Zscaler targets large enterprises and government organizations undergoing network transformation toward a zero?trust architecture. In many cases, its products are adopted as part of broader digital?transformation or hybrid?work projects, where employees and contractors need secure access to SaaS applications, public?cloud workloads and internal resources from any location or device, including unmanaged endpoints.

From a competitive?positioning perspective, Zscaler often pitches its architecture as fundamentally different from legacy firewall vendors because traffic never passes through a corporate network perimeter. Instead, the platform acts as a cloud intermediary between authenticated users and the specific applications they are allowed to reach, reducing the attack surface. This approach has gained traction after several high?profile breaches that exploited VPNs and flat internal networks.

Main revenue and product drivers for Zscaler Inc

The company’s main revenue drivers are its security subscriptions, typically sold per user or per bandwidth tier. Zscaler Internet Access is designed to inspect and secure connections to external web and SaaS destinations, while Zscaler Private Access replaces conventional remote?access VPNs for internal applications. These two flagships form the foundation of most deals and cross?sell opportunities.

Over time, Zscaler has expanded into adjacent modules such as digital?experience monitoring, cloud?workload protection and data?loss prevention. These add?on capabilities allow the company to increase average contract value with existing customers rather than relying solely on new logos. Large enterprise deployments commonly start with one use case, such as securing remote access, and then expand to branch offices, third?party users and additional applications.

Another important revenue lever is the move toward larger platform commitments with standardized licensing tiers. As organizations consolidate vendors and simplify architectures, Zscaler aims to bundle several modules into enterprise?wide agreements. This strategy can increase long?term revenue per customer and reduce competitive displacement risk, but it also introduces pricing and discounting considerations in larger negotiations.

For now, growth has been supported by strong demand for zero?trust security and the shift away from appliance?centric architectures. However, Zscaler operates in a crowded market that includes large networking and security vendors, specialist cloud?security providers and major public?cloud platforms. The balance between rapid innovation and disciplined cost control is therefore a key factor in the company’s financial profile.

Why Zscaler Inc matters for US investors

Zscaler is listed on Nasdaq and reports in US dollars, which makes it directly accessible for US retail investors using standard brokerage accounts. The company is also part of the fast?growing cybersecurity segment that many US?based portfolios use for exposure to digital?transformation trends and remote?work infrastructure.

Corporate and government clients in the United States represent an important portion of Zscaler’s customer base, particularly in regulated industries like financial services and healthcare. This ties the company’s fortunes closely to US IT?spending cycles and enterprise confidence, including budgets for cloud migration, security modernization and secure access for distributed workforces.

At the same time, the firm has a global footprint and derives revenue from customers in Europe and Asia, which can partially diversify its demand profile. For US investors, this combination of domestic exposure and international expansion offers a way to participate in worldwide cybersecurity spending while still holding a US?listed stock with familiar reporting standards.

Conclusion

Zscaler Inc has emerged as a prominent cloud?security provider centered on zero?trust network access and secure web gateways, with a recurring?revenue model and a customer base dominated by large organizations. Its recent earnings and guidance updates suggest that demand for its services remains solid, but the competitive environment and valuation continue to fuel debate among market participants. For US investors, the stock offers focused exposure to cybersecurity and cloud?migration trends, yet it also carries the usual risks linked to high?growth software names, including potential swings in growth rates, profitability and sentiment.

Disclaimer: This article does not constitute investment advice. Stocks are volatile financial instruments.