NasdaqGS:ZS

Stock Analysis Report

Executive Summary

Zscaler, Inc. operates as a cloud security company worldwide.

Rewards

Revenue is forecast to grow 21.81% per year

Risk Analysis

Currently unprofitable and not forecast to become profitable over the next 3 years

Highly volatile share price over past 3 months

Shareholders have been diluted in the past year



Snowflake Analysis

Flawless balance sheet with limited growth.


Similar Companies

Share Price & News

How has Zscaler's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: ZS's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

5.3%

ZS

2.1%

US Software

1.8%

US Market


1 Year Return

23.9%

ZS

42.2%

US Software

20.1%

US Market

Return vs Industry: ZS underperformed the US Software industry which returned 42.1% over the past year.

Return vs Market: ZS exceeded the US Market which returned 20.1% over the past year.


Shareholder returns

ZSIndustryMarket
7 Day5.3%2.1%1.8%
30 Day4.5%7.7%1.4%
90 Day39.5%18.8%8.8%
1 Year23.9%23.9%43.8%42.2%22.7%20.1%
3 Yearn/a152.6%142.2%50.1%40.4%
5 Yearn/a223.7%200.5%72.9%53.9%

Price Volatility Vs. Market

How volatile is Zscaler's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Zscaler undervalued compared to its fair value and its price relative to the market?

25.3x

Price to Book (PB) ratio


Share Price vs. Fair Value

Below Fair Value: ZS ($62.11) is trading above our estimate of fair value ($44.68)

Significantly Below Fair Value: ZS is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: ZS is unprofitable, so we can't compare its PE Ratio to the Software industry average.

PE vs Market: ZS is unprofitable, so we can't compare its PE Ratio to the US market.


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate ZS's PEG Ratio to determine if it is good value.


Price to Book Ratio

PB vs Industry: ZS is overvalued based on its PB Ratio (25.3x) compared to the US Software industry average (5.9x).


Next Steps

Future Growth

How is Zscaler forecast to perform in the next 1 to 3 years based on estimates from 20 analysts?

25.6%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: ZS is forecast to remain unprofitable over the next 3 years.

Earnings vs Market: ZS is forecast to remain unprofitable over the next 3 years.

High Growth Earnings: ZS is forecast to remain unprofitable over the next 3 years.

Revenue vs Market: ZS's revenue (21.8% per year) is forecast to grow faster than the US market (7.6% per year).

High Growth Revenue: ZS's revenue (21.8% per year) is forecast to grow faster than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: ZS's Return on Equity is forecast to be low in 3 years time (12.9%).


Next Steps

Past Performance

How has Zscaler performed over the past 5 years?

-4.3%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: ZS is currently unprofitable.

Growing Profit Margin: ZS is currently unprofitable.


Past Earnings Growth Analysis

Earnings Trend: ZS is unprofitable, and losses have increased over the past 5 years at a rate of -4.3% per year.

Accelerating Growth: Unable to compare ZS's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: ZS is unprofitable, making it difficult to compare its past year earnings growth to the Software industry (17.1%).


Return on Equity

High ROE: ZS has a negative Return on Equity (-12.15%), as it is currently unprofitable.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Zscaler's financial position?


Financial Position Analysis

Short Term Liabilities: ZS's short term assets ($488.9M) exceed its short term liabilities ($266.3M).

Long Term Liabilities: ZS's short term assets ($488.9M) exceed its long term liabilities ($55.9M).


Debt to Equity History and Analysis

Debt Level: ZS is debt free.

Reducing Debt: ZS has not had any debt for past 5 years.


Balance Sheet

Inventory Level: ZS has a low level of unsold assets or inventory.

Debt Coverage by Assets: Insufficient data to determine if ZS's debt is covered by short term assets.


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: Whilst unprofitable ZS has sufficient cash runway for more than 3 years if it maintains its current positive free cash flow level.

Forecast Cash Runway: ZS is unprofitable but has sufficient cash runway for more than 3 years, due to free cash flow being positive and growing by 72% per year.


Next Steps

Dividend

What is Zscaler's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

companyn/amarketbottom25%1.4%markettop25%3.7%industryaverage1.2%forecastin3Years0%

Current dividend yield vs market & industry

Notable Dividend: Unable to evaluate ZS's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate ZS's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if ZS's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if ZS's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of ZS's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

3.7yrs

Average management tenure


CEO

Jay Chaudhry (60yo)

12.4yrs

Tenure

US$5,579,660

Compensation

Mr. Jagtar S. Chaudhry, also known as Jay, is the Co-Founder of Zscaler, Inc. and has been its Chief Executive Officer, President and Chairman of the Board since September 2007 and serves as its Director s ...


CEO Compensation Analysis

Compensation vs Market: Jay's total compensation ($USD5.58M) is about average for companies of similar size in the US market ($USD6.26M).

Compensation vs Earnings: Jay's compensation has increased whilst the company is unprofitable.


Leadership Team

NamePositionTenureCompensationOwnership
Jagtar Chaudhry
Co-Founder12.4yrsUS$5.58m44.25% $3.5b
Remo Canessa
Chief Financial Officer3yrsUS$3.43m0.20% $15.7m
Amit Sinha
President of Research2.8yrsUS$7.25m0.67% $52.9m
Robert Schlossman
Chief Legal Officer & Secretary4yrsUS$3.75m0.024% $1.9m
Manoj Apte
Senior VP & Chief Strategy Officer3.4yrsUS$6.53m0.25% $20.0m
K. Kailash
Founder & Chief Architect13.1yrsno datano data
Patrick Foxhoven
Chief Information Officer & VP of Emerging Technologies0yrsno datano data
Hyodong Choi
Vice President of Investor Relations0yrsno datano data
Tom Stilwell
Vice President of Global Communications0yrsno datano data
Punit Minocha
Senior Vice President of Business & Corporate Development0yrsno datano data

3.7yrs

Average Tenure

51yo

Average Age

Experienced Management: ZS's management team is considered experienced (3.7 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Jagtar Chaudhry
Co-Founder12.4yrsUS$5.58m44.25% $3.5b
Amit Sinha
President of Research2.8yrsUS$7.25m0.67% $52.9m
Charles Giancarlo
Independent Director3.3yrsUS$224.46k0.29% $22.8m
Karen Blasing
Independent Director3.1yrsUS$236.96k0.044% $3.5m
Scott Darling
Independent Director3.3yrsUS$215.96k0.052% $4.2m
David Schneider
Independent Director0.08yrsno data0.0019% $155.0k
Andrew Brown
Independent Director4.3yrsUS$231.96k0.037% $3.0m

3.3yrs

Average Tenure

60yo

Average Age

Experienced Board: ZS's board of directors are considered experienced (3.3 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: ZS insiders have only sold shares in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 45.1%.


Top Shareholders

Company Information

Zscaler, Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Zscaler, Inc.
  • Ticker: ZS
  • Exchange: NasdaqGS
  • Founded: 2007
  • Industry: Systems Software
  • Sector: Software
  • Market Cap: US$7.947b
  • Shares outstanding: 127.96m
  • Website: https://www.zscaler.com

Number of Employees


Location

  • Zscaler, Inc.
  • 120 Holger Way
  • San Jose
  • California
  • 95134
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
ZSNasdaqGS (Nasdaq Global Select)YesCommon StockUSUSDMar 2018
0XVULSE (London Stock Exchange)YesCommon StockGBUSDMar 2018
ZS *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNMar 2018

Biography

Zscaler, Inc. operates as a cloud security company worldwide. The company offers Zscaler Internet Access solution that connect users to externally managed applications, including software-as-a-service applications and Internet destinations; and Zscaler Private Access solution, which is designed to provide access to internally managed applications, either hosted internally in data centers, and private or public clouds. Its platform includes Zscaler Central Authority, Zscaler Enforcement Node, and Zscaler Nanolog Server modules. Zscaler, Inc. serves customers in various industries, such as airlines and transportation, conglomerates, consumer goods and retail, financial services, healthcare, manufacturing, media and communications, public sector and education, technology, and telecommunications services. The company was formerly known as SafeChannel, Inc., and changed its name to Zscaler, Inc. in August 2008. Zscaler, Inc. was incorporated in 2007 and is headquartered in San Jose, California. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/16 02:21
End of Day Share Price2020/02/14 00:00
Earnings2019/10/31
Annual Earnings2019/07/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.