Zscaler, Inc. (ZS): History, Ownership, Mission, How It Works & Makes Money

Zscaler, Inc. (ZS) is the clear leader in the Zero Trust space, but with a full fiscal year 2025 revenue of $2.673 billion and a GAAP net loss of $41.5 million, are you defintely sure you understand the economics of its cloud-native model? The company's core mission is to enable secure digital transformation, and its platform now secures over $3.015 billion in Annual Recurring Revenue (ARR), a critical metric showing the stickiness of its subscription-based service. As enterprises race to adopt AI-powered security solutions-a trend Zscaler is capitalizing on with its recent Red Canary acquisition-knowing how this business converts massive cloud traffic into that kind of financial performance is the key to valuing its future growth.

Zscaler, Inc. (ZS) History

You're looking for the foundational story of Zscaler, Inc. (ZS), and the direct takeaway is that its success stems from a contrarian bet: ditching the traditional network perimeter for a cloud-native, Zero Trust architecture years before it became the industry standard. This early, transformative decision is why the company is now a cybersecurity leader, securing a reported $2.673 billion in revenue for its fiscal year 2025.

Zscaler, Inc.'s Founding Timeline

Year established

Zscaler was established in 2007.

Original location

The company was originally based in Santa Clara, California, a classic Silicon Valley start.

Founding team members

The company was founded by two key figures: Jay Chaudhry, who serves as the Founder, Chairman, and CEO, and K. Kailash, a Co-founder and President.

Initial capital/funding

The initial funding that fueled platform development was a Series A round in 2008, totaling $12 million, led by Norwest Venture Partners. This capital was crucial for building out their cloud-based security platform.

Zscaler, Inc.'s Evolution Milestones

Zscaler, Inc.'s Transformative Moments

The company's trajectory is defined by a few high-stakes, transformative decisions, not just incremental changes. The most important was the early, all-in commitment to the cloud.

The shift from a traditional security appliance model to a cloud-delivered Zero Trust Exchange platform was defintely the first seismic move. This meant building a massive, global, multi-tenant cloud from the ground up, which was expensive and took years, but it gave them a massive competitive moat. They were securing web traffic and private access through the cloud before most enterprises were even thinking about a cloud-first security strategy. That early investment is why they process over half a trillion daily transactions now.

The 2018 IPO was the second major step, raising $192 million and giving them the currency to start strategic acquisitions. The latest transformative move is the aggressive push into AI-powered security, exemplified by the May 2025 acquisition of Red Canary for $675 million. This acquisition directly addresses the growing complexity of threats and the need for automation, positioning Zscaler for the next decade of cybersecurity. Plus, the full fiscal year 2025 results show this strategy is working: the company reported a Non-GAAP net income of $534.8 million, a strong indicator of their operational leverage.

• Embraced Zero Trust: Built the core platform around the principle of 'never trust, always verify' from day one.
• IPO Capital Infusion: Used the 2018 public offering to fund a global expansion and product diversification.
• AI-Driven Acquisitions: Leveraged cash to buy companies like Red Canary, embedding AI and automation deep into the core platform.

Here's the quick math on their recent performance: Fiscal year 2025 revenue hit $2.673 billion, a 23% increase year-over-year, which shows strong demand for their platform, even with a GAAP net loss of $41.5 million as they continue to invest heavily in growth. For a deeper dive into the institutional money backing this growth, see Exploring Zscaler, Inc. (ZS) Investor Profile: Who's Buying and Why?

What this estimate hides is the continued investment in data centers and R&D, which is why the GAAP net loss exists, but the Non-GAAP net income of $534.8 million shows the underlying business profitability is solid. Finance: Keep watching the Free Cash Flow, which reached $726.7 million in fiscal 2025, showing real cash generation.

Zscaler, Inc. (ZS) Ownership Structure

Zscaler, Inc. is a publicly traded company on the NASDAQ Global Select Market under the ticker symbol ZS, meaning its ownership is distributed among institutional investors, company insiders, and the general public.

The company's governance structure is heavily influenced by a combination of major institutional funds and its founder, which is common for high-growth technology firms, but it also means the stock price is sensitive to the trading actions of these large holders. You can review the strategic direction driving this structure in detail by looking at the Mission Statement, Vision, & Core Values of Zscaler, Inc. (ZS).

Given Company's Current Status

Zscaler, Inc. is a publicly traded company listed on the Nasdaq Global Select Market (NASDAQ: ZS). This status requires high transparency and subjects the company to rigorous reporting standards, including quarterly and annual financial disclosures.

The company's financial health, as of the end of its fiscal year 2025 (July 31, 2025), showed robust growth with annual revenue reaching $2.673 billion, a 23% increase year-over-year. While the company reported a GAAP net loss of $41.5 million for FY 2025, it generated strong non-GAAP net income of $534.8 million, which is a key metric for investors tracking its operational profitability. It's a growth story still prioritizing market capture over immediate GAAP profitability.

Given Company's Ownership Breakdown

The ownership structure is dominated by institutional investors, who collectively hold a majority stake, but company insiders retain a significant, influential position. This dual control means the stock is often sensitive to major institutional trading, but the founder's vision remains a powerful guiding force.

Given Company's Leadership

The executive team is a mix of the visionary founder and seasoned technology and sales leaders brought in to scale the company's global go-to-market strategy past the $2.673 billion revenue mark. The leadership is defintely focused on expanding the Zero Trust Exchange platform.

• Jay Chaudhry: CEO, Chairman, and Founder. He sets the strategic and technological vision for the company, having founded multiple successful security firms.
• Dr. Amit Sinha: President. He is a key leader in product strategy and technology development.
• Dali Rajic: Chief Operating Officer (COO). He focuses on scaling global business operations, including lead-to-cash processes and customer engagement.
• Remo E. Canessa: Chief Financial Officer (CFO). He oversees the financial management and stability of the company.
• Mike Rich: Chief Revenue Officer (CRO) and President of Global Sales. He joined the team to accelerate revenue growth and sales execution.

The core leadership team has been stable, which is a significant plus for executing a clear, long-term strategy in the volatile cybersecurity market.

Zscaler, Inc. (ZS) Mission and Values

Zscaler's core purpose is to enable secure digital transformation (DX) for its customers, ensuring security is a seamless part of business operations, not a roadblock. This vision is grounded in core values that prioritize customer focus and relentless innovation in the cloud security space.

Given Company's Core Purpose

As a seasoned analyst, I see Zscaler's mission as a direct response to the shift from traditional network security-the old castle-and-moat model-to a cloud-first world. Their cultural DNA is built around disrupting that legacy approach, which is why they secure over 500 billion+ daily transactions for their customers.

Official mission statement

The mission is about more than just fighting threats; it's about enabling business agility. Their stated mission is: to anticipate, secure, and simplify the experience of doing business-transforming today and tomorrow.

• Anticipate evolving cyber threats before they impact the customer.
• Secure the exchange of information for every user and device, anywhere.
• Simplify security operations, eliminating the need for complex, hardware-based firewalls and Virtual Private Networks (VPNs).

This mission is directly reflected in their financial performance, with fiscal year 2024 revenue hitting $2.167 billion, a 34% increase year-over-year, showing clear market validation for their approach.

Vision statement

Zscaler envisions a future where security is so deeply embedded into the network fabric that it essentially disappears from the user experience. The goal is to create a world in which the exchange of information is always secure and seamless.

You want security to feel like a utility, always on and defintely never a drag on your business. This concept is central to their platform strategy, aiming to be the leading cloud security platform by extending their Zero Trust principles to users, workloads, and devices.

• Security is seamlessly embedded, not an add-on layer.
• Eliminate complexities associated with traditional security systems.
• Facilitate secure, ubiquitous access to applications and data.

To understand the players driving this vision, you should check out Exploring Zscaler, Inc. (ZS) Investor Profile: Who's Buying and Why?

Given Company's Core Values

The company's values are the operating manual for how they execute their mission and vision, especially as they serve 30% of the Forbes Global 2000 companies. Here's the quick math: serving that many top-tier enterprises requires a culture built on trust and constant evolution.

Their core values are:

• Think Customer First: Solve the customer's problem, not just the technology problem.
• Act with Integrity: Maintain the highest standards of ethics and transparency.
• Be Open and Collaborative: Work across teams and with partners to drive solutions.
• Innovate and Disrupt: Challenge the status quo; this is how they pioneered the Security Service Edge (SSE) architecture.
• Own the Outcome: Take accountability for results and follow through.

This focus on disruption is why they are heavily pushing the concept of 'Zero Trust Everywhere,' which is their strategic mantra for extending security beyond users to cloud workloads and IoT/OT devices.

Given Company slogan/tagline

While their strategic focus is 'Zero Trust Everywhere,' their official tagline captures the aspirational outcome for their customers:

Where threats stop and innovation begins.

Zscaler, Inc. (ZS) How It Works

Zscaler, Inc. operates by completely eliminating the traditional network perimeter, replacing it with a cloud-native security platform called the Zero Trust Exchange. This architecture ensures that users and devices connect directly and securely to the applications they need, never the corporate network itself, which drastically limits the potential for lateral threat movement.

Zscaler, Inc.'s Product/Service Portfolio

The company's offerings are anchored by three core clouds-User Protection, Application Protection, and Business Protection-which collectively form the Zero Trust Exchange platform. This approach consolidates multiple security functions into a single, scalable service.

Zscaler, Inc.'s Operational Framework

The operational framework is simple, but defintely powerful: Zscaler acts as a global, in-line security proxy between every user and every destination, whether it's the public internet or a private application. This is how they deliver value to over 9,400 customers as of July 31, 2025.

• Cloud-Native Proxy Architecture: Unlike legacy security built on firewalls, the Zero Trust Exchange is a multi-tenant cloud platform that inspects all traffic, including encrypted Secure Sockets Layer (SSL) traffic, in-line and in-memory. This proxy model prevents threats from ever reaching the user or the application.
• Massive Global Scale: The platform is distributed across more than 160 data centers worldwide, ensuring low-latency access and local data processing for compliance and speed.
• Real-Time Policy Enforcement: Every user-to-app connection is brokered and secured based on identity and business policy, not network location. The platform processes over 500 billion daily transactions, applying security and access policies in real-time.
• Value Creation: By shifting security to the cloud, Zscaler eliminates the need for expensive, complex on-premises security appliances like firewalls and VPNs, lowering total cost of ownership while enhancing security.

Here's the quick math: You stop routing traffic through your data center, so you save on hardware, maintenance, and network backhauling costs. For a deeper dive into the numbers, you should check out Breaking Down Zscaler, Inc. (ZS) Financial Health: Key Insights for Investors.

Zscaler, Inc.'s Strategic Advantages

Zscaler's competitive edge comes from its foundational design-it was built for the cloud era, not adapted to it. This cloud-first model is hard for appliance-based competitors to replicate at scale.

• Zero Trust Everywhere: The company is expanding its Zero Trust model beyond users and private applications to include workloads, IoT, and Operational Technology (OT) devices, securing the entire digital estate.
• AI-Driven Security: Strategic acquisitions like Red Canary in May 2025 and SPLX in late October 2025 bolster their AI capabilities, integrating agentic AI into the platform for advanced threat detection and automated response.
• Market Leadership and Momentum: Zscaler is a recognized leader in the Security Service Edge (SSE) space and serves a premium clientele, including approximately 40% of the Forbes Global 2000.
• Financial Strength and Growth: For the fiscal year 2025, Zscaler reported total revenue of $2,673.1 million, representing a strong 23% year-over-year growth, showing robust demand for their platform.
• Superior Economics: The subscription-based, Software-as-a-Service (SaaS) model drives high recurring revenue and a dollar-based net retention rate of 116%, meaning existing customers are consistently spending more on additional services.

The company's non-GAAP net income for fiscal year 2025 was $534.8 million, which shows their ability to translate that top-line growth into profitability on an adjusted basis. That's a solid platform for future investment and expansion.

Zscaler, Inc. (ZS) How It Makes Money

Zscaler, Inc. makes money primarily through selling cloud-based subscription and support services to enterprises, enabling them to securely connect users to applications regardless of location, a model known as Security Service Edge (SSE). This is a classic Software-as-a-Service (SaaS) revenue stream, where clients pay a recurring fee, typically per user, for access to the Zero Trust Exchange platform.

Zscaler, Inc.'s Revenue Breakdown

The company's financial engine is overwhelmingly driven by its recurring subscription revenue, which is the core of its Zero Trust model. Professional services, while necessary for initial deployment, are intentionally kept to an immaterial amount, ensuring the business scales with high gross margins.

Here's the quick math: For the full fiscal year 2025, Zscaler reported total revenue of $2.673 billion. Subscription and Support Services account for approximately $2.593 billion of that total, representing the highly predictable, recurring nature of the business. The trend is clearly Increasing, with Annual Recurring Revenue (ARR) already surpassing $3.015 billion as of the end of Q4 FY25, a 22% year-over-year growth.

Business Economics

Zscaler's business model is built on high-margin software delivered via a massive, globally distributed cloud platform, which is why the economics are so compelling. This is a pure-play cloud security story, not a hardware one.

• Pricing Model: The pricing is primarily per-user subscription, often structured in multi-year contracts, which creates strong revenue visibility (Remaining Performance Obligations, or RPO, grew significantly).
• Land-and-Expand: The core strategy is to get a customer on one service, like Zscaler Internet Access (ZIA), and then upsell additional modules like Zscaler Private Access (ZPA) and Data Loss Prevention (DLP). This is reflected in the strong dollar-based net retention rate (DBNRR), which was 115% in Q2 FY25. This means existing customers spent 15% more than they did the year before.
• Gross Margin: The Subscription and Support Services boast a high gross margin, helping the total non-GAAP gross margin hover near 80% (Q4 FY25 non-GAAP gross margin was 79.3%). This margin dipped slightly due to a one-time, lower-margin private cloud deployment for a government customer, but management expects a rebound to the typical 80% range.
• Scalability: The Zero Trust Exchange platform processes over 500 billion transactions daily, demonstrating massive operational scale. This scale is what allows them to maintain high gross margins while absorbing new customers and traffic.

For a deeper dive into who is betting on this model, you should be Exploring Zscaler, Inc. (ZS) Investor Profile: Who's Buying and Why?

Zscaler, Inc.'s Financial Performance

The financial performance in fiscal year 2025 shows a company prioritizing aggressive growth and market share expansion over immediate GAAP profitability, but still delivering strong cash flow.

• Top-Line Growth: Total revenue for FY 2025 was $2.673 billion, marking a 23% year-over-year increase. This growth rate is defintely strong for a company of this size.
• Non-GAAP Profitability: While the company reported a GAAP net loss of $41.5 million for the full year, non-GAAP net income (which excludes items like stock-based compensation) was a robust $534.8 million. This shows the underlying business operations are highly profitable.
• Operating Leverage: The non-GAAP operating margin expanded to 22% of revenue in FY 2025, up from 20% in FY 2024. This expansion is a key sign of operating leverage-revenue is growing faster than core costs.
• Cash Generation: Cash flow remains a major strength. Free cash flow for FY 2025 was $726.7 million, representing a healthy 27% free cash flow margin. Strong cash flow generation is a hallmark of a healthy subscription business.

What this estimate hides is the heavy investment in Research & Development (R&D) and Sales & Marketing (S&M), which drives the GAAP loss but fuels the $3.676 billion to $3.698 billion ARR guidance for the next fiscal year, FY 2026. The company is spending money now to capture the long-term Zero Trust market.

Zscaler, Inc. (ZS) Market Position & Future Outlook

Zscaler, Inc. is a clear leader in the cloud security market, specifically within the Secure Service Edge (SSE) segment, positioning itself to capture significant growth as enterprises embrace Zero Trust architecture. The company finished fiscal year 2025 with strong financials, reporting total revenue of $2,673.1 million and surpassing the $3 billion mark in Annual Recurring Revenue (ARR), demonstrating a robust and scalable subscription model.

The company's future hinges on its ability to execute its 'Zero Trust Everywhere' vision and monetize its new AI-driven security offerings, but this growth is defintely challenged by intense competition from major networking and security incumbents. The shift away from legacy Virtual Private Networks (VPNs) and firewalls is a massive tailwind, but Zscaler must maintain its innovation lead to keep its dominant market share in the core cloud security layer.

Competitive Landscape

Zscaler operates in the dynamic Secure Access Service Edge (SASE) market, which combines networking and security functions into a single, cloud-delivered service. While the overall SASE market is consolidating around a few key players, Zscaler maintains a commanding lead in the security component (SSE).

As of the most recent detailed market data (Q3 2024), Zscaler held an estimated 21% share of the overall SASE market, but its leadership is more pronounced in the SSE segment with a 34% share. Here's the quick math on the competitive field where the top six vendors collectively captured 72% of the market.

Opportunities & Challenges

The market is clearly moving toward Zscaler's cloud-native model, so the opportunities are enormous, but the risks are tied to execution and the sheer size of the competitors. You need to watch how quickly they can convert their innovation into new revenue streams. The adoption of Zero Trust is a fundamental, non-negotiable shift for enterprises.

Industry Position

Zscaler is unequivocally positioned as a leader in the cloud-delivered security space, a standing validated by key industry analyst reports. In the 2025 Gartner Magic Quadrant for Security Service Edge (SSE), Zscaler was named a Leader and achieved the highest placement on the 'Ability to Execute' axis, which is a strong signal of operational strength. They also secured a Leader position in the IDC MarketScape for Worldwide Data Loss Prevention (DLP) in 2025.

• The company serves nearly 40% of the Global 2000 and over 45% of Fortune 500 companies, showing deep enterprise entrenchment.
• Customer retention remains strong, with a dollar-based net retention rate (DBNR) of 114% as of Q1 2025, meaning existing customers are spending more.
• Strategic focus on AI Security and Data Security Everywhere is driving new Annual Recurring Revenue (ARR) streams, with their AI, Zero Trust Everywhere, and Data Security vectors collectively topping $1 billion in ARR.

This market leadership is built on their cloud-native platform, which fundamentally differs from competitors who often bolt cloud security onto legacy network hardware. For a deeper dive into the foundation of this strategy, you should review the Mission Statement, Vision, & Core Values of Zscaler, Inc. (ZS).