Zscaler, Inc. (ZS): Business Model Canvas [Dec-2025 Updated]

You're looking for a clear, data-driven view of Zscaler, Inc.'s business model as of late 2025, and honestly, the numbers show a company doubling down on its cloud-native, Zero Trust leadership. With Fiscal Year 2025 total revenue hitting $2.673 billion and Annual Recurring Revenue (ARR) surpassing $3 billion by year-end, their subscription engine is clearly firing on all cylinders, helped by a strong 115% dollar-based net retention rate from existing customers. Below, we break down exactly how they structure their key activities, resources, and revenue streams to maintain this aggressive, high-growth posture, so you can map out their entire strategic footprint.

Zscaler, Inc. (ZS) - Canvas Business Model: Key Partnerships

You're looking at how Zscaler, Inc. builds scale and market reach through its network of external players. This isn't just about signing agreements; it's about embedding the Zero Trust Exchange platform into the broader enterprise technology stack, which directly impacts revenue realization.

The partnership ecosystem is critical, especially as Zscaler reported Fiscal Year 2025 Revenue of $2,673.1 million and ended the year with Deferred Revenue of $2,468.0 million as of July 31, 2025. This growth relies heavily on these external forces driving adoption and integration.

Cloud Hyperscalers: Amazon Web Services (AWS)

The relationship with cloud hyperscalers like Amazon Web Services (AWS) is a major revenue driver through co-selling motions. Zscaler, Inc. achieved a significant milestone by surpassing $1 billion dollars in sales specifically through AWS Marketplace, a testament to the success of co-selling and co-innovating on joint solutions.

This effort was recognized when Zscaler, Inc. was named the winner of the AWS Marketplace Partner of the Year (NAMER) award in December 2025. These joint efforts help customers secure critical workloads, including generative AI deployments, directly on AWS infrastructure.

Technology Alliances for Platform Integration

Platform integrations with other security and IT leaders are essential for delivering end-to-end security enforcement. Zscaler, Inc. has deep technical ties with several major vendors.

• Zscaler, Inc. announced new AI and Zero Trust integrations with the CrowdStrike Falcon cybersecurity platform in September 2024, focusing on coordinated threat sharing and response.
• Zscaler, Inc. participated in the 'Beyond the Perimeter 2025' event alongside CrowdStrike and Okta, emphasizing unified security across identity, endpoints, and network access.
• Zscaler, Inc. is a proud partner in the Microsoft Entra Agent ID Partner Ecosystem as of November 2025, showing commitment to integrating with core identity infrastructure.

Global System Integrators (GSIs) and Consulting Firms

For large-scale enterprise deployment and digital transformation services, Zscaler, Inc. relies on established system integrators and consulting powerhouses. While specific revenue attribution is proprietary, these partners act as force multipliers for complex, multi-year security overhauls.

The outline suggests key roles for partners such as NTT Data for large-scale enterprise deployment and strategic alliances with firms like Ernst & Young (EY US) to embed Zscaler, Inc.'s Zero Trust architecture within broader digital transformation roadmaps.

Channel Sales: VARs and Distributors

Channel sales through Value-Added Resellers (VARs) and distributors provide essential market coverage and transactional volume. For infrastructure SaaS providers like Zscaler, Inc., channel revenue share is a key indicator of market penetration.

Partners such as CDW are crucial for reaching a broad set of customers who prefer to procure security solutions through established, trusted resellers.

Here's a quick look at the structure and known metrics of these Key Partnerships as of late 2025:

The overall Zscaler, Inc. guidance for Fiscal Year 2025 projected billings in the range of $3.124 billion to $3.149 billion, and the non-GAAP operating margin was 22% of revenue, showing that efficient partnership execution is directly tied to financial performance.

Zscaler, Inc. (ZS) - Canvas Business Model: Key Activities

You're looking at the core engine driving Zscaler, Inc.'s growth as of late 2025. It's all about relentless engineering, massive scale, and aggressive market capture through platform consolidation.

Aggressive Research and Development (R&D) to integrate AI-driven security features

Zscaler, Inc. keeps pouring capital into engineering to stay ahead of the threat curve. This isn't just maintenance; it's about building the next generation of the platform.

For the twelve months ending October 31, 2025, Research and Development Expenses hit $0.719B. That represented a 32.96% increase year-over-year. Looking at the full fiscal 2025, R&D expenses grew 35% to $672.5 million. This substantial investment is key to differentiating their AI security capabilities.

Global operation and scaling of the Zero Trust Exchange cloud platform across >150 data centers

The scale of the Zero Trust Exchange is a primary activity; it's the foundation for everything else. You can't offer this level of security without a massive global footprint.

The platform is distributed across more than 150 data centers globally as of June 2025. This infrastructure processes close to 500 billion daily transactions. Zscaler, Inc. protects nearly 45% of Fortune 500 organizations through this platform. By the end of fiscal 2025, Annual Recurring Revenue (ARR) surpassed $3 billion.

Here's a quick look at the operational scale:

Direct sales and channel enablement to drive platform consolidation deals

The sales motion is focused on getting customers to buy more modules, moving them from point solutions to the full Zscaler, Inc. platform. This is where you see the land-and-expand strategy in action, though the expansion rate is moderating a bit.

Sales and marketing expenses for fiscal 2025 rose 14% to $1.3 billion. The dollar-based net retention rate saw a slight dip, coming in at 114% for fiscal 2025, down from 116% in fiscal 2024. Still, the Z-Flex program, designed for flexible, multi-year platform deals, generated over $100 million in Total Contract Value (TCV) bookings in Q4 fiscal 2025, showing over 50% sequential growth in that motion.

Key sales metrics:

• Z-Flex TCV Bookings (Q4 FY2025): Over $100 million
• ARR Expansion Rate (FY2025): 114%
• Sales & Marketing Spend (FY2025): $1.3 billion

Continuous threat research and intelligence via ThreatLabz

ThreatLabz is the feedback loop, turning the massive transaction volume into actionable intelligence. Their reports show just how active the threat landscape is, justifying the platform's necessity.

The ThreatLabz 2025 Ransomware Report showed ransomware attacks skyrocketed 145.9% year-over-year (April 2024 to April 2025). Data exfiltration volumes surged 92.7% in the same period, and public extortion cases increased 70.1%. Separately, the AI Security Report analyzed over 536 billion AI transactions between February 2024 and December 2024, with 59.9% of those AI/ML transactions being blocked.

Here are some key ThreatLabz findings for 2025:

Acquiring new technologies, like the May 2025 agreement to acquire Red Canary

This activity shows a clear intent to move up the value chain into managed services and threat hunting expertise. The deal was announced in May 2025, with an expected close in August 2025.

The reported deal size for acquiring Red Canary was approximately $675 million. Red Canary reported an Annual Recurring Revenue (ARR) of $140 million at the time of the announcement. This acquisition combines Zscaler, Inc.'s data processing capacity of 500 billion daily transactions with Red Canary's threat hunting expertise.

Zscaler, Inc. (ZS) - Canvas Business Model: Key Resources

You're looking at the core assets Zscaler, Inc. (ZS) relies on to run its business as of late 2025. These aren't just line items; they are the engine behind their market position.

The proprietary, cloud-native Zscaler Zero Trust Exchange platform is the foundation. This platform is handling massive scale, securing more than 500 billion transactions every single day. This sheer volume demonstrates the platform's operational capacity and the trust placed in it by global enterprises.

The physical backbone is a global network of distributed, high-performance cloud data centers. Zscaler, Inc. operates a network of over 150 distributed, high-performance cloud data centers. Furthermore, Zscaler, Inc. is "accelerating" investment into local data centres in Europe as of mid-2025 to meet digital sovereignty demands.

Here's a quick look at the hard numbers underpinning these key resources:

Intellectual property (IP) and patents are critical differentiators in the Zero Trust and SASE architecture space. Zscaler, Inc. holds 41 patents specifically in Zero Trust Architecture, showing deep investment in protecting its core technology.

The human capital is also a significant resource. Zscaler, Inc. maintains a large, highly-skilled engineering and direct enterprise sales force to drive innovation and secure large contracts. The success of the 'Zero Trust Everywhere' initiative, which secured over 450 enterprises ahead of schedule, speaks to the effectiveness of this sales engine.

• Proprietary Zero Trust Exchange platform.
• Global network of over 150 data centers.
• 41 Zero Trust Architecture patents.
• $3,572.4 million in cash and short-term investments.
• Large, skilled engineering and direct enterprise sales force.

Finance: draft 13-week cash view by Friday.

Zscaler, Inc. (ZS) - Canvas Business Model: Value Propositions

You're looking at the core reasons why enterprises are moving their security spend to Zscaler, Inc. It's about trading complexity and risk for consolidation and speed, which you can see reflected in their financials. For the full fiscal year 2025, Zscaler, Inc. reported revenue of $2,673.1 million, a 23% increase year-over-year, showing this value proposition is resonating with the market.

Cloud-native Zero Trust security, replacing legacy VPNs and firewalls.

The value here is eliminating the risk inherent in old perimeter models. The data from the 2025 VPN Risk Report is stark: 96% of organizations are now considering or actively pursuing a zero trust strategy, and a significant 65% of enterprises plan to replace their existing VPN service within the next year. This isn't just theory; 81% of organizations are actively implementing a zero-trust architecture within the next year. The old way is clearly seen as a liability, with 56% of organizations reporting a breach linked to VPN vulnerabilities in the past year.

Reduced complexity and operational cost by consolidating multiple point products.

Consolidation drives efficiency, and we see this in customer success stories. For example, one major deployment saw help desk tickets cut by 97% after replacing VPNs with Zscaler's zero trust solution. This operational simplification supports Zscaler's financial scaling, as evidenced by their Non-GAAP income from operations reaching $580.1 million, or 22% of revenue, for fiscal year 2025. You are buying one platform instead of stitching together many disparate tools.

Secure access to applications from anywhere, improving user experience (ZDX).

When security slows users down, you lose productivity, which experts estimate costs organizations $400 billion annually in digital downtime. Zscaler Digital Experience (ZDX) directly attacks this by unifying telemetry across the device, network, and application. New ZDX innovations announced in late 2025 cut issue detection time by 98%, resolving problems in minutes instead of days. This is crucial for maintaining user trust and productivity in a distributed environment.

Advanced AI-driven data protection and threat prevention for GenAI and cloud workloads.

As the threat landscape evolves with AI, Zscaler is positioning its platform to secure these new vectors. The company recently delivered AI Guardrails for Public and Private apps, directly addressing emerging risks associated with Generative AI adoption. This focus on advanced protection is clearly driving financial momentum, as reflected in their Q3 fiscal 2025 revenue growth of 23% year-over-year to $678.0 million. The growing subscription base is visible in the deferred revenue, which stood at $2,468.0 million as of July 31, 2025, up 30% year-over-year.

Compliance and certification readiness for regulated sectors (e.g., CMMC Level 2).

For defense contractors and other regulated entities, compliance readiness is a non-negotiable value driver. Zscaler, Inc. achieved CMMC Level 2 certification, implementing this via a Zero Trust Architecture powered by Zscaler Internet Access (ZIA) and Zscaler Private Access (ZPA), both of which are FedRAMP authorized. To be precise on the rigor, Zscaler achieved a 110 out of 110 score against the required CMMC framework controls. This compliance posture is a key enabler for securing contracts in the Defense Industrial Base.

Here's a quick look at how Zscaler's compliance and security posture underpins its platform value:

Also, consider the operational improvements that translate to user value. The platform's ability to unify security and networking helps organizations consolidate, which is a defintely attractive proposition when you look at the financial scale Zscaler is operating at, with projected full fiscal year 2025 billings between $3.184 billion and $3.189 billion.

Zscaler, Inc. (ZS) - Canvas Business Model: Customer Relationships

You're looking at how Zscaler, Inc. (ZS) manages its relationships with its customer base as of late 2025. It's a mix of direct, high-touch engagement for the biggest accounts and scalable digital support for the broader user base. This approach is designed to drive platform expansion, which is key to their subscription model.

The core of the relationship strategy centers on deep integration and expansion within the existing customer base. This is quantified by the dollar-based net retention rate of 115% reported for Zscaler, Inc. (ZS) in the second quarter of fiscal year 2025. That number tells you that, on average, existing customers increased their annual spend by 15% year-over-year, even as the full fiscal year 2025 rate settled at 114%.

For the largest accounts, the relationship is highly personalized. Zscaler, Inc. (ZS) deploys dedicated direct sales teams to manage these relationships, often involving executive-level engagement with Chief Information Security Officers (CISOs) to align on strategic security roadmaps. This focus on strategic partnership is paying off in platform adoption:

• Enterprises adopting the Zero Trust Everywhere framework exceeded 450 as of the first quarter of fiscal year 2026, achieving that milestone three quarters ahead of schedule.
• The company's Unscheduled Billings, which includes upsells and renewals, grew over 25% year-over-year in Q2 FY2025, showing strong expansion momentum.

High-touch customer success management is explicitly focused on platform expansion, pushing customers to adopt more of the security pillars Zscaler, Inc. (ZS) offers. This is evident in the module penetration within their top-tier customers:

A concrete example of this expansion success was a 7-figure upsell deal in Q2 FY2025 where an existing large financial services customer expanded their data protection purchases for 100,000 users, driving a 65% increase in that customer's annual spend.

To support scale and reduce friction for broader adoption, Zscaler, Inc. (ZS) also supports customers through digital channels. This includes online self-service portals and training resources. The commitment to customer enablement is highlighted by the success of their flexible contracting model, the Z Flex program, which encourages multi-module commitments:

• The Z Flex program's Total Contract Value (TCV) surpassed $175 million in Q1 FY2026.
• This represented a sequential increase of over 70% and accounted for roughly 20% of total bookings in that quarter.

The company also hosts major customer events, such as Zenith Live 2025, which serves as a forum for executive engagement and sharing customer success stories, like the 'zero trust clinics' developed with AdventHealth.

Finance: draft 13-week cash view by Friday.

Zscaler, Inc. (ZS) - Canvas Business Model: Channels

You're looking at how Zscaler, Inc. gets its Zero Trust Exchange platform into the hands of customers, and honestly, it's a multi-pronged approach that leans heavily on strategic partnerships and direct enterprise reach.

The direct enterprise sales force remains the core for landing the biggest accounts. They are focused on driving platform adoption, which is clearly working given the scale they've achieved. For instance, as of the end of Q1 Fiscal 2026, Zscaler, Inc. had 698 customers generating over $1 million in Annual Recurring Revenue (ARR) and 3,754 customers with ARR above $100,000. This direct motion is complemented by a significant shift toward partner-driven bookings, especially through cloud marketplaces.

The global channel partner ecosystem, which includes Value-Added Resellers (VARs) and Global System Integrators (GSIs), is critical for scale, even if we don't have a precise percentage of total bookings from them right now. What we do see is the success of programs designed to empower them and simplify procurement. Take the Z-Flex program, for example; this allows customers to commit to a spend and flexibly swap or activate modules without new procurement cycles, which management noted is driving meaningful upsells and reduced sales cycles. The bookings from Z-Flex alone saw a 70% sequential increase last quarter, hitting $175 million, which represented roughly 20% of total bookings. This shows the channel's increasing importance in accelerating deal velocity.

The cloud marketplaces are a massive channel success story for Zscaler, Inc. You need to know that they officially surpassed $1 billion in software sales through AWS Marketplace as of November 2025. This is a huge validation of the co-sell motion with Amazon Web Services. To be fair, this marketplace strength is translating into sector-specific wins; Public Sector sales through AWS Marketplace achieved 68% year-on-year growth in Fiscal Year 2025.

Strategic alliances are clearly integrated into the go-to-market, as evidenced by the AWS success and the general focus on co-selling. The company's overall scale supports this broad channel strategy. Here's a quick look at the financial scale underpinning these channel efforts as of late 2025:

The online presence and digital marketing efforts support lead generation and brand awareness, feeding both the direct and channel pipelines. While specific digital marketing spend isn't itemized here, the overall momentum suggests it's effective. The company is among the few enterprise SaaS providers with over $3 billion in ARR growing above 25% year-over-year.

The key channels Zscaler, Inc. is emphasizing include:

• Direct enterprise sales force for mid-to-large organizations globally.
• Global channel partner ecosystem (VARs, GSIs) driving deal velocity.
• Cloud marketplaces, with $1 billion+ in sales via AWS Marketplace.
• Strategic alliances for joint go-to-market motions and service delivery.
• Online presence and digital marketing for lead generation and brand awareness.

Finance: draft 13-week cash view by Friday.

Zscaler, Inc. (ZS) - Canvas Business Model: Customer Segments

You're looking at the core buyers for Zscaler, Inc. (ZS) as of late 2025. This isn't a broad consumer play; it's about securing the world's most complex digital environments, so the segments reflect that high-stakes need.

Large Global Enterprises form the bedrock of the Zscaler customer base. The penetration here is deep; as of mid-2025 reporting, Zscaler counted approximately 45% of the Forbes Global 2000 as customers. This focus on the largest global entities is supported by significant deal sizes, such as a reported Fortune 500 customer signing on for a deal covering 350,000 users, valued at a minimum of seven figures ongoing. Zscaler, Inc. also serves a substantial portion of the Fortune 500. This segment drives the high-value Annual Recurring Revenue (ARR) figures.

The platform is inherently suited for organizations with a high volume of remote/hybrid workers and cloud adoption, which is nearly every large company now. The shift to Zero Trust architecture is the primary driver for these customers. The company's total ARR surpassed $3.015 billion as of the end of fiscal year 2025, showing broad adoption across the installed base.

The Government and Public Sector entities represent a critical, high-trust segment. Zscaler US Government Solutions alone surpassed $150 million in Annual Recurring Revenue during 2025. To serve this demanding sector, Zscaler Private Access achieved a Provisional Authorization (PA) at Impact Level 5 (IL5) within the Department of Defense Cloud Computing Security Requirements Guide. Furthermore, Zscaler serves 14 of the 15 US Cabinet-level agencies. They also became the first Independent Software Vendor (ISV) to earn AWS ISV Competencies in Government in fiscal year 2025.

Industries requiring the highest levels of data protection-Financial Services, Healthcare, and Technology-are core targets. Zscaler's ability to secure these sensitive environments is proven by earning AWS ISV Competencies in Healthcare in fiscal year 2025, alongside Government and Education. The company's focus on upselling platform modules to existing clients, which saw customers spending over $1 million annually growing at 17% year-over-year in Q4 FY2025, shows strong expansion within these established, high-sensitivity sectors.

The Mid-market companies are explicitly noted as a key growth area for customer acquisition. While the focus remains on large enterprises, the pipeline supports expansion here. In the first quarter of CY2025, Zscaler had 3,291 customers generating $100,000 or more in recurring revenue annually. The efficiency of acquiring these customers is tracked by the Customer Acquisition Cost (CAC) payback period, which stood at 39 months in Q1 CY2025. This segment is where Zscaler, Inc. looks to drive volume to complement its high-ACV enterprise deals.

Here's a look at the high-value customer tiers as of early-to-mid 2025:

The customer base is clearly stratified, with the largest accounts driving significant expansion. You see this in the retention metrics, where the dollar-based net retention rate improved to 115% at the end of Q2 FY2025. That number tells you the existing base is spending significantly more year-over-year.

• Penetration of Forbes Global 2000: 45%.
• US Cabinet-level Agencies Served: 14 of 15.
• AWS ISV Competencies Earned in FY2025: Healthcare, Education, and Government.
• CAC Payback Period: 39 months.

Zscaler, Inc. (ZS) - Canvas Business Model: Cost Structure

You're looking at the core expenses that drive Zscaler, Inc.'s platform delivery and growth as of late 2025. Honestly, for a cloud-native security provider, the cost structure is heavily weighted toward acquiring and retaining customers, which is typical for high-growth SaaS.

The largest single bucket of spending for Zscaler, Inc. in Fiscal Year 2025 was Sales and Marketing (S&M) expenses, which totaled $1.26 billion. This spend fuels the go-to-market engine, necessary to secure nearly 40% of the Global 2000 and over 45% of Fortune 500 companies.

Innovation remains a priority, reflected in the Research and Development (R&D) investment, which stood at $672.49 million for FY2025. This investment is directed toward platform innovation, including expanding the AI security portfolio.

The direct cost of running the service, the Cost of Revenue (CoR), was reported at $618.178 million in FY2025. This cost primarily covers the operations of the Zero Trust Exchange, which is distributed across more than 160 data centers globally, covering data center operations and network bandwidth.

Supporting the organization's operations were General and Administrative (G&A) expenses, amounting to $251.75 million in FY2025. For context on infrastructure costs, data center Capital Expenditures (CapEx) for the full fiscal year 2025 represented 6% of revenue.

The cumulative effect of these operating costs, including personnel expenses and stock-based compensation, resulted in a GAAP net loss of $41.5 million for Zscaler, Inc. in FY2025, an improvement from the $57.7 million GAAP net loss in fiscal 2024.

Here's a quick view of the major cost components for Zscaler, Inc. in FY2025:

The operational spending profile shows a clear focus on growth and platform superiority. You can see the allocation breakdown:

• Sales and Marketing: The largest outlay, driving customer acquisition.
• Research and Development: Funding the expansion of the Zero Trust and AI security offerings.
• Cost of Revenue: Directly tied to delivering the cloud security service.
• General and Administrative: Overhead supporting the global enterprise.

To be fair, the GAAP net loss of $41.5 million on total revenue of $2,673.1 million still shows the company operating at scale while investing heavily. The GAAP loss from operations was $128.5 million, or 5% of revenue for the full fiscal year 2025.

Finance: draft 13-week cash view by Friday.

Zscaler, Inc. (ZS) - Canvas Business Model: Revenue Streams

You're looking at the core engine of Zscaler, Inc.'s financial health, which is almost entirely driven by recurring software subscriptions. This model is what gives investors confidence in the long-term revenue visibility.

The primary revenue source is the subscription revenue from the Zero Trust Exchange platform. While the exact percentage isn't explicitly stated as 98%, the business is overwhelmingly subscription-based, which is best reflected by the Annual Recurring Revenue (ARR) metric.

Here are the key financial figures grounding the revenue structure for the period ending late 2025:

The Total Revenue for Fiscal Year 2025 reached $2.6731 billion, showing a 23% increase year-over-year. This solid growth was capped by a significant milestone: Annual Recurring Revenue (ARR) surpassed $3 billion by the end of FY2025, landing at $3,015 million. That ARR figure is the real pulse of Zscaler, Inc.'s business.

Revenue expansion comes from getting existing customers to adopt more of the platform. This is where upselling new modules comes into play. You see this in action with specific product adoption:

• AI-Security solutions surpassed $250 million ARR.
• Emerging products were expected to represent mid-20% of new and upsell business for FY2025.
• Specific deals, like one large healthcare provider doubling their Zscaler Internet Access subscription and purchasing ZDX Advanced Plus, saw their annual spend more than double.

The reliance on multi-year, upfront billing contracts is evident in the balance sheet strength. These contracts help improve cash flow immediately, even though the revenue is recognized over time. This is reflected in the deferred revenue balance:

• Deferred revenue stood at $2,468.0 million as of July 31, 2025.
• This represented a 30% increase year-over-year, showing strong commitment from customers signing longer-term deals.

Also, Zscaler, Inc. improved its cash position by issuing convertible senior notes due in 2028 for net cash proceeds of $1,700.0 million in July 2025, which supports future investment and operations.