Revenue minus cost of goods sold. Graham's ≥40% threshold identifies businesses with durable pricing power. Note: software and financial companies naturally exceed this; retailers and manufacturers rarely reach it due to their cost structures.
Operating Margin-0.4%
Profit after operating costs before interest and taxes. A consistent ≥15% operating margin signals a business with real competitive advantages. Capital-intensive industries (airlines, auto, commodities) rarely hit this threshold due to their structural cost base — compare within industry for context.
Net Income Margin-0.4%
Bottom-line profit as a percentage of revenue. The ≥20% target reflects Buffett's preference for highly profitable businesses. Financial engineering (buybacks, tax optimisation) can inflate this temporarily — look for consistency across multiple years rather than a single strong result.
Financial Health
C
Years to Pay Off Debt-550.9 yrs
Total Debt ÷ Net Income. Lower = stronger balance sheet. Important caveat: utilities, telecoms, REITs, and infrastructure companies carry large structural debt by design — their bond-like cash flows service it comfortably at ratios that would alarm Graham. Compare within sector.
Working Capital vs Long-Term Debt$374M
Working Capital minus Long-Term Debt. Negative results are common and expected in capital-return-focused businesses like Apple, Domino's, and McDonald's — where aggressive buybacks and dividends intentionally reduce book equity. This does not indicate financial distress in high-FCF businesses.
Working Capital$2.1B
Current Assets minus Current Liabilities. Negative working capital can be a deliberate efficiency strategy in businesses that collect cash before paying suppliers (retailers, fast food franchises, subscription businesses). Assess alongside free cash flow generation for full context.
Valuation
F
Price-to-Book13.00x
Market price vs book value per share. Rarely below 1.5x for quality businesses today. Intangible assets (brand, software, patents) don't appear on the balance sheet under accounting rules, making P/B artificially high for asset-light companies like software and consumer brands.
Cash Flow
A
Free Cash Flow$61M
Operating cash flow minus capital expenditures. Buffett's most important metric — cash a business actually generates for its owners after maintaining and growing its asset base. Consistently positive FCF is one of the strongest indicators of a durable, well-run business regardless of accounting profits.
Owner Earnings$270M
Net Income + Depreciation & Amortisation − Capital Expenditures. Buffett's preferred measure of a company's true annual earning power — what could theoretically be distributed to owners without impairing the business. More reliable than reported EPS because it accounts for the capital cost of maintaining the business.
About Zscaler, Inc.
Zscaler, Inc. operates as a cloud security company worldwide. The company offers cyberthreat protection products, including Zero Trust SASE, a solution that securely connects workforces, AI agents, workloads, and IoT/OT devices to cloud apps and AI services; Zscaler Internet Access, which provides advanced threat protection, sandbox, and zero trust firewall; Zscaler Private Access solution that includes cyberthreat and data protection, application discovery, secure application access, application segmentation, application protection, and reduced attack surface; Zero Trust Browser, a solution that secures browser-based access to business applications for the extended workforce, including third parties and partners; Zscaler Digital Experience, a solution that monitors end-user experience and helps organizations identify and resolve performance issues across their digital environment; Zero Trust Branch; and Zero Trust Cloud solutions. It also provides Security for AI solution to secure AI adoption across the full AI ecosystem; data security services, including AI-powered data classification and contextual insights, data loss prevention, Saas security, and data security posture management solution. In addition, the company offers Agentic Security Operations solution that enables enterprises to reduce cyber risk by using AI-powered automation; exposure management platform; deception; managed detection and response; agentic security operations center; and threat hunting solutions. It serves automotive, airlines and transportation, conglomerates, consumer goods and retail, energy, financial services, healthcare, insurance, manufacturing, media and communications, public sector and education, technology, and telecommunications services industries. 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.
Zscaler, Inc. operates as a cloud security company worldwide. The company offers cyberthreat protection products, including Zero Trust SASE, a solution that securely connects workforces, AI agents, workloads, and IoT/OT devices to cloud apps and AI services; Zscaler Internet Access, which provides advanced threat protection, sandbox, and zero trust firewall; Zscaler Private Access solution that includes cyberthreat and data protection, application discovery, secure application access, application segmentation, application protection, and reduced attack surface; Zero Trust Browser, a solution that secures browser-based access to business applications for the extended workforce, including third parties and partners; Zscaler Digital Experience, a solution that monitors end-user experience and helps organizations identify and resolve performance issues across their digital environment; Zero Trust Branch; and Zero Trust Cloud solutions. It also provides Security for AI solution to secure AI adoption across the full AI ecosystem; data security services, including AI-powered data classification and contextual insights, data loss prevention, Saas security, and data security posture management solution. In addition, the company offers Agentic Security Operations solution that enables enterprises to reduce cyber risk by using AI-powered automation; exposure management platform; deception; managed detection and response; agentic security operations center; and threat hunting solutions. It serves automotive, airlines and transportation, conglomerates, consumer goods and retail, energy, financial services, healthcare, insurance, manufacturing, media and communications, public sector and education, technology, and telecommunications services industries. 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.
Metric Explanations
What each dimension measures and where the thresholds come from.
Gross Profit Margin
Revenue minus cost of goods sold. Graham's ≥40% threshold identifies businesses with durable pricing power. Note: software and financial companies naturally exceed this; retailers and manufacturers rarely reach it due to their cost structures.
Operating Margin
Profit after operating costs before interest and taxes. A consistent ≥15% operating margin signals a business with real competitive advantages. Capital-intensive industries (airlines, auto, commodities) rarely hit this threshold due to their structural cost base — compare within industry for context.
Net Income Margin
Bottom-line profit as a percentage of revenue. The ≥20% target reflects Buffett's preference for highly profitable businesses. Financial engineering (buybacks, tax optimisation) can inflate this temporarily — look for consistency across multiple years rather than a single strong result.
Years to Pay Off Debt
Total Debt ÷ Net Income. Lower = stronger balance sheet. Important caveat: utilities, telecoms, REITs, and infrastructure companies carry large structural debt by design — their bond-like cash flows service it comfortably at ratios that would alarm Graham. Compare within sector.
Working Capital vs Long-Term Debt
Working Capital minus Long-Term Debt. Negative results are common and expected in capital-return-focused businesses like Apple, Domino's, and McDonald's — where aggressive buybacks and dividends intentionally reduce book equity. This does not indicate financial distress in high-FCF businesses.
Working Capital
Current Assets minus Current Liabilities. Negative working capital can be a deliberate efficiency strategy in businesses that collect cash before paying suppliers (retailers, fast food franchises, subscription businesses). Assess alongside free cash flow generation for full context.
Price-to-Book
Market price vs book value per share. Rarely below 1.5x for quality businesses today. Intangible assets (brand, software, patents) don't appear on the balance sheet under accounting rules, making P/B artificially high for asset-light companies like software and consumer brands.
Free Cash Flow
Operating cash flow minus capital expenditures. Buffett's most important metric — cash a business actually generates for its owners after maintaining and growing its asset base. Consistently positive FCF is one of the strongest indicators of a durable, well-run business regardless of accounting profits.
Owner Earnings
Net Income + Depreciation & Amortisation − Capital Expenditures. Buffett's preferred measure of a company's true annual earning power — what could theoretically be distributed to owners without impairing the business. More reliable than reported EPS because it accounts for the capital cost of maintaining the business.
Net Income From Continuing Operation Net Minority Interest
-3,369
-11,615
Reconciled Depreciation
55,213
41,284
Reconciled Cost Of Revenue
208,964
184,753
EBITDA
64,697
35,037
EBIT
9,484
-6,247
Net Interest Income
32,296
31,027
Interest Expense
-5,420
2,127
Interest Income
35,042
33,154
Normalized Income
-3,369
-11,615
Net Income From Continuing And Discontinued Operation
-3,369
-11,615
Total Expenses
901,549
824,474
Total Operating Income As Reported
-15,492
-36,362
Diluted Average Shares
161,872
158,596
Basic Average Shares
161,872
158,596
Diluted EPS
0
0
Basic EPS
0
0
Diluted NI Availto Com Stockholders
-3,369
-11,615
Net Income Common Stockholders
-3,369
-11,615
Net Income
-3,369
-11,615
Net Income Including Noncontrolling Interests
-3,369
-11,615
Net Income Continuous Operations
-3,369
-11,615
Tax Provision
18,273
3,241
Pretax Income
14,904
-8,374
Other Income Expense
-14,028
-3,039
Other Non Operating Income Expenses
-1,900
-3,039
Net Non Operating Interest Income Expense
32,296
31,027
Total Other Finance Cost
Interest Expense Non Operating
-5,420
2,127
Interest Income Non Operating
35,042
33,154
Operating Income
-3,364
-36,362
Operating Expense
692,585
639,721
Depreciation Amortization Depletion Income Statement
Depreciation And Amortization In Income Statement
Amortization
Amortization Of Intangibles Income Statement
Research And Development
241,483
200,498
Selling General And Administration
435,489
439,223
Selling And Marketing Expense
359,249
373,562
General And Administrative Expense
76,240
65,661
Other Gand A
76,240
65,661
Gross Profit
689,221
603,359
Cost Of Revenue
208,964
184,753
Total Revenue
898,185
788,112
Operating Revenue
898,185
788,112
Balance Sheet
2026
2025
Ordinary Shares Number
163,055
159,468
Share Issued
163,055
159,468
Net Debt
768,001
361,676
Total Debt
1,855,824
1,834,041
Tangible Book Value
1,165,808
772,575
Invested Capital
4,294,616
3,682,199
Working Capital
2,069,922
1,900,227
Net Tangible Assets
1,165,808
772,575
Capital Lease Obligations
159,469
134,170
Common Stock Equity
2,598,261
1,982,328
Total Capitalization
4,294,616
3,682,199
Total Equity Gross Minority Interest
2,598,261
1,982,328
Stockholders Equity
2,598,261
1,982,328
Gains Losses Not Affecting Retained Earnings
-23,544
7,889
Other Equity Adjustments
-23,544
7,889
Retained Earnings
-1,252,737
-1,201,173
Additional Paid In Capital
3,874,379
3,175,453
Capital Stock
163
159
Common Stock
163
159
Total Liabilities Net Minority Interest
5,268,453
4,520,759
Total Non Current Liabilities Net Minority Interest
2,307,142
2,215,025
Other Non Current Liabilities
70,940
44,270
Non Current Deferred Liabilities
445,272
405,113
Non Current Deferred Revenue
445,272
405,113
Long Term Debt And Capital Lease Obligation
1,790,930
1,765,642
Long Term Capital Lease Obligation
94,575
65,771
Long Term Debt
1,696,355
1,699,871
Current Liabilities
2,961,311
2,305,734
Current Deferred Liabilities
2,480,501
1,946,191
Current Deferred Revenue
2,480,501
1,946,191
Current Debt And Capital Lease Obligation
64,894
68,399
Current Capital Lease Obligation
64,894
68,399
Current Debt
Other Current Borrowings
Pensionand Other Post Retirement Benefit Plans Current
77,350
42,644
Payables And Accrued Expenses
338,566
248,500
Current Accrued Expenses
290,594
200,100
Payables
47,972
48,400
Accounts Payable
47,972
48,400
Total Assets
7,866,714
6,503,087
Total Non Current Assets
2,835,481
2,297,126
Other Non Current Assets
110,373
95,105
Non Current Deferred Assets
402,423
322,556
Goodwill And Other Intangible Assets
1,432,453
1,209,753
Other Intangible Assets
214,355
215,290
Goodwill
1,218,098
994,463
Net PPE
890,232
669,712
Accumulated Depreciation
-542,373
-410,028
Gross PPE
1,432,605
1,079,740
Leases
37,806
10,730
Other Properties
940,087
707,001
Machinery Furniture Equipment
454,712
362,009
Current Assets
5,031,233
4,205,961
Other Current Assets
192,432
171,639
Current Deferred Assets
215,577
182,563
Receivables
1,149,073
530,487
Accounts Receivable
1,149,073
530,487
Cash Cash Equivalents And Short Term Investments
3,474,151
3,321,272
Other Short Term Investments
2,545,797
1,983,077
Cash And Cash Equivalents
928,354
1,338,195
Cash Flow
2026
2025
Free Cash Flow
60,764
413,296
Capital Expenditure
-218,521
-34,984
Income Tax Paid Supplemental Data
12,391
End Cash Position
928,354
1,338,195
Beginning Cash Position
982,112
2,389,023
Changes In Cash
-53,758
-1,050,828
Financing Cash Flow
37,910
3,103
Cash Flow From Continuing Financing Activities
37,910
3,103
Net Other Financing Charges
0
-881
Proceeds From Stock Option Exercised
37,910
3,984
Investing Cash Flow
-370,953
-1,502,211
Cash Flow From Continuing Investing Activities
-370,953
-1,502,211
Net Investment Purchase And Sale
-4,406
-794,447
Sale Of Investment
284,329
101,941
Purchase Of Investment
-288,735
-896,388
Net Business Purchase And Sale
-148,026
-672,780
Purchase Of Business
-148,026
-672,780
Net PPE Purchase And Sale
-199,837
-17,311
Purchase Of PPE
-199,837
-17,311
Capital Expenditure Reported
-18,684
-17,673
Operating Cash Flow
279,285
448,280
Cash Flow From Continuing Operating Activities
279,285
448,280
Change In Working Capital
-42,791
162,789
Change In Other Working Capital
318,284
-234,792
Change In Other Current Liabilities
-23,632
-18,609
Change In Payables And Accrued Expense
81,611
-49,349
Change In Accrued Expense
72,246
-46,407
Change In Payable
9,365
-2,942
Change In Account Payable
9,365
-2,942
Change In Prepaid Assets
977
-17,322
Change In Receivables
-420,031
482,861
Changes In Account Receivables
-420,031
482,861
Other Non Cash Items
79,177
69,799
Stock Based Compensation
211,591
188,593
Amortization Of Securities
-87
-1,905
Deferred Tax
-20,713
-3,698
Deferred Income Tax
-20,713
-3,698
Depreciation Amortization Depletion
55,213
41,284
Depreciation And Amortization
55,213
41,284
Amortization Cash Flow
12,280
8,633
Amortization Of Intangibles
12,280
8,633
Depreciation
42,933
32,651
Operating Gains Losses
264
3,033
Gain Loss On Investment Securities
264
3,033
Net Income From Continuing Operations
-3,369
-11,615
📊Quarterly mode — Graham Fair Value & 7 Criteria require annual data. Switch to Annual for full analysis.
Quarter vs Same Quarter Last Year
YoY strips seasonality
Revenue Growth (YoY)
Prior year: $719M▲ $898M+24.9%
Revenue growth vs same quarter last year strips seasonality. Consistent double-digit growth is a Buffett hallmark.
Gross Margin
Prior year: 76.1%▲ 76.7%+0.7pp
Buffett: consistent gross margin above 40% signals durable pricing power and competitive moat.
Operating Margin
Prior year: -0.5%▲ -0.4%+0.1pp
Graham: operating margin reflects true business economics before financing. Trend matters as much as level.
Net Margin
Prior year: -2.4%▲ -0.4%+2.1pp
Net margin can be distorted by one-time items, tax timing, or interest costs — compare to operating margin for signal quality.
Quarterly Health Checks
3 Graham/Buffett criteria that are valid and reliable on quarterly data
✅ Adequate Size
Graham required scale for resilience. Quarterly revenue × 4 gives an annualised proxy.
$898M/qtr (≈$3.6B ann.)
vs > $1.5B annualised revenue
❌ Financial Condition
Current assets vs current liabilities — a real-time liquidity snapshot. Valid and reliable on quarterly data.
1.70x current ratio
vs ≥ 2.0x
✅ Free Cash Flow
Buffett's most important single metric. A positive FCF quarter means the business generated real cash for owners after maintaining its asset base.
$61M
vs Positive
Operating Cash Flow
$279M
Latest quarter · Buffett's cash reality check
ROIC
-0.1%
Based on latest annual operating income
Return on Invested Capital — Buffett's preferred measure for asset-light businesses. ROIC > 15% consistently signals a durable competitive advantage (moat). More meaningful than P/B for software, pharma, and consumer brand companies where most value is intangible and off-balance-sheet.
Market Cap / Net Assets
13.0x
Net Assets: $2.6B
Asset Context — Software - Infrastructure
Software companies store most of their value in code, IP, recurring revenue, and customer relationships — none of which appear on the balance sheet under GAAP. Book value and Net Assets are poor proxies for intrinsic value here. Focus on ROIC, gross margin trajectory, and free cash flow instead.
Peers & Industry
No auto-detected peers for Software - Infrastructure. You can manually compare ZS against any stock using the Compare tool.
"The management of a business is its most important single factor — more important than market position, patents, or financial structure."
— Benjamin Graham
Capital Allocation & Alignment
Insider Ownership
34.67%
High — management has strong skin in the game
Return on Equity (ROE)
-0.1%
Weak — poor returns on equity
Return on Assets (ROA)
-0.0%
Poor — assets are not generating adequate returns
Debt Trend YoY
-0.3% YoY
Debt is declining — management is deleveraging
Leadership Team
Jagtar Singh Chaudhry
Co-Founder, CEO & Chairman of the Board
Age 66
Pay: $29,753
Mike Rich
Chief Revenue Officer & President of Global Sales
Age 58
Pay: $944,231
Kevin Rubin
Chief Financial Officer
Age 50
Pay: $609,760
Kailash
Founder & Chief Architect
Top Institutional Holders
Institution
% Owned
Shares
Blackrock Inc.
6.07%
9,890,384
Vanguard Portfolio Management LLC
3.80%
6,196,726
Vanguard Capital Management LLC
2.90%
4,721,393
First Trust Advisors LP
2.16%
3,529,213
Goldman Sachs Group Inc
1.94%
3,161,548
State Street Corporation
1.53%
2,493,672
Pictet Asset Management Holding SA
1.29%
2,104,621
Geode Capital Management, LLC
1.28%
2,090,724
Risk Analysis
Beta (Market Risk)
0.95
Low volatility — more stable than the market
Short Interest
6.0% of float
Moderate short interest
Debt-to-Equity
0.72x
Conservative balance sheet — low financial risk
Current Ratio
1.70x
Adequate liquidity
52-Week Price Range
Low: $114.62Current: $207.13High: $336.99
Currently at 42% of 52-week range
Zscaler, Inc. (ZS) fundamental analysis — Overall grade D based on profitability, financial health, valuation and cash flow. Graham's
Fair Value: N/A (negative EPS). Gross profit margin: 76.7%. Operating margin: -0.4%. Net margin: -0.4%. Market cap: $33.8B. Sector: Technology. Industry: Software - Infrastructure. Analysis powered by 360investing — free fundamental stock analysis based on Benjamin Graham and Warren Buffett
principles.
Disclaimer: 360investing is provided for informational and educational purposes only and does not constitute financial, investment, legal, or tax advice. All data is sourced from public third-party providers
and may be delayed, inaccurate, or incomplete. Past performance is not indicative of future results. Analysis, scores, and valuations are algorithmic and do not represent professional investment recommendations. Always conduct your own due
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