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-3.5%
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-1.6%
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-134.1 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$454M
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$2.2B
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-Book8.53x
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$136M
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$98M
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 Zscaler Internet Access, which provides threat protection, cloud sandbox, and cloud browser isolation; Zscaler Private Access solution that includes cyberthreat and data protection, application discovery, secure application access, application segmentation, application protection, reduced attack surface, and browser isolation; Zero Trust Firewall; Cloud Sandbox; and Zero Trust Browser. It also provides data security products, such as web and email DLP, endpoint DLP, BYOD security, multi-mode CASB, unified SaaS security, DSPM, AI-SPM, public gen AI security, and Microsoft Copilot data protection; Zero Trust Cloud solution. In addition, the company offers Zero Trust Branch comprising Zero Trust SD-WAN; IoT/OT segmentation; privileged remote access; Zscaler Cellular; and Zscaler Digital Experience that measures end-to-end user experience across business applications, as well as provides an easy-to-understand digital experience score for each user, application, and location within an enterprise. Further, it provides security operations products, including data fabric for security; asset exposure management; Risk360; unified vulnerability management; deception; managed detection and response; and managed threat hunting. Additionally, the company offers Zero Trust Gateway, a fully managed Zscaler service. It serves the 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 Zscaler Internet Access, which provides threat protection, cloud sandbox, and cloud browser isolation; Zscaler Private Access solution that includes cyberthreat and data protection, application discovery, secure application access, application segmentation, application protection, reduced attack surface, and browser isolation; Zero Trust Firewall; Cloud Sandbox; and Zero Trust Browser. It also provides data security products, such as web and email DLP, endpoint DLP, BYOD security, multi-mode CASB, unified SaaS security, DSPM, AI-SPM, public gen AI security, and Microsoft Copilot data protection; Zero Trust Cloud solution. In addition, the company offers Zero Trust Branch comprising Zero Trust SD-WAN; IoT/OT segmentation; privileged remote access; Zscaler Cellular; and Zscaler Digital Experience that measures end-to-end user experience across business applications, as well as provides an easy-to-understand digital experience score for each user, application, and location within an enterprise. Further, it provides security operations products, including data fabric for security; asset exposure management; Risk360; unified vulnerability management; deception; managed detection and response; and managed threat hunting. Additionally, the company offers Zero Trust Gateway, a fully managed Zscaler service. It serves the 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
-13,883
-11,615
Reconciled Depreciation
49,457
41,284
Reconciled Cost Of Revenue
192,652
184,753
EBITDA
49,786
35,037
EBIT
329
-6,247
Net Interest Income
31,343
31,027
Interest Expense
2,700
2,127
Interest Income
34,043
33,154
Normalized Income
-13,883
-11,615
Net Income From Continuing And Discontinued Operation
-13,883
-11,615
Total Expenses
880,115
824,474
Total Operating Income As Reported
-29,640
-36,362
Diluted Average Shares
160,741
158,596
Basic Average Shares
160,741
158,596
Diluted EPS
0
0
Basic EPS
0
0
Diluted NI Availto Com Stockholders
-13,883
-11,615
Net Income Common Stockholders
-13,883
-11,615
Net Income
-13,883
-11,615
Net Income Including Noncontrolling Interests
-13,883
-11,615
Net Income Continuous Operations
-13,883
-11,615
Tax Provision
11,512
3,241
Pretax Income
-2,371
-8,374
Other Income Expense
-4,074
-3,039
Other Non Operating Income Expenses
-4,074
-3,039
Net Non Operating Interest Income Expense
31,343
31,027
Total Other Finance Cost
Interest Expense Non Operating
2,700
2,127
Interest Income Non Operating
34,043
33,154
Operating Income
-29,640
-36,362
Operating Expense
687,463
639,721
Depreciation Amortization Depletion Income Statement
Depreciation And Amortization In Income Statement
Amortization
Amortization Of Intangibles Income Statement
Research And Development
232,281
200,498
Selling General And Administration
455,182
439,223
Selling And Marketing Expense
371,941
373,562
General And Administrative Expense
83,241
65,661
Other Gand A
83,241
65,661
Gross Profit
657,823
603,359
Cost Of Revenue
192,652
184,753
Total Revenue
850,475
788,112
Operating Revenue
850,475
788,112
Balance Sheet
2026
2025
2024
Ordinary Shares Number
161,710
159,468
Share Issued
161,710
159,468
Net Debt
717,524
361,676
Total Debt
1,861,184
1,834,041
Tangible Book Value
1,080,426
772,575
Invested Capital
4,066,231
3,682,199
Working Capital
2,153,243
1,900,227
Net Tangible Assets
1,080,426
772,575
Capital Lease Obligations
161,548
134,170
Common Stock Equity
2,366,595
1,982,328
Total Capitalization
4,066,231
3,682,199
Total Equity Gross Minority Interest
2,366,595
1,982,328
Stockholders Equity
2,366,595
1,982,328
Gains Losses Not Affecting Retained Earnings
-7,718
7,889
Other Equity Adjustments
-7,718
7,889
Retained Earnings
-1,249,368
-1,201,173
Additional Paid In Capital
3,623,519
3,175,453
Capital Stock
162
159
Common Stock
162
159
Total Liabilities Net Minority Interest
4,731,484
4,520,759
Total Non Current Liabilities Net Minority Interest
2,230,542
2,215,025
Other Non Current Liabilities
56,046
44,270
Non Current Deferred Liabilities
380,063
405,113
Non Current Deferred Revenue
380,063
405,113
Long Term Debt And Capital Lease Obligation
1,794,433
1,765,642
Long Term Capital Lease Obligation
94,797
65,771
Long Term Debt
1,699,636
1,699,871
Current Liabilities
2,500,942
2,305,734
Current Deferred Liabilities
2,097,103
1,946,191
Current Deferred Revenue
2,097,103
1,946,191
Current Debt And Capital Lease Obligation
66,751
68,399
Current Capital Lease Obligation
66,751
68,399
Current Debt
1,145,799
Other Current Borrowings
1,145,799
Pensionand Other Post Retirement Benefit Plans Current
81,539
42,644
Payables And Accrued Expenses
255,549
248,500
Current Accrued Expenses
221,675
200,100
Payables
33,874
48,400
Accounts Payable
33,874
48,400
Total Assets
7,098,079
6,503,087
Total Non Current Assets
2,443,894
2,297,126
Other Non Current Assets
96,982
95,105
Non Current Deferred Assets
347,820
322,556
Goodwill And Other Intangible Assets
1,286,169
1,209,753
Other Intangible Assets
191,735
215,290
Goodwill
1,094,434
994,463
Net PPE
712,923
669,712
Accumulated Depreciation
-495,904
-410,028
Gross PPE
1,208,827
1,079,740
Leases
14,988
10,730
Other Properties
772,884
707,001
Machinery Furniture Equipment
420,955
362,009
Current Assets
4,654,185
4,205,961
Other Current Assets
187,911
171,639
Current Deferred Assets
196,706
182,563
Receivables
730,461
530,487
Accounts Receivable
730,461
530,487
Cash Cash Equivalents And Short Term Investments
3,539,107
3,321,272
Other Short Term Investments
2,556,995
1,983,077
Cash And Cash Equivalents
982,112
1,338,195
Cash Flow
2026
2025
Free Cash Flow
135,954
413,296
Capital Expenditure
-62,062
-34,984
Income Tax Paid Supplemental Data
11,454
12,391
End Cash Position
982,112
1,338,195
Beginning Cash Position
1,202,751
2,389,023
Changes In Cash
-220,639
-1,050,828
Financing Cash Flow
0
3,103
Cash Flow From Continuing Financing Activities
0
3,103
Net Other Financing Charges
0
-881
Proceeds From Stock Option Exercised
0
3,984
Investing Cash Flow
-418,655
-1,502,211
Cash Flow From Continuing Investing Activities
-418,655
-1,502,211
Net Investment Purchase And Sale
-259,325
-794,447
Sale Of Investment
313,155
101,941
Purchase Of Investment
-572,480
-896,388
Net Business Purchase And Sale
-97,268
-672,780
Purchase Of Business
-97,268
-672,780
Net PPE Purchase And Sale
-42,401
-17,311
Purchase Of PPE
-42,401
-17,311
Capital Expenditure Reported
-19,661
-17,673
Operating Cash Flow
198,016
448,280
Cash Flow From Continuing Operating Activities
198,016
448,280
Change In Working Capital
-123,910
162,789
Change In Other Working Capital
43,914
-234,792
Change In Other Current Liabilities
-21,673
-18,609
Change In Payables And Accrued Expense
34,169
-49,349
Change In Accrued Expense
32,044
-46,407
Change In Payable
2,125
-2,942
Change In Account Payable
2,125
-2,942
Change In Prepaid Assets
1,169
-17,322
Change In Receivables
-181,489
482,861
Changes In Account Receivables
-181,489
482,861
Other Non Cash Items
80,195
69,799
Stock Based Compensation
205,186
188,593
Amortization Of Securities
-933
-1,905
Deferred Tax
1,879
-3,698
Deferred Income Tax
1,879
-3,698
Depreciation Amortization Depletion
49,457
41,284
Depreciation And Amortization
49,457
41,284
Amortization Cash Flow
11,441
8,633
Amortization Of Intangibles
11,441
8,633
Depreciation
38,016
32,651
Operating Gains Losses
25
3,033
Gain Loss On Investment Securities
25
3,033
Net Income From Continuing Operations
-13,883
-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: $678M▲ $850M+25.4%
Revenue growth vs same quarter last year strips seasonality. Consistent double-digit growth is a Buffett hallmark.
Gross Margin
Prior year: 77.0%▲ 77.3%+0.4pp
Buffett: consistent gross margin above 40% signals durable pricing power and competitive moat.
Operating Margin
Prior year: -4.4%▼ -3.5%+0.9pp
Graham: operating margin reflects true business economics before financing. Trend matters as much as level.
Net Margin
Prior year: -0.6%▼ -1.6%-1.0pp
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.
$850M/qtr (≈$3.4B ann.)
vs > $1.5B annualised revenue
❌ Financial Condition
Current assets vs current liabilities — a real-time liquidity snapshot. Valid and reliable on quarterly data.
1.86x 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.
$136M
vs Positive
Operating Cash Flow
$198M
Latest quarter · Buffett's cash reality check
ROIC
-0.5%
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
8.5x
Net Assets: $2.4B
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
34.96%
High — management has strong skin in the game
Return on Equity (ROE)
-0.6%
Weak — poor returns on equity
Return on Assets (ROA)
-0.2%
Poor — assets are not generating adequate returns
Debt Trend YoY
-0.2% 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.
5.30%
8,568,317
Vanguard Portfolio Management LLC
3.67%
5,930,635
Vanguard Capital Management LLC
2.88%
4,660,890
First Trust Advisors LP
2.18%
3,518,678
Goldman Sachs Group Inc
1.81%
2,924,939
State Street Corporation
1.47%
2,384,518
American Century Companies Inc
1.47%
2,384,425
FMR, LLC
1.35%
2,190,318
Risk Analysis
Beta (Market Risk)
0.96
Low volatility — more stable than the market
Short Interest
11.5% of float
Moderate short interest
Debt-to-Equity
0.79x
Conservative balance sheet — low financial risk
Current Ratio
1.86x
Adequate liquidity
52-Week Price Range
Low: $114.62Current: $124.85High: $336.99
Currently at 5% 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: 77.3%. Operating margin: -3.5%. Net margin: -1.6%. Market cap: $20.2B. 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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