Zscaler (ZS) FY2025 10-K Annual Report
Zscaler (ZS) 10-K annual report for fiscal year 2025, filed with SEC EDGAR on Sep 11, 2025. This page provides AI-powered analysis including business overview, management discussion & analysis (MD&A), risk factors, and key financial data such as revenue, net income, gross margin, operating margin, and return on equity (ROE) extracted from XBRL.
Zscaler FY2025 10-K Analysis
Business Overview
- • Core business: Cloud-native Zero Trust security platform enabling secure access to applications and data globally without traditional firewalls or VPNs
- • New focus on AI security: Security for Public and Private AI Applications and Agentic Operations to manage AI-related cyber risks and IT efficiencies
- • Strategic shift: Expanded platform emphasizing convergence of Zero Trust + AI, introducing Security for AI, Agentic Operations, and AI-powered Data Fabric for Security
- • Quantitative highlight: Revenue $2.67B in fiscal 2025, up 23% YoY; R&D spend $672.5M in fiscal 2025, a 35% increase over prior year
- • Noteworthy fact: Platform blocks 225M+ daily threats, performs 250,000+ daily unique security updates, and is deployed across 160+ public and thousands private exchanges worldwide
Management Discussion & Analysis
- • Revenue $2,673.1M in fiscal 2025 up 23% YoY from $2,167.8M in 2024 and up 34% YoY from $1,617.0M in 2023
- • GAAP operating margin (5)% in 2025 vs (6)% in 2024; Non-GAAP operating margin 22% in 2025 vs 20% in 2024
- • Single reportable segment; revenue growth drove gross profit to $2,054.9M (77% margin) in 2025 vs $1,690.6M (78% margin) in 2024
- • Net loss improved to $41.5M in 2025 vs loss of $57.7M in 2024 and $202.3M in 2023
- • Operating cash flow $972.5M and free cash flow $726.7M in 2025, free cash flow margin steady at 27% vs prior year
- • Continued investment in sales/marketing and R&D to drive growth despite losses; sales and marketing expenses remain largest operating expense
- • Management sees continued cautious customer spending, elongated sales cycles due to macroeconomic uncertainty and expects rising operating expenses
- • Dollar-based net retentionrate 114% in 2025 down from 116% in 2024, signaling solid customer expansion potential despite challenging environment
Risk Factors
- • Regulatory risk: EU Data Act allowing customers to cancel subscriptions with 30-60 days' notice, impacting contract terms and revenues
- • Macroeconomic threat: Global economic disruptions and geopolitical events increasing credit risk and delaying customer purchasing decisions
- • Operational vulnerability: Reliance on top five channel partners for 28% of fiscal 2025 revenue, with potential partner sales or legal risks
- • Competitive risk: Competition from legacy appliance vendors and cloud providers offering hybrid or zero-margin bundled security solutions
- • Financial risk: Net losses of $41.5M in fiscal 2025 and accumulated deficit $1,189.6M with increasing operating expenses may delay profitability
Zscaler FY2025 Key Financial MetricsXBRL
Revenue
$2.7B
▲ +23.3% YoY
Net Income
-$41M
▲ +28.1% YoY
Gross Margin
76.9%
▼ -112bp YoY
Operating Margin
-4.8%
▲ +80bp YoY
Net Margin
-1.6%
▲ +111bp YoY
ROE
-2.3%
▲ +222bp YoY
Total Assets
$6.4B
▲ +36.4% YoY
EPS (Diluted)
$-0.27
▲ +30.8% YoY
Operating Cash Flow
$972M
▲ +24.7% YoY
Source: XBRL data from Zscaler FY2025 10-K filing on SEC EDGAR. All figures in USD.
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