ZSCALER, INC. (ZS)

Business overview

Business Overview We enable our customers to succeed in a digital world where technology decisions not only impact growth and competitiveness, but also directly impact enterprise risk. We were incorporated in 2007, during the early stages of cloud adoption and mobility, based on a vision that the internet would become the new corporate network, as the cloud became the new data center. We correctly predicted that with rapid cloud adoption and increasing workforce mobility, traditional perimeter security approaches would fail to protect users and data, become prohibitively expensive and deliver poor user experience. Enterprises now rely on external software as a service, or SaaS, applications for critical business functions and have moved, or are moving, their internally managed applications to the public cloud infrastructure.

As a result, users now expect to be able to seamlessly access applications and data, wherever they are hosted, from any device, anywhere in the world. The emergence and rapid adoption of artificial intelligence, or AI, is revolutionizing the transformational impact of cloud adoption and mobility. AI is fundamentally changing how organizations operate, creating new cybersecurity threats and IT challenges. Our cloud native, multitenant architecture is distributed across more than 160 public exchanges globally and thousands of private exchanges at the edge, which brings security and business policy close to users and devices in over 185 countries and provides fast, secure and reliable access. Each day, we block over 225 million threats and perform over 250,000 unique security updates.

Our customers benefit from the cloud security effect of our ever-expanding ecosystem, enhanced by our advanced AI and ML capabilities, because once a new threat is detected, it can be blocked across our customer base within minutes. Many of the largest enterprises and government agencies in the world rely on our solutions to help them accelerate their move to the cloud. We have over 9,400 customers across all major geographies, with an emphasis on larger organizations, and we currently count approximately 40% of the Forbes Global 2000 and over 45% of Fortune 500 companies as customers. Our customers span every major industry, including financial services, healthcare, insurance, manufacturing, automotive, airlines and transportation, conglomerates, consumer goods and retail, media and communications, public sector and education, energy, technology and telecommunications services.

We have experienced significant growth, with revenue increasing from $1,617. 0 million in fiscal 2023 to $2,167. 8 million in fiscal 2024 to $2,673. 1 million in fiscal 2025, representing year-over-year revenue growth of 34% and 23%, respectively. We experienced net losses of $41. 5 million, $57.

7 million and $202. 3 million in fiscal 2025, fiscal 2024 and fiscal 2023, respectively. We expect we will continue to incur net losses for the foreseeable future. We pioneered a cloud platform, the Zscaler Zero Trust Exchange TM platform, which represented a fundamental shift in the architectural design and approach to networking and security that allows companies to securely accelerate their digital transformation initiatives. The Zscaler Zero Trust Exchange is a cloud-native platform, which implements Zero Trust principles to securely connect users, devices, applications and workloads, including AI agents, without relying on traditional hub-and-spoke network architecture and firewall-centric security. These technologies have become a roadblock to transformation for organizations that want to compete in today’s digital world.

Firewalls and virtual private networks, or VPNs, create a perimeter around the corporate network and everything inside the perimeter is implicitly trusted. This is one of the root causes of ransomware attacks. Zscaler’s Zero Trust model operates on the principle that users, workloads, devices and AI 3 Agents are untrusted by default, irrespective of the network they are connected to. This approach reduces the attack surface and prevents lateral threat movement, while improving business resilience. We believe that Zero Trust combined with AI is rapidly becoming the new foundation for enterprise security architectures. Zscaler is pioneering this convergence of Zero Trust + AI, enabling enterprises to embrace technologies in a manner that is more secure, more scalable, more resilient and increasingly adaptable to the modern world.

Our ever-evolving platform provides our customers with a flexible and scalable approach to better secure their operations, optimize user experience, eliminate complexity, reduce costs and respond to the challenges and opportunities of AI and future new technologies. As the threat landscape evolves and companies look to further embrace AI and the cloud, our platform has evolved to focus on four core solutions: Zero Trust Everywhere, Data Security Everywhere, Security for AI and Agentic Operations. […]

Management discussion and analysis

Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. As discussed in the section titled "Special Note Regarding Forward-Looking Statements," the following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such difference include, but are not limited to, those identified below and those discussed in the section titled "Risk Factors" and elsewhere in this Annual Report on Form 10-K.

Our fiscal year end is July 31, and our fiscal quarters end on October 31, January 31, April 30 and July 31 . Our fiscal year ended July 31, 2025, July 31, 2024 and July 31, 2023 are referred to as fiscal 2025, fiscal 2024 and fiscal 2023, respectively. Overview Zscaler was incorporated in 2007, during the early stages of cloud adoption and mobility, based on a vision that the internet would become the new corporate network as the cloud becomes the new data center. We correctly predicted that with rapid cloud adoption and increasing workforce mobility, traditional perimeter security approaches would prove to be inadequate in protecting users and data, prohibitively expensive and result in poor user experience.

Enterprises now rely on external SaaS applications for critical business functions and have or are moving their internally managed applications to the public cloud infrastructure. As a result, users now expect to be able to seamlessly access applications and data, wherever they are hosted, from any device, anywhere in the world. The emergence and rapid adoption of AI is revolutionizing the transformational impact of cloud adoption and mobility. AI is fundamentally changing how organizations operate, creating new cybersecurity threats and IT challenges, but also the opportunity to use AI to counter cybersecurity threats and improve IT operations. We generate revenue primarily from sales of subscriptions to access our cloud platform, together with related support services.

We also generate an immaterial amount of revenue from professional and other services, which consist primarily of fees associated with mapping, implementation, network design and training. Our subscription pricing is primarily calculated on a per-user basis. We recognize subscription and support revenue ratably over the life of the contract, which is generally one to three years. As of July 31, 2025, we had expanded our operations to over 9,400 customers across major industries, with users in over 185 countries. Government agencies and some of the largest enterprises in the world rely on us to support their secure digital transformation. We operate our business as one reportable segment.

Our revenue has experienced significant growth in recent periods. For fiscal 2025, fiscal 2024 and fiscal 2023, our revenue was $2,673. 1 million, $2,167. 8 million and $1,617. 0 million, respectively. We have incurred net losses in all annual periods since our inception.

For fiscal 2025, fiscal 2024 and fiscal 2023, our net loss was $41. 5 million, $57. 7 million and $202. 3 million, respectively. We expect we will continue to incur net losses for the foreseeable future, as we continue to invest in our sales and marketing organization to maximize our market opportunity, to invest in research and development efforts to enhance the functionality of our cloud platform, and to address any legal matters and related accruals, as further described in Note 12, Commitments and Contingencies, of the consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Impact of Macroeconomic Conditions Changes in macroeconomic and geopolitical conditions can cause uncertainty in our business.

We continue to see customer scrutiny of and elongated approval processes for transactions, particularly larger deals, as customers continue to carefully consider purchasing decisions and are requiring multiple approvals for large expenditures in response to the uncertain economic environment. Macroeconomic conditions may impact the future demand for subscriptions of our cloud platform. 63 Certain Factors Affecting Our Performance Increased Internet Traffic and Adoption of Cloud-Based Software and Security In a cloud, mobile-first and AI-enabled world where organizations depend on public and third-party infrastructure and technologies to assess critical applications that power their businesses, enterprises that continue to rely on legacy network and security architecture built on firewalls and VPNs face serious challenges. […]

Key risk disclosures

Risk Factors.” Human Capital As of July 31, 2025, we had a total of 7,923 employees in locations around the world. We have not experienced any work stoppages and we consider our relations with our employees to be positive and collaborative. Zscaler's vision is to create a world in which the exchange of information is always secure and seamless. Specifically, ensuring that our people and culture are aligned with this vision is critical to our success. In order to continue to innovate and to execute our business strategy, we must attract, develop and retain skilled employees, particularly in the areas of product development, engineering, sales and customer success.

Our Culture Our culture is about creating an environment where our global workforce can contribute their best work to help our customers and our business succeed. Zscaler's cultural values are: • Teamwork • Ownership • Passion • Innovation • Customer Obsession We build this culture through the feedback we receive from our employees through company-wide surveys as well as informal feedback channels throughout the year. We ultimately view and measure the success of our culture by our ability to sustain great business results. Employee Development We invest in our employees through a suite of programs from their first day of employment to develop their talent and skills as our business grows.

Our leadership approach establishes clear expectations, enables measurement and actionable feedback and ensures that our people managers have access to learning and resources that help them to embody our leadership principles. In addition, new employees in our customer care and success teams are enrolled in structured sales and product training to build their knowledge. Our technical teams have access to live and online training resources and participate in frequent company tech talks where training on best practices and latest developments are shared. We build the skills and capabilities of our senior leaders through intentional investment in their development and opportunities for them to network, collaborate and problem solve together. To supplement our internal resources, we work with external experts to offer focused development for our leaders, as well as targeted offerings on topics that are critical to enhancing the capabilities of our talent.

We offer tuition reimbursement for eligible employees to further enhance their career growth through higher education. 18 Compensation and Benefits We provide competitive compensation and benefits packages to attract and retain our talent. In addition to base pay, employees may be eligible for performance based bonuses that are tied to our financial performance and long-term equity incentives that vest subject to continued service. Certain employees may also need to achieve defined performance metrics for parts of their long-term incentives to vest. Our employee performance management program aligns individual achievement and corporate goal attainment with compensation. Employees are assessed on both what was achieved and how they achieved it to help build a high-performance culture that delivers for our customers and is aligned to our cultural values.

We offer an employee stock purchase plan, which allows employees to contribute a percentage of their wages to purchase our stock at a discount. In addition to cash and equity compensation, we offer our employees a robust portfolio of benefits, such as health, well-being, parental leave and retirement programs, to meet their individual and family needs. Health, Safety and Well-being The health and safety of our employees is our top priority. We recognize the need to create a flexible working environment that balances collaboration, innovation and connectivity with personal preferences for employees to do their best work. Our employee wellness programs support employees across four pillars: physical, emotional, social and financial.

These programs are designed to meet the needs of our employees through connection and support, with flexibility for local and targeted approaches. We will continue to review and invest in programs to provide for the health, safety and well-being of our employees. Corporate Information We were incorporated in the state of Delaware in September 2007 as SafeChannel, Inc. , and in August 2008, we changed our name to Zscaler, Inc. Our principal executive offices are located at 120 Holger Way, San Jose, CA 95134, and our telephone number is (408) 533-0288 . Our website address is www. zscaler. com. Information contained on, or that can be accessed through, our website does not constitute part of this Annual Report on Form 10-K. […]

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