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Zscaler Annual Report, Year Ended Jul 31, 2024

Filing Date
Filed September 12, 2024
Period End
July 31, 2024
Security
ZS
In the record · 2018–202610-K910-Q258-K62

ZS filed 9 annual reports (10-K), 25 quarterly reports (10-Q) and 62 current reports (8-K) between 2018 and 2026.

  1. Leadership change8-K · Sep ’20Sep ’20
  2. Restructuring8-K · Mar ’23Mar ’23
  3. Leadership change8-K · Sep ’26Sep ’26

01—Abstract

Summary

Summary of the 10-K filed September 12, 2024. Cited figures are marked; the original filing is the authoritative source.

Zscaler, Inc. (ZS) filed its Form 10-K for the fiscal year ended July 31, 2024 on September 12, 2024.

The company, which describes itself as a cloud security company operating the Zscaler Zero Trust Exchange platform across Zscaler for Users, Workloads and IoT/OT, reported revenue of $2,167.8 milliona for fiscal 2024, up from $1,617.0 million in fiscal 2023, with revenue growth of 34%. Net loss narrowed to $57.7 million from $202.3 million in fiscal 2023, and the company reported a GAAP loss from operations of $121.5 million, while non-GAAP income from operations was $442.2 million, or a 20% non-GAAP operating margin. Free cash flow rose to $585.0 million from $333.6 million, and calculated billings increased $587.6 million, or 29%, to $2,623.1 million.

The company had 8,650 customers as of July 31, 2024, approximately 35% of the Forbes Global 2000, and a dollar-based net retention rate of 115%, down from 121% in the prior year. Remaining performance obligations totaled $4,417.6 millionb, with 48% expected to be recognized over the next 12 months.

Cash, cash equivalents and short-term investments totaled $2,409.7 millionc, against $1,150.0 million of 0.125% convertible senior notes due July 1, 2025, which are now classified as current liabilities; the company stated its current intent is to settle the principal in cash. The filing also highlights ongoing risks, including the company's history of net losses and accumulated deficit of $1,148.1 million, reliance on channel partners (top five partners represented 25% of fiscal 2024 revenue), international exposure (approximately 50% of revenue from outside the United States), and concentrated insider ownership, with executive officers, directors and 5% holders together beneficially owning approximately 43.2% of common stock.

02—Key points

Key Highlights

  1. Revenue rose to $2,167.8 million in fiscal 2024 from $1,617.0 million, a 34% increase, driven mainly by additional subscriptions from existing customers.
  2. Net loss narrowed to $57.7 million in fiscal 2024 from $202.3 million in fiscal 2023, while the GAAP gross margin held at 78%.
  3. Non-GAAP operating margin improved to 20% (non-GAAP income from operations of $442.2 million) from 15% in fiscal 2023.
  4. Free cash flow increased to $585.0 million (27% of revenue) from $333.6 million (21% of revenue) in fiscal 2023.
  5. Dollar-based net retention rate was 115% for the trailing 12 months ended July 31, 2024, compared with 121% a year earlier.
  6. The $1,150.0 million convertible senior notes due July 1, 2025 are classified as current liabilities, with cash and short-term investments of $2,409.7 million at year end.
  7. Remaining performance obligations totaled $4,417.6 million, with 48% expected to be recognized over the next 12 months.

03—One dollar

Follow one dollar

For each $1.00 of revenue in FY2024, Zscaler lost $0.03.

  1. Revenue$2.17B100.0%
  2. Cost of revenue−$477.1M22.0%
  3. Gross profit$1.69B78.0%
  4. Operating costs−$1.81B83.6%
  5. Operating income−$121.5M5.6%
  6. Interest, other & tax$63.8M2.9%
  7. Net income−$57.7M2.7%
Computed from 10-KFY2024filed September 12, 2024Computed from this filing’s revenue, gross profit, operating income and net income · right columngrey figure: share of revenue

04—Financials

Financial Highlights

Figures from 10-KFY2024filed September 12, 2024
Revenue$2.17B78.0% Gross MarginNet Income-$57.71M-2.7% Net MarginEPS (Diluted)$-0.39Total Assets$4.70BCash & Equivalents$1.42BFree Cash Flow$635.26M

Financial Statements

FY2024 against FY2023

Line itemFY2024FY2023Change
Revenue$2.17B$1.62B+34.1%
Cost of Revenue$477.13M$362.83M+31.5%
Gross Profit$1.69B$1.25B+34.8%
R&D Expenses$499.83M$350.79M+42.5%
Operating Expenses$1.81B$1.49B+21.7%
Operating Income-$121.48M-$234.62M+48.2%
Interest Expense$5.35M$5.33M+0.3%
Net Income-$57.71M-$202.34M+71.5%
EPS (Basic)$-0.39$-1.40+72.1%
EPS (Diluted)$-0.39$-1.40+72.1%
Shares Outstanding (Basic)149.59M144.94M+3.2%
Shares Outstanding (Diluted)149.59M144.94M+3.2%

05—Questions

Frequently Asked Questions

  1. How did Zscaler's revenue and profitability change in fiscal 2024?

    Revenue grew 34% to $2,167.8 million. The net loss decreased to $57.7 million from $202.3 million, and GAAP loss from operations narrowed to $121.5 million from $234.6 million. Non-GAAP income from operations was $442.2 million, a 20% non-GAAP operating margin.

  2. What is the status of the convertible senior notes?

    The company had $1,150.0 million principal of 0.125% convertible senior notes due July 1, 2025. Because they mature within the next year, they are classified as current liabilities. The company stated it currently intends to settle the principal in cash and had cash, cash equivalents and short-term investments of $2,409.7 million as of July 31, 2024.

  3. How concentrated is Zscaler's revenue and ownership?

    Sales through the top five channel partners and their affiliates represented 25% of fiscal 2024 revenue. No single end customer contributed more than 10% of revenue. Executive officers, directors and 5% holders together beneficially owned approximately 43.2% of common stock, with Jay Chaudhry and affiliates owning approximately 17.6%.

  4. What were the key customer metrics for the year?

    The company had over 8,650 customers as of July 31, 2024, up from 7,700 a year earlier, including approximately 35% of the Forbes Global 2000. The dollar-based net retention rate was 115%, compared with 121% for the prior trailing 12-month period.

06—Continue

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