01—Abstract
Summary
Summary of the 10-K filed September 11, 2025. Cited figures are marked; the original filing is the authoritative source.
Zscaler, Inc. (ZS) reported fiscal 2025 (year ended July 31, 2025) revenue of $2,673.1 milliona, up 23% from $2,167.8 million in fiscal 2024, with a net loss of $41.5 million, narrowing from $57.7 million.
Gross margin was 77% and GAAP operating margin was (5)%, while non-GAAP operating margin was 22%. Free cash flow was $726.7 millionb, or a 27% margin. Calculated billings rose 24% to $3,246.2 million, and the company says it will stop reporting calculated billings starting in fiscal 2026 in favor of ARR.
Dollar-based net retention was 114%, down from 116%. The company had over 9,400 customers, including approximately 40% of the Forbes Global 2000 and over 45% of Fortune 500 companies. The company issued $1,725.0 millionc of 0.0% Convertible Senior Notes due 2028 in July 2025 and used the proceeds, along with cash, to repay $1,150.0 million of 2025 Notes at maturity.
It ended the year with cash, cash equivalents and short-term investments of $3,572.4 milliond and an accumulated deficit of $1,189.6 million. The filing also describes an August 1, 2025 acquisition of Red Canary, Inc. for $675.0 million in cash, which adds managed detection and response capabilities to its Security Operations offerings. The company states it expects to continue incurring net losses, and risk factors cover channel partner concentration (top five partners were 28% of revenue), competition, and a 41.4% insider ownership concentration.
02—Key points
Key Highlights
- Revenue grew 23% to $2,673.1 million in fiscal 2025, with subscription and support making up approximately 98% of revenue.
- Net loss narrowed to $41.5 million from $57.7 million, while non-GAAP operating margin improved to 22% from 20%.
- Free cash flow rose to $726.7 million (27% margin) from $585.0 million, and net cash from operating activities was $972.5 million.
- Dollar-based net retention rate was 114%, compared with 116% in the prior year period.
- Issued $1,725.0 million of 0.0% convertible notes due 2028 and repaid $1,150.0 million of 2025 notes in cash; cash and short-term investments totaled $3,572.4 million.
- Agreed to acquire Red Canary, Inc. on August 1, 2025 for $675.0 million in cash, expanding managed detection and response offerings.
- Calculated billings will no longer be reported starting fiscal 2026, as the company transitions to ARR as a key business metric.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2025, Zscaler lost $0.02.
- Revenue$2.67B100.0%
- Cost of revenue−$618.2M23.1%
- Gross profit$2.05B76.9%
- Operating costs−$2.18B81.7%
- Operating income−$128.5M4.8%
- Interest, other & tax$87.0M3.3%
- Net income−$41.5M1.6%
04—Financials
Financial Highlights
Figures from 10-KFY2025filed September 11, 2025Financial Statements
FY2025 against FY2024
| Line item | FY2025FY2024 | Change |
|---|---|---|
| Revenue | $2.67B$2.17B | +23.3% |
| Cost of Revenue | $618.18M$477.13M | +29.6% |
| Gross Profit | $2.05B$1.69B | +21.5% |
| R&D Expenses | $672.49M$499.83M | +34.5% |
| Operating Expenses | $2.18B$1.81B | +20.5% |
| Operating Income | -$128.46M-$121.48M | −5.7% |
| Net Income | -$41.48M-$57.71M | +28.1% |
| EPS (Basic) | $-0.27$-0.39 | +30.8% |
| EPS (Diluted) | $-0.27$-0.39 | +30.8% |
| Shares Outstanding (Basic) | 154.40M149.59M | +3.2% |
| Shares Outstanding (Diluted) | 154.40M149.59M | +3.2% |
05—Questions
Frequently Asked Questions
Is Zscaler profitable on a GAAP basis?
No. The company reported a GAAP net loss of $41.5 million for fiscal 2025, GAAP loss from operations of $128.5 million, and an accumulated deficit of $1,189.6 million. The filing states it expects to continue incurring net losses for the foreseeable future. Non-GAAP income from operations was $580.1 million, which excludes stock-based compensation of $685.5 million and other items.
How concentrated is Zscaler's revenue among channel partners?
Most revenue comes through channel partners: 88% of fiscal 2025 revenue was from channel partners and 12% from direct customers. Sales through the top five channel partners and their affiliates represented 28% of fiscal 2025 revenue. No single end customer contributed 10% or more of revenue.
What convertible debt obligations does Zscaler have?
The company issued $1,725.0 million of 0.0% Convertible Senior Notes due July 15, 2028 in July 2025, with net proceeds of $1,700.0 million. It also purchased capped calls for $196.8 million to reduce potential dilution. The 2028 Notes are convertible under certain conditions before April 15, 2028, and the company's current intent is to settle principal in cash.
How much of the company is controlled by insiders?
As of July 31, 2025, executive officers, directors, current 5% or greater stockholders and affiliated entities together beneficially owned approximately 41.4% of common stock outstanding. Chief Executive Officer and chairman Jay Chaudhry and his affiliates beneficially owned approximately 17.0%. The filing notes this concentration could limit other stockholders' ability to influence corporate matters.
06—Continue