ZSCALER, INC.

Red flags

• Zscaler has incurred annual net losses since inception, including a $63.2 million loss in fiscal 2026, and had an accumulated deficit of $1.25 billion as of July 31, 2026.
• Stock-based compensation and related payroll taxes were $841.6 million in fiscal 2026, approximately 25% of revenue, creating substantial ongoing dilution and a significant gap between non-GAAP and GAAP profitability.
• The top five channel partners and their affiliates generated 31% of fiscal 2026 revenue; agreements are generally non-exclusive and partners may stop marketing or reselling Zscaler with limited or no notice.
• The company has $1.725 billion of 0% convertible notes maturing July 15, 2028. Although management currently intends to settle principal in cash, the obligation could constrain capital allocation or liquidity near maturity.
• Zscaler had $558.7 million of non-cancelable purchase obligations with maturities extending through 2032, including $180.4 million due in fiscal 2027 and $191.8 million in fiscal 2028.