Zscaler, Inc.
Information Technology · Systems Software
SASE pure-play monetizing the structural shift off perimeter security. $1B+ ARR per quarter, ~30% YoY billings growth, FCF margin 25%+. Replacement cycle is multi-year - enterprises peel off VPN + firewall + proxy stacks one workflow at a time.
- ZPA replaces VPN at every Fortune 2000 hybrid-work shop; TAM expands with AI-app access governance (Zenith AI)
- Land-and-expand: dollar-based net retention >115%, large customers >$1M ARR growing 25%+ YoY
- Federal traction (FedRAMP High, DoD IL5) hard to replicate; $PANW Prisma the only credible peer at this scale
- Cloud-native architecture vs $PANW/$FTNT appliance heritage - gross margin 78% vs 70s for hardware-led peers
- Microsoft Entra + Defender bundling pulls SSE downmarket; pricing pressure on net-new logos
- $PANW Prisma Access closing feature gap fast; co-sell motion with hardware refresh advantages
- Stock-based comp 22% of revenue dilutes FCF per share; operating margin GAAP still negative
- Billings deceleration any quarter re-rates the multiple - trades on growth, not earnings
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