Research Idea
Research content for general circulation. Not individualized advice. Methodology & Disclosures
Legitimate momentum setup with Q2 revenue up 26% YoY, ARR up 25%, raised FY26 guidance, RPO up 31% to $6.1B, record large-deal activity, and the stock up about 26% over 21 trading days.
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AI Analyst Overview
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Valuation Metrics
Fundamental Analysis
Key Financial Insights: ⢠Strong Free Cash Flow ⢠Profitability Still Negative ⢠Elevated Stock Compensation ZS has strong cash flow and liquidity, but persistent losses, high leverage/SBC, and an expensive valuation make profitability execution the key watchpoint.
Price Behavior
Key Price Behavior Insights: ⢠Strong monthly rebound ⢠Near-term resistance ⢠Volatile price swings Support Level: $191â$193 (secondary: $181â$184) Resistance Level: $197.47 ZS gained 13% over the last month and remains bullish above $191â$193, but traders should watch for a decisive break above $197.47 or a volatile pullback from resistance.
Sentiment & News
Key News Insights: ⢠Earnings Outperformance ⢠AI Security Demand ⢠Growth Deceleration Zscaler's strong earnings, AI-security momentum and Z-Flex adoption are offset by slowing-growth and cash-flow concerns that continue to pressure shares.
AI Summary
ZS is now a âprove the next growth vectorâ investment: its premium valuation requires data security, AI security, SecOps and Z-Flex to reaccelerate net-new ARR amid slowing 16%â17% growth, while elevated SBC and rising infrastructure CapEx threaten the free-cash-flow durability supporting the multiple.
Description
Zscaler, Inc. is a San Joseâbased provider of cloud-native security services that deliver secure connectivity for users, devices and workloads to both external and internal applications. Its offerings include secure internet and private access, tools for measuring digital experience, and cloud workload and posture controls designed to reduce misconfiguration, limit lateral threat movement and support compliance. The company serves enterprise clients across industries such as financial services, healthcare, retail, technology and the public sector and was incorporated in 2007 (renamed Zscaler in 2008).
Idea History
| Date | Close | Ticker | Company | Summary | Status | P/L |
|---|---|---|---|---|---|---|
| May 19 | May 26 | ZS | Zscaler, Inc. | Legitimate momentum setup with Q2 revenue up 26% YoY, ARR up 25%, raised FY26 guidance, RPO up 31% to $6.1B, record large-deal activity, and the stock up about 26% over 21 trading days. | Closed | +5.2% |