ZS (Zscaler, Inc.): Themes, ETFs, and Basket Ideas
Last updated June 2026
Short answer
What does Zscaler, Inc. do?
Zscaler is a cloud-native cybersecurity company built around the zero trust security model. Instead of routing traffic through a traditional corporate network perimeter, Zscaler operates a globally distributed cloud platform that sits between users and the applications they access, inspecting traffic and enforcing security policy in real time. Its two flagship products are Zscaler Internet Access (ZIA), which secures connections to the public internet and SaaS apps, and Zscaler Private Access (ZPA), which connects users directly to private applications without exposing the corporate network.
The company makes money through subscriptions priced per user, so revenue grows as customers add seats and adopt more modules. Zscaler has expanded beyond core access into data protection, cloud security posture, and AI-driven analytics. Founded in 2007 by Jay Chaudhry, who remains CEO and a large shareholder, the company is headquartered in San Jose, California.
Where is Zscaler, Inc. heading?
1. Zero trust replacing legacy perimeter.
The structural tailwind is the shift away from castle-and-moat network security (firewalls and VPNs) toward zero trust, where every connection is verified. Hybrid work and SaaS adoption broke the old perimeter model, and Zscaler is a category leader positioned to displace legacy appliance vendors as enterprises modernize.
2. Platform expansion and upsell.
Zscaler started with secure internet access but has added private access, data loss prevention, cloud posture management, and AI analytics. This expands the addressable spend per customer and lifts net revenue retention, since existing customers buy more modules over time without a new sales cycle.
3. Large enterprise and government traction.
Zscaler has won large multinational and federal customers, including FedRAMP-authorized deployments. Big enterprises generate large, sticky contracts and many seats, and government wins validate the platform for security-sensitive buyers, supporting a long expansion runway in regulated sectors.
4. AI as both feature and demand driver.
Zscaler positions AI two ways: securing enterprise use of generative AI tools and applying AI to its own threat detection across the traffic it inspects. Its huge daily transaction volume is a data advantage for training detection models, a differentiator versus appliance-based competitors.
Risks worth tracking: Zscaler trades at a high revenue multiple, so any deceleration in growth or billings can compress the stock sharply. Competition is intensifying: Palo Alto Networks, Cisco, Cloudflare, and Microsoft all push secure access service edge (SASE) offerings, and Microsoft can bundle security into existing enterprise agreements at aggressive prices. Sales cycles for large deals can lengthen in tighter IT budget environments. The company has historically run GAAP losses due to heavy stock-based compensation, which dilutes shareholders even as free cash flow is positive. Founder-CEO concentration and a premium valuation amplify volatility around quarterly results.
Earnings and valuation (approximate, early 2026)
A simple financial snapshot. These are approximations and refresh quarterly; for current figures see Zscaler, Inc.'s investor relations page or your broker.
- Revenue (TTM): ~$2.7 billion
- Revenue growth: ~20% year over year
- Operating margin (GAAP): ~low single digits or near breakeven
- Operating margin (non-GAAP): ~20%
- Free cash flow: ~$700 million annually
- Price to sales: ~12-15x
- Dividend yield: None (no dividend)
- Cash and investments: ~$2.5 billion (modest convertible debt)
Zscaler trades at a premium price-to-sales multiple typical of high-growth cloud security names, reflecting durable subscription revenue and strong free cash flow despite thin GAAP profitability. The valuation is sensitive to billings and net retention trends; a slowdown in growth or rising competitive pressure would compress the multiple quickly.
ZS's competitors
Secure access service edge (SASE) and zero trust
Palo Alto Networks (Prisma Access) is the largest direct competitor, combining network and cloud security at scale. Cisco (with Umbrella and its security portfolio), Netskope, and Cloudflare all offer cloud-delivered SASE and zero trust network access that overlaps directly with Zscaler's core ZIA and ZPA products.
Cloud and platform security incumbents
Microsoft competes through its Entra and Defender security suite, often bundled into existing Microsoft 365 and Azure enterprise agreements, which is a pricing and distribution threat. Broadcom (Symantec) and Fortinet sell competing secure web gateway and SASE capabilities, particularly to customers preferring an integrated vendor.
Legacy network security being displaced
Zscaler's growth comes partly from replacing traditional firewall and VPN appliances. Incumbents like Check Point, Fortinet, and legacy Cisco hardware represent the install base Zscaler is positioned to displace as enterprises move to cloud-delivered zero trust.
Using ZS in a Walnut basket
The most useful question to ask about a single stock is rarely “will it go up?”. It's “does this fit a thesis I actually believe in, and how do I size it alongside other stocks that fit the same thesis?” That's what Walnut is built for.
Open the AI assistant on Walnut and describe a thesis (for example: “the AI infrastructure buildout”, “dividend growth large-caps”, “global semiconductors”) where ZS would naturally fit. The AI proposes 5 to 6 constituents with target weights, you review, and you can fund the basket through your broker once you're ready.
Build a basket around ZS with Walnut
Use Zscaler, Inc. as one constituent in a thematic basket Walnut's AI helps you assemble. Describe a thesis you believe in, the AI proposes the holdings and weights, and you approve before any broker order.
FAQ
What is Zscaler's ticker symbol?
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ZS, listed on Nasdaq. Officially Zscaler, Inc. Founded in 2007 by Jay Chaudhry, headquartered in San Jose, California. The company went public in 2018 and trades during US market hours.
What does Zscaler do?
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Zscaler is a cloud-native cybersecurity company built on the zero trust model. It runs a global cloud platform that sits between users and applications, inspecting traffic and enforcing policy. Its main products are Zscaler Internet Access (ZIA) for internet and SaaS connections and Zscaler Private Access (ZPA) for private applications, sold as per-user subscriptions.
Who are Zscaler's main competitors?
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Palo Alto Networks (Prisma Access) is the largest direct SASE competitor. Cloudflare, Netskope, and Cisco offer overlapping cloud security and zero trust access. Microsoft competes through its Entra and Defender suite, often bundled into enterprise agreements. Fortinet, Broadcom (Symantec), and Check Point compete from the legacy network security side.
Is Zscaler a cybersecurity stock?
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Yes. Zscaler is one of the pure-play cloud cybersecurity leaders, focused specifically on zero trust secure access. It is frequently grouped with Palo Alto Networks, CrowdStrike, Fortinet, and Cloudflare as a core holding in cybersecurity themes and ETFs.
What is zero trust security?
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Zero trust is a security model that assumes no user or device is trusted by default, even inside the corporate network. Every connection is verified before access is granted. Zscaler delivers this from the cloud, replacing the traditional perimeter approach of firewalls and VPNs that assumed anything inside the network was safe.
Does Zscaler pay a dividend?
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No. Zscaler has not paid a dividend and reinvests cash into growth, sales capacity, and product development. Like many high-growth software companies, it returns no capital through dividends; investors rely on share price appreciation, and stock-based compensation is a notable dilution factor.
Is Zscaler profitable?
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Zscaler generates strong free cash flow and is profitable on a non-GAAP basis, but GAAP profitability has historically been thin or negative due to heavy stock-based compensation. The cash-generation profile is healthy; the gap between cash flow and GAAP earnings is mostly non-cash compensation expense.
What is Zscaler's market cap?
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Approximately $40-50 billion as of early 2026, placing it among the larger pure-play cybersecurity companies. Market cap is sensitive to growth and billings trends, so it moves materially around quarterly results given the premium valuation typical of high-growth cloud security names.
Is Zscaler in the S&P 500?
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Zscaler is a large-cap company and a member of the Nasdaq-100. Its S&P 500 membership has been subject to index review based on profitability and market cap criteria; investors should confirm current index membership, as it can change over time.
Which ETFs have the most Zscaler exposure?
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Cybersecurity ETFs such as CIBR, HACK, and BUG hold ZS at meaningful weights as a core component. QQQ includes ZS as part of the Nasdaq-100 at smaller weight. Broad tech and cloud software ETFs like WCLD and IGV also hold ZS. Most concentrated exposure comes through dedicated cybersecurity funds.
Which thematic baskets typically include Zscaler?
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On Walnut, Zscaler fits cybersecurity themes most directly, as a leading zero trust and cloud security name. It can also appear in broader cloud software or enterprise SaaS baskets. It is commonly paired with CrowdStrike, Palo Alto Networks, and Fortinet to build a diversified cybersecurity exposure.
How is Zscaler different from CrowdStrike?
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Both are cloud-native cybersecurity leaders, but they secure different layers. Zscaler focuses on secure network access and zero trust connectivity between users and applications. CrowdStrike focuses on endpoint protection, securing the devices themselves. They overlap at the edges and are often held together rather than as direct substitutes.
Is Zscaler a good stock to buy?
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Descriptive, not a recommendation. Zscaler is a category leader in cloud-delivered zero trust security with durable subscription revenue, strong free cash flow, and roughly 20% growth, balanced against a premium valuation, intensifying competition from Palo Alto Networks and Microsoft, GAAP losses from stock-based compensation, and sensitivity to billings trends. Whether it fits a given portfolio depends on the investor's goals, risk tolerance, and time horizon. Walnut is informational, not investment advice.
Walnut is informational, not investment advice. Financial figures on this page are approximations; always verify current numbers with Zscaler, Inc.'s investor relations page or your broker before making investment decisions.