ZSZscaler, Inc.
Is the business good?
The checks split: margins widening, but 3 of 9 health tests passed.
Weak, deteriorating fundamentals. Nine pass/fail tests of year-over-year health from the filings.
Operating margin has widened over the past few years, the business is getting more profitable per dollar of sales.
Where this answer is blind. The F-score rewards improvement, so an already-elite company can score mid-pack.
How good a business is ZS?
Zscaler, Inc. earns −6.3% on the capital it employs against a 9.0% cost of capital, so growth costs more than it returns.
Return on invested capital · cost of capital 9.0% · 15 points below what the capital costs: growth destroys value
- Operating margin
- −4.0%
Operating margin · Software - Infrastructure median 5.8% · 12 months to Q4 2026
- R&D as % of revenue
- 27%
R&D as % of revenue
- Gross margin
- 77%
Gross margin
| Year | Operating margin |
|---|---|
| FY2021 | −31% |
| FY2022 | −30% |
| FY2023 | −15% |
| FY2024 | −5.6% |
| FY2025 | −4.8% |
| FY2026 | −4.0% |
Details›
- Gross margin12 months to Q4 2026
- 77%
- Operating margin12 months to Q4 2026
- −4.0%
- Net margin12 months to Q4 2026
- −1.9%
- Free cash flow margin
- 25%
- R&D as % of revenue
- 27%
- Revenue, trailing twelve months
- $3.35B
- Free cash flow, trailing twelve months
- $852M
- Net income, trailing twelve months
- −$63M
- Return on invested capitaloperating profit after tax ÷ debt + equity − cash
- −6.3%
Margins, capital and share counts from the statements as filed with the SEC; cash conversion is operating cash flow over operating profit after tax.
Software, Infrastructure
Ranks #60 of 80 by RyuScore