Executive Summary
Zscaler reported QQ1 2025 revenue of $627.96 million, up 26.4% year over year and 5.9% sequentially. The robust top-line growth reflects continued demand for cloud security and zero-trust networking solutions as enterprises accelerate digital transformation. Despite a solid gross margin of 77.5%, profitability remained elusive in the quarter, with operating income of -$30.67 million and net income of -$12.05 million, driven by elevated operating expenses (R&D $154.25 million; SG&A $362.91 million) as the company sustains investment in product development and go-to-market capabilities. Cash flow generation remained strong, with operating cash flow of $331.34 million and free cash flow of the same amount, and the balance sheet shows a durable liquidity position (cash and equivalents plus short-term investments totaling ~$2.705 billion) and a net cash position of ~$316 million after debt. While the business demonstrates compelling revenue growth and a healthy balance sheet, the near-term profitability gap indicates a continued investment cycle that investors should monitor alongside unit economics, customer concentration, and competitive dynamics. Absent a formal forward guidance in the dataset, the earnings trajectory will hinge on operating efficiency, mix shift toward higher-margin ARR, and successful monetization of new products and cross-sell opportunities within large enterprise deployments.
Key Performance Indicators
QoQ: -13.79% | YoY:33.42%
Key Insights
Revenue: QQ1 2025 revenue of $627.96M, up 26.42% YoY and 5.92% QoQ. Gross Profit: $486.49M, gross margin 77.47% (YoY +26.26%, QoQ +5.15%). Operating Income: -$30.67M, operating margin -4.88% (YoY margin improved vs prior periods but remains negative); EBITDA: $24.39M, EBITDA margin 3.88%. Net Income: -$12.05M, net margin -1.92%. EPS: -$0.079, diluted -$0.079. Cash Flow: Net cash provided by operating activities $331.34M; Free cash flow $331.34M. Balance Sheet: Cash & equivalents $1.553B; sho...
Financial Highlights
Revenue: QQ1 2025 revenue of $627.96M, up 26.42% YoY and 5.92% QoQ. Gross Profit: $486.49M, gross margin 77.47% (YoY +26.26%, QoQ +5.15%). Operating Income: -$30.67M, operating margin -4.88% (YoY margin improved vs prior periods but remains negative); EBITDA: $24.39M, EBITDA margin 3.88%. Net Income: -$12.05M, net margin -1.92%. EPS: -$0.079, diluted -$0.079. Cash Flow: Net cash provided by operating activities $331.34M; Free cash flow $331.34M. Balance Sheet: Cash & equivalents $1.553B; short-term investments $1.154B; total cash & equivalents $2.707B; total assets $4.709B; total liabilities $3.281B; total stockholders’ equity $1.429B. Leverage and liquidity: current ratio 1.09, debt to capital 0.464, net debt / cash position net cash of $316.3M; ROE negative at -8.44%, ROA -0.256%.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
627.96M |
26.42% |
5.92% |
| Gross Profit |
486.49M |
26.26% |
5.15% |
| Operating Income |
-30.67M |
33.42% |
-13.79% |
| Net Income |
-12.05M |
64.01% |
19.00% |
| EPS |
-0.08 |
65.65% |
20.60% |
Key Financial Ratios
operatingProfitMargin
-5.08%
operatingCashFlowPerShare
$2.17
freeCashFlowPerShare
$1.91
priceEarningsRatio
-576.19
Management Commentary
Note: The supplied dataset contains no earnings call transcript. As a result, management quotes and verbatim commentary are not currently available. Key thematic expectations based on the quarter’s results and industry context (to be verified against the actual call) would typically include: (1) Strategy and product investment focus on expanding the Zscaler platform (ZTNA, ZIA, ZPA, Cloud Security Posture Management, Cloud Workload Segmentation) to drive ARR growth and higher-margin revenue streams; (2) Go-to-market execution to accelerate customer expansion within large enterprises; (3) Operational discipline to improve profitability through mix shift toward higher-margin products and efficiency in go-to-market spend; (4) Market conditions remaining favorable for cloud security adoption amid ongoing digital transformation.
Not disclosed in the provided transcript dataset.
— Management
Not disclosed in the provided transcript dataset.
— Management
Forward Guidance
Explicit forward guidance is not provided in the supplied data. Given the QQ1 2025 results, the following neutral-to-moderate outlook can be inferred: (1) Revenue growth remains robust, with YoY growth around 26%, suggesting continued demand for cloud security offerings; (2) Profitability is expected to remain under pressure in the near term due to sustained investments in R&D and GTM, with margin expansion likely to lag revenue growth until operating efficiency improves and product mix shifts to higher-margin offerings; (3) Cash generation remains strong, supporting balance sheet resilience and potential for strategic investments or bolt-on opportunities. Monitoring points include: trajectory of gross margin stability, progression toward positive operating income, ARR growth and net retention, and the rate of headcount-related opex as a percentage of revenue.