ZS

ACCE thesis

Zscaler operates a cloud-native security platform that routes enterprise internet traffic through its global network of data centers, scanning every byte for threats before delivery to end users. The company benefits from the structural shift away from traditional perimeter-based security as hybrid work models make castle-and-moat architectures obsolete. Revenue acceleration continues with billings growth reaching 28% in Q1 2025, driven by Zero Trust Exchange adoption and expansion within existing enterprise accounts. The stock trades at 29x forward earnings despite negative operating margins, but customer dollar-based net retention above 115% demonstrates pricing power as organizations consolidate security vendors. Zscaler's 150+ global edge locations create meaningful switching costs once enterprises commit to routing their traffic through the platform.

• high
  Extreme valuation multiples

  EV/EBITDA of 177.7x and P/S of 8.6x leave almost no margin of safety; any growth miss could trigger sharp de-rating.
• high
  ACCE score deterioration

  Score dropped 6 points in 90 days (42→36), with Value at just 22/100, signaling worsening risk-reward.
• moderate
  Negative operating margins

  Operating margin is -3.3% and ROE -3.7%; company remains unprofitable despite $727M FCF and 25% revenue growth.
• moderate
  Insider selling, no buying

  Last 10 disclosed transactions show $2.97M in sales and zero buys, suggesting insiders see limited near-term upside.
• moderate
  Revenue growth decelerating

  QoQ growth of only 4.3% against a 5-year CAGR of 47.8% indicates meaningful deceleration in the growth trajectory.

Snapshot