Thu, May 29, 8:17 PM (25 days ago)
**Summary of Zscaler, Inc. (ZS) Q1 2025 Financial Performance** **Ticker:** ZS **Quarterly Financial Health:** - **Revenue:** $678.0 million, up 23% year-over-year (YoY). - **Gross Profit:** $522.1 million, with a gross margin of 77%. - **Operating Expenses:** $547.5 million, including significant investments in sales and marketing ($314.6 million) and research and development ($169.8 million). - **Net Loss:** $4.1 million, compared to a net income of $19.1 million in Q1 2024. - **Earnings per Share (EPS):** -$0.03, diluted. **Performance Metrics:** - **Dollar-Based Net Retention Rate:** 114%, indicating strong customer retention and expansion. - **Free Cash Flow:** $119.5 million, reflecting strong operational cash generation. **Trends and Uncertainties:** - **Revenue Growth:** Driven by increased users and additional subscriptions to existing customers. - **Operating Expenses:** Significant investments in sales, marketing, and R&D to drive future growth. - **Profit Margins:** Gross margin decreased slightly due to increased employee-related expenses and data center operating costs. - **Cash Flow:** Strong operational cash flow, with significant investments in property and equipment. - **Future Operations Impact:** Continued investment in growth areas, potential acquisitions, and strategic transactions. **Key Financial Data:** - **Cash and Cash Equivalents:** $1.99 billion, providing substantial liquidity. - **Deferred Revenue:** $1.99 billion, indicating strong future revenue visibility. - **Convertible Senior Notes:** $1.15 billion, maturing in July 2025, with potential conversion obligations. **Outlook:** - **Growth Strategy:** Continued focus on expanding customer base, enhancing platform functionality, and strategic acquisitions. - **Uncertainties:** Macroeconomic conditions, competitive landscape, and regulatory environment pose risks to future performance. **Conclusion:** Zscaler, Inc. demonstrated strong revenue growth and operational cash flow in Q1 2025, driven by increased user adoption and strategic investments. However, the company faces challenges related to rising operating expenses and potential economic uncertainties. The focus on innovation, customer retention, and strategic growth initiatives positions Zscaler for future success, but careful management of costs and market dynamics will be crucial.