Zscaler (ZS) Stock Forecast & Price Target

Zscaler reported calculated billings of $743 million, an 18% year-over-year growth that exceeded market expectations by $23 million, driven by a notable 25% increase in unscheduled billings. Additionally, the company's revenue reached $657.9 million, reflecting a 23% year-over-year growth, supported by strong customer engagement and expansion in its core segments, particularly in data protection. The positive trajectory is further solidified by improvements in sales capacity and productivity, along with a robust performance in its go-to-market strategies, fostering confidence in Zscaler's execution capabilities for the remainder of FY25.

Zscaler faces significant challenges that contribute to a negative outlook, particularly due to higher-than-expected sales force attrition, which may disrupt its sales and renewal cycles. Additionally, management has indicated that the introduction of new products will negatively impact gross margins in the near term, raising concerns about the company’s profitability. Moreover, the intensified competitive landscape and the necessity for organizations to adopt Zscaler’s cloud platform are critical for future growth, highlighting risks related to billings growth and core use case expansion.