Aureus
FRed Flag

Zscaler, Inc.(ZS)

F

Financial data as of Jul 31, 2025Declining · Technology

FCF Margin2.4%Free Cash Flow / Revenue
Cash Conversion—Operating CF / Net Income
Free Cash Flow$726.7M
Revenue$2.7B
Net Cash$592.4MCash exceeds debt
Debt / FCF27.5xElevated debt burden
Current Ratio2.01Adequate short-term liquidity
YoY FCF Growth-65.3%1 of 5 quarters positive

How This Grade Was Calculated

Base grade from FCF margin, adjusted by financial health factors

BaseF
→
-2Extreme debt-to-FCF ratio (27.5x)
→
-1Significant YoY FCF decline (-65.3%)
→
-1Only 1 positive quarters recently
→
-0.5Highly volatile FCF (consistency: 4.76)
→
+0.25Solid revenue growth (25.9% YoY)
→
FinalF

Analysis Summary

Strengths

  • Net cash position ($0.6B)
  • Strong liquidity (current ratio: 2.01)
  • Strong revenue growth (25.9% YoY)

Concerns

  • Low FCF margin (2.4%)
  • High debt-to-FCF ratio (27.5x)
  • Only 1 positive FCF quarters recently
  • Significant YoY FCF decline (-65.3%)
  • Highly volatile quarterly FCF
Heavy CapEx — Operating cash flow is strong (36% margin) but most is reinvestedCash conversion ratio unavailable or not meaningfulSBC-adjusted FCF used — $0.7B stock-based compensation (91% of reported FCF) subtracted

Financial Breakdown

Key financials compared side by side

Margin Composition

FCF Margin2.4%
Net Margin-1.6%
Operating CF Margin36.4%
CapEx Ratio9.2%

Balance Sheet Health

Debt, liquidity, and leverage snapshot

Net Cash$592.4MCash exceeds debt
Debt / FCF27.5xElevated debt burden
Current Ratio2.01Strong liquidity
Debt / Equity1.00Low leverage

Quarterly FCF Trend

-65.3% YoYDeclining (-65.3%)

Free cash flow per quarter

Sector Comparison — Technology

FCF Margin ranked against sector peers

View all →

Detailed Metrics

Company NameZscaler, Inc.
SectorTechnology
Free Cash Flow$726.7M
Revenue$2.7B
Net Income-$41.5M
Operating Cash Flow$972.5M
Capital Expenditure$245.8M
FCF Margin2.4%
Cash Conversion Rate—
Net Margin-1.6%
Total Debt$1.8B
Total Cash$2.4B
Net Cash$592.4M
Current Ratio2.01
Debt / Equity1.00
Debt / FCF27.5x
YoY FCF Growth-65.3%
Positive Quarters1 of 5
Trend DirectionDeclining
Report DateJul 31, 2025
GradeF
Data SourceYahoo Finance