MeritValue

Zscaler, Inc.

ZSdata completeness 88%10 fiscal years on file
The thesis, from the filings

Zscaler, Inc. earns about -22% on invested capital, below its ~9% cost of capital, but has diluted owners by 14% over 5 years — no moat visible in the numbers. The estimate methods put fair value between $149.61 and $260.85 a share.Whether it’s worth owning at today’s price is the last question — and yours to answer, below.

i. The business — what you’d actually own
FigureFY 2021FY 2022FY 2023FY 2024FY 2025
Revenue$673.1M1$1.09B2$1.62B3$2.17B3$2.67B3
Net income−$262M4−$390.3M5−$202.3M6−$57.7M6−$41.5M6
Operating cash flow$202M7$321.9M8$462.3M9$779.8M9$972.5M9
Capital expenditure$48.2M10$69.3M11$97.2M12$144.6M12$164.3M12
Free cash flow (derived)$153.9M7$252.6M8$365.1M9$635.3M9$808.2M9
Total debt$913.5M13$968.7M14$1.13B15$1.14B15—
Cash & equivalents$275.9M16$1.01B17$1.26B18$1.42B19$2.39B19
Diluted shares135.7M140.9M144.9M149.6M154.4M

Superscripts are receipts. Each links to the SEC filing the number came from (full list at the bottom).

ii. Your slice — ownership made literal
If you owned
shares
Net assets behind them
$116.53
your share of equity
Profit it earned you last year
−$2.69
Free cash flow it threw off
$52.34
Debt you’d be carrying
—

10 shares is a claim on $116.53 of net worth that earned you −$2.69 and generated $52.34 of cash last year.

iii. Is this a good business?
Moat signal · return on invested capital
-22% avg · 5y
FY21 -14%FY22 -49%FY23 -23%FY24 -2%FY25 —

It earned about -22% on invested capital against a ~9% cost of capital — below the cost of funding. The numbers show no moat.

seeing a moat in the numbers →
Management signal · capital allocation
+14% shares · 5y

Share count is up 14% over 5 years — owners have been diluted. Worth asking what they got for it. Total debt has risen 25% over the same window.

reading capital allocation →

Signals, not verdicts — read from the filings above. Numbers don’t prove a moat; they show its footprint. You decide.

iv. What it’s worth — engine v0.1.0

The 2 estimate methods that apply put fair value between $149.61 and $260.85 a share. They rest on different assumptions, so where they diverge is the story.

DCF · Growth Exit 10Y
$260.85
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears10
  • fcfGrowth20.0%
  • fcfBase$635.3M
DCF · Growth Exit 5Y
$149.61
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears5
  • fcfGrowth20.0%
  • fcfBase$635.3M
Earnings Power Value
not applicable
normalized (5y-median) earnings non-positive — EPV undefined
Graham Number
not applicable
diluted EPS missing or non-positive — Graham Number undefined

Different models answer different questions — which to trust when →

v. The price question — last, on purpose
Is today’s price fair?
See live price ↗
Type a price. The ledger answers.
Or set your own belief
FCF growth, next 5 years20.0%
Discount rate (WACC)8.93%
Terminal growth2.5%
At your growth, a share is worth $149.61
The three cases
Bear0.0%$74.26
Base20.0%$149.61
Bull20.0%$149.61

Bear/base/bull growth = 0% / filed history / history + 5pp. Type a price to see the return each case implies.

Default growth 20.0%= this company’s own filed history (median-to-median FCF CAGR, clamped 0–20%). Your adjustments are recorded anonymously. They become the “what do owners actually believe” dataset.

Sources — the receipts
  1. 10-K · period ending 2021-07-31 · accession 0001713683-23-000113 (RevenueFromContractWithCustomerExcludingAssessedTax)
  2. 10-K · period ending 2022-07-31 · accession 0001713683-24-000109 (RevenueFromContractWithCustomerExcludingAssessedTax)
  3. 10-K · period ending 2023-07-31 · accession 0001713683-25-000158 (RevenueFromContractWithCustomerExcludingAssessedTax)
  4. 10-K · period ending 2021-07-31 · accession 0001713683-23-000113 (NetIncomeLoss)
  5. 10-K · period ending 2022-07-31 · accession 0001713683-24-000109 (NetIncomeLoss)
  6. 10-K · period ending 2023-07-31 · accession 0001713683-25-000158 (NetIncomeLoss)
  7. 10-K · period ending 2021-07-31 · accession 0001713683-23-000113 (NetCashProvidedByUsedInOperatingActivities)
  8. 10-K · period ending 2022-07-31 · accession 0001713683-24-000109 (NetCashProvidedByUsedInOperatingActivities)
  9. 10-K · period ending 2023-07-31 · accession 0001713683-25-000158 (NetCashProvidedByUsedInOperatingActivities)
  10. 10-K · period ending 2021-07-31 · accession 0001713683-23-000113 (PaymentsToAcquirePropertyPlantAndEquipment)
  11. 10-K · period ending 2022-07-31 · accession 0001713683-24-000109 (PaymentsToAcquirePropertyPlantAndEquipment)
  12. 10-K · period ending 2023-07-31 · accession 0001713683-25-000158 (PaymentsToAcquirePropertyPlantAndEquipment)
  13. 10-K · period ending 2021-07-31 · accession 0001713683-22-000081 (LongTermDebt)
  14. 10-K · period ending 2022-07-31 · accession 0001713683-23-000113 (LongTermDebt)
  15. 10-K · period ending 2023-07-31 · accession 0001713683-24-000109 (LongTermDebt)
  16. 10-K · period ending 2021-07-31 · accession 0001713683-22-000081 (CashAndCashEquivalentsAtCarryingValue)
  17. 10-K · period ending 2022-07-31 · accession 0001713683-23-000113 (CashAndCashEquivalentsAtCarryingValue)
  18. 10-K · period ending 2023-07-31 · accession 0001713683-24-000109 (CashAndCashEquivalentsAtCarryingValue)
  19. 10-K · period ending 2024-07-31 · accession 0001713683-25-000158 (CashAndCashEquivalentsAtCarryingValue)