Summary
Zscaler closed fiscal 2024 with fourth-quarter revenue of $592.9 million, up 30.3% from the prior-year quarter. Full-year revenue reached $2.17 billion, up 34.1%. The company still reported a fourth-quarter operating loss of $26.95 million, but that loss narrowed from the prior-year quarter. For fiscal 2024, the operating loss narrowed to $121.5 million. Fourth-quarter net loss was $14.9 million, also narrower, and the full-year net loss narrowed to $57.7 million. Diluted loss per share for fiscal 2024 was $0.39, narrower than the prior fiscal year.
Cash generation improved sharply. Fourth-quarter operating cash flow was $203.6 million, up 49.7%, and fiscal 2024 operating cash flow was $779.8 million, up 68.7%. Capital expenditures were $49.4 million in the fourth quarter, up 82.4%, and $144.6 million for the full year, up 48.8%. On a non-GAAP basis, free cash flow for fiscal 2024 was $584.9 million, and free cash flow margin was 27%. Calculated billings for fiscal 2024 were $2,623.1 million, an increase of 29%.
Deferred revenue was $1.90 billion at July 31, 2024, up 31.6% from the prior-year quarter. Remaining performance obligations were $4.42 billion, up 25.7%. The customer base expanded to over 8,650 customers as of July 31, 2024, up from over 7,700 a year earlier, and roughly 35% of the Forbes Global 2000 were customers. Dollar-based net retention was 115% for the trailing 12 months ended July 31, 2024, down from 121% in the prior-year period. Existing customers are still spending more, but the slower expansion rate suggests add-on sales are not scaling as quickly as they did a year ago.
Gross profit was $462.7 million in the fourth quarter, up 31.3%, and $1.69 billion for fiscal 2024, up 34.8%. Gross margin was 78.0%, up 0.6 percentage points from the prior-year quarter, and fiscal 2024 gross margin was 78.0%, up 0.4 percentage points. The fourth-quarter operating margin was negative 4.5%, up 5.2 percentage points, and the full-year operating margin was negative 5.6%, up 8.9 percentage points. The improvement reflects revenue growth and cost discipline, though the company remains unprofitable on a GAAP basis.
Management's outlook points to continued investment. Zscaler expects to incur net losses for the foreseeable future as it funds sales and marketing, research and development, and legal matters. It expects customer caution to persist in the near term, with elongated approval processes for large deals and longer sales cycles. The 10-K also notes that calculated billings growth should trend down over time as the absolute base grows, and that sales and marketing will remain the largest operating expense category. Those investments are intended to expand the customer base and grow the business over the long term, but they will keep operating expenses elevated in absolute dollars.
Risks remain material. Macroeconomic pressure from high inflation, high interest rates, and potential recessionary conditions can slow demand. Geopolitical conflicts between Russia and Ukraine and in the Middle East add uncertainty. The company continues to carry a full valuation allowance against U.S. federal, state, and U.K. deferred tax assets, and it expects to maintain that allowance for the foreseeable future. Zscaler also faces convertible senior notes repayment requirements and may need additional equity or debt financing if its capital resources prove insufficient. The company has incurred net losses in all annual periods since inception.
Forecast
No forward guidance in this quarter's filings.
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2024 | Q3 FY2024 | QoQ | Q4 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $592.9M | $553.2M | +7.2% | $455.0M | +30.3% |
| Gross profit | $462.7M | $434.9M | +6.4% | $352.3M | +31.3% |
| Gross margin | 78.0% | 78.6% | -0.6 pp | 77.4% | +0.6 pp |
| Research & development | $139.2M | $125.0M | +11.4% | $96.4M | +44.4% |
| Sales & marketing | $294.2M | $262.4M | +12.1% | $252.8M | +16.4% |
| General & administrative | $56.3M | $50.5M | +11.5% | $46.4M | +21.3% |
| Total operating expenses | $489.6M | $437.9M | +11.8% | $396.9M | +23.4% |
| Operating income (loss) | -$26.9M | -$3.0M | -794.5% | -$44.6M | +39.5% |
| Operating margin | -4.5% | -0.5% | -4.0 pp | -9.8% | +5.2 pp |
| Net income (loss) | -$14.9M | $19.1M | -177.8% | -$30.7M | +51.5% |
| Net margin | -2.5% | 3.5% | -6.0 pp | -6.7% | +4.2 pp |
| Diluted EPS | -$0.10 | $0.12 | -$0.22 | -$0.21 | +$0.11 |
| Customers | 8,650 | 7,700 | +12.3% | 7,700 | +12.3% |
| Net retention rate | 115.0% | 116.0% | -1.0 pp | 121.0% | -6.0 pp |
Risks
MD&A says high inflation, high interest rates and potential recessionary environments, geopolitical conflicts between Russia and Ukraine and in the Middle East, and global health crises can cause uncertainty. It also says customers continue to scrutinize purchasing decisions and require multiple approvals for large expenditures, particularly larger deals.
Risk factors state sales cycles can be long and unpredictable, particularly with large organizations and government entities, and sales efforts require considerable time and expense. MD&A says customer cautiousness may continue in the near term, elongating sales cycles and the timing of large deals.
Risk factors say the market is intensely competitive and the company faces competition from established network and security vendors with legacy appliance solutions and new cloud-based entrants. Competitors may sell at zero or negative margins, offer free services, bundle products or maintain closed technology platforms, which could cause price reductions and reduced gross margins.
MD&A reports dollar-based net retention rate was 115% for the trailing 12 months ended July 31, 2024, compared with 121% for the trailing 12 months ended July 31, 2023. Risk factors note customers have no obligation to renew and may renew for fewer users, shorter contract lengths or lower-cost product suites.
Risk factors state reliance on key technical, sales and management personnel, including CEO Jay Chaudhry, and that the company has added several new senior management employees in the last year. MD&A notes a February 2024 reversal of $11.7 million of stock-based compensation expense from the departure of the COO who led sales, and a fiscal 2023 reversal of $9.9 million from the departure of the President who led research and development.
Risk factors say the cloud platform is served from a global network of over 160 data centers, many controlled by third parties, and interruptions, capacity constraints, or reliance on public cloud infrastructure could cause performance degradation, customer losses and financial liabilities. It notes a prior temporary increase in public cloud use during the COVID-19 pandemic was substantially more expensive than using company data centers.
Risk factors say advancements in AI and ML are changing the way the industry identifies and responds to cyber threats, and businesses slow to adopt or fail to adopt these technologies may face a competitive disadvantage. They also note computer malware, viruses and hacking may become more frequent and effective through the use of AI.
MD&A reports calculated billings increased $587.6 million, or 29%, in fiscal 2024 over fiscal 2023, and $554.0 million, or 37%, in fiscal 2023 over fiscal 2022, and expects calculated billings growth rate to trend down over time. Risk factors state recent revenue growth rates will decline in the future as the size of the revenue base increases.
Risk factors state sales through the top five channel partners and their affiliates represented 25% of revenue for fiscal 2024, 26% of revenue for fiscal 2023 and 28% of revenue for fiscal 2022. These agreements are generally non-exclusive, and partners may promote competitors' products or cease marketing or reselling the platform with limited or no notice and without penalty.
The company issued $1,150 million aggregate principal amount of 0.125% Convertible Senior Notes due 2025, which mature July 1, 2025. As of July 31, 2024, the Notes were classified as current liabilities, which risk factors say may be seen as a material adverse reduction of net working capital.
Risk factors say the company derives a significant portion of revenue from contracts with government organizations, where demand is often unpredictable and sales involve longer procurement cycles and costly FedRAMP certification requirements. Changes in contracting or fiscal policies could adversely affect results.
The risk factor summary flags risks and challenges related to India operations, where the company has a significant facility. Failure to effectively manage these risks could harm the business.
SaaS KPIs
All quarters →Free Cash Flow Margin
Free Cash Flow
Total Customers
Forbes Global 2000 customers
Summary, forecast, risks and KPIs are extracted from Zscaler, Inc.'s SEC filings for Q4 FY2024 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 6, 2026.