Zscaler, Inc. (ZS) Stock Analysis

Zscaler’s principal competitive advantage lies in its cloud-native, proxy-based security platform, which is purpose-built for “zero trust” architecture. Unlike legacy firewall vendors such as Palo Alto Networks and Cisco, Zscaler’s platform does not connect users to the network, but rather directly to applications, sharply reducing the attack surface and lateral threat movement. This architectural distinction is widely cited by customers as a reason for platform adoption.

Scale is another differentiator. Zscaler operates the world’s largest in-line security cloud, processing over 500 billion transactions and blocking more than 8 billion threats daily. This volume generates a proprietary data set that powers its AI-driven threat detection, a feedback loop that improves efficacy and customer value. By comparison, most rivals lack this level of real-time, high-fidelity data.

Customer satisfaction and retention are strong. Zscaler reports a net promoter score above 70 (vs. SaaS average of 30) and a dollar-based net retention rate of 114–115%. Its customer base includes over 8,650 organizations, with 35% of the Forbes Global 2000.

The company’s first-mover status in cloud security, deep integration with global system integrators, and a founder-led culture focused on innovation further reinforce its position. However, Zscaler faces ongoing threats from well-capitalized competitors, rapid technology shifts, and the need to continually justify its premium pricing and platform approach.