Key Stats for Zscaler Stock
- Current Price: $212.53
- Target Price (Mid): ~$393
- Street Target: ~$234
- Potential Total Return: ~85%
- Annualized IRR: ~14% / year
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What Happened?
Zscaler (ZS) told investors at its October 6 Investor Day that existing customers hold about $15 billion of security spend it has not yet captured. That is nearly four times its fiscal 2026 ending ARR of $3.8 billion, and it is a management estimate, not contracted revenue. It came alongside a base case of more than $8 billion in ARR by fiscal 2031 and reaffirmed fiscal 2027 guidance, detailed in its investor relations materials.
The stock has since traded with the sector. Shares fell 5.92% to $207.38 on October 16 as software stocks sold off on AI funding worries. They then rose 2.48% to $212.53 on October 19, still below the October 15 close of $220.43.
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$15 Billion of Room Inside Existing Customers
Management built the estimate from $19 billion of addressable spend within current customers. Customers buy an average of 9 of more than 30 products, and over 40% have bought nothing beyond Zscaler’s core user products. Chief Revenue Officer Ross Tackett, in the role since October 1, called it “a 5x expansion potential just by cross-selling our existing products to customers who already know us and trust us.”
The clearest gap is ZPA, the private-application access product, which about 30% of ZIA user licenses still lack. Chief Product Officer Adam Geller said a Global 2000 financial services customer extended ZPA to all 120,000 users to reduce exposure to AI-discovered vulnerabilities, lifting its ARR by nearly 50%. Net revenue retention near 115% and gross retention in the mid-90s suggest the base is holding as it expands.
CFO Kevin Rubin framed the target: “we see a clear path to grow ARR organically to over $8 billion in ARR by fiscal ‘31, more than doubling our current ARR within the next 5 years.”
Newer Products Are Bringing In New Customers
The plan has a new-customer half. Zscaler counts about 4,600 of an estimated 20,000-plus enterprises with more than 1,500 employees as customers. Roughly one-third of its new-logo ARR now comes from products beyond its core user offerings, up 3x from 2023. Geller said 40% of Zero Trust Branch customers are new to Zscaler. A Fortune 500 retailer with no prior Zscaler deployment bought its browser security product for 350,000 users.
Those newer lines (branch and cloud, data security, and security for AI) grew ARR 60% combined in fiscal 2026, though security for AI ended the year at only about $70 million. On the customer panel, AkzoNobel CIO Kurt De Ruwe said: “Maybe just spending money on security for AI is not a choice. You have to do it.”
The offsets are real. Fiscal 2027 revenue guidance calls for about 17% growth. Rubin expects capital spending to stay elevated as a share of revenue until fiscal 2028 because of memory and component prices.
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TIKR Advanced Model Analysis
- Current Price: $212.53
- Target Price (Mid): ~$393
- Potential Total Return: ~85%
- Annualized IRR: ~14% / year
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The mid case assumes revenue grows around 13% a year through 2036. That is below the roughly 17% annual pace analysts expect through fiscal 2029 and below management’s 17% annual ARR growth base case. With net income margins near 23% and a slightly higher earnings multiple, the model reaches around $393 by July 31, 2031. That is about an 85% total return, or 14% a year.
The Street mean of around $234 is a 12-month target, so it does not compare directly. The main risk is another guidance reset like the 31.52% one-day drop after the May 26 report.
Conclusion
Rubin said Zscaler will now report its three growth engines as a group every quarter. The fiscal first-quarter report, for the quarter ending October 31, brings the first update. Combined growth well above the company’s roughly 17% guided pace keeps the $15 billion upsell case credible. A sharp slowdown from fiscal 2026’s 60% would suggest the white space is harder to convert than management’s estimate implies.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
