Zscaler Reports 23% Revenue Growth to $678 Million in Q3 Fiscal 2025

Zscaler, Inc. reported significant financial results for the third quarter of fiscal 2025, with revenues reaching $678.0 million, a 23% increase from $553.2 million in the same period last year. For the nine months ending April 30, 2025, total revenue was $1.95 billion, up 24% from $1.57 billion in the prior year. Despite this growth, the company recorded a net loss of $4.1 million for the quarter, compared to a net income of $19.1 million in the previous year. The nine-month net loss was $23.9 million, an improvement from a loss of $42.8 million in the same period last year.

The increase in revenue was primarily driven by a 10% growth in customer count, which now exceeds 8,650, and additional subscriptions from existing customers contributing $83.5 million. However, the cost of revenue also rose significantly, increasing by 32% to $156.0 million, largely due to higher data center and employee-related expenses. This led to a decrease in gross margin from 79% to 77% year-over-year.

Zscaler has been actively expanding its product offerings and market presence. The company completed several acquisitions, including Airgap Networks Inc. and Avalor Technologies Ltd., which have been integrated into its cloud platform. These strategic moves are part of Zscaler's ongoing efforts to enhance its security solutions and expand its capabilities in the cloud security market. The company also announced plans to acquire Red Canary, Inc. for $675 million, which is expected to further bolster its security operations offerings.

Operationally, Zscaler reported a dollar-based net retention rate of 114% for the trailing twelve months, indicating strong customer loyalty and expansion. The company continues to invest heavily in research and development, with expenses rising 36% to $169.8 million for the quarter, reflecting its commitment to enhancing its cloud platform. As of April 30, 2025, Zscaler's cash, cash equivalents, and short-term investments totaled $3.01 billion, providing a solid financial foundation for future growth initiatives.

Looking ahead, Zscaler anticipates continued investment in its sales and marketing efforts to drive customer acquisition and retention, despite the potential for elongated sales cycles due to macroeconomic uncertainties. The company expects to maintain its focus on expanding its customer base and enhancing its product offerings, while also managing operating expenses to improve profitability over the long term.