Zscaler Inc (ZS)

History and Background

Zscaler Inc. was founded in 2007 by Jay Chaudhry and K. Kailash. The company pioneered the concept of a cloud-based security platform, initially focusing on securing web traffic and evolving to encompass a broader range of security services. Zscaler went public in March 2018.

Core Business Areas

• Zscaler Internet Access (ZIA): ZIA provides secure internet and web access for users, protecting them from threats and enforcing security policies. This includes URL filtering, threat prevention, and data loss prevention (DLP).
• Zscaler Private Access (ZPA): ZPA enables secure access to private applications and resources without the need for traditional VPNs. It offers a zero trust network access (ZTNA) approach.
• Zscaler Digital Experience (ZDX): ZDX provides visibility into the user experience, enabling IT teams to identify and resolve performance issues affecting end-users, regardless of their location.

Leadership and Structure

Jay Chaudhry is the Chairman and CEO. The company has a typical corporate structure with departments for engineering, sales, marketing, finance, and operations. The board of directors provides oversight and strategic guidance.

Key Offerings

• Zscaler Internet Access (ZIA): ZIA is Zscaler's flagship product, providing secure internet access and threat protection. While precise market share data fluctuates, Zscaler is a major player in the Secure Web Gateway (SWG) market. Competitors include Netskope, Palo Alto Networks (PANW), and Forcepoint.
• Zscaler Private Access (ZPA): ZPA provides secure access to private applications, replacing traditional VPNs. Zscaler is considered a leader in the Zero Trust Network Access (ZTNA) market. Competitors include Palo Alto Networks (PANW) (Prisma Access), Akamai (AKAM), and Cloudflare (NET).
• Zscaler Digital Experience (ZDX): ZDX monitors and improves user experience with applications. Competitors in this area are larger and include companies like Dynatrace (DT) and Datadog (DDOG).

Industry Overview

The cybersecurity industry is rapidly growing, driven by increasing cyber threats, digital transformation, and the adoption of cloud computing. The shift towards remote work and hybrid environments has further fueled the demand for cloud-based security solutions.

Positioning

Zscaler is a leader in cloud-based security, particularly in SWG and ZTNA. Its competitive advantage lies in its purpose-built cloud architecture, global presence, and comprehensive security capabilities.

Total Addressable Market (TAM)

The TAM for cloud security is estimated to be in the tens of billions of dollars and growing. Zscaler is well-positioned to capture a significant share of this market due to its leadership position and innovative solutions.

Key Competitors

• PANW
• NET
• CRWD
• FTNT

Competitive Landscape

Zscaler competes with established security vendors like Palo Alto Networks and Fortinet, as well as emerging cloud-native security providers like Cloudflare and Crowdstrike. Zscaler's pure-play cloud security focus gives it an advantage in some areas, while larger vendors offer a broader range of security solutions.

Canopy

• Year: 2020
• Acquisition Price (USD millions): 0
• Strategic Rationale: Enhanced data loss prevention capabilities

Historical Growth: Zscaler has experienced rapid growth in revenue and customer base over the past several years.

Future Projections: Analysts expect Zscaler to continue growing at a rapid pace, driven by the increasing demand for cloud security. Growth rate is expected to decrease as the company grows to become a large company.

Recent Initiatives: Recent initiatives include expanding its product portfolio, strengthening partnerships, and investing in sales and marketing.

Zscaler is a strong cloud-based security company with a leading position in the SWG and ZTNA markets. The company is experiencing rapid growth, driven by the increasing demand for cloud security solutions. However, it faces intense competition and a high valuation. Success will depend on its ability to continue innovating and expanding its market reach and manage expenses.

Data Sources:

• Company SEC Filings (10-K, 10-Q), Industry Reports, Analyst Estimates, Company Website

Disclaimers:

This analysis is based on publicly available information and is not financial advice. Market conditions and company performance are subject to change.