Zscalers Comprehensive Data Security Expansion: A Game Changer in the GenAI and SaaS Era
In the third quarter of fiscal 2025, Zscaler (ZS) continued to demonstrate its strong momentum in its Data Security Everywhere strategy, one of the company's three main growth drivers. Historically, data security was most critical in regulated industries such as finance and healthcare. However, with the rapid growth of GenAI and security-as-a-service (SaaS) usage, data security is now becoming essential across all industries.
Zscaler's data security expansion now covers structured and unstructured data, both in motion and at rest, across channels like web, email, SaaS, endpoints, and GenAI apps. This comprehensive offering is helping the company win large enterprise deals, as evidenced by a recent seven-figure Annual Contract Value (ACV) deal with an existing Fortune 50 automotive customer. The customer added Zscaler's endpoint Data Loss Prevention (DLP) module and privileged remote access, while expanding Zero Trust users with additional Zscaler Private Access seats. This brought the customer to six out of Zscaler's eight data security modules, including inline DLP, cyber isolation, data isolation, SaaS security, classification and encryption, and endpoint DLP. As a result, the customer's annual spend with Zscaler grew more than 50% to well above $10 million.
Zscaler also landed a seven-figure ACV deal with a new Fortune 100 food and beverage company during the third quarter. The company adopted both Zero Trust for users and several ZS data security modules. These recent wins show that Zscaler's data security strategy is gaining traction beyond the regulated sectors as more enterprises adopt GenAI tools and SaaS applications.
In addition to Zscaler's success, Palo Alto Networks (PANW) and CrowdStrike (CRWD) are also evolving their platforms to meet enterprise security demands. Palo Alto Networks highlighted growing traction for Prisma Access Browser in the third quarter of fiscal 2025, as AI drives more applications and data into the cloud. CrowdStrike is positioning Charlotte AI as a key part of its competitive advantage in delivering automated and scalable cybersecurity. In the first quarter of fiscal 2026, CRWD expanded Charlotte AI's detection triage, enabling Charlotte AI to deliver autonomous expert-level triage, reasoning, and response at machine speed.
From a valuation standpoint, Zscaler trades at a forward price-to-sales ratio of 15.1X, slightly higher than the industry's average of 14.52X. The Zacks Consensus Estimate for ZS' fiscal 2025 earnings implies a year-over-year decline of 0.31%, while for fiscal 2026 earnings implies year-over-year growth of 12.13%. The earnings estimates for fiscal 2025 and fiscal 2026 have been revised upward in the past few months, indicating positive investor sentiment towards the company's growth prospects.
In conclusion, Zscaler's comprehensive data security offering is helping it win large enterprise deals and expand its footprint beyond regulated industries. As more enterprises adopt GenAI tools and SaaS applications, Zscaler's platform remains well-equipped to help them keep sensitive data secure. With strong momentum and positive investor sentiment, Zscaler appears to be well-positioned for continued growth in the coming quarters.
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