Zscaler Inc (ZS) Q1 2025 Earnings Report

Revenue and profitability
- Revenue: $627.96 million, up 26% YoY and 6% QoQ. YoY growth aligns with the ongoing secular demand for Zero Trust and AI-enabled security, while the sequential uptick reflects seasonal and pipeline strength.
- Gross profit and margin: Gross profit $486.49 million; gross margin 77.47% (vs 77.54% prior-year). QoQ margin was roughly flat to down slightly, indicative of continued investment in data center and AI-related infrastructure.
- Operating income and margins: GAAP operating income was -$30.67 million (operating margin -4.88%), reflecting ongoing investments in growth initiatives. Non-GAAP operating margin stood around 21% as highlighted by management, illustrating substantial leverage in the model once scale is achieved.
- Net income and EPS: Net income -$12.05 million; EPS -$0.079 (diluted) for the quarter, in line with large-scale investments and product expansion.
- Cash flow and liquidity: Free cash flow margin 46% (noting data center capex ~3% of revenue). Net cash provided by operating activities $331.34 million. Cash and equivalents plus short-term investments totaled approximately $2.707 billion, underpinning strong liquidity and capacity for continued investments in AI-enabled infrastructure and GTM expansion.
- Billings and RPO: Total calculated billings $517.0 million, up 13% YoY. Unscheduled billings grew >20% YoY, contributing to the strength in bookings. RPO rose 26% YoY to $4.411 billion; current RPO represented ~49% of total RPO, signaling solid visibility.
- Customer metrics: 585 customers with ARR >$1 million; 3,165 customers with ARR >$100,000; over 65 customers with ARR >$5 million. Net dollar-based retention (NDR) for trailing twelve months: 114%.
- Emerging products: ARR in emerging products growing at about twice the rate of core products, underpinning accelerating deal sizes and multi-pillar expansions. Management cited strong contributions from ZDX, Zero Trust for Branch, Cloud and AI analytics, and AI-powered data protection.
- Geographic mix: Q1 revenue by region – Americas 54%, EMEA 30%, APJ 16%.
- Guidance and timing: Q2 revenue guidance of $633–$635 million (~21% YoY), gross margin ~80%, operating profit $126–$128 million, EPS $0.68–$0.69. Full-year 2025 billings guidance of $3.124–$3.149 billion (+19% to +20%), revenue $2.623–$2.643 billion (+21% to +22%), operating profit $549–$559 million, EPS $2.94–$2.99, and free cash flow margin 23.5–24%.