"We delivered a strong Q4 with all metrics exceeding the high-end of our guidance. Revenue grew 30% year-over-year. Billings grew 27% and profitability reached new records with operating margins of approximately 22% and free cash flow margin of 23%. We also achieved a new milestone of $1 billion in quarterly bookings in Q4, driven by an acceleration in new and upsell business in the quarter. We crossed $2.5 billion in ARR in Q4, and we expect to achieve a new milestone of $3 billion or more in ARR in fiscal '25."
— Jay Chaudhry
03Detailed Report
ZS
Company ZS
Period
Q4 2024
CurrencyUSD
Report TypeQuarterly Earnings
GeneratedMay 14, 2026
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Executive Summary
Zscaler delivered a robust fourth quarter of FY2024, underscoring the strength of its Zero Trust platform in a challenging macro environment. Revenue rose 30% year-over-year to $593 million, and total calculated billings grew 27% YoY to $911 million, with QoQ billings up 45%. The company also announced ARR surpassed $2.5 billion in Q4 and guided to $3.0B+ ARR in fiscal 2025, signaling sustained scale-up and confidence in the land-and-expand model. Management attributed the strength to higher adoption of the broader platform (ZIA, ZPA, ZDX), expanding emerging products, and AI analytics driving incremental growth. Net income remained negative on a GAAP basis (-$14.9 million) as Zscaler continues to invest in growth and cloud infrastructure, but non-GAAP profitability and free cash flow were solid, with operating margin around 22% and free cash flow margin of 23%, supported by a cash-rich balance sheet (over $2.4B in cash and equivalents and short-term investments). The Q4 results, complemented by FY25 guidance and strategic product expansion (Airgap, Avalor, AI analytics), position Zscaler to pursue a large, multi-decade TAM in Zero Trust and security AI. The execution remains anchored in an account-centric GTM, GSIs partnerships, and a diversified customer base with meaningful ARR concentration in large enterprises. Delivering on the FY25 ARR and billings trajectory will depend on sustained RPO conversion, scaling of emerging products, and maintaining sales productivity through the go-to-market transition.
Key Performance Indicators
Revenue
Increasing
592.87M
QoQ: 7.17% | YoY: 30.30%
Gross Profit
Increasing
462.66M
78.04% margin
QoQ: 6.58% | YoY: 31.32%
Operating Income
Increasing
-26.95M
QoQ: -509.31% | YoY: 39.51%
Net Income
Increasing
-14.88M
QoQ: -177.80% | YoY: 51.50%
EPS
Increasing
-0.10
QoQ: -176.54% | YoY: 52.62%
Revenue Trend
Margin Analysis
Financial Highlights
Revenue and profitability
- Q4 2024 revenue: $593.0M, up 30% YoY and 7% QoQ. Americas 55%, EMEA 30%, APJ 15% geographic mix.
- Gross margin: 81.1% in Q4 2024, flat to 81.4% in Q3 and up from 80.7% in the year-ago quarter. YoY expansion aided by accounting change (longer cloud infrastructure useful life) contributing ~60 bps of gross margin benefit.
- Operating expenses: $353.0M, up 8% QoQ and 26% YoY.
- Operating income: -$26.95M, operating margin of -4.55% (YoY improvement of ~260 bps).
- EBITDA: $23.03M; EBITDA margin implied around 3.88%.
- Net income: -$14.88M; net margin -2.51% (GAAP). Management notes the results are presented on a non-GAAP basis in the earnings release.
- Earnings per share: GAAP EPS -$0.0995; diluted -$0.0982.
Cash flow and liquidity
- Free cash flow (FCF) margin: 23% in Q4, with data center CapEx ~8% of revenue.
- Operating cash flow: $203.56M; free cash flow: $136.32M.
- Cash, cash equivalents, and short-term investments: ~$2.409B at quarter end; total cash position strengthens liquidity.
- Balance sheet leverage: Total debt ~$1.237B; net debt position is negative $185M (net cash).
Growth metrics and pipeline
- Calculated billings: $911M in Q4 2024, up 27% YoY and 45% QoQ.
- Remaining performance obligations (RPO): $4.418B, up 26% YoY; current RPO ~48% of total.
- ARR: Exceeded $2.5B in Q4; management targets $3.0B+ in FY25.
- 12-month trailing dollar-based net retention rate (NRR): 115%.
- Customers with ARR >$1M: 567; ARR >$5M: 60; customers >$100k ARR: 3,100.
- Q4 emerging products contribution: ~22% of new/upsell in FY24; expected to be in mid-20s% in FY25.
Guidance and long-term outlook
- Q1 FY2025 revenue guidance: $604–$606M, ~+22% YoY; gross margin ~80%; operating income $114–$116M; EPS $0.62–$0.63 (assuming 164M diluted shares).
- FY2025 revenue: $2.60–$2.62B, +20% to +21% YoY; operating income $530–$540M; non-GAAP tax rate 23%; EPS $2.81–$2.87; FCF margin 23.5%–24%; data center CapEx ~3pp higher as % of revenue.
- Longer-term view: Zscaler continues to invest in cloud/AI infrastructure and emerging products (ZDX, Zero Trust for Branch, AI analytics) to sustain growth and margin expansion. Management targets >$5B in ARR over time.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
592.87M
30.30%
7.17%
Gross Profit
462.66M
31.32%
6.58%
Operating Income
-26.95M
39.51%
-509.31%
Net Income
-14.88M
51.50%
-177.80%
EPS
-0.10
52.62%
-176.54%
Key Financial Ratios
Gross Profit Margin
Excellent
78.00%
Gross profit margin is exceptional, indicating strong pricing power and operational efficiency
Operating Profit Margin
Weak
-0.05%
Operating margin is below industry norms, profitability concerns
Net Profit Margin
Weak
-0.03%
Net profit margin is below industry norms, profitability concerns
Return on Assets
Weak
0.00%
Return on assets suggests inefficient capital allocation
Return on Equity
Weak
-0.01%
Return on equity suggests inefficient capital allocation
Current Ratio
Adequate
1.09
Current ratio meets minimum requirements but limited cushion
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