Zscaler’s QQ2 2025 results underscore sustained top‑line momentum and platform expansion, driven by aggressively improving go‑to‑market efficiency and a multi‑pillar product strategy. Revenue reached $647.9 million, up 23% year over year and roughly 3% quarter over quarter, while ARR exited above $2.7 billion—up 23% YoY. Management reiterated confidence in reaching $3.0+billion+ ARR by year‑end, anchored by growing pipeline, higher sales productivity, and expanding adoption of Zero Trust Everywhere across users, workloads, and the cloud. Non‑GAAP operating margin remained strong at roughly the mid‑teens to low‑20s percentage range (and the company highlighted a 22% operating margin for the quarter on a non‑GAAP basis), with free cash flow margin at a record 22%. The balance sheet remains highly liquid, with roughly $2.9 billion in cash, cash equivalents and short‑term investments, and a net cash position (net debt) of about $520 million.
Key growth catalysts cited by management include: (1) Zero Trust Everywhere as a framework driving broader platform adoption and higher ACV, (2) Zero Trust Branch as a streamlined replacement for legacy firewalls/SD‑WANs at the edge, and (3) AI‑enabled data protection and analytics that enhance policy enforcement, reduce risk, and unlock higher‑margin product bundles. Management also highlighted meaningful customer momentum with large, multi‑pillar deployments, GSIs accelerating deal closures, and government/public sector traction. While near‑term GAAP profitability remains pressured by ongoing investments and “new product” mix, the company continues to generate strong cash flow and leverage in the business model. However, investors should monitor macro headwinds, deal scrutiny on large deployments, and the tempo of new logo vs. upsell mix as important risk factors.