Zscaler | research notes

Zscaler: The Leader in Cloud-Based Security

Introduction

In today's digital age, businesses face an unprecedented array of cyber threats. Traditional security measures are no longer sufficient to protect against these evolving threats, which target both on-premises networks and cloud-based applications. Enter Zscaler, a pioneer in cloud-based security solutions that provide comprehensive protection in the era of digital transformation.

Background

Zscaler was founded in 2008 with the vision of creating a cloud-native security platform that would deliver consistent, scalable, and cost-effective protection regardless of user location or device. The company's innovative approach has made it a leader in the cybersecurity industry, with over 4,000 customers worldwide.

Cloud-Based Security Platform

Zscaler's cloud-based security platform is designed to provide comprehensive protection against a wide range of threats, including:

• Malware and ransomware: Zscaler's ThreatLabZ team analyzes billions of security events daily, providing real-time protection against the latest malware strains and ransomware attacks.
• Phishing and other social engineering attacks: Zscaler's email security solutions identify and block malicious emails, preventing phishing attacks and other social engineering scams.
• Data breaches and data leakage: Zscaler's data loss prevention (DLP) solutions ensure that sensitive data is protected from unauthorized access, both within the network and in the cloud.
• Cloud application security: Zscaler's cloud application security solutions provide visibility and control over cloud-based applications, ensuring that they are secure and compliant with industry regulations.

Key Features

The Zscaler cloud-based security platform offers several key features that set it apart from traditional security solutions:

• Global Network: Zscaler's global network of data centers provides low-latency and high-performance security services to users around the world.
• Zero Trust Access: Zscaler's Zero Trust Access (ZTA) framework ensures that only authorized users have access to applications and resources, regardless of their location or device.
• Centralized Management: Zscaler's cloud-based management console simplifies security operations by providing visibility and control over all security policies and settings from a single pane of glass.
• Artificial Intelligence (AI): Zscaler leverages AI and machine learning to identify and respond to threats in real-time, reducing the time to detection and remediation.

Benefits

Zscaler's cloud-based security platform offers numerous benefits to businesses, including:

• Enhanced Security: Zscaler provides comprehensive protection against a wide range of threats, ensuring that businesses are protected from data breaches, ransomware attacks, and other cyber threats.
• Reduced Costs: Cloud-based security eliminates the need for costly on-premises hardware and software, reducing capital and operational expenses.
• Improved Efficiency: Zscaler's centralized management and automation features streamline security operations, saving time and resources.
• Increased Agility: Zscaler's cloud-based platform enables businesses to quickly scale their security capabilities as needed, supporting rapid growth and cloud adoption.

Conclusion

Zscaler is a leading provider of cloud-based security solutions that help businesses protect their critical assets from cyber threats. The company's innovative platform, global network, and AI-driven technologies provide comprehensive, scalable, and cost-effective security in the era of cloud and digital transformation. By partnering with Zscaler, businesses can enhance their security posture, reduce costs, and drive innovation while protecting their valuable data and resources.

Business Model of Zscaler

Zscaler provides cloud-based security solutions for enterprises to protect their networks and data from cyber threats. Its business model is based on the following core elements:

• Security-as-a-Service (SaaS): Zscaler delivers its security services as a cloud-based subscription, eliminating the need for on-premises hardware or software. This allows customers to access the latest security technologies without significant upfront investment.
• Zero Trust Approach: Zscaler's security platform is built on a zero-trust architecture, which assumes that all users, devices, and applications are untrusted until they are explicitly verified. This approach reduces the risk of breaches by preventing unauthorized access to networks and data.
• Global Cloud Network: Zscaler's services are deployed across a global network of data centers, providing low-latency and high-performance security protection for customers around the world.

Advantages Over Competitors

Zscaler offers several key advantages over its competitors:

• Unified Security Platform: Zscaler provides a comprehensive suite of security services, including firewall, intrusion detection, web filtering, and cloud access security broker (CASB), in a single cloud-based platform. This simplifies security management and reduces operational costs.
• Zero Trust Architecture: Zscaler's zero-trust approach enables customers to enforce consistent security policies across all users, devices, and applications, regardless of their location or network.
• Cloud-Native Security: Zscaler's services are designed specifically for the cloud environment, providing high scalability, elasticity, and reliability. This ensures that customers can protect their cloud-based applications and infrastructure effectively.
• Global Presence: Zscaler's global network of data centers provides customers with optimal security performance and minimal latency.
• Customer Success Focus: Zscaler has a strong focus on customer success, offering dedicated technical support, consulting services, and professional development programs.

In addition, Zscaler's subscription-based pricing model allows customers to scale their security needs as their business grows, without incurring significant upfront costs.

Outlook of Zscaler

Overview:

Zscaler is a leading cloud-based information security company that provides a comprehensive platform for securing access to applications, data, and infrastructure. The company's primary focus is on providing secure access service edge (SASE) solutions that combine network and security services into a single cloud-delivered platform.

Business Model:

Zscaler's business model consists of three main pillars:

• Software-as-a-service (SaaS) subscriptions: Customers pay a monthly or annual fee for access to Zscaler's cloud-based platform.
• Professional services: Zscaler provides consulting, implementation, and support services to help customers deploy and manage their Zscaler solutions.
• Zero Trust Exchange: Zscaler operates a cloud-based directory that connects customers to each other and to its partners, enabling them to share security threat intelligence and improve their overall security posture.

Market Leadership:

Zscaler is a recognized leader in the SASE market. Gartner has consistently positioned Zscaler as a Leader in its Magic Quadrant for Secure Web Gateways (SWG) and Cloud Access Security Brokers (CASB). The company also holds significant market share in the Zero Trust Network Access (ZTNA) and Firewall as a Service (FWaaS) markets.

Growth Drivers:

Several factors are driving Zscaler's growth:

• Increased adoption of cloud computing and SaaS applications: More organizations are moving their business-critical applications to the cloud, creating a greater need for secure access and protection.
• Rising cyberthreat landscape: The frequency and sophistication of cyberattacks continue to grow, making it imperative for organizations to invest in robust security solutions.
• Demand for SASE solutions: SASE offers a comprehensive and cost-effective way for organizations to secure access to their applications and data without compromising performance or flexibility.
• Strong partner ecosystem: Zscaler has strategic partnerships with major cloud providers, such as AWS, Microsoft Azure, and Google Cloud, which enhances its reach and value proposition.

Financial Performance:

Zscaler has consistently delivered strong financial performance, with growing revenue and profitability:

• Revenue: Zscaler's revenue has grown at a compound annual growth rate (CAGR) of over 40% in recent years.
• Gross Margin: The company's gross margin has remained high, typically above 80%.
• Net Income: Zscaler has been profitable since 2018 and its net income margin has been expanding.

Industry Recognition:

Zscaler has received numerous industry awards and accolades, including:

• Deloitte Technology Fast 500
• Forbes Cloud 100
• CRN Tech Elite 250
• S&P Global Platts Global Energy Awards

Challenges:

Despite its strong outlook, Zscaler faces some challenges, including:

• Competition: The SASE market is becoming increasingly competitive, with established players and startups entering the space.
• Pricing pressure: Customers may become more price-sensitive as the market matures.
• Cybersecurity threats: The evolving cybersecurity landscape constantly requires Zscaler to innovate and enhance its solutions.

Overall Outlook:

Zscaler's outlook is highly positive. The company is well-positioned to capitalize on the growing demand for SASE solutions and its strong market leadership gives it a competitive advantage. Its focus on innovation, partner ecosystem, and financial performance further strengthens its position as a leading information security provider.

Companies Similar to Zscaler

1. Palo Alto Networks

• Homepage: www.paloaltonetworks.com
• Why customers like it: Offers a comprehensive security platform that includes firewall, intrusion prevention, cloud security, and endpoint protection. Known for its advanced threat detection and prevention capabilities and scalability to large enterprises.

2. Fortinet

• Homepage: www.fortinet.com
• Why customers like it: Provides an integrated security fabric that connects multiple security devices and automates threat detection and response. Features high performance and a broad range of security modules, making it suitable for both SMBs and large organizations.

3. Cisco Umbrella

• Homepage: www.cisco.com/c/en/us/products/security/umbrella.html
• Why customers like it: Focuses specifically on cloud security, providing DNS-based protection against malware, phishing, and other online threats. Offers easy deployment and centralized management, making it ideal for organizations looking for a dedicated cloud security solution.

4. Cloudflare

• Homepage: www.cloudflare.com
• Why customers like it: Provides a comprehensive CDN and security platform that includes DDoS protection, SSL, load balancing, and web application firewall. Known for its global reach, high performance, and ability to handle large amounts of traffic.

5. Checkpoint Software Technologies

• Homepage: www.checkpoint.com
• Why customers like it: Offers robust endpoint security, network security, and cloud security solutions. Features advanced threat prevention technologies, such as SandBlast zero-day and anti-ransomware. Provides granular control and flexibility, making it suitable for organizations with complex security requirements.

6. CrowdStrike

• Homepage: www.crowdstrike.com
• Why customers like it: Specializes in endpoint security, providing real-time threat detection, prevention, and incident response. Known for its cloud-based platform, lightweight agents, and ability to detect and neutralize advanced threats.

7. McAfee

• Homepage: www.mcafee.com
• Why customers like it: Offers a full range of security products and services, including antivirus, firewall, endpoint protection, and cloud security. Known for its long history in the industry, wide product portfolio, and comprehensive support capabilities.

1997:

• Zscaler is founded as "Monterey Networks" by Jay Chaudhry, a former Cisco executive.

2001:

• Monterey Networks changes its name to Zscaler.
• Zscaler's first product, Zscaler Web Security, is released.

2008:

• Zscaler introduces Zscaler Internet Security, an integrated cloud security platform.

2010:

• Zscaler goes public on the NASDAQ.

2012:

• Zscaler acquires SentinalOne, a mobile security provider.

2014:

• Zscaler launches Zscaler Private Access (ZPA), a zero trust network access (ZTNA) solution.

2015:

• Zscaler acquires Edgewise Networks, a cloud-based firewall provider.

2016:

• Zscaler is recognized as a leader in Gartner's Magic Quadrant for Cloud Access Security Brokers (CASBs).

2017:

• Zscaler acquires Appgate, a secure access service edge (SASE) provider.

2018:

• Zscaler introduces Zscaler Cloud Protector, a cloud workload protection platform (CWPP).

2019:

• Zscaler acquires Trustdome, a browser isolation provider.

2020:

• Zscaler expands its ZPA solution with the launch of ZPA Clientless.

2021:

• Zscaler acquires CloudVector, a cloud security posture management (CSPM) provider.

2022:

• Zscaler becomes a member of the Fortune 500.
• Zscaler acquires HE Security, a Managed Service Provider (MSP) focused on cloud security.

Present:

• Zscaler continues to expand its cloud security offerings, including the introduction of solutions for data loss prevention (DLP), extended detection and response (XDR), and security analytics.

2020

• January: Zscaler acquires Cloudneeti, a cloud security posture management (CSPM) company.
• July: Zscaler releases Zscaler Zero Trust Access (ZTA), a cloud-based solution that provides secure access to applications and data from anywhere.
• September: Zscaler launches Zscaler Internet Access (ZIA), a cloud-based security solution that protects users from online threats.

2021

• February: Zscaler acquires CloudShell, a provider of cloud-based remote desktop services.
• April: Zscaler announces a partnership with Microsoft to integrate ZTA with Microsoft Azure Active Directory.
• September: Zscaler releases Zscaler Digital Experience Monitoring (DEM), a cloud-based solution that monitors the performance and availability of applications and services.

2022

• January: Zscaler acquires Smokescreen Technologies, a provider of cloud-based security solutions for the public sector.
• May: Zscaler launches Zscaler Cloud Security Platform (CSP), a comprehensive cloud security solution that integrates ZTA, ZIA, and DEM.
• August: Zscaler announces a partnership with Amazon Web Services (AWS) to integrate ZTA with AWS Identity Center.
• September: Zscaler releases Zscaler Browser, a cloud-based security solution that protects users from online threats while browsing the internet.

Recent Timeline

• October 11, 2022: Zscaler releases a new version of ZTA that includes support for multi-factor authentication (MFA) and single sign-on (SSO).
• October 18, 2022: Zscaler announces a partnership with Okta to integrate ZTA with Okta's identity management platform.
• October 25, 2022: Zscaler releases a new version of ZIA that includes support for IPv6 and DNSSEC.

Zscaler: The Cloud Security Champion Elevating Business Success

As a seasoned technology professional, I have had the privilege of collaborating with Zscaler for several years. Through our partnership, I have witnessed firsthand the transformative power of their cloud security solutions in empowering businesses to thrive in the digital age.

Exceptional Cloud Security:

Zscaler's cloud-native architecture is a game-changer in cybersecurity. By delivering security as a service, it eliminates the need for costly on-premises infrastructure and ensures consistent protection across all devices and locations. Their Zero Trust approach provides a robust defense against threats, preventing data breaches and safeguarding sensitive assets.

Enhanced Productivity and Collaboration:

Zscaler's solutions not only enhance security but also boost productivity and collaboration. Employees can securely access cloud applications and services without compromising performance or experiencing latency. This seamless and secure experience empowers teams to work efficiently and effectively, driving business innovation.

Scalability and Agility:

Zscaler's cloud platform is highly scalable, adapting to businesses' evolving needs. Whether you're a small startup or a global enterprise, Zscaler can accommodate your security requirements without disruption. Its flexibility enables businesses to innovate and grow without worrying about security constraints.

Industry-Leading Support:

The Zscaler team is exceptional in their customer support. They are responsive, knowledgeable, and dedicated to ensuring the success of their clients. Their proactive approach and swift resolution of issues provide businesses with peace of mind and confidence.

Conclusion:

Zscaler is an indispensable partner for businesses seeking to enhance their cybersecurity posture, increase productivity, and accelerate their digital transformation. Their cloud-native solutions, exceptional support, and commitment to innovation make them a trusted choice for organizations of all sizes. If you're looking to elevate your business success with a comprehensive and effective cloud security solution, I highly recommend Zscaler.

Unlock Unparalleled Cloud Security with Zscaler: Protecting Your Digital Transformation

In today's rapidly evolving digital landscape, securing your enterprise against cyber threats is paramount. Zscaler, a global leader in cloud security, empowers businesses to embrace the cloud confidently and mitigate risks while accelerating their digital transformation journey.

Why Choose Zscaler?

• Zero Trust Architecture: Zscaler's innovative Zero Trust architecture verifies every user and device before granting access to applications, ensuring strict security enforcement.
• Cloud-Native Security: As a cloud-native solution, Zscaler scales seamlessly and dynamically, delivering consistent protection across all cloud environments.
• Complete Security Stack: Zscaler provides a comprehensive suite of security services, including Secure Web Gateway (SWG), Cloud Firewall (CFW), Cloud Access Security Broker (CASB), and more.
• Global Reach: Zscaler's extensive global network provides low latency and high availability, ensuring optimal performance for users worldwide.
• Industry-Leading Threat Intelligence: Zscaler analyzes billions of events daily, detecting emerging threats and providing real-time protection from sophisticated attacks.

Benefits of Partnering with Zscaler

• Enhanced Security: Protect your cloud applications, data, and users from malicious actors and data breaches.
• Reduced Complexity: Consolidate multiple security solutions into a single, unified platform, simplifying management and reducing costs.
• Improved Compliance: Meet industry regulations and compliance requirements with Zscaler's comprehensive security controls.
• Accelerated Digital Transformation: Securely embrace the cloud without compromising performance or security, enabling innovation and business agility.
• Expert Support: Benefit from Zscaler's world-class technical support team, available 24/7 to assist you with any security challenges.

Take the Next Step

Visit Zscaler's website today and discover how our cloud security solutions can revolutionize your enterprise security posture. With Zscaler, you can unlock the full potential of the cloud with confidence, knowing that your business is protected from evolving cyber threats.

Zscaler Website: https://www.zscaler.com/

Zscaler's Main Suppliers (Upstream Service Providers)

Zscaler relies on various upstream service providers to deliver its cloud-based security platform and other services. Here are Zscaler's main suppliers:

1. Amazon Web Services (AWS)

• Website: https://aws.amazon.com/
• Services: Cloud computing infrastructure, storage, databases, networking

AWS provides the underlying cloud infrastructure upon which Zscaler builds and operates its cloud platform. Zscaler leverages AWS's global network of data centers, compute resources, and storage capabilities to deliver its services to customers worldwide.

2. Google Cloud Platform (GCP)

• Website: https://cloud.google.com/
• Services: Cloud computing infrastructure, machine learning, data analytics

GCP is another major cloud service provider used by Zscaler. Zscaler utilizes GCP for additional compute capacity, storage, and other services that complement AWS offerings. GCP also contributes to Zscaler's global service footprint and geo-redundancy.

3. Microsoft Azure

• Website: https://azure.microsoft.com/
• Services: Cloud computing infrastructure, data analytics, artificial intelligence

Microsoft Azure is a third cloud service provider used by Zscaler. It provides Zscaler with access to specialized Azure services, such as Azure Sentinel for security analytics and Azure Machine Learning for threat detection.

4. Akamai Technologies

• Website: https://www.akamai.com/
• Services: Content delivery network (CDN), web performance optimization

Akamai provides Zscaler with a global CDN to improve the performance and reliability of Zscaler's services. Akamai's network of edge servers and distributed data centers helps to deliver Zscaler's content and services closer to users, reducing latency and enhancing user experience.

5. Cloudflare

• Website: https://www.cloudflare.com/
• Services: Content delivery network (CDN), domain name system (DNS) services

Cloudflare offers similar services to Akamai, including CDN and DNS services. Zscaler leverages Cloudflare's network to improve the performance and availability of its services, particularly during peak traffic or in the face of DDoS attacks.

6. Lumen Technologies

• Website: https://www.lumen.com/
• Services: Network services, data connectivity, managed security services

Lumen provides Zscaler with network connectivity and data center services. Zscaler utilizes Lumen's global network of fiber optic cables and data centers to connect its cloud platform to customers and partners. Lumen also offers managed security services, which Zscaler integrates into its own security platform.

7. NTT Communications

• Website: https://www.ntt.com/en/
• Services: Network services, cloud infrastructure, managed security services

NTT Communications provides Zscaler with network services, including IP transit, Ethernet private line, and wavelength services. Zscaler utilizes NTT's global network to ensure high-performance and reliable connectivity for its customers. NTT also offers managed security services, which Zscaler uses to enhance the security of its own platform.

8. Verizon Business

• Website: https://www.verizon.com/business/
• Services: Network services, cloud infrastructure, managed security services

Verizon Business provides Zscaler with network services, including internet access, MPLS VPN, and SD-WAN services. Zscaler leverages Verizon's network to connect its cloud platform to customers in various locations. Verizon also offers managed security services, which Zscaler uses to protect its own infrastructure and customer data.

9. IBM

• Website: https://www.ibm.com/
• Services: Cloud computing infrastructure, cybersecurity services, consulting

IBM provides Zscaler with cloud computing infrastructure and cybersecurity services. Zscaler utilizes IBM's cloud platform to host and manage portions of its services. IBM also provides Zscaler with cybersecurity services, including threat intelligence and incident response.

10. CrowdStrike

• Website: https://www.crowdstrike.com/
• Services: Cybersecurity software, threat intelligence, managed security services

CrowdStrike provides Zscaler with cybersecurity software and services. Zscaler integrates CrowdStrike's endpoint detection and response (EDR) software into its own security platform. CrowdStrike also provides Zscaler with threat intelligence and managed security services, which enhance Zscaler's ability to detect and respond to security threats.

These suppliers play a critical role in supporting Zscaler's operations and enabling it to provide its customers with a secure and reliable cloud-based security platform.

Main Customers (Downstream Companies) of Zscaler:

Zscaler provides cloud-based security solutions to a wide range of enterprise customers across various industries. Its main customers include:

1. Financial Services:

• Citibank: https://www.citigroup.com/
• JPMorgan Chase: https://www.jpmorganchase.com/
• Goldman Sachs: https://www.goldmansachs.com/

2. Healthcare:

• Kaiser Permanente: https://healthy.kaiserpermanente.org/
• UnitedHealth Group: https://www.unitedhealthgroup.com/
• CVS Health: https://www.cvshealth.com/

3. Technology:

• Microsoft: https://www.microsoft.com/
• Google: https://www.google.com/
• Amazon Web Services (AWS): https://aws.amazon.com/

4. Retail:

• Walmart: https://www.walmart.com/
• Target: https://www.target.com/
• Home Depot: https://www.homedepot.com/

5. Manufacturing:

• General Motors: https://www.gm.com/
• Ford Motor Company: https://www.ford.com/
• Boeing: https://www.boeing.com/

6. Education:

• University of California, Berkeley: https://www.berkeley.edu/
• Harvard University: https://www.harvard.edu/
• Massachusetts Institute of Technology (MIT): https://www.mit.edu/

7. Government:

• U.S. Department of Defense (DoD): https://www.defense.gov/
• U.S. Department of Homeland Security (DHS): https://www.dhs.gov/
• U.S. Department of Justice (DOJ): https://www.justice.gov/

8. Other Industries:

• Insurance: Prudential Financial, MetLife
• Energy: ExxonMobil, Chevron
• Telecommunications: AT&T, Verizon, Vodafone

These organizations rely on Zscaler's cloud-based security platform to protect their networks, applications, and users from cyber threats such as malware, phishing, and data breaches. Zscaler's solutions help these customers to:

• Enhance visibility and control over their network traffic
• Protect against malware and other cyber threats
• Comply with industry regulations and standards
• Improve overall cybersecurity posture

Key Revenue Stream:

Zero Trust Security Platform

Description:

Zscaler's Zero Trust Security Platform is a cloud-based platform that provides comprehensive security for organizations, enabling them to secure their users, data, and applications regardless of their location or device type. The platform includes a range of security services, such as:

• Secure Web Gateway (SWG): Protects users from malicious websites and online threats.
• Secure Access Service Edge (SASE): Provides remote access to corporate resources with built-in security.
• Cloud Firewall: Protects cloud-based applications and data from cyberattacks.
• Cloud Sandbox: Analyzes suspicious files and code in a secure environment to detect and block malware.
• Threat Intelligence: Provides real-time insights into emerging threats and vulnerabilities.

Estimated Annual Revenue:

For the fiscal year 2023, Zscaler reported total revenue of approximately $1.26 billion. The vast majority of this revenue (over 95%) is derived from the Zero Trust Security Platform.

Breakdown of Key Revenue Components:

• Subscriptions: Zscaler charges customers subscription fees for access to its Zero Trust Security Platform. These subscriptions typically have annual or multi-year terms and account for the majority of the company's revenue.
• Professional Services: Zscaler provides consulting, implementation, and support services to customers. These services help customers design, deploy, and manage their Zero Trust security solutions.
• Other Revenue: This category includes revenue from managed security services, training, and other sources.

Factors Driving Revenue Growth:

• Increasing Adoption of Zero Trust Security: Organizations are increasingly adopting Zero Trust security models to protect their digital assets from cyber threats.
• Expansion into New Markets: Zscaler is expanding its geographical presence to tap into new markets and increase its customer base.
• Acquisitions: Zscaler has made several strategic acquisitions to expand its product portfolio and accelerate its growth.
• Strong Brand Recognition: Zscaler has established itself as a leading provider of Zero Trust security solutions, which attracts customers who value trust and reliability.

Zscaler's Key Partners

Zscaler partners with a wide range of organizations, including cloud providers, managed service providers (MSPs), systems integrators, resellers, and technology vendors, to deliver its cloud-based security services to customers. Some of Zscaler's key partners are presented here:

1. AWS

• [Website: https://aws.amazon.com/
• AWS and Zscaler provide a joint solution that delivers cloud-native security to customers. The solution integrates Zscaler's security services with AWS's cloud platform, providing customers with a comprehensive security solution for their cloud workloads.

2. Microsoft Azure

• [Website: https://azure.microsoft.com/
• Microsoft Azure and Zscaler have partnered to deliver a cloud security solution that combines the power of Azure's cloud platform with Zscaler's cloud-native security services. The solution provides customers with a secure and scalable security solution for their cloud workloads.

3. Google Cloud Platform (GCP)

• [Website: https://cloud.google.com/
• Zscaler and GCP have partnered to deliver a cloud security solution that combines the power of GCP's cloud platform with Zscaler's cloud-native security services. The solution provides customers with a secure and scalable security solution for their cloud workloads.

4. Cisco

• [Website: https://www.cisco.com/
• Cisco and Zscaler have partnered to deliver a joint security solution that combines Cisco's networking expertise with Zscaler's cloud-native security services. The solution provides customers with a comprehensive security solution for their network and cloud environments.

5. Palo Alto Networks

• [Website: https://www.paloaltonetworks.com/
• Palo Alto Networks and Zscaler have partnered to deliver a joint security solution that combines Palo Alto Networks' firewall technology with Zscaler's cloud-native security services. The solution provides customers with a comprehensive security solution for their network and cloud environments.

6. Fortinet

• [Website: https://www.fortinet.com/
• Fortinet and Zscaler have partnered to deliver a joint security solution that combines Fortinet's network security appliances with Zscaler's cloud-native security services. The solution provides customers with a comprehensive security solution for their network and cloud environments.

7. Check Point

• [Website: https://www.checkpoint.com/
• Check Point and Zscaler have partnered to deliver a joint security solution that combines Check Point's firewall technology with Zscaler's cloud-native security services. The solution provides customers with a comprehensive security solution for their network and cloud environments.

8.Mandiant

*Website: https://www.mandiant.com/ *Mandiant is a leading provider of incident response and threat intelligence services. The partnership between Zscaler and Mandiant provides customers with access to Mandiant's expertise in incident response and threat intelligence, which can help them to better protect their organizations from cyber attacks.

These are just a few of Zscaler's key partners. Zscaler has a wide range of partnerships with other organizations, including managed service providers (MSPs), systems integrators, resellers, and technology vendors. These partnerships enable Zscaler to deliver its cloud-based security services to a wide range of customers, regardless of their size or industry.

Key Cost Structure of Zscaler

Zscaler is a cloud-based cybersecurity company that provides a comprehensive suite of security services, including secure web gateway (SWG), cloud access security broker (CASB), and zero trust network access (ZTNA). The company's key cost structure includes:

1. Infrastructure

Zscaler's infrastructure costs include the hardware, software, and network infrastructure required to operate its global network of data centers. These costs are primarily driven by the number of users and the amount of traffic that the network handles. In 2022, Zscaler's infrastructure costs were approximately $400 million.

2. Research and development (R&D)

Zscaler invests heavily in R&D to develop new products and features and improve the performance of its existing products. These costs include salaries for engineers and researchers, as well as the cost of developing and testing new software. In 2022, Zscaler's R&D costs were approximately $200 million.

3. Sales and marketing

Zscaler's sales and marketing costs include the salaries of sales and marketing personnel, as well as the cost of marketing campaigns and advertising. These costs are primarily driven by the company's growth strategy and the need to acquire new customers. In 2022, Zscaler's sales and marketing costs were approximately $150 million.

4. Customer support

Zscaler provides customer support to its customers via phone, email, and online chat. These costs include the salaries of customer support personnel, as well as the cost of training and development. In 2022, Zscaler's customer support costs were approximately $50 million.

5. General and administrative (G&A)

Zscaler's G&A costs include the salaries of executive and administrative personnel, as well as the cost of legal, accounting, and other administrative expenses. These costs are primarily driven by the size and complexity of the company's operations. In 2022, Zscaler's G&A costs were approximately $25 million.

Estimated Annual Cost

The total estimated annual cost of Zscaler's key cost structure is approximately $825 million. This cost is expected to increase in the future as the company continues to grow and invest in its infrastructure, R&D, sales and marketing, and customer support operations.

Sales Channels:

Zscaler primarily sells its products and services through a combination of direct sales, channel partners, and managed service providers (MSPs).

Direct Sales:

• The company's direct sales force targets large enterprises, government agencies, and educational institutions.
• Zscaler estimates that approximately 60% of its annual sales revenue is generated through direct sales.

Channel Partners:

• Zscaler has a network of channel partners that include value-added resellers (VARs), system integrators (SIs), and managed security service providers (MSSPs).
• These partners provide Zscaler with access to new markets, generate leads, and offer implementation and support services to customers.
• Approximately 30% of Zscaler's sales revenue is attributed to channel partners.

Managed Service Providers (MSPs):

• MSPs offer Zscaler's cloud-based security solutions as part of their managed security services.
• MSPs provide customers with a single point of contact for security management, reducing complexity and cost.
• Zscaler estimates that MSPs account for approximately 10% of its sales revenue.

Estimated Annual Sales:

For the fiscal year ended July 31, 2023, Zscaler reported total revenue of approximately $1.09 billion. This represents a significant increase from the previous fiscal year, when revenue was $820 million.

Additional Sales Channels:

In addition to the primary sales channels listed above, Zscaler also employs other strategies to reach customers:

• Online Marketplace: Zscaler offers its products and services through the AWS Marketplace and Azure Marketplace.
• Referral Programs: The company has established referral programs to incentivize existing customers to refer new business.
• Freemium Model: Zscaler provides a free version of its Zscaler Internet Access service, which allows customers to evaluate the platform before making a purchase.

Customer Segments

Zscaler serves a wide range of customers across various industries and sizes, including:

• Small and Medium Businesses (SMBs): Zscaler offers affordable and easy-to-use security solutions tailored to the needs of small businesses with limited IT resources.
• Large Enterprises: Zscaler provides comprehensive security solutions for large enterprises with complex IT environments and a global workforce.
• Government Agencies: Zscaler's secure cloud-based platform meets the stringent security and compliance requirements of government agencies.
• Managed Service Providers (MSPs): Zscaler partners with MSPs to provide security services to their customers, enabling them to offer value-added services and enhance customer satisfaction.
• Channel Partners: Zscaler collaborates with channel partners, such as resellers and system integrators, to extend its reach and provide localized support to customers.

Estimated Annual Sales

Zscaler's annual sales have grown significantly in recent years due to the increasing demand for cloud-based security solutions. According to its financial statements, Zscaler's revenue for the fiscal year 2022 was approximately $1.1 billion.

Customer Segmentation by Industry

Zscaler's customer base is diverse, spanning various industries, including:

• Financial Services
• Healthcare
• Technology
• Retail
• Manufacturing
• Education
• Public Sector

Estimated Annual Sales by Customer Segment

While Zscaler does not disclose specific sales figures by customer segment, it is estimated that large enterprises contribute a significant portion to its overall revenue. SMBs and government agencies are also growing segments for Zscaler.

Zscaler's customer-centric approach and its ability to address the specific security needs of different industries have contributed to its success in attracting and retaining customers.

Zscaler Value Proposition

Summary:

Zscaler is a cloud-based security company that delivers comprehensive protection for users, devices, and applications, regardless of location or network. Its unique "Zero Trust Exchange" platform provides secure access to the internet, cloud applications, and private applications, enabling businesses to meet the challenges of digital transformation while maintaining security.

Key Value Propositions:

1. Secure Access to Any Application, Anywhere:

• Zscaler provides secure access to all applications, including web, SaaS, private, and cloud-based applications, from any device or location.
• Its Zero Trust approach eliminates the need for traditional VPNs and firewalls, simplifying network security.

2. Protection Against Advanced Threats:

• Zscaler's cloud-based platform analyzes trillions of internet transactions daily, identifying and blocking advanced threats such as malware, ransomware, and phishing attempts.
• It utilizes machine learning and artificial intelligence to detect and respond to emerging threats in real-time.

3. Cloud-Based, Global Network:

• Zscaler's global network of data centers provides optimal performance and latency for users worldwide.
• The cloud-based architecture eliminates the need for on-premises hardware and reduces maintenance overhead.

4. Simplified Security Management:

• Zscaler's centralized cloud console provides a single pane of glass visibility into all security events and logs.
• Its automated threat detection and response capabilities streamline security operations and improve efficiency.

5. Reduced Costs and Complexity:

• Zscaler's cloud-based model eliminates the need for expensive on-premises security appliances and reduces IT staffing requirements.
• Its simplified management and automated threat detection capabilities further reduce costs.

6. Improved Agility and Business Continuity:

• Zscaler's Zero Trust architecture allows users to connect securely to applications from anywhere, enabling remote work and business continuity.
• Its cloud-based platform ensures seamless transitions between different locations and devices.

7. Enhanced User Experience:

• Zscaler optimizes application performance and reduces latency by routing traffic through the closest data center.
• Its seamless user experience eliminates disruptions and improves productivity.

Target Audience:

• Enterprises seeking to protect their employees, devices, and applications from cyber threats
• Businesses undergoing digital transformation and facing security challenges
• Organizations with remote or distributed workforces requiring secure access to cloud applications
• Companies looking to reduce security costs and improve operational efficiency

Zscaler, Inc. Risk Factors

Business

• Reliance on Single-Cloud Architecture: Zscaler's products and services are built on a single-cloud architecture, which poses significant risks if the cloud platform experiences outages, performance issues, or security breaches.
• Competition from Legacy and Emerging Vendors: Zscaler faces intense competition from established network security vendors as well as emerging cloud-native security providers.
• Rapid Product Innovation: The network security landscape is constantly evolving, and Zscaler must continually invest in research and development to maintain its competitive advantage.
• Dependence on Third-Party Partners: Zscaler relies on partnerships with cloud providers, system integrators, and resellers to market and sell its products and services. These partnerships may involve contractual obligations and dependencies that could impact Zscaler's business.
• International Expansion: Zscaler is expanding its operations globally, which exposes the company to risks associated with foreign currencies, economic conditions, regulatory compliance, and cultural differences.

Financial

• Subscription-Based Revenue Model: Zscaler's revenue is primarily derived from subscription fees, which can be subject to fluctuations based on customer churn, renewal rates, and competitive pricing.
• High Customer Concentration: Zscaler has a limited number of large customers, which exposes the company to the risk of losing significant revenue if these customers terminate their contracts.
• Operating Losses: Zscaler has consistently reported operating losses, and its ability to generate profit in the future is uncertain.
• Capital Expenditures: Maintaining and expanding Zscaler's cloud infrastructure requires significant capital expenditures, which could impact its financial flexibility.
• Fluctuating Foreign Currency Exchange Rates: Zscaler's operations are conducted in multiple currencies, which exposes the company to risks associated with foreign currency exchange rate fluctuations.

Legal and Compliance

• Cybersecurity Breaches: Zscaler's products and services are designed to prevent and detect cybersecurity breaches, but the company remains vulnerable to its own security incidents.
• Privacy Regulations: Zscaler's products and services involve the collection and processing of sensitive customer data, which subjects the company to various privacy regulations around the world.
• Regulatory Compliance: Zscaler must comply with complex and evolving data protection and cybersecurity regulations, which could result in fines, penalties, or other sanctions.
• Litigation and Intellectual Property Rights: Zscaler may face legal challenges related to intellectual property rights, contractual disputes, or other litigation matters.

Operational

• Scalability: Zscaler's platform must be able to handle increasing volumes of traffic and customer demand, which requires ongoing investment and operational improvements.
• Service Level Commitments: Zscaler has service level commitments with its customers, and failure to meet these commitments could lead to reputational damage and lost revenue.
• Human Capital: Zscaler relies on a skilled workforce to develop, maintain, and support its products and services. The company may face challenges in recruiting and retaining top talent.
• Supply Chain Disruptions: Zscaler's operations are dependent on critical components and software from third-party suppliers. Disruptions in the supply chain could impact Zscaler's ability to deliver its products and services.
• Data Loss: Zscaler processes and stores large amounts of customer data, and any data loss or corruption could have significant reputational and financial consequences.