Is Zscaler Stock A Buy?
Hello guys and guys, and welcome back to Long-Term Investing with Antoaneta. Before we begin today’s blog, I just want to give you a quick reminder to like, share, subscribe, and all that good stuff. I know that sitting through a “like comment subscribe” plug at the start of each blog can be a tad annoying, there’s really a ton of work that goes into these. And even though I enjoy creating daily content for you very much. So, please bear with me through these for now. Once we hit some milestones, I’ll come up with something different. Check out my other blogs such as, “My 12 Best Tips To Avoid Mistakes On The Stock Market“.
Okay, rant over. Now, time to get down to business.
Zscaler is one of those few companies that actually benefitted from the lockdowns. Much like Zoom, the San Jose-based infosec company managed not only to increase but also to diversify its clientele during the pandemic. The company is up over 240% since October 2018 and over 180% since October 2019.
What is Zscaler?
Zscaler (short for Zenith Scalability) is a B2B cybersecurity firm, specialized in data protection for corporate clients. Their services operate on a “cloud-native” model, allowing the customer to forego local infrastructure costs while enjoying increased security at the same time. They provide web security, internet security, firewalls, Antivirus, vulnerability management, sandboxing, and more.
So, how did the lockdown help Zscaler?
Well, think about it for a second.
If people aren’t at the office, but still want to work, they have to do it over the internet.
And, to work remotely, you have to transmit data back and forth between your computer and the company’s servers (or the data centers that host them). But if you don’t use higher forms of security, it’s really easy for hackers to intercept the data and steal valuable information, account details, or company secrets.
So, even the companies who weren’t heavily invested in cybersecurity are starting to look at it more seriously. The last thing that you’d want during an economically unstable period is to leak sensitive information and damage your business, right? Naturally, this means that cybersecurity service providers, especially the B2B-oriented ones, are in high demand right now.
And, once they’ve gotten a taste of what adequate cybersecurity is like, major corporations are very unlikely to just hit the “unsubscribe button”, even after we finally put the pandemic behind us and their offices reopen. Besides, now that so many tech experts say that they can do their jobs just as easily from home, I think that it’s reasonable to expect an influx of remote working positions.
This is further backed up by Zscaler’s CEO and Founder Jay Chaudhry who points out that the “company aims to address the challenge posed by the increasingly mobile employee base that needs to get work done” regardless of where they are at any given moment. You could be at home, in the office, or on the road, but the job still needs to get done, right? And, if you are transmitting data over the internet, you need to take the appropriate measures to protect it.
Zscaler’s model allows them to essentially replace the traditional type of corporate cybersecurity with a “zero-trust-exchange”. And, best of all, their engineers can install and upgrade the entire system in a matter of days. Zscaler has released a number of success stories, some of which are quite impressive. In one example, just as the pandemic lockdowns were picking up speed, they had to handle a customer with a little over 300,000 employees in the span of a weekend. Obviously, they managed to pull it off (otherwise they wouldn’t really be bringing it up) — the entire system was up and running by Monday morning, and the company was able to resume its operations remotely.
The market volatility did hit them a bit, but the stock price recovered rapidly. There aren’t a lot of companies that can grow in this economic climate, but Zscaler is definitely making it work. Long story short, Zscaler is looking really promising in the long-term, especially given the circumstances.
Still, they aren’t without competition. Cybersecurity is a rapidly growing field, and companies like CrowdStrike and Fortinet are also looking to up their game, albeit in different aspects.
Currently, Zscaler has over 3,900 corporate clients, including more than 400 of the Forbes Global 2000, generating more than 100 billion transactions on a daily basis. About half of the companies are located in the States. The remaining are split: between Europe, the Middle East, and Africa (40%), and 9% are situated in the Asia-Pacific region.
Zscaler is rated exceptionally well on Glassdoor, with over 97% of reviewers giving Jay Chaudhry a thumbs up. 94% would recommend Zscaler to their friends, and 93% are big believers in the business as a whole. On average, Zscaler is rated above 4.5 out of 5 stars, demonstrating the trust and appreciation the employees have for the company.
Zscaler’s two main products, ZIA (Zscaler Internet Access) and ZPA (Zscaler Private Access) are currently estimated to be worth over 20 billion dollars. And while their revenue rose 40% year over year for the third quarter, they are yet to reach the $1 billion milestone. Personally, I believe that we can expect a lot of growth from this company and I see it as something worth keeping an eye on.
That’s pretty much it for Zscaler so far. They’re a really promising, highly competitive, and fast-growing tech company and their field has no shortage of demand. The numbers seem solid, and the management is excellent. I’m definitely going to keep an eye on their progress, and I will be [buying? When the price reaches?]
In closing, I’d like to give you all a big shoutout for sticking with me until the end, and, as always, I’ll ask you to please like, comment, and share this blog with your friends if you enjoyed it. If you’ve got any questions, ideas, or experiences (about Zscaler or long-term investing in general), please do not hesitate to drop me a comment or message me on Social Media — Facebook, Instagram, Twitter, Pinterest, or YouTube. I’m always happy to hear from you!
Thank you all for reading, and until next time:
Stay green and motivated!
- Great investment day! (September 2020) — My very own minimalism Ebook
- 12 Stocks I Will Buy if Stock Market Crash 2 happens (2020) — My previous video on this subject (from four months ago)
Budgeting & Investing Articles:
- 6 Steps to Take When You are Broke in 2020 — How to avoid the trap of poverty
- How to Do Better and Succeed in the Stock Market? — How to get started with the stock market
- Personal Financial Rules — How to manage your personal finances better
- My approach to minimalism in 15 steps– Why I chose minimalism and how it helps my financial situation
- How to live a minimalist life — My very own Minimalism EBook
Recommended for further reading: