Zscaler, Inc. — Earnings Quality Grade F
ZS · Technology
Major red flags
Screening Summary
Financial Trends
Revenue & Net Income ($B)
Margins (%)
18-Point Screening
Revenue Quality
DSO increased by 11 days
AR growth 34.7% vs revenue growth 23.3%
Revenue 23.3%, CFFO 24.7%. Cash follows revenue
Expense Quality
No material inventory
CapEx growth 26.1% vs revenue 23.3%. Normal
SG&A/Gross Profit = 73.4%, exceeds 70%
Gross margin 76.9%, change -1.1pp. Stable
Cash Flow Quality
CFFO < Net Income for 3 consecutive years
FCF $0.7B, FCF/NI = -17.52
Accruals ratio = -15.8%. Low accruals
Cash $3.6B covers debt $1.8B
Balance Sheet Health
Goodwill+Intangibles $0.5B = 26% of equity. Manageable
Debt/EBITDA = 16.6x (>4x). Interest coverage = -24.3x (<2x). Financial stress
Other assets grew 69.9% vs revenue 23.3%
No write-off data
Acquisition Risk
FCF after acquisitions positive
Goodwill+Intangibles change -3% YoY. Normal
Manipulation Score
M-Score = -3.00 (< -2.22). Unlikely manipulator
Beneish M-Score
Altman Z-Score
Generated from public financial data using forensic accounting frameworks. Not investment advice. Data: Yahoo Finance · 2026-04-08