Zscaler - IPO this Friday


Sticker will be: ZS

article on it:

the company’s pitch at their website:

Gartner claim on Zscaler’s website…7th straight year as a Leader:

Under “Resources” tab on main website they list competitive trade-in’s and mention Bluecoat, Websense, and Microsoft TMG (Threat Mgmt Gateway:

Former Palo Alto Networks CEO from back in 2008, joined Zscaler as COO in 2011. Interesting to note he mentions being a consultant for Arista in 2010 after he resigned from PANW. He is now listed as an investor. Doesn’t mean a ton, but PANW had a great run, he rubs shoulders with Arista…seems like he keeps in good company.

Nasdaq article on the IPO:
Zscaler will be the year’s first “unicorn” IPO. The security software provider achieved a $1 billion valuation in 2015. TPG led the $110 million round at $8.97, with equity ratchets that kick in below $11.21. Zscaler is now scheduled to raise $110 million at a fully diluted market value of $1.4 billion and begin trading during the week of March 12 .

I like the category (Security + cloud, the leadership position via Gartner, the small-cap size of company, and the revenue growth, per below. Keep in mind their 2017 revenue number is 6 months old, as they have an odd calendar.

That aside, how do the numbers look? Greater than 50 percent revenue growth from fiscal 2016 to fiscal 2017 is good at its reported revenue baseline. And the firm’s net losses aren’t too scary on a percentage or raw basis compared to its top line.

At the above link, they appear at $84m in revenue thru first 6 months of their 2018, putting them on a $168m/yr pace (likely higher with sequential growth as they have grown sequentially last 10 Q’s. Call it closer to $180m, which is still a 50% y/y growth pace.

Not sure if I can get in on the IPO or not, but may take a stab at a small position this Friday if I don’t learn anything to persuade me otherwise from now until Friday. Still want to learn more, but thought this board might be interested in this type of stock prospect.



been updating my thoughts on this stock over on NPI:

Net is, if my math is right, the IPO price is a bit crazy right now. I will try and wait for a pullback.

Still one for the watchlist I believe. Cloud-native security solution, growing 50% y/y and considered 1 of 3 top players by admission of one of its competitors (Cisco/OpenDNS). Symantec-Blue Coat is the 3rd player.