Zscaler (ZS) - ZPA Thoughts

Hi all -

As we prep for earnings season I wanted to dig further into the numbers behind ZScaler’s ZPA (ZScaler Private Access) business to understand if it is a hidden / accelerating growth story similar to what we have seen with offerings like Mongo’s Atlas or Square’s bevy of subscription services. The overall takeaway is that ZS has been very close to the vest with their ZPA numbers. They have not given this split directly and they also have not given enough commentary / data points to triangulate to a historical trend. The data they have shared is exciting overall but its a bit hard to read between the lines. Below are the relevant earnings call references to ZPA financials I have gathered since their IPO:


“Our ZPA still represents less than 5% of our revenue. However, our third quarter was our largest quarter for ZPA, and it is increasing fairly substantially. Now, the revenue is less than 5%. We recognize revenue on a ratable basis. So, when you take a look at the actual business coming in, it’s doing well. And the increase in ZPA for new business and upsell this last quarter was the highest that it’s been in the Company’s history.”

“ZPA is the fastest growing new product in Zscaler’s history. And also, we’re pleased we had our first 7-figure annualized revenue deal from ZPA this past quarter.”


“ZPA was introduced nearly two years ago and was made available to all sales reps one year ago. In fiscal 2018, ZPA contributed approximately 10% to new and up sell business with almost half coming from new customers to Zscaler.”

“ZPA remains the fastest-growing new product in our history. ZPA contributed 10% of our new and up-sell business in fiscal 2018, up from 4% in the prior year.”

Q1: “ZPA, obviously, very nice acceleration 4% to 10% is outstanding, but when I met with your customers at your trade show personally, every customer I talked to said he was aggressively moving to it.”

A1: “Yes, Alex, ZPA has done well and we are seeing tons of momentum. So we expect ZPA to gain, to grow at a faster rate than ZIA. But ZIA is growing very fast too. It’ll be very hard for ZPA to catch up with ZIA even though the market TAM of both platforms is essentially the same.”

Q2: “next one for me is an on ZPA. I think you said it was around 10% of your business. When you say business you mean Billings, you mean net new ACV, what do you mean by that?”

A2: “New ACV, whether it’s new or up-sell.”

Q3: “Okay. And you’re not going to give us any kind of revenue estimate on ZPA?”

A3: “No. So currently ZPA because it’s based on ratable basis, it’s still less than 5%.”


"what we said is that we talk about when there’s meaningful changes in our business what we called out last quarter is for a new and upsell business for ZPA. They represented approximately 10%. What I can say about ZPA on a year-over-year basis is it sits close to double, so good traction with ZPA. "


“So I mean, the increase related to Transformation and ZPA, what we said is that we give metrics out on that when we had meaningful changes. All I can say is that ZPA is doing very well and business has been increasing on a quarter-over-quarter basis. If I may add on ZPA, Alex. It’s the fastest-growing product for us, and we’re very bullish on it”

Based on the above the takeaways are…

ZPA revenue was likely ~5% of revenue in Q2’19 which would be ~$3M to ~$4M (haven’t heard on this mix specifically in two quarters and the new federal deal may have bumped this up significantly, but if it did I feel they would have shared) - for reference, this is much lower than Mongo’s Atlas ($22M w/o mLab last quarter)

ZPA is ~10% of new business (ACV or annualized) - this shows it is becoming a bigger part of the companies mix in future quarters, thus growth will be higher than overall average

ZPA was close to doubling Y/Y in Q1’19 (high growth, but much lower than Mongo’s Atlas to date) and has been increasing in dollars Q/Q

I would love to hear thoughts from others. Mainly…

Does this mean ZS has even more upside / potential for accelerating growth in the future as it is already growing like bonkers without ZPA having become a substantial part of the portfolio yet?

Or, How is this different than a “Talend” situation in which we hear great statistics on a certain offering but aren’t given the actual data and then we eventually discover it is not nearly as impactful as anticipated?

FYI I own a substantial portion of ZS in my portfolio, just wanted to share my latest thoughts on an important piece of the business. Ultimately if ZIA is still growing at this elevated (even accelerated) clip and they both have the same TAM the details themselves may not matter if ZPA follows the same arc.



Just going off my memory… If i remember right, ZS management has always said ZPA is small portion of their business… growing very rapidly but since their main product also growing rapidly, they do not see ZPA becoming too large a portion of the business.

In other words, unlike Talend, ZS has not been pointing to ZPA as growth engine for their top line when their main product is slowing down…

hope this makes sense!


FlyFisher22 - congrats on taking all the time to go through the many CC for the remarks on ZPA. Lots of hard work.
Gave up on fly fishing, too many woods where I used to fish, caught way more branches than fish. But it is a fun way to fish