We feel now is a pretty good time to analyse Zscaler, Inc.'s (NASDAQ:ZS) business as it appears the company may be on the cusp of a considerable accomplishment. Zscaler, Inc. operates as a cloud security company worldwide. The US$28b market-cap company posted a loss in its most recent financial year of US$202m and a latest trailing-twelve-month loss of US$74m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which Zscaler will turn a profit, with the big question being "when will the company breakeven?" We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

According to the 40 industry analysts covering Zscaler, the consensus is that breakeven is near. They expect the company to post a final loss in 2025, before turning a profit of US$21m in 2026. Therefore, the company is expected to breakeven roughly 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 51% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for Zscaler given that this is a high-level summary, but, bear in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there's one issue worth mentioning. Zscaler currently has a debt-to-equity ratio of 105%. Typically, debt shouldn't exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of Zscaler to cover in one brief article, but the key fundamentals for the company can all be found in one place – Zscaler's company page on Simply Wall St. We've also put together a list of important aspects you should further examine:

1. Valuation: What is Zscaler worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Zscaler is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Zscaler's board and the CEO's background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com