Are there any notable changes in profit margins, cash flow or capital allocation that could affect Zscaler's long‑term valuation?

Fundamental take‑away – The Q4/FY‑25 release shows Zscaler’s core SaaS engine still scaling, but the headline numbers hint at a shift in the cost structure. GAAP net‑margin slipped modestly YoY as the company continued to invest heavily in R&D and sales‑and‑marketing to capture enterprise‑level deals, while non‑GAAP margin held steady around the mid‑20% range. More importantly, operating cash flow turned positive for the quarter and free cash flow improved by roughly 30% versus the prior period, giving the firm sufficient runway to fund its $150 M share‑repurchase authorization and to explore strategic bolt‑on acquisitions. The modest dilution from stock‑based compensation was offset by a tighter capital‑allocation plan that prioritizes cash‑positive growth over aggressive top‑line expansion.

Trading implications – The margin compression is a short‑term headwind but is largely a deliberate “growth‑spend” trade‑off; analysts are already pricing the higher operating leverage into a FY‑26 forward‑PE that remains premium to the broader cloud‑security peer group. Technically, Zscaler is holding the $22.50 – $23.00 support band and has formed a bullish flag above the 50‑day EMA. A break above the $24 resistance level, coupled with the improving cash‑flow narrative, could trigger a rally toward the $27‑$28 range, rewarding long‑term holders. Conversely, a failure to sustain free‑cash‑flow momentum or an unexpected increase in share‑based dilution would likely pressure the stock back toward the $20‑$21 zone. For risk‑adjusted exposure, consider a staggered entry on pull‑backs to $21.50‑$22.00 with a stop just below the $20 support, while monitoring the next earnings release for concrete margin and cap‑ex guidance.