Zscaler, Inc.ZS

Zscaler, Inc. Earnings Per Share Disclosure

10-KFiled Sep 11, 20253 min read
Net Loss Per Share
Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period, less shares subject to repurchase. The diluted net loss per share is computed by giving effect to all potential dilutive common stock equivalents outstanding for the period. For purposes of this calculation, our stock options, share purchase rights under the employee stock purchase plan, unvested RSUs, unvested PSAs, unvested common stock and shares related to the 2028 and 2025 Notes are considered to be potential common stock equivalents.
The computation of basic and diluted net loss per share consisted of the following:
Year Ended July 31,
202520242023
(in thousands, except per share data)
Net loss$(41,478)$(57,706)$(202,335)
Weighted-average shares used in computing net loss per share, basic and diluted154,404 149,586 144,942 
Net loss per share, basic and diluted $(0.27)$(0.39)$(1.40)
Since we have reported net losses for all periods presented, we have excluded all potentially dilutive securities from the calculation of the diluted net loss per share as their effect is antidilutive and accordingly, the basic and diluted net loss per share is the same for all periods presented.
We calculate the potential dilutive effect of the convertible senior notes under the if-converted method. Under this method, diluted earnings per share are determined by assuming that outstanding convertible senior notes were converted into shares of our common stock at the beginning of the reporting period.
In connection with the issuance of the convertible senior notes, we entered into capped call transactions, which were not included for purposes of calculating the number of diluted shares outstanding, as their effect would have been anti-dilutive. The capped call transactions are expected to partially offset the potential dilution to our common stock upon any conversion of the convertible senior notes.
The following table summarizes the outstanding potentially dilutive securities that were excluded from the computation of diluted net loss per share as their effect would be antidilutive:
July 31,
202520242023
(in thousands)
Unvested RSUs and shares of common stock8,702 9,198 8,442 
Stock options177 453 1,267 
Unvested PSAs (1)
981 1,009 1,012 
Share purchase rights under the ESPP536 514 1,119 
2028 Notes (2)
3,925 — — 
2025 Notes (2)
— 7,626 7,626 
Total14,321 18,800 19,466 
(1) The number of unvested PSAs is estimated at 100% of the target number of shares granted and excludes unvested PSAs for which performance conditions have not been established as of July 31, 2025, as they are not considered outstanding for accounting purposes. For further information refer to Note 13, Stock-Based Compensation.
(2) Based on the initial conversion price, the entire outstanding principal amount of the Notes as of July 31, 2025, July 31, 2024 and July 31, 2023 would have been convertible into approximately 3.9 million shares, 7.6 million shares and 7.6 million shares, respectively, of our common stock, which are reflected in the table above.

Historical Timeline

Fiscal YearFiled
2025Sep 11, 2025Showing above
2024Sep 12, 2024
2023Sep 14, 2023
2022Sep 15, 2022
2021Sep 16, 2021
2020Sep 17, 2020

About Earnings Per Share Disclosures

The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.

Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.

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