Zscaler, Inc.ZS

Zscaler, Inc. Goodwill & Intangibles Disclosure

10-KFiled Sep 11, 20252 min read
Goodwill and Acquired Intangible Assets
Goodwill
Changes in the carrying amount of goodwill consisted of the following:
Amount
(in thousands)
Balance as of July 31, 2024 $417,029 
Goodwill acquired701 
Balance as of July 31, 2025 $417,730 
Acquired Intangible Assets
Acquired intangible assets consist of developed technology and customer relationships acquired through our business acquisitions. Acquired intangible assets are amortized using the straight-line method over their estimated useful lives.
During fiscal 2025, in connection with the acquisition of Fidenty B.V., we acquired developed technology with a fair value of $0.3 million with an estimated useful life of five years. For further information refer to Note 6, Business Combinations.
Changes in acquired intangible assets for July 31, 2025 and 2024, consisted of the following:
Gross Carrying AmountAccumulated AmortizationNet Carrying AmountWeighted Average Remaining Useful life
July 31, 2024AdditionsJuly 31, 2025July 31, 2024Amortization ExpenseJuly 31, 2025July 31, 2024July 31, 2025July 31, 2025
(in thousands)(years)
Developed technology$99,656 $308 $99,964 $(42,651)$(15,121)$(57,772)$57,005 $42,192 3.3
Customer relationships9,960 — 9,960 (3,130)(1,699)(4,829)6,830 5,131 3.5
Total$109,616 $308 $109,924 $(45,781)$(16,820)$(62,601)$63,835 $47,323 3.4
As of July 31, 2024, the weighted-average remaining useful life for developed technology and customer relationships was 4.2 years and 4.4 years, respectively.
Amortization expense of acquired intangible assets was $16.8 million, $14.6 million and $11.1 million in fiscal 2025, fiscal 2024 and fiscal 2023, respectively. Amortization expense of developed technology and customer relationships is included primarily within cost of revenue and sales and marketing expenses, respectively, in the consolidated statements of operations.
Future amortization expense of acquired intangible assets as of July 31, 2025 consisted of the following:
Amount
(in thousands)
Fiscal Year ending July 31,
2026$15,833 
202713,010 
202811,177 
20297,278 
203025 
Total
$47,323 

Historical Timeline

Fiscal YearFiled
2025Sep 11, 2025Showing above
2024Sep 12, 2024
2023Sep 14, 2023
2022Sep 15, 2022
2019Sep 18, 2019

About Goodwill & Intangibles Disclosures

Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.

Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.

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