Zscaler, Inc.ZS
Zscaler, Inc. Revenue Disclosure
Revenue Recognition
Disaggregation of Revenue
Subscription and support revenue is recognized over time and accounted for approximately 98%, 97% and 97% of our revenue for each of fiscal 2025, fiscal 2024 and fiscal 2023, respectively.
The following table summarizes the revenue by region based on the shipping address of customers who have contracted to use our cloud platform:
| Year Ended July 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| Amount | % Revenue | Amount | % Revenue | Amount | % Revenue | ||||||||||||||||||||||||||||||
| (in thousands, except for percentage data) | |||||||||||||||||||||||||||||||||||
United States | $ | 1,359,325 | 51 | % | $ | 1,092,304 | 50 | % | $ | 808,527 | 50 | % | |||||||||||||||||||||||
| Europe, Middle East and Africa | 792,823 | 30 | 672,421 | 31 | 515,136 | 32 | |||||||||||||||||||||||||||||
Asia Pacific | 423,811 | 16 | 327,816 | 15 | 241,250 | 15 | |||||||||||||||||||||||||||||
Other | 97,156 | 3 | 75,230 | 4 | 52,039 | 3 | |||||||||||||||||||||||||||||
Total | $ | 2,673,115 | 100 | % | $ | 2,167,771 | 100 | % | $ | 1,616,952 | 100 | % | |||||||||||||||||||||||
The following table summarizes the revenue from contracts by type of customer:
| Year Ended July 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| Amount | % Revenue | Amount | % Revenue | Amount | % Revenue | ||||||||||||||||||||||||||||||
| (in thousands, except for percentage data) | |||||||||||||||||||||||||||||||||||
Channel partners | $ | 2,360,224 | 88 | % | $ | 1,967,908 | 91 | % | $ | 1,488,379 | 92 | % | |||||||||||||||||||||||
Direct customers | 312,891 | 12 | 199,863 | 9 | 128,573 | 8 | |||||||||||||||||||||||||||||
Total | $ | 2,673,115 | 100 | % | $ | 2,167,771 | 100 | % | $ | 1,616,952 | 100 | % | |||||||||||||||||||||||
Significant Customers
No single customer accounted for 10% or more of the total revenue during the periods presented. The following table summarizes the concentration of 10% or more of the total balance of accounts receivable, net:
| July 31, 2025 | July 31, 2024 | ||||||||||
| Channel partner A | 12% | * | |||||||||
Contract Balances
Contract liabilities consist of deferred revenue and include payments received in advance of performance under the contract. Such amounts are recognized as revenue over the contractual period. Deferred revenue, including current and noncurrent balances as of July 31, 2025 and July 31, 2024 was $2,468.0 million and $1,895.0 million, respectively. In fiscal 2025, fiscal 2024 and fiscal 2023 we recognized revenue of $1,643.1 million, $1,277.8 million and $919.9 million, respectively, that was included in the corresponding contract liability balance at the beginning of the related fiscal year.
We receive payments from customers based upon contractual billing schedules and accounts receivable are recorded when the right to consideration becomes unconditional. Payment terms on invoiced amounts are typically 30 days but may be up to 90 days for some of our channel partners. Contract assets include amounts related to our contractual right to consideration for both completed and partially completed performance obligations that may not have been invoiced and such amounts have historically not been material.
Remaining Performance Obligations
The typical subscription and support term is to three years. Most of our subscription and support contracts are non-cancelable over the contractual term. However, customers typically have the right to terminate their contracts for cause, if we fail to perform. As of July 31, 2025, the aggregate amount of the transaction price allocated to remaining performance obligations was $5,780.1 million. We expect to recognize 46% of the transaction price over the next 12 months and 90% of the transaction price over the next three years, with the remainder recognized thereafter.
Costs to Obtain and Fulfill a Contract
We capitalize sales commission and associated payroll taxes paid to sales personnel that are incremental to the acquisition of customer contracts. These costs are recorded as deferred contract acquisition costs in the consolidated balance sheets. We determine whether costs should be deferred based on our sales compensation plans, if the commissions are in fact incremental and would not have occurred absent the customer contract.
Sales commissions for renewal of a contract are not considered commensurate with the commissions paid for the acquisition of the initial contract given the substantive difference in commission rates in proportion to their respective contract values. Commissions paid upon the initial acquisition of a contract are amortized over an estimated period of benefit of five years while commissions paid for renewal contracts are amortized over the contractual term of the renewals. Amortization of deferred contract acquisition costs is recognized on a straight-line basis commensurate with the pattern of revenue recognition and included in sales and marketing expense in the consolidated statements of operations.
We determine the period of benefit for commissions paid for the acquisition of the initial contract by taking into consideration the expected subscription term and expected renewals of our customer contracts, the duration of our relationships with our customers, customer retention data, our technology development lifecycle and other factors. We periodically review the carrying amount of deferred contract acquisition costs to determine whether events or changes in circumstances have occurred that could impact the period of benefit of these deferred costs. We did not recognize any impairment losses of deferred contract acquisition costs during the periods presented.
The activity of the deferred contract acquisition costs consisted of the following:
| Year Ended July 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
(in thousands) | |||||||||||||||||
Beginning balance | $ | 445,398 | $ | 375,234 | $ | 297,002 | |||||||||||
Capitalization of contract acquisition costs | 230,453 | 200,303 | 176,950 | ||||||||||||||
Amortization of deferred contract acquisition costs | (166,310) | (130,139) | (98,718) | ||||||||||||||
Ending balance | $ | 509,541 | $ | 445,398 | $ | 375,234 | |||||||||||
The outstanding balance of the deferred contract acquisition costs consisted of the following:
| July 31, | |||||||||||
| 2025 | 2024 | ||||||||||
(in thousands) | |||||||||||
Deferred contract acquisition costs, current | $ | 180,819 | $ | 148,873 | |||||||
Deferred contract acquisition costs, noncurrent | 328,722 | 296,525 | |||||||||
Total deferred contract acquisition costs | $ | 509,541 | $ | 445,398 | |||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Sep 11, 2025 | Showing above |
| 2024 | Sep 12, 2024 | |
| 2023 | Sep 14, 2023 | |
| 2022 | Sep 15, 2022 | |
| 2021 | Sep 16, 2021 | |
| 2020 | Sep 17, 2020 | |
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.