Zscaler (ZS) risk factors, FY2026 10-K

Zscaler's FY2026 10-K, filed Sep 03, 2026, lists 59 risk factors in 8 groups. Against the prior year's 66: 3 new, 10 dropped, 27 substantially reworded.

Open ZS in Gloom →
Zscaler's chart, financials and news, free in your browser.Open ZS in Gloom →
Risk factors listed
598 groups
New this year
3vs 66 last year
Dropped
10since the prior 10-K
Substantially reworded
27of those kept
Section length
24k wordsItem 1A

What the changes say

  • AI/ML risk now covers internal systems, resource allocation and realizing expected benefits, not only product development.
  • Cybersecurity exposure expands to AI-enabled attacks, publicized customer incidents and flaws that could drive customers to competitors.
  • Economic risks emphasize inflation, tariffs, Middle East energy disruption and broad reductions in IT-security spending.
  • Customer acquisition risks now detail legacy vendors, switching costs, tariffs, competition, sales capacity and channel-partner execution.

What changed since the prior 10-K

New

  • NewRisks Related to Our Growth

    customers. These factors significantly impact our ability to add new customers and increase the time, resources and sophistication required to do so

    Legacy vendors, switching costs, tariffs, competing security products, sales capacity and channel-partner or deployment failures could hinder new-customer growth.

  • NewRisks Related to Artificial Intelligence, Information Technology, Intellectual Property, Data Security and Privacy

    to use our services are the subject of a cyberattack that becomes publicized, our current or potential customers may look to our competitors for alternatives to our services

    Testing failures, cloud-platform flaws or publicized customer cyberattacks could damage Zscaler’s reputation and push customers toward competitors.

  • NewRisks Related to Artificial Intelligence, Information Technology, Intellectual Property, Data Security and Privacy

    solutions and on the economic health and general willingness of our current and prospective customers to purchase our security services. A broad reduction in IT security spending would have a material impact to our business

    Inflation, tariffs, high rates, labor and shipping costs, shortages, weaker currencies and Middle East energy disruption could reduce security spending and raise expenses.

Dropped

  • DroppedRisks Related to Our Growth

    acquisitions involving our customers, competition and deteriorating or uncertain general economic conditions, which may result in reductions in IT budgets and lower employee headcounts

  • DroppedRisks Related to Our Products and Services

    vendors. As a result, these organizations may prefer to purchase from their existing suppliers rather than add or switch to a new supplier

  • DroppedRisks Related to Our Products and Services

    perceived or purported security breaches of our cloud platform could result in actual, perceived or purported breaches of our customers’ networks and systems

  • DroppedRisks Related to Information Technology, Intellectual Property, Data Security and Privacy

    discovery required in connection with patent and other intellectual property rights litigation, there is a risk that some of our confidential information could be compromised by the discovery process

  • DroppedRisks Related to Information Technology, Intellectual Property, Data Security and Privacy

    result of the increased interest income we earn on our cash and investments, but a reduction of interest rates in the future would reduce this income

    Customer expansion through additional users or services, including pricing, satisfaction and economic conditions.

  • DroppedRisks Relating to Legal, Regulatory, Accounting and Tax Matters

    these hedging activities may not be successful in effectively mitigating the potentially adverse impact on our financial statements due to unfavorable movements in foreign currency exchange rates

  • DroppedRisks Related to the 2028 Notes

    fundamental change repurchase date for such 2028 Notes. If the 2028 Notes have not previously been converted or repurchased, we will be required to repay the 2028 Notes in cash at maturity

  • DroppedGeneral Risks

    component suppliers or other third-party providers, including our network bandwidth and SaaS solution providers, this could materially and adversely affect our ability to provide services in a timely or cost-effective manner

  • DroppedGeneral Risks

    recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers

  • DroppedGeneral Risks

    We rely on third parties for certain essential financial and operational services, and a failure or disruption in these services could materially and adversely affect our ability to manage our business effectively

Reworded

  • 91% rewrittenGeneral Risks

    Our business is subject to the risks of earthquakes, fire, floods and other natural catastrophic events, and to interruption by man-made problems such as acts of war and international conflicts

    The risk now covers disasters and conflicts wherever facilities, employees, customers, partners, suppliers, vendors or infrastructure are located, and adds more frequent AI-enabled cyberattacks.

    Was: Our business is subject to the risks of earthquakes, fire, floods and other natural catastrophic events, and to interruption by man-made problems such as power disruptions, computer viruses, acts of war, international conflicts, terrorism and security breaches or incidents

  • 90% rewrittenRisks Related to Artificial Intelligence, Information Technology, Intellectual Property, Data Security and Privacy

    Adverse economic conditions or reduced IT security spending may adversely impact our revenue and profitability

    The heading now explicitly links adverse economic conditions and reduced IT-security spending to revenue and profitability; the supplied body is truncated.

  • 81% rewrittenRisks Related to Our Growth

    If we are unable to attract new customers, our future results of operations could be harmed

    No substantive change is visible in the supplied text; acquiring customers still requires proving cloud-platform advantages and significant customer deployment resources.

  • 78% rewrittenGeneral Risks

    If we fail to maintain an effective system of internal controls, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired

    The wording now specifically warns that current or new controls may become inadequate and that future weaknesses could be discovered.

  • 70% rewrittenRisks Related to Artificial Intelligence, Information Technology, Intellectual Property, Data Security and Privacy

    Issues in the development, use and execution of AI and ML, combined with an uncertain regulatory environment and evolving market expectations, may harm our business

    AI/ML use expands from products to business operations and internal systems, with added risks around resource forecasting, deployment and realizing benefits.

    Was: Issues in the development, use and execution of AI and ML, combined with an uncertain regulatory environment, may harm our business

  • 70% rewrittenRisks Related to Our Products and Services

    If our cloud platform or internal networks, systems or data are or are perceived to have been breached, our solution may be perceived as insecure, our reputation may be damaged and our financial results may be negatively impacted

    The security measures now expressly include Zscaler’s newly developed products and services, which may still fail against attacks.

  • 66% rewrittenRisks Related to Artificial Intelligence, Information Technology, Intellectual Property, Data Security and Privacy

    Claims by others that we infringe their proprietary technology or other rights, or other lawsuits asserted against us, could result in significant costs and substantially harm our business, financial condition, results of operations and prospects

    No substantive wording change is visible in the supplied prior-year and current-year excerpts.

  • 61% rewrittenRisks Related to the 2028 Notes

    The capped call transactions may affect the value of our common stock

    The description simplifies the capped-call counterparties and adds that they may trade derivatives or Zscaler securities, potentially affecting the stock.

  • 53% rewrittenRisks Related to Our Products and Services

    We face intense and increasing competition and could lose market share to our competitors, which could adversely affect our business, financial condition and results of operations

  • 49% rewrittenRisks Related to Our Growth

    If our customers do not renew their subscriptions for our services and add additional users and services to their subscriptions, our future results of operations could be harmed

  • 47% rewrittenRisks Related to Artificial Intelligence, Information Technology, Intellectual Property, Data Security and Privacy

    The actual or perceived failure of our cloud platform to block malware or prevent a security breach or incident could harm our reputation and adversely impact our business, financial condition and results of operations

  • 44% rewrittenRisks Related to Our Products and Services

    If we fail to develop or introduce new enhancements to our cloud platform, including AI enhancements, on a timely basis, our ability to attract and retain customers, remain competitive and grow our business could be impaired

    Was: If we fail to develop or introduce new enhancements to our cloud platform on a timely basis, our ability to attract and retain customers, remain competitive and grow our business could be impaired

  • 42% rewrittenRisks Relating to Legal, Regulatory, Accounting and Tax Matters

    Taxing authorities may successfully assert that we should have collected or in the future should collect sales and use, value added or similar taxes, and we could be subject to liability with respect to past or future sales, which could adversely affect our operating results

  • 41% rewrittenRisks Related to the 2028 Notes

    Servicing of our debt will require a significant amount of cash, which may impact our cash available for working capital, capital expenditures and other corporate purposes

    Was: Servicing our debt will require a significant amount of cash, which may impact our cash available for working capital, capital expenditures and other corporate purposes

  • 40% rewrittenRisks Related to Artificial Intelligence, Information Technology, Intellectual Property, Data Security and Privacy

    Some of our technology incorporates "open source" software, and we license some of our software through open source projects, which could negatively affect our ability to sell our platform and subject us to possible litigation

  • 37% rewrittenRisks Relating to Legal, Regulatory, Accounting and Tax Matters

    Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited

  • 34% rewrittenRisks Related to Our Growth

    We have a history of annual net losses and may not be able to achieve or sustain profitability in the future

  • 32% rewrittenRisks Relating to Legal, Regulatory, Accounting and Tax Matters

    We are exposed to fluctuations in currency exchange rates, which could negatively affect our operating results

  • 30% rewrittenRisks Related to the 2028 Notes

    We are subject to counterparty risk with respect to the capped call transactions

  • 26% rewrittenRisks Related to Our Sales and Operations

    Our international operations expose us to significant risks, and failure to manage those risks could materially and adversely impact our business

  • 25% rewrittenRisks Related to the Ownership of Our Common Stock

    The concentration of our stock ownership with insiders will likely limit your ability to influence corporate matters, including the ability to influence the outcome of director elections and other matters requiring stockholder approval

  • 25% rewrittenRisks Related to Our Growth

    We have experienced rapid revenue and other growth in recent periods, which may not be indicative of our future performance

  • 22% rewrittenRisks Relating to Legal, Regulatory, Accounting and Tax Matters

    We are subject to governmental import and export controls and trade and economic sanctions and other trade controls including tariffs that could impair our ability to compete in international markets and subject us to liability if we are not in full compliance with applicable laws

  • 22% rewrittenRisks Related to Our Sales and Operations

    We rely on our key technical, sales and management personnel to grow our business, and the loss of one or more key employees or the inability to attract and retain qualified personnel could harm our business

  • 21% rewrittenRisks Relating to Legal, Regulatory, Accounting and Tax Matters

    Our corporate structure and intercompany arrangements are subject to the tax laws of various jurisdictions, and we could be obligated to pay additional taxes, which would harm our results of operations

  • 20% rewrittenRisks Related to Our Products and Services

    If our global network of data centers, which deliver our services, was damaged or otherwise failed to meet the requirements of our business, our ability to provide services to our customers and maintain the performance of our cloud platform could be negatively impacted, which could cause our business to suffer

  • 20% rewrittenRisks Related to Our Products and Services

    If the delivery of our services to our customers is interrupted or delayed for any reason, our business would suffer

All 59 risk factors

Headings as the filing states them, in filing order.

Risks Related to Our Growth

  1. 01We have a history of annual net losses and may not be able to achieve or sustain profitability in the future34% rewritten
  2. 02If organizations do not adopt our cloud platform, our ability to grow our business and operating results may be adversely affected
  3. 03If we are unable to attract new customers, our future results of operations could be harmed81% rewritten
  4. 04customers. These factors significantly impact our ability to add new customers and increase the time, resources and sophistication required to do soNew
  5. 05If our customers do not renew their subscriptions for our services and add additional users and services to their subscriptions, our future results of operations could be harmed49% rewritten
  6. 06We have experienced rapid revenue and other growth in recent periods, which may not be indicative of our future performance25% rewritten
  7. 07If we fail to effectively manage our growth, we may be unable to execute our business plan, maintain high levels of service, adequately address competitive challenges or maintain our corporate culture, and our business, financial condition and results of operations would be harmed
  8. 08Our operating results may fluctuate significantly, which could make our future results difficult to predict and could cause our operating results to fall below expectations
  9. 09Our business and growth depend in part on the success of our relationships with our channel partners

Risks Related to Our Products and Services

  1. 10We face intense and increasing competition and could lose market share to our competitors, which could adversely affect our business, financial condition and results of operations53% rewritten
  2. 11If the delivery of our services to our customers is interrupted or delayed for any reason, our business would suffer20% rewritten
  3. 12If we fail to develop or introduce new enhancements to our cloud platform, including AI enhancements, on a timely basis, our ability to attract and retain customers, remain competitive and grow our business could be impaired44% rewritten
  4. 13If our global network of data centers, which deliver our services, was damaged or otherwise failed to meet the requirements of our business, our ability to provide services to our customers and maintain the performance of our cloud platform could be negatively impacted, which could cause our business to suffer20% rewritten
  5. 14If our cloud platform or internal networks, systems or data are or are perceived to have been breached, our solution may be perceived as insecure, our reputation may be damaged and our financial results may be negatively impacted70% rewritten
  6. 15Any of the above could materially and adversely affect our business, financial condition and results of operations
  7. 16If our cloud platform does not interoperate with our customers’ network and security infrastructure or with third-party products, websites or services, our cloud platform may become less competitive and our results of operations may be harmed

Risks Related to Our Sales and Operations

  1. 17If we are not able to maintain and enhance our brand, our business and results of operations may be adversely affected
  2. 18If we do not effectively develop and expand our sales and marketing capabilities, we may be unable to add new customers or increase sales to our existing customers, and our business will be adversely affected
  3. 19Our sales cycles can be long and unpredictable, and our sales efforts require considerable time and expense
  4. 20Because we recognize revenue from subscriptions for our services over the term of the subscription, downturns or upturns in new business may not be immediately reflected in our operating results and may be difficult to discern
  5. 21We provide service level commitments under our customer contracts. If we fail to meet these contractual commitments, we could be obligated to provide credits for future service and our business could suffer
  6. 22We rely on our key technical, sales and management personnel to grow our business, and the loss of one or more key employees or the inability to attract and retain qualified personnel could harm our business22% rewritten
  7. 23Our business depends, in part, on sales to the public sector and significant changes in the contracting or fiscal policies of public sector organizations could have an adverse effect on our business and operating results
  8. 24Our international operations expose us to significant risks, and failure to manage those risks could materially and adversely impact our business26% rewritten
  9. 25Future acquisitions, strategic investments, partnerships or alliances could be difficult to identify and integrate, divert the attention of key management personnel, disrupt our business, dilute stockholder value and adversely affect our operating results, financial condition and prospects
  10. 26If we are unable to effectively manage certain risks and challenges related to our India operations, our business could be harmed
  11. 27Our failure to raise additional capital necessary to expand our operations and invest in new solutions could reduce our ability to compete and could harm our business

Risks Related to Artificial Intelligence, Information Technology, Intellectual Property, Data Security and Privacy

  1. 28The actual or perceived failure of our cloud platform to block malware or prevent a security breach or incident could harm our reputation and adversely impact our business, financial condition and results of operations47% rewritten
  2. 29to use our services are the subject of a cyberattack that becomes publicized, our current or potential customers may look to our competitors for alternatives to our servicesNew
  3. 30Any of the above results could materially and adversely affect our business, financial condition and results of operations
  4. 31Issues in the development, use and execution of AI and ML, combined with an uncertain regulatory environment and evolving market expectations, may harm our business70% rewritten
  5. 32We incorporate technology from third parties into our cloud platform, and our inability to obtain or maintain rights to the technology could harm our business
  6. 33Some of our technology incorporates "open source" software, and we license some of our software through open source projects, which could negatively affect our ability to sell our platform and subject us to possible litigation40% rewritten
  7. 34Claims by others that we infringe their proprietary technology or other rights, or other lawsuits asserted against us, could result in significant costs and substantially harm our business, financial condition, results of operations and prospects66% rewritten
  8. 35The success of our business depends in part on our ability to protect and enforce our intellectual property rights
  9. 36Adverse economic conditions or reduced IT security spending may adversely impact our revenue and profitability90% rewritten
  10. 37solutions and on the economic health and general willingness of our current and prospective customers to purchase our security services. A broad reduction in IT security spending would have a material impact to our businessNew

Risks Relating to Legal, Regulatory, Accounting and Tax Matters

  1. 38Failure to comply with laws and regulations applicable to our business could subject us to fines and penalties
  2. 39If we were not able to satisfy data protection, security, privacy and other government- and industry-specific requirements or regulations, our business, results of operations and financial condition could be harmed
  3. 40We are subject to governmental import and export controls and trade and economic sanctions and other trade controls including tariffs that could impair our ability to compete in international markets and subject us to liability if we are not in full compliance with applicable laws22% rewritten
  4. 41We are exposed to fluctuations in currency exchange rates, which could negatively affect our operating results32% rewritten
  5. 42We are subject to counterparty default risks
  6. 43Our corporate structure and intercompany arrangements are subject to the tax laws of various jurisdictions, and we could be obligated to pay additional taxes, which would harm our results of operations21% rewritten
  7. 44Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited37% rewritten
  8. 45Taxing authorities may successfully assert that we should have collected or in the future should collect sales and use, value added or similar taxes, and we could be subject to liability with respect to past or future sales, which could adversely affect our operating results42% rewritten

Risks Related to the Ownership of Our Common Stock

  1. 46The concentration of our stock ownership with insiders will likely limit your ability to influence corporate matters, including the ability to influence the outcome of director elections and other matters requiring stockholder approval25% rewritten
  2. 47Certain provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove members of our board of directors or current management and may adversely affect the market price of our common stock
  3. 48The market price of our common stock may be volatile, and you could lose all or part of your investment
  4. 49We do not intend to pay dividends in the foreseeable future. As a result, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock
  5. 50If industry or financial analysts issue inaccurate or unfavorable research regarding our common stock, our stock price and trading volume could decline
  6. 51Our amended and restated certificate of incorporation further provides that the federal district courts of the United States are the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act of 1933, as amended

Risks Related to the 2028 Notes

  1. 52Servicing of our debt will require a significant amount of cash, which may impact our cash available for working capital, capital expenditures and other corporate purposes41% rewritten
  2. 53The capped call transactions may affect the value of our common stock61% rewritten
  3. 54We are subject to counterparty risk with respect to the capped call transactions30% rewritten

General Risks

  1. 55Our business is subject to the risks of earthquakes, fire, floods and other natural catastrophic events, and to interruption by man-made problems such as acts of war and international conflicts91% rewritten
  2. 56We are subject to anti-corruption, anti-bribery and similar laws, and noncompliance with such laws can subject us to criminal penalties or significant fines and harm our business and reputation
  3. 57If we fail to maintain an effective system of internal controls, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired78% rewritten
  4. 58If our estimates or judgments relating to our critical accounting policies prove to be incorrect or financial reporting standards or interpretations change, our results of operations could be adversely affected
  5. 59We may become involved in litigation that may materially and adversely affect us

Other Zscaler 10-Ks

  • FY2025 10-K risk factors
    66 risks9 new3 dropped22 reworded

    Zscaler faces heightened competition from larger tech firms offering bundled or zero-margin security products.

    Filed Sep 11, 2025
  • FY2024 10-K risk factors
    60 risks

    Zscaler relies heavily on channel partners for sales and faces intense competition in the evolving cloud security market. The company has a history of accumulated net losses totaling $1,148.1 million as of July 31, 2024. International operations represent about 50% of revenue, with 37% of the global workforce based in India.

    Filed Sep 12, 2024

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.