Key takeaways
- Palo Alto Networks trades at a steep premium to Zscaler on sales and forward earnings, but its platform strategy and 24.5% revenue growth complicate the valuation debate.
- Note that stock-based compensation (SBC) represented roughly 39% of operating cash flow, which inflates reported cash generation since SBC is a non-cash expense added back in the cash flow statement.
- In FY 2026, ended July 31, Zscaler reported revenue of $3.4 billion, reflecting growth of 25.4% over the previous twelve-month period.
Palo Alto Networks is aggressively shifting to a platformization strategy to consolidate its security services for 70,000 customers. Zscaler continues to dominate the cloud-native zero trust market with a presence in over 50% of the Fortune 500 companies.
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