Zscaler, Inc.

“Zscaler is a structurally sound cloud security business with real switching costs, strong FCF generation, and a founder-CEO with deep alignment — but it is not a compounding machine at the current price. Growth is decelerating toward ~20%, SBC dilution runs ~2-3% annually, and Microsoft plus Palo Alto represent genuine threats to new-business win rates. At ~32x forward FCF with no GAAP profitability, the valuation embeds 17-18% FCF CAGR for 7+ years, leaving a probability-weighted 5-year return below a 10% equity hurdle. This is a business to own at the right price — that price is materially lower than today.”