Zscaler, Inc.
Cloud Security — Zero Trust Architecture and Secure Access Service Edge (SASE)Founded 2007- Updated July 2025
Reviewed by Swet Parvadiya
Last reviewed: July 2025
CorpDigest
Zscaler, Inc.
Company History
Founded 2007 in San Jose, California
Last reviewed: 2025-07-15 · By Swet Parvadiya
Jay Chaudhry founded his first security company, AirDefense, in 1999. He sold it. He founded Cipherstone Networks, sold it to Cisco. He founded CipherTrust, sold it to McAfee. He founded Secure Computing — sold again. By the mid-2000s, he had built and exited enough security companies to understand precisely where the enterprise security market was going wrong: firewalls and VPNs were designed for a world where everything valuable sat inside a corporate building, and employees worked from inside that building. Neither condition would remain true.
Zscaler incorporated in 2007 with a specific architectural bet: security inspection should happen in the cloud, inline, for every user connecting to any application from any location. The company built its own global network of data centers — 160-plus as of fiscal 2025 — to process traffic close to where users actually were, rather than requiring traffic to backhaul through a corporate datacenter for inspection.
The platform took years to gain traction with enterprise buyers who were accustomed to hardware security appliances they could touch and manage locally. The 2009 Microsoft partnership helped; so did NIST's zero trust architecture guidelines, which gave enterprise security architects a framework for explaining to boards why perimeter-based security needed replacement.
The March 2018 IPO at $16 per share raised $192 million. The stock rose 71 percent on the first day of trading, reflecting strong institutional demand for a security company with genuine recurring revenue growth and a differentiated architectural position. Subsequent acquisitions — Canonic Security in 2023, Avalor in 2024, Airgap Networks in 2024, Red Canary in 2025 — extended the platform into identity security, AI-powered data analytics, microsegmentation, and threat detection and response.
Jay Chaudhry is the co-founder, Chairman, and CEO of Zscaler, Inc. Born in India, he earned a Bachelor of Technology in Electronics Engineering from Benares Hindu University and an MBA in Marketing, MS in Computer Engineering, and MS in Industrial Engineering from the University of Cincinnati. He also completed the Executive Management Program at Harvard Business School. Before founding Zscaler, Chaudhry built and sold four successful cybersecurity companies: SecureIT (acquired by VeriSign, 1998), CipherTrust (merged with Secure Computing, 2006), AirDefense (acquired by Motorola), and CoreHarbor (acquired by USi/AT&T). He serves as Zscaler's Chairman and CEO, maintaining tight strategic control over the company's cloud-native vision. Forbes estimates his net worth at over $18 billion, making him the wealthiest Indian American. He and his wife Jyoti have established a charitable foundation and donated $3 million to COVID-19 relief in India. Chaudhry is a vegetarian and fitness enthusiast who enjoys hiking and white-water rafting.
Kailash Kailash is the co-founder and Chief Architect of Zscaler, Inc. He holds a B.Tech in Electronic Engineering from Benares Hindu University (1980) and a Masters in Computer Technology from IIT Delhi (1982). Kailash serves as Zscaler's Chief Architect, overseeing the technical design and evolution of the Zero Trust Exchange platform. He has been instrumental in building the cloud-native proxy architecture that distinguishes Zscaler from legacy security vendors. Unlike Chaudhry, who maintains a public profile as CEO, Kailash has remained relatively private, focusing on technical innovation. He owns a negligible amount of Zscaler stock compared to Chaudhry. His technical vision was essential to realizing Chaudhry's concept of a cloud-only security platform with no on-premise appliances.
Jay Chaudhry and Kailash Kailash incorporate SafeChannel, Inc. (later renamed Zscaler) in San Jose, California. Chaudhry provides much of the seed capital from proceeds of his previous four company exits, preserving founder control.
Zscaler launches its cloud-native cybersecurity platform, becoming one of the first companies to offer enterprise security exclusively through a cloud-based proxy architecture with no on-premise appliances.
Microsoft partners with Zscaler to provide advanced cloud security capabilities, validating the cloud-native approach and providing early enterprise credibility.
Zscaler secures $38 million in funding from Lightspeed Venture Partners and Strategic Investments, marking the company's first major external financing after five years of founder-funded operation.
TPG Capital leads a $100 million funding round, valuing the company at over $1 billion and providing capital for global data center expansion and product development.
Zscaler goes public on March 16, 2018, raising $192 million and achieving a valuation that would grow significantly as cloud security adoption accelerated. The company trades under ticker ZS.
Zscaler stock is added to the Nasdaq-100 index on December 17, 2021, reflecting the company's growth into one of the largest technology companies by market capitalization.
Zscaler celebrates 15 years of innovation, with the Zero Trust Exchange processing over 200 billion transactions daily and protecting thousands of enterprise customers globally.
Zscaler formally launches the Zero Trust Exchange platform brand at Zenith Live in June 2023, unifying ZIA, ZPA, ZDX, and data protection capabilities under a single architecture.
Zscaler acquires Canonic Security, an Israeli startup specializing in SaaS supply chain security, adding capabilities to protect against third-party application risks.
Zscaler acquires Avalor, an Israeli risk management platform, for approximately $350 million, adding risk quantification and data fabric technology for security operations.
Zscaler acquires Airgap Networks, adding network segmentation capabilities that complement the zero trust architecture by preventing lateral movement within networks.
Zscaler announces Zscaler Zero Trust SASE, enabling the company to offer its first single-vendor SASE solution by combining SSE capabilities with SD-WAN partnerships.
Zscaler reports total revenues of $2.673 billion for fiscal year 2025, a 23% increase from fiscal 2024, with ARR surpassing $3.015 billion and calculated billings reaching $3.246 billion.
In May 2025, Zscaler announces the acquisition of Red Canary, a leading managed detection and response provider. The deal closes in August 2025, marking Zscaler's expansion into AI-powered security operations.
Zscaler launches AI Guardrails for public and private applications, Zscaler AI Protect for securing AI workloads, and Zscaler Cellular for Zero Trust IoT/OT connectivity. The company achieves CMMC Level 2 certification and becomes the first ISV to earn AWS ISV Competencies in Healthcare, Education, and Government.
Zscaler acquired Canonic Security, an Israeli startup, in 2023 to add SaaS supply chain security capabilities. Canonic's technology helped organizations identify and manage risks from third-party applications connected to their SaaS environments, addressing the growing threat of supply chain attacks.
Zscaler acquired Avalor, an Israeli risk management platform, for approximately $350 million in 2024. Avalor provided risk quantification, data fabric technology, and security analytics that helped organizations prioritize vulnerabilities and measure security posture.
Zscaler acquired Airgap Networks in 2024 to add network segmentation capabilities. Airgap's technology provided agentless microsegmentation that prevented lateral movement within networks, complementing Zscaler's zero trust architecture.
Zscaler acquired Red Canary, a leading managed detection and response (MDR) provider, in August 2025. Red Canary combined high-fidelity signals with AI, behavioral analytics, and global threat intelligence to deliver fast, accurate threat detection and response across endpoints, identity, network, and cloud workloads.
Zscaler was founded in 2007 in San Jose, California by Jay Chaudhry and K. Kailash, two veteran security entrepreneurs who recognized that the appliance-based network security model was incompatible with cloud computing and mobile workforces. At founding, the typical enterprise security stack consisted of stacks of physical hardware in corporate data centers, including web proxies, firewalls, intrusion prevention systems, sandboxes and data loss prevention boxes, with traffic from branch offices and remote users hairpinned back through the headquarters for inspection. As employees increasingly worked from coffee shops and used Salesforce and Gmail outside the network perimeter, this architecture introduced latency and security gaps. Chaudhry and Kailash proposed a radical alternative: deliver the entire security stack as a multi-tenant cloud service, with users connecting to the nearest Zscaler data center and traffic inspected there before reaching its destination. The company spent its first several years convincing skeptical chief information security officers that a cloud-native model could match appliance performance, eventually anchoring blue chip references like Schneider Electric and Siemens. Zscaler raised approximately $148 million across private rounds before its initial public offering. The proxy-as-a-service narrative ultimately evolved into the Zero Trust Exchange and laid the groundwork for what Gartner later codified as Secure Access Service Edge.
Zscaler completed its initial public offering on March 16, 2018, listing on the Nasdaq under the ticker ZS at $16 per share, above the marketed range of $11 to $13 that had already been raised once from an earlier $10 to $12 indication. The first day of trading saw shares more than double, closing at $33 for a market capitalization of approximately $3.7 billion, the strongest cybersecurity IPO debut since CrowdStrike would later replicate the pattern in 2019. Zscaler raised $192 million in proceeds, with David Schellhase, Goldman Sachs, Morgan Stanley and Credit Suisse leading the underwriting syndicate. At the time of IPO Zscaler reported fiscal 2017 revenue of $125.7 million growing 56% year over year, with a customer base spanning 2,800 organizations including more than 200 of the Forbes Global 2000. Founder and CEO Jay Chaudhry held roughly 45% of the company at the time, retaining majority economic and voting control. The company was unprofitable at IPO with a net loss of approximately $35 million, a common profile for high-growth security software but one that did not deter investors given the strategic narrative of cloud-native security. The IPO marked the start of an extraordinary run, with Zscaler's market capitalization peaking above $80 billion in late 2021 before settling in the $20 billion to $30 billion range.
The Zero Trust Exchange is Zscaler's name for its globally distributed cloud security platform, the architectural foundation of every product the company sells. The Exchange consists of more than 160 data centers across more than 60 countries through which all customer traffic is routed for inspection before reaching its destination. Rather than trusting any device, user or workload simply because it sits inside a network perimeter, the Exchange evaluates each connection request against identity, device posture, application sensitivity and risk signals, granting access only to the specific application required. Conceptually this implements the zero trust security principle articulated by former Forrester analyst John Kindervag in 2010, which holds that no implicit trust should be granted based on network location. Zscaler differentiates by delivering zero trust through a single inline cloud-native proxy rather than through stitched-on agents or perimeter appliances. The Exchange processes more than 500 billion transactions per day and blocks more than 9 billion threats and policy violations daily. The brand investment around Zero Trust as a category-defining term has been deliberate and sustained since at least 2018, with Zscaler positioning itself as the only vendor to have built the architecture as a clean-sheet cloud rather than retrofitting it onto firewall hardware.
Zscaler's growth has been one of the most consistent in cybersecurity, with revenue compounding from $125.7 million in fiscal 2017, the last full year before IPO, to $2.67 billion in fiscal 2024, more than a 20x expansion in seven years. The growth has been driven by three forces. First, secular adoption of cloud and remote work, with the pandemic of 2020 accelerating board-level mandates to replace virtual private networks and centralized firewalls with cloud-delivered security. Second, expansion of the product portfolio from a single core product, Zscaler Internet Access, to a platform spanning Zscaler Private Access, Zscaler Digital Experience, Posture Control, Risk360 and Data Protection. Third, deep penetration of the Forbes Global 2000, where Zscaler now counts more than 40% as customers including 35 of the Fortune 100. Annual contract value has compounded as customers expanded from departmental pilots to enterprise-wide rollouts, with billings frequently exceeding bookings as multi-year contracts moved through the pipeline. Net retention has consistently exceeded 115% in recent years. Fiscal 2025 guidance, issued in September 2024, projected revenue exceeding $2.6 billion with continued operating leverage. Employee headcount reached 7,348 globally by mid-2024, distributed across San Jose, Israel, India, Costa Rica and European hubs.
Zscaler is widely credited as a pioneer of the Secure Access Service Edge category coined by Gartner analysts Neil MacDonald and Joe Skorupa in August 2019, and of the more narrowly defined Security Service Edge subcategory introduced by Gartner in 2021. SASE describes the convergence of wide-area networking and network security into a single cloud-delivered service, while SSE focuses specifically on the security services portion including secure web gateway, cloud access security broker, zero trust network access and firewall as a service. Zscaler's products map cleanly onto SSE: Zscaler Internet Access provides secure web gateway, cloud access security broker and firewall as a service capabilities, while Zscaler Private Access provides zero trust network access. Gartner has consistently ranked Zscaler as a leader in its Magic Quadrant for SSE since the category was introduced, and Forrester has named Zscaler a leader in its Wave reports for both zero trust edge and SSE. The company has chosen to remain focused on the security layer rather than entering wide-area networking, partnering with SD-WAN vendors including Cisco, VMware/Broadcom and HPE Aruba rather than acquiring or building competing networking products. This focused posture has been a defining strategic choice as competitors including Cisco, Palo Alto Networks and Cloudflare have pursued broader SASE consolidation.