Zscaler's Q2 2025: Navigating Contradictions in Zero Trust Adoption, Market Position, and Sales Outlook

These are the key contradictions discussed in Zscaler's latest 2025Q2 earnings call, specifically including: Zero Trust Everywhere adoption, Customer Focus, Market Share and Competitive Landscape, and Sales Productivity and Pipeline:



Strong Financial Performance:
- Zscaler reported revenue of $648 million for Q2, up 23% year-over-year.
- The growth was driven by increased sales productivity, double-digit new and upsell business growth, and lower sales attrition.

ARR and NRR Improvement:
- Annual recurring revenue (ARR) grew 23% year-over-year to over $2.7 billion.
- The net retention rate (NRR) improved to 115%, indicating strong customer retention and upsell success.

Expansion into Zero Trust Everywhere:
- Over 130 enterprises have adopted the Zero Trust Everywhere strategy, with a goal to triple this number in the next 18 months.
- This is a strategic initiative to eliminate legacy security appliances and reduce the attack surface.

Data Protection and AI Growth:
- Data protection saw over 40% year-over-year growth in net new ACV, driven by increasing adoption of Gen AI and customer demand for secure public AI app usage.

Government and GSI Partnerships:
- Zscaler secured a significant 8-figure deal with an APAC government and is engaged with several U.S. government agencies.
- GSIs are actively partnering with Zscaler to drive business by embedding the platform into their transformation practices.