Cyber Monday sales may be over, but cyber threats never take a day off. As cloud computing and remote workforces create complex networks vulnerable to attack, companies are failing to adequately invest in protection. But for innovative cybersecurity providers like Zscaler, this gap represents a massive growth opportunity.
In 2025 alone, cyberattacks may cause $10.5 trillion in damages, tripling since 2015, McKinsey research shows. To combat this, they estimate companies need to spend $2 trillion per year on cybersecurity. But current spending is only tracking towards $189 billion in 2023, leaving a $1.8 trillion annual shortfall.
As attacks proliferate and losses mount, underprotected businesses will have to rapidly bolster security – an opportunity tailor-made for Zscaler’s advanced, cloud-focused products. Though economic turbulence has hit its stock price, financial results remain strong and structurally, demand looks poised to surge.
The Old Security Model Is Broken
For decades, companies relied on firewalls and antivirus to protect on-premise servers holding critical data and applications. But cloud computing upended this model. With data now hosted remotely and employees working from anywhere, threats can originate from countless endpoints.
Research suggests 90% of successful attacks start by compromising user credentials through tactics like phishing. If a remote employee’s login details are stolen, traditional security can’t detect or respond.
Zscaler: Security Designed For The Cloud Era
Zscaler’s “Zero Trust” architecture provides watertight protection for cloud networks. It authenticates each user attempt by analyzing their device and location, blocking attackers even with stolen credentials.
Better yet, it only grants access to specific applications employees need for their role – isolating breaches and preventing lateral movement across the network. Augmented by AI that identifies emerging attack patterns, Zscaler’s multilayered shield adapts in real-time.
Surging Corporate Demand Drives Growth
In Q1 of Fiscal 2024, Zscaler saw its customer base swell to over 7,700 businesses, including 40% of the Fortune 500. 470 clients now spend $1M+ annually, up 34% from 2021.
Total revenue jumped 40% to $496M as net retention hit 120% – proof that clients rapidly increase spending once onboard. Moreover, 37% growth at rival Crowdstrike and 20% at Palo Alto Networks implies Zscaler is rapidly gaining market share.
The driver? With cyber losses spiraling, security has become CIOs #1 IT investment priority. Larger, more complex organizations especially need Zscaler’s cloud-native protection. AI-powered features that simulate breaches to eliminate risks before they happen should unlock further premium pricing and growth.
Rising risks have created a $1.8 trillion cybersecurity spending gap – a shortfall Zscaler looks well-placed to help fill. Despite economic uncertainty dragging down valuations, it remains 45% below all-time highs. For investors, this innovative player looks compellingly positioned to capitalize on surging corporate security demand.
Key Takeaways:
- Cyberthreats may cause $10.5 trillion in business damages annually by 2025, 3X since 2015
- Companies need to spend $2 trillion per year on cybersecurity, but 2023 spending is only tracking to $189 billion, leaving a $1.8 trillion shortfall
- Cloud computing and distributed workforces require new security approaches focused on users and applications rather than networks
- Zscaler provides multilayered Zero Trust and AI-powered cloud security tailored for modern IT environments
- 40% revenue growth and 120% net retention shows strong momentum driven by surging customer demand
- 45% below all-time highs, Zscaler looks set to benefit as underprotected businesses race to fill the widening cybersecurity spending gap