Conviction / Adjacent Beneficiaries
ZS
Zscaler Inc.
conviction
Zscaler has lost about half its value this year because investors fear companies will need fewer paid user licences as work gets automated. The counterargument is that its usage-billed products are more than doubling and already make up over a quarter of new business.
What we judge
The view on expected return from here, 0 to 100.
Whether the thesis could succeed without this company at all. This moves slowly, and only when the company's position genuinely changes.
What we measure
Facts from market data, not judgments.
| Price | $161.91 |
| 30-day move | +8.3% |
| Position in 52-week range | 21 |
| From the 52-week high | -52.0% |
| Average daily volume | $400.4M |
Why it is in the fund
Thesis
Zero-trust architecture becomes non-negotiable as agentic AI systems access sensitive data across cloud environments.
Standing judgment
Zero trust network access is adjacent to the thesis rather than inside it: agent traffic does need policy enforcement, but Zscaler is one of several ways to provide it and nothing about the buildout requires this vendor. Down roughly 52% from its 52-week high and about 60% from peak, so a great deal of seat-erosion fear is already discounted at $163. The May 27 2026 print produced the worst single day in company history, down 31%, on prudent guidance plus the loss of two sales leaders, which is an execution wound layered on top of the narrative wound.
What changed, and why
Every move in this number carries the reason it moved. A score does not change without new evidence.
| Date | Conviction | Change | Cause | Evidence |
|---|---|---|---|---|
| 2026-08-05 | 58 | flat | first v3 judgment (v2 score was uninformative, see L-001): The consumption-priced part of the business is compounding at over 100% and is already a quarter of new bookings, which is real evidence the seat-erosion fear is being actively offset, but headline ARR growth is guided to decelerate to 16-17%, so the offset is not yet winning. | ARR $3.5B, up 25% y/y; FY2026 revenue guide raised to $3.330-3.333B. FY2027 outlook for ARR and revenue growth of only 16-17%, a sharp deceleration. Offsetting: non-seat metered ARR (AI Protect, Zero Trust Branch) growing over 100% y/y and now more than 25% of new bookings; AI Protect passed $100M i |
| 2026-08-05 | 58 | +54 | first v3 judgment (v2 score was uninformative, see L-001): The consumption-priced part of the business is compounding at over 100% and is already a quarter of new bookings, which is real evidence the seat-erosion fear is being actively offset, but headline ARR growth is guided to decelerate to 16-17%, so the offset is not yet winning. | ARR $3.5B, up 25% y/y; FY2026 revenue guide raised to $3.330-3.333B. FY2027 outlook for ARR and revenue growth of only 16-17%, a sharp deceleration. Offsetting: non-seat metered ARR (AI Protect, Zero Trust Branch) growing over 100% y/y and now more than 25% of new bookings; AI Protect passed $100M i |
| 2026-07-31 | 4 | flat | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-07-30 | 4 | -3 | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-07-29 | 7 | -12 | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-07-28 | 19 | +15 | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-07-27 | 4 | -50 | ⚠️ v2 rank-normalization artifact, unexplained move | v2 `scores` row |
| 2026-07-26 | 54 | -8 | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-07-25 | 62 | +27 | ⚠️ v2 rank-normalization artifact, unexplained move | v2 `scores` row |
| 2026-07-24 | 35 | -21 | ⚠️ v2 rank-normalization artifact, unexplained move | v2 `scores` row |
| 2026-07-23 | 56 | +10 | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-07-22 | 46 | -4 | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-07-21 | 50 | flat | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-07-20 | 50 | +7 | migrated from v2 (cause not recorded) | v2 `scores` row |