Zscaler Expects To ‘Benefit’ From US Government Efficiency Measures: CEO Jay Chaudhry

With its promise of ‘eliminating multiple legacy security products’ such as firewalls and VPNs, Zscaler is ‘well-positioned to benefit from the government's efficiency measures,’ Chaudhry said during the vendor’s quarterly call Wednesday.

Even amid concerns about the potential impact of the Trump administration’s cost-cutting measures on federal cybersecurity, Zscaler sees the U.S. government efficiency initiative as a tailwind to its business, according to Zscaler Founder and CEO Jay Chaudhry.

During the security vendor’s quarterly call with analysts Wednesday, Chaudhry suggested that Zscaler is in a better position than other vendors — particularly those focused on network security hardware — to capitalize on the federal efficiency push.

“Incumbent security vendors cannot save costs for the government. But Zscaler can and does by eliminating multiple legacy security products, including firewalls, VPN, NACs, DLP, VDI and more,” he said during the call.

“Having landed in nearly all the cabinet-level federal agencies and with significant upsell opportunities still remaining, we are well-positioned to benefit from the government's efficiency measures,” Chaudhry said.

Chaudhry made the comments as Zscaler reported financial results for the second quarter of its fiscal 2025, ended Jan. 31, which saw the company exceed Wall Street expectations on revenue and earnings.

The sentiments also echoed recent comments made by Chaudhry during an interview with CRN, in which the Zscaler CEO elaborated on why the company believes it can do more than rivals to lower costs as customers modernize their networks.

“Will a firewall company want to eliminate its firewall [footprint]? Not really. They can’t really do cost reduction,” he said during the January interview with CRN.

“When a firewall company says, ‘I’m creating a platform for cost savings,’ it’s hard [to actually do],” Chaudhry said in the interview. “Half of the spend in security, most of the time, is firewalls and VPNs.”

On the other hand, “we don't have to worry about cannibalization [at Zscaler],” he said at the time.

Zscaler’s portfolio — which now includes a SASE (secure access service edge) offering in addition to its core security service edge (SSE) platform — is focused on enabling partners and customers to adopt a zero-trust security posture for accessing applications and other corporate resources.

The company reported Wednesday that its fiscal second-quarter revenue grew 23 percent from the same period a year earlier, reaching $647.9 million and surpassing the analyst consensus estimate of $634.4 million.

Zscaler’s stock price climbed 5.3 percent in after-hours trading Wednesday, to $206.99 a share, as the company also raised its earnings guidance for its full fiscal year 2025.

The raised guidance is “based on our pipeline and our visibility,” Zscaler CFO Remo Canessa said during the call with analysts Wednesday, and reflects the fact that the company feels a “bit more bullish than we did before.”