Zscaler’s Security-as-a-Service Offering

According to Gartner, the cloud-based security services market is estimated to be worth $4.2 billion by 2016. The researcher estimates that by 2015, the cloud will be the delivery platform for 10% of total IT security enterprise product capabilities. San Jose–based Zscaler is one organization working to transform enterprise security by building the world’s largest security cloud so that users can access a safe cloud even outside of their corporate networks.

Zscaler’s Offering
Zscaler was founded in 2008 by Jay Chaudhry, their current CEO. The company focuses on handling enterprise security challenges being faced because of emerging trends such as bring-your-own-device (BYOD), cloud applications and social media. Zscaler decided to address the opportunity of securing services by developing a cloud-based solution that was built to securely enable these trends.

Most appliance-based network security solutions were built to protect static corporate networks. These solutions address mobile and remote components by directing the traffic through the appliances, thus invariably suffering from latency. Unlike these solutions, Zscaler’s security-as-a-service offering was built entirely on the cloud scans traffic between any device and any location. The service does not require deployment of any on-premise hardware or software. It helps provide web, email, and corporate data security on mobile devices and data loss prevention through a single platform. Zscaler also operates a research lab, Zscaler ThreatLabZ that monitors web transactions from worldwide users and alerts customers of upcoming threats.

Today, their security cloud secures more than 10 million users in 180 countries and processes more than 8 billion transactions each day. They boast of more than 3,500 global enterprises as their customers including names like the National Health Service (NHS), British American Tobacco (BAT), Pitney Bowes, and VMware, to name a few.

Zscaler earns revenues through an annual subscription model where customers are charged on the basis of features used and the number of users protected. Recent price details are not available, but in 2011, prices began at $2.40 per month per person for web filtering services for fewer than 50 users and went down to $1.50 per user for more than 100 users. Enhanced features were available at prices ranging from $5.20 for up to 50 users to $3.25 per user for more than 100 users.

The company does not disclose their financials. They did report that they saw revenues grow 100%  over the year last year and expect that growth rate to continue during the current year. Unlike many other new age players, Zscaler has been a cash positive organization. Until last year, they were funded entirely by internally generated funds. Last year, they tapped into venture funding to generate additional funding needed for product development and increased marketing efforts. They raised $38 million in funding from Lightspeed Venture Partners and an unnamed investor, which analysts believe is EMC. Zscaler expects to be IPO-ready in the next two years.