Zscaler Plans Significant $1.5 Billion Convertible Notes Offering

Author: Evelyn Baker Updated: 06-30-2025 07:31 AM

Zscaler Announces Offering of Convertible Senior Notes

Zscaler, Inc. today revealed its plans to offer a substantial $1.5 billion in convertible senior notes due in 2028. This private offering will be aimed at qualified institutional buyers and is structured under Rule 144A of the Securities Act of 1933. Alongside the primary offering, Zscaler has given initial purchasers an option to acquire up to an additional $225 million in notes. As with any financial offering, this initiative is subject to market conditions, and no definitive closure or terms have been established yet.

Details of the Convertible Notes

The notes will represent senior unsecured liabilities for Zscaler and will accrue interest, payable semiannually. Scheduled to mature on July 15, 2028, these notes provide the company with the flexibility to convert into cash, stock, or a mixture of both at Zscaler's discretion under specified situations. The specific interest rate and conversion figures will be set at the pricing of the offering.

Use of Proceeds from the Offering

Zscaler plans to allocate a portion of the proceeds gathered from this offering to cover costs associated with capped call transactions. The rest will be used for various corporate purposes which may include working capital and potential acquisitions, positioning the company for further growth.

Capped Call Transactions Explained

In conjunction with the note pricing, Zscaler anticipates entering into capped call transactions with the initial purchasers and their affiliates. These transactions will serve to hedge against potential dilution that could influence Zscaler's stock as a result of the note conversions. This strategy helps mitigate the dilution's impact on shareholders, ensuring stability in stock value.

Market Influence and Anticipated Reactions

There is a possibility that as part of establishing their initial hedges related to the capped call transactions, counterparties could begin purchasing shares of Zscaler’s stock. Such activities might lead to fluctuations in the market price of Zscaler's common stock, affecting the notes' market value. Observations indicate that these hedging strategies could heavily influence market behavior, potentially impacting Zscaler’s stock valuation significantly.

The Future and Market Strategy

The offering reflects Zscaler's strategic approach to fund growth initiatives and manage capital effectively. As it continues to expand its services and enhance its market position, this substantial investment will allow the company to pursue key operational objectives and remain competitive in the technology landscape.

Frequently Asked Questions

What is the total amount Zscaler is looking to raise?

Zscaler plans to raise $1.5 billion through the issuance of convertible senior notes.

What are the convertible notes due?

The convertible notes will be due in 2028.

What will the proceeds from the offering be used for?

Proceeds will be utilized for capped call transactions and general corporate purposes like working capital and acquisitions.

How will the capped call transactions affect Zscaler’s stock?

These transactions are intended to limit dilution for stockholders and stabilize potential stock price fluctuations.

What is Zscaler's overall strategy with this offering?

This approach is aimed at enhancing Zscaler's capital structure, supporting growth initiatives, and maintaining competitive advantages in the market.

About The Author

Greetings, I'm 32-year-old author and financial specialist Evelyn Baker. My introduction into the financial industry started with an economics degree and continued with a wealth of experience in wealth management and financial consulting. My great passion over the years has been assisting people and companies in making wise, well-informed decisions to reach their financial objectives.

My goal with writing is to simplify difficult financial ideas into understandable, doable guidance. My goal in writing many books and articles is to make personal finance understandable to everyone, irrespective of their experience or background. I want to give readers the information they need to take charge of their financial futures, from investing and retirement planning to budgeting and saving.

Along with my writing, I lead webinars and workshops where I provide doable advice and methods for achieving financial success. To reach a larger audience, I also frequently contribute to financial blogs and publications. My method is always to offer doable, real-world guidance that can actually improve people's lives.

Aside from my job, I like to cook, travel, and experience other cultures. I work hard to apply my belief in the value of a balanced life to my financial counsel. My goal in working is to encourage and enable people to succeed financially so they may lead the best lives possible.

Contact Evelyn Baker privately here. Or send an email with ATTN: Evelyn Baker as the subject to contact@investorshangout.com.

About Investors Hangout

Investors Hangout is a leading online stock forum for financial discussion and learning, offering a wide range of free tools and resources. It draws in traders of all levels, who exchange market knowledge, investigate trading tactics, and keep an eye on industry developments in real time. Featuring financial articles, stock message boards, quotes, charts, company profiles, and live news updates. Through cooperative learning and a wealth of informational resources, it helps users from novices creating their first portfolios to experts honing their techniques. Join Investors Hangout today: https://investorshangout.com/

The content of this article is based on factual, publicly available information and does not represent legal, financial, or investment advice. Investors Hangout does not offer financial advice, and the author is not a licensed financial advisor. Consult a qualified advisor before making any financial or investment decisions based on this article. This article should not be considered advice to purchase, sell, or hold any securities or other investments. If any of the material provided here is inaccurate, please contact us for corrections.