Zscaler (ZS) 25 Feb 222022 Q2 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Zscaler Second Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be question-and-answer session. [Operator Instructions] Please be advised that, today's conference is being recorded. now today, hand Mr. will to conference I speaker your Instructions] like the to over [Operator Bill Relations and Senior Strategic Choi, Vice Finance. President of Investor Mr. floor the is Choi, yours.

XXXX the Good Fiscal welcome everyone, Call. to afternoon, Second and Quarter Earnings Conference Zscaler

about website. Jay numbers supplemental On CEO; will Chairman basis. our financial today note we schedule and the earnings we our Relations Please and have CFO. to Chaudhry, posted an today Unless Canessa, release on call all adjusted me that with talk otherwise are noted, Remo and be Investor a non-GAAP

non-GAAP performance, net rate, income a per measures risk share, like You operating to gross comments of today's performance, margin, subject market are our anticipated statements our are of but rather beyond statements, of These and not will which guarantees find are market reconciliation uncertainty, future you some company's performance decisions, not the operating share, income, and and net retention cash remind other our opportunity. GAAP operating control. today discussion should rely views this call. and them I'd income, as apply not obligation flow, our These We in as to future dollar-based hiring these release. you earnings but the contain representing undertake forward-looking obligations, to remaining future. future statements including financial earnings will revenue, after statements on the taxes, no that forward-looking update of billings, to in limited free to expenses, calculated

today's risks For as the please as see release. a uncertainties, our and in with the SEC, more discussion filings well of complete earnings

in Conference March to Virtual I Q&A website, Technology Berenberg today's we'll Thematics Conference Securities Research like prepared inform would March segment Wolf attending you upcoming when XX. copy on Software of a on we to X; remarks upload events and Software JMP call. following of the the on will be X; to Conference March: that, also March the IR the move We

Now, over Jay. to I'll call turn the

Thank for our to I'm strong you, pleased results Bill. share fiscal QX.

for Exchange Public profits cloud. We we also SaaS delivered operating our embrace of while continue billings execution XX% see and We growth large in Zero been rule get of exceeding demand free over growth, as our customers to generating strong and in for our to platform, strong XX our cash rule Trust revenue are XX% XX% opportunity. XX, companies months, growth year-over-year happy to market have flow. XX the last while validating pursuing the the

for cloud exceeding and for in momentum exchange to Business plus of is $X an million architecture zero priorities. scaling, market the world the of strong have substantial investment making continued What XX% ARR billion the the sizes, growth. machines critical had we Our in continue in a to for deal increase plan success orders best is highest even expanding who growth customers pace of our number of we value. platform are with large as rapid investments and logo which over We million significant across yielding our to now with This we revenue. new $X in and our platform XXX the annual in of have company engineering three our customers in customers' on and our with deliver buying with is to in enterprises due are revenue in over growth reflected years keep increasing $X more is upsell our innovation need go-to-market We our due modern year-over-year. annualized mobility. surpassed to a security a

of offering services. of ZPA supporting customers. our has Global has our flagship our majority flagship growing data ZIA Our continue and offering XXXX as second the very well cyber users and millions as expand been we to emerged protection

With scalability. zero trust in maturity success and the we demonstrated implementing leader zero had are clear for ZPA We trust access proven users. ZIA market and application our with

pillar our immediate in Our the to to powered trust ZIA technology. opportunity big zero workloads bring is next same by ZPA core ZCP and

In it seeing our a cloud secure In users, systems productive zero demand. and addition trust location. exchange is pillar their enabling single applications, and integrated is IoT workforce strong connectivity a our of highly provides regardless workloads, and any-to-any OT for platform, ZDX

native While close a hard one many extensible point they to a our are platform bought the no of that very vendors capabilities claim comes integrate, because to offer to bunch of products cloud platform.

on believe to accelerate a growth We high customer engineering, support, invest products, in sales the sustained and offer in the demand our momentum marketing, continue will we to products. are We flagship keeping strong new while environment.

and ensure in We customers' seen continue secure. opportunity that and the by recent resilient, never remote IT supporting report, business IDG's the CEO all at agile, have top customer before. to According is XXXX a are transformation market expanding cybersecurity which reduce place risk. to must for of powered mandate digital work, our large leaders state a operations journeys to and IT new is business it Whether employee experiences, upgrade enabling CIO digital

leaders Despite legacy data transformation. is architecture true zero architecture. be from can network phase security in the full growth large unlock on the zero enterprise digital security legacy breaches, built in and to wins vendors Given our marketing It that our ransomware out trust matters. are clear to castle trust architecture to explosion claims, adopt and looking IT high-profile moat points security of

This laterals are that reasons with the One As cloud architecture to achieved by of can't zero at are I provider be scale superior the proven trust We why eliminating at applications cloud are next-gen principle to VPNs. firewalls or and security Zscaler. TLS security. we that encrypted architecture two have proxy only connect users highlighted core traffic selecting not moment. deliver is a inspects a enterprises to before, there network,

that start anywhere. transmission Fortune CASB employees Let bundle Trust Zero will ZIA a customer of highlight me I working and searches QX initially DLP purchased ZIA for from our wins the ZDX XXX big of discuss event. plus XXX,XXX advantages deal some Exchange. our with our A professional and

they selected platform scalable to sits their added XXX Internet the all quarter, with mission-critical footprint requirement major in at a of a With with secure and architecture. global cloud-first proven support XXX,XXX and a employees. strategy was their customer encrypted, our traffic business XXX,XXX ZIA needed stake countries TLS only a over to client-facing data inspection This XX% they considered proxy

ZPA a their of discovered manufacturer, and private Exchange. our can't part apps started will with XX This secure. Next logo in initiative is users applications for trust attack infrastructure. eliminate strategic be protecting new DDoS. behind Europe Exploited a or ZPA XXX,XXX customer ZPA to surface, their their to global of Hence implement thousands IT transform Plus zero headquartered purchased Zero as

played partners. We their allow with win, systems who SI a our Zscaler lateral VPN are our global example driving the are overall the firewall-based in major integrator partner, creating the in role replacing that channel of investments we A type implementing an transformation is leverage project, movement.

As the access together, to private shift SaaS public applications are transformation whether on-prem buying and ZPA the accelerates, direct in customers the and or ZIA cloud seamless and true to enabling with a cloud.

and several or They plus logo experience SaaS win. IT. the and XX,XXX access factors to for few management CSPM enable employees. purchased and is Fortune also seven closure full I'm also grown signed users need they highlight eliminates protection, SaaS. our also security employee investments. such in a ZDX and This selling America, to our headquartered is In where user and customer XX,XXX networks. a, success advanced in security ZPA purchased in a and products for are bundle we a comprehensive to which through plus XX transformation making countries, ZPA win XX,XXX as high-end our commitment the Fortune well the ZIA new and Company over SSBM another days annual of from employees from for recently up-level insurance securely or new different had security win a me superior months. global cybersecurity the region were about data users. of XXX for Let and This consolidated anywhere point simplify key year XXX XXXXX nearly working that to laptops seven-figure Fast centers. transformation X.X deal onboarding a the security as the shortens excited Mexico a and CASB, two manufacturer portal ZDX first ZIA, started Moreover, cyber transformation for accelerates acquisitions for commitment separate DLP many DPA purchased XX new Latin data signed employees two In new Fintech CASB a It deals. has like customer ZPA five-year DLP ZIA and ZDX

XXXXX users could Trust integrated to spend They with to that reduce upsell which who to Transformation bought is have time with more corporate previously network. In accelerate Zero Next technology deal both browser secure actors, elegant data integration access isolation M&A connect doubled have ZIA customer ZPA M&A platform. weeks Zscaler may bundle the case two XX with purchased without money. to provided operating This over latest ZPA deception also us. infiltrated our saving companies having diversified or for the business added firewalls, for Bundle legacy XX networks risk taken use companies an more industrial months conglomerate with and to and across annual purchase in a applications purchased Exchange intercept high-end enhance their protection. This our than bad an

win four ZCP pillars a platform. ZPA employees In XXXX of ZDX for leader products highlight ZIA XXXXX in for new me all environment. multi-cloud Next and purchased Global DLP workloads workload let posture transformation XXXX a logo in customers technology our and CASB, with purchasing and

led troubleshoot priority we natural user VPNs the and As to CIO. an core traveling customer customer while to the productivity in time issues executive the was real Microsoft by risk tech Europe. for us allowing isolating test the mapped movement one poor ZDX transformation experience. to in I the XXX improve believe user They to ZPA over the entire path a workforce eliminate every This proof highest purchase. issue over value best legacy the the ensuring resolve put embrace the will ZDX network asking quick ZIA the specific of quickly CIO's to priorities that experience. of and and Internet accelerate digital ZDX ZDX is experience of of time the and the as

our with routes in happy to market expanding I'm Lastly, cloud via marketplaces. success our early

and AWS with Azure. with First now

deals. two Azure highlight me marketplace Let

with cloud for access XXX us. done ZPA Trust was with Europe and a environments. private global doubled apps the XXXXX spend pharma couple annual posted purchased in customer This existing clicks to First, all Zero the headquarters with employees mouse just an enabling purchase of in it hybrid

new commitment and a customer eight-figure all in XXX industry Fortune for for made a three-year ZDX ZIA ZPA XX,XXX the Second, energy employees.

Zero true new invest a have and a imitators revenue. We cloud years running entrants Trust as operational trust over and channel Enterprises experience, in marketplaces world. largest architecture we will of the continue in XX because security cold over to Zscaler to the new have cloud

than requires Our largest for Trust availability security requires transactions expertise. Exchange to to flawlessly and unmatched Xs five more and day, the processes run per Zero network line violations billion over seven more policy security the with expertise of billion world's than security providing and ability security the in effect our control traffic XXX customers an [ph] superior cloud pass. networking It prevents

was born since and as been cloud operating company Zscaler an a XXXX. As has in-line cloud

expertise This as time. and millions become OT of expertise billions We more algorithm of experience. IoT compression hundreds over this workloads years There's important, address even have gained no of of devices. for we will

fiber validation operations cloud because connectivity Microsoft. direct Let and between the our performance to me criticality connectivity our higher volume to exchange share that to of and differentiation. from of of the peering our flows direct Internet traffic traditional deliver the the centers customers. enables Microsoft ours This reliability approach. This major and of scale services our Zscaler a an of extended data is example and us mutual

our which and and and lost. performance disrupted availability productivity is integrations API-based with user and Microsoft issues great delivering is Zoom. is for With proactively and latency-sensitive Teams of example identify apps. collaboration integration Another performance for Zoom, Without resolve business we these high

partner Zscaler access the mission-critical world's Our record to and the securely security applications. trusted running makes of obvious need choice, proven in-line but enterprises largest cloud track

for again Isolation Web platform leader Gateway Let subsume After approach Many NQ about such as talk trust MQ Gartner to include market functionalities ZTNA, renamed Browser expanded such scope Security Experience Digital secure market of SASE. recognized me named a Zscaler. for Service point Gartner's were and CASB, platform it aware Secure foundation of leadership. of a named you leader we XX architecture. Web and migrated Zscaler gateway, and evolves years pioneered customers as the of time, multiple our SSE the SSE. products the and as secure web or towards are a And in into consecutive being also of Edge. gateway our functionality innovation zero over Monitoring market the our

SASE architecture connectivity and the are Edge. type and SSE So combination to framework generally SSE which has WAN WAN built capabilities how SASE and the zero SSE an trust all the security related? is provides network. is of cloud. on SD-WAN of Edge independent SSE of is

security Edge. cloud, in Importantly the implemented WAN SSE is in Zero Trust not the

category the productivity the As deepest consolidation is and protection. in the user Zscaler leader platform for cyber cost widest offerings better SSE go-to with and savings vendor increased

responsibilities cloud scaling the broad expanding teams, Sinha's new our areas. to market company. expansion leaders As we to lead our engineering into also will are to and expand while Zscaler. We're continue Amit continue for assuming promoting platform opportunities two of President of strong operations Amit role our

journey. path approximately energized in competitive towards talent. Dali seamless. hiring continue customers' assuming cycle a hyperconnected the all among to In operational creating excellence our We growth that scale, our employees sales will and the next Dali are digital milestone enable billion and We is a top transformation by which over also shared at Officer. Zscaler globally to XXXX broader interlocking added Amit the our months and world are attracting and and as driving the also further culture transformation continue destination our digital last In new Operating organization global information our will talent development market business Chief of our enhance roles, to developing we and focused while of responsibilities teams sales, in collaboration promoting for six be entire ever-growing marketing, who aspirations their on Rajic always XXXX employees across responsive $X customers' ARR. life the to and lead levels. mission To create for in innovation is further have extend leadership, organization exchange to secure market today's rewards is and a Dali

in We our and growing been Glassdoor has never the the a I are and believe we opportunity highest front is large proud of in stronger industry. of have among Zscaler rating which us.

to turn results. for Now call the financial I to like would over Remo our

Thank you Jay.

we Jay $XXX quarter Revenue As basis year-over-year. driven total was XX% up revenue, to product business with On XX% are regions. for broad accelerated of with major of results our fastest-growing continues the fiscal sequentially XXXX. the we revenue growth growth APJ revenue the XX%. XX% XX% quarter for of was was our represented of by APJ XX% revenue. XX%. From year-over-year a strength mentioned revenue region pleased second the activity. EMEA strong million quarter Americas and perspective, be was in had geographic three across and a ZPA

XX with Our of grew months billings our million midpoint total to calculated to near year-over-year XX% range. XX $XXX billings the months duration

or one obligations RPO. XX% billings. current We The January performance XX% growing Remaining as from XX were to year growth report is RPO pleased ago. year-over-year total XX% are RPO of billion the short-term of in also $X.XX

in role our the speaks our customers' Our a broader XXX more in customers. We us year. months dollar-based the up metric quarter $X strong customer XXXX over the continued XX prior initiatives. retention XXX ability customers retention added rate strength the to We in above high than at platform ending The transformation play the which had $XXX,XXX XXX strategic paying to paying rate XXX%. net we and this annually in digital from such annually XX% past have customers again in us was more million than upsell resulted

down quarter-over-quarter our total XX.X% of QX was of year-over-year. rest margin flat gross basis points and financial approximately the to XX performance Turning

X% investments sequentially flow was Operating increased margin year-over-year in as and cash acquired million. ongoing last the revenue to T&E. percentage was businesses in total even expenses free operating second we smokescreen a of of and XX%. similar Operating expenses Our return and were XX% as was trust-owned half partial XX% a a $XXX to XX% we year and of margin up made ago year

be high expect cash, continue investments. equivalents year. billion for of the percent We short-term quarter $X.XX as the CapEx with cash single-digits in to We the ended revenue over in a to full and

and points. Now moving modeling guidance to on

As intangible of and compensation payroll amortization are stock-based of excludes these a and assets. which expenses related reminder, non-GAAP debt numbers taxes, amortization all discount

because For gross including I XX%. third margins have the focused quarter investors to within than products range margins. will more to $XXX ZDX, fiscal remind emerging we them revenue are profit for core growth initially gross of expect range workload XX% million million market Operating $XX like CSPM year-over-year segmentation would XXXX, million XX% optimizing on to lower to $XX we in to rather the of of of $XXX the gross of our and a products that million. growth our margins a time and number in of reflecting

have including and per we before taxes million starting $X.XX $XXX,XXX, earnings income this XXX noted million midyear loss of other to As of net XXX share fully customer our $X conferences, to income events, interest internal sales shares. events, more $X.XX diluted quarter events assuming of million

profit method For of note million, aggressively million our increasing of billings market to on $X.XX fully $X.XX our range billion to debentures range year-over-year growth a to to $X.XXX see the $X.XX XX% accounting. to first-mover shares. XX% calculated which are long-term opportunity Please share that per platform, to billion of positive or XXXX, range have guidance operating earnings million or this large to increasing convertible our to fast-growing diluted increasingly a of With full a impacts. to our the of $XX a treasury guidance $X.XX our we're count assuming of our growth from includes of year in market, a the of revenue fiscal XX% advantages billion increasing increasing dilution XX%, share year-over-year to approximately XXX committed opportunity a company. million our based broader customers extend $XX We $X.XXX existing to to billion we in to investing adopting XXX and will window range

We will call is based of to customers. the open continue shareholders, Operator, on we in and prioritize employees you growth balance best business the but growth, and growing, is our our which now interest questions. believe profitability may for how we'll

to time. ask Thank a one you. yourself at [Operator We limit please that question also Instructions] you

Now, stand-by roster. as we compile the Q&A

Our of Wells first Andrew Nowinski question Fargo. from comes

open. Your line is

afternoon, I'd question to impact with like Congrats the off nice on this Russia-Ukraine quarter, the gentlemen. a start from Great. a on conflict.

So pandemic, effect, at the forced the momentum wondering similar creating new has be saw that the to whether concerned even Ukraine if from for could or you the a start clearly outside of solutions. And cyberattacks COVID were with launched? some be it's I'm any ZPA, work your region of as remotely. conflict more the Russia-Ukraine with demand new had might companies in employees ensuing that

to this bit a our the are with us sure is actually And the we I hide help a concerned. topic. going talking to secure. ZPA think Andrew, was him attack but customers things he which surface. it's CXO of earlier opened little early with can impact, had from call There's customers And directly want and I is the one today to make they're sensitivity. higher tell Germany cyber our to

ZIA more see the becomes If production. And you you in-line all it. attack for something important can't can't

few seeing of weeks. Our research signals the for reconnaissance increased increasing activity, is past team that's

team we're XXX% making as available and a customers. have our a resource research to them We

Thank Got you. it.

Thank you.

comes question next Markets. Hedberg Our line of Capital RBC the Matt of from

Your is open. line

six four hire the on new you to about environment. Zscaler should And when talk and new multi-polar growth? adding employees the able we just you're draft Matt the Swanson the you. for This for Yes. of could But also, impressive how incredibly to the is one and sales kind given Hedberg. about you all, people every first Jay, ramp sales, expanded in think months time the of being think how be products X,XXX company, over headcount? of this that managing about of last Thank find to Matt more

question. multi-part you, thank Well,

pleased all, So start that in to top me first are have for this are saying environment, of though good that do we destination by very because talent. we able been let hiring we a hiring top

systems And point. number a a do the enablement easily think, things starting sure in incorporated these the I number team, realign. for of done training obviously we need is make doing about people Two, in strong that be talked be beyond we the hiring to past a boot can buddy very to camps So of company. and

these two job do So we it. a been of are Remo, becoming the sure shown zones them are productive. years part. doing in a make have show COVID have things that over of environment And this number part to past good making in the to people next able we

had equally out for an a From called QX. so quarter in an quarter outstanding had pass. headcount we perspective, also quarter, last few great We we quota

So market really hire opportunity. We're our to huge going to a plans to growth. we're as do We push to continue are across this the see and to company. that continue going

ASMs that The I'll next not is add it only us. just for comment it's matter to

Our strategic solution They important team CSOs process have doing architects we board sales CIOs, of in play CTOs. role the we're hiring. transmission across all well requires and and an top-down

Thank you.

Thank you.

have you. Needham. Henderson line Alex next Thank And of we the of

open. is line Your

quarter. also extend Great. an compliments to let my outstanding Thanks. And me

could CY terms say another to it hiring capacity a get against growth? Thanks. organization to a to of on little quota are really be the current for XX% what the around superb really talk for when and a to hiring increases in to year capacity. Is was bit prior you are staffing on they'll quota more think comp that your where in XXXX I year could what hiring we sales and the reasonable it results. getting your sales deliver expansion think you've expectations within the tough guys You delivered very ago capacity you getting hoping of extent

it. take I'll Yes.

year. ramped So after are people getting quicker from we a seeing quota but one quota they're perspective full on

hasn't changed at all. that So

that's What we want opportunity is and I'd sales see huge that Regarding it. don't give capacity, say a to like to percentages market out. I

did build we're revenue or So we expect out before, in over our growing thing margin sales points line quarter top the can The capacity we one continue in that if the basis model. expansion. on to you less call XXX the last than will quarter operating XX%

is outstanding. market growth you're And got absolutely These Our outstanding. you've They're at view XX%, short-term billings And huge Alex. are But you this you've continue a opportunity. at that's billings at in that's is on for our results XX%. a in that we got a have look invest leverage accompanied right, got tremendous market really going growth to model product We're the market and opinion to opportunity. a huge. our my that in business. focus scale very in that confident huge top line and we're best And

Great. Thank much. very you

Thank you.

of of Hamza Next we line the have Morgan Stanley. Fodderwala

Your open. line is

guys. impressive. growth was XX% of at I guys at the Thanks doing larger you and sizes. are question. environment billings seasonality I of great little the sort XX% mentioned my usual bit tailwinds seeing It things obviously guys the growth billings Jay of if for very you demand deal four lot question mean, first. my were type quarters. look that this direct secular over I Hey, that Remo, about If the to taking you last a a growth could is some scale and about the below

to perhaps there in about four anything a one-timey about of growth last this terms forward, just curious, think when we ago, I'm scale, at be we relation in billings mindful that revenue or or growth So year billings of is that was think seasonality quarters? quarter anything over next the should we when going

there. mean I of Yeah. lot a questions

Yeah.

try Let me answer to it.

is that So was one that I it didn't it absolutely federal. there's new single our XX% low if a outstanding. If upsell the with Federal and you growth we perform area billings was look at as mentioned at of level take business. QX, digit bought

budget Now that? It's why basically. is constraints just the

or So of strong is Also, we've built portion, be with our a got We a up the federal portion will that, team our business. relationships. FedRAMP certification. the a substantial feeling big

was I one didn't It single that would So in as expected we – comment call the to federal. but would digits. say, quarter thing was out be low

It forward market Regarding level hard all huge billings before, We had XX% as than mentioned go the top a ARR, Alex, feel opportunity. revenue, huge. we I we're with growth. our and absolutely well prior greater on really the is customers $X our over say. traction year. I million we XXX Like the to it's positioned. customers. believe which growth We're with seeing rate depends

$X,XXX. than customers was like ARR Our appear $XXX,XXX

operating gross So substantial top investors I or profitability, like like The that to something to difficult in of take the business. to solution. again, a we not is Really growth profitability were margin, that We related the thing. my operating customers feel to think XXX the And in year-over-year, key to it with But line We'll we're for cognizant again, we the outstanding market put also going continue trying down. no and reason is high operating that XXX. after. you're up or be it's invest thing XX% this base, profitability. have perspective, And see results. market slow all aware getting growth we advantage results what the there SaaS model from is we're to

helpful. Really Got it.

next have Fishbein Truist. And we you. of Thank Joel

is line Your open.

guess, for congrats Remo. on and the is execution. you, Thank I this great and Jay

of trending. in That part be been on is the I'd cross-selling pretty of seat the lot organization? that of per dramatically. as the obviously, going how has a get ARPU deal terms and been your to And of sizes You've love different successful up products are to being pretty an into obviously sell it different parts an well. able would organization since products of Thank helpful affect then second is, different you. parts how take

fillers with covered where ZIA, deals ZPA, many ZDX number of my so all remarks, Let deals prepared and me worked a bought. start. were I In four together product

with So we're very traction we're the happy actually seeing.

workloads. becoming ZDX last lots common seen ZDX an become more because buying the And we well ZCP for interesting seating of the a for can't of something ZIA, becoming for ourselves seen over goes on troubleshoot one the fairly opportunity more thing. couple common somebody. and And you an has And we've years that's early that on this if You've grow without year lots position together past common, to ZPA us is has are and it. because customers market

it? about feel good color we to cross further So can give very side. the Remo,

Yeah. is ARPU on definitely annual we'll that an giving I mean basis. the information increasing be and on

was and upsell. New the new quarter versus upsell XX% in XX%

So for new us. and between a balance good upsell quarter

Thanks.

Thank Gray you. BTIG. we And next Powell of have

is line Your open.

a taking for question. yeah, strong the Thanks And congratulations on Great. quarter.

know RPO XX% it your quarter. correctly, But close as if are Pretty current growth math quarter XX% above the a looks grew and I billings well last people to primary doing focused lot like So this of I'm revenue about on metric. rate. my XX%

what you think we just to growth? the indicator over should should trends be as So best it And looking converge at leading future revenue time? for curious do RPO

that versus other -- you XX of deals, -- in the more contract looking we to a look we're feel you months. our business. triple people the look Yeah, way year-over-year, And CRPO. be is growth our specific to great and XX was RPO sensitive was we billings when renewals, CRPO look at our at CRPO we for take growth billings that's called they're durations timing we've And going timing and take the it growth digit, or the CRPO, range rates at when RPO back these the terms. question. reasons XX% and the at RPO about a XX%. growth What out and It's and always should to just a of large said best rates are if Also especially want RPO when brought investors of

out was right XX both growth. is the I'll and the quarter, call to XX probably in investors look middle thing -- in range short-term our billings of the So months. that of One duration at also

growth billings short-term XX%. was Our

at CRPO months XX we're to everything equation. RPO kind billings. perspective look but range as metrics. That if Those And it's an the the out things all level growth. with would a and in I Zscaler from the So of going then bounces investor short-term that the and really on all are XX billings noise it takes key also of

helpful. you really That’s Thank much. Understood. very

Thank you.

question the line Baird. of Jonathan next comes Our from Ruykhaver of

open. is line Your

Yes, hey guys.

announced workload So, quarter last availability you general communication. of

how what larger opportunity? And on long-term it bigger limited you over or would around organizations to commentary time? So, expectations to workload it somewhat just ramp. be commented adoption of you've is trends similar on view curious kind segmentation to hear adoption that Will a

Workloads one talk It's what image call talk a to zero the And basic Like And for core, workloads. is is to Workload workloads, like talk peace also question. trust a good workloads. are users. offering. workloads only we users of users very Internet. they mirror offering other segmentation the to

So, the taken users workloads. apply our trust ZIA, disruptive and we've to ZPA zero

the got the so There's really version a a we So, firewall ZIA, you for of cloud? region with will today secure on ZPA. way another workload-based before we largely VM in did the forth. what's and security workloads to to firewalls. internet. the you It's same the and We go before users disrupt There's firewall done so believe it

asset of an I multiple a deals it's together opportunity. So, number bought highlighted where got including products actually ZCP.

XXX company. deals company, Some XXX company, global Fortune Fortune logistics a of included financial a these semiconductor service a

and area workload in start do small Now, cloud say that I the us. grow then with they would customers

Jay. Thanks. Helpful.

you. Thank

Fatima question of next line Citi. of from Our comes the Boolani

Your open. is line

you cash that the Hey course the between my cash a margins pandemic relationship Thank flow, good to materially over you consolidate and we we the Remo for afternoon. pretty flow a saw operating margins on see question. the this are starting of little question diverged taking bit. and for

remarks curious start deal should particularly trajectory in to eight-figure flow cash can multiyear and how we think free to deals in the you in alluded commits and large prepared on business? and I'm more that seven, about a lot the shed you light from of the large So, context Jay as if his do here, enterprise some

Yes.

like first projections. would me to our say Let prudent with be we

So, in keep that mind.

-- my was a XX% flow our basis. From it In it's perspective, cash cash revenue. of think a in the X%. range quarter-on-quarter fluctuate higher QX, were margins higher just operating at flow free four, prudent you margins points free at like QX, about to XX% take fiscal being on in is profitability free slightly It look in with three, operating percentage profitability. going just think flow five XX% cash If to I than our

is Our cash for flow. billing QX to quarters. typically quarter QX that that are highest QX our to The is for our QX our biggest free reason

QX QX. the So, cash in on you're collecting

annually. we As we typically build bigger, get

could XX XX What multiyear but when doing a year. have flow seen about get we that's and billings, we talk and is But what free we in try that not multiyear So -- which we increase. our model. one on do cash billings or contracts, to cash we flow commitment months billings for say free by being we it typically between metric increase a that's good Certainly, about. that's talk

Thank Very you helpful.

have of we Thank Liani Tal of you. America. Bank next And

is Your line open.

down to because buy-side growth the about billing is Hi. stock I growth want ask going expectations. lower on than billing

XX% grew four quarters. previous you pretty around stable billing the So

it we've This quarter much better guidance, it previous than but quarters. seen four than lower was in was the what

XX%. guidance the or year more less. for that's then And XX% So the is

is, question should are quarter? billing for What how is this Thanks. lower we than think quarters? can and the say the few about puts the or And you takes then it what's quarters? what about growth? explanation, four previous the So following Why

great scale plus XX% I that is to at that is that are. size get sustain a growth the we sustainable? you to mean Yes. It's XX% question. Well outstanding. quarters outstanding this row when is in very four billings that hard

a of into some If prior growth. that at our you billing plays duration top line look quarters, take

short-term at billings growth, was it If XX%. you look

if a And that's prior go so back see you growth number it's XX% billings you'll number. good pretty good a in a quarters, short-term very

revenue because two Because to then leverage in the you see years we're and to that and you've in thing going get on projections. number, huge. the numbers. that Those a is and numbers is got the for going And that And like that range we get SaaS the as in get We keep we're billing long and prudent operating that driving to profitability. our for huge our being a to it value top line contribution continue XX% billings. market. The Going you top take model forward with with short-term margin key projections. doesn't invest this driving line three, to

getting really, dominant player. in ARR really up important our That's the is focus. your building So that market share and being

Got Thank it. you.

you. Thank

Walkley from of Our comes question next Genuity. Mike Canaccord

is Your line open.

afternoon. Good taking Daniel Hi, on guys. question. Mike. my for for Thanks It's

periods additional color on, guess, your some this sales business this so give So wins over how the over some segment. you're made if investments you've Could you've improving trended the us within really part the of been given you I on your quarter? enterprise motion recognizing And working recent far?

Hi, this well is team. Jay. as Enterprise per to very continue make employees segment the is and investments define in which we X,XXX growing X,XXX company significant to progressing we

it's for market. an also a helping play market bigger It's where small program a step can enterprises some Moving is a channel us us. attractive quite a and to channel been And natural in role has bit.

you the So and grow want anything too? Remo, we same. continue to do add invest plan to to

Yes. strength grew I during well. our segments better. the quarter the deals large quarter did mean enterprise large all in in given the But

you Okay. Great. Thank so for much color. the

you. Thank

question Bank. of Deutsche comes Patrick next from Colville Our

Your line is open.

Hey, question. taking thank on for I around earlier call you just the so made double point you my much Can the in click federal.

have ask should of can that after or I you of? like compare that subsequently You last January federal that get any was of closed what you give aware was Can a hope year? we can frame we upsell. that that reference. that deals were a called quarter were also single-digits pushed us out So just out last be and only just low to XX framework new there just And

part But been has mid-single-digit. answer federal can I'll answer first the part and Jay typically the deals. about the

But quarterly contribution Patrick this single-digits. of what a single-digits. it I you quarter high to and But of can federal even our and being average upsell business recall low new mid-single-digit last Sometimes don't think was on year.

in deals is And and is Pipeline terms pipeline growing. going. of

the in We seeing more We the coming We and are from well new architecture. certifications. some got initiatives memos being We're momentum of engaged. put place. got certain

little the remains the unpredictable timings. federal thing one budgets of some is think a I and

so you much. Thank

you. Thank

Bachman Our of comes Keith next Montreal. Bank of from question

open. Your is line

Hi, thank you.

Just clarification Remo. the on question,

And short-term degradation You XX%. at billing you grew was points but points a the of little previous the mentioned It's from if seven bit higher. a six duration. it at compare you look quarter call

just to going about if facilitate actually new it rolling I you those for talk stay you think may have through do as Does can normalize the that quarters see you Thanks one look as the enhanced If And wanted percent. I billings steady, could short-term your just me trends So at duration by allowed products was like can we improve XX-plus through year. out trends or remind year of much. you're you just steady. if you last see that growth. then how sneak grew in July to very much to But I'm compare. been NRR ZCP so the pretty January

last that last of I'll of which quarter was to in QX QX just aware call XX-month year XX- out to that QX. range of it I'm one that is range, in close year. XX-month

of I that's impact So duration the can year recall. QX which last

NRR ZPA. quarter Regarding to And NRR, our we new is. going products is new our in it's two new first well. well it's the see the mean do may the XXX% as doing NRR. well. made said doesn't specifically bundles up If today XXX%, out products. NRR things we But we add The over if well of over in contributors bigger that deal the we're but and comment what quarter, second NRR. I doing that the I having that are in upsell as NRR. to last one that, products the related expect really if lower we was to that we do give are Or do not we deal, upfront, those very It get big those are quarters sell picked

with of don't XXX% as that, you we on to gave why a focus higher good happy in the But we So, NRR. past kind we really That's NRR. of try indicator. too much said

Thanks, Great. Jay.

Sachs. Essex Goldman Brian And next have we of

Your line open. is

and board, his question of force. now of have was thank and and Jay, maybe also larger you Well, afternoon address hiring. you Good velocity a came the on one. know I the Dali could kind guess for getting this you're on when got deal congrats focus deals, more you've mature sales results. Hi. you taking increasing I -- if

managing numbers that deals takes you're and like? there. mature more what sales any there's cycles? larger and can So look dynamic a growing commentary those some puts how now sales force bigger you're And Maybe you. sales with but cycles provide with now on over Thank that you large

Yes.

So, it's question. a good

the with all number well two. past X.X, first place in in over put That's enablement we the we it is grow put three over the exceptionally new of place. us So years Number processes has one. -- force all, these this since sales and helped motion

of think that I the we end on focused the are at time, in higher largely our major lease. merely market

Now further well, enterprise as doing well. quite is to expanded down we which

towards are keep we of lower the is cycle as transformation some up involves end CIO, fairly high multiple start, CISO, market. expect the be the we end would not of in on the And remains It we accounts, we that these you It we're But It growing. lower end that going CTO on parties. a As market. sticky is we upselling only winning so back. go wherever engaged, in sale. and

I'm bigger, So need are there. Product growing doing do very on we is as numbers -- comfortable. is keep very thing. Obviously, market the to confident there. The portfolio same

to needs executing. on keep really it and pressure, competitive no have We

have margins an keep we'll gross I think and level we're good we at on job doing the a and good driving investment. to keep margin

trended. Great. are, how sales and they've Any cycles what quantify way to

reduced getting by smaller months. say, it's a percent the x six I bigger, have It’s are in was for always and movement sizes. probably said shapes deals lower months we side come of to come bigger would many said a and say, I lower deals three the it. But to and but would there's haven't six XX we range are from they

of we growing pipeline our have all a rates it, well. they we are good close So pretty but are and -- very are rapidly as

So, bullish I and comfortable. feel very

Very you. Thank helpful.

Thank you.

line Next of Boyd question comes your Please, UBS. open. Roger from is

Quadrant what wonder about Wondering so for service of plus as cohort. you in XXXX -- performance you of questions. secure with out if of seeing that of about smaller and talk could competition thanks Magic the terms to in I go enterprise million smaller Hi, means really to talk new cohort the cohort? could what's that Gartner all ARR taking their $X strong XXXX recognition edge also market you're on then you if my first

good a It's Right. question.

the markets larger So first market, the the in just tend MQ companies relevant board the to across is not more to MQ Gartner because probably lower larger the be to CASB real them all out of degree world see vendors quadrant there. customers. But in the the I was in frankly that we would because see don't say some surprised I listed leaders twin

are quibble from to is is a was Gartner easier were believe which out and overweight I which I secure use to trust criteria and we it much at ZCP years. build you all. it if ZIA, And base the over line. ZDX, of significantly In with was much lots of gateway underway CASB sold that because replacing in is web our that harder to build of it's and ZPA, So, look it on our platform, point band have foundation customer CASB it products zero been expanded has

very they Well, cloud, keep vendors vendors they when than are services have much and want I CIO their Now of architecture I it talking excellence. functionality. the the financial that the the many large running this, a see second to start saying in to question feature really They right talk coming the He higher by related some look kind I who so the -- don't experience on end savvy. of end on see about see before. about. to they call operational saw don't for vendors out have with done and because of haven't discussion operational also the all when company. to wanted talked low and And do had to don't more smaller rule high enterprises, we Yesterday they we of actually enterprise There right? a we

the the the It's entrants. more engaged had more presence But these -- world out lower there. some as issues of some some you vendors and almost Azure AWS but So every now and and in new of time. of are the is seen on putting winning. end in But other growth we do with for AD resources is cost of us. to and more becoming Typically, in important have once area we a end enterprise actually market the we in past the operational those we firewall less see stuff win lower of we engage experience

Thanks Jay. Great. Helpful.

Wolfe we next Joshua Tilton of have And Research.

open. is line Your

thanks follow up your in. across to you number me how but just previous just you just of more I of your little Could entire question, market the quarters? comment Hey been guys, previous kind on competition squeezing overall a that's would And relative possibly for characterize kind maybe wanted to have rates on the trending? how bit broadly. win

how first our numbers? Sorry one was the

trending? over less of months Are previous of facts couple opportunities? your getting quarters? trending more that How are been How you in the has last number the opportunities

Yes.

you help by to off the CIO people how quarter. driven win. we of going drive So it's from We do degree quarter really main because to working because down don't It go a have with get couldn't back always cases where next we really aren't expect security don't case closed and moved have off, win the first transformation like. less active and we engage in too off of that, space transformation you the the in the down we do do almost in we many all. back The to went are deals track many to a the we in reason -- if there. typically thing and And deal, wins there all, and back we us used can

grow XXXX, that when three years and reason, same ago more market it place. IPO, and we and the our of kind did not of or And is pressure ZIA longer small We fast, different. part it's business. we as and was the the competitive -- as platforms delayed when is days getting 'XXs -- of the no it's two shifting probably years no it's look So generally ago at we early piece hurting more

is now. Now transformation a ZIA, became bundle big ZIA ZPA together. thing

could part have requirements Then the game being of we move digital So workload know user wherever. from the to work whatnot. and every experience and

it's are sure the to we just we competitive and people, to keep good. training hiring We sales. make need we strategic stuff, top-down on think So do on this,

That's you. Thank very helpful.

you. Thank

back for of comments. Thank concludes the Jay conference And you. to I call. that final will the Q&A hand Chaudhry, portion over the

your strong also to us employees I again. look continued are or who our Zscaler. want continued helping events progress. on quarter in you, at and you us joining for next everybody deliver to investor customers, partners you interest our forward updating fourth. and thank seeing to We Thank Thank you upcoming

call. conference today's concludes This

Good bye.

you conference for call. This today's concludes Thank participating.

disconnect. have now a You And pleasant may day.