Zscaler (ZS) 30 May 242024 Q3 Earnings call transcript

Hello, and thank you for standing by. Welcome to Zscaler Third Quarter 2024 Earnings Conference Call.

[Operator Instructions]

I would now like to turn the call over to Ashwin Kesireddy, Vice President of Investor Relations and Strategic Finance. Sir, you may begin.

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

On Jay CEO; CFO. Chaudhry, call Chairman the with and and me Remo today are Canessa,

supplemental our Unless website. noted, on all about release posted an Investor talk otherwise have we will we to our note and Please a today financial numbers adjusted schedule Relations basis. earnings be non-GAAP

margin, discussion our GAAP will earnings but operating opportunity. to, the gross find billings, objectives our market non-GAAP customer decisions, dollar-based hiring remaining market the will you flow, including, to expenses, performance that products share response forward-looking obligations, operating reconciliation remind contain and of to and today's I'd statements, not cash outlook, release. our the measures earnings future You operating and like our company's net free performance, income our retention to share, future income, net in revenue, financial rate, taxes, income, limited per anticipated calculated

comments the of control. These this and and of which no call. our on our beyond statements them subject not future are after should to uncertainty, statements statements undertake in some as not apply risk these you are rather other views today, forward-looking as to These future. rely but We of performance, are and obligation representing guarantees update

want on SEC For of in San you a inform Bank the in Technology see June well Conference as more attending I to X. with complete be discussion filings as also of earnings the Global please risks and Francisco that our uncertainties, America the today's we'll release.

to Jay. over turn the I'll call Now

XX%. and on to our with performance. by Thank in our outstanding QX year-over-year grew full all year you, I'm Ashwin. our quarter an by based billings guidance increase and delivered strong XX% grew Revenue guidance metrics pleased very We exceeding

customers over in quarter XX% $X year-over-year Our ARR. ended customers ARR $X XX XXX, plus and with we million-plus to with increased the million

doubled had first year-over-year, net for which and in XX%. growth profitability pleased we a reached GAAP disciplined QX. a record of our also our is I'm our to operating margin quarter reflected basis that approach operating nearly income profit, on Our report to

was users, secure by devices. Trust we and Zero our which among to communication purpose Our continued demand driven workloads built Exchange strong performance for platform,

expect is strong number adopt a and remains initiative planning cyber of cloud our as remain IT demand [indiscernible] security We enterprises Trust ineffective and for to new the are increasing for protection. of legacy world in an file-based teams platform security Zero to mode as data better AI. top

billion superior security XXX and per and our Our day of customers. violations Zero over Exchange preventing billions Trust policy transactions provides processing security to

introduced We innovations This protect apps. with recently data We automate visibility solution. across deep our XX% platform one, of data For platform are example, to expansion X vulnerability AI vulnerabilities. monitoring The in we pillar: phishing We platform to granular critical ZDX, experience pillars. protection last AI-powered classify protection identify discover, customers to clouds; for and are introducing introduced and detection resonating calendar first campus and public Zero expands posture We DSPM, unified the security helps controls inside Trust and area factories. and accelerating by network management branches, cloud two, to networks, year, attempts, issues. security billion products resolution provide enable solutions segmentation, to the our capabilities of our AI industry's copilot up of year-over-year. and platform over sensitive our and Gen which local customers expanded data proactively digital app Gen our or AI our prevented with to cyber X significant added core performance for multiple our simplify management, and data

holistic innovators early-stage Airgap across as strategic business platform unifies in continue systems will well networks. security and risk. rapid third-party transactions timely enterprise based data Data with of provide add data various Avalar's organic expansion data understanding daily sources vulnerabilities to We fabric mitigation. acquired We will X XXX innovations XXX and as prioritize dynamically This and contexts to Avalar combine just our innovative on to our recently Fabric over acquisitions. data risk better with from for normalizes billion

As the customers efficiencies, posture. can insights and improving security a result, get operational actionable real-time overall

factories, For innovate. securing to customer branches, continue we campuses and

Starbucks, office, are which Our and exposed Zero year each treated like longer firewalls there internet. for enables released is branches be is no as network, last the solution lateral not are to fab the the no branches as no campus and movement need means branch Trust branch there on corporate factory a to

With the industry acquisition, as IoT servers introducing and inside taking segmentation, are are devices. branch factories we the to first level security for we and campuses next Airgap Trust OT branches, Zero the

This the traffic. market for billion $XX our the legacy opportunity eliminates talked about need fiber-based segmentation for East-West We past. in

dollars billion platform recent extend security. including management, Our other our operations increased and markets, market adjacent new as opportunity security and our branch acquisitions into by vulnerability they several innovations

Moving innovations. on our AI to

We are and Risk business developing vulnerability insight, management unified including multiple AI-powered XXX more. applications,

our models generated transactions billion XXX threat vast our are superior daily security the over AI on with training to detection. platform by We data amounts deliver of

data loss AI automatically enforce leveraging are for classify We prevention. data to policies and better

AI enable by of delivered to have apps AI Gen We our customers. secure app use security

user AI of employees; one, two, to used by data delivers: prevent allows control, data visibility services. the into policies three, access to AI sensitive from enforcement security such app services leaking of AI different to thousands from AI public which only services; services Gen and protection groups Our policy the approved

of User Zero in AI combine We with Zenith June. Conference will be showcasing the other Live that these at our Trust and power innovations

security posing exploited Nexen to actors based of firewall by VPN as of will organizations relying firewalls new out enterprises challenges firewall are exploiting Trust flat and continue legacy Hackers a and attackers in a vulnerability move vulnerability innovate networks to can and until as Zero exploits threat architecture continue frequently created are on to leading be These Such leading and put VPNs. firewalls. architecture. exploited VPN. Zscaler legacy X-day phase at evolving shortfalls laterally by security Recently, on risk embrace Organizations and the a

of which movement, improves threat organizations. lateral security posture eliminates architecture dramatically Trust zero Zscaler's

Our differentiated Zero to foundational security. architecture is and Trust delivering proxy-based superior

a me protection cyber financial ZDX After This deal. year, firewall wanted vendors Trust you experiencing purchased data in examples. customer hence attack Zero consideration. Let and our last a the ZIA ACV new large for excluded for XX,XXX services a multiyear give pillars few and X-figure catastrophic current logo a users customer architecture

protection the works." CASB, this EDM data Zscaler Our amazing. just were superior key technologies said, OCR strong architecture deal "Zscaler's customer are and to capabilities winning as and

purchase branch existing rolled are data out remote in major also and privileged legacy our vulnerability, of Zscaler X users, debt customer, experience. increasing another speaks an increased made manufacturing user solution, initial to platform example, also tech ZIA, in XXX,XXX of days. point Zero ACV devices global a advanced to customer a our purchasing In multiple of an interest and an Trust to and improving which learning platform. in the simplifying X-figure purchase their ZPA, IT just customer by access and while protection million. deal, after operations growing broader for more Subsequently, Customers eliminate ARR customers' for This our products consolidate over ZDX, including Zscaler about VPN $X the

for services over an that X-figure illustrate purchase users year, for upsell customer of Let expanded Zscaler in last despite me ACV purchase users the making this. XXX X significantly a deal After highlight a deals one our relationship financial XX,XXX We initial having Zscaler. of chose vendor, legacy years work and firewall web including with this multiple with consolidating of is project. GSI the products, closely This security VDI. secure it point VPN customer on large partners global gateway,

X-figure multiyear with services. users working our us services most expand of a buying for market XX,XXX upsell example large win, GSI signed an of based is financial a partners our In deal deal platform another opportunity. This to APG customer ACV

and In addition purchase AI their Zero Zero to Trust for for purchased for of Zscaler cloud users, solutions. Trust workloads, expanding they our branch

nearly emerging emerging ACV this of seeing value of upsell the which in nearly pleased to contributed quarter. products, our and X/X products the contributed I'm very we are business share deal. new customer interest Our that X/X strong of

also to of ACV deals customers' customers With Business several including a thrilled our the X-figure to ARR XXX was million. over I'm and more receiving protection verticals, largest total a our and workload our Xx $XX Here see than multiple consulting, across AI insurance ACV. AI In in closed protection of date first more. purchase, users with technology and purchase Fortune for innovations Trust cloud XXX representing workloads solutions. are Risk This deal customer X figures deal, including Zscaler recent and made workload increased Zero traction. Insights their We in their many to expanded examples. few for broadcasting, increased solutions, this purchase cloud our an for

it help the the specific don't inundated and plying with of provides based the are them alerts XXX risk actionable Risk reduce overall organizations, contributing lots that Customers on and them get of score signals security as recommendations risk with risk. to to actions CISOs risk. factors take

for Zero of regional deal Zero about deployed expanded a SD-WAN, in at year, retailers the protection deal. X-figure which of contributed be deployment full locations and adopted largest the suite Trust the one For will SD-WAN. users of include Europe who data the last in value the X/X and ACV Zscaler Trust to branch, this ZIA, of ZDX Trust a initially upsell Zero

business we the cabinet-level XX Next, the across opportunities by to order. we and federal Trust to be them the federal upsell serving vertical, executive continue pursue help in XX are adopt President's mandated and to as proud architecture of Zero new the market agencies

purchase increasing in this the To existing X-figure million-plus customer. agency an the $XX XX%, and increased ARR ZIA give over an example, by cabinet ZPA upsell of significantly win, a already driver of

the Zero DoD opportunity share deal, made Zero Next, this for the DoD demonstrates we cybersecurity give has ACV the Zscaler work with our segment. DoD. services solutions that users. let a requirement with in or With this DoD an to to customer that latest a the to branch signed the that on a and to best of update of we large deal for Department military architecture, individual X-figure implement an XX,XXX DoD, and I'm you proven In purchase thrilled users at Defense, protect departments. technologies are me capture this planned our initial Trust positioned quarter. Trust well deal progress

let organization, an go-to-market we on our me progress. great to give update make you where Next, continue

progress The QX leadership level. our and team full to business strong key the Chief our beyond. in management Revenue our We at to quality in I'm $X to our appointed exceptional. has his and of Mike's pleased with place. sales Rich Mike leadership of billion leaders demand and capture the scale as QX. the caliber very Mike now is and First, Officer ARR in in particularly platform hired he hiring, team for

are right of pace place, With now hiring in the the quota-carrying increasing leaders on reps. we focused

our evolving a that sales from are Second, of opportunity the Fortune we technology an to mentioned XX motion as earlier I ACV is X-figure The out of called success with centric deal the last quarter, account-centric. example fully company We solution with Zero and and We they to motion. embracing customer Trust sales look best this engaged new this to transformation the working closely for future. security. with as them recommend forward digital now are I

are user productivity. to platform better year, we customers our from conclusion, take operations security, mission simplified benefit every on improved In can IT a so and

Trust of around effective world. few defined that been no believe firewalls, we industry decades tangible multiple decades and longer mobile of centered Zero one are last as deliver be the eliminate I We next The the will today's products. are the by X legacy AI cost vendors security cloud, X which architecture. point in savings have

the We large Zero look have our and power at Trust the future AI capture right Zenith customers growing secure transformation. to digital excited Fly, and the Zscaler to and with the team about to opportunity. our power our journey and I'm market forward sharing combining platform delight right of of is ahead the

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

you, Thank Jay.

EMEA with growth XX% sequentially. even perspective, attrition APJ higher-than-expected X% a was on $XXX the our year-over-year represented results deals, of of large sales XX% customer geographic up million, scrutiny sales ongoing QX changes guidance XX%. our XX% organization quarter. up and was and in the Americas revenue, Our exceeded in and and From was profitability Revenue

grew flat calculated $XXX remained XX% and total QX at year-over-year million. in billings Our sequentially

calculated Our billings current year-over-year. grew XX%

than Current performance RPO. RPO or billion. remaining customers with XX% $X.XXX greater grew approximately XX% total Our RPO, from with of the XXX year obligations, a ended was QX We ago our $X X,XXX million strong ARR. large customers over transformation speaks play journeys. in continued This in in role of the customers growth with $XXX,XXX to and strategic digital ARR we customers' to

dollar-based net retention XX-month Our XXX%. was rate trailing

rate can just While in a bigger a the net year, good for in due start our is reduce quarterly our the pillars business, within upsells to from mentioned. could multiple bundles, basis success and factors be faster selling I dollar-based increased metric future. our retention variability the selling on this There

our performance. in compares to to cloud gross ago Total Turning rest On QX change by the quarter XX.X% basis, XX of in useful prior of and XX.X% year-over-year the attributed from XX.X% of a gross to points financial margin a infrastructure. approximately margin longer year benefited life the in quarter. the our the county basis

call, life equipment our previous in the of beginning infrastructure mentioned X fiscal X to and we depreciable, As our extended network useful earnings our on servers cloud for years. XXXX,

Moving our million. and sequentially X% year-over-year operating $XXX total on, expenses increased to XX%

to points continue margin leverage significant approximately XXX increase our of reaching XX%, with financial basis in model We operating an generate year-over-year.

investments. $X.X short-term billion CapEx of flow of cash, cash approximately We X% the equivalents over quarter ended cash data free including XX%, and with in revenue. Our margin center was

and XXXX. to guidance QX fiscal year on for Moving full

these all non-GAAP. reminder, are As a numbers

to income million $XXX $X.XX, quarter, to $XXX profit margins $XXX million $XXX of range shares. income assuming diluted taxes reflecting range in $X.XX growth in million, million, the million, earnings XX%, of expect share the of XX% XXX in per For revenue year-over-year net to million fourth of range XX%, to of of the million, of $XX $XX fully we other the gross operating

XX%, approximately billion in of For the approximately as $X.XXX to full year-over-year the range taxes billion fully reflects $XXX diluted to the profit of our billion $XXX year follows: million fiscal to range reflecting in improvement up per million, XX%, earnings XXXX, $X.XXX billion income approximately increasing of we're compared billings $X.XX calculated range share of $X.XXX or growth range XXX $X.XX, year-over-year guidance to of approximately points $X.XX of shares. basis which growth to assuming year, operating revenue margin of $XX XXX operating the of the in million, last million in to

mid-XX% low expect margin to the to cash our flow range. free We be in

spend 'XX We 'XX. center go-to-market team, 'XX an had to fiscal we mention give that will CapEx, our a for and data fiscal increased specific transitional I'd for navigating fiscal planned the for like we outstanding through next now quarter it. did I earnings which the was planned on guidance call, but job the on is believe recently QX

expected, Although our we attrition as sales hiring, quarter was we a Jay at mentioned, particularly higher level. than the had leadership strong

in of of stronger hires new in take time quota-carrying existing We to reps. are organization. sales We now to billings we focused with a of pace believe much ramp to on That go-to-market the result will combination team 'XX. our increasing hiring productivity, the in said, these growth our which new will will full hires believe headwind a fiscal few total points result

obsession, may growing well gain platform market that, in customer to us. questions. to and teams for we're the our and open sales you share With operator, continue strengthening positioned now a large call With for expanding

[Operator Instructions]

of Our RBC Matt first from question comes line the Hedberg Capital. with

strategic of to a around I nice quarter. just think is you're you from less. obviously products And initiative? guess, customers one often think Can a just great investors and anecdotal on Zscaler do little questions lot is consolidation. there. role certainly talk I the that consolidation see it and environment. bit And how of really I of the seeing traction sort selling Jay, more Really, we difficult Zscaler expand security about to just in with like gave get of that around feels success evidence a newer the Congrats upon of because broader results more that the want the in you and

what may moving prone of DMZ, want Our course, okay? offering lots believe want goes They best-of-breed it consolidation I do to zone, Security God along of they of entire, but a don't Customers and bunch products, platforms. de-militarized platform, do call, single customers Matt. a Of vendor whole in are you. point simplification product, to Thank away. the

sale to playing lot a taking We're lots that's are we're savings of VPNs, by in why from. we justify So out a and able of firewalls, That's the consolidation. platform taking role products. all out big our of of lots

vendor. want being tiers an are of of and Now EMA more notion and with the in-line, security. CIO shelf that's everything doesn't But it's identity more EDR why bought. bundle X go often well, for vendor and CFOs X customers do That's selling or Zscaler scrutinizing

So of point focused but consolidation, a we role, big everything is a it's staff. selected consolidation happening, type blank, me playing not are give

Our question next comes the of Kalia from Saket line with Barclays.

Okay. the Great. quarter. for make on you. congrats Echo Jay, I'll my maybe my question

against changing on SASE I feel like you're your that competitors we solutions. And how curious is think But the here pricing do figuring all views here as smaller of enter those we competitors are SASE at purpose-built the see more on SASE more competitively firewall-based market's maybe you view know purpose-built the solutions? all I'm market.

but of certainly just indicate won't that want sort view results the So part to your of competitive landscape. on the I so, hear

Thanks, Saket. Sure.

yes, So SASE vendors. small

of that that a SASE large natural as and some vendors see customers, know, those As challenge network entrust it into you says we play the a thing together SD-WAN lot come type movement. service attack firewall I enables really taking all of the with believe small CISOs vendors that SD-WAN that purpose-built from my from purpose-built. so-called in don't A Part have SASE. are of of is market. stuff. the My these SASE We

replaced where Zero think are we are Trust SD-WAN pioneering. the new to segment we headed, away. go will So SD-WAN. has It be we market That's

innovations. So we will driving on keep

to a trying what the is question, up years Sometimes X investors ask Jay, innovating think up it's ago. smaller market. or to do Of catch SASE and be space, going these In us? with SSEs pace. But years And race, up catch are and vendors X or on another us. catch done will with we've vendors SASE did they're a faster guys a able keep cyber to we don't firewall at static think that years X ahead, I They ahead. the often course, we

Alex Next question line comes with of from the Needham. Henderson

guys against taken organization of new great and you bit I a even back of it's the bringing sales see But your tough a in And executing commentary to higher salespeople additional as Great. sales was the attrition around by in lot a leadership. environment here. little you're

mechanics bit -- a that firm is is the we're does change and need departing you a when is that that it caused of be talk attrition, change policy, seeing people has needs? in sets reflection little of it that a accelerating we skill the can should sanguine about that occurring, hearing in thinks a So the you're why What firm.

So COO, Alex, of to with QX pleased with the a I'm in skill is higher transition stabilize combination we But the saw our well it attrition It's expected, in departure but QX. including we how of factors, progressing. than GTM very set. expect

hiring Mike now key the full team. management in leaders QX, With has of

As you a great know, we brand. have

we We hiring accelerated talent have right top are quota-carrying for leaders pace a destination QX. reps place, the in in with of

finding attracting leaders a reps key successful from take us Our to they high $X caliber $X are and and billion role our Remo? billion. play in seasoned to making will

question, I great a Alex. it's Yes. mean

to the in mind, is both you keep attrition it's So got unvoluntary voluntary and attrition.

coming first quarter. Jay entire mentioned, in leadership with here, Mike full is As hired quarter first board, he's Ridge his on his

for be of quota-carrying increasing Our now the going reps. is hiring sales focus to pace

you amount of we QX. the of we've same first Just in the color, hired which some comparably hired in reps May, is that month, which of this all to quarter, is give

leadership place want going leadership of that in what sales So to to because and you've you to organization. got is the get makeup your drive the do go-to-market is

it. are absolutely work that very have, direction organization feel Jay the outstanding. on done, the quite The feel people and go-to-market being I that board is about bringing we're frankly. think, going, mentioned, very, we that's I As good outstanding, I the

transition part I Yes. very to the of on I think base is selling. And get I'm may pleased if the plan to to account bring Mike say, with board

Zelnick next Our the question with of comes Bank. from Brad line Deutsche

as about Saket's trends, wanted foremost, Zscaler specialized the the itself, appreciate some but Trust to on market, cycle durability help Jay, it's not because well. you're all of your concerned metrics success follow you exchange, advantage? you can to and especially of I ones bigger in Zero players help intensifying us that anything share up Remo, what core question And the architectural maybe on product I else us its win investors SASE on cetera. has know sales Congrats, can just having. amongst advantage, times think share distinguished I the And quantitative are some environment? always first competition whether with what et competitive or gauge for that rates, can But that pricing emerging

traditional area not that's believe upon with, of don't we we'll architecture them, from It's market to we going just So is car. large Number what So it's electric matters. Most all, evolving. build It's moving and car trying ever said, the to first starting in vendors they of are as to okay? two, architectural. get and have, static. the the functionality like this

years just we when at how it's only went expanded public platform ago, workload. has recall You Look for big and it that's our much market small. a for X was relatively users,

deals of is IoT-OT trillions You then we are number workload there talked taking good traction about, a of where devices. saw

We are we platform, in that are expanding area. right the

by In data inside has do firewalls. the of done protection IoT-OT doing comes was typically did reason a Nobody to And to as fact, well been part the data close Trust expand Airgap exploded. we area at has plant protection. to look do. into inside we which as segmentation, campus, Zero acquisition the That

number is functionality two. So

innovation. long The third will believe in I thing ahead of is the run keep speed us

more buy Fortune I'll Zscaler bought once customers who CXOs I for number with That innovated -- extremely last well sure. is to that than I'm have how a we've ago, this worked proud happy with make I snitbit. point seeing fast we That's is our have us. slow share counted Net for companies. X, I'll A of The more one this months came I more. than not innovated. interesting from in of is few You're financial any or staff prouder of going XXXX This Score XXX. down. area Promoter have

this prompt, all confident and me Remo? stuff makes So very

trends, they really very high, Yes. to perspective. relatively change remains just rates. no we're It trend anything from rate a From so Pricing win be seeing basis, in pricing not win continue constant.

strategic that to what our about XX basically speaks cycles that months. to our mentioned really a large ago sales are sales our customers. for XX they're cycles, And think do talked of moving few I what more that nature change there deals for month, and We've platform X also quarters no the we that either. we here is towards

a I Remo. on may add the little pressure, bit pricing

the is we Of pricing and are on focused technology, value take and course, there in so pressure, go When much selling. X million but it some in so say, dollar we able QX, we'll doing are able to team in in [indiscernible]. to able in aren't we to value QX, much our do [indiscernible] by we is eliminating a QX, good The scrutiny is make. of point but to I much so good lots my That's pricing. customers market secure pretty there, to job want are showing point

with of from line comes UBS. question Boyd Roger next the Our

leadership. getting right In about margin I'm confident versus pretty talk about message growth. new profitability you've like attrition year. seeing sales sounds fiscal know Remo, think But but the be comment a to not few expansion the the you're here to feel a third growth past, you're that that, guiding next under talked your would level the wondering about we'll certain biasing rehiring growth under if alternatively, you now, can I it you on you framework. I Great. don't of but the in just 'XX, suggest did impactful towards quarter

here A thoughts growth that on GAAP how you're profitability. of parts, be about from on verging any lot also but would framework moving You're profitability versus thinking just great.

perspective, profit, I'll and expanding with perfectly focus points. in most our this your base. stages where think product in hits platform early in positioned my basically Zscaler profitability our market, Yes. of also on GAAP growth is the that its the versus From I emerging we're

Jay's we to from So still line top growth. on invest view, will continue and view my

get I naturally operating profitability profitability went on a XX%, QX, down. XX% XX%. profitability. operating You When we non-GAAP operating to saw am the was target said not increase business basis we basically concerned profitability our in The public, we slows XX%. model was our will as about

focus name to So really really top that to and game continue operating profitability and now to there's build line right is no the reason the on of growth. invest

From reversal who got QX, on That of XX% perspective, a in of a PSUs the going for left revenue company. to down the XX% profitability relates also executives GAAP compensation profitability related of GAAP we primarily certain to my stock-based to revenue.

forward going we get going profitability, to to projections profitability, but don't will that's to So GAAP of when on make I GAAP want any happen.

growth is the top and Again, focus also operating maintain profitability. on line

to shareholder For making one do profitability about as on comment is not didn't to things a I'll as to we're on, increase value, that. comment I but of up Again, purposes, Think our going we modeling the operating feel and now. focus and in the exploit we're going right continue lot. slightly long fiscal 'XX, investments growth really this market

very should about fiscal 'XX. operating versus you is fiscal So a profitability increase 'XX in slight think very, what

proud disruptive to in X that and at some in of areas: a so faster we investments innovating big faster technologies investing keep market. pace, of. And two, building on the go Number keep on are

line from the Oppenheimer Kidron comes of [indiscernible]. Our and question with next Ittai

This Kidron. [indiscernible] for on is Ittai

I I time. I to right people just just from If outside for sales of, to a back bit all, your but maybe go that this to First deceleration that of couple there's growth guide rate higher understand say, thinking understand, little change XQ significant of guidance bit. want of much the XQ a doesn't XQ year-to-year XQ, years, last our your not is about conservatism I'm attrition want now. are in missing something in a little that

being you prudent. we one, for question. Number Thank like the

line consensus out deal. X was also We beat us. basically QX had is 'XX, one. very, number million quarter very quarter that's fourth a Number we that of $XX and for by called large So basis a we X% a fiscal strong on top

a from tough tough you last a -- for did it into 'XX. And compare it's play compare into perspective a So going versus the 'XX attrition The [indiscernible]. billings got point.

question KeyBanc. of with Eric Heath next the from comes Our line

look, mean, strong difficult results pretty and macro great I to Again, so Jay, pretty tough. the just compares, really acceleration environment is see.

So willingness topic seem they're moment, what of and projects other I'd hear -- do to just are hear like when on to more be some areas. they especially be the perspective do at the customers' transformational to your in button curious pause the SASE hitting

Yes.

So high, scrutiny things about helping Boards attacks. remains one, remains are and CIOs, X remain ransomware worried us: it's CISOs all with macro cyber Deals but very tough. the that

So with CXO get this play you dollars, we x show a with minimize save can engagement and as more you're get you cyber do going Trust we if attention going C-level. movement, that to to to the cyber in critical role million threats, and then architecture Zero minimizing attention. initiative, But you lateral you're do if

So build pipeline. helping you CFO a hurdle and savings that need the X can to engagement next the you is are done. the be do actually things those strong us that, if convince Even

me being show savings by by quarter They're more scrutinizing, quarter quarter.

value be tangible benefits. that We how early business actually with savings. the of show C-level doesn't this there we team Think out strong show assessment are on engaged those and have a cyber way, companies many

all of We VPNs to they show want firewall they can to don't want the savings? do firewalls, We protect No, actually to and take [indiscernible] a [indiscernible] can the and world. out think You firewalls cannibalize. company their cannibalization.

salespeople about leadership opportunity. just We that's drive team. seasonal sales all good a I'm that caliber And and with engage have who sure and to why the Mike we so under want initiatives. high make can it's the So these excited C-level

growing. and expanding We are

question Our Jefferies. comes Gallo from line Joseph the next with of

are think XX Really And Or sustainability from new top broader software. next how of Jay, the should we these the about numbers? quarter biggest products? months, at we coming ramping? then is especially growth when out the where looking upside over should as congrats to the look XX business year? you on think nice that that line then the it next force emerging? drivers Is sales about to How results, of the new And model?

form the what? first Sorry, sustainability of or

growth? biggest of Sustainability the And upside. what's

upside. Biggest

here. It's makes you force X It kind a big is, obviously, matters. So interesting. sales mentioned of One difference. points

big opportunity going for initiatives, force, we're more engage the a So obviously to able our sales with are our GSI sure at the more with us. big, and [indiscernible] is initiative C-level, salespeople through combined making

talked taking has more, us protection the become sitting to CPA want giving we're It biggest actually products. data you if a give over customer of have us we ask that the Then very evolving. emerging emerging you going significantly. are move product for They're the what's line They're but natural needle once pretty to they about numbers me because is you good, to to of has What's It's so expect traffic small me, in vendor has experience strong doing offerings. from We growth. [indiscernible] the still will move view, ask from portfolio needle. year a if significant. they in of CPA When a number, plenty dollar-wise. Zscaler terms strong going the the [indiscernible] start the point grown don't data growth sizable. to our needle protection Zscaler give be next inspection, should time and product and data production almost every And move growth. are

Zero new us, for of entering best stayed things never change a branch. far. new We acquisition The a can We're bit area We inside quite the to the X went that the left up to branch. is We [indiscernible] Trust alone. so the segmentation market. it's firewalls Airgap, areas, really

going whole with the Avanar in doing But of Life in that. will your about bullish firewall, very, very a we're once a combine range opportunities, the talk firewall a excellence. and great Zero without team, better segmentation. there, But portfolio portfolio. with go-to-market you product more opens Now amazing you Trust And Zenith but get not

Citi. with Boolani Fatima from comes question next Our

sales the wanted reconcile quarter against strength Jay around or Remo, attrition. in very execution higher-than-expected this the I commentary to capacity explicit the

wondering update specifically, you sales of relative departure? And can back on us if on that yielding help go-to-market the in capacity expectations? anything those you've verticalization spite that to your maybe organization, I'm you map outperformance been in how if how sales to internally can drive have efforts execution instituted So the

back So start, and Remo, can maybe I come to. you

spread be a to more So solution-centric. started then team see it's those well. see markets. very from growth We market, are to folks all, come our But first market journey journey. expanded the through more federal companies vertical. vertical we initiatives expanded the to you're they gone -- to a some to we recently far grow, the work vertical going get with company need more to utilization. some importantly, previous his And of It's actually of and They journey companies as going have actually expansions. accelerate they Rich then Healthcare. and Mike more that going And more you're where

I'm So on keep it comfortable pursuing very we successfully.

a Your sales [indiscernible] not and alone. second product numbers, reps the involved? teamwork. It's what's question where the Zscaler a on was in sale point spite good of is depends attrition,

They a When some salespeople told We former about value talk well. required, that top all some engaged, along have number have season limited has impact, have departure who some have the we been CISO, assessment. very doing CIO, this CTOs, team we and people. of like CXOs need of a of are we business architect, very we you you

You saw forward from results.

mean, for just confirm the had and outstanding, Jay, our add salespeople. also coming Yes. to sales perspective, quarter that the world organization that's entire we my the off to I new was execution just on the to driven salespeople the in from get existing and

I did one and need execution reason our speaks we that for the platform strength to and think the our of it the really that customers of of well, service. and our the Zscaler our things

no tactical, and going tactical. not talked strategic say, to I understanding into a in customers really companies that that -- really company And matter. with Zscaler, As more, a have it's as matters, public about box has the we workshops a have I team been And that architect takes even career have box we're more when a company. matter. transformational want high solution There's relationships with what CXOs changes. what scale. mentioned, cell at my strategic talked -- the close called scales a architectural is to EBCs. it's as here relationships which And This level Jay to not are really basis, and is the matters, these goes unique highest on we worldwide been ever it's make It's at

all into that played of think basically I So execution.

And one more comment I'll make.

Our and our mission-critical That partner. retention engagement, customers a so view case, that's there's us as a strong why overall the very high. and being strategic

next Baird. of Our comes Kothari the Shrenik from question with line

on Congrats great the quarter.

in It protection a we comprehensive increasing seems Jay, kind of starting need data for hearing It's protection. the focus kind to about now. very are you data pay up And like It's key inflecting dividends. of the Q&A. been also highlighted it. here for it's So

TAM and So that new the could just continues curious, next year, like also as bigger potential kind how you of rise and digital overall potentially like get AI expand into growth new use cloud drive industries, to verticals thinking cases across adoption and year see do and your next like and workloads beyond?

TAM. new case -- use the the or new increasing Yes, definitely case products are our

data look expanding it you data In supply data rest, only it, own [indiscernible] a for used piece be SaaS if at what public to data endpoint, cloud, in security data sitting line fact, protection, in is of to vendors, at loss chain its DSPN. sitting related

Workload If and all we bullish X bit. protection for that using expanded you Trust It's AI about it. you our bit Zero will interesting. of getting and products, is the it's you us where SD-WAN per of it's quite but of Trust A all believe are. years. time data is X, branch. quite in matter embedded kind of is is using "Are Everyone SD-WAN". We're traditional say, also have a a This TAM We actually Zero expansion are a in or that area big leverage portfolio very increasing TAM we growing. itself,

in try We X next Zero and we Trust going copy that years, to the then next us to to market in SD-WAN move X, and are will are the the come the offer level. only follow cats vendor

you think Ashwin $XX I before. XX somewhere on talked added in quarters. But to $XX been top [indiscernible] the a to We will in ask debating we talk billion billion have take we me we have a coming billion about $XX if of probably guess, and little about bit,

question of comes from Powell BTIG. with the next Our Gray line

Great. Maybe go-to-market side. the on

heard Just ]. Accenture, their [ folks larger GSIs, that we like that anecdotally, we've just like some fans the are Rich of saw

what doing Just maybe So that growth? there can better I'd those curious, Zscaler you more how can improve be before? drive relationships he was and do not

good a point. it's Yes,

one, making be good content-centric to last a to Mike's two being and opportunity-centric have We GSIs three. being the table. bring value we And the are key quarter, on focus X highlighted doing being we'll X things know progress. GSIs as verticals initiative All

doing more. as We saying deals. a is doing of deals, not need have number do enough is Jay we been inpatient and all But to

caliber leaders in the key needed space. be of to So in higher that's us that for one would bring some more

other caliber GSIs, who and of and with we on with in and providers number extension is have have area worked business, going cloud We a our counting of and added accelerate so of that expansion having dollars leaders business, expertise like it. from comes to working are billions

question Tilton the Our next from of with Wolfe comes Joshua line Research.

the to is impact recent we've on the out if from firewall seen those about Coming And federal to This VPN-based Josh. disclosed demand, what talk specific months competitors have Patrick on for then call those Can had in back several you offer in solutions. anything any? your space some competition, as of vulnerabilities well? and that there

Yes.

give on-prem like. start for Zero that and about and out there fully VPN number. still have and of VPN from well. fiber sure It leading reading vendors coming as vendors a point demand, as true. VPN become replacing some a it's We you number. I a lot it's directive the Mass are a been that the now vulnerabilities of some that the issued all quantifiable I increased the have So the has virtual for government they we then engagements ZPA, There machine the not in as tell is I'm But looking it you, of segmentation number service a meaningful we're VPN or the can starting vulnerabilities the that number VPN from Trust a already a of them CISA a pipeline. those can Customers whether came closed federal for. cloud understand of

you. the has decided stays sector federal of deployed that got public but those all longer engagements going of number a deals private In active sector have out government, on. to We've public eliminate been non-evident to than VPNs

role. an there pleased final combination Most and seen we're is playing them. with going both well. making deals ZPA important of in progress are both of our our combine business You've and the quite CIP Very

user any So in from application access can Zero fashion. Trust anywhere any

of Moskowitz line question next with Gregg the Our Mizuho. comes from

you well your be Jay, speaking, at workload point been protection? sort pipeline limited of But you fairly inflection given Or sizes may we're do in an called success overall. suggest prepared a has that. does the from still ways off deal done out the historically have workload we for protection think that the remarks, that

I apply Remo, slightly. you And in operating Or profitability then saying to that slightly Does op expect dollars go we fiscal may. clarification to that a if for going margins up you mentioned Remo, 'XX. shortly quick well? up operating profit as are

talks workflow who protection, workflows the nobody but in the Yes. I off. of guess, It production the market Trust the and That getting workload companies proud thing I'm is coming very way to deal need still has companies communication of like out are pioneers there evangelize. and for be the In because Zero bigger, up in fast. do, the type as taking we are market traditional take off we are to and size technology deal the is smaller size not still to

the of our opportunities, product, customers of workload be a are buying kind revenues products I will of the with big but It a bring working growing as time start a number a at matter other us. than the will say is probably for believe not it's matter almost of to want I think scaler market of faster very there going I time it don't a So customers. We're faster than this. strategic and do It's that it's all good. pace.

was margin percentage. I Gregg, referring And operating to profit

line the of America. with Our of next from comes Liani Tal question Bank

question NRR. on is My

of the the to color NRR you and comments there the us declined any do customers new about XX% XXX% lot customers? XXX% How in this to went to different new And your to meaning you this with go downmarket quarter. XXX% growth up new upsell products? flip bit a on SMB? talked your but on has to and connect verticals, quarters. of your growth ability side, to on Is last it any contribution Can you details from to profile, products expand, to X You a little the give do new

influence a that Yes. user ZPA to later, so a CIA, influence the platform to they all going talked NRR. within The is versus it's buying our about really a buy our and within outstanding. I said is get year good And Having XXX ZDX, that if Also, sell is the captured that, times NRR we many year at and basically, is users, The to trying includes we're that XXX%, NRR. doesn't NRR, perspective. NRR. year think, this but that that with NRR things basically customers number impact this customize year, from can our customers.

many over the we've faster you bundle, NRR, the you years, past said your And lower the the sell lower. sell, bigger the

factor So we look at the it important as a it's track. most we not factor, but

Adam the will come Borg line question final with Stifel. of from Our

this a Stifel. is Borg newer and healthy that Maybe Plus given the Adam some new you Jay it's on really know curious kind is talked to AI is offering pricing time? uplift a And could quarters Plus just if base Advanced installed how addressable of percent the this you do what think and a I few back, resonating from bundle. about Awesome. Advanced the of about for talk was bundle over capabilities. I more you of that

take can and our our the our out up pricing bigger why sure them are But have Yes. bundles bigger to bundles. because speaking, products I bundles bigger provide -- and and data Overall, rate are any customers buying functionality. That's are happening. is bigger you. is going quantitative give not I'm ARR bigger more

as bundles we're are AI beginning and for it's quite our no users, protection well. selling longer you users, prepared with to solutions sell [indiscernible] selling the data as -- platforms, listen remarks, buying you along our If like often and like XXX we to

the turn time, would call closing to Jay Thank remarks. this I for you. At like to back over

look forward you. the you thank some interest We upcoming Thank for seeing Well, your to you Zscaler. conferences. of at in

your and conference Ladies you Thank this for today's gentlemen, call. concludes participation.

wonderful day. may disconnect. have You a Everyone, now