Zscaler Investor Welcome & Agenda Ashwin Kesireddy, VP, IR & Strategic Finance Innovations Briefing - Zenith Live 2025 Safe Harbor Unless otherwise noted, all numbers presented will be on an adjusted, non-GAAP basis. Reconciliation of GAAP to non-GAAP financial measures is in the appendix of this presentation. This presentation has been prepared by Zscaler, Inc. ("Zscaler") for informational purposes only and not for any other purpose. Nothing contained in this presentation is, or should be construed as, a ...

Zscaler, Inc. (NASDAQ:ZS) Investor Innovations Briefing Call June 3, 2025 2:30 PM ET Company Participants a - Corporate Participant Adam Geller - Chief Product Officer Ashwin Kesireddy - Vice President of Investor Relations & Strategic Finance Brian Beyer - Co-Founder, CEO & Director Dhawal Sharma - Corporate Participant Jagtar Singh Chaudhry - Co-Founder, CEO & Chairman of the Board Mike Rich - Chief Revenue Officer & President of Global Sales Conference Call Participants Adam Tyler Tindle - Raymond James ...

Summary of Zscaler (ZS) Update / Briefing June 03, 2025 Company Overview - **Company**: Zscaler (ZS) - **Focus**: Cybersecurity solutions with a strong emphasis on Zero Trust architecture and AI integration Key Industry Insights - **Zero Trust Architecture**: Zscaler has evolved its Zero Trust strategy from ZIA (Zscaler Internet Access) to ZPA (Zscaler Private Access) and ZDX (Zscaler Digital Experience), now promoting "Zero Trust Everywhere" as a comprehensive security approach [5][8][34] - **Data Security Growth**: Data security is identified as one of the fastest-growing areas for Zscaler, with significant investments in AI to enhance detection and prevention capabilities [5][6][13] - **AI Integration**: The company is embedding AI across its operations, particularly in security operations, to improve efficiency and effectiveness in threat detection and response [6][20][39] Core Strategic Initiatives - **Acquisitions**: The acquisition of Red Canary is aimed at enhancing Zscaler's security operations capabilities, leveraging their expertise in threat detection and incident response [17][39] - **Agentic Operations**: Zscaler is developing "agentic task agents" that utilize AI to automate security operations, improving the speed and accuracy of threat investigations [16][39][42] - **Zero Trust in Branch and Cloud**: Zscaler is expanding its Zero Trust framework to include branch locations and cloud environments, integrating SD-WAN capabilities to eliminate the need for traditional firewalls [46][48] Financial and Operational Highlights - **Customer Engagement**: Zscaler has seen strong validation from analysts and customers regarding its Zero Trust branch and cloud solutions, with significant deployments in various sectors, including finance and healthcare [47][49] - **Market Positioning**: The company positions itself against traditional firewall solutions, advocating for a firewall-free approach in cloud environments, which is gaining traction among enterprises [66][81] Important Metrics and Data - **Data Processing**: Zscaler processes over 500 billion signals daily, providing a unique vantage point for threat detection and response [97] - **Customer Base**: The company has a large and satisfied customer base, which is crucial for its growth and market penetration [98] Additional Insights - **Identity Security**: Zscaler emphasizes the importance of identity in its Zero Trust framework, integrating with identity vendors to enhance security posture [100][104] - **Proactive Security Measures**: The company is focusing on proactive security measures, including continuous threat exposure management and vulnerability assessments [31][34] - **Customer Testimonials**: Customers like FICO have reported successful implementations of Zscaler's solutions, highlighting the effectiveness of their Zero Trust approach [55][57] Conclusion Zscaler is strategically positioned to lead in the cybersecurity space with its innovative Zero Trust solutions and AI-driven security operations. The company's focus on integrating acquisitions and enhancing its product offerings will likely drive future growth and market share expansion.

Core Insights - Zscaler has announced advanced AI security capabilities aimed at enhancing data security and preventing cyberattacks, addressing challenges faced by businesses adopting AI technologies [1][4] - The Zscaler platform processes over 500 trillion security signals daily, leveraging this data to power its AI engines for accurate threat detection and automated security [2][3] AI-Powered Innovations - Zscaler's new AI-focused solutions aim to simplify the deployment of advanced AI tools in large environments, enhancing precision and automating threat neutralization [3][4] - Key innovations include AI-powered data security classification, which identifies sensitive content across more than 200 categories, improving data security assessments [5] - Enhanced generative AI protections provide greater visibility and control over AI applications, allowing organizations to block non-compliant prompts and safeguard sensitive data [5] - AI-powered segmentation features a user-to-application segmentation engine that streamlines app management and improves security posture [5] Network Intelligence Enhancements - Zscaler Digital Experience (ZDX) now utilizes AI to benchmark and visualize internet performance, enabling proactive detection of ISP issues and optimizing connections to Zscaler data centers [5]

Core Insights - Zscaler has launched a new suite of solutions aimed at enabling customers to adopt Zero Trust Everywhere, enhancing security across branches and multi-cloud environments [1][2][3] - The updates to the Zscaler Zero Trust Exchange™ platform empower organizations to secure their networks against threats like ransomware by making branches and clouds invisible to malicious actors [2][3] Product Innovations - Unified Appliance for Zero Trust Branch: This solution secures communications between various locations and segments OT and IoT devices, eliminating the need for traditional firewalls and reducing complexity and costs [4] - Zero Trust Gateway for Cloud Workloads: A cloud-native service that secures communications from workloads to the internet and between workloads in under 10 minutes, enhancing security in hybrid and multi-cloud environments [4] - Zscaler Microsegmentation for Cloud Workloads: This service provides granular segmentation policies for cloud workloads, protecting critical assets against lateral threats [4] - Zero Trust Exchange for B2B: A platform that facilitates secure collaboration between partner organizations, replacing outdated technologies and enhancing data protection during mergers and acquisitions [4] Strategic Impact - The expanded Zero Trust Everywhere approach allows organizations to modernize their security infrastructure, mitigate risks, and protect data across various environments [5] - Zscaler's solutions are designed to simplify security network infrastructure, making it easier for businesses to scale securely in a rapidly changing threat landscape [3][4]

Core Viewpoint - Zscaler's share price is projected to reach $360 due to positive technical price action, favorable analyst sentiment, and strong business fundamentals, indicating a breakout from a long-term trading range [1][2][5]. Group 1: Business Fundamentals - The recent breakout in Zscaler's stock price is attributed to business fundamentals catching up to valuation concerns, leading to an improved outlook for sustainable 20% growth and increasing shareholder value [2][10]. - Zscaler reported a solid fiscal Q3 2025, with revenue exceeding analyst forecasts and growth remaining above 20%, supported by accelerated gains in billings and deferred revenue [10][11]. - The company has a robust balance sheet with over $3 billion in cash and equivalents, a 21% increase in net income, and an 18% free cash flow margin [11]. Group 2: Analyst Sentiment - Analyst activity shifted positively following Zscaler's fiscal Q3 results, with a 17% increase in the consensus price target and no decreases tracked among 36 analysts [5][6]. - The consensus price target reflects a 25% increase compared to the previous year, indicating strong analyst confidence in the company's performance [6][11]. - The stock currently has a Moderate Buy rating, with a high forecast of $320 and an average forecast of $277.32 [11][15]. Group 3: Market Dynamics - The market is experiencing a recovery rally, with projections suggesting potential new all-time highs in the range of $375 to $403 [4]. - Institutional investors own 41% of Zscaler's stock and have been buying on balance throughout the year, providing a solid support base for price action [13]. - Short interest was at 9% ahead of the release, setting the stage for a potential short-covering rally [14]. Group 4: Product Development - Zscaler's new product, Z-Flex, is designed to streamline security stack adjustments for businesses, enhancing flexibility and scalability while reducing costs [9][8].

Core Insights - Zscaler, Inc. (ZS) shares have increased by 46% over the past three months, significantly outperforming the Zacks Security industry's return of 10.7% and its peers like CyberArk Software, Palo Alto Networks, and CrowdStrike [1][7] Company Growth and Developments - Zscaler has launched the Asset Exposure Management solution to improve asset risk management and partnered with SAP to integrate its Zero Trust Network Access service within SAP's RISE framework, facilitating cloud migrations and compliance with regulations [2] - The company has expanded its capabilities through the acquisition of Red Canary, enhancing its Managed Detection and Response solutions to address rising cyber threats [3] - Zscaler is integrating artificial intelligence into its products by partnering with NVIDIA and CrowdStrike, enhancing its Zero Trust Security model with advanced AI technologies [4] Financial Performance - In Q3 of fiscal 2025, Zscaler achieved a 12-month trailing dollar-based retention rate of 114%, driven by larger bundle sales and robust upsells [5] - Remaining Performance Obligations increased by 30% year-over-year, with 642 customers generating $1 million or more in annual recurring revenues (ARR) and 3,363 customers with ARR exceeding $100,000 [8] Government Sector Expansion - Zscaler is enhancing its GovCloud solutions to comply with government security standards, serving 14 out of 15 U.S. cabinet-level agencies, which could provide a stable growth stream [9][10] Competitive Landscape - Zscaler faces intense competition from established cybersecurity players like Palo Alto Networks, CyberArk, and CrowdStrike, particularly in its Internet Access and Private Access offerings [11] - The company is investing heavily in sales and marketing to broaden its capabilities, which may impact near-term profitability [12] Earnings Outlook - Zscaler expects non-GAAP earnings per share for fiscal 2025 to be in the range of $3.18-$3.19, with the Zacks Consensus Estimate at $3.06, reflecting a 4% year-over-year decline [13] Valuation Concerns - Zscaler holds a premium valuation with a Forward 12-month P/S ratio of 13.92X, significantly higher than the sector average of 5.54X, indicating potential valuation concerns [15] Investment Recommendation - Despite challenges related to rising costs and premium valuation, Zscaler's investments in AI, innovative cybersecurity capabilities, and strong customer retention make the stock worth holding for now [16]

Core Insights - Zscaler's international operations are crucial for understanding its financial resilience and growth potential [1][2] - The company's total revenue for the quarter ending April 2025 was $678.03 million, reflecting a 22.6% increase year-over-year [4] International Revenue Analysis - Europe, Middle East, and Africa contributed $203.02 million, accounting for 29.94% of total revenue, surpassing the consensus estimate by 1.11% [5] - Asia Pacific generated $107.35 million, representing 15.83% of total revenue, exceeding expectations by 4.08% [6] - Other International regions brought in $24.67 million, making up 3.64% of total revenue, also surpassing projections by 2.82% [7] Future Revenue Projections - Analysts project total revenue for the current fiscal quarter to reach $707.18 million, a 19.3% increase from the same quarter last year [8] - Expected contributions from international markets include $211.52 million from Europe, Middle East, and Africa (29.9%), $109.91 million from Asia Pacific (15.5%), and $25.52 million from Other International (3.6%) [8] - For the full year, total revenue is anticipated to be $2.65 billion, marking a 22.2% increase compared to the previous year [9] Stock Performance Insights - Zscaler's stock has appreciated by 19.6% over the past four weeks, outperforming the Zacks S&P 500 composite, which increased by 6.1% [13] - Over the last three months, Zscaler's shares rose by 32.1%, while the S&P 500 experienced a decline of 0.5% [13]

Cloud stock Zscaler Inc (NASDAQ:ZS) was last seen up 7.6% at $270.32, after the company posted strong fiscal third-quarter results and raised its full-year forecast once again. Separately, the firm also announced the appointment of Kevin Rubin as the new Chief Financial Officer. The positive momentum has ZS brushing off a downgrade from Piper Sandler to "neutral" from "overweight," though no fewer than 18 analysts also lifted their price targets on the stock. Today's pop has ZS trading at three-year highs a ...

Core Insights - Zscaler reported strong third-quarter fiscal 2025 results, with non-GAAP earnings of 84 cents per share, exceeding the Zacks Consensus Estimate by 12% and reflecting an 18.3% year-over-year increase driven by revenue growth and cost management [1][3] - The company's revenues for the third quarter reached $678 million, surpassing the Zacks Consensus Estimate by 1.8% and management's guidance, marking a 23% year-over-year growth [2][3] - Following the positive results, Zscaler raised its fiscal 2025 guidance, which is expected to positively impact its stock performance [3] Financial Performance - Zscaler's calculated billings increased by 25% year over year to $784.5 million, with the Americas contributing 54% of revenues, EMEA 30%, and Asia Pacific and Japan 16% [4] - The non-GAAP gross profit rose by 20.8% year over year to $544.15 million, while the non-GAAP gross margin contracted by 100 basis points to 80% [7] - Total non-GAAP operating expenses accounted for 58.6% of revenues, increasing by 21% year over year to $397.5 million, resulting in a non-GAAP operating income of $146.7 million [7] Customer Metrics - Zscaler added multiple large customers across its offerings, achieving a net 12-month trailing dollar-based retention rate of 114% [5] - The company had 642 customers with annualized recurring revenues (ARR) of $1 million or more, and 3,363 customers with ARR exceeding $100,000 at the end of the third quarter [6] Balance Sheet and Cash Flow - As of April 30, 2025, Zscaler had $1.99 billion in cash and short-term investments, down from $2.88 billion as of January 31, 2025 [8] - The company generated operating cash flow of $211.1 million and free cash flow of $119.5 million during the third quarter [8] Updated Guidance - Zscaler revised its fiscal 2025 revenue forecast to a range of $2.659-$2.661 billion, up from $2.640-$2.654 billion, indicating a growth of 22.18% from fiscal 2024 [9] - The company expects calculated billings to be in the range of $3.184-$3.189 billion, an increase from the previous guidance [9] - Non-GAAP earnings per share for fiscal 2025 are now projected between $3.18 and $3.19, compared to the previous guidance of $3.04-$3.09 [10]