Cyber risks are growing, and that spells opportunity for cybersecurity giant Zscaler. According to Cybersecurity Ventures, cybercrime will cost the global economy $9.5 trillion this year. Companies continue to shift more of their operations, sales channels, and valuable assets online using cloud computing, which makes them more vulnerable to attacks than ever before. Generative artificial intelligence (AI) enhances the cyber threat even further by empowering malicious actors with the ability to create reali ...

To this end, Zscaler's zero-trust solution assumes that anyone attempting access to a network is a threat. Users gain access through contextual factors such as one's device or location, the policies of a given business, and the user's identity. Also, part of identity is rank, meaning some users may gain a greater degree of access than others based on one's position in an organization. This limits the potential for harm should a hacker gain access to a network. In addition to zero trust, Zscaler offers numer ...

Financial Data and Key Metrics - Gross margins were 80%, with operating profit ranging from $107 million to $109 million, net other income of $17 million, income taxes of $11 million, and earnings per share between $0.69 and $0.70, assuming 165 million fully diluted shares [5] - Revenue for Q3 was $553 million, up 32% year-over-year and 5% sequentially, with Americas representing 54%, EMEA 31%, and APJ 15% of revenue [38] - Total calculated billings grew 30% year-over-year to $628 million, with current billings up 29% year-over-year [38] - Remaining Performance Obligations (RPO) grew 27% year-over-year to $3.824 billion, with current RPO representing 51% of total RPO [38] - Free cash flow margin was 22%, with data center CapEx at approximately 6% of revenue, and the company ended the quarter with over $2.2 billion in cash, cash equivalents, and short-term investments [43] Business Line Data and Key Metrics - The Zero Trust Exchange platform processed over 400 billion transactions daily and prevented billions of security and policy violations, driving strong demand [2] - Emerging products contributed nearly a third of the ACV value in deals, with strong customer interest in products like Zero Trust SD-WAN and AI Cloud solutions [57][16] - The company closed several deals for AI Cloud solutions, including Risk360 and Business Insights, across multiple verticals such as broadcasting, consulting, and insurance [84] Market Data and Key Metrics - The company serves 12 of the 15 cabinet-level federal agencies, with a seven-figure upsell deal increasing ARR by over 50% for an existing agency [35] - In the APJ region, a large financial services customer signed a seven-figure ACV multi-year deal for 10,000 users, expanding the purchase of Zscaler for users and adding Zero Trust for workloads and AI Cloud solutions [33] - A Fortune 500 technology customer expanded its purchase of Zscaler for users and made its first purchase of Zero Trust for workloads and AI Cloud solutions, increasing ARR over 5X to more than $10 million [34] Company Strategy and Industry Competition - The company is focused on expanding its Zero Trust platform, with innovations like Zero Trust Network Segmentation and AI-powered applications such as Risk360 and Unified Vulnerability Management [55][29] - The company believes that legacy firewall-based security is ineffective in the cloud and AI era, and the next three decades will be defined by Zero Trust architecture [4][30] - The company is leveraging AI to enhance data protection and threat detection, with innovations like GenAI App Security and AI-powered Co-pilot for ZDX [27][40] Management Commentary on Operating Environment and Future Outlook - Management highlighted the strong demand for the Zero Trust platform, driven by the need for better cybersecurity and data protection in the cloud and AI era [2][4] - The company expects continued growth, with full-year fiscal 2024 revenue guidance increased to $2.140 billion to $2.142 billion, reflecting 32% year-over-year growth [44] - Management emphasized the importance of innovation and speed in maintaining a competitive edge, with smaller SaaS vendors and firewall vendors unlikely to catch up [48][72] Other Important Information - The company extended the depreciable useful life of its servers and network equipment, benefiting gross margins by approximately 60 basis points [42] - The company is transitioning its sales motion from opportunity-centric to account-centric, with a focus on larger deals and strategic partnerships [58][63] - The company is investing in data center CapEx, with increased spending planned for fiscal 2025 [63] Q&A Session Summary Question: How is Zscaler positioned in the security consolidation trend? - Zscaler is playing a significant role in security consolidation by replacing legacy firewalls and VPNs, offering cost savings and improved security [65] Question: How does Zscaler compete against smaller SaaS vendors? - Zscaler competes effectively against smaller SaaS vendors by leveraging its superior architecture, rapid innovation, and focus on large enterprise markets [67][48] Question: What is the impact of sales attrition on growth? - Sales attrition was higher than expected in Q3, but the company is focused on hiring quota-carrying reps and expects stabilization in Q4 [69][101] Question: What are the key drivers of growth over the next 12-18 months? - Key growth drivers include Salesforce ramping, new products, and emerging use cases like Zero Trust segmentation and data protection [87][94] Question: How is Zscaler addressing pricing pressure? - Zscaler focuses on value selling, demonstrating cost savings to customers by eliminating legacy point products, which helps maintain pricing [107] Question: What is the outlook for Workload Protection? - Workload Protection is gaining traction, with deal sizes increasing, particularly in technology companies, and is expected to grow significantly over time [121][149] Question: How is NRR trending and what factors influence it? - NRR declined slightly to 116%, influenced by customers buying bigger bundles and faster sales cycles, but remains strong overall [150][151] Question: How is Zscaler leveraging AI in its products? - Zscaler is integrating AI into its products for data classification, threat detection, and policy enforcement, with innovations like GenAI App Security and AI-powered Co-pilot for ZDX [27][40]

Zscaler (ZS) came out with quarterly earnings of $0.88 per share, beating the Zacks Consensus Estimate of $0.65 per share. This compares to earnings of $0.48 per share a year ago. These figures are adjusted for nonrecurring items. This quarterly report represents an earnings surprise of 35.38%. A quarter ago, it was expected that this cloudbased information security provider would post earnings of $0.58 per share when it actually produced earnings of $0.76, delivering a surprise of 31.03%. Over the last fou ...

| --- | --- | --- | --- | |------------------------------|-------|-------|-------| | | | | | | | | | | | | | | | | azscaler" | | | | | | | | | | Fiscal Q3 2024 Earnings Call | | | | | May 30, 2024 | | | | FORWARD-LOOKING STATEMENTS This presentation contains forward–looking statements. All statements of historical fact, including statements regarding our future firancial and operating performance, including our financial outbok for the fourth quarter of fiscal 2024, our planned products and upgrades, busine ...

Exhibit 99.1 Third Quarter Highlights SAN JOSE, California - May 30, 2024 - Zscaler, Inc. (Nasdaq: ZS), the leader in cloud security, today announced financial results for its third quarter of fiscal year 2024, ended April 30, 2024. "We delivered an outstanding quarter driven by growing customer interest in our Zero Trust Exchange platform," said Jay Chaudhry, Chairman and CEO of Zscaler. "As threat actors evolve and continue to exploit firewall-based security, Zero Trust security remains a top IT priority, ...

Third Quarter Highlights Revenue grows 32% year-over-year to $553.2 million Calculated billings grows 30% year-over-year to $628.0 million Deferred revenue grows 34% year-over-year to $1,577.0 million GAAP net income of $19.1 million compared to GAAP net loss of $46.0 million on a year-over-year basis Non-GAAP net income of $139.8 million compared to non-GAAP net income of $74.6 million on a yearover-year basis SAN JOSE, Calif., May 30, 2024 (GLOBE NEWSWIRE) -- Zscaler, Inc. (Nasdaq: ZS), the leader in clou ...

One of the fastest-growing IT services brands, Persistent sought a partner that not only had the trusted technology to support its digital transformation but also shared its environmental, social and governance corporate values. "Our initial focus was supporting our anywhere computing model for our employees spread across the globe coupled with zero trust architecture that paid dividends along the way," said Debashis Singh, Chief Information Officer at Persistent. "Ultimately, we aimed to enhance our cybers ...

One of the fastest-growing IT services brands, Persistent sought a partner that not only had the trusted technology to support its digital transformation but also shared its environmental, social and governance corporate values. "Our initial focus was supporting our anywhere computing model for our employees spread across the globe coupled with zero trust architecture that paid dividends along the way," said Debashis Singh, Chief Information Officer at Persistent. "Ultimately, we aimed to enhance our cybers ...

SAN JOSE, Calif., May 28, 2024 (GLOBE NEWSWIRE) -- Zscaler, Inc. (NASDAQ: ZS), the leader in cloud security, today announced the appointment of James Beer to its Board of Directors and also to the audit committee of the Board of Directors. Following the appointment of Mr. Beer, the Zscaler board of directors consists of eight members. "Mr. Beer brings extensive expertise in leading complex finance organizations at large-scale enterprises across multiple industries and will be a valuable asset in helping adv ...