Zscaler(ZS) - 2025 Q3 - Quarterly Report

Revenue Growth - For the nine months ended April 30, 2025, revenue was $1,953.9 million, a 24$1,574.9 million in the same period of 2024[119] - Revenue for the three months ended April 30, 2025, was $678,034,000, up from$553,201,000 in the same period of 2024, marking a growth of 22.6%[143] - Revenue increased by $378.986 million, or 24$294.8 million[179] Customer Base Expansion - As of July 31, 2024, the company had over 8,650 customers, up from over 7,700 customers in 2023, representing a growth of approximately 12.3%[122] - The company is focused on expanding its customer base, particularly among the Forbes Global 2000, where it currently serves approximately 35%[122] - The company increased its customer base by 10% from April 30, 2024, to April 30, 2025, contributing to revenue growth[163] Financial Performance - GAAP gross profit for the nine months ended April 30, 2025, was $1,507.951 million, compared to$1,227.979 million for the same period in 2024, reflecting a growth of 22.8%[136] - The company incurred a net loss of $23.9 million for the nine months ended April 30, 2025, an improvement from a net loss of$42.8 million in the same period of 2024[119] - Net loss for the three months ended April 30, 2025, was $(4.1) million compared to a net income of$19.1 million for the same period in 2024[161] Cash Flow and Liquidity - Free cash flow for the period is calculated as net cash provided by operating activities less capital expenditures, indicating liquidity for strategic initiatives[139] - Net cash provided by operating activities for the nine months ended April 30, 2025, was $721.8 million, compared to$576.3 million for the same period in 2024, reflecting an increase of 25.2%[201][203] - As of April 30, 2025, the company had cash, cash equivalents, and short-term investments totaling $3,005.6 million, available for working capital and general corporate purposes[194] Operating Expenses - Operating expenses are expected to increase in absolute dollars as the company invests in sales and marketing, research and development, and general and administrative functions[153][154][155] - Sales and marketing expenses rose by$52.2 million or 20% to $314.6 million for the three months ended April 30, 2025, driven by higher employee-related costs[166] - Research and development expenses increased by$134.201 million, or 37%, for the nine months ended April 30, 2025, primarily due to higher employee-related expenses and costs associated with facility and software[184] Deferred Revenue - Total deferred revenue at the end of the period for April 30, 2025, was $1,984,985,000, compared to$1,577,014,000 at the end of the same period in 2024[143] - As of April 30, 2025, the company had deferred revenue of $1,985.0 million, with$1,677.9 million expected to be recognized as revenue in the next 12 months[199] - The company strategically entered into multi-year advance billing agreements, significantly contributing to its deferred revenue[199] Market Risks - The company’s investments are exposed to market risk, with a hypothetical 100 basis point change in interest rates potentially affecting the fair value of investments by $9.6 million[212] - The company has a foreign currency risk management program, utilizing forward contracts to hedge forecasted foreign currency-denominated expenses[218] Future Outlook - The company expects to continue incurring net losses in the foreseeable future due to ongoing investments in sales, marketing, and research and development[119] - The company anticipates that gross profit will increase in absolute dollars and gross margin will slightly improve over the long term[150] - The company expects calculated billings growth rate to trend down over time due to seasonality and the mix of billings[142]