SentinelOne Brings AI Security to On-Premise, Regulated, Sovereign, Self-Hosted and Airgapped Environments Mar 23, 2026 9:05 AM Eastern Daylight Time SentinelOne Brings AI Security to On-Premise, Regulated, Sovereign, Self-Hosted and Airgapped Environments Share New and expanded on-premises offerings deliver industry-leading, AI-powered security, giving customers complete control over their data while ensuring it never leaves their environment. SAN FRANCISCO--(BUSINESS WIRE)-- SentinelOne®(NYSE:S), the AI S ...

00X FY27 FINANCIAL ANALYST DAY Welcome Cynthia Hiponia Vice President, Investor Relations Forward looking statement This presentation contains forward-looking statements that involve risks, uncertainties, and assumptions, including statements regarding Box's expectations regarding its growth and profitability, the size of its market opportunity, its investments in go-to-market programs, the demand for its products, the potential of AI and its impact on Box, the timing of recent and planned product introduct ...

Core Insights - Zscaler, Inc. (ZS) shares have decreased by 33.7% over the past three months, significantly underperforming the Zacks Computer and Technology sector, which declined by only 1% [1][3] - The decline is more pronounced compared to competitors like Cisco Systems, Fortinet, and Palo Alto Networks, with Fortinet's shares rising by 2.4% during the same period [1][3] Financial Performance - Zscaler reported Q2 FY26 revenues of $816 million, reflecting a 26% year-over-year increase, while EPS rose by 29.5% to $1.01 [7][17] - The company has a growing customer base, with 728 customers generating $1 million or more in annual recurring revenues (ARR), including a significant portion from Fortune 500 and Global 2000 companies [18] Market Position and Valuation - Zscaler holds a premium valuation with a Forward 12-month Price-to-Sales (P/S) ratio of 6.66, higher than the sector average of 6.18 [4] - Compared to key competitors, Zscaler trades at a lower P/S multiple than Palo Alto Networks (10.76) and Fortinet (8.00), but higher than Cisco Systems (4.89) [8] Growth Drivers - Zscaler's three main growth areas—AI Security, Zero Trust Everywhere, and Data Security Everywhere—have surpassed $1 billion in combined ARR, indicating strong growth potential [10][11] - AI Security's ARR is expected to exceed $500 million in fiscal 2026, driven by the adoption of AI Guard and agentic operations [11] - The Z-Flex program has generated over $290 million in total contract value bookings in Q2 FY26, marking a 65% sequential increase, which supports long-term customer relationships and sustainable growth [14] Future Outlook - Despite macroeconomic challenges, Zscaler is well-positioned to benefit from enterprise migration to cloud environments and increasing adoption of AI-driven cybersecurity solutions [19] - The Zacks Consensus Estimate indicates strong double-digit revenue and earnings per share growth for fiscal years 2026 and 2027 [19]

Core Viewpoint - Zscaler, Inc. is identified as a promising AI stock for investment in 2026, with Wells Fargo initiating coverage and setting a price target of $200, citing a favorable entry point despite recent market noise [1][2]. Financial Performance - For fiscal Q2 2026, Zscaler reported a revenue increase of 26% year-over-year, reaching $815.8 million, and an Annual Recurring Revenue (ARR) growth of 25% to $3.359 billion [2]. - The company achieved a non-GAAP EPS of $1.01 and a non-GAAP operating income of $181.0 million, reflecting a 22% margin [2]. - Management raised the full-year fiscal 2026 ARR growth guidance to 24%, indicating strong demand across its growth pillars [2]. Business Model and Market Position - Zscaler operates as an AI-powered cloud security company focused on zero-trust architecture, securing users, workloads, and devices without traditional network perimeter tools [3]. - The company is well-embedded in large enterprises, with significant penetration in the Fortune 500 and Global 2000, suggesting that concerns about market saturation are overstated [1]. Growth Areas - Zscaler's growth pillars include AI Security, Zero Trust Everywhere, and Data Security, which are expected to sustain approximately 20% growth moving forward [1][2].

Core Insights - Zscaler, Inc. (ZS) shares have declined 38.5% over the past six months, underperforming the Zacks Computer and Technology sector, which rose by 10.4% [1][8] - The company's stock drop is attributed to macroeconomic headwinds, including inflation, high interest rates, and cautious enterprise IT spending, along with increasing competition in the Zero Trust cybersecurity space [4][10] Financial Performance - Zscaler reported a 26% year-over-year revenue growth to $788 million in Q1 fiscal 2026, achieving a record operating margin of 22% [8][11] - The company has a growing customer base, with 698 customers generating $1 million or more in annual recurring revenues (ARR), including a significant portion from Fortune 500 and Global 2000 companies [12] Competitive Positioning - Zscaler's forward 12-month price-to-sales (P/S) ratio is 7.49, which is higher than the sector average of 6.54, indicating a premium valuation [5] - Compared to competitors, Zscaler trades at a lower P/S multiple than Palo Alto Networks (10.22) and Fortinet (8.58), but higher than Cisco Systems (5.46) [9] Growth Drivers - Zscaler's AI Security, Zero Trust, and Data Security units have crossed the $1 billion ARR milestone, indicating strong growth potential [17] - AI Security alone reached $400 million ARR and is expected to exceed $500 million in fiscal 2026, driven by enterprise adoption of AI technologies [18][19] - The Z-Flex program has generated over $175 million in total contract value bookings in Q1 fiscal 2026, reflecting a 70% sequential increase and encouraging long-term commitments from customers [20] Long-Term Outlook - Despite current challenges, Zscaler's investments in AI and innovative cybersecurity capabilities position the company for sustained growth [21] - The Zacks Consensus Estimate indicates strong double-digit revenue and earnings per share growth for fiscal 2026 and 2027 [13]

Summary of Cybersecurity Industry Conference Call Industry Overview - The conference call focused on the **cybersecurity industry** in North America, particularly the performance and outlook for 2026. - **Platforms** have been identified as the primary source of excess returns in 2025, with a notable performance disparity between platform companies and other cybersecurity names. Key Points Performance Metrics - Platforms (e.g., Palo Alto Networks (PANW), CrowdStrike (CRWD), Zscaler (ZS), CyberArk (CYBR)) saw an average return of **~30%** in 2025, while other cybersecurity names were down **~12%** [3][7]. - The overall cybersecurity market was largely flat, with platforms being viewed as multi-year compounders due to their growth potential [3][14]. Growth Expectations - Continued favor for platforms is expected, but M&A activities in the first half of 2026 may create volatility and present opportunities for other companies [4][31]. - Companies like Netskope (NTSK) and SailPoint (SAIL) are highlighted as potential outperformers with expected growth rates of **20%+** [3][9]. M&A Impact - The ongoing M&A activities, such as PANW's acquisition of CyberArk and ZS's acquisition of Red Canary, may create short-term noise around organic growth metrics [8][31]. - Despite the potential for dilution and integration challenges, these acquisitions are expected to enhance long-term growth prospects [8][31]. Valuation Insights - PANW is noted as a top pick due to its reasonable valuation at **25x EV/27e FCF**, which is in line with large-cap software [7][31]. - Other companies like SAIL and NTSK are seen as undervalued with significant upside potential, trading at lower multiples compared to their growth prospects [9][35]. Market Dynamics - The cybersecurity market is characterized by a trend towards consolidation, with enterprises increasingly looking to reduce the number of disparate security tools [54]. - The shift towards platformization is expected to continue, driven by the need for integrated solutions that enhance security effectiveness [54]. Additional Insights Emerging Opportunities - The AI security segment is growing rapidly, with Zscaler's AI Security revenue expected to exceed **$500 million** by year-end, reflecting a **80%+ YoY growth** [32]. - SailPoint is positioned to benefit from the transition to cloud and AI, with multiple avenues for growth including a **$2 billion+ legacy replacement opportunity** [35]. Cautionary Notes - Companies like Fortinet (FTNT) are viewed with caution due to potential downward revisions in growth expectations, particularly related to firewall refresh cycles [38][45]. - Qualys (QLYS) faces longer-term growth concerns despite recent performance, with a need for clearer visibility into future growth drivers [46]. Conclusion - The cybersecurity industry is poised for continued growth, particularly among platform companies, despite potential short-term challenges from M&A activities. - Investors are encouraged to consider both established platforms and emerging players with strong growth narratives as they navigate the evolving landscape of cybersecurity.

Core Insights - Zscaler (ZS) shares experienced a significant decline of 13% on November 26, despite reporting strong financial results for Q1 and raising its full-year guidance, projecting $3.29 billion in revenue and earnings of up to $3.82 per share, both exceeding consensus estimates [1][2] Financial Performance - In Q1, Zscaler achieved a remarkable 26% top-line growth and a free cash flow margin of 52%, surpassing the typical Rule of 40 benchmark for SaaS companies [3] - The company improved its free cash flow margin by 600 basis points year-over-year, indicating efficient scaling while maintaining high growth rates [4] Strategic Growth Initiatives - Zscaler's three strategic growth pillars are performing ahead of schedule, with AI Security expected to exceed $500 million in annual recurring revenue (ARR) by year-end, achieving this target three quarters early [5] - The Z-Flex program generated over $175 million in total contract value bookings in Q1, reflecting over 70% sequential growth and strong market demand [5] Market Sentiment - Historical data suggests that owning Zscaler shares heading into 2026 is favorable, with an average gain of 7.66% in January over the past four years [6] - Wall Street analysts maintain a bullish outlook on Zscaler, with a consensus rating of "Strong Buy" and a mean target price of approximately $329, indicating a potential upside of nearly 30% [8]

Financial Data and Key Metrics Changes - The company reported a strong start to fiscal year 2026, with annual recurring revenue (ARR) growth accelerating to 26% year-over-year and remaining performance obligation (RPO) growth accelerating to 35% [7][23] - Q1 revenue was $788 million, growing 26% year-over-year and 10% sequentially, exceeding the high end of guidance [23] - The gross margin was reported at 79.9%, down from 80.6% in the same quarter last year, influenced by new product introductions [24] - Free cash flow margin for Q1 was 52%, with cash and short-term investments totaling $3.3 billion [25] Business Line Data and Key Metrics Changes - ARR from the three growth pillars—AI Security, Zero Trust Everywhere, and Data Security Everywhere—accelerated in the quarter [7][23] - AI Security pillar grew over 80% year-over-year, exceeding the FY 2026 target of $400 million ARR three quarters early [8] - Data Security Everywhere ARR accelerated to approximately $450 million [19] Market Data and Key Metrics Changes - Geographically, the Americas accounted for 58% of revenue, EMEA for 27%, and APJ for 15% [23] - The company closed Q1 with 698 customers generating over $1 million in ARR and 3,754 customers exceeding $100,000 in ARR [24] Company Strategy and Development Direction - The company aims to exceed $10 billion in ARR, leveraging its leadership in Zero Trust security and comprehensive AI Security offerings [22] - The introduction of the Z-Flex program is driving meaningful upsells and reducing sales cycles, generating over $175 million in total contract value (TCV) [20][21] - The company is focusing on expanding its Zero Trust Everywhere initiative, having secured over 450 enterprises, surpassing its goal three quarters ahead of schedule [16] Management's Comments on Operating Environment and Future Outlook - Management noted that while IT budgets remain tight, there is less pressure on cybersecurity spending, with strong interest in Zero Trust Security and AI Security [65] - The company is optimistic about the future, citing strong demand for its solutions and a robust pipeline [66] Other Important Information - The company announced the transition of its Investor Relations leader, with Kim Watkins joining in early December [4] - The integration of Red Canary is progressing well, with the majority of the pipeline coming from existing Zscaler customers [48] Q&A Session Summary Question: About Zero Trust Branch and its future acceleration - Management indicated that the technology for Zero Trust Branch is in great shape, with significant demand from customers, and sees a big opportunity for growth [31] Question: Regarding the growth of the $2 billion ARR segment - Management confirmed that a significant part of the remaining $2 billion is from ZIA and ZPA, which are growing well, but the core business will grow at a slower rate than the overall business [40][42] Question: Performance of Red Canary and its integration - Management stated that the integration of Red Canary is going well, with its contribution trending slightly better than previous guidance, although it is not material to overall business [48][49] Question: Breakdown of revenue strength - Management highlighted that all three growth pillars—Zero Trust Everywhere, AI Security, and Data Security—are growing well and accelerating [53] Question: Competitive landscape and core business performance - Management noted that the competitive landscape has not changed significantly, with Zscaler's brand becoming stronger among large enterprises [58] Question: Customer spending priorities for 2026 - Management observed that while IT budgets are tight, there is strong interest in Zero Trust and AI Security, which are driving pipeline creation [65] Question: Trends in the SASE market - Management expressed confidence in their position within the Zero Trust market, stating that their expansion is driven by new functionalities [71] Question: Organic net new ARR in the quarter - Management indicated that organic growth in Q1 was consistent with Q4 and exceeded internal expectations [78][79] Question: Synergies between Red Canary and data security portfolio - Management discussed the integration strategy, emphasizing the potential for enhanced threat detection and governance capabilities [119]

Financial Data and Key Metrics Changes - The company reported a strong start to fiscal Q1 2026, with annual recurring revenue (ARR) growth accelerating to 26% year-over-year and remaining performance obligation (RPO) growth accelerating to 35% [7][23] - Q1 revenue reached $788 million, growing 26% year-over-year and 10% sequentially, exceeding the high end of guidance [23] - The gross margin for Q1 was 79.9%, down from 80.6% in the same quarter last year, influenced by new product introductions [24] - Operating margin was 21.8%, with a free cash flow margin of 52% [25] Business Line Data and Key Metrics Changes - ARR from the three growth pillars—AI Security, Zero Trust Everywhere, and Data Security Everywhere—accelerated in Q1 [7][23] - AI Security pillar grew over 80% year-over-year, exceeding the FY26 target of $400 million ARR three quarters early [8][15] - Data Security Everywhere ARR accelerated to approximately $450 million [19] Market Data and Key Metrics Changes - Geographically, the Americas accounted for 58% of revenue, EMEA for 27%, and APJ for 15% [23] - The company closed Q1 with 698 customers generating over $1 million in ARR and 3,754 customers exceeding $100,000 in ARR [24] Company Strategy and Development Direction - The company aims to exceed $10 billion in ARR, leveraging its leadership in Zero Trust security and comprehensive AI security offerings [22] - The introduction of the Zflex program is driving meaningful upsells and reducing sales cycles, generating over $175 million in total contract value (TCV) [20][21] - The company is focusing on expanding its Zero Trust Everywhere initiative, having secured over 450 enterprises, surpassing its goal three quarters ahead of schedule [16] Management's Comments on Operating Environment and Future Outlook - Management noted that while IT budgets remain tight, there is less pressure on cybersecurity spending, with strong interest in Zero Trust and AI Security solutions [65] - The company is optimistic about the future, expecting AI Security ARR to surpass $500 million by the end of fiscal 2026 [15][21] Other Important Information - The company announced the transition of Ashwin Kesireddy to a new role as Product Manager of AI Security, with Kim Watkins joining as the new head of Investor Relations [4][27] - The integration of Red Canary is progressing well, with its contribution trending slightly better than previous guidance, although it is not expected to be material to overall business [48][116] Q&A Session Summary Question: About Zero Trust Branch and its future acceleration - Management indicated that the technology for Zero Trust Branch is in great shape, with significant demand from customers, and they see a big opportunity for growth [30][32] Question: Regarding the growth of the $2 billion ARR segment - Management confirmed that a significant part of the remaining $2 billion is from ZIA and ZPA, which are growing well, but the core business will grow at a slower rate than the overall business [40][42] Question: Performance of Red Canary and its integration - Management stated that the integration of Red Canary is going well, with its go-to-market team uncovering opportunities within Zscaler's customer base [48][116] Question: Insights on revenue strength and core business performance - Management highlighted that all three growth pillars are accelerating, contributing to strong overall performance, and they are seeing organic growth consistent with previous quarters [54][56] Question: Competitive landscape and customer priorities - Management noted that the competitive landscape has not changed significantly, with Zscaler's brand becoming stronger and customers prioritizing Zero Trust and AI Security solutions [58][66] Question: Trends in the SASE market - Management emphasized that Zscaler remains strong in the Zero Trust market, differentiating itself from other vendors claiming to offer SASE solutions [70][72] Question: Organic net new ARR in the quarter - Management confirmed that organic growth in Q1 was consistent with Q4, exceeding internal expectations [78][116] Question: Synergies between Red Canary and data security portfolio - Management discussed the integration strategy, highlighting opportunities for remediation and governance within the data security portfolio [119]

Financial Data and Key Metrics Changes - In Q1, annual recurring revenue (ARR) growth accelerated to 26% year over year, with ARR reaching over $3.2 billion [5][18] - Remaining performance obligation (RPO) grew approximately 35% year over year to $5.9 billion [19] - Q1 revenue was $788 million, growing 26% year over year and exceeding guidance [18] - Gross margin was 79.9%, slightly down from 80.6% in the previous year [19] - Operating margin was 21.8%, with a free cash flow margin of 52% [20] Business Line Data and Key Metrics Changes - AI Security pillar grew over 80% year over year, exceeding the FY26 target of $400 million ARR three quarters early [6][12] - Data Security Everywhere ARR accelerated to approximately $450 million [16] - Zero Trust Everywhere achieved over 450 enterprise customers, surpassing the goal set three quarters ahead of schedule [13] Market Data and Key Metrics Changes - The Americas accounted for 58% of revenue, EMEA for 27%, and APJ for 15% [18] - The company is one of only five enterprise SaaS companies with over $3 billion in ARR growing at over 25% [5] Company Strategy and Development Direction - The company focuses on three growth pillars: AI Security, Zero Trust Everywhere, and Data Security Everywhere, which are driving strong top-line performance [5][12] - The introduction of the Zflex program is aimed at providing customers with flexibility and driving upsells [16][53] - The company is positioned to exceed $10 billion in ARR by leveraging its leadership in Zero Trust security and comprehensive AI security offerings [18] Management's Comments on Operating Environment and Future Outlook - Management noted that while IT budgets remain tight, there is less pressure on cybersecurity spending, with strong interest in Zero Trust and AI Security solutions [32][34] - The company expects to continue investing aggressively to position itself for long-term growth and profitability [21] Other Important Information - The company announced a leadership transition in Investor Relations, with Kim Watkins joining to lead the team [3] - The acquisition of Red Canary is expected to enhance the company's threat intelligence capabilities [39] Q&A Session Summary Question: About Zero Trust Branch and its adoption - Management indicated that Zero Trust Branch technology is in great shape, with significant demand and a growing customer base [23][24] Question: Growth of the $2 billion ARR segment - Management confirmed that a significant portion of the $2 billion ARR comes from ZIA and ZPA, with a focus on transitioning customers to Zero Trust Everywhere [25][26] Question: Performance of Red Canary - Integration of Red Canary is progressing well, with contributions trending slightly better than previous guidance, though not material to overall business [27][28] Question: Drivers of revenue strength - Management highlighted that all three growth pillars are accelerating, contributing to strong overall performance [29][30] Question: Competitive landscape - The competitive landscape remains stable, with the company's brand recognition growing among large enterprises [31] Question: Customer spending priorities for 2026 - Customers are prioritizing Zero Trust Security and AI Security, with a focus on cost savings and improved cybersecurity [32][34] Question: Demand for Zero Trust Gateway - Management noted that Zero Trust Cloud simplifies deployments and reduces the need for traditional firewalls, enhancing customer buy-in [44][45] Question: SAP RISE migration opportunity - The migration to SAP RISE is expected to provide significant opportunities for the company, similar to past migrations like Microsoft Exchange to Office 365 [50][51] Question: Zflex program impact - Zflex is gaining traction, providing customers with flexibility and longer-term visibility on future ARR [52][53]