Financial Data and Key Metrics Changes - Revenue for Q4 2025 was $719 million, representing a 21% year-over-year growth and exceeding guidance [19] - Annual recurring revenue (ARR) surpassed $3 billion, marking a 22% year-over-year increase [19][6] - Operating margin reached 22.1%, a record high, with a free cash flow margin of 24% [21][19] - Gross margin was 79.3%, slightly lower than the historical target of 80% due to a one-time deployment [21] Business Line Data and Key Metrics Changes - AI Security, Zero Trust Everywhere, and Data Security Everywhere collectively surpassed $1 billion in ARR in Q4 [6] - SecOps ARR grew over 85% year-over-year, while ZDX Advanced Plus Queue bookings increased by 58% year-over-year [10] - Data Security Everywhere ARR grew to approximately $425 million, with significant deal wins [16] Market Data and Key Metrics Changes - The Americas accounted for 55% of revenue, EMEA for 29%, and APJ for 16% [20] - The company serves nearly 40% of the Global 2000 and over 45% of Fortune 500 companies [19][5] Company Strategy and Development Direction - The company is focusing on three growth vectors: AI Security, Zero Trust Everywhere, and Data Security Everywhere [6] - The ZFlex program is being utilized to facilitate strategic multi-year deals and increase module adoption [17] - The company aims to replace legacy solutions in various sectors, including finance, healthcare, and retail [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand for their solutions, particularly in AI and Zero Trust security [5] - The company anticipates a stable macro environment for fiscal 2026, with a focus on ARR as the primary growth metric [24][72] - Management expects to continue strong growth in AI Security and Zero Trust solutions, with significant upsell opportunities [67] Other Important Information - The acquisition of Red Canary is expected to contribute approximately $95 million to ARR in fiscal 2026 [23] - The company ended Q4 with $3.6 billion in cash and short-term investments [23] Q&A Session Summary Question: How is SASE replacing firewall appliances? - Management indicated that Zero Trust architecture is essential, and firewall appliances are being phased out, starting with branch firewalls [29] Question: How will ZFlex be utilized by the sales force? - ZFlex is designed to provide flexibility in module adoption, allowing for larger and better deals, and is being expanded to a broader customer base [33] Question: What does a Zero Trust Everywhere customer look like? - A Zero Trust Everywhere customer typically adopts multiple modules, leading to significant increases in ARR [36] Question: What is the focus of AI security product adoption? - Customers are primarily interested in securing both public and private AI applications, with a growing focus on agent-to-agent communication [41] Question: What is the expected growth trajectory for net new ARR? - Management is guiding for high single-digit net new ARR growth in fiscal 2026 on an organic basis [46] Question: How is the data security portfolio performing? - Data security solutions are often purchased alongside Zero Trust solutions, with significant growth potential as customers consolidate their security products [49] Question: What is the impact of ZFlex on financial metrics? - ZFlex is applicable to both new and existing customers, increasing potential deal sizes without fundamentally changing the financial model [53]

Financial Data and Key Metrics Changes - Revenue for Q4 2025 grew 21% year over year, reaching $719 million, and total revenue for fiscal year 2025 was $2.7 billion, representing a 23% year over year growth [6][23] - Annual recurring revenue (ARR) surpassed $3 billion, marking a 22% year over year increase [7][22] - Operating margin for Q4 was 22.1%, exceeding long-term targets and growing approximately 60 basis points year over year [26] - Free cash flow margin for Q4 was 24%, with data center CapEx at 8% of revenue [26] Business Line Data and Key Metrics Changes - AI security solutions, including AI Guard and JNI security offerings, saw significant customer interest, contributing to the overall growth [6][10] - SecOps ARR grew over 85% year over year, while ZDX Advanced plus SKU bookings increased by 58% year over year [12][19] - Data Security Everywhere ARR reached approximately $425 million, with strong demand driving growth [18] Market Data and Key Metrics Changes - The Americas accounted for 55% of revenue, EMEA for 29%, and APJ for 16% [23] - The company now serves nearly 40% of the Global 2000 and over 45% of Fortune 500 companies, indicating a strong market presence [22][24] Company Strategy and Development Direction - The company is focusing on three growth factors: AI security, Zero Trust Everywhere, and Data Security Everywhere, which together surpassed $1 billion in ARR in Q4 [8][19] - The Z Flex program generated over $100 million in TCV bookings in Q4, representing over 50% sequential growth, and is expected to drive future growth [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing demand for their solutions and the potential for growth in the Zero Trust and AI security markets, which are expected to disrupt a $100 billion security market [20][21] - The macro environment is anticipated to remain relatively unchanged, with a focus on ARR as the primary growth metric moving forward [28][92] Other Important Information - The acquisition of Red Canary is expected to contribute approximately $95 million to ARR and $90 million to revenue in fiscal year 2026 [27] - The company plans to optimize new products for margins over time as they scale [29] Q&A Session Summary Question: How is SASE replacing firewall appliances? - Management indicated that firewall appliances, particularly in branches, are being replaced by Zero Trust architecture, with significant demand for Zero Trust branch solutions [33][36] Question: How will Z Flex help exceed sales goals? - Z Flex provides flexibility in module adoption for customers, allowing for larger and better deals, and is being expanded to a broader customer base [39][42] Question: What does a Zero Trust Everywhere customer look like? - A Zero Trust Everywhere customer typically adopts multiple modules, with significant increases in ARR observed as they transition to this model [45][50] Question: What is the focus of AI security product adoption? - Customers are primarily focused on securing public AI applications first, followed by private models, with significant interest in agent-to-agent communication solutions [54][56] Question: What is the expected growth for data security solutions? - Data security solutions are being adopted alongside Zero Trust solutions, with a significant opportunity for upselling additional modules to existing customers [60][63] Question: What is the methodology behind fiscal year guidance? - The company maintains a prudent approach to guidance, shifting focus from billings to ARR as a more aligned growth metric [90][92]

Financial Data and Key Metrics Changes - Revenue for Q2 was $648 million, representing a 23% year-over-year increase and a 3% sequential increase [39] - Annual recurring revenue (ARR) grew 23% year-over-year to over $2.7 billion, with a net retention rate (NRR) improving to 115% [8][39] - Total calculated billings increased 18% year-over-year to $743 million, with unscheduled billings growing over 25% year-over-year [40] - Operating profit grew by 36%, leading to a 2 percentage point improvement in operating margin to nearly 22% [9][39] - Free cash flow margin reached a record of 22% [9] Business Line Data and Key Metrics Changes - The Zero Trust Branch solution saw significant customer interest, with 57% of customers being new logo customers [17] - Data protection solutions experienced over 40% year-over-year growth in net new annual contract value (ACV) [19] - The number of customers with over $1 million in ARR grew by 25% year-over-year [17][41] Market Data and Key Metrics Changes - Geographic revenue distribution: Americas accounted for 54%, EMEA for 30%, and APJ for 16% [39] - The company ended Q2 with 620 customers generating over $1 million in ARR and 3,291 customers generating over $100,000 in ARR [41] Company Strategy and Development Direction - The company is focusing on the "Zero Trust Everywhere" initiative, aiming to triple the number of enterprises adopting this model within 18 months [14][36] - The strategy includes targeted campaigns to educate customers on transitioning from legacy security stacks to Zero Trust solutions [13][36] - The company is leveraging the upcoming hardware refresh cycle to promote its solutions, emphasizing cost savings and improved security [13][104] Management's Comments on Operating Environment and Future Outlook - Management noted that while there is ongoing scrutiny of large deals, the demand for cybersecurity solutions remains strong [104][110] - The company expects to achieve $3 billion or more in ARR by the end of the fiscal year, driven by strong demand and sales productivity [8][37] - Management highlighted the importance of partnerships with global system integrators (GSIs) in driving growth and closing deals [32][66] Other Important Information - The company is investing in AI solutions, with AI analytics driving strong growth and nearly doubling year-over-year [28][27] - The company has hired a new EVP of AI innovations to accelerate the development of AI solutions [29] Q&A Session Summary Question: How much of the business is coming from ZIA and Secure Web Gateway replacements versus broader platform products? - Management indicated that ZIA is often a starting point, but many customers are now adopting a broader platform that includes ZIA, ZPA, and CDx [52] Question: What proves that the go-to-market changes are making a difference? - Management cited the strength of the pipeline, double-digit growth in new ACV, and increased engagement with C-level executives as indicators of success [58] Question: Can you provide insight into the NRR improving to 115%? - Management noted that larger deals and upsells are contributing to the NRR, with expectations of continued growth in this area [75][76] Question: Can you elaborate on the 8-figure APAC government deal? - Management described it as a landmark deal focused on cybersecurity rather than ROI, with significant upsell opportunities in the government sector [81][83] Question: How is the company addressing the need for data classification? - Management explained that AI is being utilized for data classification, and the platform can work alongside other providers' classifications for policy enforcement [90][92] Question: What is the competitive landscape for Zero Trust solutions? - Management stated that competition primarily comes from legacy firewall vendors and that Zero Trust solutions eliminate the need for traditional security appliances [146]