Zscaler(ZS)2024-09-04 01:30Financial Data and Key Metrics - Revenue grew 30% YoY to 2.17 billion, up 34% YoY [4][22] - Billings grew 27% YoY to 1 billion in quarterly bookings in Q4 and crossed 3 billion or more in ARR in fiscal 2025 [4][5] Business Line Performance - The Zero Trust Exchange platform secured 47 million users across nearly 8,700 customers, with strong demand for new and upsell business [6] - Emerging products, including ZDX, Zero Trust for Branch and Cloud, and AI analytics, contributed 22% of new and upsell business in fiscal 2024, up from 18% in fiscal 2023 [13] - The data protection pillar grew rapidly, with customers adopting advanced features, contributing to significant wins in healthcare and financial services [12][14] Market Performance - Americas represented 55% of revenue, EMEA 30%, and APJ 15% in Q4 [22] - The company added 13 cabinet-level agencies in the federal vertical, with significant upsell opportunities in the public sector [16] - Global 2000 customer penetration reached 35%, with 40% of Fortune 500 companies as customers [19] Strategy and Industry Competition - The company is expanding its platform beyond users to include applications, workloads, and IoT/OT devices, leveraging AI to address security gaps [6][7] - Zscaler's cloud platform surpassed 0.5 trillion daily transactions, enhancing its market leadership and enabling AI-driven innovations [8] - The company is investing in R&D and cloud infrastructure to scale with growing demand, focusing on long-term growth and profitability [27][28] Management Commentary on Operating Environment and Future Outlook - Management highlighted the worsening cyber threat environment, with an 18% increase in ransomware attacks blocked by Zscaler's cloud [9] - The company expects strong demand for Zero Trust and AI-driven security solutions, with a 96 billion addressable market opportunity [9] - Sales productivity improved in Q4, with expectations for further improvement in fiscal 2025, driven by strong pipeline and second-half acceleration [17][25] Other Important Information - The company plans to continue hiring at a strong pace in fiscal 2025, with a focus on R&D, sales, and marketing [77] - Zscaler introduced a business continuity service in January 2023, enhancing its resilience and reliability, which has become a key differentiator [20] Q&A Session Summary Question: Competitive landscape and newer SASE players [30] - Zscaler has not seen meaningful competition from newer SASE players, as its proven architecture and resilience give it a significant advantage [31][32] Question: Impact of Microsoft and CrowdStrike outages on customer strategies [35] - Customers are increasingly focused on resilience, with Zscaler's business continuity plan gaining traction among large customers [36][37] Question: Billings guidance and conservatism [40] - Billings guidance reflects a second-half weighted growth, driven by scheduled billings from prior contracts and improved sales productivity [41][42] Question: Pricing dynamics and competitive environment [54] - Zscaler is able to handle pricing pressures by demonstrating cost savings through the consolidation of multiple point products [55][56] Question: Emerging products and their contribution [70] - Emerging products, including ZPA and ZIA, are expected to grow, with ZPA now representing over 40% of new business between the two products [70][71] Question: Headcount growth and investment areas [76] - Zscaler plans moderate headcount growth in fiscal 2025, with investments across R&D, sales, marketing, and cloud infrastructure [77] Question: Early indications of new sales leadership impact [80] - The new sales leadership has driven a shift to account-centric selling, resulting in increased upsell and large deal activity [80][81]