ZS - Earnings call transcript Q2 2025

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Operator

Good day, and thank you for standing by. Welcome to the Zscaler Second Quarter 2025 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Ashwin Kesireddy, Vice President, Investor Relations and Strategic Finance.

Ashwin Kesireddy

welcome conference Zscaler call. and year quarter everyone, earnings XXXX afternoon, to second the fiscal Good

On Jay CEO; CFO. Chaudhry, call Chairman the with and and me Remo today are Canessa,

supplemental our Unless website. noted, on all about release posted an Investor talk otherwise have we will we to our note and Please a today financial numbers adjusted schedule Relations basis. earnings be non-GAAP

our GAAP earnings the find non-GAAP the will to reconciliation of release. measures You in financial

our but to performance, of uncertainty, including, limited customer outlook but I'd share future recurring share, income, objectives will operating rather flow, remind other our contain statements market retention of future subject cash obligations, company's and our like future and beyond to, market expenses, and are to dollar-based income responds some opportunity. free you discussion These anticipated rate, our statements, to hiring the comments performance, today's control. revenue, which that forward-looking calculated are and gross operating are not and remaining revenue, earnings annual decisions, net income, our billings, products guarantees taxes, net not operating margin, per risk performance

views apply undertake statements them and rely today, as as call. statements future. this no after the you not representing should forward-looking These obligation of to these our in We on update

Stifel inform XX, March also Technology Investor Conference on to on X, the filings a well Technology Morgan XX, Stanley Markets more X, want For following Tech March XX. Conference Luke complete that as Susquehanna release. Plus discussion Travel conferences: and March March Conference Capital Cantor attending on uncertainties, SEC Conference the as with Forum I March today's on of Global see TMT our we'll on Gambling risks please the in be earnings you

Jay. Now I'll the over to call turn

Jagtar Chaudhry

Ashwin. you, Thank

both demonstrate by customer in metrics of improvements with platform. in revenue XX% Our QX and grew a for our results outstanding demand end guidance. the above go-to-market accelerated execution high growing against year-over-year QX of our coming our in the backdrop Billings

new Our number go-to-market sales expect business investments in growing are and growth resulting of sales double-digit and sales ramped ongoing the I continue second by in lower sales initiatives go-to-market to of our growth productivity reps. and upsell productivity, half, driven success increased attrition.

XX% recurring revenue, and to or in or QX annual Our improved ARR, our grew $X.X to year-over-year retention billion, over XXX%. NRR rate net

and XX, rarified workforces to Trust they placing rapidly growing of at publicly move vulnerabilities enterprises ransomware across on vendors marketing built the of security, are unchecked growing only to the which customers' in securely percentage wherever cash the scale. Zero our SASE, above of flow and better pipeline to our X to With a was sales operating in profit, growth also achieve Driven XX%. I year. rule by XX%. revenue free also QX in growth profitability more of and XX% quarter or us improvement points strong end growing $X driving with nearly was firewall attacks. relied us companies Zscaler, Vans, the expect VPN-based productivity, large are networks. strong allowed Free ARR margin, reside. we operating a by billion cash and fiscal margin pioneered record which in the the attackers for corporate flow worsens which enables QX margin of category operated on architecture, issue exploit applications that Many Prior traded access Zscaler SD to SaaS

we to concept Everywhere. expanded and Zero standard users, our Building on pioneering users, architecture, Exchange reduces threats our We of Trust of Zero Zero are the secure platform our systems we Trust BXB Zero call that Today, SASE success propagation built eliminates surface. true which upon workloads. Trust and IoT, BXB attack new to by securing OT in beyond a have gone devices, far dramatically Trust lateral we more. elevating

customer a put every users, on be they corporate the where and untrusted to network. Trust never Zero year, users need Zero are Trust For

communicate exchange and where devices Cloud, warehouses untrusted through islands only Trust own. factories, our are IoT, and of Zero we workloads their or Zero OT can have Trust branches, branch,

is Our a to Trust Zero Everywhere create mission world.

for refresh hardware upcoming cycle, the CXOs SD-WANs are VPNs, including security With increasingly stack legacy eliminate and to ways looking more. firewalls, the

appliances leaning happy opportunity free seeing on initial to to share are We into success cycle that year to and Trust other can we presented these our by field themselves leapfrog refreshed firewalls the surgical and educate Zero customers they every the campaigns forever. legacy I'm with from campaigns. are from how

Trust number surpassed in to Zero Everywhere. of have XX enterprises the And XXX we to that end As teams mandate months. next of my become our is the QX, that triple

One of which is Trust seeing Trust Everywhere Zero the branch, core interest. customer is Zero tremendous solutions of

share expensive existing snacks, sites, customer example. for eliminating a to need routers manufacturing at customer ZPA our manufacturing the Trust leveraging their sites. purchased these deal, branch An commitments. Zero firewalls, a me Global switches Let in the and all This Zscaler to customer XXXX secure critical adding and ZIA X-figure is

Next, working customer them their equipment with upsell Zero SD-WAN. communications purchased Zero our phase company the to In to branch cloud path on a Trust existing Trust put to to large Trust we become are Everywhere. out this Zero another example,

platform. help customers. our We new simplicity helping also operational this security Trust realize of are of customers. purchased logo Trust new customers is work better XX% them excited to QX, to Zero logo branch with or who win branch Zero In us customer and

cost per to large metrics. on Moving

while our security broader lowering their firewalls, XX,XXX Gateways, and including Zero ZIA This the legacy win purchases By the customer Zero the platform, of is grew deals. for year-over-year. how security branch of Trust customer and Zscaler energy X-figure are users deal. Vans, Trust cost logo VPNs choice both eliminating Trust branch $X thus count Zero ARR customer adopting large plus ZPA showcases Our XX% X land of company customers platform with initial to adopted and made our deal in Secure a cloud in again workloads more SD And Fortune-XX as complexity. and embracing transformation, and a and new million platform improving Web secure

XX% am key also data ACV. consolidation I growth with experienced strength. simplicity operational protection. drivers net and in point of which X of year-over-year over in pillar, momentum see new pleased of data One, the our We products protection

lower of data customers modules, adopt We of most protection modules The and have this all in the fiscal spend across all overhead. all protection workloads the more. seamlessly endpoint, fiscal structured $X unstructured, customer. users provide types year In across modules X or their X data, the of whether data pace. data most in are customers across too contrast, rest to These be various to this in network new point last million-plus policies example, transformation an the chose multiple with security nearly give a flexibility company project secures deal modules the common drive products protection adopted in protection to modules their significantly ARR including X many a multiple their QX data Zscaler manage implemented e-mail, retail all which history web, rapid and platform, that data and and and in operational annual set significant packaged additional can policies protection at of to from forced resulting This capabilities or customers to is the what data as comprehensive had data in deployment SaaS, in To cloud in tripled use already at motion data environments, Zscaler own QX. products. to are X-figure customer that upsell expanded you Global-XXXX world all year, channels,

purchases a for example, of this For an drove Global-XXXX in significantly X-figure a users. existing data XXX,XXX upsell ARR This customer financial already million-plus in XX% annual increase the upsell services protection $X the deal, expanded customer. spend

our million-plus more QX, data more ARR customers end XX% modules over the of protection XX% or have have $X modules. X of As of and or X

to module adoption expect continue We to this grow.

for driver AI. growth of data protection The adoption second Gen is increasing the key

and public all loss. With more. use Copilot, across widespread customers confronting of as to XXX data of our AI, protection purchasing AI and prevent data industries into AI apps gain apps are all the the and the such data to ChatGPT Microsoft visibility enterprises DeepSeek, importance in and customers, of elevating all solution is public This loss risk are Gen

customers Global-XXXX securely including Global-XXXX company, public For a company, adopt a hospitality AI, many manufacturing purchased to company a and example, data protection QX, more. technology Global-XXXX in

to In and chatbots addition are solutions to to such securing investing customers' the deliver models, secure as private we AI apps use of AI public SLM apps, and inference LLM engines.

prompt and other are Trust the prevent real malicious of our proxy an detect and exchange We analyze queries activities. to in results time with and injections functionality prompt Zero to LLM Exchange expanding

deliver We better to more our are make utilizing also value even products and to customers. AI

ZDX resolution faster popular leverages Gemini offer we issues. in efficiency ZDX ZDX like Plus Less than of performance and operational which a ago, to package. Advance introduced end-to-end Copilot year our AI We deliver models user Copilot,

the times. ZDX cause grew IT access remediation Copilot, technology demonstrating and the Agentic by Building over the level automate are XX% leveraging on Following AI-powered growth ZDX resolution the next of analysis products. reduce of launch nearly by AI faster Plus for we Advance workflow success, bookings to taking $XX ZDX to to potential and root million, integrations expand for

including leveraging other discovery app prevention, and many are and image data ITOT in areas, [indiscernible] We segmentation, automated detection AI more. classification, device also classification,

role, advancements incubation accelerate more company AI our the drive accelerate is AI AI further model an XXX, analytics Management, continue focusing business ACV doubled release IT as DeepSeek our ops. Tee of Business RX monitoring enterprise and Agentic Phil Insights innovations intelligent around newly highlights transform AI in To to In co-founder advancements on AI EVP of Phil and innovations. Unified AI AI-driven strong our Gen Phil training, further can his and capabilities make cutting-edge Risk software an Vulnerability drive we solutions, to the for of AI which development DevOps Analytics provided AI growth. recently will everywhere of to Our Solutions, including solutions available. from widely and others lead year-over-year. The nearly introduced in that growth us. hired group was

agree Paradox, Someone with. called it which Jevons I

the global At moment GSIs. AI in will Forum will is our security. lives or I every adoption World think Zscaler our the several and well fact, customers. positioned aspect is in met Economic I integrators In rapid for this a AI, better which of internet greater create of Davos, system of CEOs of to need drive protect very

as strategic and practices. helping Salesforce. GSI are strategic compared in of change as consider sea Several partners played GSIs engagements the one in network them number national top a and Microsoft and close role critical security seeing us GSIs embedding ago Zscaler like deals. several a Zscaler just not QX, to year their partners into increasing a an are We In of transformation

XXX,XXX another example, a a with care million close new with purchased XX,XXX deal For customer logo see working dedicating This Zscaler data purchased for a leaning an am than their who health us our large to for with Fortune-XXX customer. X-figure $X In pleased solutions helped spend a example, to growth. Zscaler and ZIA, and customer, users, we annual increased which by closely Cognizant users protection existing to over deal partner insurance ZPA with are drive X-figure XXX%. GSI employees. I with for resources GSIs close that in, us Global-XXXX plus more

the in me highlight federal progress Next, vertical. our let

make security with costs you grow more. from Zscaler at are U.S., by significant new cannot and measures. including our government well legacy are security sector publicized and aware but multiple agencies eliminating measures firewalls, in Outside level upsell results. practice, VPNs, the save taking does offer we highly the we Having we we and of all federal can public products, better nearly DLP, the are place government's for United of still cabinet investments and put, in positioned States. benefit remaining, administration All efficiency opportunities the VDI Incumbent efficiency to cost. Simply snacks, security the lower seeing to under continue the vendors our to landed

put team, For X-figure Zscaler entire a secure APJ deal, the example, purchased monumental humbled to us. for in in for and national Zscaler sales trust I'm and this government has a an the government our win TCV nation's by workforce. users government is This

are productivity the X year sales of I to with entering expect In drivers: in driven sales productivity First, strong key fiscal the in by QX, half. increasing conclusion, improve demand, productivity increased second continue to we the second half our and

in Second, we customers. Everywhere Trust Zero driving are our

educate and on a Trust Everywhere targeted launched appliances. our how can campaigns to become fresh they customers for have escape that cycle Zero We

multiple tailwinds. across security Third, of our protection driving the fully data products. adoption growing AI and I demand is expect benefit to dimensions, from including AI-powered these

the $X in our I to As forward of and billion end more June. platform or achieve ARR I strong and at I look to strategy demand our innovations us more mentioned in Zenith about earlier, Live sharing for by platform growing year. the with innovations, expect fiscal

over the like Remo I'd our for to to Now results. turn financial call

Remo Canessa

Jay. you, Thank

profitability, results Our represented up was with XX% APJ QX our deals, year-over-year X% perspective, Americas even million, customer guidance From and a $XXX large growth and was was ongoing and XX%. of exceeded XX% on sequentially. scrutiny geographic EMEA revenue, XX% up revenue of

exiting ARR was or remaining XX% year annual recurring total growth ARR the obligations approximately surpassed XX% Our a was performance revenue $X.X or RPO, Current RPO billion. approximately RPO. XX% $X.XXX year-over-year from to ago billion. QX grew of

XX% $XXX to Total year-over-year calculated million. grew billings

comprised upsell over grew and unscheduled new Our of XX% billings billings renewal year-over-year.

the strong our of to We role XXX and grew in year-over-year. in X,XXX digital with ended QX journeys. strategic in with This growth with $XXX,XXX continued Our ARR transformation billings customers customers over customers play calculated large current million XX% speaks $X customers we over ARR.

Our good metric our start upsells this for rate pillars basis the our success multiple mentioned. bigger the a and XXX%, factors I increased rate be business, faster There quarterly year, future. XX-month variability our in trailing due a to in dollar-based bundles, while net in from retention was just can could selling net reduce dollar-based selling within retention on the

of our Turning the to XX.X% ago in rest year gross to of margin compares Total quarter. financial QX the performance. XX.X%

X% sequentially XX% $XXX increased expenses million. operating total year-over-year Our to and

operating We about financial an model to XX%, leverage continue of significant in basis of our approximately points year-over-year. generate with XXX increase margin

ended X% the approximately with XX%, cash cash free equivalents and billion center We quarter of at including Our revenue. was cash, margin $X.X short-term investments. in data CapEx flow

provide me for our XXXX. let and year fiscal guidance Next, QX full

reminder, all a As non-GAAP. these numbers are

to in than XX%. continue products margins. influence to other $XXX that growth like new million. $XXX expect investors strong growth and of $X.XX of shares. plan remind experiencing and to range operating time of For new for our the that faster Earnings million of optimize year-over-year introducing million optimized Would third of in range per to reflecting gross approximately assuming This over million, I profit XX% share to of will quarter, we rather revenue margins for a to And the gross margins. range rate the income Net XXX scale, products as XX%. they $XXX We fully XX% are we're to million. are the margins diluted $X.XX, go-to-market in $XX million $XXX tax

we expect in XX%. $X.XXX For the billion, of of billion full to the year reflecting range fiscal growth XXXX, XX% year-over-year billings a $X.XXX approximately to

modeling For QX, the billion range growth we to billings sequential rate $X.XX per points $XXX diluted $XXX reflecting year-over-year and a expect in XX%. $X.XX, Earnings in billings approximately of to growth $X.XX the revenue to $X.XXX continue million billion, million. to XXX improve XXX.X of in growth, of billion approximately share of and tax Operating profit XX% to million the XXX encourage of basis to and range assuming range shares. fully

a invest customers growth increasingly us to position the market we platform to large will broader free margin aggressively XX.X% opportunity long-term for expect to be adopting with XX% and our profitability. cash approximately We flow and

may With you for that, questions. now call the operator, open

Operator

Instructions] Saket comes [Operator question first Kalia Our Barclays. from with

Saket Kalia

that that about data looking in points how Gateway you for forms I of certain Secure you is a your about know kind replacements of performing. But maybe Jay, of in else products, are the curious gotten data from how everything sort business well, platform. couple higher-level platform aggregate. ZIA is, quarter. of they're and sort protection. from remarks into products on everything broader the But Web talk how doing you, talked could your Again, perspective is of maybe ZIA much we've prepared that else question coming the products Good business like clearly and of and dug if from versus we've

Jagtar Chaudhry

Sure.

platform gateways. you was ZPA with lot start As left ZIA, there. that a out know, start often out taking start, still Saket, quite Code point. Blue ZIA we a But web Code includes We starting other of a we and and Blue CDx. There's when

coming replacement from VPN the becomes maybe or Code starting from more common Blue So thing. platform

number point. the Zero interesting customers. is XX% new logo quarter becoming The on our recently, as of customers Zero was Trust starting a an fact, In area branch, this important our Trust branch that

a expanded Blue point. VPN as Code platform proxies So as is thing. starting starting wonderful a a point,

users, taking Zero Everywhere, the are and Trust branches We cloud.

Operator

Brad comes question next with from Our Zelnick Deutsche Bank.

Brad Zelnick

see I those that are to someone not making coming know product go-to-market durable? do satisfied are that go-to-market it good And what the in to customers a transformation changes growth. X it's proves the easily think who's life. out Jay, see million we Jay, the plus difference strength And emerging and changes ARR see that I you you're in and

Jagtar Chaudhry

Brad, growing so of the and automatics growing, the indicator is is quantity is level new very is that enterprises relationships So in is growing. with first then pipeline And good good. sales good data the that's team, important. getting needing up over large which expanding is board, very XX% ACV double is And forth. leadership our protection quality the the and and that two, across and strength newer all, digits, stronger of of pipeline, so on because C accounts. engagements It's very those Number account

Brad Zelnick

you, follow-up That's a quick Maybe helpful. for Remo.

maybe than commentary billings. I little bit looks around great. lighter some expected, though your the It's think year full QX even a

the if versus back any assumptions to there's unscheduled billings change the around been half? curious timing Just scheduled in

Remo Canessa

in scheduled unchanged. unscheduled and Thank that the Brad. half you, also called also. We remains XX% out first billings on half, no we in changes. No, is before virtually X% second piece, expected the with the And unchanged

our basically that guidance. see raised can You we

more bullish before. pipeline feel I did we It's bit our based our and on little a than So visibility.

and we positioned, going feel mentioned, things well. Jay well good. We're As are

Operator

with Our from Mike next Cikos question Needham. comes

Michael Cikos

It's added customers you number this a we've just know I If to time wanted on had to great get for question of of quarter. that see build Brad's some guys there off now. I the I the [indiscernible] go-to-market. could sense, million-dollar

You're cohort you now? talking of $X of have GSIs, but you about in that the light initiatives some maybe go-to-market have been guys color can that you on working million these

Jagtar Chaudhry

Yes.

transformation and are X those One with talked good things the process, sales was the We war. So them. account-centric sales biggest results. already about

the me care us. GX are our more right? integrators both we're base my upsell their role where that's big couple thing you -- our there's deals get to opportunity really deployed, They active that to a very role, firewalls, us script installed into see companies, help about kind as legacy all are an for big played was remove to They more you and itself. global us Xx important base, even second still is, an X if a seeing stuff well. of We help saw And of it GSI and in important And and VP earnings us. The happening. system playing playing what that of trained hole think in when a for getting us customers drive stuff. GSIs the And they business. embedding that more are They're people platform. more highlighting opportunities there all are And these all and installed want

In fact, is I a company. large say, XX would Fortune,

ZPA, ZIA, are in comes We to [indiscernible] stuff further us the additional stuff. to and upsell help was sold ZDX simplify

our the plan. part performance, So and pleased very of with that's

Operator

Baird. Next question Kotari comes [indiscernible] from with

Unknown Analyst

everyone. Congrats,

the So a initiative. Jay, Everywhere strategic as Zero emphasized you core Trust

XX guys months. figure pretty have to targets that [indiscernible] in triple You ambitious in

your are point customers can traction stack, anchor hardware of as an terms towards you the [indiscernible]. as seeing replace talk going talk to refresh with in pack seen the be really the [indiscernible] CR you cycle lengthy can conversations, the who of out looking the we've curious, is about, about Just opportunity, post-capital that to you're

Jagtar Chaudhry

still Zero but telling Trust been SD got help. have the time branch creating I customers is vans from some some routers us quite our for needs your branch, your some from change firewalls wonderful, sitting So that complexity.

the launch, question are cannot initiative without branch complexity which line CXO the Trust to attacked simplify From any and a to It said question any embrace be it becomes other had So and a of be our simple Exchange ready branch is ready Zero and exceeded policy of discovered. was, stuff. [indiscernible] was recently, so firewall all cost dark, removes we up. attendees. And goes Summit we There asked everything. to actually embrace you like XXX The it. survey that one Zero a they to expectations. It can cafe appliance XX% my Trust are and goes

with very Stories with combination Zero Trust a good story. the Trust branch Zero cloud Zero So of Everywhere, becomes

customers Our love it.

Unknown Analyst

Just the NRR quickly improving XXX%. to on

number talking provide Just can longer-term deal velocity They're guys of maximizing Reps more deal upfront sales. you play versus the expansion And increased is into landing and does insight? of sizes the the the how versus You mentioned NRR. about expansion? deal improving. improving more rep it

Remo Canessa

guide don't bit. mentioned, the are on into We you NRR All things bigger. play. Yes. come a Deals all getting

about expected before, we XX% Our and upsell the year, quarter. basically as we what in that's over upsell talked during came this

landing are We deals. bigger

see You companies the can large the than $X million. greater customer with with emphasis

So XXX% talked all at products, come new new We than outstanding this The we've new. those that look factors line our ACV, drive call. play. upsell whether We it's on to and also before. expanding the emerging But try into all or they again, on top other don't basically something products it's platform, really on metric. about is the and an

Operator

next Boyd question Our comes with Roger UBS. Instructions] [Operator from

Unknown Analyst

to X-figure the to Jay, I back APAC deal. government go wanted

of hear specifics as you love the you can deal kind for think this about deals, Zscaler talked feels the what the you you replacing. give scale the guys. going global like to of for of And landmark of them kind you're think upsell wall ROI about for I users. wall -- with then kind customer, on pipeline the to with any government and there, this a I'd

governments. other love any opportunity about on you're Just how thinking the would color with

Jagtar Chaudhry

at this office, internal Internet It us. or driven better by having facing -- in Trust whether landmark applications. is they're it home the And whether deal governments. was SaaS for deal was very This or deal their wasn't are accessing ROI. cybersecurity said by users, Trust you what by protection. Zero for this we includes driven important right. Yes, applications a way, And Zero they're the for access

our which proud Starting of So essentially part very critical a with its entire government is of. platform. workforce,

engaged of which friendly U.S. we've and We as well, but a other government can shouldn't done forget that good is several we're in work these to longer, I traction, pursue Government about. of with thing, but it the this lot are see some countries take getting U.S. deals to

So we a as it see us. bit it be but time, deals can but for pretty opportunities, good can call lumpy it's bulk you what government unique [indiscernible] and little a

of We are very, proud it. very

Operator

Our with next comes JPMorgan. Essex Brian question from

Brian Essex

Jay, getting is I the data platform was wondering that? on discovery be if your approach in data agent genic coming to classification in protection customers I top could are viewing dig you need into ZDX. And maybe the pursue order the you're they comments are before estate of would utilization? for And side, How seeing enterprises protection. that how and or on you had their love on data know

Jagtar Chaudhry

problem. Sure. is a AI classification question. and choice in a Eddie Often, very to lot classification. good a It's doing they we hard can, is helping data give where like data customers flexibility

for Gen use AI a bit. ossification do quite we So technology

In that may fact, X may ZIA, our data classification be goes else do been traffic data policy But class also for work in the internet, your and other quite some on fly by to along doing point said we technology. out at with share wherever Having can drive we that, classification be done providers. sitting also or enforcement. with we our have can customers scan the for time, as

that and is policy only sitting us the are leak point. way policy The we tax and applied and through goes traffic enforcement in because that we take path. the out can a it data So enforcement if natural via classification can

Our solution data has protection very been growing nicely.

grown year-over-year. example, for ACV, Our has XX%

and line. data doing e-mail good We're using like DSVM products. security We're they which only doing policy buy in single We're data for engine, opportunity, endpoint X application. rather data what it's not at because data for not a rest us it's cloud. different So were is customers doing point and in data scale the and SaaS

Operator

Gregg Our with next Mizuho. question comes from Moskowitz

Gregg Moskowitz

to or of realize I small, if start. and size more net Zscaler's how the that larger far, to a I off -- curious campaign compare so from does Trust Trust The far it's to good you from also lands, logo? Zero be but typical enterprises, Everywhere Everywhere adoption new early, very thus Zero you're what then appears midsized does how was seeing

Jagtar Chaudhry

Right.

headquarters, going, first of that is on a was has focus happening but primary growth I our very So the all, end larger which natural over not branch on And we Everywhere. essentially Trust, or like they're that Zero matter for Zero at coffee of with Everywhere. a users are say or shop That's the your see business in is home really sitting, no We've Zero changed. absence case, Zero enterprises. happy where at to remains lower XXX Zero Trust There your focus Trust. to enterprises. your is the Trust, of cloud keeps gone Trust

in feedback that's at we the the we triple can months. And based next customer -- we're getting. think are what reception XX also We we this number Now bullish. on

fresh think the have excited So with big we in we a make, branch opportunity. area, difference I'm the a new

firewall you're refresh do X was moving through more not I talking forward CIO, Our to I'm of glad cycle want the to time. go because said, I

Operator

Our Fatima with from Citi. comes Boolani next question

Fatima Boolani

to that made deals. scrutiny large ongoing specific you fact on reference Remo, the a is there

wanted question. ask more both actually becoming So business to The a the the you is deals. larger indexed and stratospheric tethered pipeline and very entire to business and model

accelerate by you economy for love would that. just aspirations layer and expectations. that and Summit your of their wars kind flux economy of things kind with that are you, all, to implications I about your got security get have of some anecdotal and kind and or of helping and the the for a their then little like could the referenced from there talking transforming economy you think if actually tariffs perspective that's budgetary conversation from virtue bit internalizing earlier, of you maybe and global some the that segments real-time wanted in networks and customers trade been given have this how CXO about feedback sectors that to of on maybe architecture their get I color feedback any the of scrutiny fact how how You're are on at

Jagtar Chaudhry

so I'll from business. what direct limited let start. me So Fatima, impact know we expect tariffs From to far, our we

macro Now in tight. high but remarks, said general, as IT in cyber. is Yes, our still for deal scrutiny, not we there's budgets large for

can a if and Trust The double. I do for then talk I you. Zero to if reduce cybersecurity, we'll about Now But cost can CISO they and CIO interested. or get interest this say, becomes go

X pipeline. pipeline. it But these to are things not these factors, we more close takes So pipeline struggle. our If together then didn't have X driving actually the will the

If business pipeline, cost cases actually been at helping and they And to Dan us. and value you business create the we is have approval. to CFO see close assessment want our refining for stuff refining savings

done. we are champion quarter, transformation. out. come in to GSIs tell goes are become them X partners what say, they the The X the It need can this we in us But want, they more and quarters, going CXOs Everywhere, when us. this to Trust combination. really out this the essentially show part a is can goes in buy, that push helping we really go And help a saving of with helping savings means to Zero -- It the bigger drive as bigger quarter, fascinating if is get deals are they platform. part to and seeing. That's the the an So really see of you that interesting goes you because along and out also platform thing the okay? becomes X

partners and do has us. that good work Someone for they're to Remo?

Remo Canessa

follow to some I of Yes. Jay's just mean comments. on

strong call Jay macro the we're uncertainties agencies. baking positioned. guide and We're negatives, our tariffs. said deals pipeline, half well you that but stronger a believe not we're going. XX currently for that in with we related The those also product. and in cabinet for or of demand to federal types sales as I the We're security, platform If deal Jay half, are of called good strong second a well costs and feel as out Having the look lumpy. XX strong a But at very called a take which the the and the We're out efficiencies banking the pipeline, macro, productivity, we're are roll second seeing our in we that company. mentioned, positioned. Jay the that, And product scrutiny. service again,

point, believe have don't significant at will impact this unless an change. we So on or impact tariffs things us

those we're second and minuses are our related forward. guide the to of the pluses well for positioned. But So kind going half

Operator

question next Our with comes Joseph from Jefferies. Gallo

Joseph Gallo

billings we of Remo, that fiscal does as piece business scheduled as acceleration 'XX? that how into the follow-up earlier in comments, think we a XQ, your or should about move peak to

Remo Canessa

Yes.

in fiscal not report. comment we're it 'XX, So increase making does a but for

Operator

Matt comes with next RBC. from Our question Hedberg

Matthew Hedberg

I lot out Jay, security I customers' roll Zscaler's your curious, about guess a guess, customers back to agents, I wondering like think aspects of ZDX. I go trend I'm that's cloud comments and I'm wanted agents what think a role right? of fit very it people think that's Agentic they And in a might seems like as protecting to But identity, natural early. there. like because obviously massive

Jagtar Chaudhry

That's correct.

headcount do with the on used, fee-based coming. are agents. future, are I agents communication if entity No impact among believe if is, model, big but changes workloads be matter we and more seen what that's will happens those is Agent what's the asked AI any question for AI just gets the agents to of some there often users, in us. your another users, machines, comes more down, question haven't is. changes, what the So

Zero to delivered on are enforce We Exchange means policy our communication customers. value for That communications. to the More all means more more Trust traffic.

time. in additional able upselling communication, agents technology have additional been well. think agent are moving active headcount to to that, And but grows by where to as charge grow charging, higher most prices customer role we we we're we well. data to volumes. in help that core as cases, for have up secure started charge also And We while time using to from agent to that traffic in protection dollars We we customers. evolve our Even our for [indiscernible]. ZDX an now keep and play ARR to the able expect we for agent. They're our as seen products And selling pricing past, we pilot, reduction example,, those have to can

Operator

Joshua from Research. comes question Tilton Wolfe next Our with

Joshua Tilton

the congrats sales see is we you ahead to from it's the kind guidance sales of then the as I lines go solid today? us were hit X-parter, comments. to well. the improvements to but productivity is, does echo my And the a quarter have saw that updated of Good here quarter. along balance the expecting for of sales a this as I year. what look to to quarter productivity gave I'll the that entered you order productivity billings if I'm I in has where of year, understand what trying year on you the in the like this guess

Remo Canessa

sales did Basically, Yes. our in called can it's increase year, out before expected see and is what that QX. I say about we we expected. throughout that I call What productivity to mean on the than is to productivity our the guidance, more any to to prudent. sales than productivity, want continue I we don't the expect would feel up. our it I color sales supports go that guidance give we and

Operator

with question next Gray comes from Powell Our BTIG.

Gray Powell

existing results refresh. a should the it sizing know And sometime start around some really in to in some that. guessing see I just wanted wanted should materialize doing in some actually follow we it's get talk targeted thoughts how early just Greg's we question meaningful the with say I congrats was when it's customers you want Can then front I I'm about you're And to to firewall good year, but to All But think opportunity? about Yes, about way? next up, it I refresh. of marketing right. the so the days, but the of more just get of firewall general yes, the think earlier results. to

Jagtar Chaudhry

Right.

we launched of branch driver is So firewalls. solution on replace Zero the the Trust to branch underpinning the a call,

really So how thousands of data branches branch a of the They've I the Most of there. center, focused do have inside are like hundreds we on large asking out them my enterprises. data large, cafe. for, aren't make center, we got but

you bringing complicated be of really being technology at and the no more sitting the should than home branch and Your table. able That's simply to a disruptive applications. access

out customers routes sitting replace some today customers there. of And us kind our with SD-WAN looking it. for some they're So have of firewalls some kind to firewalls, or existing

really point a exchange single we take what's collect data care to and get our become driving. of and it So it. That's to

reach XX% the sitting become we doing office X,XXX to this. So are the our them customers, XX% the primary We're the Campus don't are XXX,XXX to customers There's the marketing have the we are to These with benefits the some And get engage and of teams X,XXX target. reach fine dealing and next that top natural are some to the size. of ways customer. What branch Summits in give of solutions. We account-based ones these collateral our doing. number out customers, thing teams. with CA good, enterprise have and They with us. moving to our of Extra feedback SMB to webinars, essentially customers? on are campaigns we're them new for in large touch a them, marketing get

That's for branch new is working well. What's base. about grow bought us. logo XX% customers. Zero our it's Trust new me So off. helping Zero a or that telling Trust Customers exciting us talked customer We the branch

Operator

of America. with next Bank comes Our Tal question from Liani

Tal Liani

I hear myself. was to talking you i me now? Can was mute,

Jagtar Chaudhry

Yes.

Tal Liani

you, what to is it want Zero products. break concept meaning Okay. of for Trust, means down Zero concept trying to Trust the I understand to I'm it a

about practically, if the how mean? you it the branch on Trust? What the does it competitive someone to you competitive If landscape when meaning in I change talk are we competitive does branch landscape, Zero -- on cloud, is competed and there is the the change years, you solutions. on focus and rewind in does you top are back how someone SaaS, customers? X of when Trust what So cloud, And it Zero second, Trust selling Zero

Jagtar Chaudhry

by not with, is left falls a under on based having Trust. access the VPN, being SD-WAN, Trust secure In and is we gap on movement We the Zero any SASE branch. acquisition. and network, or eliminate connection technology, Zero the is the the or essentially not a West lateral inside they right, MPLS To starts using way, our segmentation anyone They SASE. X-wall with, air SASE Zero network not meaning all branch Trust branch, our till go every SASE, East of that customer relance through start no, had had an either firewalls. SD-WAN had

segmentation Zero doing Phone movement, or way area without branch to no our are inside firewalls connection We SD-WAN. and means makes the without wide Trust internet, Trust Zero relance. appliance the network the branch Zero the lateral Trust no

each Exchange means network. Zero cloud the switchboard, Zero the an laterally Trust to without movement. our moving lateral talk cloud other entity in connected gets sitting through on branch application the in to part Given Trust can of no

in our cloud. So exchange is switchboard, the our sitting

of Not You can workloads say Did that in south north only to as workloads in talk VPCB. it. VPCA in or firewalls make exciting only cloud east the well. can needed That's the the sense? part

Tal Liani

you kind the Yes. value was, And when them. and your you with you do the that focus part on to my it, have what's need compete same question of that of provides second competition who

Jagtar Chaudhry

free stuff. we is land NAC new Zero are the vendors, doing lots in legacy, in vendors, versus cases, of competition of branch, is legacy Trust a Our vendors, one firewall some of needed, that

Operator

from comes with Weed next question Our Peter Bernstein.

Peter Weed

that about deceleration that looking net looking growth? put even kind X Or And short-term particularly would performance. also does continued so upsells. it forward? get Glad signal to is good pretty new things thing, we we forward? you net a that back when and around be up? could the we together, one Is The the How should with contribution expanding probably of from the customers Obviously, progress, to and been contribution has is though, think expecting indicate should NRR those a sales seem pick new hear customers from lower declining. stronger exciting

Jagtar Chaudhry

Right.

In of and company, companies have it, you have only you about So when versus to upsell XX-plus when upsell. as very want customers, to have new our new logo coming got and push debate, few new young really very you're opportunity. internally, you percent big think ton or a have We from on do Fortune-XXX get logos. special of if you upsell we platform. new There's CRO we a ACV a grow

expect I X/X, So over onwards upsell logo from on is today, years, base there with sitting have Remo, right? is going, customers. would to because smaller. a the larger And keep upsell about large installed The we'll up a customer new of base,

it's companies, to yet. Fortune-XXX customer you XX% aren't next There customers. after. go a customers have who the good do thing. sizable think They said a I go we us, customers that, opportunity of Having for of base whether level are an about are to

That are GXK. of You about us. They're are them. a X/X good for

growing. So logos we platform the well and growing opportunities, both see and on as and upsell keeps new

Remo Canessa

opportunity thing including in to a new I that that customers. base The the existing what our only is user not is add Xx side have want we mentioning the only, on

XX%. landing the Our take currently. it, XX% penetration have Fortune these our over it's for part XXX, you for in you once at over the focus, you're hard the is and to trust, their customers. build is if The XXXX, look ability And Global a But upsell. you

is XXX% correct. Jay So

GXK and is to we go XXX at and just continued penetration as increase look fiscal As company, currently, we I you penetration expect the forward percentage as GXK that we our quite and -- our we're take I and for year. Gap] and said upsell forward have important a a selling [Audio But think great very, go it's well that you very really impressive. XXX, a across product in into introduction in bodes position this Fortune Zscaler. XX% Fortune the in would our and platform

Operator

our Keith Bachman from comes And last BMO. with question

Keith Bachman

And change wanted the million. a a on to changes at if versus analytics bit some slide dig billion And $XX out AI I little you how solution your a a a I AI is relative landscape and this there. have the to deck, around wanted your to I in $X level, question TAM you deeper bit, positioning you. to think Jay, of direct high competitive

a it's relatively part. small So

more change is existing is AI? to perspective, argue, technology you a products Now your both? Or much could I benefits question if to offering or capture solutions data how that into downstream just from do which down of X understand, want the it parts, embedding break the new products? part And we is of well, is But as meaningful. into again I protection, that is

Jagtar Chaudhry

piece But growing day. about you couple point a a already good very about they're It's It's there, was Yes, question. a as AI a out data good Everywhere small as think healthy. if Trust security the a as getting we're of nicely. logs That you point. cloud very, X anywhere analytics. or AI starting made are only that with products largest Exchange platform the That's Zero Zero powers transaction that Trust billion is over

So that's a X north star.

take What it it. data becomes products technology value us, is taking star data become for and it next Avalor, around around a big around fabric all and that building synthesize build acquired north the be data to Now which has us for it. and the built the value [indiscernible] that can harmonize that

like unified things and more alike. are launched already more reach management. have security, products vulnerability management. want risk We asset operations to just around There around We protection, are that going come

engine unfolding, that number AI that That's So X part. part. by are powered do you a see products of to

it digital is being experience because sizable and using get ends AI. part accelerated it second but taking up Agentic business, and more CDX pretty already a will more The make to technology powerful. of AI AI

Third data area protection. is

AI, But AI addition data do others, that, us Gemini We as have using already. been doing some we or very public in make a CIOs is, the is to company my ChatGPT, how good ask question such #X as league. classification data

application AI own the make customers Then of using We are our models. sure We're DLP safely. their are can to sitting they private in [indiscernible] traffic internet. use LLM it using building

inspect We and are an able enforce to be policy. proxy building LLM to

use the becomes of generate compelling opportunities the power all to several it and X is the then secure probably most we combination for What AI combination. exchange us. trust believe customers to loans So and

Operator

to like Jay to for call would I any the Chaudhry back closing over now turn remarks.

Jagtar Chaudhry

Well, you Thank you for call. I this plan thank to you we to us look conferences forward joining investor for the of many attend. one all in seeing again.

Remo Canessa

Thank you.

Unknown Executive

Goodbye.

Operator

your for you Thank conference. participation. the concludes This you. Thank

You may now disconnect.

Zscaler (ZS) 5 Mar 252025 Q2 Earnings call transcript