Zscaler Inc at Bank of America Global Technology Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Tal Liani - Bank of America - Analyst : Excellent. Thanks. So I want to start from the last quarter and then go back basically and maybe Remo, you outperformed billings significantly last quarter. You grew 30%. We expected 21% and the performance was so much better than expectations. Then the question is what is happening in the underlying market, meaning what is -- on one hand, we are worried about newcomers, Cisco and Fortinet, et cetera. On the other hand, your performance was phenomenal. So how do you describe the competitive landscape, your ability to sell? What kind of questions are you getting from customers about competition, et cetera?

Question: Tal Liani - Bank of America - Analyst : So Steve, I'm going to ask it in a simple way for non-tech investors or non-tech people, what does it mean zero trust SASE versus the competition? How is your offering different from the others?

Question: Tal Liani - Bank of America - Analyst : And when you look at the competitive solution, for example, Microsoft has announced they don't have a firewall, so when you're talking about firewall-based SASE, you only referred to Fortinet, Cisco, maybe even Palo Alto, or you also referred to Microsoft?

Question: Tal Liani - Bank of America - Analyst : So what do you say to a customer that tells you, and that's coming from Fortinet, for me that tells you, you charge -- I'm making up a number -- you charge $300 license if I put it on top of my Fortinet, I'm going to pay only $100 a license. Current management, they offer a significant price advantage over a Zscaler. How do you position yourself versus this kind of price difference?

Question: Tal Liani - Bank of America - Analyst : Got it. So historically, you offered SSE and not SD-WAN. What's your journey on SD-WAN? How important is it to have SD-WAN as part of the solution?

Question: Tal Liani - Bank of America - Analyst : Got it. When I look at competition, and by the way, I know people are standing in the back, there are seats here, if you want to sit down. When I look at the competition -- not competition, other cybersecurity plays. Take, for example, CrowdStrike. They started from endpoint and then they expanded into many, many other areas. Take me through the same journey from the eyes of Zscaler, meaning you started with ZIA, ZPA, how will the company evolve over the next three years in a way that expands the TAM?

Question: Tal Liani - Bank of America - Analyst : Still on going back to competition, what is the risk that the market will be bifurcated into customers that understand zero trust, and customers that will not understand zero trust? What I'm asking is when I look at your competition, none of them is offering the same vision, you're differentiated in your vision. And this differentiation is both a risk and an opportunity, like how many people are going to adopt it. So what are kind of discussions do you have with customers? Where do you see reception for the zero trust offering? Is it a certain vertical, big companies, small companies, et cetera?

Question: Tal Liani - Bank of America - Analyst : What if a customer tells you -- I'm not talking about data center firewall. That will probably never change. So I'm talking about branch firewall and [my own] firewall, but not data center. So what if a customer tells you, don't touch my firewall. I've been around for many years. I'm a big organization. Politically, I can change it or whatever. What do you offer to those that still want to keep their firewall in the branch? What are the advantages that you have and how can you compete to -- and then compete with the firewall company?

Question: Tal Liani - Bank of America - Analyst : So we spoke about data index and it takes me to the next question, which is about, I asked you about it, but I'm going to ask it more direct, and where are the opportunity to grow your NRR, meaning to upsell additional modules to existing customers? So what are the markets you're going after? And you mentioned data, there was mentioning of cloud before, et cetera.

Question: Tal Liani - Bank of America - Analyst : One of the things you spoke about was cloud. What do you offer for cloud protection?

Question: Tal Liani - Bank of America - Analyst : And how well are you positioned? I ask it because some of the big start-ups like Wiz, et cetera, started earlier. Palo Alto, Prisma Cloud started earlier. But we do see CrowdStrike as a late entrant to the market. So where are you positioned from a technology readiness point of view?

Question: Tal Liani - Bank of America - Analyst : Got it. Okay. Now it's time to ask some financial plans. So the quarter was great. But still, if you look at Street consensus growth, for next year, it went down from 25.6% to 20% revenue growth. And the question is, when I spoke to your team, it was about, Street didn't model properly the cyclicality. Fundamentally, the question is, how do you see next year playing out? How do you see pricing environment? How do you see growth environment? What is the outlook for next year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 05, 2024 / 4:20PM, ZS.OQ - Zscaler Inc at Bank of America Global Technology Conference

Question: Tal Liani - Bank of America - Analyst : Great. Ran out of time. Thank you very much.