Zscaler Inc at Needham Growth Conference Transcript

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

Question: Mike Cikos - Needham & Company, LLC - Analyst : Great. Thanks, Jay. And just sticking with the AI theme for a second while we're already here but for Zscaler's Copilot's offering, can you talk about what's involved from the customer standpoint to deploy and get those offerings up and running? Have we measured or quantified yet just how quickly customers can generate value? How quickly is that accelerated because of the Zscaler Copilot's offering?

Question: Mike Cikos - Needham & Company, LLC - Analyst : Excellent. And just to maybe think about this more holistically, but if we just take a step back and look at AI and the monetization opportunity, how does Zscaler think about that monetization, right? We're talking about massive opportunity with Microsoft 365, right? So how is it you guys are looking to make sure that you're capturing value versus other industries are just going to have to embed this technology, and they can't necessarily monetize it, right?

Question: Mike Cikos - Needham & Company, LLC - Analyst : Awesome. And on that Copilot's point in the top of the call with the presentation, but you had said it had led to one of the deals on the most recent quarter. I imagine that's the seven-figure ACV deal with that global 2,000 customer. I'd love to get a sense of when Copilots or when these AI offerings are being introduced, how does the sales process change? Are the cycles slightly longer? Is there a different cast of characters as far as the procurement process? Anything that would be incremental. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 09, 2025 / 5:45PM, ZS.OQ - Zscaler Inc at Needham Growth Conference

Question: Mike Cikos - Needham & Company, LLC - Analyst : Got it. And I know we were -- I think it was the first slide you had brought up was really talking to how Zscaler has been built and maybe some of those architectural decisions that you guys went through the nitty-gritty and the hard stuff early to ensure that you have this platform today. Again, just for the audience here, but can you walk through how those architectural decisions have led to this unique value prep versus how competitors may not have the same kind of inside baseball that you guys have at this time?

Question: Mike Cikos - Needham & Company, LLC - Analyst : Excellent. And it's probably starting to go into the go-to-market angle here. But from a high level, for these Gen AI offerings that you guys have, are we at a significant enough volume with your customers at this point to start thinking about what that associated uplift to the deal value is at this time?

Question: Mike Cikos - Needham & Company, LLC - Analyst : Excellent. Okay. And from a go-to-market standpoint, does that require you to introduce more sales heads into the sales process? Like I know that you have your CRO, Mike Rich, who's been implementing some go-to-market changes, but just interested if you need more architects now as a result of this kind of sale.

Question: Mike Cikos - Needham & Company, LLC - Analyst : Got it. And again, just thinking about that sales process, the different personas brought in, are you potentially or were you already -- in some way already tackling, let's say, compliance, legal? Again, I think about the number of people that may need to be brought in for these kinds of decisions and the implications that might have for sign-off on a deal, right?

Question: Mike Cikos - Needham & Company, LLC - Analyst : Got it. Well, you're obviously seeing traction there, especially given the AI analytics stat that you gave. I think it was that new and upsell ACV was up north of 90%. So kudos on that. If we shift gears for a second to going back to the earnings call you guys hosted in early December, you had gone out of your way, I think in the prepared remarks, to talk about ZPA as being a large growth driver in the upcoming year. I guess what are you seeing and hearing in customer conversations that gives you that confidence? Is there anything from a competitive landscape or maybe the pipeline build? Just help walk us through that comment please.

Question: Mike Cikos - Needham & Company, LLC - Analyst : And I know a lot's been made about this upcoming firewall refresh, right? I know that you guys have been vocal as far as standing to benefit from this cycle. First question, just super high level, but is this firewall refresh more pertinent for Zscaler today versus the last cycle in your view? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 09, 2025 / 5:45PM, ZS.OQ - Zscaler Inc at Needham Growth Conference

Question: Mike Cikos - Needham & Company, LLC - Analyst : Okay. But the way you're describing it -- correct me if I'm wrong -- it sounds like these offerings, we're really going to be taking this to your existing customers

Question: Mike Cikos - Needham & Company, LLC - Analyst : They've already recognized the value. That Zscaler is a strategic partner for them. Okay. Got it.

Question: Mike Cikos - Needham & Company, LLC - Analyst : Excellent. For, let's say, device segmentation, how has traction or adoption trended there versus internal expectations or who are customers traditionally displacing, if they are displacing someone, TCO? Cost savings, any anything on that front for the device segmentation? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 09, 2025 / 5:45PM, ZS.OQ - Zscaler Inc at Needham Growth Conference

Question: Mike Cikos - Needham & Company, LLC - Analyst : Excellent. And if we, I guess, again, just change over, but maybe a more macro question here. Again, investors have their pencils out thinking about the new year. What are you hearing or what's the tone of conversation you're currently having with customers? How's commentary trending?

Question: Mike Cikos - Needham & Company, LLC - Analyst : Got it. And just to come back to it as well on that macro theme, we finally have certainty on the administration we're working with although the policy we'll be working with is still up to debate, right? But have you seen any change in customer behavior, whether it's public or private sector, in recent weeks? Just because we do have that certainty with the administration at this time.

Question: Mike Cikos - Needham & Company, LLC - Analyst : Got it. Two questions on the management team here. The first, you guys obviously appointed Adam as Chief Product Officer for the company. Can you just help us think about the expertise he's bringing to the role? What, if anything, this might represent as far as how Zscaler continues to view the market and build that platform?

Question: Mike Cikos - Needham & Company, LLC - Analyst : Excellent. And then the second management question, obviously, the bigger one for folks on my side is, Remo announced departure with some big shoes to fill, obviously, because we all loved working with him so much. I guess, where are we in that search? And can you help us think about the credentials we're looking for just because of who and what Remo was, right? So can you help us walk through that?

Question: Mike Cikos - Needham & Company, LLC - Analyst : Excellent. With that, we'll have to call it. But thank you very much to Jay and Ashwin for your time today. Thank you to the audience for tuning in. Looking forward to a successful NGC next week, but thank you. Thank you so much. We'll talk soon.