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Zscaler, Inc.


Wall street consensus:


​Recent Conference Call

### Summary of Zscaler, Inc. FQ1 2024 Earnings Call

**Insightful Quote from CFO, Remo E. Canessa:**
"Our Q1 results exceeded our guidance on growth and profitability, even with ongoing customer scrutiny of large deals. Revenue was $497 million, up 40% year-over-year... Our free cash flow margin was 45%... reflective of our ability to deliver high growth and high profitability, unique among SaaS companies."

### Key Quarterly Business Trends

1. **Strong Large New Logo Wins**: Zscaler achieved a Q1 record with 14 new logos each contributing over $1 million in ARR, demonstrating Zscaler's relevance across many verticals.

2. **Increased Adoption of Broader Platform**: Nearly half of new logo customers purchased all 3 user pillars - ZIA, ZPA, and ZDX, indicating a trend towards platform consolidation and an upsurge in average deal size.

3. **Record Quarter for U.S. Federal Business**: New business in the federal sector grew by over 90% year-over-year, showcasing the company's competitive strength in meeting the U.S. government's Zero Trust security requirements.

### Critical Questions from Analysts:

1. **Brad Alan Zelnick, Deutsche Bank**: Asked about sustaining high growth despite challenges from traditional network security providers.

- **Management Response**: Jay Chaudhry highlighted the company's unique zero-trust architecture and ongoing product and platform expansion as key differentiators for sustained growth.

2. **Saket Kalia, Barclays**: Inquired about the willingness of customers to shift from appliance-based firewalls to Zscaler's SASE architecture.

- **Management Response**: Chaudhry expressed confidence in the increasing shift towards Zscaler’s architecture due to its security benefits and efficiency.

3. **Unique Question - Alex Henderson, Needham & Company**: Queried about the role and expansion of sales channels.

- **Management Response**: The company sees a strengthening of VAR channels, and an expansion in engagements with Federal SIs, pointing towards accelerated adoption and sales through varied channels.

### Outlook and Guidance

For FQ2 2024, Zscaler expects revenue in the range of $505 million to $507 million, reflecting a 30% to 31% year-over-year growth. Full-year fiscal 2024 guidance upgraded, with revenue expected in the range of $2.09 billion to $2.1 billion. This guidance, along with insights into margin changes and investments, indicates the company’s strategic focus on long-term growth and profitability against a backdrop of a challenging macro environment and internal operational adjustments.

Key Questions to follow

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