Zscaler Inc · NASDAQ:ZS
Zscaler — Q1 2025 Earnings Presentation
24 slides from Zscaler's earnings presentation, Dec 2, 2024
Slide 1: Fiscal Q1 2025 Earnings Call
Slide 2: Safe Harbor
Safe Harbor FORWARD-LOOKING STATEMENTS Unless otherwise noted, all numbers presented will be on an adjusted, non-GAAP basis. Reconciliation of GAAP to non-GAAP financial measures is in the appendix of this presentation. This presentation has been prepared by Zscaler, Inc. (“Zscaler”) for information
Slide 3: Fiscal Q1'25 results
Fiscal Q1’25 results APJ Q1 Guidance Q1 Results oi eesults | 604M - $606M 628M Revenue 8 8 8 @ Exceeded 722% y/y 26% y/y REVENUE BY GEOGRAPHY Americas ae $504M - $508M $517M Calculated Billings 4 S Exceeded mu ling 10% -11% y/y 13% y/y iv] * agai Revenue $517M EMEA Calculated Current Billings 12% y/
Slide 4: FY25 guidance increased
FY25 guidance increased Revenue Calculated Billings Operating Profit Earnings Per Share Free Cash Flow Margin Prior FY25 Guidance $2.60B - $2.62B 20%-21% y/y $3.110B - $3.135B ~19%-20% y/y $530M - $540M 20.2%-20.8% margin $2.81 - $2.87 23.5%-24% New FY25 Guidance $2.623B - $2.643B 21%-22% y/y $3.124
Slide 5: Outstanding Q1'25 results for growth and profitability
Outstanding Q1’25 results for growth and profitability Innovations resonating Increasing customer Driving profitable with customers commitments with Zscaler growth at scale Dollar-based NRR Bookings Growth Y/Y Revenue Growth Y/Y 9 114% 30%+ 26%+ upselling expanded portfolio acceleration vs Q4’24 >$2
Slide 6: Zero Trust Exchange
Securing use of AI-apps Zscaler AI Innovations AI-powered products 1 Secure use of Public-AI apps 3 Cyber and Data protection Leveraging relevant enterprise data for AI • Granular visibility into Copilots, ChatGPT, etc. • Automated data classification • Discovery and classification of data Zscaler h
Slide 7: AI-driven differentiation in 7-figure ACV deals
Al-driven differentiation in 7-figure ACV deals Secure use of Automated Digital Public-Al apps Experience (ZDX Copilot) Global 2000 Services Company Large Healthcare Provider Upsell, 7-figure deal Upsell, 7-figure deal + Al-powered Data Protection to enable secure roll * ZDX Copilot to automate IT o
Slide 8: Cyber threats continue to increase in frequency and sophistication
Cyber threats continue to increase in frequency and sophistication “| The limitations of firewall and VPN based architectures are being cM) _ exploited by threat actors ne Increasing high profile breaches and volume of sophisticated attacks Rising adoption of GenAl is exposing new gaps in organizati
Slide 9: Velocity and variety of attacks continue to proliferate
Velocity and variety of attacks continue to proliferate (a) 111. YoY growth in spyware YoY growth in loT attacks Ad 29. YoY growth in banking malware, most of which can bypass MFA Source: Zscaler Threatlabz Mobile, loT and OT Threat Report (October 2024) @zscaler Experience your world, secured?
Slide 10: Select Q1'25 deal highlights
Select Q1’25 deal highlights SUCCESS IN SELLING THE BROADER PLATFORM <S TUL ———} Fortune 500 Health Care Upsell, 7-figure deal Fortune 500 Insurance Upsell, 7-figure deal pz | 70,000 users ZIA >23,000 users Es 70,000 users ES >23,000 users 70,000 users ZDX Future upsell opportunity paca 70,000 users
Slide 11: Zero Trust for Branch and Cloud
Zero Trust for Branch and Cloud Growing Workloads footprint in Cloud; First 7-figure ACV deal in Branch Zero Trust for Zero Trust for Workloads Branch Fortune 500 Transportation Large US Automotive Supplier Upsell, 7-figure ACV deal New logo, 7-figure ACV deal * ZIA for workloads for protecting all
Slide 12: Making significant progress in transforming our go-to-market engine
@zscaler Making significant progress in transforming our go-to-market engine Strong hiring quarter and lower-than-expected attrition Account-centric selling driving better close rates and stronger customer engagements; $1M+ ARR customers up 25% YoY GSI initiatives starting to contribute to wins - tw
Slide 13: Powerful cloud effect of better cyber protection
Powerful cloud effect of better cyber protection 500B+ 60+ Zscaler 9B+ 250K+ Scale! Daily security / Daily Threat intel Platform iin ‘ok tie Daily cloud transactions partners reorevented updates More Data + More Customers Deeper Insights @zscaler Experience your world, secured: (©2024 Zscaler, Inc.
Slide 14: Above Rule-of-70 in Q1'25
Above Rule-of-70 in Q1’25 26.4% 4 46.5% — ~73% Revenue Free Cash Above Rule-of-70 Growth Y/Y Flow Margin in Q1 ‘25 SaaS companies aspire to achieve Rule-of-40 Among top handful of the 145 largest public SaaS companies @5zscaler | Experience your world, secured:
Slide 15: Large customer momentum
Large customer momentum $100K+ ARR Customers ~19% CAGR 3/165 | | Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24Q4'24 Q1'25 Fortune 500 and Forbes Global 2000 customer count based on June 2024 rankings. $1M+ ARR Customers e 585 ARR Custome 348 j e e fe) e 500 ome e e Glob O00 ome QN'23_Q2'23 Q3'23 Q4'23 Q
Slide 16: 85.0% 25% $350.0 52% $600 80.0% 47% $300.0 $500 20% 75.0% 42% $250.0 70.0%
85.0% 180 25% $350.0 52% $600 80.0% 160 47% $300.0 $500 140 20% 75.0% 42% $250.0 70.0% 120 $400 37% 15% 100 $200.0 65.0% 32% $300 80 60.0% $150.0 10% 27% 55.0% 60 $200 $100.0 22% 50.0% 40 5% $100 $50.0 17% 45.0% 20 0 0% $0.0 12% $0 40.0% • • • • • • © 2024
Slide 17: Growing across all geographies
Growing across all geographies $628M $593M $553M $525M $497M Revenue mix by geographies Q1'24 Q2'24 Q3'24 Q4'24 Q1'25 m@ Americas mEMEA mAPJ @zscaler Experience your world, secured: (©2024 Zscaer, Inc, All rights reserved.
Slide 18: In early stages of capturing our large market opportunity
In early stages $ 9 6 B Serviceable Addressable Market of capturing our large marke Oo p po rt U n ity Zero Trust for Users’ Zero Trust for Cloud’ and Branch: = = Data Protection’ Al-Analytics Solutions* (©2024 Zscaler, Inc. Allrights reserved. 18
Slide 19: Strong Q1, well positioned for Fiscal 2025
Strong Q1, well positioned for Fiscal 2025 4) Customer adoption of our Zero Trust platform is stronger than ever, with CXOs prioritizing Zero Trust security and Al for their IT spending (2) We are expanding Al-portfolio to secure use of public and private Al apps, enabled Automated Digital Experienc
Slide 20: Financial Appendix
Slide 21: Non-GAAP to GAAP reconciliations shown on the following slides
▪ ▪ ▪ ▪ *Non-GAAP to GAAP reconciliations shown on the following slides. © 2024
Slide 22: Appendix A: GAAP to Non-GAAP Reconciliation
Appendix A: GAAP to Non-GAAP Reconciliation $ IN THOUSANDS, EXCEPT PERCENTAGES Q125 Q124 Q123 Revenue $ 627,955 $ 496,703 $ 355,548 Non-GAAP Gross Profit and Non-GAAP Gross Margin GAAP gross profit $ 486,493 $ 385,309 $ 278,851 Add: Stock-based compensation expense and related payroll taxes 15,793 1
Slide 23: Appendix A: GAAP to Non-GAAP Reconciliation (cont.)
Appendix A: GAAP to Non-GAAP Reconciliation (cont.) Revenue Add: Total deferred revenue, end of period Less: Total deferred revenue, beginning of period Revenue Add: Current deferred revenue, end of period Less: Current deferred revenue, beginning of period Net cash provided by operating activities
Slide 24: Appendix A: GAAP to Non-GAAP Reconciliation (cont.)
Appendix A: GAAP to Non-GAAP Reconciliation (cont.) $ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS Q1 25 Q124 GAAP net loss $ (12,051) $ (33,483) Add: GAAP provision for income taxes 7,637 8,997 GAAP loss before income taxes (4,414) (24,486) Add: Stock-based compensation expense and related payroll taxes