Slide 1: Fiscal Q2 2024 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 Q2'24 Results
Fiscal Q2’24 Results REVENUE BY GEOGRAPHY Based on Americas Q2'24 Revenue EMEA 117% Dollar-based net retention rate 497 $1M+ ARR customers Q2 Guidance Q2 Results $505M - $507M $525M Revenue Approx. 30%-31% y/y 35% y/y Calculated Billings $628M 27% y/y Calculated Current $597M Billings 26% y/y Gross
Slide 4: Current Business Environment
Current Business Environment Zero Trust a top priority for customers * Threat actors continue to exploit vulnerabilities of firewalls and VPNs * SEC cyber risk and breach reporting requirements Customers want a fully integrated platform on Zero Trust architecture * Point product consolidation and RO
Slide 5: Zscaler Zero Trust Exchange Platform
Internet, SaaS Internet, SaaS Internet, SaaS SaaS Cloud, DC Cloud, DC Cloud, DC Cloud, DC Secure Secure AI / ML Data Protection Cyber Protection Data-at-Rest Communications Services SaaS, Cloud, Endpoint Turn Data into Insights Secure Users Secure Workloads Secure IOT/OT Secure B2B Remote, Office Cl
Slide 6: Customer growth by Q3'22 to Q2'24
2,820 2,708 2,609 497 2,432 468 2,337 449 2,217 2,089 400 378 1,891 348 327 288 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 © 2024
Slide 7: Initiatives to scale our Go-to-Market to $5B ARR and Beyond
Initiatives to scale our Go-to-—Market to $5B ARR and Beyond psek} O re Account-Centric Philosophy Top Accounts Program Vertical Domain Expertise * Developing account plans that are * Introduced pilot program a couple of * Adding domain experts who can drive aligned with our customers’ long-term qua
Slide 8: Q2'23 vs Q2'24 margin metrics
19.6% 80.4% 80.8% 19.2% 16.2% 12.6% Q2'23 Q2'24 Q2'23 Q2'24 Q2'23 Q2'24 © 2024
Slide 9: Select Q2'24 Deal Highlights
@ scaler Select Q2’24 Deal Highlights Technology Company New logo, 8-figure TCV 20,000 users 20,000 users 20,000 users 20,000 users Why Zscaler + After repeated ransomware attacks, phasing out legacy firewall-based security for Zero Trust architecture Eliminating firewalls, VPNs, and VDls, generatin
Slide 10: Financial Tech Company, Large Aerospace Company, Global 2000 Customer
Financial Tech Company Large Aerospace Company Purchased 25K workloads, Nearly tripled their purchase, doubling their annual spend contributing to a 60% with us to >$1M ARR increase to >$1M ARR Global 2000 Customer Global 2000 Manufacturing Purchased for 97K users, Purchased for 16K users for risk r
Slide 11: SaaS insights
SaaS insights Discover cost saving opportunities Office utilizations trends Data and app integrations • Global view of SaaS usage • Discover redundant / overlapping apps • Users, departments, office locations • Closed-loop analytics on office • Complete SaaS app inventory • Identify inactive users •
Slide 12: Fiscal Q3'24 and FY24 guidance
Initial Updated Fiscal Q3’24 Fiscal FY24 Fiscal FY24 $534M - $536M $2.050B - $2.065B $2.118B - $2.122B Revenue 28% y/y 27%-28% y/y 31% y/y $2.52B - $2.56B $2.55B - $2.57B Calculated Billings Approx. 7% q/q decline 24%-26% y/y 25%-26% y/y Gross Margin 80% $330M - $340M $395M - $400M Operating Profit
Slide 13: Financial Appendix
Slide 14: Non-GAAP to GAAP reconciliations shown on the following slides
▪ ▪ ▪ ▪ *Non-GAAP to GAAP reconciliations shown on the following slides. © 2024
Slide 15: Appendix A: Non-GAAP to GAAP Reconciliation
Appendix A: Non-GAAP to GAAP Reconciliation $ IN THOUSANDS Q2 24 Q2 23 YTD Q2'24 YTD Q2'23 Revenue $ 524,999 $ 387,598 $1,021,702 $ 743,146 Non-GAAP Gross Profit and Non-GAAP Gross Margin GAAP Gross Profit $ 407,800 $ 299,994 $ 793,109 $ 578,845 Add: Stock-based compensation expense and related payr
Slide 16: Appendix A: Non-GAAP to GAAP Reconciliation (cont.)
Appendix A: Non-GAAP to GAAP Reconciliation (cont.) $ IN THOUSANDS Q2 24 Q2 23 YTD Q2'24 YTD Q2'23 Non-GAAP Net Income per Share, Diluted GAAP net loss $ (28,469) $ (57,453) $ (61,952) $ (125,615) Stock-based compensation expense and related payroll taxes 145,536 111,518 278,265 220,154 Amortization
Slide 17: Appendix A: Non-GAAP to GAAP Reconciliation (cont.)
Appendix A: Non-GAAP to GAAP Reconciliation (cont.) $ IN THOUSANDS Q2 24 Q2 23 YTD Q2'24 YTD Q2'23 Calculated Billings Revenue $ 524,999 $ 387,598 $ 1,021,702 $ 743,146 Add: Total deferred revenue, end of period 1,502,175 1,111,880 1,502,175 1,111,880 Less: Total deferred revenue, beginning of perio
Slide 18: Appendix A: Non-GAAP to GAAP Reconciliation
Appendix A: Non-GAAP to GAAP Reconciliation Stock-based compensation expense and related payroll taxes 13,434. 9,595 26,389 18,256 ‘Amortization expense of acquired intangible assets 2,717 2,175 5,434 44 GAAP Gross Margin 78 % 77% 78 % 78% Non-GAAP gross margin 81% 80% 81% 81% Stock-based compensati
Slide 19: Appendix A: Non-GAAP to GAAP Reconciliation (cont.)
Appendix A: Non-GAAP to GAAP Reconciliation (cont.) ‘Stock-based compensation expense and related payroll taxes 182,102 101,923 251,876 201,898 Amor ion expense of acai -d intangible assets 366 376 685 989 GAAP total operating expenses as a percentage of revenue 86% 94.% 87 % 96 % Non-GAAP total ope
Slide 20: Appendix A: Non-GAAP to GAAP Reconciliation (cont.)
Appendix A: Non-GAAP to GAAP Reconciliation (cont.) $ IN THOUSANDS Q224 Q2 23 YTD Q2'24 YTD Q2'23 Free Cash Flow $ 100,788 $ 62,818 $ 325,506 $ 158,432 Revenue 524,999 387,598 4,021,702 743,146 Free cash flow margin 19% 16 % 32% 21% Net cash provided by operating activities $ 142,069 $ 89,481 $ 402,