Zscaler, Inc.

telephone keypad. As a reminder, this conference call is being recorded. At this time, I would like to turn the conference over to Mr. Bill Choi, Senior Vice President, Investor Relations and Strategic Finance. Mr. Choi, you may begin.

as we talk about today will be on an adjusted non-GAAP basis. You'll find the reconciliation of GAAP to the non-GAAP financial measures in our earnings release. I'd like to remind you that today's discussion will contain forward-looking statements, including but not limited to the company's anticipated future revenue and market share. calculated billings, operating performance, gross margin, operating expenses, operating income, net income, free cash flow, dollar-based net retention rate, future hiring decisions, remaining performance obligations, income taxes, and earnings per share. These statements and other comments are not guarantees of future performance, but rather are subject to risk and uncertainty, some of which are beyond our control, including but not limited to the duration and impact of COVID-19 on our business, the global economy and the respective businesses of our customers, vendors, and partners, market adoption of our offerings, the impact of any previous or future acquisitions, and the development of the markets in which we compete. These forward-looking statements apply as of today, and you should not rely on them as representing our views in the future. We undertake no obligation to update these statements after this call. For a more complete discussion of the risks and uncertainties, please see our filings with the SEC as well as in today's earnings release. We will upload a copy of today's prepared remarks to our investor relations website when we move to the Q&A segment of the call. I would also like to inform you that management will be presenting at the following upcoming virtual events. J.P. Morgan Technology, Media, and Communications Conference tomorrow on May 26th. Bernstein's Strategic Decisions Conference on June 4th. Bank of America Global Technology Conference on June 8th. Bayer's Global Consumer Technology and Services Conference on June 10th. And Mizuho Cybersecurity Summit on June 15th. Sessions which offer a webcast will be available on our investor relations website. Lastly, we would like to invite you to Zenith Live 2021, which is our virtual customer and partner cloud summit. The Americas and EMEA events will run from June 15th through the 17th, and for APJ will be June 22nd to the 23rd. We encourage everyone to register and attend our summit from our website, zscaler.com slash zenithlive. Now I'll turn the call over to Jay.

Thank you, Bill. As you saw in our earnings release, we delivered outstanding results for the third quarter with accelerating growth at scale while increasing adoption of our broader platform. We drove 60% growth in revenue and 71% growth in billings. We also generated strong growth in operating profits and delivered record-free cash flow. Enterprises are looking to Zscaler to secure the digital transformation and architect for the work from anywhere economy, which we believe is the new normal. Our results exceeded our expectations and we are again increasing our guidance for fiscal 21. Our business is fighting on all cylinders, our superior architecture, and optimized go-to-market engine is elevating us above the competitive noise. Our Zero Trust Exchange platform connects users, devices, and applications, which is fundamentally different from firewall-based CASL and mode security. Our platform prevents lackful threat movement and eliminates the attack surface by making applications invisible from the internet hence reducing business risk. Furthermore, our proxy architecture designed to inspect SSL encrypted traffic blocks sophisticated threats and prevents loss of sensitive data. Faced with the latest news making ransomware and other cyber attacks, CISOs and CIOs are turning to Zscaler to dramatically improve the security posture while reducing the legacy IT costs. As you have heard me say before, architecture matters. Zscaler purpose-built the right high-performance multi-tenant proxy architecture from day one, whereas many vendors are trying to retrofit their existing solutions, which inevitably fail. Built from the start to enforce policy at the edge, as advocated by SASE framework, we are deployed across 150 data centers with five nines of availability. We are processing more than 160 billion transactions daily, preventing up to seven billion security incidents and policy violations. This unmatched network effect provides better security and user experience. Let me highlight three factors that drove our strong performance in the quarter. First, building on our strength with large enterprises, we closed a record number of seven-figure ACV deals across a broad range of industries. Most of these wins are clear commitments to provide our customers the foundation for application network, and security transformation. Second, an increasing share of our sales is coming from broader platform purchases by new and existing customers. Strong platform upsells drove our 126% dollar-based net retention rate in the quarter. On newer solutions like AutoBank CASB, Zscaler Digital Experience, or ZDX, and Zscaler Cloud Protection, or ZCP, are increasingly contributing to our wins. The breadth and depth of our platform is resonating with customers, and I believe Zscaler is the go-to platform for vendor consolidation, cost savings, increased user productivity, and better cyber protection. Our strategic decision last year to increase our investments in go-to-market is yielding fantastic results. I'm very pleased with our performance and momentum across all GEOs, all market segments, and all products. Earlier this year, we expanded our investment in the enterprise segment, which consists of organizations with 2,000 to 6,000 employees. This quarter we saw a higher mix of new business from the segment. Now let me highlight key wins in the quarter starting with ZIA. Because of the pandemic, a global 500 technology company in Asia was routing internet traffic of their employees working from home over VPN through the corporate data center. This created a poor user experience for SaaS applications like Office 365 and overwhelmed the security appliances. To power the workplace modernization initiative for their 18,000 employees, the customer purchased ZIA Transformation Edition, including SSL inspection, cloud firewall, and sandboxing, as well as ZDX. ZDX improves productivity by identifying and helping resolve user performance issues over the entire cloud network path in real time before users complain. In another new logo win, a global business services company facing challenges supporting work from anywhere purchased our business edition plus cloud firewall, CASB, DLP, and ZDX for all 46,000 employees to directly access SaaS applications to reduce business risk and improve user experience. In addition, they replaced a legacy VPN with CPA to provide zero cost access to private applications for the 29,000 call center employees. With a purchase of three of our four platform pillars, This customer is accelerating the digital transformation from a five-year goal into a six-month reality. Next, let me share two significant deals that show our growing momentum in the financial services vertical and our increasing success working with our tech partners. A top-tier global investment bank is pursuing a zero-trust strategy by rebuilding its security architecture for the modern hybrid work environment. They purchased a ZIA Business Edition plus DLP, Cloud Sandbox, and ZDX for 50,000 users. With security as a major requirement, only a proxy architecture with SSL inspection at scale was considered. Our 10-year track record of running a massive, highly reliable, and available inline security cloud made us the best choice. Taking advantage of the breadth of our platform, this customer also started limited deployments of additional products, including browser isolation, CASB, workload segmentation, and CPA. This deal is a great example of the successful field sales collaboration between Zscaler and our tech partner, CrowdStrike. In another financial services win, a multinational company embracing cloud transformation purchased the entire ZIA portfolio, including CASB, Advanced DLP, and CSPM for Microsoft Office 365, plus ZDX for 30,000 employees. Like the prior deal, this customer only considered a proxy architecture, and firewall architectures were disqualified. The Zscaler platform purchase consolidated four vendors, streamlined their operations, and reduced IT costs. This is another great example of field sales engagement with another important tech partner In this case, Microsoft. As these new customer wins show, the attached rate of our data protection products, including DLP, out-of-band CASB, browser isolation, and CSPM for SaaS is growing. Now let me discuss an upsell deal that was primarily driven by data protection. An existing global 200 pharma customer with headquarters in Europe purchased CASB, advanced DLP, and Sandbox for all 79,000 employees to up-level their security. We displaced the incumbent out-of-band CASB point product, a trend we are increasingly seeing as customers are standardizing on Zscaler's integrated platform. In addition to access private applications, they bought 3,000 ZPA seats, The first step to eliminate the legacy VPN. This latest purchase was a seven-figure ACV deal with double the customer's ARR. As we look forward to a post-pandemic world in which employees unwittingly bring infected laptops back to the office, organizations need a true zero-trust platform to eliminate the risk of lateral threat movement. Secondly, we are also seeing SD-WAN projects restarting with companies moving to direct-to-cloud architecture from the legacy hub and spoke network and castle and moat security. In the quarter, an existing global 200 manufacturing customer with headquarters in Europe upgraded their 120,000 user subscription from business to transformation bundle to secure local breakouts at the 1,000 locations worldwide, some with SD-WAN and some without SD-WAN. The transformation bundle added cloud sandbox and cloud firewall, which doubled this customer's ARR. And finally, I will highlight an upsell win with the Global Pharma Company that previously purchased the transformation bundle and ZPA for 15,000 users. The SD-WAN deployment was delayed last year, and now they're accelerating the network and application transformation with a five-year commitment to Zscaler. This quarter, they purchased an additional 50,000 ZIA and ZPA seats to cover all 65,000 employees, while also adding DLP for all users. They also purchased our new ZPA private service edge to enable zero trust access for the employees returning to the office. This demonstrates customers are implementing ZPA for all employees, not just for remote users. In addition to our ongoing success in protecting users, our next big opportunity is protecting workloads with Zscaler cloud protection. We are rapidly expanding our GCP portfolio through organic innovation and targeted acquisitions. Let me highlight our recent M&A activity. As announced last month, we acquired TrustDome, a leading provider of cloud infrastructure and entitlement management, or CIEM, to complement our CSPM solution. CIEM and CSPM together, properly integrated, can correlate identity information with configuration data and enforce least privileged access for cloud environments, hence reducing business risk. This further expands our market opportunity for workload security. In addition, today we announced a definitive agreement to acquire smoke screen technologies, which provides us with a deception technology to detect active attacks and lateral threat movement. We plan to integrate smoke screen with our CIA and CPA solutions to enhance our active defense capabilities. You will hear more about these solutions at our Zenith Live Cloud Summit next month. As we look forward to the next few years, the focus on driving broader adoption of our four platform pillars, which together maximize the success of digital transformation. Our core ZI and ZPA business has never been stronger, and we are excited about the early traction of ZDX and ZCP, the next growth engines for the company. Now I will highlight three points about our go-to-market machine, which is scaling very well. Our field organization continues to scale and is executing on all cylinders. Moving to our partners, as I mentioned in our deal wins, we have strong and growing technology partnerships. In addition to incremental product integration, we continue to grow our go-to-market partnership with CrowdStrike, who also became a customer this quarter. I'm proud that Zscaler was named the Zero Trust Champion at Microsoft's 2020 Partner Awards. Further expanding our technology relationships, we recently partnered with IBM to add Zscaler services to the Zero Trust security offerings. This partnership includes integrating with their identity MDM and SIM solutions and joint go-to-market initiatives. On the channel front, we're expanding our summit partner program and adding VARs that are building cloud transformation practices. Our service provider relationships are strong and we're building joint engagements with system integrators. On the marketing front, we are aggressively investing in thought leadership for zero trust security and expanding demand generation programs. In summary, we are making tremendous progress across all three areas, sales organization, marketing, and channel partners, and delivering strong results quarter after quarter. we are on track to capture a material share of our $72 billion serviceable market. Now, I'd like to turn over the call to Remo for our financial results.