Zscaler, Inc.

and welcome to Zscaler fourth quarter 2025 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. We ask that you limit yourself to one question only. I would now like to turn the conference over to Ashwin Kesariddy, Vice President of Investor Relations and Strategic Finance. Sir, you may begin.

Good afternoon, everyone, and welcome to the Zscaler Fourth Quarter Fiscal Year 2025 Earnings Conference Call. On the call with me today are Jay Chowdhury, Chairman and CEO, and Kevin Rubin, CFO. Please note, we have posted our earnings release and a supplemental financial schedule to our investor relations website. Unless otherwise noted, all numbers we talk about today will be on an adjusted, non-GAAP basis. You will find a 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, annual recurring revenue, 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, earnings per share, our objectives and outlook, our customer response to our products, and our market share and market opportunity. are not guarantees of future performance, but rather are subject to risk and uncertainty, some of which are beyond our control. 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. I also want to inform you that we'll be attending the following conferences. City Global TMT Conference on September 4th. Truist Securities Technology Symposium on September 4th. Goldman Sachs Communicopia Plus Technology Conference on September 10th. Wolf Research TMT Conference on September 10th. Now, I'll turn the call over to Jay.

Thank you, Ashwin. We had an outstanding Q4, and I am very pleased to share our strong growth, which once again exceeded our guidance. Our revenue grew 21% year over year, and operating margin exceeded 22%, which is a quarterly record for us. We are seeing growing demand for our large and expanding platform, which provides best-in-class cyber and AI security. while eliminating complexity and reducing cost. We are seeing significant customer interest in our powerful AI security solutions, including our new AI Guard and GenAI security offerings. An increasing number of enterprises are choosing Zscaler because of our technology leadership and platform scale. I am pleased to share that Our platform now secures nearly 40% of the global 2000 and over 45% of the Fortune 500 companies. Driven by the strong customer demand, our annual recurring revenue, or ARR, increased about 22% year-over-year and surpassed $3 billion, making us one of the only two pure-play SaaS security vendors to achieve this milestone. For fiscal year 2025, with our revenue growth of 23% and free cash flow margin of 27%, we operated at rule of 50. While many public SaaS companies strive for rule of 40 results, we have consistently exceeded the sought-after industry benchmark. Heading into fiscal 2026, we are accelerating our platform innovations across three growth vectors, AI security, zero trust everywhere, and data security everywhere, which together surpassed $1 billion in ARR in Q4. Let me share more details on our innovations in these three areas, starting with AI security. We have entered an era of omnipresent AI, which is fundamentally transforming enterprises and is leading to an explosive growth of AI ML traffic. The scale of this transformation is truly remarkable. Our Threat Labs report revealed that AI ML transactions on our cloud increased 3,500% in the past year. The adoption of AI at this breakneck pace is creating new security challenges such as model jailbreaking, prompt injection, model poisoning, and more. The growth in AI also increases complexity and creates new cyber risks. To address these emerging security challenges, we are innovating in two primary areas. Security for AI applications. We have delivered solutions to secure AI apps and access to those apps, whether by users or AI agents. To secure AI apps from traditional cyber and emerging intent-based attacks and to battle the new security challenges I just referenced, we recently launched Zscaler AI Guard, which is being tested by a significant number of large customers. We are already the leading vendor for Zero Trust communication between users, workloads, devices, and B2B. Agent-to-agent communication is a natural extension of our proven Zero Trust platform. We are developing Zero Trust solutions to secure agent-to-agent and agent-to-application communication. As an increasing number of software vendors are introducing their own agents, enterprises are looking for a proven vendor-agnostic platform like Zscaler to secure agentic communication using standard protocols like MCP or A2A. Our second area of AI innovations is agentic operations, which includes agentic SecOps and agentic ITOps. I am pleased to see continued strong demand for our agentic operation products, and I expect this portfolio to surpass $400 million in ARR in fiscal year 26. In addition, we're delivering several innovations to continue driving growth in these areas. For example, for security operations, We're building an AI-powered SOC solution to simplify customers' operations, reduce alert fatigue, automatically hunt for threats, discover vulnerabilities, and predict breaches while reducing cost and complexity and eliminating legacy SIMs. We are combining our highly differentiated data fabric with the recently acquired Red Canary's agentic AI technology. to deliver a truly AI-powered SOC. During the quarter, we saw strong demand for our solutions, which drove over 85% year-over-year growth in SecOps ARR. For IT operations, we are introducing several Zscaler digital experience or ZDX innovations to enable faster resolution of IT tickets. To share an example, we are introducing an AI-powered endpoint remediation solution, which will further reduce resolution time of IT tickets. Our current innovations, like the ZDX Co-Pilot, are resonating with customers and draw 58% year-over-year growth in the bookings of ZDX Advanced Plus SKU in fiscal 25. Our second growth factor, Zero Trust Everywhere, which includes Zero Trust Users, Zero Trust Branch, and Zero Trust Cloud, is exceeding our expectations. Two quarters ago, we shared our goal of securing 390 enterprises with Zero Trust Everywhere by the end of fiscal 26. As of the end of fiscal 25, We are already close to reaching this goal with over 350 Zero Trust Everywhere enterprises. Let me share an example of an enterprise that embraced Zero Trust Everywhere. In a seven-figure ACB win, an existing Zero Trust users and Zero Trust cloud enterprise purchased Zero Trust branch to secure over 120 manufacturing plants and become a Zero Trust everywhere enterprise. Zero Trust branch enables this global 2000 enterprise to replace legacy SD-WAN, firewall-based VPNs, and existing OT security solutions, and they expect to realize more than 60% cost savings. Customers are leaning into our vision of a cafe-like branch by eliminating north-south firewalls and SD vans. Furthermore, they're deploying Zero Trust Security inside branches, factories, and campuses and eliminating legacy point products such as network access control and east-west firewalls. With our over 350 Zero Trust Branch enterprise customers, we're just beginning to benefit from the massive opportunity to replace legacy solutions in millions of branches across a wide range of verticals, including finance, insurance, services, retail, healthcare, education, and more. To give you an example, in Q4, we signed our largest ever branch deal with a leading higher ed institution. They purchased our Zero Trust device segmentation to secure around 150,000 devices across more than 400 locations in a seven-figure new logo ACV deal. We are also seeing strong demand for our Zero Trust Cloud the third component of Zero Trust everywhere. Zero Trust Cloud secures workload to workload and workload to the internet communication and provides workload segmentation by design. This eliminates the need for VPNs, north, south, and east, west, virtual firewalls, express routes, and direct connects. The proliferation of AI is driving an urgency to secure the large footprint of enterprise workloads, and I believe our Zero Trust Cloud is the best solution for it. We are seeing strong demand for Zero Trust Cloud, which resulted in an acceleration of its ARR in Q4. To share a customer example, in a seven-figure ACV win, an existing Fortune 10 healthcare enterprise expanded their workload protection from public cloud workloads to data center workloads. This large enterprise chose Zscaler to implement Zero Trust Security and eliminate east-west firewalls. This is our fourth workload expansion deal with this customer, highlighting the large upsell opportunity we have for Zero Trust Cloud. Zero Trust Cloud enables enterprises to safely adopt agentic AI technologies that require workload communication between cloud and data centers, particularly in special retrieval augmented generation or RAG implementations. To drive faster adoption of Zero Trust Cloud, we recently introduced an innovative cloud gateway solution, which reduces the deployment time to under 10 minutes. By simplifying connectivity for distributed workloads across hyperscalers, we are helping customers achieve Zero Trust at global scale, which accelerates their cloud and AI initiatives. With the ongoing growth in AI workloads and the need to secure them, I expect Zero Trust Cloud to continue its strong growth in fiscal 26. Our third growth vector Data Security Everywhere is seeing strong demand as enterprises are consolidating multiple data security point products on our platform. I'm pleased to share that Data Security Everywhere ARR grew to approximately $425 million. Our comprehensive data security capabilities, including data discovery, classification, posture management, and data loss prevention are driving large deal wins. For example, an existing Fortune 500 services enterprise that's also a key global system integrator partner adopted our data security solution in a seven-figure ACV deal for 350,000 users. This customer adopted isolation, email DLP, endpoint DLP, data classification, and encryption and GenAI security, enabling them to consolidate multiple point products. I'm very pleased with the pace of our platform innovations for Zero Trust Everywhere, Data Security Everywhere, and AI Security. And I expect our strong growth in these areas to continue. To accelerate the adoption of our broader platform, we introduced our ZFlex program less than two quarters ago. In Q4, this program generated over $100 million in TCV bookings, representing over 50% sequential growth. Our ZFlex program is becoming the preferred motion for strategic multi-year deals as it enables seamless adoption of new product modules by our customers. To share an example, In a five-year, eight-figure TCV deal, a large enterprise energy customer chose our ZFlex program to increase the number of modules adopted from 14 to 19, including Zero Trust Branch for hundreds of locations. This purchase resulted in an over 100% increase in ARR with us. Customer interest in ZFlex continues to grow. and I expect it to be a meaningful growth driver in fiscal 26. In conclusion, our expanding platform and a stronger go-to-market engine position us well to benefit from the tailwinds of Zero Trust and AI security. With accelerating pace of our Zero Trust and AI innovations, we're still in the early innings of disrupting a large $100 billion security market. Now, I'd like to turn over the call to Kevin for our financial results.