The following is a summary of the Zscaler, Inc. (ZS) Q3 2024 Earnings Call Transcript:

Financial Performance:

• Zscaler reported a 32% year-over-year increase in revenue, amounting to $553 million in Q3, with billings also growing by 30%.

• Operating margin reached a record 22%, showing approximately 680 basis points increase year-over-year, and operating profit nearly doubled compared to the same period last year.

• Guidance for Q4 includes expected revenue between $565 million and $567 million, indicating year-over-year growth of 24-25%.

• Full-year fiscal 2024 revenue projection increased to $2.140 billion to $2.142 billion, reflecting a year-over-year growth of about 32%.

Business Progress:

• Zscaler's disciplined growth strategy was highlighted by the expansion of its $1 million-plus ARR customer base by 31% year-over-year.

• The company made strategic acquisitions of Avalor and Airgap Networks, aimed at extending its platform into new markets including vulnerability management, security operations, and branch security.

• Innovation in AI-powered solutions and Zero Trust architecture has solidified, with significant product advancements and expansions, including the introduction of Zero Trust Network Segmentation, Unified Vulnerability Management, and AI Cloud solutions.

Opportunities:

• Continued emphasis on Zero Trust architecture, highlighted by the development and expansion of new services around Zero Trust segmentation and vulnerability management, presents opportunities for market growth and client acquisition.

• Strategic acquisitions such as Avalor and Airgap Networks are set to enhance Zscaler's offerings in data security and network management, targeting new verticals and expanding market reach.

Risks:

• Higher than expected sales attrition rates observed during Q3 could impact near-term growth and scalability, as new hires may take time to reach full productivity.

More details: Zscaler IR

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