The following is a summary of the Zscaler, Inc. (ZS) Q1 2025 Earnings Call Transcript:

Financial Performance:

• Zscaler reported Q1 FY 2025 revenue of $628 million, a 26% increase year-over-year, driven by growing customer commitments and interest in AI solutions.

• Billings grew 13% year-over-year to $517 million, exceeding the growth rate of legacy network security vendors by over 10 percentage points.

• Operating profit increased by 50% year-over-year with operating margin reaching 21% and free cash flow margin setting a new record at 46%.

Business Progress:

• Zscaler is extending its product line with AI innovations across three areas: securing AI applications, automating digital experiences for operational efficiency, and enhancing cybersecurity and data protection.

• The company highlighted large deal wins and successful deployments of their AI-powered solutions, demonstrating robust business growth.

• Zscaler's emerging products, including ZDX, Zero Trust for Branch, and Cloud and AI analytics, are increasingly contributing to the company's success, growing at twice the rate of core products.

Opportunities:

• Customer adoption of Zscaler's AI solutions and Zero Trust architecture is rising, particularly in federal sectors, indicating growing market opportunities.

• The company's AI and data protection capabilities are seen as significant drivers of customer interest and deal size, reflecting an opportunity for rapid growth in these areas.

Risks:

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