Zscaler, Inc. (NASDAQ:ZS) UBS 2022 Global TMT Conference December 5, 2022 9:10 AM ET
Company Participants
Jay Chaudhry – Chairman & Chief Executive Officer
Remo Canessa – Chief Financial Officer
Conference Call Participants
Roger Boyd – UBS
Roger Boyd
All right. I think we’re ready to start. So welcome all to the UBS TMT Conference. Very happy to have Zscaler here this morning. With us, we have Jay Chaudhry, CEO, Chairman and Founder; as well as Remo Canessa, CFO. So thank you, gentlemen, and welcome for being here.
Jay Chaudhry
Thank you.
Question-and-Answer Session
Q – Roger Boyd
So maybe we’ll start with just an overview of the quarter. I think there was a lot of focus on some of the macro conditions. But on the other hand, there’s a lot of positives to it. You signed a large bank deal. Can you just go through the top two or three highlights of the quarter and what really stood out to you in terms of strength?
Jay Chaudhry
Yes. I’ll start and Remo can add up. I mean, you saw the numbers. We had strong billings growth. We had strong revenue growth. We had strong bottom line. Across the board, I thought we did quite well. It’s true that there were macro pressures and more deal scrutiny. So it takes longer sometimes to close some of the deals because it no longer is up to the CIO. Sometimes some of these deals go through CFO and even CEO.
The good thing is our deals are important. We often work at the CIO level, which makes it a lot easier to get those deals done. In addition, we also have been doing what we call business value assessment that allows us to show our customers that we can eliminate a number of legacy point products to save money. Savings is very important in today’s world. Cost reduction is important, combine that with need for cybersecurity. I think we are pretty well positioned in spite of the tougher market situation.
Remo Canessa
Yes. I mean coming from a product point of view also, we have emerging products, which is our Cloud Protection and ZDX. And we talked about those being in the high teens contribution for doing an upside business, and they’re tracking that. That was a positive. Also ZPA is in the high 20% range. So that is outstanding. .
Free cash flow in the quarter was 27% of revenue, which is outstanding also, and we beat across the board related to our guidance. We beat billings by 2%, revenue by 4%, and operating profitability by a pretty good amount.
Roger Boyd
Makes sense. So in addition to macro, you called out the sales reshuffle. I don’t want to call it a reorganization, but in many ways driven by a lot of positive traction you were seeing in a couple of few cohorts. Can you just rehash kind of those changes, why you made those? Why now? And any sense of how that might have impacted the quarter?
Jay Chaudhry
Of course, till about two years ago, we only focus on large enterprises and the cutoff was companies bigger than 6,000 users. And it’s natural for us to expand and come down market, and we’ve decided to really pursue a market segment we called it enterprise. It’s really the lower end of the enterprise from 2,000 users to 6,000 users.
And to start with, we said, let’s have a central team, a one central leader for this segment reporting drag to the CRO and who figures out how to really get this team rolled out. We’ve done very well in the past two years. As the team has grown, it made sense to move it under the geo and regional leaders that is natural for us to do. That’s one change we made. The second change was that two years ago, when we would made and make a proposal to a company with 5,000 users, it was very likely ZIA Business Bundle because that was the most common bundle we were selling.
And now for same company, it’s very likely we’ll be proposing what we call Zscaler for users, which is a combination of ZIA, ZPA and ZDX. Or if the customer is not ready for all of that, we’ll be selling ZIA Transformation Bundle or ZPA transformation. In any of these cases, very likely our proposal will be probably 50% to 100% larger than it was two years ago. Our sales team, which used to — which has been handling this lower segment is less experienced. So they don’t really know how to handle the larger deals as well as our large enterprise sales team. So it made sense for us to bring down the large enterprise segment from 6,000 users to 5,000 users. That was one change.
And then on the lower end, we lowered the 2,000 boundary for this enterprise down to 1,500 users. So this made us shuffle some of that counts in various segments changes — segment changes and the leadership getting decentralized. These two things together were done in August. So it kind of slowed a little bit start of the first quarter.
And since these two changes are a bit more than what we do every year. We mentioned that because it played a role, but I would say the macro did play a bigger role. We are behind with all these changes. We have been seeing good pipelines being created. Our pipeline is record high. It is good quality. The other thing that personally I look for is then when slowdown happens, customer engagements go down.
We are having a record number of customer engagements at C-level, at architect level and at the technical level. So I feel good about the customer interest in Zscaler. I feel good about our pipeline. Those are probably two good indicators or leading indicators of business for us.
Roger Boyd
Great answer. Maybe zooming out, I mean, when you talk to partners and customers, the concept of Zero Trust and Security Service Edge, SASE continues to be one of the strongest areas of demand that customers and partners you’re talking to. I think to some extent, some people view that as maybe contrary into this view that in a macro environment, more transformational deals would be less appealing. But I was wondering if you can just talk to, one, the Zero Trust tailwind, the fact that you have the Zero Trust Exchange. No one company is selling Zero Trust, but Zscaler is getting pretty close. Just where does that stack up when you talk to CIOs and CSOs in terms of priorities? Just elaborate on that demand point?
Jay Chaudhry
So it is true that, that is beyond driving transformation. We are not replacing one firewall with a better firewall, okay? But it doesn’t need to be a massive project like transforming applications. It’s not like SAP being moved from the data center to the cloud. Some of these changes can be pretty simple. In fact, I’ll tell you an interesting dialogue I had with a CIO, who moved from one large company to a second large company in April of 2020. And he was a Zscaler customer called me and said, “We need Zscaler here.” I said, “I’ve been talking to your company. CSO wants us, your Head of Networking is slow. You kind of not moving forward. Have you talked to the Head of Networking?” He said, “No, I don’t need to.” He said, “All of my employees are working from home. I do not need to touch my network. It’s not being used. I want to just deploy Zscaler agent on the endpoint and it goes from there.” It’s interesting. So we rolled that out. And a couple of months later, he called me, he said, “I used to talk about network transformation. Now I talk about network elimination. Internet is becoming the network.”
So our deployment actually have become much simpler because in our world, you don’t even care about the network, all the networks that connect our branches through data center, a lot of cost, all that kind of stuff goes away.
So what we found during COVID was Zscaler can be rolled out in a few weeks rather than a few months. So I think changes are simpler. It is a change, because it’s a different way of doing things, but it is like moving away from using DVD players to Netflix. Is it different? It is. Is it simpler? It is. It’s moving from your traditional internal combustion engine cars to Tesla. Is it different? It’s very different? Is it simple? It is. So I think our technology is fairly simple to deploy. So it’s not slowing us down. And the big reason — the big driver to embrace it is cyber, being one. Every company is worried about ransomware and other issues. That’s the driver. And the second driver on top of that, under macro condition is, help me save money. We actually probably help save more money than any other company I know of because security, generally, is viewed as, you don’t say bottom line, you don’t grow revenue, okay, in either one.
In our case, we actually are able to show that you can take out these eight products with Zscaler and actually save money, and that’s where we help our customers quantify through what we call our business value assessment. I hope it helped.
Roger Boyd
Very helpful. Remo, maybe the number side of the macro question. You came out in the fiscal fourth quarter and laid out a fiscal ’23 guide that incorporated some level of macro conservatism. You noted calling out sales cycle or engage in back half later quarter, in the fourth quarter. But for the most part, it was not truly impact from the numbers. Can you just talk about how that’s going to progress through the first quarter here and your updated view of what the assumptions behind the new fiscal ’23 guidance?
Remo Canessa
Yes. So in Q4, we did see elongation of the sales cycle and also back-end loading. The deals though in Q4, we closed. So we had outstanding Q4. Our comment was that in Q1 and going forward, we expect to see the same thing. We expect to see the elongation of the sales cycle and also back-end loading. We did see that in Q1 going forward, and we did see deals basically slipping into Q2.
Going forward, I’d expect still the macro environment has changed, as Jay talked about, more approval levels. We are seeing that. We have bigger deals. We’re becoming much more relevant with our platform. I’d expect also to be the same type of back-end loading on a linearity perspective. Having said that, it could be a little better because of the December flush — potentially not flash, but December year-end. But I would be expecting, from my perspective, I’m still expecting more of a back-end loaded quarter.
The approval cycles. I’d expect the same thing as with the macro environment, the way it is, that’s what’s embedded into the guidance.
Roger Boyd
Yes. Got it. Maybe a question for both of you. Jay, you talked a little earlier about the value-based sales approach, CFO-ready business cases, ROI assessments. I mean this has been a focus for the sales organization for a long time, but certainly more relevant in the current environment. So can you just talk about how that’s resonating? I mean there’s examples you can talk to of the replacement opportunity for Zscaler?
Jay Chaudhry
Yes. So what’s interesting in today’s environment is that the pressure of macro environment is making our deals bigger. Now why is that? A CIO is saying, “What can I replace to save money?” Actual costs and operational costs, both. So when they look at it, they basically come and say, we go in and save with ZIA, ZPA and ZDX. Your employees can access any application anywhere with fast experience exactly knowing if they’ve performance issue and why. So deals start to get bigger because we end up replacing a lot of products. It’s interesting that the same macro that’s making our deals bigger, but then we go through more scrutiny at the same time because the deals are bigger, and that’s where this business value assessment comes in.
If you really think about what can be replaced out there, there’s so much legacy stuff because think of today’s architecture, it’s about 30 years old. Clearly, I’ll use one diagram to clarify it. Security is such a confusing topic. And I can see all of you probably struggling with it because even experts do. I had a dinner with one of the Gartner analysts about three, four years ago at ARS Security Conference. He said, “Jay, my day started at 7:30 and I met eight security vendors and I’m more confused now than I was at the start of the day because they all talk about the same thing, you try to decipher what’s good, what’s bad.” Probably I’ll take a minute to walk you. It’s a little bit technical. But if you think about it, how much money has been spent on firewalls and VPNs over the past 20 years? Is anyone feeling safer? Not really. Actually, we are, say, feeling more and more unsafe. Why is that? Because the architecture or network and security we use today is 30-plus years old. In late ’80s, early ’90s, when IBM dominance ended, I’ve been used to have its proprietary network every day, then something called TCP/IP-based network was agreed upon as a standard.
So using that every company could buy a standard routers from companies like Cisco and extend your data center to essentially any branch office, you go the branch office, you get on the network, you move laterally, you could access applications. The most breakthrough in networking and distributed computing technology, it was wonderful. That’s why Cisco became so big.
Then industry invented VPN. So you’re sitting at home, logically, you’re the office, you can access everything sitting at home. And as cloud came, we have been — companies have been extending their network to every data, every cloud region because applications and users should be on the same network. And then they’re spinning out virtual firewalls. All this stuff is becoming like a big sprawling highway system. You get on the Highway 80 in San Francisco. You can reach New York, Miami or Dallas without hitting a single light. So can bad guys. So what are the risks? Look, number one, they find you. Every firewall that’s facing the Internet from every branch office can be discovered, exploited and definitely DDoS. That’s an attack. Every firewall, every VPN becomes an attack surface. It needs to be hidden. If they can find your application, they can attack you. That’s number 1 thing we do, which is the officer of firewalls and VPN.
Number two, they want to compromise you. Every attack comes from the Internet, and they take your weak link like users to compromise them, phishing, malware, all this stuff. We sit in line like an international airport. We stop it.
Number three, if something slips in, they establish a beachhead on your machine, and the machine is connected to the network. Remember, the network is like a highway system, they move laterally, they find high-value targets and ask for ransomware. That’s what happened to Colonial Pipeline. They stole VPN credentials got on the network, move laterally, phone billing application, asked for ransom. With Zscaler Zero Trust, there’s no lateral movement like firewalls and VPNs. That’s one big change with Zero Trust.
Number four, they want to steal your data, and the stolen data gets sent to the Internet. We sit in line inspecting traffic to make sure the data can’t be sent out. So this is the approach Zscaler has taken to make sure that threats can be stopped at one of the four stages. We eliminate your attack surface, prevent compromise, prevent lateral movement, prevent data along. This is opposite of what traditional security does.
In this world, you don’t need your network. Internet becomes a corporate network. You don’t need a bunch of these firewalls and all these devices. That’s why our enterprises are finding our solution more effective. Our challenge is not really that competition. Our challenge is still lack of understanding and knowledge.
It’s getting better and better and better. But the world knows to do security and network in the old way. And ours is the new way. The good thing is, which I didn’t think would be good. The job span of a CIO and CSO less than two years. Okay. They move and they call us because they’re so happy with us. A lot of our new deals come because these folks are calling us because they’ve seen us do so well in saving money and having much better cyber protection. Sorry for the long answer. I hope it helped.
Roger Boyd
No, very clear. As you think about evolving deals from a business package to a transformational package and getting more engrained in the network, you’ve called out the 6x upsell opportunity within the installed base. And — over the past eight quarters, you delivered 125% plus net retention rate, the numbers are still fantastic there. I mean you talked earlier this year about 60% of new business coming from upsell and maybe a bigger split of that in the next year as you bias towards the installed base away from new logos. How do you think about this timeline to that upsell opportunity in this climate, the fact that CIOs are trying to consolidate a little bit? How does that in your longer-term ARR target?
Remo Canessa
Yes. I mean — so just — and that’s is just for ZIA and ZPA. It’s not ZDX or the Cloud Protection products. There’s two parts to it. There’s a huge upsell opportunity. And as we build — and the key thing right now, we’re putting growth prioritizing growth, but we are putting more focused on operating profitability with the changing environment, but still think of us as a growth company. And the key thing is to build that installed base because once you get these customers and they’re happy with Zscaler, they buy more. Our net retention rate was 125%.
As we go — and Cloud Protection is just starting. So the ability for us to upsell more as we go forward is definitely contemplated in our guidance. Roger, as you mentioned, on a go-forward basis, we expect 40%, 60% generally new versus upsell. Q1 was actually 50-50, new versus upsell, which is outstanding. Primary reason for that, Federal. We have four deals in Federal, 12 of the 15 government agencies. So we’re very — with the highest certifications in Federal. So Federal remains — or is a larger opportunity for us.
When you take a look at the — so with the installed base, the ability to upsell is significant. But also you look at the penetration into this market. For companies [not] greater than 2,000 employees, there’s about 20,000 of those companies worldwide. We are about 10%. So — and if you think about it, with what Jay outlined here and the attack service and the key thing with legacy vendors, however way they package it, it’s still a single-tenant architecture that they’re bringing basically traffic back to the network and they’re extending the network to other areas. Zscaler is a cloud and when you go through our cloud, it’s invisible.
So everything that we do, basically, we have the highest level of security down to the proxy level at the highest efficiency with the best user experience. But as we — and you can see from our growth, we’re growing revenue over 50% and the market is huge. The ability to upsell is very significant. We feel we’re well positioned with the best product. Also, security now is becoming a Board conversation. Boards kind of step back, but now Boards are on the forefront. Boards that have to take basically a much forward view and responsibility for security and they’re doing that.
So Jay has presented to several Board meetings related to security. And again, with the change in environment, the way it was, everything came back to the data center. It was all centralized. Now users are mobile, applications are in the cloud. When I talked to Jay six years ago when I came from NetScreen, which was a firewall VPN, company. And he talked about it, my — where I was, was you got to bring security back because you got to control it. Security is such an important thing. And ever talking Jay, very simple comment. If applications are in the cloud and users are mobile, why do you want to backhaul everything and you don’t. And so the architecture purpose built for this world is where Zscaler is, and we’re well positioned. So both the upsell and also the greenfield is significant for Zscaler.
Roger Boyd
Yes. Awesome. Jay, can you talk a little bit about the partner strategy. And I feel like the channel has really evolved in the last few years and you would go talk to VARs two years ago, and they’d say, we don’t like to buy Zscaler because they’re competitive. And that narrative is completely flipped. Like you have, I think, more so than ever, you have the partner community wanting to work with you? And maybe to the extent following the demand of the customers, you had opted at RSA, talk about how strategic you become. What areas within the channel are you most focused on growing over the next year?
Jay Chaudhry
So go-to-market channel can be viewed into three buckets unlike traditional security vendors, where most of the channel would be VARs. VARs were the late adopters of Zscaler because they felt that they could sell more professional services by selling offices along with that. Our first two channels that embraced us service providers and system integrators. Why is that? Because service providers were told by CIOs and say, “I need local breakouts, so please work with Zscaler to really provide the local breakout.”
And it’s a little bit interesting relationship because it does impact the MPLS revenues, but it has worked in a reasonable way because the market is moving. SPs can stop the market moving to this local breakout. And then size drive transformation to applications. So SIs had been working with us that piece of business, that partnership is growing. They’re actually more strategic than any other channel.
VAR channel was hoping for a long time that the box business will not go away. And as it became obvious that it’s going away, the progressive kind start to reach out to us. We start working with us to not really show how to sell boxes or how do you sell Zscaler as a point product, but how do they really get more services to help customers do better deployment changing the way network and security works, and it’s a growing part of our business.
So now all three channels have become important for us. But if you ask me from getting leverage, I think we are getting more leverage every year from channel. But if we really — we still have a lot more opportunity to get forward leverage from a channel, which can reduce our go-to-market costs, and we have invested quite a bit in channel partners, training them with certain programs like Summit programs, and we’re pleased with the results.
Roger Boyd
Got it. Maybe back to Remo for a margin question, but you’ve always talked about this balanced growth and profitability framework. The fact that you have leverage weight in the model when you want to get to it, but then if you’re growing above 30%, you’re going to continue to invest in the business and focus more on growth and profitability. On the last call, you reiterated the fiscal ’23 your operating margin guide on a percentage basis on a higher dollar number. But can you just talk about that framework and the dollars you have to turn, if you get to that point when you get to that point?
Remo Canessa
Yes. It’s a great question. The key thing is what the major cost is when you land a customer. So the contribution margin, first year you land a customer is actually negative. When you go to years two and three that contribution margin is 60%. So as we grow and as we are going more from our existing customer base and selling more upsell, the contribution margin goes up. And when that contribution margin goes up, operating profitability goes up and free cash flow goes up. So from my perspective, knowing that we have that model, and as I mentioned, our free cash flow margin was 27% in Q1. Operating profitability in the low double digits.
I’m not concerned about operating profitability. The key thing for Zscaler and for our shareholders is for us to basically get market share. The more customers that we can get and at this point here and to continue to build on that customer base, is what’s going to drive value. We’re the largest security — network security or cloud security company in the world. The amount of transactions that we see today, it’s 250 billion transactions per day. It’s huge. The platform, which the company has created scales. I mean when I first started Zscaler 5.5 years ago, we’re seeing 30 billion transactions a day. We’re 250 billion transactions per day.
We have 30% of the Global 2000 companies as customers. We want a lot more. We’ve got about 40% of the Fortune 500, we want more. We have the ability to go downstream. This is not the time to really focus completely on operating profitability. As I mentioned before, growth is, number one, we’re more mindful of operating profitability with the changing environment. If we see things slowing down, we can adjust. But at this point here, we’re still going to invest — but again, put more focus on operating profitability.
Roger Boyd
Yes, makes sense. And just a follow-up on that. I mean, can you talk about what you’re seeing in the hiring market? And I think you mentioned that first quarter was a very strong quarter for hiring at Zscaler. You talked a little bit about moderating that growth to an extent. But I think when you talk about moderating, it’s coming down from a 50% growth number, which is quite strong. So can you just talk about like what you’re seeing in the hiring market, the fact that, that labor market has become a little less strained and how you think about what moderation means over the next year?
Remo Canessa
Yes. I mean that’s another good question. So we’ve grown significantly from a headcount perspective last year. Last year, in fiscal ’22, we grew our headcount by over 60%. That’s a lot. Q1 was an outstanding quarter. It was a record quarter for hiring. Where we are right now, we’re still going to put the focus on revenue-generating heads and R&D. We’ve built the foundation in the company. So we’re going to moderate our hiring through the rest of this year. Having said that, we’re still hiring. We are still hiring at a really good pace. .
Really, Jay and I have talked about it, is it really — the most important thing where the stage we’re at right now is attracting the strongest employees we can, retaining the strongest employees and making sure we have the strongest employees. What does that come down to? It comes down basically the responsibility on both Jay and myself and others in the company to ensure that the stronger — and when you take a look at the time it is now when macro environments get where they are, you’re going to see companies take off — move from the pack. Zscaler is going to be one of those companies going to move from the pack. But in order to do that, it comes down to execution and execution is people. And so our focus is really to attract, retain, ensure that we have the strongest employees in the valley.
Roger Boyd
Yes. Jay, on Federal, it seems like there’s definitely a point of strength in the last quarter. You are now, correct me if I’m wrong, but the only SASE vendor with a complete FedRAMP coverage across the platform, got relationships with 12 out of 15 Cabinet-level agencies. Where do you think we are in kind of the Federal government adoption of SASE, Zero Trust? And how do you think about that opportunity going forward?
Jay Chaudhry
Actually, very early stage. The good thing is we have been able to, call it, establish a beachhead in a lot of these agencies. In the last year or so, they went through some slow budgets, testing, approval, you’ve seen what happened, but not all those things are opening up, and we are pretty well positioned.
And if you look at 12 or 15 Cabinet-level agencies, I think an opportunity to go from where we are to the next level is very, very significant. A couple of things that are different were federal market. One, Federal is not really impacted by the macro conditions. When the budgets are approved, the budgets are approved, they don’t have to deliver a bottom line, okay? So that’s kind of one part of it.
The second part is federal has more inertia than the other markets. They take longer. The good thing is this administration has been pushing for Zero Trust over and over across the whole thing. That’s helping us get there. But it does take longer time in Federal from inertia point of view than other market. Once — but once you get in, it’s very hard to get you out. So that’s why we’ve made early investments. We are seeing good traction, good growth, and we’re counting on it, and we’ll keep on investing.
Roger Boyd
I just want to remind the audience, we’ve got about 6 minutes left. If you have any questions, you can — I think, submit it through the QR code, and I’m happy to pass it along. But otherwise, I’ll continue on.
Maybe just a high level thought on competition. I think a lot of people get caught up on the near term. And in that kind of scenario, there’s maybe two or three vendors that will bring on the conversation with you guys. But if you look down to the smaller — to the private markets and smaller companies, there’s a whole host of companies that want into the SASE space. And I’d love to get your impression. If we look out five years from now, how you — what do you think the competitive landscape will look like considering things like platform breadth and enterprise scale?
Jay Chaudhry
Yes. I think people get confused sometime about platform. They think that if a large vendor goes and buys 10 companies then the platform became 10x bigger. That’s a collection of different products. In software, unless things work, they don’t really bring synergy. Your operating cost, you’re running, building, doing audits, that tough customer support becomes hard. So that’s why I think the legacy company will struggle in the long term, they may try to show some short-term gains. But I think unless customers embrace the right architecture, you don’t win.
Salesforce was so tiny as compared to Siebel. Why did they win? Workday was so low as compared to Peoplesoft. It’s the right cloud-native architecture that help. I think that’s the bet we made when I started the company and said, “Let’s build a clean slate.” Now I happen to be at a stage of my life when I started Zscaler, I had — I was fortunate. I had built and sold four start-ups, okay? And I was at a stage we are willing to invest whatever it takes to build the next big thing rather than one more point products.
When start-ups start, they generally start with narrow. They need to be narrow and deep because you can’t be too wide, you’ve got too many competitors then and you have too much money to invest. The right philosophy for start-up should be narrow and deep and then you expand.
Now I started with fairly wide and fairly deep because I knew I was in it with big investments. I think the challenge that young companies will face is that the market is moving towards more broader adoption of platform because of overhead of point products. But the opportunity to disrupt comes in when architecture changes, unless there’s a change in architecture, it doesn’t. That’s why you didn’t see some big changes in many vendors. When cloud happen, lots of things change. Same thing is happening in the security market. And I think we are pretty well positioned, and we’ll keep on evolving and innovating to stay ahead of us. So I think it’ll be hard for young private companies to come. You’ll see lots of security private companies, but they’ll largely get bought by larger companies.
Roger Boyd
Maybe just a product question. You’ve had DLP on the platform for a number of years, I think, since you introduced out-of-band CASB. But data security in general continues to become a really important topic, specifically around the cloud. And it feels like you’ve been talking a little bit more about it. You mentioned it quite a bit at Zenith Live earlier this year, you released some new data-centric innovations this past quarter. Can you just talk about how Zscaler approaches the data security, both at rest and in transit?
Jay Chaudhry
So data security, data is no longer just sitting in the data center or your laptop. It’s in SaaS application. It’s an S3 bucket or AWS, it’s in Azure, it’s everywhere. And a broader holistic approach is needed. You can have 4 vendors, one doing CASB, one doing this, one doing this because there needs to be a certain level of policies. A policy says, I need to protect this type of data, whether it’s sitting here, here or here. So while we have had a DLP solution for in-line from early on and then we added CASB, our customer said, you need to give me truly a holistic solution with some of the very advanced technologies.
If you talk to Fortune 500 companies, actually a large number of them had bought a solution from Symantec called Vontu, okay, that’s the acquisition they’ve made. It was a rich technology for DLP. It took forever to deploy it, and it’s pretty expensive to run and operate.
So when customers bought ZIA first, they bought it for cyber. And the large companies who did not embrace our DLP at that time because they said it’s not as rich and functionality as my current solution is. So we are working and evolving. Now we are at a level where our data protection has become extremely rich. We are replacing a number of Vontu deployments because now we have all the functionality. The need for data protection has become bigger and bigger. What happened with Colonial Pipeline, first, they encrypted the data and asked for ransom. And they just said, if you don’t give me ransom, I’ve also stolen your data. I’m going to put it on a public site for PIA and all that kind of stuff. So they call it double extortion. The loss of data is a massive threat it is becoming bigger and bigger priority. At the end of the day, security is about protecting your data.
So for us to double down to make it more sophisticated was important. We are aware from a product point of view. Now we are really pushing our sales team, our channel partners to go and upsell our data protection suite on top of what they’ve already sold.
Roger Boyd
Great stuff. Perfect time. And I think we’re about at time. So we’ll wrap it there. I want to thank you all for attending. And thanks, Jay and Remo for being here. Thank you.
Jay Chaudhry
Thank you so much, and thank you for your time.
Remo Canessa
Thank you. It’s great.
Be the first to comment