Zscaler at Citi’s 2025 Conference: Surpassing $3 Billion ARR

On Thursday, 04 September 2025, Zscaler Inc. (NASDAQ:ZS) participated in Citi’s 2025 Global Technology, Media and Telecommunications Conference. The company showcased its impressive growth trajectory, marked by surpassing $3 billion in Annual Recurring Revenue (ARR), while also addressing challenges in market expansion and strategic transitions.

Key Takeaways

• Zscaler achieved over $3 billion in ARR, joining the ranks of top SaaS security firms.
• The company is transitioning its growth metric focus from billings to ARR.
• Fiscal year 2026 guidance projects 22% to 23% growth, including contributions from the Red Canary acquisition.
• Zscaler is expanding into AI-powered security operations and data security.
• The company is emphasizing innovation and strategic M&A for future growth.

Financial Results

• ARR and Growth: Zscaler crossed $3 billion in ARR with a growth rate of 22%.
• Billings and Cash Flow: Billings grew by 32%, while cash flow increased by 27%.
• Rule of 50: The company concluded the year as a Rule of 50 entity.
• Net Retention Rate (NRR): Q4 NRR stood at 114%, though this metric will no longer be used.
• ZFlex Bookings: Achieved $65 million in Q3 and over $100 million in Q4.

Operational Updates

• ARR Definition Shift: Transitioned from contract exit value to a 12-month revenue perspective.
• Sales Transitions: Completed significant sales transitions over the past 15-18 months.
• Customer Base: 45% of Fortune 500 companies are Zscaler customers, with over 350 enterprises implementing zero trust solutions.
• Red Canary Acquisition: Closed in Q1, contributing approximately 2.5% to the fiscal year 2026 growth.
• ZFlex: Introduced as a flexible packaging and pricing solution to ease adoption.

Future Outlook

• Growth Projections: Fiscal year 2026 is projected to see 22% to 23% growth.
• Strategic Focus: Continued innovation in zero trust, data security, and AI security.
• Expansion Plans: Extending zero trust to cloud workloads, branches, and devices.
• M&A Strategy: Focused on acquiring disruptive technologies for platform integration.

Q&A Highlights

• ARR as the North Star: Emphasis on ARR as the primary growth indicator.
• Data Security Opportunities: Comprehensive solutions for diverse data locations and channels.
• AI Security Focus: Leveraging AI for security operations with insights from the Red Canary acquisition.
• Market Opportunity: Confidence in a large and expanding market opportunity.

For more in-depth insights, refer to the full transcript of the conference call below.

Full transcript - Citi’s 2025 Global Technology, Media and Telecommunications Conference:

Fatima Boolani, Analyst, Citi, Citi: Welcome to day two of Citi’s Global TMT Conference. Very delighted to have you all here. I’m Fatima Boolani. I jointly head up our software equity research effort here at Citi, and I am so thrilled to be kicking off day two with the the management team at Zscaler. So to my left is founder CEO Jay Chaudhary.

And to his left is brand new CFO just coming into the seat, Kevin Rubin. Thank you so much. I think this is one of your first tours of duty as CFO of, Kevin, so I know we have a lot of, lot of things to discuss here. So very excited that you’re here with us.

Kevin Rubin, CFO, Zscaler: Thank you. Thank you. Right.

Fatima Boolani, Analyst, Citi, Citi: Well, I wanna jump right into it. Jay, you all reported your fourth fiscal quarter results on Tuesday. And I think maybe just to level set and and set the tone for the conversation, you know, if we can spend a little bit of time on reemphasizing and highlighting, you know, the the mile markers and milestones in the quarter and continue from there.

Jay Chaudhary, CEO, Zscaler: So so the biggest thing was crossing $3,000,000,000 in ARR. Only two pure play SaaS security companies have done it, so it’s it’s a great milestone. We also beat all metrics that we set out. ARR growth, 22%. Billings growth, 30 what percent?

Thirty two? Thirty one? 32%? 32. The cash flow, 27%.

I think by all measures, it was very, very good quarter. And, Kevin, other thing you want to add?

Kevin Rubin, CFO, Zscaler: Yeah. I mean, look, we we ended the the the year as a rule of 50 company again. As Jay mentioned, you know, we exceeded the $3,000,000,000 in ARR, the benchmark that, you know, we had set out for. I think it sets us up really well as we think about ’26.

Fatima Boolani, Analyst, Citi, Citi: I’m glad you brought up ARR, Kevin. That was a, you know, meaningful pivot in the way you’re thinking about the business, talking about the business. And, you know, to be fair, I think, we were socialized that that was coming down the pike, so it wasn’t entirely a surprise. But, just from a guidance and forecasting methodology perspective, ARR is presumably going to be the North Star and the guiding light for the company. I’m wondering if you can spend a little bit of time talking to us about the formulation of the ARR guidance, how some of the downstream impacts are playing out from the sales organization perspective.

If a salesperson is no longer sort of you know, compensated on billings or or, you know, it’s a different paradigm, I I would love to have you spend a little bit of time on that. And I think it’s worth discussing because this time last year, there was a lot of hand wringing about the billings dynamics between the scheduled and the unscheduled pieces. So what a difference a year makes, but I’d love to have you take it away on the ARR front.

Jay Chaudhary, CEO, Zscaler: Kevin, can I start with this broad comment and you can get into specific? Historically, when we started in 2018 and as after the IPO, billings

Fatima Boolani, Analyst, Citi, Citi: It’s a humble cloud security Yes. Web gateway company.

Jay Chaudhary, CEO, Zscaler: Sitting at some $250,000,000 range. Right? So billings seem like the norm, and that’s what we looked at. That’s where we started out, and we have been building on it. And as over time, it all became more important, so it is natural for us to think about it and make a switch.

Your broad sales question I’ll answer, then Kevin can get into the more detail of ARR. When we settled compensation, our leadership compensation was linked to billings, number one, and some of the ARR growth, number two. When it come to sales teams, at the sales team level, we always had we used to have only new ACV. K? And then as churn as company got bigger, we start adding any churn linked to the compensation.

So sales teams haven’t changed a whole lot. Management compensation is getting more aligned with ARR and deemphasizing billing in this case. Over to you.

Kevin Rubin, CFO, Zscaler: And maybe just to emphasize as a point, as as Mike has introduced a more account centric model, that is also much more aligned to ARR as as a growth metric than than billings was. So to the point, we did shift our growth metric from billings to ARR going forward. We also took the opportunity to redefine how we look at ARR. The prior definition looked at the exit value of a contract. So if we had a multiyear contract that ramped during the period, we reflected ARR today at that exit value.

The definition that we have adopted going forward, we think, is more industry standard and more comparable, which is effectively the next twelve months of revenue, which much more closely aligns to how we’re actually recognizing revenue. So you’ll see alignment in those two metrics. And that was what guidance was ultimately based on. I know there had been a question out there, we set the $3,000,000,000 target some quarters ago. Had we used the prior definition, we actually would have rounded to $3,100,000,000 in ARR as opposed to what So just for apples and apples comparison.

So we we restated Correct.

Jay Chaudhary, CEO, Zscaler: A number of things that used old ARR definition, and the new definition brought the ARR number down. So the number of 5,000,000 customers, 1,000,000 customers, and the like, the number slightly came down. In this case, we’re reducing upfront, but every year, you actually get incremental gain. Correct.

Fatima Boolani, Analyst, Citi, Citi: Kevin, I know you had mentioned that there hasn’t been a wholesale change or shift in the way the guidance philosophy has evolved, you know, since you’ve come in. Maybe there’s some tweaking and toggling, but no wholesale changes. But as you think about guiding towards a brand new metric, I mean, certainly, it’s not a brand new conceptual metric for all of us, but for you, for Zscaler, for investor expectations, how should we think about some of the mitigants that you’ve wrapped around the ARR guidance so we can get comfortable with the fact that, hey, this is actually your first year guiding towards ARR?

Kevin Rubin, CFO, Zscaler: Yeah. Look, I think that that’s fair. We have the two dynamics. We have I’m new in seat and we have a shift in growth metric. If we just look at the guidance that we put out, we’re guiding fiscal twenty twenty six at 22% to 23% growth.

That includes the recent acquisition of Red Canary that we closed at the end of well, in Q1, so August 1, and that represented 95,000,000 or about 2.5% of growth as we think about the guide. But what it also implies is that the organic growth of the business is growing over 19% in this guide that we put out, which I think is pretty impressive for a company that’s over $3,000,000,000 in revenue today.

Jay Chaudhary, CEO, Zscaler: Yeah. If I may add, the sales transitions we wanted to make over the past fifteen to eighteen months essentially are complete, sitting in August, lots of moving parts. And we gave you guidance even though there’s lot lot of moving parts. I’m very pleased that we exceeded all the guidance we gave you. And talking about the scheduled and unscheduled billing, that’s one of those funky things that we ran ran into.

And we told you and we delivered. We beat all the numbers we had to beat. But I think the opportunity for us is large. The platform is large. Sales team is all in place.

And I am here because we think we have big opportunity, much better opportunity, a bigger growth opportunity. But with some of the changes we’ve gone through, the new metrics, new CFO, we’re be prudent to really give expectations that makes sense for this stage of the time. But the opportunity for us is to grow at a much better rate.

Fatima Boolani, Analyst, Citi, Citi: Before we put the ARR conversation to bed, I I did want to broach the topic of net retention rates. It’s a very much a companion metric. Any definitional tweaks or changes we should think about on on net retention rate and dollar based net retention rate? I know historically, you all have been very consistent in discussing the fact that, hey, as the business as the portfolio has widened and increased in capabilities, as the land sizes with your customers have increased, it necessarily creates more variability in that DBNR metric. So, any commentary that you can offer us as the ARR definition has changed?

Should we also think about, hey. Maybe there is a a recalc or a definitional shift on the net retention rate?

Jay Chaudhary, CEO, Zscaler: You know, among all the numbers we talked about, there are two numbers that are kind of inconsistent or or not always logic. One is NRR, and the second is number of total customers for Zscaler. I could have a thousand user customer. I could have a 100,000 user customer. So one lump of customers count is meaningless in my view.

So in that area, we always tell investors it’s segment of the customers that matter. Rather than saying, oh, your customer count went only up 10% or or whatever. Second is NRR. We always given it and trying why are we giving it when it doesn’t make sense. Just to remind you, when your platform is growing bigger and you’re selling the bigger platform upfront, it brings you an error down.

Two, if I am a upsell within twelve months, it doesn’t count in that. And I want my sales reps to be selling all the time. And so as a channel philosophy at Zscaler, no one waits for three years for renewal. If my salesperson is waiting for three years, something’s wrong. K?

We are engaged. The platform is going adding stuff. So NRR has never been part of my philosophy to look at my business success. Upsell versus new ACV is a more meaningful metrics. Is my upsell growing?

How much is growing? What’s my new ACV growing? So those are numbers we look at. Kevin?

Kevin Rubin, CFO, Zscaler: Yeah. And the only thing I would add, so in that regard, I think ARR growth is actually a more representative metric for the business. Right? Are we growing our ARR period over period? We did give the NRR for Q4 just to kind of put that to bed, came in at 114%.

We don’t intend to use use that metric going forward.

Jay Chaudhary, CEO, Zscaler: Yeah. So ARR growth within that new logo growth and upsell growth gives you a fuller view.

Fatima Boolani, Analyst, Citi, Citi: Very clear. I appreciate the nuance there. Maybe just to zoom out and talking about the market environment and the market opportunity. I think at the very highest level, wanted to discuss some of the dynamics playing out in the let’s just call it your core business, which is, you know, the the bread and butter, the historical flagships of ZIA, ZPA. You know, I think I tend to have a lot of investor conversation about, hey, where are we in the cycle for sassy and to use I should be using football analogies because, you know, we’re in fantasy season, but let’s just use the baseball analogy.

You know, I think there is a perception that the core business on the sassy side, a term that you helpfully coined for all of us, you know

Jay Chaudhary, CEO, Zscaler: Zero trust. Zero trust. SASE is actual to please every vendor.

Fatima Boolani, Analyst, Citi, Citi: Fair enough.

Jay Chaudhary, CEO, Zscaler: But they could latch onto something. Okay.

Fatima Boolani, Analyst, Citi, Citi: So where are we in terms of the market penetration?

Jay Chaudhary, CEO, Zscaler: Yeah.

Fatima Boolani, Analyst, Citi, Citi: I can make a very strong case that it’s still early days, but we’ve seen a lot of competitive influence in the space by some of your largest peers. There are some pure plays that have come into the market. Right? So, Jay, please spend a little bit of time telling us, hey. This is not a saturated market and, you know, why.

Jay Chaudhary, CEO, Zscaler: Yeah. So let’s start with where the market started with what the market has been. It used to be a secure web gateway dominated by BlueCode, WebSense, McAfee, and Cisco of the world. That used to be our primary competition. And then where is that competition now?

It’s kinda gone most essentially. Then we pioneered zero trust private access to applications that not only eliminated VPNs, it eliminated the entire inbound gateway. That inbound gateway has a collection of things starting with load balancers, external firewalls, VPN internal firewalls, DDoS protection, the like. The whole thing went away. The market expanded, and we added zeros sorry.

Zscaler digital experience measuring end to end performance. We looked at the market very differently than any market segments were looked at before. I think investors make the mistake of trying to put the things in old buckets. Those buckets are going away. None of those buckets really matter at all.

This thing was done for users. K? That’s users, the starting piece. And then this thing had to be done for next level. Cloud workloads.

Cloud workloads are somewhat like users. They talk to Internet. They talk to each other. Why is that secured today? Firewalls.

North, south virtual firewall, east, west virtual firewall. We’ve taken the zero trust to really revolutionize that stuff. No one else there’s no other competition in the market other than legacy firewall. Then branches had to be zero trust ties. Device segmentation had to be zero trust eyes.

The portal has expanded far bigger. When somebody says, I do what Zscaler does at third the price or half the price, they’re barely trying to give a basic functionality of zero trust for users, or many of them don’t even have zero trust for users because they’re spinning a firewall. Let me give you simple examples. If you went out and talked to Fortune 500 companies, there are lots of these regional communication hubs, regional data centers. The traffic comes to those places, then it goes out to cloud or it goes to Internet.

And that’s and that investment is hundreds of billions of dollars. With Zscaler, all that stuff goes away. It goes from directly from the branch, you go direct. We are able to take out all of that stuff and give customers a lot of value, better ROI. So zero trust has moved from zero trust users to zero trust branches, zero trust cloud, zero to devices.

That’s what we call zero trust everywhere. And we’re giving you some of the data about customers. Now over about three and fifty customers doing zero trust everywhere. This is enterprise. If you look at the total number of enterprises we have, Kevin, the definition we use is 2,000 users minimum on enterprise definition, Kevin.

Sorry, Ashwin. How many total enterprises do you count when you say that are our customers today? 4,000. 4,000 enterprise customers, 350 have that means there’s a lot of upsell opportunity in that space. This year, we crossed a milestone to go to 45% of the Fortune 500 companies.

And when we say 45%, we don’t mean we sold you a little bit CASB here or some firewalls here. When we go in, they they take all the users, essentially, to take us. There’s most of the market sitting up there. So tons of opportunity in zero trust space. But then the next area, think of zero trust agentic communication.

That’ll be massive. The user count in a in a enterprise is not gonna go up a whole lot. There’s a lot of pressure with agents and AI. But number of workloads is going up significantly. Number of agents will grow in billions of dollars.

We are very well positioned to really keep on driving the market growth. So if you ask me, do I worry about people trying to come from behind? Not really. I’m focused on innovation. I’m focused on solving the next generation of problem, and we solve it in very, very innovative way than trying to be the the copycats.

Fatima Boolani, Analyst, Citi, Citi: You know, you brought up agentic, and, you know, I wouldn’t be a software analyst if we didn’t talk about AI. So we’ll absolutely get to that. But before we do, you know, clearly a lot of, expansion in the vision on the zero trust side for traditional SASE that’s expanding, like you said, to to cloud and devices. That’s helping you mitigate some of the the pressures on a headcount model or seat based model perspective.

Kevin Rubin, CFO, Zscaler: Mhmm.

Fatima Boolani, Analyst, Citi, Citi: But the other area of excitement that I think has surprised to the upside is the type of momentum you’re seeing on the data security side. I think you size that that business for you, frankly, at $400,000,000 in ARR. And and so there has been a renaissance of sorts in the data security world. It’s gathering a lot of attention for what I think are very obvious reasons. But, you know, I I’d love to have you kind of talk to to the opportunity here.

Many ways to skin the cat. We’ve heard different ways to do data security from some of your some of the pure plays, the backup and recovery vendors, and, you know, some of the the larger platform vendors like yourselves. So, why is it why would do you think, Jay, the Zscaler’s way a way of in line cloud data, DLP centric, data security prowess is, the right set of ingredients to be the the the AI security, player?

Jay Chaudhary, CEO, Zscaler: Very good question, Fatima. So customers want data security no matter where the data is, And they want to make sure the data doesn’t leak from any channel. So traditionally, they have an in line DLP. What’s in line DLP? Before your traffic gets out the Internet, somebody needs to inspect it.

K? Every bad thing comes from the Internet. Every good thing leaks to the Internet. If the loss of data happens to Internet, that’s the best place. If there’s one place you could do data security, you should be sitting there.

And that’s the prayer place where we came from. All of our customers, all traffic that goes out to the Internet goes through us. And that’s how we got a jump start. This market used to be dominated by Symantec want to some of the McAfee offerings of world and a little bit coming from WebSense. We had taken a lot of those large customers out.

If we are sitting in line doing traffic inspection, we are the natural player to do DLP. It makes no sense for our customers to go somewhere else. Now the question, Fatima, you’re asking is, now the data is changing. Data is sending SaaS applications. Data is sending s three buckets.

Data is sending Snowflake. Data is sending endpoint. Over the past half a dozen years, we expanded our portfolio to cover all the places the data sets because the customers are saying, I have hard time actually enforcing policy of the data, k, with one vendor. Trying to deal with three vendors or five vendors is a nightmare. So we had the most comprehensive solution.

The the point you alluded to, different approaches, it’s not really different approaches. It is being able to understand the data in different places. So this new one more four letter acronym, DSPM, data security posture management, started out and say, if data is in the cloud, how do I discover it? How do I classify it? So we have expanded in that space.

We built over time. I can discover, classify your data that may be sitting in SaaS application, cloud, endpoint, even in data center on prem. It’s a very holistic, most competent solution with one policy. We built endpoint DLP, which has taken off very nicely. Built email DLP, which is going very well.

We have eight DLP modules covering all areas. If a business unit of data security were an independent company, it’ll probably be the largest data security independent company of it on its own. And this also requires inspection of traffic. A proxy architecture plays an important role. That’s why you never hear that a firewall vendor is a great data security vendor.

Fatima Boolani, Analyst, Citi, Citi: And just to kinda close the loop on this, you know, clearly a burgeoning opportunity. But from a pricing model perspective, you know, are you tethered to the exponential growth of data that’s happening today and that is only going to continue to be more exponential as AI, you know, acts as a force multiplier on on data creation? And, you know, how does that influence the way you think about having a variety and diversity of pricing models within the base?

Jay Chaudhary, CEO, Zscaler: Yeah. Our pricing has been evolving and will further evolve. People always think about user based pricing. User based pricing worked for a while. When I do is even zero trust for cloud workloads.

The workload based price works kind of, but this amount of traffic starts playing a big role into it. So our pricing has evolved. When you talk about data in s three buckets, for example, how much is the data? What’s going on? The user based pricing no longer makes sense.

The volume plays a role in it, and the traffic both play a role in it. And and it’s evolving, and it should evolve.

Fatima Boolani, Analyst, Citi, Citi: I think the this is a good segue into the the next area that I really wanted to touch on was Red Canary. You know, would be really helpful for you to give us a reminder of, you know, the impetus of bringing on that acquisition. I think there’s a perception that, hey. This was a very services heavy orientation of an asset. You know, what is it really bringing to the table?

And, ultimately, I think you’ve wrapped that conversation around, you know, advancing your agentic AI aspirations. How does Red Canary service that vision?

Jay Chaudhary, CEO, Zscaler: Yes. If you think about, historically, what we’ve done about eighteen months ago or so, we acquired a company called Avalar to help us build a data fabric. Data fabric is a new approach to analyzing your logs for security operations point of view. Traditionally, you have built a data lake, tons of transactions. You’ll fire queries against it.

The bigger the database, slower the query, the harder it gets. The data fabric approach is create sensors of the logs, which is much smaller, but it works. Think of it. How many of you use Tableau? You get all the reporting from Tableau versus going to Salesforce against millions of transactions.

Tableau can do 95% of the stuff, and 5% you go to the source of data. Similarly, data fabric technology is in a simplistic fashion is like Tableau. It also do a lot of work. I don’t want my customers to go and buy one more data lake. I want to eliminate the need for having data lake, and we have the source data sitting.

We have the Tableau equivalent, which is our data fabric. We have been on that journey. But also then we need to build the tools for security operations on top of that. We have been building it, but to accelerate, we said, let’s go ahead and buy an AI SecOps company. K?

We spent about eight months doing it, and we looked at about 25 AI SecOps companies. Okay? And guess what? We couldn’t really find anyone that a real solution deployed in real life, okay, with real customers. If they gave me five customers, four of our friends and family customers, then I came across Red Canary.

They’re very good agentic AI, but the agents are actually doing what security analysts do in production. We are we are excited about that. And also with ten years in business, they actually had real expertise in detection engineering. So numb number one reason to acquire Redkenetti was accelerate our completion of security operation solutions that can be sold as a solution or technology to our customers. But also, then it gives an option and say, if customers want us to manage that solution, I can offer as a managed service as well.

But solution also be available to other partners to run it that way. So that’s the rationale, but also what I’m finding from many of our now Zscaler customers is, oh, I want the solution, and I want some managed service as well. There’s a large Fortune 100 company that did a deal in the past recent past where they are a seascaler customer, and they bought Red Canary to augment their security operations, not to outsource it all the way. So there’s a plenty of opportunity. But think of the revenue ARR.

Sitting at about $95,000,000 projections are us on 3 plus billion dollars. It’s what? About two to 3%. It’s not gonna make us an MDR company. That part gives us some expertise, but we remain focused on technology and but leveraging some of the key technology they brought to the table.

Fatima Boolani, Analyst, Citi, Citi: Jay, just to play devil’s advocate, AI powered SecOps and the modernization of the the SecOps and and SIM, you know, very attractive areas because we know the competitive and the technology dynamics are very similar to maybe what you saw in the secure web gateway land almost ten years ago. Right? But the reality is there is a lot of competition. There are very fierce forces that are advocating to displace and disrupt those very, very large budgets. So I want to understand, how do you think you are going to be a very formidable player in the AI SecOps movement as companies look to completely refresh and modernize their SecOps stack?

Jay Chaudhary, CEO, Zscaler: So two points there to start with. One, is the market ready for disruption? The answer is absolutely yes. It’s hard to find customers who say, I love my current SIMs. That’s starting point.

And the second point is, why is it that way? Because traditionally, everyone’s gone in, give me a SIM solution, and I’ll and they charge by number of gigabytes. It’s it’s crazy because they all build build a big lake on it. Our view is that if you go in a market, you go in with different architecture, different approach, and then you must have some core competencies. The biggest core competency we have in this space is data.

Half a trillion transactional logs a day that allow us to create metadata and train our models on top of that while keeping the customer’s data private. AI is only as good as the data, and we have the best quality data. If you look at the logs that matter in this area, the endpoint logs, the communication logs, identity logs, the like. The old school firewall logs, routers, switches logs aren’t really meaningful. If you have the best logs who train, if you have technology like data fabric, which is very different, I think we it positions us far better than others trying to go and do it all the way.

Fatima Boolani, Analyst, Citi, Citi: Bringing this back into the discussion around go to market and how customers are consuming a much wider Zscaler platform. Kevin, maybe the question is for you. Zflex is four four and a half months, about the age of my newborn daughter. So a lot of learnings in that period. Can you give us a sense of know, outside of the 100,000,000 in bookings that you did on on z z flex this past quarter, what is the ultimate goal and outcomes that are aspired to with this initiative?

And just from, again, a guidance perspective, how is this being considered in the way you’re thinking about ARR and you’re thinking about revenue? And even RPO, if you can comment on that.

Kevin Rubin, CFO, Zscaler: Sure. So ZFlex, just by way of background, was introduced I think halfway through our third quarter. We did about $65,000,000 in bookings in Q3. We did over $100,000,000 in bookings in Q4. And it’s really a packaging and pricing solution for customers that makes it far easier for them to ultimately consume more modules on the Zscaler platform and have the flexibility to do that over time.

So it’s designed for multiyear contracts. It’s designed for flexibility. We pre negotiate pricing. So every time there is an upgrade or a desire to expand, you don’t have to go through a procurement process. So So it’s really intended to reduce friction in that buying process and that expansion process for a customer over time.

Aside from that, it really is a growth opportunity as we think about continuing to grow this business from an ARR perspective. It’s not the only vehicle that we have to be able to support our customers, but it’s a very elegant vehicle that allows them to adopt today and have confidence that their investment is is flexible as they go forward in terms of the modules that they’d like to use.

Jay Chaudhary, CEO, Zscaler: If I may add, in some of the investor research I signed, I think people are over pivot into flex. It’s a pricing and packing to make it easier. The real measurement of the business success is ARR growth. That’s where it should be. Because before I do Z Flex, I actually do discovery and architecture workshop to understand what all can be taken out.

Then we go through business value assessment to quantify what can be saved. And then Zflex allows you to create a package that’s flexible for your needs. So it it’s a natural evolution for us, but our focus remains growth of ARR, and this helps grow ARR.

Fatima Boolani, Analyst, Citi, Citi: And and just to be clear, is is the orientation of Z Flex primarily a commitment based model that, you know, a customer draws down against solution or skew of their choice within Zscaler? Or there are just more favorable amenable financing terms? I mean, because we’ve seen different variations and permutations of this. So is it is it a little bit of both? Is it something else?

Kevin Rubin, CFO, Zscaler: So our Zflex is not a, committed spend, over a multiyear period of time. It’s an annual commitment, different than other subscriptions. It adds to a traditional subscription the ability to swap out modules. It gives flexibility on future expansion pricing. So it’s really a more flexible subscription arrangement that again encourages and facilitates expansion.

It is not a consumption oriented model. It’s not you commit to spend and you can wait until the end of the contract and spend it all in the last year. There are annual commitments. There are a set of specified modules that the customer is going to deploy. There is the opportunity to flex into more modules over time as well as swap modules.

Fatima Boolani, Analyst, Citi, Citi: I wanted to quickly shift gears to the other side of the ledger. We talked checked the box on talking about the revenue opportunities, the secular dynamics. But just from a capital allocation and reinvestment standpoint, there the growth in the emerging product suite has been remarkable, right? And to continue to feed that growth, you have been leaning and you are leaning into reinvesting in the business alongside inorganic activity. I’m wondering if you can talk about where the preponderance of that investment is going and expected to go in fiscal ’twenty six and how should we think about M and A as a complementary force in your capital allocation efforts?

Jay Chaudhary, CEO, Zscaler: So you can start with capital allocation. I’ll talk about M and A.

Kevin Rubin, CFO, Zscaler: Yeah. No. Of course. So look, we have a very efficient financial model as you’ve seen play out over the last several years. I earlier mentioned, we have been a consistent rule of 50 company.

As we go into ’26, you can see the guide as it implies to the areas that we’re going to invest. We continue to focus on innovation. You see that manifest in how we support engineering and product. And so I don’t expect any change in in approach there.

Jay Chaudhary, CEO, Zscaler: So regarding m and a, we have been very selective. We don’t go out to buy companies for revenues. We look for disruptive new technology that could be embedded with our platform to make very into your solution for us. If you look at what we’ve done, maybe if you show one slide, the four pillars out there. Okay.

Actually, one one slash. I know we’re out of time. Can you show one more? Go ahead. Here.

This is our platform evolution. The first pillar, zero trust everywhere. That’s a big opportunity for us. Data security everywhere is second area. And under AI security, that we have two buckets.

Security for AI applications, the models you’re building. We announced products like AI guardrails for that. And then agentic operations is where security operations fits in and IT operations fits in. I think we got a big lead. The innovation will continue, and we got a Salesforce engine in place, and we are excited about 2026 fiscal year.

Fatima Boolani, Analyst, Citi, Citi: I like to end the conversation on that positive note. Thank you so much.

Jay Chaudhary, CEO, Zscaler: Thank you.

Fatima Boolani, Analyst, Citi, Citi: Appreciate the time.

Kevin Rubin, CFO, Zscaler: Thanks for having us. Great.

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