Zscaler(ZS)2024-06-05 21:20Key Points Company and Industry * Company: Zscaler, Inc. (NASDAQ:ZS) * Industry: Cybersecurity, specifically Zero Trust SASE (Secure Access Service Edge) Core Views and Arguments * Outperformance in Q3: Zscaler outperformed billings significantly in Q3, growing 30% compared to expectations of 21% [5]. * Win Rates: Zscaler maintains strong win rates in the market, with 40% of Fortune 500 companies and over 30% of Global 2000 using their platform [6]. * Market Positioning: Zscaler is well-positioned in the Zero Trust SASE market, with a focus on protecting workloads and expanding into areas like Zero Trust SD-WAN and data protection [10]. * Competitive Landscape: Zscaler differentiates itself from competitors like Fortinet and Cisco by offering true Zero Trust architecture and a broader platform [12]. * SD-WAN Strategy: Zscaler views SD-WAN as an important component of a single vendor SASE solution, focusing on Zero Trust SD-WAN to protect branch offices and workloads [20]. * Product Evolution: Zscaler has evolved from a Secure Web Gateway to a comprehensive security platform, including data protection, endpoint security, and cloud workload protection [23]. * Zero Trust Adoption: Zscaler targets large enterprises that understand the value of Zero Trust and are willing to invest in the right technologies [28]. * Data Security: Zscaler offers a range of data security solutions, including data loss prevention (DLP), cloud security posture management (CSPM), and data security posture management (DSPM) [37]. Other Important Points * Transition: Zscaler is currently going through a transition in its go-to-market strategy, led by new leadership from ServiceNow [6]. * Billings Growth: Zscaler expects a headwind of 2% to 3% on billings growth in fiscal '25 due to the transition and higher-than-expected attrition in Q3 [7]. * Market Opportunity: Zscaler has a significant opportunity to grow its customer base, with less than 20% penetration in the market for companies with over 2,000 employees [8]. * Upsell Opportunities: Zscaler has a 6x opportunity to upsell additional modules to existing customers, including Zscaler for users, Zero Trust SD-WAN, and data protection [8]. * Cloud Protection: Zscaler offers solutions for cloud workload protection, including internet access protection, data protection, and workload communications [37]. * Technology Readiness: Zscaler's approach to data security differs from traditional CNAPP vendors like Wiz and Palo Alto, focusing on a broader SASE framework [39]. * Fiscal '25 Outlook: Zscaler expects the market to remain scrutinized, but also expects growth in revenue and sales organization maturity [43].