Zscaler Inc (NASDAQ:ZS) Q4 2019 Earnings Conference Call - Final Transcript

Sep 10, 2019 • 04:30 pm ET


Zscaler Inc (NASDAQ:ZS) Q4 2019 Earnings Conference Call - Final Transcript


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Jay Chaudhry

51%. I will start the call by commenting on our market opportunity. Next , I will discuss our sales execution, including the hiring of our new President Go-To-Market and Chief Revenue Officer and conclude with some of our deal wins in the quarter.

We are seeing a mega shift take place, where organizations are choosing multi-tenant cloud architecture to empower them to scale quickly as they move their applications and data to the cloud. Digital transformation and adoption of mobile and cloud fundamentally change network traffic patterns and break that traditional perimeter protection model, where organizations build a hub-and-spoke network and a mode of security appliances to secure the network.

Built for a World Without Walls, Zscaler cloud acts as a business policy engine, which is now deployed across more than 150 data centers to deliver the full set of security and policy enforcement on a direct path to the application. Our mission is to provide fast, secure and reliable access to information, no matter where it lives. Responding to customers' need for a better advice for a cloud-centric world, where appliance-based perimeter security is less relevant. Gartner has recently published a groundbreaking research note titled, the future of network security is in the cloud. In this paper, they introduced the concept of a Secure Access Service Edge pronounced SASE. SASE goes well beyond the disruption of MPLS with SD-WAN or hardware appliances with cloud or applying zero trust principles. As I interpreted, SASE has the following key points. Number one, demands that service edge providers offer compute power at the edge of a widely distributed network, distributed as close as possible to each end point. Number two, light branch with just a router and all security services in the cloud. Three, delivers in line encrypted traffic inspection at scale. Most importantly, Gartner recommends reducing complexity of network security by moving to ideally one vendor for secure web gateway, cloud access security broker or CASB, DNS, zero trust network access and remote browser isolation capabilities.

We agree with these key findings and I recommend that everyone read this report. It is available on our main website. Zscaler platform was designed from the start for the world that Gartner has spelled out. As the world moves towards the SASE model, traditional network security vendors are embracing Zscaler's vision of cloud-based security after rejecting it for years. They are trying to retrofit their legacy appliances into a cloud world and making more and more noise about what we believe are their fundamentally flawed hybrid security cloud offerings. Their messages keep on buying [Phonetic] my boxes but use my so-called cloud service, when your users are on the road or in a branch office. But we believe the piece together hybrid clouds can't scale leave gaps in security are expensive, deliver a poor user experience and will not allow enterprises to fully realize the benefits of the cloud.

Just like you can't create a Netflix service by stacking thousands of DVD players in