Where do you fall in the agentic stack?

So agentic stack, if you look at security, there are a few things that one need to worry about.

Number one, you may not be embracing any AI.

You are still a target of these agentic attacks.

All these security vulnerabilities that Mythos preview of the world have found.

Zscaler comes in, make sure I can hide your application behind our exchange.

If they can't reach you, they can't breach you.

Mm.

Yeah, when did it really start taking off? Is it with the sort of onset of agentic AI and cyber actors getting more complex, are businesses taking it much more seriously now than they did before?

So I started this company in 2008.

I've been in the cyber security space since 96, when internet just arrived.

And my thesis was, if everything connects to the internet, The bad guys can start doing bad things, so cybersecurity should become important.

So I did my first startup to deploy traditional old technology, firewall, VPNs, and the like.

And then over the years, as I did more and more work in the security space, I was wondering that there are more companies building security products, there's more money being spent on cybersecurity by companies, yet there are more breaches.

So something needs to be done differently, thinking out of the box.

What about in Australia? How big is your market share? What brings you here right now to Australia?

How much of your full-year guide, which is a little lighter than the current quarter guide, is conservative, especially given that you said your sales force's productivity just hit a high?

So, John, good to see you again.

First of all, the record quarter from any measurement.

Our revenue, our ARR, going at 25%.

At scale, our ARR exceeded $3.8 billion.

Our non-GAAP operating margin, 24%.

These are spectacular numbers.

that's an interesting point because as i understand it if you're talking days or weeks that's just figuring out what got stolen and what window they entered in as opposed to if it's in real time you could potentially prevent and arrest what's happening tell me to what degree Did the incident with Hugging Face, with OpenAI, kind of rogue agents breaking in, and then all of the follow-on announcements from Anthopic and others, to what degree is that driving interest and demand right now among customers in your products?

Is ignorance bliss or should they still find out their vulnerability? What do you recommend?

They need to.

So these models, they don't need to wait for mythos.

Opus 4.7, pretty powerful.

Opus 4.8 just got released.

I think it's becoming publicly available.

They can use it.

link.

It is true that AI can simplify and-

and-handles some of the tasks easily, but there are other type of applications that are very hard for AI to deal with.

I'll give you a simple example.

If you want to, uh, detect some vulnerabilities in the code, perhaps AI can help.

But when you're talking mission-critical applications, sitting in line inspecting traffic to make sure bad guys are not trying to reach your application, steal your data, you need a global distributor infrastructure that Zscaler has, and 100% reliability.

That's where AI w- doesn't really happen.

So we feel very comfortable that AI actually is a tailwind for us, 'cause it is creating lots of new opportunities that customers want to make sure they are embracing AI se- safely and securely.

Can you walk us through, quantify what that means for Zscaler in terms of revenue opportunity when you think about this proliferation of AI agents?

Nobody's going to answer that.

Everyone should and need to use AI.

We use AI to make sure we can deliver better customer support to our employees.

The AI agents are helping us.

We are increasing productivity of our engineering team by using all this stuff.

But I think the numbers that Block shared, they seem way out of line that anyone else is saying out there.

We are seeing some reduction in hiring.

How does that impact a company like yours that operates globally, given sovereigns are more keen to deploy this on-prem? Does that impact a cloud security company like yours?

So Jay, is your growth slowing down?

Not at all, John.

We had a fantastic quarter.

We beat the high end of our guidance for revenue and profitability both.

Look at our results.

ARR, 25% year-over-year; revenue growth, 26%; operating cash flow growth, 14% year-over-year; free cash flow, 18%; operating margin, 22%.

I think these are great numbers, and if you look at our overall performance, there are only five major public SaaS companies with over $3 billion in ARR that are doing rule of 40, which means if your revenue growth and free cash flow margin together is over 40, you're a rule of 40 company.

Tell me why you expect that there's going to be so much more volume and more work for Zscaler software to do in the agentic era.

Absolutely.

So the firewall-based security is generally called castle and moat security.

If you need to protect your castle, what do you do? You build a moat around it so bad guys can't come in, and then there's one place to get in, and that's the moat has a special door, and they check you before they let you in.

And once you're in, you're supposed to be a trusted good party.

Okay, now that model worked fine for the traditional world of computers.

Here's your data center, and here are some devices sitting there, and you have a network connecting them.

And you want to make sure that if you connect the internet, the moat is a firewall.

But I think many investors would be interested to hear what is the time horizon of the CEO and how do you think stakeholders of the company, whether they're employees, customers, shareholders, how should they think about their partnership with Zscaler to align them to the interests and the activities and the decision-making process of the CEO?