John DiFucci -- Guggenheim Partners -- Analyst. We're seeing deals getting larger as customers are trying to consolidate more and accelerate their security transformation around our Zero Trust Exchange. Now, I like to turn over the call to Remo for our financial results. Returns as of 06/03/2023. They are realizing value from it. Are we going to be able to see that generative AI was actually a tailwind to growth? tabcontent[i].style.display = "none"; Our total calculated billings in Q3 grew 40% year over year to $482 million. Net other income of $13 million. I have many times described Zscaler being the in-line business, almost like an ERP application. You can enter: An IP address (for example, 198.51.100.100), A range of IP addresses (for example, 192.0.2.1-192.0.2.10), An IP address with a netmask (for example, 203.0.113.0/24). 6 Cybersecurity Software Stocks Could Be Set Up for Huge Second Half Your question, please. If you select one of these options, a confirmation window will appear. } One point I'll make, which hasn't come across so far in this discussion, what we do being the switchboard is probably the most critical -- mission-critical business service, and it must work. All of the above. One moment for our next question. Zscaler named a Leader in the 2023 Gartner Magic Quadrant for Security Service Edge. So, I guess a question for Remo, and I know you addressed it a little bit on the call, but I'd love to take a little bit step further about the methodology considered in making sure that you're not sacrificing growth as you continue to expand margins at this pretty impressive level. A firewall company will be a great firewall company. SIEM TCP Port: Enter the port number of the SIEM to which the logs are streamed. So, the penetration into this market, our ability to upsell also is 6x. Were there any like sort of anomalous large deals out there or is it just really just you guys buckled up and are executing better? At the end of Q3, we had 400 customers with greater than $1 million in ARR, up 39% from a year ago. At 125%, it's outstanding. As noted earlier, to account for our convertible notes in EPS, you will need to add back $1.4 million in annual interest expense. Zscaler Firewall Connector Download PDF Last updated on November 08, 2022 Zscaler Private Access Configure the connection on device Configure the connection in SNYPR Overview The following properties are specific to the Zscaler Private Access connector: Collection Method: Syslog Format: Regex Functionality: Access / Identity Management Yeah, I mean, all the factors aligned, but we are still in that tougher environment where there's now more scrutiny. *Stock Advisor returns as of May 30, 2023. Cybersecurity was a top priority as their IP in software development and manufacturing was being actively targeted by nation-state actors and hackers. Network Services: Use this filter to limit the logs to specific network services associated with the session or aggregated sessions. A valid license for Microsoft Defender for Cloud Apps, or a valid license for Azure Active Directory Premium P1. As we think about fiscal 4Q and fiscal '24, it sounds like you're broadly being pretty conservative around close rates. Thank you. In our largest win in the transportation vertical, a Global 50 company purchased the ZIA Transformation Bundle plus ZDX and advanced Data Protection suite for 165,000 users. I would like to inform you that we'll be attending the following upcoming events in June: Bank of America Global Tech Conference in San Francisco on June 7th, Cantor's Security and Infrastructure Conference on June 9th. For more information about unsanctioning apps, see Sanctioning/unsanctioning an app. That's still the case. So, very happy with what we're doing, and we'll keep on executing. Get in touch 1-408-533-0288 Chat with us. Collected using the Azure Monitor Agent based Security Events connector to the SecurityEvent table. And we have some customers who go with just ZIA or ZPA. The following image is just for reference: For Zscaler Internet Access, select the following information: Note: For more information on Parser Management, refer to the SNYPR 6.4 Data Integration Guide. Thank you for standing by and welcome to the Zscaler third quarter fiscal year 2023 earnings conference call. You can remove all items from the list (Remove All) or only items from a specific page (Remove Page). Multiple strings are allowed. Click Save & Next in the upper-right corner of the page. This does conclude the question-and-answer session. If you select Remove All or Remove Page, a confirmation window will appear. We created the public sector vertical some time ago that covers U.S. federal, as well as the SLED part of it. See NSS Feed Output Format: Firewall Logs for information about the available fields and their syntax. Higher public cloud usage for emerging products drove the year-over-year change in gross margins. So, this tougher market has made us a lot more sophisticated than we were before. So, Jay, is there any validity behind kind of what they're building? Collected using the Cisco Meraki API connector. And this quarter was really strong. PDF Zscaler Cloud Firewall So, I'm just trying to figure out like what changed for you guys this quarter relative to the past two quarters. Client Source Ports: Use this filter to limit the logs to specific client source ports. You can enter: Server Destination Port: Use this filter to limit the logs to specific server destination ports. You can remove all items from the list (Remove All) or only items from a specific page (Remove Page). For the fourth quarter of fiscal 2023, we expect revenue in the range of $429 million to $431 million, reflecting a year-over-year growth of 35% to 36%, gross margins of approximately 80%. for (i = 0; i < tabcontent.length; i++) { We've done well there. Thanks for taking my question here. Purpose-built for today's digital world, Zscaler Cloud Firewall ensures you can securely . Our go-to-market engine enables us to close many large multiyear multiproduct deals. Yeah. I said, I don't know. Thank you, Saket. Zscaler Inc. (ZS) Q3 2023 Earnings Call Transcript | AlphaStreet Pipeline, maturity of pipeline, execution, strong across the board. Choose the categories from the list. You can provide multiple entries. Mega deals are, you know, deals of greater than $20 million. Server IP Super Categories: URL super category that corresponds to the server IP address. A whopping 300 billion logs per day. You can enter the following: You can provide multiple entries. For item lists, you can view up to 500 items on a page. Calculated by Time-Weighted Return since 2002. These are not DNS logs that have little information beyond the domain. 1. So, basically, it's a tough compare. Threat Category: Use this filter to limit the logs to specific threat categories. 1 in eight of them. APJ was strong. And our next question comes from the line of Saket Kalia from Barclays. I would like to remind investors that a number of our emerging products, including ZDX and Zscaler for Workloads, will initially have lower gross margins than our core products. Firewall Insights Logs: Columns | Zscaler SIEM Rate Limit (Events per Second): Leave as unrestricted, unless you need to throttle the output stream due to licensing or other constraints. Our unique architecture with our patented single scan, multiaction technology enables us to deliver comprehensive security at high performance and scale. We delivered strong third quarter results, with all financial metrics above the high end of the guidance we provided last quarter. You can choose Name-Value Pairs or Tab-separated. Really appreciate the question and great job on the billings performance in a tough environment. Specify the User Attribute, Operation, Parameter, Condition, and Separator parameters in the Correlate events to user using rule section. Hey, guys. Thank you. } But when companies try to pivot, it takes a while, and especially pivoting do something that's in-line, multitenancy, figuring out all the cyber threats without slowing things down is hard. I think it's better execution on our sales organization. Our proven experience at scale makes us a partner of choice for customers pursuing their zero-trust security journey. And our net promoter score of over 70 is a testament to our strong relationship with our customers. Server IP Categories: URL category that corresponds to the server IP address. You can remove all items from the list (Remove All) or only items from a specific page (Remove Page). Our engagement in cloud marketplaces have gotten much better because we are leveraging the annual commit that's already spent -- annual spend that's already committed to the hyperscalers. *Average returns of all recommendations since inception. But, Jay, you talked a little bit about some of the efforts you've made internally to get in front of budget scrutiny with some of these CFO-ready business cases. We believe the intellectual property, the IP needed to do so is very hard. Together, Defender for Cloud Apps and Zscaler provide the following capabilities: In the Zscaler portal, do the steps to complete the Zscaler partner integration with Microsoft Defender for Cloud Apps. If you select one of these options, a confirmation window will appear. Having landed 12 of the 15 cabinet-level agencies, we have plenty of opportunity to expand further with these very large organizations. The continued strength of this metric speaks to the strategic role we play in our customers' digital transformation initiatives. One, customers are seeing value. Add an NSS server. For more information, see About Nanolog Streaming Service (NSS)and Adding NSS Feedson the Zscaler support website. If the employees submit sensitive data to ChatGPT-like applications, our DLP technology detects it and blocks it. And then just one quick one from Remo. Remo, you talked a little bit about future lumpiness in dollar-based net retention, I guess, given some large deals that you'll grandfather in, but can you share with us kind of that mix you expect through maybe fiscal '24 of new logo sales versus upsells? This is useful if you are using this character as your delimiter and would like to ensure it does not cause erroneous delimitation. Select Do you want to schedule this job for future? You can enter: You can provide multiple entries. ]]>, https://help.zscaler.com/zia/adding-nss-feeds-firewall-logs#IPS. These statements and other comments are not guarantees of future performance but rather are subject to risks and uncertainties, some of which are beyond our control. Your question, please. admin.zscaler.com admin.zscalerone.net admin.zscalertwo.net admin.zscalerthree.net admin.zscalerbeta.net admin.zscloud.net Zscaler Private Access. A large number of filters or complex filters, such as string search, might impact the performance of the NSS. For each feed, you can configure multiple types of filters. We're going to invest, you know, continue to invest in hiring in R&D and throughout the company for that matter. The configured time zone can be output to the logs as a separate field. Thank you. I think we're focused on building, delivering, keeping our customers happy. Seamless deployment of Cloud Discovery - Use Zscaler to proxy your traffic and send it to Defender for Cloud Apps. We have a blueprint for delivering greater value, which drives strong upsell. In the right section of the screen, select a resource and click Select Timezone. Thanks. With this latest purchase, this customer's ARR surpassed $10 million. Our dollar-based net retention rate was once again above 125%. If you select one of these options, a confirmation window will appear. Zscaler. We're going to continue to invest, and we're going to, you know, balance, you know, basically top-line growth and operating profitability. You know, federal was strong. Traditional network security based on firewalls and VPNs cannot handle the complexity of safeguarding enterprises in what has become a work-from-anywhere world. View a sample Firewall log. Is it impacting our engagement? Microsoft Sentinel provides the following parsers in the packages deployed from GitHub: To use ASIM Registry Event parsers, deploy the parsers from the Microsoft Sentinel GitHub repository. Number two, we're actually able to remove a bunch of point products and show ROI, and that actually gives them more incentive to buy more from us. One moment for our next question. Hey, guys. Our free cash flow margin was 18%. Press Enter after each entry, then click Add Items. This allows failover from one IP to the other without manual intervention, but rather relying on updating the DNS entry. It's pretty much across the board. So, I would say, yeah, let's be more refined in channel checks, OK? Zscaler Inc. operates as a cloud security company worldwide.Its offerings include the following: And that's what we are beginning to see. The proxy sensor is designed to receive these logs and upload them to the same destination as FortiNDR Cloud sensors. This is also an example of the geographic diversity of our business outside the U.S. Today, we serve eight out of the 10 largest financial services and diversified insurance companies in the world outside of China. Feed Output Type: The output is a comma-separated (CSV) list by default. These are complete logs that have structured and unstructured data, including the full URL, providing trillions of signals per day. Thanks for taking my questions, guys, and congrats on the strong results. _Im_NetworkSessionZscalerZIAVxx: Deploy the workspace deployed parsers version from the Microsoft Sentinel GitHub repository. We are entering Q4 with a record pipeline, and our customer engagements remain strong. With Firewall Filtering, you can configure policies that define which types of traffic are allowed from specific sources and to specific destinations . SIEM Destination Type: The type of destination. We ended the quarter with over $1.97 billion in cash, cash equivalents, and short-term investments. For more information about Firewall logs, see Adding NSS Feeds for Firewall logs (https://help.zscaler.com/zia/adding-nss-feeds-firewall-logs). And we will also host an investor briefing focused on our latest innovations at our Zenith Live conference on June 15th. Adding NSS Feeds for Firewall Logs | Zscaler. For the Standard Firewall subscription, allowed sessions are logged in aggregate form, resulting in fewer logs for the allowed transactions. First of all, the numbers speak for themselves. Our first acquisition in 2018 was an AI-ML company. Last year, our billings growth was approximately basically -- I think it was close to 60% billings growth in Q4. While many companies can hire data scientists and large language models are becoming open source and will probably be available more easily, the data will become the new IP, the new barrier to entry. It really seems like you've got a number of good things happening there. Choose the Firewall type (ZScaler NSS) Choose the SpanVA; Click Create connection; If you run into any problems, we're here to help. As we have indicated before, we have a 6x upsell opportunity with our existing customers for protecting their users. And our next question comes from the line of Joshua Tilton from Wolfe Research. Filter the list by searching for a word, phrase, or number contained in an item. For more information about Web logs, see Adding NSS Feeds for Web Logs (https://help.zscaler.com/zia/adding-nss-feeds-web-logs). We did moderate some of the hiring as we saw the market come down quite a -- in the past couple of quarters. So, it is fitting well. And after the launch of ChatGPT, Zscaler delivered policy-based access controls to ensure that customers can use AI applications safely. These are not DNS logs that have little information beyond the domain, these are not firewall logs that cannot often see SSL traffic, these are complete logs that have structured and unstructured data, including the full URL, providing trillions of signals per day. At this customer, we are consolidating dozens of point products from a handful of vendors, including DLP, CASB, web proxies, firewalls, and VPNs. Zscaler, Inc. (NASDAQ:NASDAQ:ZS) Q3 2023 Earnings Conference Call June 1, 2023 4:30 PM ETCompany ParticipantsBill Choi - SVP, IR and Strategic FinanceJay Chaudhry - Chairman and CEORemo. NSS Feed Output Format: Firewall Logs | Zscaler Where are you going? To use the Search function, enter the location name in the Search box and click Search. We focus on our customers. Process Event parsers. For item lists, you can view up to 500 items on a page; filter the list by searching for a word, phrase, or number contained in an item. Follow the following steps if you are using SNYPR 6.4: Click Discovered. We see more customers buying our Data Protection, along with ZIA, and replacing their existing CASB point products. For aggregated sessions, this is the server destination port of the last session in the aggregate. If you select one of these options, a confirmation window will appear. 10 stocks we like better thanZscalerWhen our analyst team hasa stock tip, it can pay to listen. For item lists, you can view up to 500 items on a page; filter the list by searching for a word, phrase, or number contained in an item. Traffic Forwarding: Use this filter to limit the logs based on the traffic forwarding mechanism used to send traffic to the Zscaler firewall. If you take a look at basically, you know, the duration, you know, the billings duration, you know, our growth rate was 44% short term. And now, you know, that's basically pretty much the same on a year-over-year basis. So, there's really no headwind or tailwind related to the RAMP deals. We are partnering earlier with CXOs to jointly create compelling CFO-ready business cases that have clear ROI and payback periods. Zscaler (ZS) Q2 2023 Earnings Call Transcript, Zscaler (ZS) Q1 2023 Earnings Call Transcript, Zscaler (ZS) Q4 2022 Earnings Call Transcript, Zscaler (ZS) Q3 2022 Earnings Call Transcript, Zscaler (ZS) Q2 2022 Earnings Call Transcript, Cumulative Growth of a $10,000 Investment in Stock Advisor, Join Over Half a 1 Million Premium Members And Get More In-Depth Stock Guidance and Research, Copyright, Trademark and Patent Information. No longer annual numbers are good enough. You can try to pivot, but that competency you build and create over years and years is very hard. Blocking of WeChat with Advance Cloud Firewall - Zenith Thanks, guys. Zscaler Internet Access (ZIA) Integration - Cisco Meraki It is a priority. ZIA acts like a secure web gateway where 0.0.0.0/0 traffic will be routed for inspection and enforcement prior to internet termination. You know, one of the things I mentioned, Sterling, is that, you know, not lost on us is that this is a huge market opportunity. One moment for our next question. A limit that is too low for the traffic volume will cause log loss. To use the Search function, enter the department name in the Search box and click Search. Remo, do you want to give some more color to it? https://help.zscaler.com/zia/adding-nss-feeds-firewall-logs#IPS. Operator, you may now open the call for questions. Number two, the amount of traffic one has to handle to really deliver the service. This document describes how to configure and troubleshoot Zscaler Internet Access IPSEC peers with the Meraki . You know, when your top line, you know, slows down, you're going to get that natural leverage. Collected using the Corelight Zeek connector. And then, of course, the execution, high-touch engagement is helping to get through finish line, international. This document provides a list of Advanced Security Information Model (ASIM) parsers. Typically, these ramp deals reduce our first-year billings but will grow into a higher annual run rate level in the second year. We remain focused on creating shareholder value by driving customer-centric innovation, new business growth, and increased profitability. For more information about these changes, see Microsoft Defender for Cloud Apps in Microsoft 365 Defender. As these deals show, customers are embracing our expanded platform, including our two emerging product pillars: ZDX for digital user experience and Zscaler for Workloads. So, do I kind of try to focus too much on some of the comparative campaigns that are kind of trying to spread lies on? You know, that basically was related to duration. You can specify individual ports and a range of ports. You're now in 12 of 15 cabinet-level agencies. You know, again, I think the key thing, it was really good execution on our sales organization on a worldwide basis. Zscaler offers two cloud firewall services: A standard Cloud Firewall that's included with every Zscaler Internet Access subscription and an advanced Cloud Firewall upgrade that is included in the transformation bundle, or can be purchased as a separate upgrade. This will allow you to stream logs from Zscaler's logging clusters (called Nanolog) towards a SIEM or product of your choice (in this case, Sentinel). If this is enabled, the login field in Feed Format Output automatically changes to ologin field which outputs the obfuscated login name. The data protection advancements we launched in October 2022 leveraged AI-ML to classify unstructured documents for policy enforcement. Thank you. You know, what we look at really is we look at new and upsell as the driver in total. The most intelligent information that generative AI can use comes from the URL, which could be hundreds of bytes long. In the Add data source page, enter the following settings: Make sure the name of the data source is NSS. On a year-over-year basis, revenue grew by 46%, billings grew by 40%, and current billings grew by 44%. And someone who does CDN and DNS should be a good CDN and DNS company. Yeah. He was a driving force in scaling the AI-powered customer engagement platform at Salesforce, which is critical to the next phase of our AI journey. Zscaler (ZS-0.29%) Q3 2023 Earnings Call . *string -> Suffix matching match threat names ending with string, String* -> Prefix matching match threat names beginning with string, *string* -> Substring matching match threat names containing string, String -> Exact matching match threat names that are exactly string. This will allow you to stream logs from Zscaler's logging clusters (called Nanolog) towards a SIEM or product of your choice (in this case, Sentinel). Sterling Auty -- MoffettNathanson -- Analyst. You mentioned on a sequential basis, you saw better-than-normal seasonality. Microsoft 365 Defender correlates signals from the Microsoft Defender suite across endpoints, identities, email, and SaaS apps to provide incident-level detection, investigation, and powerful response capabilities. We are not a firewall company that's trying to pivot to zero trust. On the Remote Ingester Node (RIN), verify you are receiving Zscaler Firewall logs. // Declare all variables ASIM is currently in PREVIEW. Again, congrats on the very strong results. Yeah. Americas was strong. You know, there can be thousands of SaaS applications out there. . Select View sample of expected log file. Thank you. IP connection logs collected using Syslog. Microsoft Sentinel provides the following parsers in the packages deployed from GitHub: ASIM Network Session parsers are available in every workspace. Can you double-click on the opportunity and pipeline ahead and maybe talk just more about your strategy in the public sector more generally, not just fed, but SLED, and maybe international government as well? Thank you. If you select either of these options, a confirmation window will appear. Please note that starting in fiscal 2023, we adopted the new accounting standard, which requires the use of the if-converted method for calculating EPS. The Motley Fool has positions in and recommends Zscaler. We have a disciplined approach to growth. You know, it's all the things I mentioned and your comments. Event name Low-level category There is no limit on the number of users that you can select. By moving security to a globally distributed cloud, Zscaler brings the Internet and web gateway closer to the user for a faster experience.. So, it is not unnatural for us to see the competition trying to come and say, maybe I can get into this space. One other area that's helping us with some of the new private companies and all customers are kind of wary of trying to go with someone who may be losing a lot of cash and who may not be around tomorrow. The following properties are specific to the Zscaler Firewall connector: Before you connect Zscaler Firewall, ensure you have the details to send data to the Remote Ingestion Node (RIN). Our NPS score sits north of 80. To use ASIM audit event parsers, deploy the parsers from the Microsoft Sentinel GitHub repository. For item lists, you can view up to 500 items on a page; filter the list by searching for a word, phrase, or number contained in an item. Adam Borg -- Stifel Financial Corp. -- Analyst. // Show the current tab, and add an "active" class to the button that opened the tab I don't. Timezone: By default, this is set to the organization's time zone. After logging in to the Cognito Detect, navigate to Settings > External Connectors > Zscaler Private Access (ZPA) and click the "Edit" or pencil icon. Thanks for taking the question. Our focus is still top-line growth. The Docker Container must be run from a system that is separate from the NSS log server. Customers are expanding their commitments with us, from a targeted use case to a much broader platform-centric approach. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns. And as we said before, if we do so, our current customers are spending -- their spend with us could go to 5x or 6x kind of stuff. It's something you started talking about at the start of the year. Our new business grew significantly across various industry verticals, and we had approximately half of our revenue come from outside the U.S. We have a strong and loyal base of customers, with growth retention rates in the high 90s. You can specify numbers or ranges. tablinks[i].className = tablinks[i].className.replace(" active", ""); Search. Yes. But overall, a bigger bundle to eliminate a bunch of point products is the trend we are seeing. You can specify individual ports and a range of ports. However, predicting close rates in any 90-day period has become more challenging in this environment. But if you got good product offerings that are highly differentiated and there's a need for it because customers do want to save money and better cybersecurity, that's really what's positioning us well. Market-beating stocks from our award-winning analyst team. But now, they're beginning to do full rollout. We now have 400 customers with greater than $1 million in ARR, including over 35 customers exceeding $5 million in ARR. They built their products using something known as service function chaining in order to reduce their time to market. One moment for our next question. You know, our mix this year, we're expecting 40-60, you know, new versus upsell. Our customer success team, our TAMs are doing a great job. Zscaler NSS Syslog sample message for Firewall logs feeds supported by Zscaler NSS. Feed Output Format: These are the fields that will be displayed in the output. Administrative credentials. What's your experience that's helping us? I guess I'm wondering relative to a few quarters ago, are you feeling incrementally better about controlling your own destiny, your ability to influence sales cycles? Provide a descriptive name for the correlation rule in the Correlation Rule section. An example screenshot follows. Zscaler Firewall delivers cloud-based protection for web and non-web trac for all users and devices regardless of where they connect. Then, click on Add Cloud NSS Feed. Zscaler NSS To stream Zscaler logs to MCAS, you will need to have deployed and configured Zscaler's Nanolog Streaming Service (NSS) in the ZIA admin portal - this allows you to stream logs from their logging clusters (called Nanolog) towards a SIEM or product of your choice (in this case, MCAS). Thanks, guys, for squeezing me in. Our consultative sales process enables our account teams to adapt to the changing business environment and stay close to our customers, especially at the C level. And it's being also helped by White House guidelines, zero-trust implementation. Thank you. You know, when we did the -- we reduced our workforce at the end of Q2, one of the things we talked about is we're still going to prioritize basically quota-carrying heads and R&D. To make the world smarter, happier, and richer.
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