Jay Chaudhry, ZScaler CEO, joins 'Money Movers' to discuss the company's quarterly results, guidance and the cybersecurity M&A environement.

Zscaler reported strong financial results, beating expectations on both revenue and profit for the latest quarter. The company has shifted its primary performance metric from billings to annual recurring revenue (ARR), responding to investor preferences. CEO Jay Chaudhry noted that Zscaler is one of only two pure-play SaaS security firms to surpass $3 billion in ARR, with significant growth in both operating margins and free cash flow.

Chaudhry emphasized the company's expanding presence among Fortune 500 and Global 2000 companies, as well as the rapid growth of its AI security and data security products. He addressed industry consolidation, stating that Zscaler's integrated platform is driving customer adoption by replacing legacy security products. The CEO also highlighted the increasing importance of AI security, with the company's AI-led portfolio expected to grow at a faster pace.

ZScaler CEO: We are hitting on all cylinders

security company zscaler down a touch under some pressure this morning in today's session despite the company reporting beats on the top and the bottom line for q4 also offering some upbeat guidance for the new fiscal year conservative annual recurring revenue guidance might be behind the stock's move lower today according to some analysts joining us this morning in a cbc exclusive is zscaler ceo jay chaudhry jay welcome back it's good to have you thank you i appreciate the opportunity did did we sir did you introduce a new metric is that is that resulting in some confusion i think whether you look at the old metrics or new metrics our performance has been outstanding the arr growth year over year 22 at scale and for the most exciting news is that we are only one of the two pure play sas security companies that have crossed three billion dollars in arr and not only the top line growth the bottom line growth our operating margins are wonderful our free cash flow 27 so very pleased with the performance that we delivered yes we are focused more on arr as the new matrix and our guidance is great as well why the shift from billings to arr billings was good early on but as a reckoning business uh for a pure play sas security company our investors have been telling us they would prefer arr so we listened to them and we said it makes sense let's move on to arr and we have been doing very well in this area i think some of the problem is the the guidance there if you take out the acquisition the red canary acquisition implying smaller organic growth in in new arr that that's what i'm reading from some of the analysts and some of the investors were you are you being conservative what's happening with with demand there so look a market does what it does you're focused on making sure we solve the customer problems i think our guidance is very good the feedback i'm getting from investors and analysts that it's a good guidance and it's a good top line good bottom line good growth and new emerging markets our ai security based products are doing extremely well our data security products they exceeded 425 million dollar arr so i think they're hitting on all cylinders we moved from 40 percent fortune 500 companies to 45 percent fortune 500 company our share of global 2000 companies went from 35 percent to 40 percent so we are ecstatic our solutions are solving not just the cyber problem but helping customers save money because in today's market there is some pressure on it leaders to make sure they can reduce cost so we are hitting on all cylinders we're very pleased with the performance jade a lot of chatter among consolidation in the industry among some of your rivals is that going to be a big piece of the z scalar story consolidation and simplification where it makes sense is a good thing consolidation by buying companies here here here and try to slam them together is not a good thing i have always believed in a fully integrated comprehensive platform look at z scalar platform we started by protecting users then we extended zero trust for branches then we extended for cloud then we extended for iot ot devices and it is one platform that works well together so yes consolidation is happening in fact our growth is happening because our customers are buying and buying more and more products to eliminate legacy firewalls vpns networking products so consolidation is happening will happen but what we do is by eliminating legacy products not building on top of that how much of what you just laid out the growth drivers and what you're seeing is driven by ai spending in particular and how do you look at it as far as the opportunity so ai security is becoming a bigger piece and there's no such thing as one ai security products we introduced securing gen ai public applications like chat gpt about 15 months ago recently we introduced securing your your private ai models and now we are focused on agent to agent zero trust communication when you look at our ai portfolio with agentic operations and the like we crossed a quarter billion dollar in arr so it's real opportunity and we expect our ai-led portfolio to drive at a to grow at a much faster pace

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