Executive Q&A Panel - ZSCALER INC

Okay, I see the hands up. So when we call on you, just remember to state your name and your company name for the webcast. Really, really appreciate that. Brad, I think you had your hand up first, so we'll go from there. It's one of my skills. Brad Zelnick, Deutsche Bank. Thank you for an amazing day, really great, compelling presentation. I want to direct my question at Ross and maybe for Jada Chyman as well. It seems there's been a lot of change in the sales organization. Great to see you stepping into the role as well, I guess, as we think about the underlying drivers of turnover that you've seen, what it is that there is, you know, there might be to know why we shouldn't be concerned by any ongoing disruption as a result of these changes. And then I'd also love to hear from you. What's new? like, you know, from going from one leader to the next, usually there's, you know, your fingerprints that you're going to want to put on things. As I look at the presentation you gave today, it sounds like with the 75% of the market that you haven't reached yet, it would seem like there's a real opportunity to go further down market. And related to that, I'm just wondering, you know, the resources put behind that versus maybe not then allocating enough towards this amazing $2 billion AI opportunity that we see and how you balance that? So I know a few different questions, but all related. Thank you. Four-part question, I think. Let me see if I can remember all those. So I'll start with the latter parts. So new logos, as you heard, are a real emphasis for us. And with the expanding platform and things that we've done in our go-to-market machine around focus and incentivizing our teams, I feel like we'll accelerate there. As we look at the down market opportunity, that is not a discrete focus for us. It is an opportunity, and that's why we're leveraging relationships like Herosoft that I mentioned. We need to drive velocity and scale, andthat's what we're focused on there. We will remain very focused on enterprise and majors. We do have an opportunity in that space. We're not ignoring it, but that's where we're really going to leverage our partners. You asked what I would do differently. Yeah, you led the witness a little bit in that new logos are very important for us. We're driving verticals. I think I talked about vertical strategy. We have a lot of opportunity in public sector international, as well as sovereign cloud. So we are really leaning in there. And then obviously the platform opportunity. I have a long history of selling platforms. I know how to do it. I know How to Lead Those Teams. And so very focused on that. And then I think coming around to your first question, and Jay, I'd encourage you to chime in as well. I mean, yes, there have been some changes, and they've all kind of been unrelated to each other, frankly. So there's not any individual macro thing. We've got a strong leadership bench. We have our leadership team in place. I'm very happy. And as I've mentioned multiple times, we are really focused just on execution. If I may add, you saw us retreading the guidance that tells us the confidence we have. You also saw us give long-term guidance as well that could tell you that we are very confident on the opportunity. The overall platform need for cyber, our role as being the linchpin, is fundamental. The sales process and strategy we put in place is doing well. We just need to keep on accelerating on it. And I think we have a strong leadership team, and there will be some changes from time to time. Very confident. Okay. We're going to go to Fatima, and then we'll head over to Joe. So, Fatima and Joe in the first row. Can we get a mic over to Fatimah in the middle? Can you keep your hand up for a sec? Webcast. Webcast, yeah. Thank you. Fatimaa Boulani from Citi. Thank you so much for such an insightful set of comments and presentations. Dawal or Adam, for you, you mentioned something that was really interesting to me in your session, just around this intersectionality of security for AI and data security. Now, those two seem to me very interrelated because you can't have secure AI usage without having a handle on your data assets. And the data tax surface or the data risk surface, as you pointed out, is absolutely metastasizing. So why is there still a distinction from a product standpoint, if presumably data security is going to be a conduit for security for AI and vice versa. And then as a related question to Ross, why not unleash Z-Flex to the entire base? What are some of the limiting reagents? Because if you are going full force from platform perspective, you talked about only nine of the 30 individualized SKUs are being uptaken. You know, Why not just tear up kind of the traditional motion? You've seen the success with Zscaler, I'm sorry, Zflex, and go all hands on deck. Thank you. So probably I'll start with the first part. When we look at the AI security broadly, right, or security for AI, data security is a very strong tailwind, as I was explaining the numbers. But security for API is broader than that. lot of new cyber attacks that we are seeing. Think about how users are being tricked to get phished these days is happening through prompts, right? Prompt injection, jailbreaking is happening to that as well. So there is definitely more to it. But and as you saw, securing AI also needs to secure AI applications and infrastructure that you're using from what goes into your models. And data security then becomes a key pillar on that. You're absolutely right that AI agents are not just consuming data, or models are not Just consuming data that transform your data, they also leave remnants of this data in multiple places. And this is why, you know, we've been classifying data, and we have a strong DLP business that has grown significantly. But the challenges that come with data security in the AI world are also different. And this was one of our core thesis for acquiring symmetry systems that we can discover data everywhere. We can discover AI everywhere. What is really hard in this world is understanding the relationship between data and how that data goes into AI and how identities are playing pale with very excessive permissions and role. And that problem is getting compounded with stat that Jay showed there are 75 agents for every single user. So the short answer, in my opinion, is like, yes, data security is a big part of it, but AI security in itself is much broader. That's why we are keeping it that way, but we are bringing it together. Yeah, maybe just one quick add on that. This is why data security is part of a platform and it's a consistent capability that crosses everything. I didn't spend much time talking about it, but it's foundational in everything we're doing in Zero Trust SASE as well. What we've been recognizing is where does that need to evolve? And primarily AI has just solved as a major accelerator of if we knew this was important before our customer knew, now it's really, really important. And then you're seeing these specific pieces around data security is always about find the data, classify it, and then enforce policy. What we've learned in AI, there are new elements of what that policy looks like. And it's broadly applicable, not just for AI, but AI is driving that. And that's why we're doing it at a platform level. So we can use it across every one of our product areas. Ross? ZFlex. And Kevin, chime in if you have any thoughts. So that is a growth enabler for us. We don't have any limiters on, I mean, there's some obvious baseline. You need to spend X minimum. But yes, ZFlex is kind of a core motion for us and we did give an example where a customer actually in the case study is able to take the entire security portfolio through ZFLEX as well. With so many questions coming up, we're going to keep our answers short So we can take more and more questions. Thank you, Jeff. It's taking my role. Now we're with Jeff. Okay. So I have a question for Joe Gallo, Jefferies. Thanks for this. Question for Adam, primarily on SecOps. So I know it's early, but who are you competing with? Like I assume in your existing customers, you are the network security platform. So I assume you're competing with the endpoint-centric platforms. So I'm just curious your right to win there because those vendors also have a lot of data. They certainly do. And I think the data gravity is the main point. Every customer that we work with when they're figuring out SecOps, they're going to orient around some center of gravity. And in some cases, in many cases, that's going to be us. It can also be other players that they have. So the solutions, anyone who has a SecOps solution, if they're not, they don't have that data gravity. They're a new agentic SecOps startup. I don't think they have that easier right to win compared to a Z-scale or a larger platform play. SecOps has become more and more of a platform play, that's why I think we have that right and that shot to be competing in that space. With the telemetry, the data we have, and that agent-first approach that we're taking, I think Kim likes to bring it up, I have this comment where I say, we get sometimes a second mover advantage, we weren't first to this space, we recognize that, But the benefit is we didn't spend all of our time building a solution around log collection and storage. We built it all around an agent-first approach. Adam, we are a fast mover when it comes to solutions built for agents. Others build solutions for humans and try to add agent to it. That's point one. The second short answer would be data. We got full inline data. We got endpoint data. We got cloud workload data. We also got branched devices data. We have better telemetry than anybody out there. And we bring in third parties. Yes. We'll go Etai, and then we'll do you two. Adam, can we get a mic right here in the front? Thank you. Thank you very much. Etai Kidron from Oppenheimer. Great presentation. Really appreciate the disclosure. A couple of questions for me, for you, Adam, first on the technology side. You talked about the importance of context. I guess why not own the identity side of the equation? It sounds like you are drawing from identity in order to create context. Some of your biggest competitor has decided to own that layer. We already see some data security companies moving into the identity site to create that context more closely linked. I guess the question is why not earn that category instead of partner over there and potentially end up with no partners if they get acquired? So that's question one. And for you, Kevin, on the financial side of the equation, appreciate the long-term targets on Fiscal 31. I guess if I think about just that $8 billion target, just kind of doing back of the envelope, it sounds like that new ARR needs to be growing around the 10% plus minus on a consistent basis for you to reach that target. That's already well ahead of your target right now for Fiscal 27. So are you already raising the numbers or should we look for a little bit? Are you going to grow into this fiscal 31 number, or how do we think about that? Yeah, I guess I'll go first. So the 17% CAGR is in line with the midpoint of the guidance for this year. So that would be my direction there. As we think About the opportunity to $8 billion and potentially $10 billion, let's remember, we have a huge opportunity in a giant market. We've talked about new logos. We've talking about continued extension of the platform. We've been talking about moving even beyond into adjacent sec ops. So I think there's a lot of opportunity and a lot of reason to be really excited about the opportunity. But that's how I would think about the longer term model. If I may add, I'm only focused on $10 billion. No question. Adam, do you want to finish off the first question? Let me try to. So from the identity piece, leveraging identity as context is part and parcel to everything we've done in Zero Trust. It requires that. It does not require you necessarily owning it. Customers use identity for lots of different things, and they have identity players and components that bridge well beyond security. So if you wantto get into that space, you have to sign up to do all of those pieces. So we've been very successful leveraging it as key context. The other piece is identity players are not typically inline. They're inline for one piece of it. They are not an inline processing engine, which is what we are. That's where we are focused. We're focused on leveraging that context. It's a relationship for sure. It is getting a lot of attention, but I don't see the burning need to say we have to own it because I I think that brings a lot of other distraction, and you saw what we have to go after. We have a lot in front of us, and I think focus is gonna be very important as well. If I may add, in the agentic world, identity, basic identity, but who are you, is coming from the party that's creating agents. That's the starting point. Identity doesn't give any more context than who you are, who are. The rest of the context come from sitting in line. We have lots of context today for user identity, as Thelma talked about, without having the core identity. Would I go and spend $25 billion and hoping that this business will become a genetic identity? Not really. Will I work with Microsoft and Azure and AWS and Google and the world and take identity from them, add context to it, add intent to it? That's a winning formula. Adam. Awesome. Adam Borg with Stifel. Thanks so much for the time and really appreciate the conversation today. Maybe for Ross, so talking about the new logo opportunity, especially down market, talk about the confidence you have there, especially given investor perception, it's a lot more competitive down market. So like what changes would need to be made, if any, on the pricing and packaging side to be more competitive there? Thanks. Sure. So at a high level, and keep this brief, a couple of things. A, we are looking at more simple bundles, like t-shirt sizes, that we are then leveraging our partner ecosystem. I talked about Kerasoft, and we are look at doing similar relationships in other geographies. And so having those simplified bundles through a partner machine that can leverage and touch all those organizations that we just don't have the human capacity to do, is why I feel confident that we can grow the new logos in our commercial and SMB space. I mean, the interesting challenge we have is the upsell opportunity is so big, the new logo opportunity is still big. We are trying to do a balancing act rather than saying A versus B. And the only thing I would add to it is, remember, we have about 4,600 of what we've determined to be about 20,000 of the largest customers. So there is a 75% white space, if you will, relative to new logos. So there's a large opportunity for us to continue to replicate the excess that we've had with existing customers into the 75% that we're yet to serve. Okay. Let's go back to John in the corner and then Sockett up in the front. Thanks. Good eyes, Kim. I'm way back here. It's John DeFucci from Guggenheim. I guess I want to go back to Fatima's question because AI does look like a discrete opportunity at this point out there, and that's how all cyber companies are addressing it. But if AI becomes part of everything and is much broader, as DeWall mentioned earlier, doesn't it just become part of anything you do and everything everybody does? And if that's the case, that $2 billion number you put out there to me, I just wonder how we should be thinking about that. And frankly, the risk in it. And then just a quick follow-up for Kevin. Why in 26 did the delta between free cash flow and operating cash flow narrow so much in 26? And I don't think it was just CapEx, but thank you. You want to just talk? Yeah, I'm happy to go with the last one. John, we did see a pretty significant tick up in CapEx as a result of pricing and supply chain related items. The other deviations is really just timing. So maybe I can start on the AI and data side of it. We're going to keep the answer short this time. Thank you. Yes, AI and Data are interrelated. You saw the presentation for the first time I've seen any presentation with AI and Datai sitting together. discovery of AI data, risk of AI and data, who accesses what, they're all related in our solution. So we are selling it as a combined solution, but also giving options to customers to buy individual solutions. There are separate buying centers for data security today. AI is separate, but they're coming together. As time goes on, you're going to see more and more stuff being sold together. I'm sorry, it's more than just data. If you think of endpoint, you think of identity, you Think of, I mean, they're all related to data, but it's more than Just data, it is process. It's things happening, everything happening out there, right? I'm just concerned about the two billion out there, because I think you guys are doing a great job, but that seems like some risk to put that out there. Lots is happening, but we need to figure out Our job is to make sure right entity can access right entity so things don't get compromised and data doesn't lose. So we're not trying to figure and fix every workflow in the company. Right security, the right access for that identity plays a role. Inspection plays a roll. And AI is a main source and data is one of the key pieces to look at. So we can take it more offline. Thank you, John. Saket, right up here in front. Thanks, Zach, Kelly at Barclays, great, great session as always. So Jay, this question's for you. The message on the mix shift as part of this long-term plan is very clear. There's about 25% of ARR, give or take, that will become a bigger mix by 2031. But what about the user part, which is right now is the vast majority, I think, let's just assuming the 8 billion right now, right, just for a base case, that'll still be the majority, I think, right by 2031. You correct me if I'm wrong. I just want to ask the question, can the user part of the business grow faster than double digits? And a question that hasn't been asked yet today that I think is on all of our minds is, what about competition? Can we just do a level set on competition in the user market? So if you think about competition, first of all, we pioneered securing users with zero trust. Largely, competition is now trying to secure users without zero trust, when you guys talk about all the firewall vendors as a competition, none of them are zero trust even for users, all this SC and SSC, is still firewalls and VPNs running in the cloud, that's a starting point, and they cannot afford to change to zero trust architecture, because of cannibalization that's going to cause, because all the firewalls go away. Our customers are telling us that they need to take care of that. So number one, the next part, we are not sitting at users. Customers are asking for zero-toss everywhere. I'm not going and saying buy my user stuff. I'm going and say you need zero-to-tose everywhere. Users, branches, devices, cloud workloads, and next becomes agents. You need to look at the solution and customers buying us. Holistic story, user is one part of it. It's an important part of It. But I think if you ask me what piece will be the biggest piece, it's too early to tell, but I'll tell you, agents will become the biggest pieces because that number will grow significantly. That's even more risk than users. And we are so well positioned to sit in line, understand how to deal with agentic traffic. And also we've taken one other approach. A lot of stuff will happen in the cloud and exchange. Some will happen on the endpoint. And we've all talked about having a solution that takes our endpoint and exchange both. We're pretty unique in that area. Okay, we'll do Peter in the second row and then up to the front for Roger. Thank you. Peter Levine, Evercore. A follow-up question to Zach. it's you know we think about competition you know your predecessor what are you keeping what are you changing so if you think about you now stepping in the role like what are You thinking about just help us level set some of the changes anything that you're thinking about that worked and then second Kevin to John's question I was gonna ask it similar but maybe if you pick about the two billion is that a base case is that like bull case bear case like how did you come up with that number and the realistic, based on the products you have today, what does that fit? Yes, I'm happy to kick it off. Look, we outlined a base case that gets us to $8 billion by fiscal 31, more than double the ARR. And I kind of articulated through how we see the growth opportunities to achieve that case. The $10 billion is really a scenario where AI happens faster and in a much more meaningful way. And it happens across the totality of what we offer. One of the things that you've heard from us this entire morning is we believe that the architectural foundation of what мы offer is uniquely going to be driven by AI. When you think about all of the different threats and exposures that exist, the ability to reduce your tech service and eliminate lateral movement is just fundamental to how you secure AI. And so we think that everything in the platform will ultimately benefit. So I'm not trying to put a $2 billion bogey on just AI. It really is the momentum that likely could play out with AI and the benefits across the totality of the platform as a result of that. If I may add, I think the demand is growing. Everything's growing so rapidly. and we will not be constrained by market size. I don't believe we'll be constrained by competition. The main thing will be how well we execute as a company. Our execution on internal products and go-to-market is really what we are looking at and that's why we've given you the targets we're giving you. Yeah, and on your first question, great segue, Jay. What I'm thinking about is execution. Yeah. I've been at Zscaler three years. I have been part of every strategic conversation. I was part of the annual planning. So we have a plan and it's time to go execute it. And the elements of that plan we've talked about, I think a bunch, you know, new logos, platform expansion, international public sector, sovereign cloud, maximizing our specialty sales team. And, you know, those are the things I'm focused on. And it's really about execution versus a change in strategy, because I think we have the right strategy and it's time to put the foot on the gas. Yes, to add on, the question was what changes? As Kross has said, we aren't expecting any meaningful changes. The approach is working. We just need to keep on executing with focus, a strong team, strong bench. Changes from time to time are a good thing. So I'm very confident in the leadership and go-to-market, and we will execute and we'll deliver on our numbers. Okay, Roger, right here in front. Cool, thank you. Roger Boy with UBS. Jay, it felt like one of the themes today was the strength that new products are having and driving new logos. And you talked about 40% of Zero Trust branch customers that are new to Zscaler, the 350K branch win that you had. and the ability to land with AI Gateway. It seems like a lot of this may be product-led. You talked about the differentiation you have compared to SD-WAN as well as AI Gateway, but can you talk about how these customers are finding Zscaler? And maybe for Ross, how do you think about building sustainable sales motions to go after these non-ZIA and CPA lands, and how does that kind of factor in kind of the next five years? So your first part, Zero Trust Branch, it's growing very rapidly, and the new logo, actually new logos aren't coming because of just the branch. New logos are coming because when the customer buys zero trust for users, they want zero to the branch at the same time. So the deal is getting bigger and this is helping us win bigger deals and a bigger part of the solution. You always seen us do early on. Remember we used to have ZIA just for business, enterprise, we combined the bundles, ZIA, ZPA. It's natural when customers want a bigger part of the platform, zero-trust users and branches happening together. We're starting to see more and more cloud workloads happening together Our goal is to sell the platform. Since it's an integrated platform, it's working. And I think your other question is around sales plays? Yeah, just anything about investing around landing. Very important. And so, Adam, maybe you can chime in. So we work with the product teams very closely to develop these sales plays and make these sales plays consumable for our field as well as our customers, pardon me. And then we work avec our marketing team to launch that out there. So we've got roughly five to six sales plays that our teams have been enabled on, which are at a high-level conversation, and then they bring in the real technical people to get under the covers. Yeah, very quick add on that. And the reason why I highlighted this in my presentation, so yeah, I'm glad you did pick up on it. I'm two years at Zscaler. That was not as high a priority of a focus. So that did involve, you have to adjust your products so that they are easier to land and more focused. And that's what we did. And so that creates this new opportunity for messaging and how to explain to customers where you can start with us and then the selling motion of that. And so this is really the year where we're driving that with force, so we're excited to see where that plays out. That's why we wanted to articulate that to this group. Okay, we'll go to the second row here, Shrenik and then Gray, and then we'll move down to Craig. Great. Shreni Kotari from BED. So all of you guys did reinforce the re-experience potential and the reexperiencing embedded in the long-term framework. did not go too deep into what is still relatively under-monetized or unmonetised opportunity to monetise the zero-trust exchange for agents, which is going to be indexed towards traffic and agent transactions. So just how should we think about that agented monetisation evolving? And then how is that contemplated in the long-term framework beyond just kind of reactivation through new logos and users and seats? I'll start. So if there's number one thing that's holding enterprises back from fully rolling out agents is the security policy governance concern. And it's not easy to do. Everyone seems to talk about, I got control plane, I got this plane. How do you even get the data? And agents can be, the control plane can be sitting on an EDR endpoint. It can be setting here. You need to be able to take agentic traffic coming from Salesforce, coming from Snowflake, Databricks, hyperscalers, endpoint, all these places. We've done some of the same kind of stuff before when we did cloud workloads, when we Z users part of it. So we are pretty well positioned. We have a product that we launched in June. It's in early availability right now. And this is going to take some time, even though there's more interest in the design partners, customers for this product than any other product. When you're sitting in line, you need to understand things right. There are many things that are nuanced in the agentic world, intent, all those contexts. Our team is figuring out, working with them, but agentic product, agentic exchange will take some longer time. Yes. The other products, visibility, discovery, access graph, all this stuff is good seeding for us. I think we're well prepared. So are we really factoring exactly in what we know about agenting this chain? It's a little bit too early to say, but early indicators are very positive. Yeah. To add to what Jay said, one of the advantages we have is that we already have a footprint where agents are getting deployed. On the endpoint, we have a client that can steer traffic to our AI gateway already, right? Then we have seen in public clouds, NeoCloud, edge compute platforms, SaaS services where the agents are embedded. We are able to steer traffic from them. So a lot of that complexity is what we have solved. Now, building the functional layer of features and policies and intent and context is what мы строим. So very strong design partnership, and we expect this to grow in a meaningful way. Let's head to Gray in the second row. Great. Thank you. Thank you very much. Gray Powell with US Bank. So I actually wanted to follow up on Roger's question earlier. And Jay, you hit on this. But we frequently hear that customers they want to buy Secure Service Edge and SD-WAN together like in the same motion. So, I guess my question is what gets customers comfortable with your product over a dedicated SD-WAN product or something that just gets bundled in with network security? And then, I mean, it sounds like you're seeing good demand for it, so I'm just curious, like, what kind of uplift do you see to the typical zero trust for user ACV or whatever metric you want to give when customers take zero trust branch? So first of all, you know, analysts, industry analysts have asked us, going to SD-WAN business, right? I said, we want disruptive technologies that have no lateral movement. So we refused to really go with SD-WAN market when everyone kind of said, I'm SD-WAN, I am SD- WAN. So it took us some time. We built zero-dose branch, no lateral movement. It's becoming more and more important today. When we were rolling out, getting the product out last year, early stage, I was thinking that perhaps two-thirds of our customers will embrace it. Others will still say, I want my SD-wan. I can tell you every Zscaler customer I talk to, they're all ready to dump SD-WAN and go with Zero Trust Branch. I am surprised, but that's what results are. In this frontier model world where risks are growing of breaches and lateral movement, SD-WAN is a risk. The only time customers buy SD-wan now, when we haven't been able to spend time and show them the merits of it, When we engage, we tell them, SD-WAN, elimination and having zero trust branch and user is a very natural thing. And the next day, I want to be here and say zero trust cloud workload is a natural thing, and for the same thing, and agents, being able to do zero trust everywhere is the key strength of Zscaler, and we'll build upon it. Greg? Hi, it's Greg Moskowitz from Mizuho. I thought you did a really good job today outlining your Zero Trust Everywhere solution and specifically the benefits of it, you know, hiding all applications, strong microsegmentation, preventing lateral movement, layering on extensive AI security protection, et cetera. But the SASE market does seem to have become more crowded or minimally noisier, I would say, in recent months, if not last year or two. When you speak with customers, Jay, Ross, how much confusion exists? And I think all of us here can appreciate that strong execution can drive a winning outcome. But over, again, the past year or so, has it become a bit more difficult to articulate your value proposition to customers and to close new and upsell transactions? Thank you. I'll start by saying, look, when we get engaged, we almost always win because we're able to clarify it. It is true that every vendor in security wants to be in SASE because if they aren't in Sase, SASE is a big part of it, then they're what are in. SASE eventually, if done right, will consume all the firewall business. So if really firewall vendors were to do real SASE, they'll be worried about SASE because no firewalls will be needed. But our goal is really not to pigeonhole SASE for users. We bring the story together. Our goal is to show differentiation on branch level, show differentiation in cloud workflow level. Wherever we go, who offers Zero Trust everywhere? Or who offers zero to SSE everywhere? What do you do in the cloud? It's same old virtual firewalls. Nothing, nothing is new. Branch is same old SD-WAN. And in the user level, it's firewall in the Cloud as a virtual firewall. It's VPN in the Clou as a Virtual VPN. That's not real competition. and I think a lot of bundling that has happened they'll come out and I'm feeling very bullish and confident we just need to keep on executing on the sales side Jay, I don't have a lot to add I'm very bullish and confident as well it's about execution as Jay mentioned we are fundamentally different and it's our job to explain the value in that difference Let's go to Eric Alright All right. Thank you. Eric Keith with KeyBank. Question for DeWall, I guess. That was really interesting, the comment you had that you were the only vendor with the context and intent to understand agentic and AI actions. So can you just elaborate on that point a little bit more and maybe help us delineate the lines of where the endpoint visibility ends and where your visibility picks up? Because obviously there's a lot of rhetoric that a lot of the agentic activity happens on the endpoint. So help us understand what's incremental in terms of unique data that you can provide and be that enforcement point? Yeah, so I'll start by saying that context layer in a lot of agent security platform is tied to agent identity only. Going back to what I said earlier, the visibility we are building with connecting the dots of data identity and AI and using that as the context with our gateway and endpoint is unique. So that context there is the golden layer. A lot of new AI gateways that are coming in the market are very intent focused or use case focused. I think one of the biggest advantages in that area is, yes, the intent policy stack will become very commoditized over a period of time, but being able to build AI gateway at scale at which we run our cloud is something as a muscle that we as a company have built. So bringing context from a zero-trust perspective and intent from a functional perspective, when you bring it together, we are seeing that validation coming from our customers, from a design perspective, that we are unique. Your point on endpoint AI security is good because when we think about where policies can be enforced, the amount of attack surface that gets generated in the endpoint with the actions that AI agentic applications can do on the endpoint with data, as well as actions they can take, they actually are becoming hard to control before even it hits the network. You can do a lot of damage within the network itself or before it hits that gateway. That's why being able to meaningfully do when things are happening within a prompt, controlling that kind of skill files that people are downloading, for example. So those kind of controls could be implemented there. but one thing we have already done is our endpoint AI security product is fully integrated with our gateway. When the traffic needs to leave to the internet or to an agentic application, that is subject to gateway policy if the agentic action on the endpoint is not triggered. So it's best of both our approaches that we are taking in such things. It's either or. Okay, hands one more time. Josh, right there. Thanks, guys. Joshua Tilton from Wolf Research. There's been a lot of talk today about re-accelerating new logos. If you look at the other side of that, it's been pretty impressive that you've been able to sustain a mid-teens NRR for the last three years. When you look at the FY31 target, maybe just in the context of that $8 billion, do you still expect to be achieving a midteens NRR rate? I didn't call out a particular longer-term target for net expansion, but it's fair to say that I would expect that we continue to have significant success upselling based on everything that you heard today, the broader platform, et cetera. Okay. Probably time for one, maybe two more. We'll go over to the second row aisle. And then I think we have one here and you'll be our last. Thanks. Mike Sikos from Needham. And thanks again for hosting the day. Maybe just building off the building blocks here. But Ross, I know you were saying we're looking at the execution and you had spoken about the Hunter territories earlier. Can you just give us or elaborate on that further? Like, where are we? Was that something that we just established at sales kickoff and what's required as far as hiring bodies to stand that up, ramp time to start seeing the fruits of those investments? Yeah, and Jay, if you want to chime in as well, you and I have had a lot of discussions about this. So historically, we have had new logo hunters around the globe, and we have expanded that here in FY27. That is not our only new logo motion, though. We have territories that have a combination. They're hybrid territories with new logos and existing customers where that makes sense. So we are building out those additional territories, or they have been built out, I should say, and hiring is almost complete for all of those. We've talked about new logos. I do want to come back and remind everybody the white space opportunity we have within our existing customers. We've only got 4,600 out of the 20,000. And then if you look at those 4,600, there's like a $20 billion TAM, and we have 3.8 of that. So, yes, new logos are important, but we have a tremendous opportunity within our existing customer set. If I may add, yes. As a part of the fiscal 27 plan, the territories were very well done. We spend a lot of time understanding each territory. What's the mix of new logo versus upsell current customers? Because ideally, you want to give a balance of both to many reps, but then having some of the very focused hunter territories. Both are in motion, so I don't want to send a message that we are expecting new logo only from hunters-only territories. That's one more step, a combination of that and existing reps who have both new and upsell opportunities. We expect good results this year. Yes, spot on, Jay. Okay, well, did you, Nate? And then I'm going to add one more rich poll in, and then we're going to wrap. Thank you, Junaid Siddiqui, Truist Securities. Jay, we've seen some of your competitors expand deeper into observability, and we're seeing some of the swim lanes convert to security. Where do you see Zscaler uniquely positioned in that convergence? And, you know, given your in-line architecture and vision around agentic sec ops, do you see evolving towards an operational control plane beyond just security? So we generally got very strong convictions about where we want to go, where we don't want to Go. And generally, it's not driven by somebody buying a vendor A or vendor B or vendor C. We think our customers want meaningful, integrated solutions in certain areas. You saw the TAM we had today. It's a massive TAM in a very synergistic area. So do we need to get into observability to look at performance across everything? That's a secondary area. Not really. The core markets we shared with you, they're so big, so massive. I would rather dominate those markets than trying to expand into other markets. Where it becomes complementary really quick and additional, though, is, as I said, if we're mission-critical infrastructure for a customer with our Zero Trust SASE everywhere, understanding the end-to-end experience on that is quite important. And that's why we do have our ZDX, but it's specifically about the experience for things on Zscaler's platform across Zero Trust SSASE, not general IT observability. So I think that's the right lane for us to be in for it. And it is a big value for our customers. Okay, I'm going to try to squeeze one more in. Rich Polin in the front row. Thank you, Kim. Rich PolIN from Wells Fargo. I think just to kind of bring it all together, I think one of the questions that we've gotten from investors is just thinking about, you know, SASE and the architectural shift that Zscaler proposes is a large undertaking. And so I think part of the reason why you've seen some of the SD-WAN is because it's kind of almost the path of least resistance in some cases. And so while customers are thinking about AI and all these other things that are going on right now in this current environment, just kind of how do you think about getting customers that would be new logos or embracing zero trust everywhere over that hump? I'll start. Actually, moving to Z-scale or Zero Trust is not a large undertaking. We've seen customers deploying, say, Zero Trust users in a matter of weeks or a few months. All you need to do is start with a lightweight agent on the endpoint. You don't even touch your network. The traffic starts taking whatever path is available. You define some policies. We can be fully up and running. Now, it can take time to dismantle all the stuff that's sitting there. But customers typically get moving with rolled-out disease. They'll start getting the benefit of security and then have the benefit of removing the stuff. Now, if we get some inertia and pushback, generally that comes from lower level. People who own those stuff, a little bit of job security, a little Bit of Inertia, I know this thing too. That's why we have very strong relations with CIOs, CISOs, CTOs, AI offices, who drives change? The leadership does. When they want to embrace AI, they really become a catalyst for us. So we're seeing AI as a catalyst, not to say that Zscaler requires a big info change. The world has moved to the level where the management is buying our story. That's why we're seen a lot of expansions. I mean, the customer you heard today and the example we shared with you today, these customers starting with $1 million to $5 to $10 to $20 million. This is real. It's happening because of the benefits we offer. Okay, that's it on Q&A. Jay, do you want to wrap us up? Yes. Thank you again for joining us today. We hope that today's presentation has given an opportunity to see that one, Zscaler is the cybersecurity platform for the AI era. Two, AI is the largest tailwind our business has ever seen. And three, we have strengthened our go-to-market engine, and we intend to keep on penetrating it, driving it to achieve our large TAM. We have multiple growth engines that will accelerate our growth to move forward, and we look forward to proving you that we can do it in coming quarters. Okay. Thank you, Jay. And thanks for all of you for joining us today and making the time. For those of you online, this will end our webcast.