Zscaler, Inc. (ZS) 2019 Q1 法說會逐字稿

Good day, and welcome to the Zscaler First Quarter 2019 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Bill Choi, VP of Investor Relations. Please go ahead, sir.

大家好，歡迎參加 Zscaler 2019 會計年度第一季財報電話會議。今天的會議將進行錄音。此刻，我想把會議交給投資人關係副總裁 Bill Choi 先生。先生，請開始。

Good afternoon, and thank you for joining us to discuss Zscaler's financial results for the fiscal first quarter 2019. With me on the call are Jay Chaudhry, Chairman and CEO; and Remo Canessa, CFO. By now, everyone should have access to our earnings announcement. This announcement may also be found on our website in the Investor Relations section. In addition, a supplemental financial schedule was posted to our website earlier today.

各位下午好，感謝各位加入我們，一同討論 Zscaler 2019 會計年度第一季的財務結果。與我一同參與電話會議的有董事長暨執行長 Jay Chaudhry，以及財務長 Remo Canessa。到目前為止，大家應該都已取得我們的財報新聞稿。該公告也可在我們網站的投資人關係專區找到。此外，我們今天稍早也已在網站上發布補充財務明細表。

Let me remind you that we'll be making forward-looking statements during today's discussion, including, but not limited, the company's anticipated future revenue, calculated billings, operating performance, gross margin, operating expenses, net loss, pro forma net loss per share, free cash flow, and dollar-based net retention rate. These statements and other comments are not guarantees of future performance but rather are subject to risk and uncertainty, some of which are beyond our control. Our actual results may differ significantly from those projected or suggested in any forward-looking statements. These forward-looking statements apply as of today, and you should not rely on them as representing our views in the future. We undertake no obligation to update these statements after this call. For a more complete discussion of the risks and uncertainties that could impact our future operating results and financial condition, please see our filings with the Securities and Exchange Commission as well as in today's earnings release.

提醒各位，在今天的討論中我們將作出前瞻性陳述，包括但不限於公司對未來營收、計算後帳單金額（calculated billings）、營運表現、毛利率、營業費用、淨損、按備考（pro forma）計算之每股淨損、自由現金流，以及以美元計價的淨留存率（dollar-based net retention rate）的預期。這些陳述及其他評論並非對未來表現的保證，而是受到風險與不確定性影響，其中部分超出我們的控制範圍。我們的實際結果可能與任何前瞻性陳述中所預測或暗示的結果有重大差異。這些前瞻性陳述僅適用於今日，您不應將其視為代表我們未來的觀點。本次電話會議後，我們不承擔更新這些陳述的義務。如需更完整了解可能影響我們未來營運結果與財務狀況的風險與不確定性，請參閱我們向美國證券交易委員會（SEC）提交的文件，以及今日的財報新聞稿。

Unless otherwise noted, all numbers we talk about today will be on an adjusted non-GAAP basis. Please refer to our earnings release on the Investor Relations portion of our website for a reconciliation of GAAP to the non-GAAP. For historical periods, the GAAP to the non-GAAP reconciliations can be found in the supplemental financial information referenced a few moments ago.

除非另有說明，我們今天討論的所有數字皆以調整後的非 GAAP 基礎呈現。請參閱我們網站投資人關係專區的財報新聞稿，以取得 GAAP 與非 GAAP 之間的調節表。就歷史期間而言，GAAP 與非 GAAP 的調節亦可在剛才提到的補充財務資訊中找到。

I would also like to inform you that we will be participating in the Barclays Global TMT Conference in San Francisco tomorrow and the Needham Growth Conference in New York on Tuesday, January 15.

我也想告知各位，我們將於明天在舊金山參加 Barclays 全球 TMT 大會，並於 1 月 15 日（週二）在紐約參加 Needham 成長大會。

Now I'd like to turn the call over to Jay.

現在我想把電話會議交給 Jay。

Thank you, Bill, and thank you, everyone, for your interest in Zscaler. I'm pleased to share with you our solid first quarter results. We posted strong revenue and calculated billings as we continue to experience robust growth in our business. Our revenue grew 59% year-over-year to $63.3 million and total billings grew 56% year-over-year to $64.6 million.

謝謝你，Bill，也謝謝各位對 Zscaler 的關注。我很高興與各位分享我們穩健的第一季成果。隨著我們的業務持續展現強勁成長，我們繳出亮眼的營收與計算後帳單金額。我們的營收年增 59% 至 6,330 萬美元，總帳單金額年增 56% 至 6,460 萬美元。

In addition to our top line growth, we achieved positive operating profit and free cash flow for the quarter. Our operating margins improved approximately 20 percentage points year-over-year to 2%. We are very pleased with reaching profitability this quarter. This demonstrates the leverage in our business model. Having said that, we will continue to aggressively invest in our business to pursue our significant market opportunity.

除了營收成長之外，我們本季也達成正向的營業利益與自由現金流。我們的營業利益率較去年同期提升約 20 個百分點至 2%。我們對於本季達成獲利感到非常滿意。這展現了我們商業模式的槓桿效益。儘管如此，我們仍將持續積極投資於業務，以掌握龐大的市場機會。

We believe the primary driver for our market success is the change in data center and network architecture to support the adoption of cloud. Cloud and mobility are breaking the traditional perimeter where organizations built a hub-and-spoke network to backhaul branch office traffic over private networks to the data center. Then they built a moat of security appliances to secure the network -- that is why we call it network security.

我們認為，推動我們市場成功的主要動力，是資料中心與網路架構為支援雲端採用而發生的變革。雲端與行動化正在打破傳統邊界；過去組織建立樞紐—輻射（hub-and-spoke）網路，將分支辦公室流量透過私有網路回傳（backhaul）至資料中心。接著他們建立一圈由各式安全設備構成的「護城河」來保護網路——這也是我們稱之為「網路安全」的原因。

In the cloud world, applications can be anywhere and devices and users can be anywhere; the notion of "inside the network" or "outside the network" is disappearing. We believe the corporate network is changing to a direct to Internet architecture. This is commonly known as "local Internet breakout," which significantly improves user experience and lowers networking costs.

在雲端世界中，應用程式可以在任何地方，裝置與使用者也可以在任何地方；「在網路內部」或「在網路外部」的概念正在消失。我們認為企業網路正轉變為直接連網（direct to Internet）的架構。這通常被稱為「本地網際網路出口」（local Internet breakout），可大幅改善使用者體驗並降低網路成本。

But when you go direct to the Internet, what is the corporate network and where would you build the moat? How do you do network security in this world? Well, you can't. Network security is becoming irrelevant. Designed for the world, which has no walls, Zscaler Security Cloud acts as a business policy enforcement engine, deployed across 100 plus data centers to securely connect the right user to the right application: ZIA for Internet and SaaS applications and ZPA for internal applications in your data center or the public cloud.

但當你直接連上網際網路時，企業網路是什麼？又要在哪裡建立護城河？在這樣的世界裡要如何做網路安全？答案是：做不到。網路安全正變得不再重要。Zscaler Security Cloud 是為「沒有圍牆」的世界所設計，作為企業政策的執行引擎，部署於 100 多個資料中心，安全地將正確的使用者連到正確的應用程式：ZIA 用於網際網路與 SaaS 應用，ZPA 用於您資料中心或公有雲中的內部應用程式。

As organizations embrace the cloud, more and more of our deals start with our high-end Transformation Bundle, which includes cloud firewall, IPS and sandboxing. I would like to highlight three new customer wins in the quarter that we believe illustrate the value we deliver for secure network transformation.

隨著組織擁抱雲端，我們越來越多的交易是從高階的 Transformation Bundle 開始，其中包含雲端防火牆、IPS 與沙箱（sandboxing）。我想重點分享本季三個新客戶的成功案例，我們認為這些案例展現了我們在安全網路轉型方面所提供的價值。

A Fortune 100 conglomerate purchased Transformation Bundle for all of its 100,000 employees. While we are replacing traditional network security appliances, such as secure web gateway, branch firewall, DNS in a dozen data centers, it is mostly a greenfield opportunity -- we are creating about 400 new secure local Internet breakouts. Zscaler will be the only security check-post for traffic headed to the Internet from all of the branches and all the data centers, thus, enabling a cloud-first approach to applications, such as Office 365. They also purchased ZPA for third-party contractors who needed access to internal applications, replacing legacy VPN that provides them access to the entire corporate network increasing their security risk.

一家《財富》100 大的綜合企業為其 10 萬名員工採購了 Transformation Bundle。我們正在取代傳統網路安全設備，例如安全網關（secure web gateway）、分支防火牆、DNS 等，涵蓋十多個資料中心；但這多半是一個綠地（greenfield）機會——我們正在建立約 400 個新的安全本地網際網路出口。Zscaler 將成為所有分支與所有資料中心對外上網流量的唯一安全檢查站（security check-post），從而支援以雲端優先（cloud-first）的方式使用應用程式，例如 Office 365。他們也為需要存取內部應用程式的第三方承包商採購了 ZPA，以取代傳統 VPN；傳統 VPN 會讓承包商存取整個企業網路，進而提高安全風險。

In another deal, a Fortune 500 global food and beverage company purchased Transformation Bundle for 52,000 users to secure local Internet breakouts for over 400 sites, including about 350 international locations. This customer had already realized the need for local breakouts, but went about it the old way -- they installed over 300 branch firewalls, which was complex and required substantial resources to manage. Our system integrator partner saw an opportunity for the customer to do it the new way -- using Zscaler's cloud platform. Our approach enhances security with coverage of all users, including mobile, with full SSL inspection. It also improves user experience. All this at a lower cost of ownership and greater operational simplicity, while eliminating on-prem security appliances. This customer also purchased DLP for all users. When customers do local Internet breakout, data leakage becomes a major risk and they need a cloud-based DLP solution to secure sensitive information at any location.

在另一筆交易中，一家《財富》500 大的全球食品與飲料公司為 52,000 名使用者採購了 Transformation Bundle，以保護超過 400 個據點的本地網際網路出口，其中包含約 350 個海外據點。該客戶早已意識到需要本地出口，但採用的是舊方法——安裝了超過 300 台分支防火牆，管理複雜且需要大量資源。我們的系統整合商合作夥伴看到了機會，讓客戶以新方式來做——使用 Zscaler 的雲端平台。我們的方法透過涵蓋所有使用者（包含行動使用者）並進行完整 SSL 檢查來強化安全性。同時也改善使用者體驗。在更低的總持有成本與更高的營運簡化程度下，並可消除地端（on-prem）安全設備。該客戶也為所有使用者採購了 DLP。當客戶採用本地網際網路出口時，資料外洩會成為主要風險，因此需要雲端式 DLP 解決方案，以在任何地點保護敏感資訊。

Another new customer, a global pharma company, had a strategy to pursue a full transformation to the cloud -- for the network and for their applications. To realize this strategy, they bought our Transformation Bundle for ZIA and ZPA for over 15,000 users. They're deploying SD-WAN across 80 sites with Zscaler securing all traffic from these locations. With this new architecture, the customer is estimating a 50% reduction in their $35 million per year MPLS spend plus lower CapEx and management cost for the network and security infrastructure. While ZIA provides secure and fast access to Internet and SaaS, ZPA will do the same for the internal applications, some of which are in the data center, while others are moving to Azure and AWS. The Zscaler platform enables the realization of their strategy - a perimeter-less enterprise with direct access to any service or application from anywhere, on any device without backhauling traffic through the data center.

另一位新客戶是一家全球製藥公司，其策略是推動全面雲端轉型——包括網路與應用程式。為了實現此策略，他們為超過 15,000 名使用者採購了我們的 Transformation Bundle，涵蓋 ZIA 與 ZPA。他們正在 80 個據點部署 SD-WAN，並由 Zscaler 保護這些地點的所有流量。在此新架構下，客戶預估其每年 3,500 萬美元的 MPLS 支出可降低 50%，並同時降低網路與安全基礎設施的資本支出（CapEx）與管理成本。ZIA 提供對網際網路與 SaaS 的安全且快速存取；ZPA 也將為內部應用程式提供同樣能力，其中部分位於資料中心，另一些則正遷移至 Azure 與 AWS。Zscaler 平台使其策略得以落地——打造無邊界（perimeter-less）的企業，從任何地方、任何裝置直接存取任何服務或應用程式，而無需將流量回傳（backhaul）至資料中心。

I also want to highlight 2 up-sell deals with existing customers that are leveraging our platform for the next phase of their cloud journey.

我也想重點說明兩筆來自既有客戶的加購（up-sell）交易，這些客戶正運用我們的平台來支援其雲端旅程下一階段。

A customer in the food processing industry started with Zscaler one year ago with a security-led use case of protecting 50,000 mobile users with our Business Bundle. Last quarter, they purchased the Transformation Bundle and DLP for all 100,000 employees. The value realized from the initial security use case helped us win over the networking team as they began to rearchitect their network for the cloud. This customer had recently deployed the leading next-gen firewalls across 200 sales and manufacturing offices, but they realized that deploying security appliances and spinning virtual machines in the public cloud fails to deliver cloud security. The customer expects Zscaler to save them over $10 million per year on purchasing and managing firewall appliances.

一家食品加工產業的客戶在一年前開始採用 Zscaler，最初以安全為導向的使用案例是透過我們的 Business Bundle 保護 50,000 名行動使用者。上一季，他們購買了 Transformation Bundle，並為全部 100,000 名員工採購 DLP。初始安全使用案例所實現的價值，協助我們在其開始為雲端重新架構網路時，贏得了網路團隊的支持。該客戶近期才在 200 個銷售與製造據點部署了領先的次世代防火牆，但他們意識到，部署安全設備並在公有雲中啟動虛擬機，無法提供雲端安全。該客戶預期 Zscaler 每年可為其在購置與管理防火牆設備方面節省超過 1,000 萬美元。

Finally, let me highlight a customer headquartered in Europe that has been using Business bundle and DLP for 32,000 users. Last quarter, they purchased additional 9,000 seats and added cloud sandbox for all users. Drivers of this deal were two-fold. One, M&A used case -- the customer acquired a competitor in the U.S. and wanted to implement a consistent policy and protection across the entire organization. Number two, this initiative is part of a larger managed network services RFP, where all five telecom service providers bid Zscaler for the security.

最後，我想強調一家總部位於歐洲的客戶，該客戶已為 32,000 名使用者採用 Business bundle 與 DLP。上一季，他們額外購買了 9,000 個席位，並為所有使用者新增雲端沙箱（cloud sandbox）。促成這筆交易的驅動因素有兩點。第一，併購（M&A）使用案例——該客戶收購了美國的一家競爭對手，並希望在整個組織內實施一致的政策與防護。第二，這項計畫是更大型的託管網路服務 RFP（招標案）的一部分，五家電信服務供應商皆以 Zscaler 作為其安全方案進行投標。

With over 40% of our sales in EMEA, we have been very successful in the European market because our cloud service is architect to meet stringent EU data privacy requirements. The only customer data that we store are customer logs, and customers can choose to store these logs in our EU data centers, or they can choose to store them in their own data center.

由於我們超過 40% 的銷售來自 EMEA，我們在歐洲市場非常成功，因為我們的雲端服務架構可滿足嚴格的歐盟資料隱私要求。我們唯一儲存的客戶資料是客戶日誌（logs），客戶可選擇將這些日誌儲存在我們的歐盟資料中心，或選擇儲存在其自有資料中心。

We believe these deals demonstrate the tremendous value we are delivering. Our strategic advantage for us is the partnerships with large system integrators and global service providers who implement cloud transformation projects. SI and SPs represent over 50% of our revenue, and they are the fastest growing channel for us. We will continue to invest in our partners to enable them to create leverage and accelerate our sales.

我們相信這些交易展現了我們所提供的巨大價值。我們的策略優勢在於與大型系統整合商以及執行雲端轉型專案的全球服務供應商建立合作夥伴關係。系統整合商（SI）與服務供應商（SP）貢獻了我們超過 50% 的營收，且是我們成長最快的通路。我們將持續投資於合作夥伴，使其能創造槓桿效益並加速我們的銷售。

We are investing in a go-to-market capabilities, which enables us to sell top-down at the C-level. During the quarter, we hired a new CMO, Micheline Nijmeh, with deep experience in enterprise marketing and proven ability to grow revenue and pipeline. In addition, we hired Kavitha Mariappan, as an SVP for a newly created role to drive customer experience and transformation. With these two roles filled, our priority remains to find the right leader for our global sales organization. With strong sales leaders in place for Americas and International markets, I'm confident that our sales momentum will continue. We also continue to expand our global salesforce.

我們正在投資於市場進入（go-to-market）能力，使我們能以自上而下的方式向 C-level 銷售。本季我們聘請了新的 CMO——Micheline Nijmeh，她在企業行銷方面具備深厚經驗，並有經證實可推動營收與銷售管線成長的能力。此外，我們也聘請 Kavitha Mariappan 擔任資深副總裁（SVP），負責一個新設立的職務，以推動客戶體驗與轉型。在這兩個職務到位後，我們的優先事項仍是為全球銷售組織找到合適的領導者。在美洲與國際市場均已配置強而有力的銷售領導團隊之下，我有信心我們的銷售動能將持續。我們也持續擴大全球銷售團隊。

Overall, we are executing well on our vision. We believe we have a significant competitive advantage on the technology and architecture for cloud security. We have 10 years of operational experience running our security cloud at scale. We process about 60 billion Internet request per day, which you can see on our website real-time. Each day, we detect and block about 100 million threats and perform more than 120,000 unique security updates. This network effect delivers superior security as compared to traditional appliances or a hybrid security cloud.

整體而言，我們正良好地執行我們的願景。我們相信在雲端安全的技術與架構上具備顯著的競爭優勢。我們擁有 10 年在大規模運行安全雲的營運經驗。我們每天處理約 600 億次網際網路請求，您可在我們網站上即時看到。每天我們偵測並封鎖約 1 億個威脅，並執行超過 120,000 次獨特的安全更新。相較於傳統設備或混合式安全雲，這種網路效應可提供更優異的安全性。

Last week's report by Gartner named Zscaler a leader in its Secure Web Gateways Magic Quadrant for the eighth year in a row.

Gartner 上週的報告連續第八年將 Zscaler 評為其《安全網頁閘道（Secure Web Gateways）魔力象限》中的領導者。

In October, we brought our Zenith Live Cloud Summit to London, with hundreds of customers and partners attending from 19 countries. Zenith Live is where CIOs, CTOs, CISOs, security and networking practitioners meet to discuss cloud transformation with insights from leaders who have gone through this journey. We had an outstanding lineup of keynote speakers, including Microsoft, Siemens, Orange Business Services, Carlsberg Group and others.

10 月，我們將 Zenith Live Cloud Summit 帶到倫敦，來自 19 個國家的數百位客戶與合作夥伴出席。Zenith Live 是 CIO、CTO、CISO 以及資安與網路實務工作者聚集之處，透過已走過這段旅程的領導者洞見，共同討論雲端轉型。我們安排了非常出色的主題演講講者陣容，包括 Microsoft、Siemens、Orange Business Services、Carlsberg Group 等。

In summary, we are very pleased with our strong Q1 results and continued momentum in our business. We believe we are in the early innings of a significant market opportunity to disrupt traditional network security.

總結而言，我們對強勁的第一季（Q1）業績以及業務持續的動能感到非常滿意。我們相信，我們正處於一個重大市場機會的早期階段，有望顛覆傳統網路安全。

I'd like to now turn over the call to Remo to walk through our financial results.

接下來我想把電話會議交給 Remo，請他帶大家回顧我們的財務結果。

Thank you, Jay. As Jay mentioned, we had a very strong start to our fiscal year. Revenue for the quarter was $63.3 million, up 13% sequentially and 59% year-over-year. From a geographic perspective, for the quarter, Americas represented 49% of revenue, EMEA was 43% and APJ was 8%.

謝謝你，Jay。如 Jay 所提到的，我們在本財政年度有一個非常強勁的開局。本季營收為 6,330 萬美元，較前一季成長 13%，較去年同期成長 59%。從地區來看，本季美洲占營收 49%，EMEA 占 43%，APJ 占 8%。

Turning to calculated billings, which we define as the change in deferred revenue for the quarter plus total revenue recognized in that quarter. Billings grew 56% year-over-year to $64.6 million. As a reminder, historically, Q2 and Q4 have been our strongest billings quarters with sequential declines in Q1 and Q3 quarters, respectively. The sequential decline in Q1 is higher than prior years due to a difficult comparison from a large upfront deal we had in Q4. Excluding the $16.5 million upfront deal from Q4, billings would have declined sequentially to 18%, which is an improvement over the 25% declines seen in the prior 2 years. Also, as a reminder, we primarily invoice our customers one year in advance, and our contract terms are typically one to three years. The upfront greater-than-one-year billings year-over-year were fairly small in both periods.

接著談計算後的帳單金額（calculated billings），我們將其定義為本季遞延收入的變動，加上本季認列的總營收。帳單金額年增 56% 至 6,460 萬美元。提醒一下，歷史上第二季（Q2）與第四季（Q4）通常是我們帳單金額最強的季度，而第一季（Q1）與第三季（Q3）則分別會出現季減。本季 Q1 的季減幅度高於往年，原因是與 Q4 一筆大型一次性預付交易相比的比較基期較高。若排除 Q4 的 1,650 萬美元一次性預付交易，帳單金額的季減將為 18%，優於過去兩年所見的 25% 季減。另外提醒，我們主要以一年預先開立發票給客戶，而合約期限通常為一到三年。兩個期間中，超過一年期的一次性預付帳單金額年增幅度都相對不大。

Total backlog, which represents remaining performance obligations, was $411 million on October 31, up 77% from $232 million one year ago.

截至 10 月 31 日，總積壓訂單（total backlog，代表剩餘履約義務）為 4.11 億美元，較一年前的 2.32 億美元成長 77%。

Our strong customer retention and ability to up-sell have resulted in a consistently high dollar-based net retention rate, which was 118% for the period ended October 31. This compares to 116% a year ago and 117% last quarter. Our increased success selling bigger deals upfront, which start with the Transformation Bundle and faster up-sells within a year, while good for our business, can reduce our net dollar retention rate, which is calculated on a year-over-year ARR basis. Considering these factors, we feel 118% is outstanding, and it will vary quarter-to-quarter.

我們強勁的客戶留存與加購能力，使我們的以金額計算的淨留存率（dollar-based net retention rate）持續維持在高水準；截至 10 月 31 日止期間為 118%。相較之下，一年前為 116%，上一季為 117%。我們在前期成功銷售更大型的交易（以 Transformation Bundle 起步），並在一年內更快完成加購；雖然這對業務有利，但可能會降低我們以年對年 ARR 為基礎計算的淨金額留存率。綜合考量這些因素，我們認為 118% 表現非常出色，且該指標會隨季度而波動。

Total gross margin was 82%, up 2 points sequentially and 2 points year-over-year. The year-over-year increase was driven primarily by an increased mix of higher-priced bundles and more functionality as well as operational efficiencies. While we were pleased with our gross margins, our focus is not to maximize our gross margins at this stage. We feel 80% continues to be a good target range in the near-to-medium term, and it is important to continue to invest in our platform and to drive customer satisfaction to drive top line revenue growth.

總毛利率為 82%，較前一季提升 2 個百分點，較去年同期也提升 2 個百分點。年對年提升主要來自較高定價的套裝方案占比提高、功能增加，以及營運效率提升。雖然我們對毛利率表現感到滿意，但在現階段我們的重點並非將毛利率最大化。我們認為在短至中期，80% 仍是良好的目標區間；同時，持續投資於平台並提升客戶滿意度，以帶動營收（top line）成長，仍然非常重要。

Turning to our operating expenses. Our total operating expenses grew 7% sequentially and 29% year-over-year to $50.5 million, but decreased as a percentage of sales to 80%. As we continue to invest to grow our business, we increased our headcount by over 80 employees in Q1 and approximately half were in sales and marketing.

接著談我們的營運費用。我們的營運費用總額較前一季成長 7%，較去年同期成長 29%，達到 5,050 萬美元，但占銷售額的比重下降至 80%。隨著我們持續投資以擴大業務，我們在第一季增加了超過 80 名員工的人力，其中約一半在銷售與行銷部門。

Sales and marketing increased 10% sequentially and 29% year-over-year to $33.7 million. We have been building our sales and marketing teams and investing in marketing programs to drive growth and awareness, including the Zenith Live Conference held in Europe during the quarter.

銷售與行銷費用較前一季增加 10%，較去年同期增加 29%，達到 3,370 萬美元。我們一直在擴編銷售與行銷團隊，並投資行銷方案以推動成長與提升知名度，包括本季在歐洲舉辦的 Zenith Live Conference。

R&D was flat sequentially and up 22% year-over-year to $10.3 million as we continue to invest to enhance product functionality and to offer new products.

研發費用較前一季持平，較去年同期增加 22%，達到 1,030 萬美元，因為我們持續投資以強化產品功能並推出新產品。

G&A increased 1% sequentially and 42% year-over-year to $6.5 million. The year-over-year growth in G&A includes investments in building our teams, consulting and other expenses that we have made as we became a public company. These expenses exclude $2.2 million in litigation-related expenses.

一般與行政費用（G&A）較前一季增加 1%，較去年同期增加 42%，達到 650 萬美元。G&A 的年增包含我們在成為上市公司後，為建置團隊、顧問服務及其他費用所做的投資。上述費用不包含 220 萬美元與訴訟相關的費用。

Our first quarter operating margin was a positive 2%, which compares to a negative 19% in the same quarter last year. Net income in the quarter was $2 million. Our non-GAAP earnings per share $0.01. Given the positive earnings in the quarter, our EPS was calculated on a fully diluted basis of approximately 134 million shares.

我們第一季的營業利益率為正 2%，相較去年同期為負 19%。本季淨利為 200 萬美元。我們的非 GAAP 每股盈餘為 0.01 美元。由於本季獲利為正，我們的 EPS 以完全稀釋後約 1.34 億股計算。

We ended the quarter with $314 million in cash, cash equivalents and short-term investments. Free cash flow was positive $5.2 million in the quarter compared to negative $8.9 million for the same quarter a year ago. Our ESPP program contributed approximately $3 million to our free cash flow in the quarter. The first stock issuance under the ESPP program will be in December, which will reduce our free cash flow by approximately $8 million in Q2 but will have no impact on overall cash balance.

本季結束時，我們持有現金、約當現金及短期投資共 3.14 億美元。本季自由現金流為正 520 萬美元，相較一年前同季為負 890 萬美元。我們的員工股票購買計畫（ESPP）本季約為自由現金流貢獻 300 萬美元。ESPP 計畫下的首次股票發行將在 12 月進行，這將使我們第二季自由現金流減少約 800 萬美元，但對整體現金餘額沒有影響。

Now moving on to guidance. As a reminder, these numbers are all non-GAAP, which excludes stock-based compensation expenses, amortization of intangible assets, certain litigation-related expenses and any associated tax effects. For the second quarter, we expect revenue in the range of $65 million to $67 million; operating loss in the range of $1 million to $3 million; income taxes of $600,000; and net loss per share in the range of $0.00 to $0.02, assuming approximately 122 million to 123 million common shares.

接下來談財測指引。提醒一下，以下數字皆為非 GAAP，排除以股票為基礎的薪酬費用、無形資產攤銷、特定與訴訟相關的費用及任何相關的稅務影響。第二季我們預期營收介於 6,500 萬至 6,700 萬美元；營業虧損介於 100 萬至 300 萬美元；所得稅為 60 萬美元；每股淨損介於 0.00 至 0.02 美元，假設普通股約 1.22 億至 1.23 億股。

While we're pleased with our profitability ahead of schedule, we will continue to aggressively invest for growth. We believe we have a unique opportunity to disrupt and to capture a large market opportunity. As I mentioned in the past, we plan to achieve sustained profitability and positive free cash flow sometime in fiscal 2020.

雖然我們很高興能提前達成獲利，但我們仍將持續積極投資以追求成長。我們相信我們有獨特的機會去顛覆市場並掌握龐大的市場機會。如我過去所提，我們計畫在 2020 財年某個時間點達成可持續的獲利能力與正向自由現金流。

For the full year 2019, we expect revenue in the range of $268 million to $272 million or year-over-year growth of 41% to 43%. Operating loss in the range of $4 million to $6 million; income taxes of $2.4 million; and net loss per share in the range of $0.01 to $0.03, assuming approximately 124 million common shares outstanding.

就 2019 全年而言，我們預期營收介於 2.68 億至 2.72 億美元，年增 41% 至 43%。營業虧損介於 400 萬至 600 萬美元；所得稅為 240 萬美元；每股淨損介於 0.01 至 0.03 美元，假設流通在外普通股約 1.24 億股。

As you model billings for fiscal 2019, I want to remind you that the Q4 2018, we had a large upfront billing of $16.5 million from one customer. This will produce a difficult year-over-year comparison in Q4 2019. If we exclude this large upfront billing of $16.5 million from fiscal 2018 results, we believe total billings growth in fiscal 2019 would be comparable to our guided revenue growth, which would imply a billings range of $340 million to $345 million for the year.

在你們建立 2019 財年的帳單金額（billings）模型時，我想提醒各位，2018 年第四季我們曾因一位客戶而有 1,650 萬美元的大額預先開立帳單。這將使 2019 年第四季的年對年比較變得較為困難。若我們將 2018 財年結果中的這筆 1,650 萬美元大額預先開立帳單排除，我們認為 2019 財年總帳單金額的成長將可與我們所給的營收成長指引相當，這意味著全年帳單金額區間約為 3.40 億至 3.45 億美元。

We're very proud of what we have achieved and look forward to building on our opportunity. Now I will hand the call back over to Jay.

我們對已達成的成果深感自豪，也期待在此機會上持續累積成果。現在我把電話交回給 Jay。

Thank you, Remo. We believe we are the best choice for securing the cloud and the mobile-first world. The right architecture matters. On-prem, single tenant architecture, whether deployed as appliances or as virtual machines spun up in a public cloud, will not allow enterprises to fully realize the benefits of cloud. They can't scale, leave gap in security, are expensive, and deliver a poor user experience.

謝謝你，Remo。我們相信，在保護雲端與行動優先的世界方面，我們是最佳選擇。正確的架構很重要。本地部署的單一租戶架構，無論是以硬體設備部署，或是在公有雲中啟動的虛擬機部署，都無法讓企業充分實現雲端的效益。它們無法擴展、會在安全性上留下缺口、成本高昂，且帶來不佳的使用者體驗。

With multiple tailwinds, such as SaaS adoption, SD-WAN, and app migration to public clouds, we believe the market is coming to us. We are making solid progress in the Global 2000 accounts as these large enterprises embrace cloud transformation. We are executing on our vision: we are scaling our cloud to meet the growth in customer base, driving greater adoption of our high-end Transformation Bundle and ZPA. We are delivering high ROI for customers that leverage our platform for transformation.

在多項順風因素推動下，例如 SaaS 採用、SD-WAN，以及應用程式遷移至公有雲，我們相信市場正朝向我們而來。隨著這些大型企業擁抱雲端轉型，我們在 Global 2000 客戶上取得了紮實進展。我們正落實我們的願景：擴展我們的雲端以因應客戶基礎的成長，推動我們高階 Transformation Bundle 與 ZPA 的更高採用率。對於運用我們平台進行轉型的客戶，我們正在提供高投資報酬率（ROI）。

We thank you for your interest in Zscaler and look forward to reporting on our progress in the future. Operator, you may now open the call for questions.

感謝各位對 Zscaler 的關注，我們期待未來向各位報告我們的進展。接線員，現在可以開放提問。

(Operator Instructions) We'll take our first question from Brad Zelnick with Crédit Suisse.

(接線員指示) 我們先接第一個問題，來自 Crédit Suisse 的 Brad Zelnick。

Congratulations on another phenomenal quarter, guys. I've got two questions. My first is for Jay. Jay, your primary competitor has experienced disruption of late with leadership turnover and various company-specific distractions. Is this perceptible to you in the field? And can you maybe give us an update more generally on the competitive environment?

恭喜各位又交出一個非常出色的季度。我有兩個問題。第一個是問 Jay。Jay，你們的主要競爭對手近期因領導層更迭以及各種公司特定的分心因素而受到干擾。你們在第一線是否有感受到這點？另外，能否更一般性地更新一下競爭環境的狀況？

Brad, thank you. We are having tremendous success in the field. I think our #1 reason for the success is our innovative multi-tenant architecture, which scales and works well. And whether the success is due to competitors' issues or not, I'm not sure. I can't tell, but we are winning the same market and growing rapidly. I don't see a significant shift in the competitive landscape.

Brad，謝謝。我們在第一線取得了非常大的成功。我認為成功的首要原因是我們創新的多租戶架構，具備可擴展性且運作良好。至於這樣的成功是否來自競爭對手的問題，我不確定。我看不出來，但我們正在贏得同一個市場並快速成長。我沒有看到競爭態勢出現顯著變化。

Appreciate the commentary. And Remo, just for you. Thanks for calling out, reminding us the $16.5 million upfront billing in Q4, which if you remove that, you've actually done better than the seasonality we've seen in Q1 in the past couple of years. And also appreciate the guidance that you've given us on billings for the full year. But as we think about the seasonality from here, anything we should take into account as we model the quarterly billings, just given the strong start that you've had here in Q1?

感謝你的說明。另外 Remo，想請教你。謝謝你特別指出並提醒我們第四季那筆 1,650 萬美元的預先開立帳單；如果把那筆拿掉，你們其實比過去幾年我們在第一季看到的季節性表現更好。也感謝你提供全年帳單金額的指引。不過，當我們從現在開始思考季節性時，在建立各季度帳單金額模型時，有沒有什麼我們需要納入考量的因素，尤其是考量到你們第一季有這麼強勁的開局？

Brad, just what we've said before, basically as you mentioned, as we've called out, both Q2 and Q4 are strong quarters. Q4 year-end and Q2 straddles 12/31 and also our prior year-end as a company was 12/31, so we have a lot of renewals to come through. I'd expect the same type of seasonality. It was a great quarter for us, and so I'd expect the same type of seasonality going forward.

Brad，正如我們先前所說的，基本上如你提到、也如我們所強調的，Q2 和 Q4 都是強勁的季度。Q4 是年終，而 Q2 橫跨 12/31；此外，我們公司先前的會計年度年終也是 12/31，所以會有大量續約在那段期間進來。我預期會有同樣類型的季節性。這對我們來說是個很棒的季度，因此我也預期未來會延續同樣的季節性。

(Operator Instructions) We'll take our next question from Daniel Ives with Wedbush.

(接線員指示) 我們的下一個問題來自 Wedbush 的 Daniel Ives。

So Jay, I mean, you alluded to it a little bit but maybe you could elaborate, how are conversations changing in regards to more enterprises looking to really expand with Zscaler? I mean, maybe customers at 6, 12 months now had small deployments, now the pipeline is expanding significantly. And what do you think the drivers are there when you compare your conversations?

Jay，我的意思是，你稍微提到了一點，但也許你可以再多闡述一下：在更多企業客戶希望真正擴大採用 Zscaler 的情況下，對話內容正在如何改變？我的意思是，也許有些客戶在 6 到 12 個月前還只是小規模部署，但現在管線正在顯著擴大。當你比較你們的對話時，你認為背後的驅動因素是什麼？

The biggest change in the past 1 to 2 years versus now is that almost every CIO wants to do cloud transformation with security in mind. That was, well, 2 years ago. That's directly impacting us is in a couple of ways. One was with transformation, that all are looking at local Internet breakout as one of the key drivers, which really drives our Transformation Bundle, which includes cloud firewall, cloud sandbox and the like. That's number one. Two, we used to have a lot more deals starting with Business Bundle, which really get more security breakout but did not have all protocols, all ports functionality. So moving to bigger bundle is having bigger pipeline and more momentum. And that's why we are posting strong growth in sales.

過去 1 到 2 年相較於現在最大的改變是：幾乎每位 CIO 都希望在以安全為前提的情況下進行雲端轉型。那是——嗯——兩年前的情況。這正以幾個方式直接影響我們。第一，在轉型方面，大家都把本地網際網路出口（local Internet breakout）視為關鍵驅動因素之一，這會強力帶動我們的 Transformation Bundle，其中包含雲端防火牆、雲端沙箱等。這是第一點。第二，我們過去有更多交易是從 Business Bundle 開始，這確實能提供更多安全出口，但不具備全協定、全連接埠（all protocols, all ports）的功能。因此，轉向更大的套裝方案會帶來更大的管線與更強的動能。這也是我們銷售能維持強勁成長的原因。

Great. Could you just quick comment about tuck-in M&A and how you're thinking about that just as we go through 2019?

很好。你能否快速評論一下補強型（tuck-in）併購，以及你們在 2019 年的思考方向？

We are always open to M&A opportunities. We aren't looking to buy companies for revenues. If we look at something, it will be largely driven by a strategic fit to expand our platform in a meaningful way. We did a small acquisition last quarter. It was in the machine learning and AI area. It's already delivering results. As opportunities present themselves in the strategic area, we will be open to those.

我們一直對併購機會保持開放。我們並不是為了營收而去收購公司。如果我們評估某個標的，主要會由策略契合度驅動，以有意義的方式擴展我們的平台。我們在上一季做了一筆小型收購。是在機器學習與 AI 領域。它已經開始帶來成果。當策略領域出現機會時，我們會保持開放態度。

We'll take our next question from Alex Henderson with Needham.

我們的下一個問題來自 Needham 的 Alex Henderson。

I would also extend that congrats, that's a spectacular quarter. The question I wanted to address -- actually, there's 2 pieces of it. One is, can you talk a little bit about, in terms of new orders, what the mix looks like between ZIA and ZPA? And are you seeing an accelerated uptake or any metrics around the rate of uptake on ZPA, which obviously is a small part of revenues currently, but is a key piece. And then second, can you give us any metrics around the move up the stack from professional business to Transformation bundles? Where are we on that? Have we seen a meaningful change in the rate of uptake of Transformation bundles versus the other two?

我也要延伸一下恭喜，這是一個非常出色的季度。我想問的問題——其實有兩個部分。第一，就新訂單而言，你能否談談 ZIA 與 ZPA 之間的組合占比大概是什麼樣子？以及你們是否看到 ZPA 的採用加速，或是有任何關於 ZPA 採用速度的指標？顯然它目前在營收中占比仍小，但它是關鍵的一塊。第二，你們能否提供一些指標，說明從 Professional、Business 往上升級到 Transformation bundles 的進展？我們目前到哪個階段了？相較於另外兩種方案，我們是否看到 Transformation bundles 的採用速度有顯著變化？

From a new business perspective, which is new or up-sell, what we said is that we'll talk about it when there's meaningful changes in our business. What we called out last quarter is for full-year 2018 new and up-sell business for ZPA represented approximately 10%. What I can say about ZPA on a year-over-year basis is it's close to doubled. So good traction with ZPA. Similarly for Transformation, what we called out last quarter is that Transformation has increased to 35% of our total ARR for ZIA. What I can say is that it is going up, so it's increasing. And we'll make updates when we feel it's meaningful.

從新業務的角度來看，不論是新客或加購（up-sell），我們的說法是：當業務出現有意義的變化時，我們才會對外談更多細節。我們上一季提到的是：在 2018 全年，ZPA 的新購與加購業務約占 10%。就 ZPA 的年對年表現而言，我可以說它接近翻倍。因此 ZPA 的進展很不錯。同樣地，對於 Transformation，我們上一季提到：Transformation 已提升至 ZIA 總 ARR 的 35%。我可以說它仍在上升，也就是持續增加。當我們覺得變化具有意義時，會再更新。

Is there any change in the sales cycle associated with the time it takes for either of those upsell purchase orders? Or is the sales cycle still fairly similar despite the fact that you're selling a lot more product?

在銷售週期上，針對這兩者的加購採購單所需時間，有任何變化嗎？或者即使你們賣出更多產品，銷售週期仍然相當類似？

We are selling more higher bundles, and the sales cycle hasn't changed. But I would say that a year ago, if the sales cycle was x month to sell Business Bundle, we are able to sell the Transformation Bundle in the same kind of sales cycle. Similar sales cycle, but being able to sell bigger bundles. And that's partly because market is moving faster in our direction.

我們確實在銷售更多高階套裝方案，而銷售週期並沒有改變。但我會說，一年前如果銷售 Business Bundle 的銷售週期是 x 個月，我們現在也能在相同類型的銷售週期內賣出 Transformation Bundle。銷售週期相近，但能賣出更大的套裝方案。部分原因是市場正更快地朝我們的方向移動。

We'll take our next question from Gray Powell with Deutsche Bank.

我們的下一個問題來自 Deutsche Bank 的 Gray Powell。

Over the last few weeks, we've heard a lot of questions around the macro environment and the sustainability of the improved IT spending, which we have seen in 2018 extending into 2019. So how do you feel about things going into calendar 2019, and then how do you think Zscaler is positioned if the overall macro next year is not as strong as it was in 2018? Thanks.

過去幾週，我們聽到很多關於總體環境以及 IT 支出改善是否可持續的問題；我們看到 2018 年的改善延續到 2019 年。那麼你們如何看待進入 2019 年曆年的情況？以及如果明年的整體總體環境不如 2018 年強勁，你認為 Zscaler 的定位會是如何？謝謝。

Good question. I'll answer it in two parts. Number one, Zscaler not only helps you drive cloud transformation, it actually drives tremendous ROI. So in many ways, when spendings are tight, we become actually a more attractive solution. That's one. Number two, we are still such a small piece of the overall IT environmental budget that I don't think we will see much of a change because of some of the environment tightening. I'll tell you an interesting dialogue I had with the CIO of probably Global 2000 companies. I went to see him. I said, thank you for making time for me. I know I'm a very tiny fraction of your overall IT budget. He interrupted me and said, "Stop. You may be small piece of my IT budget, but I don't have a cloud strategy without you. So I want you to come and see me every 6 months." So with that kind of strategic positioning for transformation, with such a small piece of budget, I don't think we'll see a negative impact.

好問題。我會分兩部分回答。第一，Zscaler 不僅能協助推動雲端轉型，實際上也能帶來非常可觀的投資報酬率（ROI）。因此在許多情況下，當支出吃緊時，我們反而會成為更具吸引力的解決方案。這是第一點。第二，我們在整體 IT 環境預算中仍只占非常小的一部分，因此我不認為因為環境收緊就會看到太大的變化。我分享一段我和某位（可能是）Global 2000 企業 CIO 的有趣對話。我去拜訪他。我說，謝謝你撥時間給我。我知道我在你整體 IT 預算中只占非常小的一部分。他打斷我說：「停。」「你也許只占我 IT 預算的一小部分，但沒有你，我就沒有雲端策略。」「所以我希望你每 6 個月來見我一次。」因此，憑藉這種在轉型上的策略定位，再加上我們只占很小的預算比重，我不認為會看到負面影響。

We'll take our next question from Melissa Franchi with Morgan Stanley.

我們的下一個問題來自 Morgan Stanley 的 Melissa Franchi。

Jay, you noted how adoption of the Transformation bundle is being driven by the need to enable secure local Internet breakout. Can you maybe elaborate what functionality exclusively within the Transformation Bundle enables those local breakouts? And since the cloud firewall solution is part of the Transformation Bundle in that incremental relative to the prior bundle. Does it mean that you are increasingly displacing firewall even at the branch or in the data center?

Jay，你提到 Transformation bundle 的採用是由啟用安全的本地網際網路出口需求所驅動。你能否進一步說明，Transformation Bundle 中有哪些獨有的功能可以實現這些本地出口？另外，由於雲端防火牆解決方案是 Transformation Bundle 的一部分，且相對於先前的套裝方案屬於增量功能。這是否意味著你們正日益在分支機構甚至在資料中心取代傳統防火牆？

So good question. So first of all, to give you the difference, Business Bundle has lots of good functionality and local breakout for the web traffic. But the 2 big modules in Transformation Bundle that's outside of the Business Bundle, one is cloud firewall, second is cloud sandboxing. People are buying Transformation Bundle not because they are displacing branch firewalls. People are buying it because they are creating new local Internet breakouts. And when they see the option with a cloud firewall where they can handle all ports and protocols, rather than just web traffic at a relatively smaller cost, it becomes attractive for them to buy Transformation Bundle. So the driver for Transformation Bundle is cloud firewall to handle all kinds of traffic. And especially Office 365 traffic, Skype and all, which works beautifully to our cloud firewall and which won't work very well to a traditional web proxy. And sandboxing, everyone has bought sandbox in the data center. They all buy into it because of security threats. When they find that with Zscaler, now this functionality is available everywhere on every branch office, even for a road warrior, it becomes very easy for new add-on of cloud sandboxing. Those are the 2 drivers. One key module that's not in the Transformation Bundle is DLP, data loss prevention, and that's still bought à la carte.

所以這是個好問題。首先，先說明差異：Business Bundle 具備許多很好的功能，並且可針對網路流量進行本地分流（local breakout）。但 Transformation Bundle 中有兩個 Business Bundle 以外的大模組：第一是雲端防火牆（cloud firewall），第二是雲端沙箱（cloud sandboxing）。客戶購買 Transformation Bundle 並不是因為要取代分支機構防火牆。他們購買是因為正在建立新的本地網際網路分流。當他們看到雲端防火牆這個選項，可以以相對較低的成本處理所有連接埠與通訊協定，而不只是網頁流量時，就會覺得購買 Transformation Bundle 很有吸引力。因此，Transformation Bundle 的驅動因素是雲端防火牆，用來處理各類型流量。尤其是 Office 365 流量、Skype 等，這些在我們的雲端防火牆上運作得非常好，但在傳統網頁代理（web proxy）上就不太好用。至於沙箱，大家都在資料中心買過沙箱。他們之所以採用，都是因為安全威脅。當他們發現透過 Zscaler，這項功能現在可以在每個分支辦公室、甚至對於行動辦公者（road warrior）而言都隨處可用時，就很容易加購雲端沙箱。這就是兩個驅動因素。而 Transformation Bundle 裡沒有的一個關鍵模組是 DLP（資料外洩防護，data loss prevention），目前仍以單點選購（à la carte）的方式購買。

Remo, in terms of operating margin improvement and particularly related to sales and marketing leverage, I'm wondering if you can elaborate what's enabling that magnitude of sales and marketing leverage? And particularly, I'm wondering if you can comment on hiring plans and how that came in relative to your expectations in the quarter? And if you see any change in the sales attrition?

Remo，關於營業利益率的改善，特別是與銷售與行銷槓桿相關的部分，我想請你進一步說明，是什麼讓銷售與行銷槓桿能達到這樣的幅度？另外也想請你談談招募計畫，以及本季實際招募情況與你們原先預期相比如何？以及你們是否看到銷售人員流失率（attrition）有任何變化？

We had a very good sales and marketing leverage. The productivity on a quarter-over-quarter basis from Q1 of last year versus this year was up. From a hiring perspective, what we called out is that we hired over 80 net employees. And about half of those were in sales and marketing and most of those were in sales. So what we plan to do as we go forward, we're very proud of achieving profitability, but we see this as such a large market opportunity that we are going to continue to invest. So from our perspective, there's no change to what we said before in that we expect to be sustained profitability and free cash flow positive sometime in fiscal '20. What we've demonstrated over the last 3 quarters, being positive free cash flow and reaching operating profitability, we've got the model in order to really show significant expansion in profitability. But because of the large market opportunity, we are going to do investment, and we are going to try to capture this market opportunity as best we can.

我們的銷售與行銷槓桿表現非常好。以季度對季度來看，去年 Q1 到今年 Q1 的生產力是提升的。從招募角度來看，我們先前提到本季淨增（net）員工超過 80 人。其中約一半在銷售與行銷部門，而大多數是在銷售端。展望未來，我們對達成獲利感到非常自豪，但我們也看到這是一個非常龐大的市場機會，因此我們會持續投資。所以就我們的觀點而言，我們先前所說的沒有改變：我們預期在 2020 會計年度的某個時間點，能夠維持持續獲利並且自由現金流轉正。過去 3 個季度我們已經展現出自由現金流為正並達到營業獲利，代表我們的商業模式已經到位，能夠真正展現顯著的獲利擴張。但因為市場機會很大，我們仍會進行投資，並盡可能把握這個市場機會。

We'll take our next question from Gabriela Borges with Goldman Sachs.

接下來我們將接聽 Goldman Sachs 的 Gabriela Borges 的提問。

Jay, I would love to understand a little bit better, for your new CMO and your new SVP for customer engagement and customer success, what are the priorities for those two roles? And what are some of the key initiatives that the ladies will be working on over the next 12 months or so?

Jay，我想更深入了解一下，對於你們新的 CMO，以及新的客戶互動與客戶成功（customer engagement and customer success）資深副總裁（SVP），這兩個職位的優先事項是什麼？另外，接下來大約 12 個月，兩位女士將推動哪些關鍵計畫？

CMO, Micheline Nijmeh, her #1 priority is overall to help us do more demand generation. As our goals are getting bigger and bigger, targets are getting bigger and bigger. So is the need for higher demand gen. And along with that, we are going to focus on building our brand and awareness overall. IPO has helped us in this area quite a bit. A lot of visibility, but we think a lot more can be done in that area. So those are 2 big objectives in addition to many others. Regarding our SVP of Customer Experience and Transformation, we are a very customer-focused company. It starts from me. And this customer experience is really starting with a product experience, to sales experience, to once the sale is made, deployment and ongoing interaction. So Kavitha is able to really pull together all these things in a holistic fashion across multiple functions to make sure our customers have the best experience. And that second part in the transformation is actually, not only just a customer side of it, but it's our own transformation as a company. We have been going through changes and transformation in the way we deal with customers and the way we go to market. You have seen some of the innovations we've done in go-to-market at Zscaler, which is not traditional sale through VARs. We figured out that go-to-market top down CXO, CTO level. We figured out all the new transformation sales need to be done with solution architects and the like. So this is more to focus on making sure Zscaler as a company is transforming, changing itself as the world is moving fast. We are very happy to have these 2 very capable executives join my team.

CMO Micheline Nijmeh 的第一優先事項，整體而言是協助我們做更多需求開發（demand generation）。隨著我們的目標越來越大、指標越來越高，對更高強度的需求開發的需求也隨之增加。同時，我們也會著重於建立品牌與整體知名度。IPO 在這方面對我們幫助很大。帶來了很多能見度，但我們認為在這方面還能做得更多。因此，這是兩個主要目標，此外還有許多其他目標。至於我們的客戶體驗與轉型資深副總裁（SVP of Customer Experience and Transformation），我們是一家非常以客戶為中心的公司。這從我開始。而客戶體驗其實是從產品體驗開始，延伸到銷售體驗，再到成交後的部署與持續互動。因此 Kavitha 能夠以整體性的方式，跨多個職能把這些事情整合起來，確保我們的客戶獲得最佳體驗。而「轉型」的第二部分，實際上不只是客戶端的轉型，也包括我們公司自身的轉型。我們一直在改變並轉型我們與客戶互動的方式，以及我們的市場進入策略（go-to-market）。你們已經看到我們在 Zscaler 的一些 go-to-market 創新，並非傳統透過 VAR（加值經銷商）銷售。我們摸索出自上而下的 go-to-market，從 CXO、CTO 層級切入。我們也摸索出所有新的轉型型銷售需要由解決方案架構師等角色來完成。因此，這更著重於確保 Zscaler 作為一家公司，能在世界快速變動之際持續轉型、持續改變自己。我們非常高興有這兩位非常能幹的高階主管加入我的團隊。

That's helpful. And the follow-up is on the status of some of the telecom service provider partnerships that you have. I think you mentioned in the prepared remarks that there was one deal where 5 separate telecom providers bid to offer the Zscaler services. Are there large telecom providers that you can still bring online? Do you feel like you have good penetration in the partnerships that you already have? And then is there more willingness to embrace the Zscaler platform as a counter to what may otherwise be headwind in MPLS?

這很有幫助。追問一下你們與電信服務供應商（telecom service provider）的合作夥伴關係進展狀態。我記得你在事先準備的講稿中提到，有一筆交易是由 5 家不同的電信業者競標來提供 Zscaler 服務。是否還有大型電信業者可以再導入上線（bring online）？你覺得在既有合作夥伴中，你們的合作滲透率（penetration）是否已經不錯？另外，面對 MPLS 可能帶來的逆風，市場是否更願意採用 Zscaler 平台作為對策？

Yes, we all know that the world is moving from hub-and-spoke network to local breakouts. It is true that of 2, 3 or 4 years ago, many telcos were kind of wondering between how fast to move in this direction and how much they can do to slow it down. But everyone understands and realized that the market is moving in that direction. So all large telcos, in fact, if I would say, the top 10 largest telcos in the world, they all do business with us. Some of them a lot more than others, so our goal is to make sure we work more closely with them. And they see it as a joint opportunity. They want to see the customer moving to a new network that's still managed by them. As they are managing the network, they are managing Zscaler security service for the customer. It's a good win-win proposition, and we are seeing more leverage, more traction coming from SPs, partly because of 2 reasons. One, the market is taking them there. That's number one. Number two, they are seeing increased revenue opportunity with Zscaler, along with able to keep account control.

是的，我們都知道世界正從樞紐—輻射（hub-and-spoke）網路走向本地分流（local breakouts）。確實在 2、3 或 4 年前，許多電信業者還在猶豫：要多快往這個方向移動，以及他們能在多大程度上放慢這個趨勢。但大家都理解並意識到市場正在往這個方向走。因此，所有大型電信業者——如果要我說，全球前 10 大電信業者——都與我們有業務往來。其中有些合作量比其他家大得多，所以我們的目標是確保與他們更緊密合作。而他們也把這視為共同的機會。他們希望看到客戶轉向一個仍由他們管理的新型網路。在他們管理網路的同時，也為客戶管理 Zscaler 的安全服務。這是一個很好的雙贏命題；我們也看到來自服務供應商（SPs）的槓桿效益與動能（traction）增加，部分原因有兩點。第一，市場正在把他們推向那裡。這是第一點。第二，他們看到與 Zscaler 合作能帶來更多營收機會，同時也能維持對客戶帳戶的掌控。

We'll take our next question from Saket Kalia with Barclays Capital.

我們接下來的問題來自 Barclays Capital 的 Saket Kalia。

Jay, just to pick up on an earlier line of questioning on the Transformation Bundle and the traction there, do you track any stats on which of those modules are being used particularly heavily? So you mentioned cloud firewall and cloud sandboxing are the biggest additions versus the Business Bundle. Are you seeing one module used perhaps more heavily than the other?

Jay，我想延續先前關於 Transformation Bundle 以及其市場牽引力的提問，你們是否有追蹤哪些模組被特別大量使用的統計數據？你提到相較於 Business Bundle，雲端防火牆與雲端沙箱是最大的新增項目。你們是否看到某一個模組的使用程度可能比另一個更高？

It's a good question. If we were in the appliance world, then you would say, "Well, this module got turned on, this did not." Because when you buy a cloud sandbox in a traditional world, there are a bunch of steps to figure out to integrate how to take traffic, how to authenticate users, how to set up SSL sandboxing. All of those things are essentially in place when the traffic comes to Zscaler. So turning on firewall or turning on sandboxing is very simple. Once the customer has bought Zscaler modules, they are essentially turned on almost all the time. It's very rare when those modules are not used. Now it is possible that the customer may have only 20 local Internet breakouts early on and it may take them 9 months to go from 20 to 200. They still turn on sandboxing and firewall on those 20 local breakouts, and as an additional 180 gets added, they still remain turned on and now getting more benefit. It's rare to have customers buying a module from Zscaler and not using it because turning it on is simple. It's simply a single click in our configuration. In fact, in our sales process, we show the customer what we call a single-click deployment of cloud firewall and cloud sandbox from our console.

這是個好問題。如果是在硬體設備（appliance）的世界，你會說：「嗯，這個模組被打開了，那個沒有。」因為在傳統世界裡，當你購買雲端沙箱時，會有一堆步驟要弄清楚：如何整合流量、如何驗證使用者、如何設定 SSL 沙箱。而當流量進到 Zscaler 時，這些事情基本上都已經就緒。所以要開啟防火牆或開啟沙箱非常簡單。一旦客戶買了 Zscaler 的模組，基本上幾乎隨時都是開啟的。這些模組不被使用的情況非常少見。當然也可能客戶一開始只有 20 個本地網際網路出口（local Internet breakouts），可能需要 9 個月才會從 20 增加到 200。他們仍會在那 20 個本地出口上開啟沙箱與防火牆；當另外 180 個出口加入後，這些功能仍然保持開啟，並且帶來更多效益。客戶向 Zscaler 購買模組卻不使用的情況很少，因為開啟它非常容易。在我們的設定中只要按一下即可。事實上，在我們的銷售流程中，我們會向客戶展示我們所稱的「一鍵部署」：可從主控台一鍵部署雲端防火牆與雲端沙箱。

You mentioned DLP is sold à la carte outside of the bundling strategy. Can you just talk about why à la carte pricing for DLP is the best avenue? And could we ever see DLP as part of a bundle in the future?

你提到 DLP 是在綑綁策略之外以單點（à la carte）方式銷售。你能談談為什麼對 DLP 來說，單點定價是最佳途徑嗎？未來我們是否可能看到 DLP 成為某個套裝的一部分？

Yes, bundling is an interesting exercise. There are no simple answers. If you bundle too much, you can increase the price too much. If you don't bundle enough, you're not selling additional modules. So it's one of those art and science - we try to learn and figure out. And I think when a module becomes widely accepted and more and more customers start buying it à la carte, it tells us it's really time to bundle it. If you asked me 2 years ago, I wasn't ready to bundle cloud firewall or cloud sandbox. Transmission Bundle is relatively new. It's a 15-month-old bundle. We didn't have this bundle before. We sold cloud firewall and cloud sandbox separately. DLP is an interesting area. We have been selling decent amount of DLP before. There's one critical module we needed to add to make it the richest DLP functionality in the world - that's called Exact Data Match, where we can match exact field from a customer's record about Social Security number or data of what they like, and that module became available. As customers are opening hundreds of local breakouts, and they may have DLP deployed in 3 or 5 data centers, DLP is no good because these locations don't really go through the DLP systems, so to speak. So we are seeing an increased demand of DLP. We're selling more of it as we highlighted a few customers during our call earlier. We do see potentially DLP becoming a part of a bundle in the future. I'm not exactly sure what timing is, but it's a natural course for us to move to.

是的，綑綁是一個很有意思的課題。沒有簡單的答案。如果綑綁太多，價格可能會拉得太高。如果綑綁不夠，你又賣不出更多附加模組。所以這是一種藝術與科學的結合——我們會嘗試學習並找出最佳做法。我認為當某個模組被廣泛接受、越來越多客戶開始以單點方式購買時，這會告訴我們：差不多是時候把它納入套裝了。如果你兩年前問我，我還沒準備好把雲端防火牆或雲端沙箱納入套裝。Transformation Bundle 相對較新。這是一個推出約 15 個月的套裝。以前我們沒有這個套裝。我們是分別銷售雲端防火牆與雲端沙箱。DLP 是一個很有意思的領域。我們之前就已經賣出相當數量的 DLP。我們還需要加入一個關鍵模組，才能讓它成為全球最完整的 DLP 功能——這個模組叫做 Exact Data Match（精確資料比對），我們可以比對客戶紀錄中的精確欄位，例如社會安全號碼，或是他們偏好的資料，而這個模組已經推出。當客戶開出數百個本地網際網路出口，而他們可能只在 3 或 5 個資料中心部署 DLP 時，DLP 就派不上用場，因為這些地點的流量並不真正經過 DLP 系統（可以這麼說）。因此我們看到 DLP 的需求正在增加。正如我們稍早在電話會議中提到的幾個客戶案例，我們也正在賣出更多 DLP。我們確實看到未來 DLP 可能會成為套裝的一部分。我不確定確切的時間點，但這是我們自然會走向的方向。

We'll take our next question from Fatima Boolani with UBS.

我們接下來的問題來自 UBS 的 Fatima Boolani。

Jay, maybe to start with you. In your prepared remarks around the customer examples, you gave a lot of instances where customers went in with both the ZIA and ZPA. So just broadly speaking in terms of the pipeline, are you starting to see a greater incidence of landing with both your product portfolios? And just as an extension, what sort of impact is this having on your land and expand?

Jay，或許先從你開始。在你準備好的發言中談到客戶案例時，你舉了很多客戶同時導入 ZIA 與 ZPA 的例子。所以就整體銷售管線而言，你們是否開始看到同時以兩個產品組合落地（land） 的情況更常見？再延伸問一下，這對你們的「落地並擴張」（land and expand）有什麼影響？

Approximately half the deal of ZPA are coming as new customers who have never bought from Zscaler before. And the other are up-sell. It is true that a number of deals are picking up ZPA along with ZIA upfront. But I would say that in majority of those cases, ZPA is bought for a subset of users, not for all users. As we have said before, when ZIA is bought, it is bought to protect all users from all locations, essentially every employee in the company. When ZPA is bought, it's largely driven by business application needs. And typically in an enterprise, the number of ZPA users may be somewhere from 40% to 80% of the total users. So if I were to simplify it, wherever ZPA is bought, majority of the cases it's a subset of users. People are also moving applications to Azure and AWS. They're still in early phases. And as that market matures more and more, the number of ZPA users will go up significantly.

大約一半的 ZPA 交易來自從未向 Zscaler 購買過的新客戶。另一半則是加購（up-sell）。確實有不少交易是一開始就同時購買 ZIA 與 ZPA。但我會說，在多數情況下，ZPA 是為一部分使用者購買，而不是所有使用者。如同我們之前所說，當客戶購買 ZIA 時，通常是為了保護所有地點的所有使用者，基本上是公司裡的每一位員工。而購買 ZPA 主要是由業務應用程式需求所驅動。一般在企業中，ZPA 使用者數通常約占總使用者的 40% 到 80%。所以如果我簡化來說，只要有買 ZPA，多數情況下都是一部分使用者。人們也正在把應用程式搬到 Azure 和 AWS。他們仍處於早期階段。隨著市場越來越成熟，ZPA 使用者數將會顯著上升。

That makes a ton of sense. And Remo, just a follow-up for you on the profitability strength in the quarter. As I think about some of the commentary you gave us during the IPO around unit economics being fairly weak in the first year of the customer acquisition process, but then see a significant improvement in year 2. As I think about you doing larger deals upfront, doing more Transform bundle deals at the outset, you've got better awareness as a public company, and just generally better awareness overall. Can you give us a sense of how those unit economics have changed from a customer acquisition perspective?

這非常合理。Remo，我再追問一下本季獲利能力表現強勁的部分。我回想你們在 IPO 時的說法：在客戶取得流程的第一年，單位經濟效益（unit economics）相對偏弱，但在第二年會顯著改善。現在你們一開始就做更大的交易、在初期就做更多 Transform bundle 的交易，加上成為上市公司後的知名度提升，以及整體認知度更好。你能否從客戶取得的角度，談談這些單位經濟效益如何改變？

So you're talking about contribution margin?

所以你指的是貢獻毛利（contribution margin）嗎？

Yes.

是的。

So our contribution margin, as we talked about at the public offering, is with years 2 and 3 was in the high 60% range. What I'd like for you to keep in mind is that we see this as a very large market opportunity, and our plan is to grow the company as quickly as we can. As we talked about on the roadshow, and it hasn't changed, relates to our long-term model of 20% to 22% operating profitability once we reach $800 million to $1 billion in revenue. That's still our plan. So we have not deviated at all related to our long-term goals. Our expectations of hitting breakeven and positive free cash flow profitability on a sustained basis in fiscal '20. When you think about contribution margin, if we stopped everything and just went renewals, then it goes incredibly high. With this large market opportunity, we are going to keep on investing the business to maximize what we feel is the biggest shareholder value.

我們的貢獻毛利，如同我們在公開發行時所談到的，在第 2 年與第 3 年會落在 60% 後段（high 60%）的區間。我希望你記住的是，我們把這視為一個非常大的市場機會，而我們的計畫是盡可能快速地成長公司。如同我們在路演時所談到的，而且至今沒有改變：我們的長期模型是在營收達到 8 億到 10 億美元時，營業獲利率可達 20% 到 22%。這仍然是我們的計畫。因此，我們在長期目標上完全沒有偏離。我們的預期是在 2020 會計年度達到損益兩平，並在可持續的基礎上實現正的自由現金流獲利能力。當你思考貢獻毛利時，如果我們停止一切、只做續約，那貢獻毛利會高得驚人。面對這個巨大的市場機會，我們會持續投資業務，以最大化我們認為能帶來最大股東價值的成果。

We'll take our next question from Jonathan Ruykhaver with Robert W. Baird.

我們接下來的問題來自 Robert W. Baird 的 Jonathan Ruykhaver。

You've commented in the past that high-volume transaction business into the midmarket through channel was tracking at about 40% of total business. I'm just wondering, that was something that I heard several quarters ago, is that still consistent with what you are seeing today?

您過去曾評論，透過通路進入中型市場的高交易量業務約占總業務的 40%。我只是想確認一下，這是我在幾季前聽到的說法，今天您看到的情況是否仍然一致？

What we talked about in the past is the business coming through the VAR channel in the 40% range. It's not really the midmarket business. It's the total business coming to the VAR channel. That's still sitting in broadly the same range. And I mean, if you look at the two broad channel buckets, SP/SI is one bucket and VAR is the second bucket. Yes, we are seeing some VARs are successfully able to pivot to the cloud, and they are driving more business for us. But overall, growth from a channel is coming faster from the SP/SI side of it.

我們過去談到的是透過 VAR 通路進來的業務約在 40% 的區間。這其實不完全是中型市場的業務。而是進到 VAR 通路的總業務。目前仍大致維持在相同的區間。我的意思是，如果你看兩個主要的通路類別，SP/SI 是一類，VAR 是第二類。是的，我們看到有些 VAR 成功轉向雲端，並為我們帶來更多業務。但整體而言，通路端的成長更快是來自 SP/SI 這一側。

Okay. So it's safe to assume that when you look at the channel investments you're making, the greater allocation is going to SP/SI side?

了解。所以可以合理推論，當你們檢視正在進行的通路投資時，較大的配置會放在 SP/SI 這一側？

Yes, but we are also investing in VAR channel as well, proportionately, to make sure we're working all channels. We are picking up a new kind of channel called born in the cloud VARs. These guys were built for the new world who are not really married to pushing boxes, and they are a pretty good channel for us. Small, but growing.

是的，但我們也同樣按比例投資 VAR 通路，以確保我們在所有通路上都有投入。我們也正在吸納一種新的通路，稱為「雲端原生（born in the cloud）」的 VAR。這些夥伴是為新世界而生，不太執著於推銷硬體盒裝產品，對我們而言是相當不錯的通路。規模不大，但正在成長。

That's good to hear. And Remo, I just wanted to get some clarification. The large deal activity you saw in 3Q and 4Q in fiscal '18, you've suggested that the impact of those large initial upfront deals is very positive on retention rates when they occur. But as they anniversary, should we expect to see somewhat of a dampening effect as we anniversary those 2 quarters?

很高興聽到。另外 Remo，我想再釐清一下。你們在 2018 財年第三季與第四季看到的大型交易活動，你曾表示，這些大型的前期一次性（upfront）交易在發生時，對留存率的影響非常正面。但當它們進入周年（anniversary）時，我們是否應預期在跨過那兩個季度的周年時，會出現某種程度的抑制效果？

It depends. Related to those deals, if we get these large upfront deals for multiyear, customers are making the investment and also having Zscaler as their security and networking company that they use. So these upfront deals, what we look at is more on a contract basis. On a contract basis, over the last 4 or 5 quarters for new business, it's been over 70% for 3-year type deals. Related to dollars, if customers would like to give us -- pay more to Zscaler because of budgetary reasons, then we will accept that. So does that answer your question?

這要看情況。就那些交易而言，如果我們拿到的是多年期的大型前期交易，客戶是在做投資，同時也把 Zscaler 作為他們使用的資安與網路公司。因此，對於這些前期交易，我們更關注的是合約層面。以合約來看，過去 4 到 5 個季度的新業務中，三年期類型的合約占比超過 70%。就金額而言，如果客戶因預算因素希望——支付更多給 Zscaler，那我們也會接受。所以這樣有回答你的問題嗎？

Yes, that provides a little bit more insight. But I'm just wondering, in specific situations like that, the opportunity I would imagine to drive greater subscribers and the higher bundled offerings are somewhat limited. So does it become increasingly incumbent upon additional large deals like that to kind of keep that retention rate where it was? Or is that not the case?

有的，這提供了更多洞見。但我想問的是，在那種特定情況下，我想像中要推動更多訂閱者以及更高階的組合式方案（bundled offerings）的機會可能會比較有限。所以，是否會越來越需要靠更多像那樣的額外大型交易，才能把留存率維持在原本的水準？還是其實不是這樣？

Got it. Good questions. So yes. So we called out before that more customers are going Transformation. So as more customers go Transformation, that's ZIA. They typically purchase that for all employees. So as that happens, that will put a downward impact potentially on our net retention rate. Related to that also is that, what we are seeing, is we are seeing more customers upgrading sooner. When we calculate net retention rate, we look at the customers we had a year ago, and for the same customers, what is their ARR? So we look at ARR a year ago versus ARR currently. What you're seeing is that if customers are upgrading within that period, we're not picking that up potentially in that retention rate. As we go forward, though, ZPA could have a positive impact, DLP could have positive impact. And as we add more services under our platform, those can have positive impacts. Our net retention rate at 118%, we feel is outstanding when you think about how we sell. And again, ZIA, we're selling more Transformation upfront to customers.

了解。好問題。所以是的。我們之前提到，更多客戶正在進行 Transformation。當更多客戶走向 Transformation，那就是 ZIA。他們通常會為所有員工購買。因此，當這種情況發生時，可能會對我們的淨留存率造成向下的影響。另外，我們看到的是，更多客戶更早進行升級。當我們計算淨留存率時，我們看的是一年前就存在的客戶，對同一批客戶而言，他們的 ARR 是多少。所以我們比較一年前的 ARR 與目前的 ARR。你看到的情況是，如果客戶在那段期間內升級，我們可能不會在該留存率指標中完全反映出來。不過往前看，ZPA 可能帶來正面影響，DLP 也可能帶來正面影響。而且當我們在平台下新增更多服務時，也都可能帶來正面影響。我們的淨留存率為 118%，考量到我們的銷售方式，我們認為這是非常出色的。再說一次，ZIA 方面，我們正向客戶銷售更多前期的 Transformation。

Yes, if I may add, Remo, we have many metrics. We are less focused on net retention rate. We're focused more on growth and customer retention, or reducing a churn, but this net retention rate may fluctuate up and down.

是的，如果我可以補充一下，Remo，我們有很多衡量指標。我們較不聚焦在淨留存率。我們更聚焦在成長與客戶留存，或是降低流失（churn），但這個淨留存率可能會上下波動。

At this time, there are no further questions in the queue. I would like to turn the call back over to CEO, Jay Chaudhry, for closing remarks.

目前隊列中沒有其他問題。我想把電話會議交回給執行長 Jay Chaudhry 作結語。

Thank you for your time to join us. We look forward to talking to you during the next quarter's earnings call. Thank you again.

感謝各位撥冗參與。我們期待在下一季的財報電話會議中再與各位交流。再次感謝。

Thank you.

謝謝。

Thank you. Ladies and gentlemen, this concludes today's teleconference. You may now disconnect.

謝謝。各位女士先生，今天的電話會議到此結束。您現在可以掛線。