Joel Fishbein: Thanks. And thanks for taking my questions. Great execution here. Jay, one for you, and then I’ll jump back in queue. On these new advance plus bundles, obviously very exciting. Just can you share with – you said AIs included – some of the new AI included in that. Can you talk about adoption rates and whether or not you’re getting any pushback on pricing as it relates to some of those bundles?
Jay Chaudhry: Yes. So we have had advanced bundles that include a bunch of functionality of ZIA or ZPA type of stuff. Now we have added functionality where some of the data protection can be done with AI advanced techniques, some of the cyber threat protection can be done using that. So we clear these bundles, we call them advanced plus. So we’re getting very good traction. And these advanced plus bundles are about 20% or so higher than the non-plus bundles. So this is a good area. In fact, this is a good way for us to reach our customers as they’re looking at buying these bundles with additional functionality, it’s helping them, it’s helping us. Now in addition, we are also creating some standalone SKUs. We talked about Risk360, a very popular recently introduced product.
When I talked about having closed 10-plus deals in a pretty significant manner where the average ACV is sitting in six figures. And then you’ll see some more SKUs coming down the road as you’ll really be – as AI cloud is one of the big focus areas. And the reason we’re making focus is because we have better logs, better data to train AIML models. The starting point of good AIML is the data that we have better than anybody else.
Joel Fishbein: Great. Thank you.
Operator: Thank you. One moment please. Our next question comes from the line of Rob Owens of Piper Stanley. Your line is open.
Rob Owens: Great. Thanks for taking my question. Maybe building a little bit on Joel’s question. You mentioned in your prepared remarks with an example around data protection as kind of one of the faster-growing solutions and how it doubled spend at an existing customer. Just curious the potential for that and what you’re seeing relative to typical uplift when you’re able to attach that solution? Thanks.
Jay Chaudhry: You know when Zscaler customer started working with us several years ago, the number 1 focus for them was cyber protection, so they don’t get compromised. Data protection was slower in adoption, data protection also takes a little bit work, there’s more contributions and customization needed. And in large enterprises where our large customers have been, they’ve used Symantec 1, 2, as one of the primary data protection products. Over the past five, six years ago, we have expanded our data protection platform significantly, not just in line, but can be actually endpoint DLP cloud data protection, all those things, including EDM IDM technology are there. So with all that technology, we are in a great position to replace some of those complicated data protection products out there.
And it’s natural. If we are sitting in traffic path, if we are doing access and inspection, it’s natural for the customers to use our cloud because the traffic is coming to a cloud from all kinds of positions. That’s really driving our growth. That’s why we talked about this data protection DRR is approaching $0.25 billion and it grew 60% year-over-year for us, and we see a lot of growth for quite a long time in this area. Did I answer your question?
Rob Owens: Yes. Thanks.
Jay Chaudhry: The one comment I’ll make is, we have more complete platform for data protection. And customers want one set of policies, whether they want to secure data at rest or data at motion. That’s why it’s picking up quite fast.
Operator: Thank you. One moment please. Our next question comes from the line of Joseph Gallo of Jefferies. Your line is open.
Joseph Gallo: Hi, guys. Appreciate the question. Remo, I appreciate the rationale on the full year billings guide. But just on methodology, is there any changes there? I mean you saw a strong 1Q driven by Fed stream why not pass along some of that beat. Is that solely due to the market? Or the go-to-market change conservatism? Or is there anything else you’re seeing there with large customer calendar ’24 budgets? And then maybe just to simplistically ask, is fiscal ’24 billings more or less conservative now than it was 90 days ago?
Remo Canessa: Great question. So I mean the guide that we gave is solely related to basically the go-to-market with our new sales leadership on board. We feel it’s prudent to do that. When you take a look at close rates for Q2 this year versus last year, we’re being a little more conservative with our close rates this Q2. From a market – overall market perspective, the macro still remains challenging, but we feel that things – that there’s more of an acceptance to Zero Trust, there’s more of an understanding of our platform. So we feel good. Regarding guidance, whether it’s more conservative now or not, I’d like to say we like being prudent. And again, it’s all related to go-to-market with our new CRO, and I don’t want to comment any further than that.
Joseph Gallo: Thank you.
Operator: Thank you. One moment please. Our next question comes from the line of Gabriela Borges of Goldman Sachs. Your line is open.
Gabriela Borges: Good afternoon. Thank you. Remo, I wanted to ask you about some of the idiosyncratic drivers in your federal business. And more specifically, as we think about all the momentum that you’re seeing now, how should we think about the durability of growth in the federal vertical? Meaning, is this like a three to five year product cycle where we’ll see a ramp and then we should be cognizant of a slowdown? Is it an 18-month to 36-month product cycle? How do we think about some of the visibility you have in federal and how it’s going to impact your growth over the medium term? Thanks.
Remo Canessa: It’s another great question, Gabriel. I’ll start and then maybe Jay can come in also. We’ve invested significantly in federal. This is not an overnight basically what’s occurring. This is occurring over the last five, six years of significant investments both from a platform technology as well as people within the federal organization that works for us. We’re in 12 of the 15 agencies, cabinet agencies. As Jay talked about in the script, our growth rate in federal in Q1 was 90% year-over-year. I feel that we are very well positioned in federal, what we talked about, we’ve got incredibly strong federal team. And I feel that going forward, federal should be a good driver, potentially significant driver for Zscaler. And we’re doing well in federal. I’ll turn it over to Jay.
