Jay Chaudhry: Yes. So this is the how I think about it. First of all, number of users in the federal commerce DoD, non-DoD. Yes, we do have 12 of the 15 cabin lab agencies, but they are in various stages. There’s a big, big upsell opportunities there itself. Then DoD, just scratching the surface out there. So if you look at from a number of users’ point of view, it’s a massive market in front of us because we count number of users. Then there are workloads for federal. There’s a whole range of IoT, OT devices in federal business that needs to be taken care of. So massive stuff, but then on top of that, it’s a platform. Our platform has expanded, it keeps on expanding. So I think this is a significant growth opportunity for a long, long time.
And then DoD takes us to next – sorry, federal takes to other federal friendly countries out there. They all want to follow the NATO friendly countries want to adopt what U.S. has done here. That’s an opportunity for us. The state governments are getting very, very worried about adopting Zero Trust. That’s another big opportunity for us. So very bullish. We’ve done some big investments, and that’s why we have some of the best certifications for Zscaler platform than any other company out there.
Gabriela Borges: Thank you for the color. And congrats on the quarter.
Operator: Thank you. One moment please. Our next question comes from the line of Jonathan Ruykhaver of Cantor Fitzgerald. Your line is open.
Jonathan Ruykhaver: Yes. Thank you. So Jay, we are seeing this convergence between cloud workload protection platform, [CSPM, CIM] a lot of other acronyms that are being thrown into this seat kind of bucket. We’re also seeing a number of next-gen vendors that seem to have more of a product-led sales motion aimed at the developer, which contrasts with your approach, which is more a high touch A,B to C level. So as a product that fits between build and run time environment, and you could argue maybe that portfolio is shifting either to even further left. How do you balance those dynamics when you look to go to market with your CNAPP offering?
Jay Chaudhry: It’s a very good question. So all those four letter acronyms you gave us. And we tried to track them. And there have been 100-plus vendors in that space over the past two years. So about a year ago, I used to see a new vendor show up every other day. For the last year or so it has slowed down and actually they’re shrinking. But there’s adjacent next to it. That is cloud workload communication. Cloud workload communication is about workloads soft, Internet workloads talking to each other. That’s where our core strength comes in the Zero Trust architecture. We are the only vendor, I know out there. We have workloads talk to each other through Zero Trust architecture without being on the network. That’s our starting point.
Then we look at the CNAPP as an extended. To me, CNAPP is almost like cases in many ways. You make API call, leading logs, you’re leading configurations to figure out the risk and whatnot. And that is towards shifting more of the left. We believe that a combination of cloud workload detection, along with CNAPP, puts us in a better position. Regarding product net growth. I think there’s an interesting opportunity for some of the companies obviously, we don’t come from that side. I haven’t seen many, many security companies have grown to hundreds of millions of dollars doing product that growth. But we are watching and monitoring the space, but we will be going from where our strength is. Our large customers, loves Zscalers users, now they’re embracing Zscaler for workloads, for communication, and that allows us to extend it to CNAPP space as well.
That’s how we look at it.
Jonathan Ruykhaver: Yes. That’s helpful. Thank you.
Operator: Thank you. One moment please. Our next question comes from the line of Patrick Colville of Scotiabank. Your line is open.
Patrick Colville: Hi, there. Thank you for taking my question. I mean, really impressive set of results, guys. So congrats on the start in the new fiscal year as you have with – you guys have shown very impressive momentum. I guess I wanted to touch on the leadership change. These two new executive level hires. How has Dali’s role changed? Is he still at the firm? Or has he moved on? And if so, how can we expect his decisions to change going forward?
Jay Chaudhry: Dali has an active role as the COO of the company. He has played a phenomenal role in Zscalers growth you’ve seen over the past four years. He have built a great go-to-market machine that has helped us go past $2 billion in ARR. So Mike’s goal is take us from here to $5 billion and beyond. This frees up Dali to focus more in his capacity as a COO to really help scale our business operations capabilities. Now what do you mean by that? As we are growing at a rapid pace. We have many things to improve on scaling side up in the operational side, streamlining our post-sale customer engagements. Ranging from support to TAM to deployment, to success. How do you bring them together to make it more productive and better stay in line for better value realization of the customers.
Second example, we do cash process systems, productivity improvement, streamlining. If we do a better job in these areas as a company will become a lot more productive and Dali’s experience across the company will help us achieve some of those key things that are needed
Patrick Colville: Thank you so much.
Operator: Thank you. One moment please. Our next question comes from the line of John DiFucci of Guggenheim Securities. Your line is open.
John DiFucci: Thank you. Jay and Remo both spoke about the challenging macro backdrop. And I think Remo, if I – correct me if I’m wrong, but I think you said that you did not hit your internal targets for 1Q. I guess, what do you think the reasons for that were? I mean, you have new go-to-market people, and you explained that with the guide with Joe’s question. And sometimes that means the previous people were an issue, but your COO is really good at it to say the least. I know Remo said customer sentiment is stabilizing, but I’m not quite sure how that sort of fits in. Has the macro gotten a little worse? Or is there something else that I’m not thinking about?
Remo Canessa: Yes. The macro has not gotten worse. And the comment, John, was related to quota-carrying reps. So we didn’t hit our internal projections for internal reps. We do expect to catch up. We’ve talked about before on earlier calls, we’re in a huge market opportunity. We’re going to invest significantly in our company. You can see in the second half, we’re going to increase our sales and marketing spend based on our guidance. That’s related to just overall, we’ve gotten new CMO on board with Mike on Board. That was the gist of the comment. It’s related basically purely to quota-carrying reps. We did increase capacity, but not to the levels we wanted. And from my perspective, John, it’s really execution on our part. We need to execute better on that part.
John DiFucci: Got it. Thank you, everyone.
Operator: Thank you. One moment please. Our next question comes from the line of Tal Liani of Bank of America. Your line is open.
