The earnings call covered Q2 2026 financials, including non-GAAP metrics, forward-looking statements on revenue, and market opportunities. Upcoming conference appearances were also announced.

The dialogue outlines Zscaler's strategy to secure the AI era through its Zero Trust Exchange, addressing the urgent need to protect AI applications and agents from escalating cyber threats. It highlights the company's expanded Total Addressable Market (TAM) and technological lead, positioning it uniquely to secure AI transformations and mitigate vulnerabilities in the rapidly evolving AI landscape.

Z Killala stands out as a pioneering cybersecurity platform, leveraging a global infrastructure for unparalleled AI security. With over 15 years of experience, it secures AI agent communication across millions of devices and cloud environments, achieving 99.999% reliability. Processing nearly 1 trillion AI transactions in 2025 and millions of MCP requests monthly, Z Killala offers a unique advantage with its Zero Trust Exchange, securing over 4 million prompts per week for a Fortune 500 entertainment company. Its architectural differentiation from traditional security models positions it as a leader in driving demand for advanced AI security solutions.

The dialogue highlights the rapid growth and increasing demand for ZScaler's AI security solutions, specifically AI Protect and AgentiOps. It details successful deployments by Fortune 500 companies, emphasizing the integration of AI security into enterprise operations, prevention of data leakage, and enhancement of operational efficiency through advanced agent technologies and automated threat hunting. The discussion underscores the strategic importance of securing AI applications and the lifecycle, positioning ZScaler as a leader in the evolving landscape of AI security.

The Zero Trust Everywhere strategy, encompassing Zero Trust Users, Branch, and Cloud, is disrupting traditional security markets and driving significant ARR growth. With over 550 enterprises adopting this model, pricing scales with devices, workloads, and traffic, fueling demand for advanced data and AI security offerings.

The dialogue highlights successful implementations of Zero Trust Branch and Cloud solutions by a Fortune 500 retailer and a global financial services customer, showcasing significant growth in ARR, operational efficiency gains, and enhanced cyber protection through virtual firewall elimination and secure workload isolation.

A global financial services company significantly expanded its data security platform, increasing ARR nearly 5x, by consolidating legacy point products onto an integrated solution, highlighting the growing demand for comprehensive data protection amid increasing AI app usage.

Zscaler leverages its Zero Trust architecture to secure the AI era, processing over 500 billion transactions daily. The company's proprietary AI engine, trained on anonymized data, enhances real-time threat detection. With a significant market presence and growing opportunities, Zscaler aims to protect AI adoption, focusing on secure communication and policy enforcement.

The company delivered robust Q2 results, exceeding targets with a 19% increase in net new ARR to $156 million, bringing total ARR to $3.4 billion, a 25% year-over-year growth. Excluding Red Canary, ARR growth was 7%, accelerating from 1% the previous year. Revenue reached $816 million, up 26% year-over-year, and the company set a record with 1 million plus new ACV deals.

Revenue surged across regions, with Americas leading. Z Flex program and Square X acquisition bolster customer engagement and zero trust capabilities, signaling robust Q2 execution and future growth.

Executed Red Canary integration, reported elevated churn, achieved 80.2% gross margin, $181M operating income, $3.5B cash reserves, and $204M operating cash flow. Anticipated impact from memory and processor price hikes, provided Q3 and FY26 guidance on non-GAAP basis.

The dialogue outlines detailed financial forecasts for Q3, including revenue, gross margin, operating profit, and net income expectations, alongside strategies for achieving durable, profitable growth through AI security portfolio expansion, Zero Trust adoption, and data security advancements.

Discussion highlights the competitive backdrop and win rates observed in Q2, with emphasis on the improved transparency regarding Red Canary's market position and successes against competitors.

The company celebrated record pipeline conversion and large deal wins in Q2, attributing success to the market's preference for Zero Trust solutions. Legacy products like firewalls and VPNs are overshadowed, with Zero Trust emerging as a key strategy to prevent lateral movement, solidifying the brand's position among large enterprises.

A discussion on the raise in full year ARR expectations, attributing the growth to strengthened overall business and typical H2 seasonality, while noting that the increase is not significantly impacted by newer acquisitions, excluding Red Canary. The conversation highlights confidence in the second half of the year due to a strong pipeline of deals.

The dialogue discusses the growing importance of non-seat based security solutions, now comprising over 25% of new ACV, with ARR more than doubling year-over-year. It highlights the shift towards zero trust networking, emphasizing its application in AI agents, guest WiFi, and B2B data exchange. The conversation underscores the scalability and reliability of these solutions, especially for securing AI agent communications, positioning them as a key component for future growth in cybersecurity.

Executives are increasingly integrating AI into projects, emphasizing security as a priority. CIOs are allocating budgets for AI security, viewing it as essential to stay competitive. Companies are seeking visibility into AI assets and implementing zero-trust policies for enhanced protection.

The dialogue reveals anticipation for an upcoming question from a Morgan Stanley analyst during an investor Q&A session, highlighting engagement with financial stakeholders.

Discussion revolves around how incorporating AI into sales cycles influences project scopes, customer decision-making, and the preference for integrated solutions from trusted vendors over startup offerings. The trend indicates faster, smaller initial deals that are consumption-based, aiming for scalable growth over time.

Discussed the apparent contradiction between increased churn and ARR gains post-acquisition, emphasizing the strategic integration of Red Canary into the Agen X SOC, which positively impacts revenue despite higher churn rates.

The dialogue highlights the company's strategy to enhance sales productivity by focusing on larger, more complex transformational deals. The shift towards an account-centric model and increased engagement with customers, particularly through Z Flex, has led to double-digit growth in sales productivity. Anticipated future improvements in productivity are expected as the company continues to execute its strategic sales transformation.

Discussion highlights record Q2 conversion and revenue, indicating positive outcomes, with anticipation for further results and an upcoming question from a representative of Oppenheimer Company.

Discusses consistent performance and massive growth potential in ZPA business, highlighting opportunities for upselling and expanding within existing and prospective customers, emphasizing the stability and core of the business.

A query explores the acceleration of accounts receivable in D-Flex agreements versus historical contracts, seeking insights into typical D-Flex customer size at maturity and product-driven upside potential.

The dialogue emphasizes Z Flex as a strategic offering that fosters long-term partnerships, reduces customer concerns about future product decisions, and facilitates easier expansion into new modules. It highlights the benefits of Z Flex over traditional models, noting the average 8-figure TCB commitments over a four-year period, and underscores its role in enhancing customer flexibility and reducing transactional selling.

Discusses the benefits of browser extensions for security over full browsers, emphasizing flexibility and reduced agent load, while linking the approach to winning broader zero trust deals.

The dialogue explores the monetization strategy for increased network traffic driven by AI agents, emphasizing the importance of secure 0 plus exchanges for agent-to-agent communication. It highlights the potential for significant revenue growth as AI agent traffic escalates, positioning enhanced security as a key value proposition for the business.

The dialogue clarifies the company's ARR growth guidance, emphasizing the organic increase and the mechanical effect of Red Canary's revenue expectations, while highlighting a strong first-half performance and accelerated net new ARR growth.

The dialogue highlights the significant impact of transitioning to Zero Trust Everywhere, noting a 2-3x ARR uplift. It discusses the high interest from enterprise customers looking to replace SD-WAN for cost and security reasons, and the potential for the entire installed base to adopt this model, with no real competition in the cloud space.

QA session wraps up, thanking attendees and inviting them to future investor conferences, concluding the program and allowing participants to disconnect.