Zscaler Data Security Platform Takes on Symantec, CASB Tools – Source: www.govinfosecurity.com

Cloud Access Security Brokers (CASB)
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Data Loss Prevention (DLP)
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Endpoint Security

CEO Jay Chaudhry: In-Line Inspection, App-to-App Protection Aid Data Defense Growth

Michael Novinson (MichaelNovinson) •
September 5, 2023    

Zscaler’s ability to inspect traffic in-line and secure application-to-application communications has driven massive growth in its data protection business, founder and CEO Jay Chaudhry said.

See Also: Live Webinar | Unmasking Pegasus: Understand the Threat & Strengthen Your Digital Defense

Clients have embraced the San Jose, California-based cloud security firm’s data protection technology over both legacy incumbents like Symantec as well as pure-play cloud access security broker tools, according to Chaudhry. Zscaler’s data protection tool is growing at 60% year-over-year and approaching $250 million in annual recurring revenue as it takes on a $10 billion total addressable market, he said (see: Moving Zero Trust Conversations Beyond the CISO to the Board).

“Due to targeted investments and rapid innovation, we believe our data protection solution is now the widest and the deepest in the market,” Chaudhry said. “We have a track record of building and growing new innovation.”

Chaudhry said offering data protection was a “natural thing” for Zscaler given how much web traffic flows through the company’s technology, and that it’s hard for customers to use any other data protection vendor since Zscaler is actually sitting in the traffic path. This has allowed Zscaler to displace Symantec, which Chaudhry said has long been the top data protection vendor for large enterprises.

From Users to Applications and Workloads

Zscaler’s data protection platform also has replaced pure-play cloud access security broker offerings, which Chaudhry described as a “point product on the margins” and said is a feature of Zscaler’s broader platform. The company recently extended its data protection capabilities to endpoint and email via organic investments and has added supply chain data protection by acquiring Canonic in February 2023.

“We literally have no competition when it comes to this area.”



– Jay Chaudhry, founder and CFO, Zscaler

“All this has made Zscaler the most comprehensive platform,” Chaudhry said.

Chaudhry said Zscaler’s secure web gateway offering began by allowing users to securely communicate with applications, and has in recent years extended to allowing workloads to talk with one another in a zero trust fashion. Workload protection represents a great upsell opportunity for Zscaler, and Chaudhry said the company has enjoyed good success at boosting customer spend as well as revenue per user.

“The deal size is still small because the number of workloads vary from customer to customer,” Chaudhry said. “But we literally have no competition when it comes to this area because we’re the only provider that actually offering zero trust communication from a workload to a workload or to the internet as well.”

Going forward, Zscaler plans to introduce multi-modal data loss prevention to stop customers’ data from leaking in media formats beyond text and images such as video and audio. Chaudhry said multi-modal DLP is still in development and isn’t shipping yet, but he noted there’s been a lot of customer engagement and high levels of interest since there’s nothing else like it in the market today.

Sales Surge, Losses Lessen

Zscaler’s revenue of $455 million in the quarter ended July 31 beat Seeking Alpha’s sales estimate of $430.6 million. And the company’s non-GAAP earnings of $0.64 per share crushed Seeking Alpha’s estimate of $0.49 per share.

For the fiscal year ended July 31, Zscaler’s sales surged to $1.62 billion, up 48.2% from $1.09 billion the year prior. The company’s net loss lessened to $202.3 million, or $1.40 per share, 48.2% better than the net loss of $390.3 million, or $2.77 per share, recorded the year prior.

The company’s stock is down $2.34 – 1.44% – to $160.40 per share in after-hours trading Tuesday. The Americas accounted for 53% of Zscaler’s revenue in the most recent fiscal quarter, while EMEA and APAC generated 32% and 15% of the company’s sales, respectively, Chief Financial Officer Remo Canessa said.

For the quarter ending Oct. 31, Zscaler expects non-GAAP net income of $0.48 to $0.49 per share on revenue of between $472 million and $474 million.