Zscaler’s data protection offering is seeing surging adoption by customers, who are increasingly replacing “legacy” data loss prevention (DLP) products with the technology, Zscaler Founder and CEO Jay Chaudhry said Tuesday.
“The No. 1 vendor we are replacing there is Symantec,” Chaudhry said during Zscaler’s quarterly call with analysts.
This is the second wave of Symantec displacement that Zscaler has been driving, he said.
Initially, the company’s cloud-native cybersecurity platform, Zscaler Internet Access, was adopted in large numbers by customers looking to replace secure web gateway appliances from Symantec-owned Blue Coat, according to Chaudhry.
Now, “DLP is the secondary piece” that the vendor — through its Zscaler Data Protection offering — is displacing from Symantec, he said.
CRN has reached out to Broadcom, which owns Symantec, for comment.
All in all, “data protection is an important new pillar of growth for us,” Chaudhry said. Zscaler’s data protection business is approaching $250 million in annual recurring revenue — out of a current total of more than $2 billion in ARR for the company — and is up 60 percent from a year ago, he said.
The Zscaler CEO made the comments as the San Jose, Calif.-based company reported results for the fourth quarter of its fiscal 2023, ended July 31, which beat analyst estimates on both revenue and earnings.
‘Widest’ And ‘Deepest’ Offering
Data protection is a “natural” area for Zscaler — a top player in security service edge (SSE) — to become a disruptor, Chaudhry said Tuesday. With so much traffic now “flowing through Zscaler,” it makes little sense for customers “to have any other data protection vendor when Zscaler is actually sitting in the traffic path,” he said.
In addition to DLP, customers that have deployed “pure-play” cloud access security broker (CASB) technology “essentially gets replaced by our data protection platform,” Chaudhry said.
“We believe our data protection solution is now at the widest and the deepest in the market, and we are taking data protection beyond users to workloads and devices,” he said.
Notably, Zscaler is seeing “tremendous traction” for its recently launched endpoint DLP capability, and its email DLP module is enjoying strong growth, as well, Chaudhry said.
Meanwhile, Zscaler’s acquisition of Canonic has rounded out the picture with protection against SaaS supply chain threats, according to Chaudhry.
“All this has made Zscaler the most comprehensive platform,” he said.
In one recent customer win that was “led by data protection,” a large telecom firm adopted Zscaler after becoming “increasingly uncomfortable with gaps left by their firewall and VPN-based security, which struggles with data protection for TLS encrypted traffic,” Chaudhry said.
‘Challenging’ Economic Environment
For Zscaler’s fiscal Q4, revenue climbed 43 percent year-over-year to $455 million, above the Wall Street analyst consensus estimate of $430.4 million. Non-GAAP net income was 64 cents per share, beating analyst estimates by 15 cents per share.
The expectations-beating results came in spite of a macroeconomic environment that “remains challenging,” Chaudhry said.
Ultimately, Zscaler has doubled its ARR from $1 billion to more than $2 billion in seven quarters, he said — “reaching a milestone only a select handful of SaaS companies have achieved.”
Nonetheless, Zscaler’s stock price was down 1.4 percent in after-hours trading Tuesday, to $160.50 a share. Major stock market indexes declined during regular trading Tuesday amid the release of new data on China’s economic slowdown.