Zscaler Making ‘Very Good Progress’ With VARs: CEO Jay Chaudhry

The cybersecurity vendor beat expectations on its quarterly revenue and announced the hire of a ServiceNow veteran as its new CRO.

Zscaler is seeing strong momentum with reseller partners as the security service edge provider continues working toward reaching $5 billion in annual recurring revenue, Founder and CEO Jay Chaudhry said Monday.

Initially, “VARs were slow to adopt Zscaler,” Chaudhry said during the company’s quarterly call with analysts. However, that has changed as “the market has moved” to focus on zero-trust security and Channel Chief Karl Soderlund has come aboard to launch new partner initiatives, he said.

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As a result, “we’re seeing very good progress” with resellers right now, Chaudhry said. Later in the call, he characterized Zscaler’s sales efforts as centered around “working side-by-side with our partners.”

“Almost all of our business [goes through] channel,” Chaudhry said, with the exception of “a few” customers that insist on going direct with the vendor.

The Zscaler CEO made the comments as the San Jose, Calif.-based company reported results for the first quarter of its fiscal 2024, ended Oct. 31, which beat analyst estimates on both revenue and earnings.

The company also announced the hire of a pair of new C-level executives Monday, including a new CRO, Mike Rich, who’d most recently been the president of ServiceNow’s Americas business. Rich had spent more than 12 years in total with ServiceNow.

Zscaler will continue to work up to achieving its target of $5 billion in ARR with Rich at the helm of its sales strategy, Chaudhry said. The company is currently generating more than $2 billion in ARR, he said during the call Monday.

Rich will take over the sales leadership responsibilities at Zscaler from COO Dali Rajic, who’ll now be mainly focused on the company’s business operations, the vendor said.

Zscaler also announced the hire of Joyce Kim as its new CMO. Kim had most recently been CMO at Twilio, a role she’d held since mid-2022, and before that had led marketing at tech companies including Genesys and Arm.

For Zscaler’s fiscal Q1, revenue climbed 40 percent year-over-year to $496.7 million, well above the Wall Street analyst consensus estimate of $437.4 million. Non-GAAP net income was 67 cents per share, beating analyst estimates by 18 cents per share.

Zscaler achieved the expectations-beating results “in a challenging macro environment,” Chaudhry said. “The elevated scrutiny of large deals remains mostly unchanged.”

Zscaler’s stock price was down 6.7 percent in after-hours trading Monday, to $179 a share.