Zscaler, Inc. (ZS) Earnings Call Transcript & Summary

Good day, everyone, and welcome to the Zscaler, Inc. Annual Meeting of Stockholders. I would now like to turn the conference over to Jay Chaudhry. Please go ahead.

Thank you. Good afternoon. I'm Jay Chaudhry, CEO and Chairman of the Board of Directors of Zscaler, Inc., and it's a pleasure to welcome you to Zscaler's Annual Meeting of Stockholders. The meeting is now called to order. I will act as Chairperson of this meeting. I've asked Robert Schlossman, our Chief Legal Officer and Secretary, to record the minutes of this meeting. Before proceeding further, let me first introduce the other directors and officers of the company. Our current directors other than myself are: Karen Blasing; Andrew Brown; Charles Giancarlo; Scott Darling; Nehal Raj; and Amit Sinha. The officers here with us today are Remo Canessa, our Chief Financial Officer; Amit Sinha, who in addition to being a director is also our President of Research and Development, Operations and Customer Service and Chief Technology Officer; Robert Schlossman, our Chief Legal Officer and Secretary; and Bill Choi, our Vice President of Investor Relations. And also with us are Chris Stephens and Courtney Blum, representing PricewaterhouseCoopers LLP; Mark Baudler, representing Wilson Sonsini Goodrich & Rosati PC, our outside corporate counsel; and Kathy Whelan, as a representative of Broadridge Financial Solutions, our inspector of elections. I will now turn the meeting over to Robert Schlossman, who will conduct the formal portion of the meeting.

Thank you, Jay. Before proceeding, please be aware that we have opened the online portal for anyone to ask questions during the course of the meeting. Questions are to be restricted to the procedures for the meeting and the proposals under consideration. If you ask such a question, please enter it into the online portal, and we will do our best to answer it. Any other questions will not be addressed during the meeting. If you have a question unrelated to the meeting, you can send questions to our Investor Relations team through the company's Investor Relations page on our website, and if appropriate, a member of the Zscaler management team will arrange a mutually convenient time to discuss the matter. The annual meeting is being held for the following purposes: number one, to elect 3 Class 2 directors to hold office until the 2022 Annual Meeting of Stockholders or until their successors are elected and qualified subject to their earlier death, resignation or removal; and two, to ratify the election of PricewaterhouseCoopers LLP as our independent registered public accounting firm for our fiscal year ending July 31, 2020; and number three, to approve on a nonbinding advisory basis the frequency of future stockholder advisory votes on the compensation of our named executive officers. Each of these proposals is described in detail in the company's proxy statement dated November 27, 2019. In order to ensure that the business of the meeting proceeds in an orderly fashion, we ask that you please observe the rules and procedures provided to you on the online portal. The annual meeting is being held in accordance with the company's bylaws and Delaware law. During the formal meeting, we will address the matters described in the proxy statement. We will then complete the balloting process, an announcement will be made regarding the preliminary results and then the meeting will be adjourned. As a reminder, any submitted questions are to be restricted to the procedures for the meeting and the proposals under consideration. Thank you for your understanding. I have proof by affidavit that the notice of Internet availability of proxy materials was mailed on or about November 27, 2019, to all stockholders of record at the close of business on November 15, 2019, which is the record date for the meeting. The affidavit, together with copies of the notice of Internet availability of proxy materials, proxy statement and proxy will be filed with the minutes of the meeting. We have appointed Kathy Whelan, a representative of Broadridge Financial solutions, to act as inspector of election for this annual meeting. The inspector of election has signed an oath of office, which will be filed with the minutes of this meeting. The inspector of election has advised me that we have present at the meeting sufficient voting power of the stock issued and outstanding and entitled to vote on business before the meeting to constitute a quorum. Therefore, the meeting is duly constituted, and we will proceed with business. I will now briefly describe the voting procedures. You may vote by proxy and by online ballot. Each stockholder is entitled to 1 vote for each share of our common stock held as of the record date. If you have previously turned in your proxy and you do not intend to change your vote, you do not need to complete another proxy or vote online. Your vote will be counted as indicated in your proxy. If you have previously turned in your proxy and you would like to change your vote, you can change your vote by voting through the meeting portal during the meeting. If you are eligible to vote and have not submitted your proxy or if you want to change your vote, please follow the instructions provided on the portal for the meeting. The votes cast today will be counted in the final tally along with proxies previously received. I will announce the preliminary results of the voting at the end of the meeting. If there are any questions regarding the voting procedures, we will now pause to allow them to be entered into the online portal. No questions were received, and we will now continue with the business of the meeting. It is now 2:07 p.m. Pacific Time on January 10, 2020, and the polls for each matter to be voted on at this meeting are now open. The first item of business is the election of directors. 3 Class 2 directors will be elected at today's meeting. The 3 director nominees receiving the highest number of votes represented by the voting power of the shares present at this meeting and entitled to vote thereon will be elected as directors. Directors elected at today's meeting will hold office until the 2022 Annual Meeting of Stockholders or until their successors are elected and qualified subject to their earlier death, resignation or removal. As indicated in the company's proxy statement, Andrew Brown, Scott Darling and David Schneider have been nominated by the company's Board of Directors to serve as Class 2 directors. Mr. Brown and Mr. Darling are currently serving as directors of the company. The Board of Directors recommends that the stockholders vote in favor of each of these 3 nominees, and the proxies solicited by the Board will be voted in favor of these nominees. If there are any questions concerning director elections for this meeting, we will now pause to allow them to be entered into the online portal. No questions were received, and we will now continue with the business of the meeting. The next item of business is to ratify the appointment of PricewaterhouseCoopers LLP as the company's independent registered public accounting firm for the fiscal year ending July 31, 2020. The Audit Committee of the Board approved PricewaterhouseCoopers LLP as the company's independent registered public accounting firm for the fiscal year ending July 31, 2020. The Board of Directors is now asking stockholders to ratify this selection. Approval of this proposal requires the affirmative vote of a majority of the voting power of shares present in person or represented by proxy at the meeting and entitled to vote thereon. The Board of Directors recommends that stockholders vote in favor of this proposal and the proxies solicited by the Board will be voted in favor of this proposal. Chris Stephens and Courtney Blum are present from PricewaterhouseCoopers and are available to answer any questions that you may have at this time. If there are any questions concerning this proposal, we will now pause to allow them to be entered into the online portal. No questions were received, and we will now continue with the business of this meeting. The next item of business is to approve, on an advisory basis, the frequency of future stockholder advisory votes on the compensation of our named executive officers. You may vote for the frequency of future advisory votes on executive compensation to be 1 year, 2 years or 3 years, or you may abstain with respect to this proposal. The frequency receiving the highest number of votes from the holders of shares present in person or by proxy at the annual meeting and entitled to vote thereon will be considered the frequency preferred by stockholders. Because this proposal is an advisory vote, the result will not be binding on our Board of Directors or our company. However, our Board of Directors values stockholder opinions, and our Board of Directors and our Compensation Committee will consider the outcome of the vote when determining how often we should submit to stockholders an advisory vote to approve the compensation of our named executive officers. The Board of Directors recommends a vote to hold future stockholder advisory votes on the compensation of our named executive officers every 1 year, and the proxies solicited by the Board will be voted in favor of 1 year for this proposal. If there are any questions concerning this proposal, we will now pause to allow them to be entered into the online portal. No questions are received, and we will now continue with the business of this meeting. If you have not voted and intend to vote, please do so now in accordance with the instructions provided. You submit your vote in order for it to be counted as the polls will close momentarily. The inspector of election will not accept ballots, proxies or votes or any changes or revocations submitted after the closing of the polls. We will now pause to allow any final votes to be submitted. [Voting]

It is now 2:13 p.m. on January 10, 2020, and the polls for each matter to be voted on at this meeting are now closed. No additional ballots, proxies or votes and no changes or revocations will be accepted. We will now pause while preliminary results are confirmed. At this time, I will provide you with a preliminary report on the voting results as provided to me by the inspector of elections. With regard to proposal #1, the 3 director nominees, Andrew Brown, Scott Darling and David Schneider, received the highest number of affirmative votes and have been elected to serve as Class 2 directors. With regard to proposal #2, the appointment of PricewaterhouseCoopers LLP as the company's independent registered public accounting firm for the fiscal year ending July 31, 2020, has been ratified by a majority of those voting power present and entitled to vote thereon. With regard to proposal #3, 1 year received the highest number of affirmative votes and will be considered the frequency preferred by stockholders for future advisory votes on compensation of the company's named executive officers. These are preliminary results of voting. The final count may vary following final examination of the proxies and ballots. The final results of voting, including any votes recorded during this meeting, will be set forth in the report of the inspector of election and will be included in the minutes of the meeting. The final results will also be reported in a Form 8-K to be filed with the Securities and Exchange Commission. The formal portion of the meeting is now adjourned. With the formal business of the meeting now completed, I turn the meeting back over to Jay Chaudhry, Zscaler's Chief Executive Officer.

Thanks, Robert. Before we formally adjourn this meeting, I want to personally thank Nehal Raj for his many years of service to Zscaler, and to our Board of Directors. We wish Nehal well on his future endeavors. I want to thank all of you for attending today's annual meeting. We very much appreciate your attendance, and as always, we thank you for your continued support of Zscaler. The meeting is now adjourned.