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

Good morning, and good day to everyone joining us on day 3, the final day of Citi's Global Tech Conference. For those of you who haven't spent much time with me over the conference, I'm Fatima Boolani. I help run the software equity research Effort here at Citi. And for this session, the pleasure of hosting the Zscaler management team. I've got on the line with me, Jay Chaudhry, CEO and Founder; as well as Remo Canessa, CFO. Thank you, gentlemen, for joining me.

Thank you.

Thank you.

Terrific. Before we get into the exciting part of the discussion, I just want to remind the audience to the extent you do have any questions, feel free to shoot me an e-mail [email protected], and I'd be happy to address some of the questions, and I'll do my best to get to them as well. So with that, I'm going to turn it over to you, Jay. because I think it would be helpful for the audience to just get a lay of the land of where you sit within the world of cybersecurity and the ecosystem of cybersecurity and maybe touch on some of your technical and competitive advantages. It's been a very busy week in terms of content and activity from some of your peers. And so I think it would be very helpful to set the stage that way and then we can dive into some more specific questions. So take it away, Jay.

Indeed, thank you, Fatima. Today, if you look at the security landscape, security used to be endpoint only in the '80s, Symantec and McAfee, then in '90s, when we built networks, Cisco came on the land by connecting branches to headquarters. We start to do network security, which means I secure my network. How do you secure your network? You build a castle in the data center. You build the moat with security appliances. A firewall became a very important piece, it's a moat, it's a gate because in you're safe, you're out, you're not safe, and out was the Internet, the wild west. Only some information sat on the Internet but not a whole a lot. In the past 25 years, we have been trying to build a bigger and bigger moat. Now the applications that left the castle, user that left castle, firewall-based technology is trying to protect the empty castle. So the new architecture was needed, which is not based on firewalls, which is not based on VPN. And that's the technology we pioneered. So let me share a few slides to set the stage just to say what's different about Zscaler architecture. Because, unfortunately, when things become popular, every vendor becomes that kind of vendor overnight, for example, zero trust, everyone claims to do zero trust. But if you look at network security architecture, this orange is generally your network strategies to every branch office. And once you're on the network, everything that get infected because you are on the network. If you're at home, with VPN, you extend your network to a household. If a PC is infected in 1 of the 50,000 households, you can get infected. That's what happened to Colonial Pipeline, the remote VPN. In the Zscaler world, your applications are destinations. They're not on the same network the users are. Network simply becomes plumbing. It's nothing more than the transport, and you access applications going through Zero Trust Exchange as Zscaler. Think of us as a smart switchboard, a smart control panel. And we do 4 things when you go through us: One, we terminate connection. So you're not just passing through; two, we verify access policy. That's where we work with identity vendors and important is zero trust, device posture, important piece of zero trust. Then we'll do check a few more context, we'll enforce policy and we'll connect you to the right application or service. One set of policies for external applications, second set of policies for internal applications, but the key is we don't put people on the network, we don't connect you own the network. A firewall and VPN we're designed to put people on the network. You can't tweak a firewall and change it. The architecture needs to be built very differently. That's why the claims that a firewall can become zero trust. Our not just stretch, their outright false. They make no sense. So in our world, with our exchange, users go through our ZIA service to remain secure as they access Internet and SaaS, but internal applications, they go through ZPA service so they can access internal applications in your data center or public cloud without being on the network. And then lastly, third piece, user experience. We have a service called ZDX that tells you if there're any user experience issues and how to solve them. This is a pretty simple story. This is about ZIA and ZPA for users. The same thing is being has been now done for workloads. But if you go through Zscaler service, your complicated network gets simplified. You select your cloud providers, SaaS provider data centers. Your users could be anywhere. You come on any network, doesn't matter what the network is. You go through our exchange. We connect your right application. We are the policy engine. We integrate with identity vendors. We integrate with endpoint. We can take traffic from any router or SD-WAN vendors, and we can feed logs to security operational center. Your life becomes simple. With that, let's get into our Q&A.

I think a lot of what you touched on, Jay is going to provide helpful context in some of the questions I'm going to ask you. But maybe just to kind of take a step back, and recap for fiscal '21, it was a milestone year for you. You just wrapped up your fourth quarter earnings last week. And what we saw was a continued acceleration in your top line metrics. So maybe given the sort of background that you shared with us from a technical angle, can you characterize for us some of the external factors you were able to really capitalize on over the course of this year? And frankly, what gives you the confidence in your ability to sustain capitalizing on some of these trends?

So if you look at our driver, it has not been just security from early on asset. It has been secure transformation that CIOs are driving. We end up transforming the network security, all of that stuff. When COVID happened, it accelerated transformation because you had to work from home, collaboration tools had to be used. They had to be secured. That became -- that actually changed the mindset of lots of people. So they used to think that my company network is so critical. And we have said, hey, Internet is your corporate network, don't worry even having your network. That was a big push. Then you saw SolarWinds happen. SolarWinds highlighted the need for lateral threat movement needs to be fixed. It's a big issue. Then came all these other ransomware attacks. All those attacks happen when companies as the best or the best firewalls in place. Why did they get hacked? because they got in they're laterally moved and they compromise them. All those things might like the need for zero trust, which means trust no one. That means don't trust that your firewall has said, I am on the network, I'm safe, not so. So zero trust has become the biggest theme. Even CIOs are asking for zero trust. There is no longer just CISOs. So we think with that, that drive for security and transformation is helping our business push forward Biden administration's EO in this area has helped. The good thing is they're clarified that zero trust requires actually a new architecture where you don't connect people to the network. It's unfortunate that legacy vendors, since they're afraid of getting disruptive, are all claiming zero trust, a lot of disinformation we have to help our customers. I was reading last week in an article, which said we are the best zero-trust network security vendor. I said no statement could be more oxymoron, either your network security or your zero trust. But the opportunity is big. We are seeing bigger deals being signed. Remo, you can give a little more color.

Yes. I mean I also think it's the expansion of our platform. We started off when we went public, primarily ZIA. We -- ZPA was just being introduced, and we were going public, and we've expanded into 4 pillars. And the 4 pillars that we've got are ZIA and ZPA and ZDX, on the user side and then ZCP cloud protection for the workload side, what we're seeing is that we're seeing customers buying our broader platform. We're seeing also that exceeded our expectations for emerging products, ZDX and ZCP were high single digit. In comparison, we said, ZPA, and we think the emerging products will go in the same type of trajectory. And what we're seeing is the trajectory of ZDX and ZCP adoption is higher than ZPA. And at the same stage, ZPA was 4% of our new and upsell business and ZDX and ZCP is high single digit, and we're expecting it to go low teens in fiscal '22. So I think the platform, the broadening the platform and also the way our customers are embracing it. And we're seeing it also sell through in large deals. The number of large deals is a record. There was order magnitude more actually in Q4 versus other quarters. And it was evenly split, pretty evenly split between upsell and new, which was also very encouraging. And so we're seeing just momentum really in the market for, as Jay talked about, zero trust, both on the user side and workload side.

Remo, I want to stick to this area of discussion as it relates to your large deal momentum. So maybe looking back on the year specifically. There were various initiatives underway, so cross product and upsell momentum from a wider product portfolio, a lot of the things that you've done internally from a go-to-market perspective. Any particular observations from a geography vertical or market segment perspective that you can share, whereby you really outperformed your expectations?

Yes. I mean all geos did outstanding. So all geos really did -- there is -- they just all did very, very well. Financials did well for us this year. The adoption of Office 365 and starting to go over the cloud, that was a big, big positive for us. The -- basically the 2,000 to 6,000 employee companies, the enterprise, which we just started, that's our fastest-growing segment. Channel picked up, the VAR channel picked up with our Summit Program. That was a positive for us also. Just overall, though, general business trends were just across the board in every segment, majors, large enterprise, enterprise and commercial was all very positive, but the enterprise part was our fastest growing, which was good to see because that's where we're making the investment this past fiscal year in the channel with the Summit Program geared towards more of those enterprise size type customers.

And when you're thinking about fiscal '22 bringing to bear the go-to-market and sales organization investments that you have been making in the last 1 year or 1.5 years, how do you expect that to change in fiscal '22?

Yes. I mean that was one of the kind of the themes of our call, which was -- we're seeing really strong adoption of zero trust. We're seeing strong adoption of Zscaler. So what we're doing basically is we're looking to invest and put priority growth over operating profitability. The reason for that is that the #1 thing we're trying to do right now is get market share. And to get market share, we invest, and we're going to invest broadly across the company. Sales and marketing clearly is an area. We do plan to increase our sales headcount year-over-year. So we did increase our field quota sales headcount fiscal '21 versus fiscal '20. We expect to do the same in fiscal '22. One thing, I can talk about is also is that, in fiscal '21, when we went into the planning process, we expect that sales productivity for the year to be down based on number of hires. And actually, it was up. It just shows momentum that we're seeing. So going into fiscal '22, we're expecting sales productivity to be flattish to slightly down. Why is that? It's the number of hires we're doing. So we really see an opportunity for us to really capture this market. We're going to put growth over operating profitability. If you want to think about what we're thinking about it internally, if we're growing over 30% in revenue, expect operating margin expansion of less than 300 basis points. If we're growing 30% or less in revenue, you can expect the 300 basis point expansion. That's kind of the guardrails that we set for ourselves. And so we're going to continue to invest. We feel that's in the best interest of our shareholders to drive value. We also feel it's best for the shareholders to put that really in Jay's in my hand to make the decisions to really drive that share value really pushing growth and making the right decisions for the company going forward.

Remo, I want to double-click on the sales headcount and field sales hiring posture. I think you've shared some staggering numbers in the past in terms of how that organization has grown. Can you just remind us sort of fiscal '19 into '20 and '20 to '21 and then pair that up against sort of relative growth in '22, I understand that you are generally increasing the sales headcount nominally, but if you can help us put some numbers around sort of the sheer scale and the growth there?

Yes. Fiscal '20 versus fiscal '19, there was a growth rate of 60%. So net quota-carrying sales rep grew 60% year-over-year. What we talked about in fiscal '21 versus fiscal '20, we'd increase the numbers. So we'd have a higher number, which we did. And in fiscal '22, same comment. We're going to increase the number of net adds in '22 versus '21. And the comment, I made, which was that we expect sales productivity to be flattish to slightly down kind of tells you what we're thinking about hiring. We're looking to significantly invest in Zscaler going forward because we really see just the growth opportunity. And really, the market is in the very early stages, and you take a look at our penetration into this market, the -- our focus is companies are greater than 2,000 employees, and there's about 20,000 of those companies worldwide, we have about 2,000. And that is just for ZIA primarily. The ability to penetrate into -- or the ability to sell the ZPA, for G2K customers, about 44% have both ZIA and ZPA. So significant upsell capability there. And ZDX and ZCP are just starting. The thing we talked about also on our Analyst Day, just for ZIA and ZPA, in our existing customer base, there's an opportunity to sell 6x more. One of the things Jay talked about on the earnings call is that we're approaching $1 billion in ARR. So order magnitude, that's what we're seeing. We're seeing the ability to upsell a significant amount into our customer base with our broadening platform as well as to capture new business going forward in a market that basically, like I said, we have 2,000 of those 20,000 companies, so about a 10% penetration.

Remo, you talked about the solution footprint, essentially doubling since the time of your IPO. You have 4 pillars that you can monetize from a product perspective. So I want to talk about the breadth of the portfolio and comparing and contrasting that to the upsell, cross-sell motion. And I specifically mean by that is, how do you ensure that your sales people aren't necessarily putting themselves in a situation where sales cycles are elongating because there's -- while the great thing is that there's more opportunities to upsell, the flip side of that coin is that it probably takes longer to debunk some of the fund in the marketplace. And really compel and convince the customer the value proposition around ZDX and ZCP for instance. So how do you manage the sales cycle around what is the broader portfolio?

Okay, if I may start. See sales cycle is generally linked to how big the deal is or broad a platform you're selling up front. And upsell generally goes a lot faster, okay? Because the upsell means, they already got some Zscaler products, and they want to go to the next level. That's expected to be faster and relatively easier, if I may say, okay? So no problem there. We aren't necessarily pushing our sales team to sell the biggest platform to start with. We're basically saying, do what the customer needs. But when we tell them the story that have with ZIA, you can access all external applications, ZPA internal applications, and by the way, with ZDX, you can know if there are any performance issues where and why, the customer naturally leans towards having all 3 services now. Now it's -- what's different about us since our sales are driven by C level. It's generally, when CIO is involved, all 3 things happen more often because CIO is thinking about user experience as well. When CISO is driving it, generally, ZIA, ZPA comes together because CISO needs to worry about both. If we were selling like legacy security vendors, which generally get sold at the petty level, then you'll be selling piece A, piece B, piece C. So our sales motion naturally takes it towards a bigger, broader platform sale, but we are not trying to extend the sales cycle by pushing for bigger sale upfront. But the market is leading towards consolidation and simplification of point products, which is why more and more customers are buying bigger bundles. We're seeing more customers buy ZIA, ZPA and ZDX together. About a year ago, 18 months ago, we started seeing customer buying the ZIA, ZPA together upfront. It is natural for us to expect to see ZDX being part of the initial deal. And now we are seeing new things, I mean, I hope it happens even faster, customers buying ZCP upfront as well. But that's early stage right now. But the trend is happening in that area. Remo, you want to add on maybe some of the quantitative data behind it? I mean you see a number of transformation, the percentage of adoption and the like.

Yes. 4 transformation deals, it's gone from 49% last year to 55%. And it's -- again, we're seeing basically customers fine. And I think Jay is absolutely right. If you're an IT professional, you're trying to simplify things. When things get complex, try to make them simpler because if they stay complex, it creates risk. And through Zscaler, when I think about companies that are managing extensive networks worldwide, it's very hard to do and very, very risky. And the question for me is kind of like how do you do that? I mean for even a large company, very large companies, how do you keep track of all your appliances and all your -- all the applications that you've got running on a worldwide basis. It's very hard to do. And for me, it comes down to simplifying things. It comes down to, authenticate the user, make sure you got the endpoint and then have the exchange, the Zero Trust Exchange, and Zscaler's Zero Trust Exchange. And when you think about that, that simplifies things. And what are you doing? You're putting basically that Zero Trust Exchange and that type of structure in place that you're putting into companies like, for Zscaler, that's seeing 170 million, 180 billion transactions a day, who has 35% or thereabouts of the Fortune 500 and 25% of the Global 2000 companies, a trusted partner and vendor who basically -- their whole job is to make sure that you're secure, and is able to, with that any transactions, see where there's problems and see where there's ransomware attacks and other things that might attack you. And you put into a cloud that's distributed worldwide that we can put protections in place very quickly. I can't see how you do it, to be honest with you, efficiently when you're basically having a lot of different vendors and appliances. One of the significant benefits of Zscaler is that the one code base. All this stuff -- all our applications, or most of our applications in ZIA, and there's like, I don't know, Teams-type applications, firewall, cloud sandbox, DLP and so forth, all developed by Zscaler, all under 1 code base, efficiency, user experience, security. It's compelling, in my opinion.

Remo, I'm curious if you can reconcile this dynamic for me. Your transformation bundle deals. So you're the Cadillac version of your products are over half the mix of your sales, and yet, at the same time, you're seeing such tremendous momentum in the 2,000 to 6,000 full-time employee market segment, which, relative to the G2K where you're typically landing maybe 50,000, 75,000, 100,000, 200,000 employees, it's a smaller pool of employees to address. So I'm actually curious, even though you're sort of moving sort of down market, so to speak, relative to your core market audience, you're still seeing the uptake of transformation bundles accelerate. So how do you reconcile maybe some of the intuitive nature of [ pay ]? There's probably some more price sensitivity in the 2 to 6K market segment, but how are you able to overcome that? Because the metrics would suggest that you're overcoming that. And if there's any price elasticity or sensitivity in that vertical?

Do you want to take that, Jay, do you want me?

Go ahead.

Yes. I mean For me put myself in the position of a CFO or CIO about 2,000 to 6,000 person company Well, we'll guess that's where we are. That's the scale. Do we consider ourselves a small company, we don't. It's a pretty big company with a large market cap. So there's a large responsibility we have to our shareholders and to ourselves. When I step back, and if I'm a company that basically is doing things the old way, I'm at risk. I mean, if I spent a day with my CIO, if I was CFO of one of those smaller companies of 2,000 to 6,000, I said line up what Zscaler can do, line up what other vendors can do, I'd like to see what the cost, like so what the user experience. I'd like to see the security, I'd like to see the scalability and I'd like to see the simplicity trying to simplify my security networking infrastructure. It's, for me -- I'd be honest with you, and I'm not saying this -- for me, it's -- it would be an easy decision. It would be an easy decision. I mean from a cost perspective, okay? Zscaler is going to be less expensive. From a security perspective, clearly, with the technology that we've created and the platform that we've created and the breadth of the platform, just on the ZIA side, going down to SSL encrypted traffic, where others can't do that. From a user experience perspective, it just -- it checks all the boxes and protects me. And from a CFO perspective, I want to be protected. I don't want to be seen my name on the cover of The Wall Street Journal saying there's a ransomware attack or whatever. And I think that the best defense and the best solution is Zscaler. That's from my perspective. That's my personal perspective. And I've been in smaller companies, larger companies, but -- and -- but that's my perspective.

Jay, I don't know if you wanted to chime in on that?

Yes. So I think partly, maybe help me understand. So large company, there's a big opportunity still out there. We have only about 35 of Fortune 500 companies. And in Global 2000, it is a little over 25%. So they need us. In fact, in the high end, we are uncontested because these customers understand it. That's why 8 of the top 10 banks outside China, 7 of the 10 insurance companies outside China are our customers. And coming down market. I think our customers are finding that. We are so easy to deploy and run and manage. So that market, there's no reason for us to leave it open. In fact, in hindsight, I would have probably spent cycles here year sooner than I did. The solution works at 2 to 6K, solution works at 300,000 employees. It's wonderful. It's opportunity across the board for us.

Maybe driving that point home a little further. As it relates to addressable market, maybe specifically in the enterprise vertical, I can appreciate that you're doing a lot of handholding as it relates to network transformation and security transformation. But the reality is a lot of these large organizations actually have very siloed budgets that were earmarked under historical pillars like network security or MPLS or SD-WAN or network equipment, right? So can you help us understand where the budget application to you is coming from? And what are some of the most -- the categories, the traditionally defined categories that you're disrupting the most and most frequently?

Yes. It's fascinating. One of the big benefits of dealing at the C level is that those traditional budget boundaries are actually getting blurred. When the -- a lot of our stuff, take, for example, about 2/3 of our deals are coming from the CTO budget, not from the CISO budget, okay? Now it's true that security is part of it, CISO and CTO come together. But when you look at the amount of money that can be saved by not having to spend on the network and whatnot, justifying Zscaler becomes very easy, the ROI numbers are very attractive. If I were selling at a technical level, lower level, what you talked about would be an issue. It's really not an issue for us because of ROI, but also when CIO has a priority to roll out Office 365 and deliver good user experience. The money actually shows up because what CIO is spending on this large transformation project, we are a rounding error in the big scheme of things. Selling at the right level with the strategic stuff, makes it -- what makes it happen. That's why our prices have gone up. Remo talked about 35% to 40% increase over the past 12 months in our -- Remo, is it per user pricing, I would say?

Yes, per user pricing for new customers, yes.

Right. Now why is that? It's not all increase in price of the same to SKU, it's also expansion of the SKU, our product that is expanding significantly. If you looked at where Zscaler was 3.5 years ago, IPO. And investors said, "Oh, you've got ZIA, but it's only secure web gateway. You want really selling transformation much. You really aren't selling the ZPA is totally unproven. Look at what our portfolio is today. It has grown multifold. And now we are a much bigger company. I mean -- when I looked at and say, wow Remo, we're spending about $1 billion this year, fiscal '22 as a part of our plan. We can do a lot more development in -- with this kind of funding. So rather than having 4 streams of new product development, so why not 8 streams. Why don't have a lot more products coming forward. I think you should think about this way. Just like hyperscalers, when they started several years ago, it was simple cloud -- sorry, compute, storage and connect. Now look at their portfolio. It's grown big time. I think security sector is changing the same way. Hyperscaler stuff doesn't look like data center. It's a lot more expansive. Security is growing and becoming big. You'll see our TAM expand. Look at our offerings. Investors have been asking me for 3 years, "Oh, you've done a good job in the secure web gateway ZPA area. Why do you buy end point? Why do you buy SD-WAN companies? Why don't you get into identity?" I've always told them, don't worry, we have plenty of TAM, will have a bigger can. Our TAM has grown to $72 billion. And those numbers are fairly conservative numbers as we shared with you. We think, we will -- we'd like to expand in areas that markets are not really mature kind of already taken market. Look at ZDX. Where is that coming from? Is there a market segment for ZDX? Who's our competition? Nobody really. It's a new need, it was need be figured out. In the same way we see -- we are seeing many expansion area on the cloud front and cloud workload from. You'll see us our TAM expanding. You will see us offering more and more products. So we're very excited.

And Jay, in the spirit of talking about competition, I know we sort of discussed some of the incumbent vendors and some of the legacy vendors that you maybe encounter or you're faced with, maybe you want to specifically talk about the hyperscalers as well as some of the network and content delivery providers who are making a more aggressive foray into the user and zero trust network access use cases, where you've established a very strong footprint? So I'm curious to get your perspective on how you see the dynamic between hyperscalers with cloud-native and embedded security offerings as well as some of the content delivery network providers who are, again, making their entry into provide layering security offerings on their transit solutions?

Yes. Very good question. So let's talk about content delivery requirements. CDN has been a market growing for quite a while. Akamai pioneered Cloudflare of the world are coming from a different angle. But CDN is essentially getting embedded more and more into hyperscalers, okay? It is really getting commoditized. So CDN vendors don't have a choice but to move in some other areas to make sure they can go. So now they are trying to expand, look at even Akamai for the last 6 years, they have been trying to get into a secure well gateway marking. In fact, they bought a company out of U.K. for a proxy, are yet to compete with them. And lately, Cloudflare has been making orders. I am yet to see them in any meaningful deal in the field. So I think it's a tough area for them. They are used to sitting in front of servers, selling to content department, okay? And we are actually all about -- we have been user focused. So a very different architectural position. It's not easy to move from where they are to where they need to be. That's kind of 1 point. Look at hyperscalers. #1 priority of the hyperscaler is to make sure their cloud service, Azure AWS functionality is richer, it works well, traffic can get to it, okay? Is it critical for a hyperscaler to make sure every user of a company, even if 70% of the traffic is going to Internet somewhere out there, is there a priority or is getting traffic to their cloud a high priority? The latter. So can they try to come into our space? Yes. It's a long shot. They probably have many other higher priority items to work on than trying to get into our area. Take for example, identity is a high priority for hyperscalers because that's critical. That's why you see Microsoft in that space. AWS is doing some of the stuff. Google does some of the stuff. But, look, as the market goes and we become bigger, there will be some overlap between some of these vendors. But some of the overlap doesn't stop you for working together in some of the key areas. We overlap in Microsoft in CASB. CASB is around being entered from Microsoft. CASB is a feature for us, does not really stop us from working together, it doesn't really.

And we certainly get this question a lot as it relates to competition from some of the legacy providers. How much more runway do you have in terms of displacing and/or modernizing some of the solutions like Blue Coat on the secure web gateway side, Citrix on the VPN nextgen VPNs? I mean how much -- where are you in terms of baseball innings [indiscernible].

So actually, plenty, and I'll give you some data points. Five, 6 years ago, Blue Coat had 85% of Fortune 500 companies, a pretty impressive number because they have built an amazingly good proxy that was on-prem. They couldn't pivot and build a multi-tenant proxy in the cloud. That's why we came in and we took the business. Otherwise, they would have been our hardest competition, okay? Now in the Fortune 500 space, it's rare for companies to go outside a proxy architecture. I mean you're going to find a few examples. But by and large, a firewall will not succeed with it because it just doesn't work for security. So we have -- we think -- if you ask me, we think there's some were in that 40% range of the large companies that still have Blue Coat. Every quarter, when I review the deal list of top 25 deals we closed, most of them actually come from replacing Blue Coat today, some MacAfee, some Cisco and all, but there's a pretty good opportunity. On the VPN side, that becomes a starting point to replace with ZPA. Two vendors generally show up there, Pulse Secure is one and Cisco AnyConnect is the other one, they become an entry point of check, but they don't really buy a ZPA as a VPN replacement, they buy it as zero trust transition that replaces the entire DMZ. So it's a big opportunity for us.

I want to cap off the discussion with Remo and some of your forward-looking guidance for fiscal '22 and in the context of the medium-term outlook. We've touched a lot on the differentiation of your architecture? How confident you are in your competitive positioning? And on top of that, you've been hiring very assertively. So can we talk about the initial outlook for 40% revenue growth next year and low 30s in billings growth versus the almost 100% backlog growth that you did exiting fiscal '21? Maybe if you can help us tie some of these metrics together, and, I guess, maybe asking more simplistically, where are you embedding the most conservatism in your '22 forecast?

Yes. What I can say is that our approach is similar to prior years. And so -- and we're being prudent in our guidance. And I think that's simply said what we're doing. It's -- we're being prudent in what we do, and we've always have been as a company since we've been public, and we don't plan to change.

I know that's true. Well, I want to thank you for spending very lively 40 minutes with me, and I appreciate a lot of the ground that we've covered and look forward to seeing all in real life very soon. So thank you for the time.

Thank you very much.

Thank you.