Good day, and welcome to the Zscaler's First Quarter 2019 Earnings Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mr. Bill Choi, VP of Investor Relations. Please go ahead, sir.

Good afternoon and thank you for joining us to discuss Zscaler’s financial results for the fiscal first quarter 2019. With me on the call are Jay Chaudhry, Chairman and CEO; and Remo Canessa, CFO. By now, everyone should have access to our earnings announcement. This announcement may also be found on our Web site in the Investor Relations section. In addition, a supplemental financial schedule was posted to our Web site earlier today. Let me remind you that we’ll be making forward-looking statements during today’s discussion, including, but not limited to, the company’s anticipated future revenue, calculated billing, operating performance, gross margin, operating expenses, net loss, pro forma net loss per share, free cash flow and dollar-based net retention rate. These statements and other comments are not guarantees of future performance, but rather are subject to risk and uncertainty, some of which are beyond our control. Our actual results may differ significantly from those projected or suggested in any forward-looking statements. These forward-looking statements apply as of today and you should not rely on them as representing our views in the future. We undertake no obligation to update these statements after this call. For a more complete discussion of the risks and uncertainties that could impact our future operating results and financial condition, please see our filings with the Securities and Exchange Commission as well as in today’s earnings release. Unless otherwise noted, all numbers we talk about today will be on an adjusted non-GAAP basis. Please refer to our earnings release on the Investor Relations portion of our Web site for a reconciliation of GAAP to the non-GAAP. For historical periods, the GAAP to the non-GAAP reconciliations can be found in the supplemental financial information referenced a few moments ago. I would also like to inform you that we will be participating in the Barclays Global TMT Conference in San Francisco tomorrow and the Needham Growth Conference in New York on Tuesday, January 15. Now, I’d like to turn the call over to Jay.

Thank you, Bill. And thank you, everyone, for your interest in Zscaler. I am pleased to share with you our solid first quarter results. We posted strong revenue and calculated billings as we continue to experience robust growth in our business. Our revenue grew 59% year-over-year to $63.3 million and total billings grew 56% year-over-year to $64.6 million. In addition to our top line growth, we achieved positive operating profit and free cash flow for the quarter. Our operating margins improved approximately 20 percentage points year-over-year to 2%. We are very pleased with reaching profitability this quarter. This demonstrates the leverage in our business model. Having said that, we will continue to aggressively invest in our business to pursue our significant market opportunity. We believe the primary driver for our market success is the change in data center and network architecture to support the adoption of cloud. Cloud and mobility are breaking the traditional perimeter where organizations built a hub-and-spoke network to backhaul branch office traffic over private networks to the data center. Then they built a moat of security appliances to secure the network. That is why we call it network security. In the cloud world, applications can be anywhere and devices and users can be anywhere. The notion of inside the network or outside the network is disappearing. We believe the corporate network is changing to a direct to Internet architecture. This is commonly known as local Internet breakout which significantly improves user experience and lowers networking costs. But when you go direct to the Internet, what is the corporate network and where would you build a moat? How do you do network security in this world? Well, you can’t. Network security is becoming irrelevant. Design for the wall which has no walls, Zscaler security cloud acts as…

Thank you, Jay. As Jay mentioned, we had a very strong start to our fiscal year. Revenue for the quarter was $63.3 million, up 13% sequentially and 59% year-over-year. From a geographic perspective, for the quarter, Americas represented 49% of revenue, EMEA was 43% and APJ was 8%. Turning to calculated billings which we define as the change in deferred revenue for the quarter plus total revenue recognized in that quarter. Billings grew 56% year-over-year to $64.6 million. As a reminder, historically Q2 and Q4 have been our strongest billings quarters with sequential declines in Q1 and Q3 quarters, respectively. The sequential decline in Q1 is higher than prior years due to a difficult comparison from a large upfront deal we had in Q4. Excluding the $16.5 million upfront deal from Q4, billings would have declined sequentially by 18% which is an improvement over the 25% declines seen in the prior two years. Also as a reminder, we primarily invoice our customers one year in advance and our contract terms are typically one to three years. The upfront greater than one year billings year-over-year were fairly small in both periods. Total backlog, which represents remaining performance obligations, was $411 million on October 31st, up 77% from $232 million one year ago. Our strong customer retention and the ability to upsell have resulted in a consistently high dollar-based net retention rate, which is 118% for the period ended October 31st. This compares to 116% a year ago and 117% last quarter. Our increased success selling bigger deals upfront which start with the transformation bundle and faster upsells within a year, while good for our business, can reduce our net dollar retention rate, which is calculated on a year-over-year ARR basis. Considering these factors, we feel 118% is outstanding and it will…

Thank you, Remo. We believe we’re the best choice for securing the cloud and the mobile-first world. The right architecture matters. On-prem, single tenant architecture whether deployed as appliances or as virtual machines spun up in a public cloud will not allow enterprises to fully realize the benefits of cloud. They can’t scale, leave gap in security, are expensive and deliver a poor user experience. With multiple tailwinds such as SaaS adoption, SD-WAN and app migration to public clouds, we believe the market is coming to us. We’re making solid progress in the global 2,000 accounts as these large enterprises embrace cloud transformation. We are executing on our vision. We are scaling our cloud to meet the growth in customer base, driving greater adoption of our high-end transformation bundle and ZPA. We’re delivering high ROI for customers that leverage our platform for transformation. We thank you for your interest in Zscaler and look forward to reporting on our progress in the future. Operator, you may now open the call for questions.

Thank you. Ladies and gentlemen, at this time we will open the floor for questions. [Operator Instructions]. We’ll take our first question from Brad Zelnick with Credit Suisse.

Excellent. Thank you so much and congratulations on another phenomenal quarter, guys. I’ve got two questions. My first is for Jay. Jay, you’re primary competitor has experienced disruption of late with leadership turnover and various company specific distractions. Is this perceptible to you in the field and can you maybe just give us an update more generally on the competitive environment?

Brad, thank you. We are having tremendous success in the field. I think our number one reason for the success is our innovative multitenant architecture which scales and works well. And whether the success is due to our competitors issues or not, I’m not sure I can tell but we are winning. We’re seeing market growing rapidly. I don’t see a significant shift in the competitive landscape.

I appreciate the commentary. And Remo just for you. Thanks for calling out, reminding us the $16.5 million upfront billing in Q4 which if you remove that you’ve actually done better than the seasonality we’ve seen in Q1 in the past couple of years. And also appreciate the guidance that you’ve given us on billings for the full year. But as we think about the seasonality from here, anything we should take into account as we model the quarterly billings just given the strong start that you’ve had here in Q1?

Brad, just what we’ve said before basically as you mentioned as we’ve called out, both Q2 and Q4 are strong quarters. Q4 our year-end and Q2 straddles 12/31 and also our prior year end as a company was 12/31, so we have a lot of renewals to come through. I’d expect the same type of seasonality. It was a great quarter for us and so I’d expect the same type of seasonality going forward.

All right. Thanks again and congrats.

Great. Thank you.

Thank you.

Thank you. [Operator Instructions]. We’ll take our next question from Daniel Ives with Wedbush.

Thank you. So, Jay, you alluded to it a little bit but maybe you could elaborate how are conversations changing in regards to more enterprises looking to really expand with Zscaler? Maybe customers at 6, 12 months now had small deployments; now the pipeline is expanding significantly and what do you think the drivers are there when you compare your conversations? Thanks.

Right. The biggest change in the past one to two years versus now is that almost every CIO wants to do cloud transformation with security in mind. That was slow two years ago. What’s it directly impacting us is in a couple of ways. One was with transformation they’re all looking at local Internet breakout as one of the key drivers, which really drives our transformation bundle which includes cloud firewall and sandbox and the like. That’s number one. Two, we used to have a lot more deals starting with Business Bundle which really get more security breakouts but did not have all protocols, all parts functionality. So moving to bigger bundle is one and having bigger pipeline, more momentum is two and that’s why we are posting strong growth in sales.

Great. Could you just – a quick comment about tuck-in M&A and how you’re thinking about that just as we go through 2019? Thanks, again.

Yes. So we are always open to M&A opportunities. We aren’t looking for buying companies for revenues. If we look at something it will be largely driven by a strategic fit to expand our platform in a meaningful way. We did a small acquisition last quarter or so. It was in the machine learning and AI area. It’s already driven results. So as opportunities present themselves in the strategic area, we will be open to those. We’ll be looking for those.

Thanks.

Thank you. We’ll take our next question from Alex Henderson with Needham.

Great. Thank you very much. I would also extend that congrats. It’s a spectacular quarter. The question I wanted to address, actually there’s two pieces of it. One is, can you talk a little bit about in terms of new orders what the mix looks like between ZIA and ZPA? And are you seeing an accelerated uptake or any metrics around the rate of uptake on ZPA which obviously is a small part of revenues currently but is a key piece? And then second, can you give us any metrics around the display move up the stack from professional to business to transformation bundle? Where are we on that? Have we seen a meaningful change in the rate of uptake of transformation bundles versus the other two? Thanks.

I’ll take that, Alex. So from a new business perspective which is new or upsell what we said is that we talk about when there’s meaningful changes in our business what we called out last quarter is for a new and upsell business for ZPA. They represented approximately 10%. What I can say about ZPA on a year-over-year basis is it sits close to double, so good traction with ZPA. Similarly for transformation, what we called out last quarter is that transformation has increased to 35% of our total ARR for ZIA. What I can say is that it is going up, so it is increasing and we’ll make updates and when we feel it’s meaningful.

Okay, great. And when you look at that mix, is that causing any – is there any change in the sell cycle associated with the time it takes for either of those upscale purchase orders or is the sell cycle still fairly similar despite the fact that you’re selling a lot more product?

This is Jay. Alex, thank you. We are selling more higher bundles. Though the sell cycle hasn’t changed, but I would say that a year ago if the sell cycle was X month to sell Business Bundle, we are able to sell the transformation bundle in the same kind of sell cycle. So it’s helping. Similar sell cycle but being able to sell bigger bundles. And that’s partly because market is moving faster in our direction.

Sounds good. Thank you very much.

Thank you.

Thank you.

Thank you. We’ll take our next question from Gray Powell with Deutsche Bank.

Great. Thank you very much and congratulations on the strong results.

Thank you.

Thank you.

So just one on my side. Over the last few weeks we’ve heard a lot of questions around the macro environment and the sustainability of the improved IP spending we’ve seen in 2018 extending into 2019. So how do you feel about things going into calendar 2019? And then how do you think Zscaler is positioned if the overall macro next year is not as strong as it was in 2018? Thanks.

That’s a good question. I’ll answer it in two parts. Number one, Zscaler not only helps you drive cloud transformation it actually drives tremendous ROI. So in many ways when spendings are tight, we become actually a more attractive solution. That’s one. Number two, we are still such a small piece of the overall IT environment budget that it is – I don’t think we would see much of a change because of some of the environment tightening. I’ll tell you an interesting dialogue I had with a CIO of Global 2000 companies. I went to see him. I said, hey, thank you for making time for me. I know I’m a very tiny fraction in your overall IT budget. He interrupted me and said, stop, you may be a small piece of my IT budget but I don’t have a cloud strategy without you. So I want you to come and see me every six months. So with that kind of strategic positioning for transformation with such a small piece of budget I don’t think we’ll see a negative impact.

Got it. That’s very helpful. Thank you very much.

Thank you. We’ll take our next question from Melissa Franchi with Morgan Stanley. Hello, Melissa. You’re line is open.

Hi. Sorry about that. Can you hear me?

Yes, we can.

Okay, great. Congrats on the quarter. Jay, you noted how adoption of the transformation bundle is being driven by the need to enable secure local Internet breakout. Can you maybe elaborate what functionality explicitly within the transformation bundle enables those local breakouts? And since the cloud firewall which you have part of the transformation bundle and that’s incremental relative to the prior bundle, does this mean that you’re increasingly displacing firewall either at [indiscernible]?

Okay. It’s a good question. So first of all to give you the difference, Business Bundle has lots of good functionality and local breakout for the web traffic. The two big modules in transformation bundle and that’s new outside the Business Bundle. One is cloud firewall. Second is cloud sandboxing. So people are buying transformation bundle not because they are displacing branch firewalls. People are buying it because they are hearing new local Internet breakouts and when they see the option with a cloud firewall where they can handle all ports and protocols rather than just web traffic at a relatively smaller cost, it becomes attractive for them to buy transformation bundle. So the driver for transformation bundle cloud firewall to handle all kinds of traffic and especially Office 365 traffic, Skype and all which works beautifully through our cloud firewall and which won’t work very well through a traditional web proxy. And sandboxing, everyone has bought sandbox in the data center. They all buy into it because of security threats. When they find that with Zscaler now this functionality is available everywhere on every branch office even for road warrior, it becomes very easy for new add-on of cloud sandbox. Those are the two drivers that are in there. One key module that’s not in the transformation bundle is DLP, data loss prevention, and that’s still bought à la carte. Did I answer your question or --

Yes. That’s great. Thank you. And then, Remo, in terms of operating margin improvement and particularly related to sales and marketing leverage, I’m wondering if you can maybe just elaborate what’s enabling that magnitude of sales and marketing leverage? And particularly I’m wondering if you can comment on hiring plans and how that came in relative to your expectations for the quarter and if you’ve seen any changes in sales attrition?

Yes, so good question. So we had a very good sales and marketing leverage. The productivity on a quarter-over-quarter basis from Q1 of last year versus this year was up. From a hiring perspective what we called out is that we hired over 80 employees, net employees in Zscaler and about half of those were in sales and marketing and most of those were in sales. So what we plan to do as we go forward we’re very proud of achieving profitability, but we see this as such a large market opportunity that we’re going to continue to invest. So from our perspective there’s no change but we said before in that we expect to be sustained profitability and free cash flow positive sometime in fiscal '20. I think what we’ve demonstrated over the last three quarters being positive free cash flow and reaching operating profitability, we’ve got the model in order to really show significant expansion in profitability. But because of the large market opportunity, we’re going to do investment and we’re going to try to capture this market opportunity as best we can.

Thank you.

Thank you. We’ll take our next question from Gabriela Borges with Goldman Sachs.

Good afternoon. Thanks for taking the question. So, Jay, I would love to understand a little bit better for your new CMO and your new SVP for customer engagement and customer success. What are the priorities for those two roles and what are some of the key initiatives that the ladies will be working on over the next 12 months or so?

Good. So the two new roles, the CMO, Micheline Nijmeh, so her number one priority is overall help us do more demand generation as our goals are getting bigger and bigger, targets are getting bigger and bigger, so is the need for higher dimension. And along with that we are going to focus on building our brand and awareness overall. IPO has helped us in this area quite a bit with a lot of visibility but we think a lot more can be done in that area. So those are two big objectives in addition to many others. Regarding our SVP of customer experience and transformation, we are a very customer focused company. It starts from me. And this customer experience is really starting with products experience to sales experience to once the sale is made, deployment and ongoing interaction. So Kavitha is able to really pull together all these things in a holistic fashion across multiple functions to make sure our customers have the best experience. In that second part on the transformation is actually – not only just the customer side of it, but it’s our own transformation as a company. We have been going through changes in transformation in the way we deal with customers on the deal, the way we go to market. You have seen some of the innovations they’ve done in go-to-market at Zscaler which is now our traditional sale through VARs. We figured out that go-to-market top-down CXO, CTO level, we figured out all the new transformation sales need to be done with some of the architects and the like. So this is more to focus on making sure Zscaler as a company is transforming and changing itself as the world is moving fast. So we are very happy to have these two very capable executives join my team.

That’s helpful. Thank you. And the follow up is on the status of some of the telecom service provider partnerships that you have. I think you mentioned in the prepared remarks that there was one deal where five separate telecom providers bidded to offer Zscaler services. Are there large telecom providers that you can still bring online? Do you feel like you have good penetration in the partnerships that you already have? And is there more willingness to embrace the Zscaler platform as a counter to what may otherwise be a headwind in MPLS? Thank you.

Yes, we all know that the world is moving from hub-and-spoke network to a local breakout. It is true that of two, three or four years ago many telcos were kind of wondering between how fast to move in that direction and how much they can do to slow it down. But everyone realized that the market is moving in that direction. So all large telcos – in fact if I would say that the top 10 largest telcos in the world, they all do business with us; some of them a lot more than others. So our goal is to make sure we work more closely with them. And they see it as a joint opportunity. They want to see the customer moving to a new network that’s still managed by them. So they are managing the network, they are managing Zscaler security service for the customer. So it’s a good win-win proposition and we are seeing more leverage, more traction coming from SPs partly because of two reasons. One, the market is taking them there. That’s number one. Number two, there are seeing increased revenue opportunity with Zscaler along with able to keep account control. Did that make sense?

Yes. Thank you for the color.

Thank you.

Thank you. We’ll take our next question from Saket Kalia with Barclays Capital.

Hi, guys. Thanks for taking my questions here. Jay, just to pick up on an earlier line of questioning on the transformation bundle and the traction there, do you track any stats on which of those modules are being used particularly heavily? So you mentioned cloud firewall and cloud sandboxing are the biggest additions versus the Business Bundle. Are you seeing one module used perhaps more heavily than the other?

It’s a good question. If we were in the appliance world, then you would say, well, this module got turned on. This did not. Because when you buy a cloud sandbox in the traditional world, there are a bunch of steps to figure out to integrate how to take traffic, how to authentic users, how to set up SSL sandboxing. All those things are essentially in place when the traffic comes to Zscaler. So turning on firewall or turning on sandboxing is very simple. So I would say once the customer has bought Zscaler modules, they are essentially turned on almost all the time. It’s very rare when those modules are not used. Now it is possible that the customer may have only 20 local Internet breakouts early on and it may take them nine months to go from 20 to 200. Now they still turn on our sandboxing and firewall on those 20 local breakouts. And as additional 180 gets added, they still remain turned on and now they’re making more benefit of the benefits. But it’s rare to have something that customers bought a module from Zscaler and they’re not using it because turning on is simple. It’s simply a single click in our configuration. In fact, we in our sales show the customer what we call a single click deployment of cloud firewall and cloud sandbox from our console.

Got it. That’s helpful. Just a follow up for you, Jay. You mentioned DLP is sold à la carte outside of the bundling strategy. Can you talk about why à la carte pricing for DLP is the best avenue and could we ever see DLP as part of a bundle in the future?

Yes. Bundling is an interesting exercise. There are no simple answers. If you bundle too much, you can increase the price too much. If you don’t bundle enough, you’re not selling additional modules. So it’s one of those art and science things we try to learn and figure out. And I think when a module becomes widely accepted and more and more customers start buying it à la carte, it tells us that it’s time to really bundle it. So if you asked me two years ago, I wasn’t ready to bundle cloud firewall or cloud sandbox, so transformation bundle is relatively new. I think, Remo, it’s about a 15-month old bundle. We didn’t have this bundle before. We sold cloud firewall and cloud sandbox separately. DLP is an interesting area. So we have been selling a decent amount of DLP before. There’s one critical module we needed to add to make it the richest DLP functionality in the world. That’s called exact data match, where we can match exact field from a customer’s record about social security number or data of birth and the like. And that module became available. But also what’s happening is as customers are opening hundreds of local breakouts and they may have DLP deployed in three or five data centers. Now the DLP is no good because lots of your locations don’t really go through that DLP system, so to speak. So we are seeing an increased demand of DLP. We’re selling more of it as we highlight it. A few customers during our call earlier, we do see potentially DLP becoming a part of a bundle in the future, not exactly sure what timing is. But it’s a natural course for us to move to.

Got it. Very helpful. Thank you.

Thank you.

Thank you. We’ll take our next question from Fatima Boolani with UBS.

Good afternoon. Thank you for taking the questions. Jay, maybe to start with you. In your prepared remarks around the customer examples, you gave a lot of instances of customers who went in with you at the point of land with both the ZIA and ZPA. So just broadly speaking in terms of the pipeline, are you starting to see a greater incidence of landing with both your product portfolios? And just as an extension, what sort of impact is this having on your, call it, land ARRs?

So if I give you some idea, we’re probably approximately half the deal of ZPA are coming as brand new customers who have never bought from Zscaler before and the other are coming with ZIA as an upsell. So that’s a broad trend. It is true that a number of deals are picking up ZPA along with ZIA upfront. But I would say that in a majority of those cases, ZPA is bought for a subset of users, not for all users. As we have said before, when ZIA is bought, it is bought to protect all users from all locations, essentially every employee in the company. When ZPA is bought, it’s largely driven by business application needs. And typically in an enterprise, the number of ZPA users may be somewhere from 40% to 80% of the total users. So if I were to simplify it, wherever ZPA is bought, a majority of the cases, it’s a subset of users and people are still moving applications to Azure and AWS. They’re still in early phases. And as that market matures more and more, the number of ZPA users will go up significantly.

That makes a ton of sense. And, Remo, just a follow up for you on the profitability trends in the quarter. If I think about some of the commentary you gave us during the IPO around unit economics being fairly weak in the first year of the customer acquisition process but then seeing a significant improvement in year two. As I think about you doing larger deals up front, doing more transformed bundle deals at the outset, you’ve got better awareness as a public company and just generally better awareness overall. Can you give us a sense of how those unit economics have changed from a customer acquisition perspective? And that’s it for me. Thank you.

So you’re talking about the contribution margin. Our contribution margin as we talked about at the public offering is that in years two and three was in the high 60% range. What I’d like for you to keep in mind is that we see this as a very large market opportunity. And our plans are to go to the company as quickly as we can. As we talked about on the road show and it hasn’t changed, it relates to our long-term model of 20%-22% operating profitability once we reach $800 million to $1 billion in revenue. That’s still our plan. So we have not deviated at all related to our short-term goals or expectations of hitting breakeven and positive free cash flow profitability on a sustained basis in fiscal '20 and also the 20%-22%. So when you think about contribution margin, yes, if we stopped everything and just went renewals, then it goes incredibly high. With this large market opportunity, we’re going to keep investing in business to maximize what we feel is the biggest shareholder value.

Thank you. We’ll take our next question from Jonathan Ruykhaver with Robert W. Baird.

Yes. Hi. Good afternoon. You’ve commented in the past that high volume transaction business into the midmarket through channel was tracking at about 40% of total business. I’m just wondering – that was something that I’d heard several quarters ago. Is that still consistent with what you’re seeing today?

Jonathan, thank you for the question. I think what we talked about in the past is the business coming through the VAR channel in the 40% range. It’s not really the midmarket business. It’s the total business coming through the VAR channel. That’s still sitting broadly in the same range. If you look at the two broad channel buckets, SPSI is one bucket and VAR is the second bucket. Yes, we are seeing some VARs who are successfully able to pivot to the cloud and they are driving more business for us. But the overall growth from our channel is coming faster from the SPSI side of it.

Okay. So it’s safe to assume that when you look at the channel investments you’re making, the greater allocation is going to SPSI?

Yes, but we are also investing in VAR channel as well proportionately to make sure we’re working on all channels. We are picking up more – a new kind of channel called born in the cloud VARs. These guys were built for the new world who are now really married to pushing boxes and they are a pretty good channel for us, small but growing.

That’s good to hear. And, Remo, I just wanted to get some clarification. The large deal activity you saw in 3Q and 4Q of fiscal '18, you’ve suggested that the impact of those large initial upfront deals is very positive on retention rates when they occur. But as they get anniversaried, should we expect to see somewhat of a dampening effect as we anniversary those two quarters?

It depends. Related to those deals if we get these large upfront deals for multiyear, customers are making the investment and also having Zscaler as their security and networking company they’re going to use. So these upfront deals where what we’d look at is more on our contract basis. And on a contract basis over the last four or five quarters, for new business it’s been over 70% for three-year type deals. That’s our focus. Related to dollars, if customers would like to pay more to Zscaler because of budgetary reasons, then we will accept that. Does that answer your question?

Yes. That provides a little bit more insight, but I’m just wondering does it make situations like that the opportunity I would imagine to drive greater subscribers and higher bundle operating somewhat limited. So does it become increasingly incumbent upon additional large deals like that to kind of keep that retention rate where it was or is that not the case?

Yes, I got it. Good question. So yes, we called out before is that more customers are going transformation. So as more customers go transformation, that’s ZIA. They typically purchase that for all employees. So as that happens, that will put a downward impact potentially on our net retention rate. Related to that also is what we’re seeing is we’re seeing more customers upgrading sooner. So we calculate net retention rate. We look at the customers we had a year ago and for those same customers what is their ARR. So we look at ARR a year ago versus ARR currently. So as more – so what we’re seeing is that if customers are upgrading within that period, we’re not picking that up potentially in that retention rate. As we go forward though, ZPA could have a positive impact, DLP could have a positive impact and as we get more services under our platform, those can have positive impacts. Our net retention rate at 118% we feel is outstanding when you think about how we sell. And again, ZIA we sell – we’re selling more transformation upfront to customers.

Yes. So if I may add, Remo, we are out of many metrics. We are less focused on net retention rate. We are focused more on growth and customer retention or reducing our churn, but this net retention rate may fluctuate up and down.

Yes. Jay, Remo, that’s very helpful. Thank you very much.

Thank you.

Thank you. At this time, there are no further questions in the queue. I will like to turn the call back over to CEO, Jay Chaudhry, for closing remarks.

All right. Thank you for your time to join us. We look forward to talking to you during the next quarter’s earnings call. Thank you, again.

Thank you.

Thank you. Ladies and gentlemen, this concludes today’s teleconference. You may now disconnect.