Tim Beyers

We had some good numbers, and I want you both to react to these.

So Zscaler said they exceeded their expectations on both the top and bottom line.

They say they blew past what they call rule of 78.

They're just making stuff up here.

There's a rule of 40 number that is very common, which is growth compared to margins.

If the growth is materially above 40 over the margin, that's a good sign for the company.

They say, forget about 40, we're at 78.

I think that's a little nonsensical, but revenue did grow 26% year-over-year.

Annual recurring revenue was up 26% year-over-year.

Their backlog now is $3.2 billion in annual recurring revenue, $1 billion of that

are some very high-growth initiatives, including what they are calling AI security.

They say their AI security ARR surpassed their fiscal year 2026 target of $400 million three-quarters early, and now they are anticipating they'll hit half a billion before fiscal 2026.

More AI,

more need for security, zero trust, lots of companies in the market for this, 450 enterprises.

Dave, let me start with you here.

Would you make it these Zscaler results and does anything give you pause?

Asit, let's talk about the full-year forecast here.

They are forecasting some slowing growth.

Overall revenue growth for fiscal year 2026, the forecast is for 22.8% to 23.5% year-over-year growth.

That's down from 26%.