Good day everyone and welcome to the Zscaler's 4Q 2019 Earnings Conference Call. Today's conference is being recorded. And at this time, I would like to turn the conference over to Mr. Bill Choi, Vice President of Investor Relations. Please go ahead sir.

Good afternoon and thank you for joining us to discuss Zscaler's financial results for the fourth quarter of fiscal 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 website in the Investor Relations section. In addition, a supplemental financial schedule was posted to the Investor Relations section of our website 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 billings, operating performance, gross margin, operating expenses, operating income, net income, free cash flow, dollar based net retention rate, income taxes, and earnings per share. 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 other then revenue will be on an adjusted non-GAAP basis. Please refer to our earnings release on the Investor Relations portion of our website for a reconciliation of GAAP to the non-GAAP financial measures. For historical periods, the GAAP to 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'll be hosting our Analyst Day next week on September 17th, in conjunction with our Zenith Live Conference in Las Vegas. Zenith Live is our annual customer and partner cloud summit featuring keynote presentations and topic specific breakout regarding the transformation to a cloud for future. We will be webcasting both the Zenith Live keynotes and the Analyst Day program which you can access on the event section of our IR website. Now, I'll turn the call over to Jay.

Thank you, Bill and thank you everyone for joining us on our call today. In Q4, we are pleased to announce that we delivered strong revenue and operating profit growth in the fourth quarter with positive free cash flow. For the quarter, our revenue grew 53% and billings grew 32% year-over-year against a very difficult comparison. And for the full year, our revenue grew 59% and billings grew 51%. I will start the call by commenting on our market opportunity. Next, I will discuss our sales execution, including the hiring of our new President Go-to-Market and Chief Revenue Officer and conclude with some of our deal wins in the quarter. We're seeing a mega shift take place where organizations are choosing multi-tenant cloud architecture to empower them, to scale quickly as they move their applications and data to the cloud. Digital transformation and adoption of mobile and cloud fundamentally change network traffic patterns and break that traditional perimeter protection model, where organizations build a hub-and-spoke network and a mode of security appliances to secure the network. Built for a World Without Walls, Zscaler cloud acts as a business policy engine, which is now deployed across more than 150 data centers to deliver the full set of security and policy enforcement on a direct path to the application. Our mission is to provide fast, secure, and reliable access to information, no matter where it lives. Responding to customers' need for better advice for a cloud centric world where appliance-based perimeter security is less relevant. Gartner has recently published a groundbreaking research note titled, "The future of network security is in the cloud." In this paper, they introduced the concept of a Secure Access Service Edge pronounced SASE. SASE goes well beyond the disruption of MPLS with SD-WAN or hardware appliances with…

Thank you, Jay. Revenue for the quarter was $86.1 million, up 9% sequentially and 53% year-over-year. For the year ago comparison recall that Q4 2018 revenue was aided by $1.4 million in nonrecurring revenue from a large public sector customer deployed our platform as private cloud. From a geographic perspective for the quarter Americas represented 51% of revenue, EMEA was 41% and APJ. For the full year revenue was $303 million, up 59%. ZPA remains the fastest-growing new product in our history. ZPA contributed 14% of our new and upsell business in fiscal 2019, up from 10% in the prior year. Trying to calculate billings, which we defined the change in deferred revenue for the quarter plus total revenue recognized in that quarter. Billings grew 32% year-over-year to $126 million. As a reminder, our contract terms are typically one to three years, and we primarily invoice our customers one year in advance. The excluding upfront greater than one year billings in both periods, billings would have grown over 50%. Remaining Performance Obligations or RPO was $554 million on July 31, up 39% from $398 [ph] one year ago. As a reminder, the large public-sector deal added $26 million to RPO a year ago. Based on our ending July 31, annual recurring revenue for ZIA, approximately 43% is from a high-end transformation bundle, which includes our next generation firewall and sandbox, up from approximately 35% last year. A strong customer retention and ability to upsell have resulted in consistently high dollar basement, net retention rate, which is a 118% for the quarter ended July 31. This compares to 117% of year ago and under 118% last quarter. Our increase success selling bigger deals upfront which start with transformation bundle and faster upsells within a year, while good for business can reduce…

Thank you, Remo. In summary design as a cloud native, multi-tenant architecture, we believe we are in the early innings of a significant market opportunity to enable cloud transformation just like salesforce and Workday developed cloud native multi-tenant platforms to disrupt large legacy software vendors, Zscaler has a similar opportunity to disrupt network security. With multiple tailwinds such as Office 365 SaaS adoption, SD-WAN and app migration to public clouds, we believe the market is coming to us. With the addition of Dali Rajic we're building a sales organization that can deliver world-class execution. We look forward to seeing you at our Zenith Live Cloud Summit and our Analyst Day in Las Vegas where we will showcase some of our upcoming new product. 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. [Operator Instructions] And we'll take our first question from Brad Zelnick with Credit Suisse. Please go ahead.

Great. Thank you so much. Can you guys hear me?

Yes.

Hello. Excellent. Congrats on a fantastic year and it's excellent, excellent. So, congrats on a fantastic year and it's great to see your sustained growth above 50% if we make the proper adjustments. Jay, I wanted to ask you about your comment about large deals taking longer to close. What are the proof points that suggest to you that this may be due to macro deterioration versus perhaps execution issues? And what gives you the confidence this isn't a change in the competitive dynamic for what you're selling?

Yes. So, we deal with a large number of deals. Our pipeline has been growing. The comment we made was that some of the larger deals took longer. Talking about macro versus competition, I can tell you that if we analyze our Top 50 deals which we did, we really see any competitive, real competition from firewall guys or other guys. So, our competitive rate remains very, very strong. On the macro level, we haven't seen any significant things to really say that macro is playing a role in it. We do believe that as the large number of reps are being hired, they all need to go through a bit more sophisticated sales methodologies, sales framework and the like, so we can keep on scaling the successful execution we have been doing so far, so not worried about any competitive pressures. No clear indications on the macro though that kind of remains to be seen as everyone does talk about them, but we are excited that we have a new CRO who can help us further scale the kind of work we’ve done before to the next level.

Congrats on the hire and just the follow up on this topic with Remo. If we look at long-term deferreds, it would seem there as well that duration might be shrinking a bit from what it had been last quarter. Is this due to the same dynamics that Jay is discussing or are there other factors to consider as well? What’s baked into your guidance for the full year? Is it more of what you’re seeing exiting fiscal 2019 or is it assuming what you saw on average throughout the entire year? Thank you.

Yes. Thank you, Brad. My guidance basically is what we’ve seen through the entire year based on duration. If you take a look at total deferred revenue, it grew 53%, short-term deferred revenue grew 57%, and what we have in long-term deferred revenue, we’ve got that public sector deal which transfers over from long-term to short-term. I wouldn’t think anything different related from a duration perspective in my guidance for fiscal 2020.

Great, thanks so much. We will see you next week.

Thank you.

Thank you.

We will take our next question from Alex Henderson with Needham & Company. Please go ahead.

Hi, thanks. This is Roger Boyd on for Alex. I'm wondering another way, can you say what portion of RPO you expect to recognize over the next 12 months.

Well, the CRPO is – it’s about 45% -- I'm sorry, the CRPO is $305 million, so that will be over the next 12 months.

Got it. And then on sales execution, I was wondering if you could just provide some detail on what you offer in terms of channel enablement and what you do for your partners in the way of training education to help them smooth out their deployments?

Yes. So, two questions here, one is, what are we doing to enable our partners? And the second question is about deployment. Remember, we have said all along that our sale is not a typical security appliance type of sales where you train hundreds of our channel and they go and sell to technical people. We are fundamental to enabling cloud transformations, so sales is driven top down at the C level, CIO, CTO, CSO. So our best channel partners are system integrators and service providers, though we end up doing a fair amount of heavy lifting and the heavy lifting is natural, because when you’re doing -- driving a new transformational sale, when you’re disrupting the old world, you have to drive high touch, but as I indicated in one of the wins I highlighted, our SI partners are doing a great job. Regarding deployment, actually Zscaler is relatively easier to deploy. We do train our channel partners. We also have our own deployment teams that work with channel partners. Our deployments happen pretty well, fairly fast, and customers overall are very happy as you can see from our net retention rate, and also our churn rate which has been pretty low.

Great, thank you very much.

Thank you.

Moving next, we’ll go to Tal Liani with Bank of America. Please go ahead.

Hi guys, I have two questions. Number one is more high-level question for Jay. Last week, there was an analyst day of one of the competitors that said that in the long run proxies are not the right solution and the right solution is to offer the same services from the network and this was a firewall company. I’m wondering if you – the stock went down on this. I am wondering if you can address this issue directly. The second thing is there anything you’re planning on doing outside of what you discuss, is there anything you plan on doing to address the slower sales growth because of the environment that you noted. Thanks.

Yeah. So, first of all about proxy. I think if you asked any expert out there what security inspection technology gives you better capability to inspect on law threats, I think 99% of smart people agree it's a proxy technology. So, I think statements like that may have a competition truly making zero sense. In fact, a lot of you work for large banks, alright. You are clear about security. If you look at the top ten large banks in the world and how many of them have next-gen firewall, lots of them. How many of them replaced a proxy technology for outbound traffic, I believe you'll find it zero. In fact, I know of a very large bank that has spent tens of millions of dollars on a next-gen firewall and deployed them all over, and this bank is still depending upon a proxy technology to inspect to clear traffic for threats. It’s one piece. Two, if you look at any vendor who is doing any meaningful thing, even sitting in front of servers like Akamais of the world, they all have proxy-based technology, because without proxy you have little or no control. Lastly, firewall which is a pass-through device was a good thing before the SSL world when traffic was not encrypted. Today, in most of the cases 90 plus percent of the cases it’s SSL traffic, TLS traffic, firewalls were never designed to inspect SSL proxy technologies needed for SSL. If you really don’t inspect the traffic, it is like your luggage passing through an airport inspection check post without inspected. That’s not a good thing. So I think these statements are meaningless. They mislead customers. They give them false sense of security and do a disservice to the security industry. From a growth perspective things that we've done, we've been up without a CRO for about a year and a half, that was deliberate on our part, Jay’s part to make sure we found the right person, so we did not want to jump the gun and hire the wrong person. We feel that we have the absolute right person to run our sales organization. Also, we’ve hired – we made several hires over the last four to six months. VP of Federal, the VP of the East, a new VP, general manager of EMEA, the CRO and the VP of Sales Enablement, we see this as a large market opportunity and we’re going to increase our sales and marketing efforts in fiscal 2020. Having the right person on board gives us confidence to invest more into our sales and marketing organization to maximize this market opportunity.

Yeah. If I may add – I mean as we compete out there we almost win every deal, very little situations where we don't win. So, very comfortable with our differentiator technology, very comfortable with the sales process refined [ph]. We just need to make sure we can keep on scaling it, as we set our targets for bigger and bigger numbers.

So given the comments you just mentioned, does it mean it’s going to take you longer to get to your margin targets as it changes the trajectory of margin improvement?

No. I mean from our perspective what we’ve said all along that we get to our operating model of 22% operating profitability. Once we're at $802 billion [ph], there’s no change in that. The one change related to the guidance is that we brought down the first half down to 42%, 43% versus historically where we’ve been 43%, 44% in our total billings. The reason for that is that with Dali coming on board, he’s going to take some time to get ramped up to understand the landscape, so we want to give him some room related to our billing guidance.

Thank you.

Our next question will come from Andrew Nowinski with Piper Jaffray. Please go ahead.

Alright, thanks and congrats on the nice quarter. Maybe if you could just start with, I know in the past you’ve talked about Office 365 as significant tailwind Zscaler. I’m just wondering if you can give us any parameters on how we should think about that in terms of what’s left in fiscal -- as we head into fiscal 2020 and if you could also just rank order, your top growth drivers impacting your fiscal 2020 guidance? Thanks.

Yes. Office 365 has been a big driver, because Office 365 almost requires that you do local breakout and that’s because the amount of traffic generated by Office 365 is far, far bigger than all other SaaS applications combined. So that’s point number one. Point number two, today about 20% of the largest Global 2000 companies are Zscaler customers that means about 80% aren't. Most of the customers have bought Office 365, but the deployment is lagging behind Zscaler comes in to help do local breakouts, so deployment can happen cost-effectively with better response time. So we see significant opportunity for Office 365 ahead of us. We are not linked to the sale of the Office 365. We are needed for the deployment of Office 365. The second big driver for us is SD-WAN. SD-WAN technology is evolving. Actually, SD-WAN is also driven by a big part, because of Office 365 and local breakout type of requirements. If you look at all the SD-WAN deployments are happening in large enterprises, Zscaler is often the choice to secure those SD-WAN, so that’s a big opportunity as well. So among drivers I would say Office 365 and SD-WAN are top two drivers along with ability to provide security, especially with the SSL traffic happening out there at a much larger scale than it used to be.

It’s great, thanks Jay.

Our next question will come from Saket Kalia with Barclays. Please go ahead.

Hey guys, thanks for taking my questions and apologies for the background noise. First, maybe for you Jay, we were talking about competition from the firewall players, I guess the major changes that’s happened in the last 90 days has been one of the major appliance vendors of course changing hands. So, I’m curious and of course I’m talking about Broadcom and Symantec. I’m curious how have your conversations with customers changed if at all since that’s been announced.

Yes. So first of all the large enterprises we are dealing with, they largely if there's one solution that’s deployed besides Zscaler for outbound traffic. It is Symantec Blue Coat. On the lower end, you start seeing other proxies from different other vendors, and our success in the large enterprises has been by displacing those proxy appliances. So as I have went out and met customers, which I often do, where the customers in the past felt that, yes, they need to change, but they’ll make a change over time. There is more urgency because of uncertainty in the space. So we do believe that we will be the beneficiary of this change.

Got it. That makes sense. It's my follow-up for you Remo. As we think about the billings guide for next year, how do you sort of thought about the big deal environment. It sounds like here in Q4, maybe some large deals took a little bit longer to close, what have you assumed about large deals in your fiscal 2020 guys?

Yeah I would say they're going to get back to similar levels, as they were in fiscal 2019. I mean there’s a lot of things that go into the guidance. I mean it’s the news they are on board, trajectory of hiring and so forth. Let’s say it’s going to be pretty similar.

Very helpful, thanks guys.

We'll go next to Dan Ives with Wedbush Securities. Please go ahead.

Yeah, thanks. Can you just talk about maybe some of the hiring plans in fiscal 2020 and maybe how that would be even U.S. versus international?

Yes. The total hires that we had in fiscal 2019 we had net hires about 430 [ph] employees. My expectation is that we’ll hire and our for planning for hiring more people than that. The concentration of the hiring is going to be in sales and marketing, number one; R&D, number two; cloud operations support number three, and then basically everything else. When I take a look at geographically, if you take a look at the distribution we have at Zscaler about a third of the employees are here in our headquarters in San Jose, a third are in India, and a third the rest of the world. India has been ticking up a little bit over the last few quarters. We’ve got two offices, one in Chandigarh and one in Bangalore. So my expectation is the percentages will probably be pretty similar, maybe a little bit more in India versus the rest of the world, but pretty similar percentages based on what we have currently.

Got it. And if I think about seven-figure deals, there's a large deals in the pipeline, do you think most of those deals right now it’s only Zscaler in those deals in terms of them being noncompetitive, maybe just talk about that, and then the questions were asked about competitive and dynamics. Maybe just talk about is there any change there or just from a high-level talk about what you're seeing in sales cycles? Thanks.

Yes. So as you would expect a large enterprise when they go and make a change, they do look for multiple providers as a standard process, as a standard practice, but what's exciting that I find in this company that I never seen before is when an SPs -- when a large enterprise goes to RFP with five service providers for the network transformation and Zscaler being -- local breakout being part of it. We quite often get bid by all five providers which is very exciting, and sometimes it may be four. And most of the time other one or two providers end up being typical proxy vendors you would expect because that's what large enterprises expect. And we win those deals hands down. We do very well. So that's why we aren't worried about the competition. There's a lot of noise we hear about the firewall guys, okay. And it makes no sense. In fact, last week, as someone alluded to, they talked about displacing Zscaler in two deals. And I wasn't sure what they're talking about. I know every Zscaler customer with over a million users and they're all very happy and doing very well. Regarding displacement at a Fortune 50 retail customer they alluded to, I personally know every Zscaler, Fortune 100 Zscaler customer and we did not lose any. So, people, I think when they get desperate, they look for leading information. I've analyzed Top 50 deals and we rarely see this fireball vendor in there. We do expect to see further misleading claims in the future from legacy firewall vendors who are trying to tout their cloud security wins. When legacy secure web gateway vendors were trying to compete with Zscaler, we saw the same behavior. They try to upgrade the security appliances. They gave away the cloud and they were falsely claim it as a cloud security win and displacement of Zscaler. Our technology, our differentiation stay strong, our sales methodology stay strong, we just need to make sure we can scale our sales execution well as a numbers keep on getting bigger and bigger.

Thanks.

Our next question will come from Joshua Tilton with Berenberg Capital Markets. Please go ahead.

Hi. This is Brett [ph] on for Joshua. We were trying to understand the focuses on the win, winning the market. But could you possibly speak to how you're seeing pricing developed? Has it been improving? How has average deal size has been trending? Any commentary around that would be helpful. And then one more follow-up on macro and EMEA, have you seen any signs of slowdowns in that region due to these macro fears? Thank you.

Yes. I'll try to answer a few of them. Average deal size is based on ARR, for customers are greater than 3,000 users has gone up every quarter and it did go up in Q4. Related any pricing pressure, our discounting a quarter to quarter, Q3 to Q4, year-over-year for new and upsell business is lower. So no, we're not seeing the pricing pressure. Related to EMEA I'll let Jay talk more about that.

Yes. EMEA, there's a fair amount of talk on Brexit. You can hardly see the newspaper without a news about it. We do wonder about it, but we haven't seen tangible effect on the business. We do see customers talking about some of the uncertainty out there. Can I put my pulse on the big effect. I'm watching carefully. I'm not sure I can put it on. I think we need to do -- probably we have some more work to do to hiring and scaling the business. We brought in a new leader in EMEA last quarter. He's doing great job, ramping up the sales teams and really scaling it to where we need to go. I want to remind you guys that we are unusually large in EMEA or internationally. At our stage of the company 50% of the business comes from international and about 40% that come from EMEA. It's a very important market for us and we'll remain focused on investing there to keep that kind of market share.

Thank you.

Our next question will come from Gray Powell with Deutsche Bank. Please go ahead.

Great. Thanks for working me, and I greatly appreciate it. And maybe just a couple of questions. So one, if I look at the guidance and I look at revenue growth in absolute dollar terms. In fiscal 2019 you added a little over a $110 million in new revenue just a total revenue basis and the guide for fiscal 2020 implies that you add a little bit less than a $100 million. So is there any reason that the absolute dollar growth should go down particularly given the sales and marketing investments that you made?

We like to be prudent with our guidance and our guidance we feel is prudent.

Okay. Fair enough. Good answer. Maybe this one on the product side then, what kind of improvements have you made on the cloud firewall functionality and how do you feel about your potential to displace branch office firewalls?

So, potential to displace branch office firewalls, we had done tons and tons and tons of them. So first of all if someone is talking about firewall, cloud firewalls, Zscaler lacking functionality. They maybe carrying mixed up with the data center firewall. Many times I talked to customers this is what they say. They say, firewall guys who are here, they're telling me that you should have the same policy in your branch firewall and that it is in a new data center. I say, okay, tell me more. How many rules do you have in your data center firewall? I say 6,000. In fact they say I bought two products to manage those firewall rules. I said, of course, your data center is complex, over time evolved netting and everything. I said, what are you trying to protect in your branch office as far as employees. What's the difference between when you sit in a branch office or you sit in a – airport in a coffee shop? They say, nothing. So, are you really putting a firewall with 6,000 rules at your home or every branch office? That's silly. So firewalls in a branch office for outbound traffic are very straightforward. In fact most of the cases they're aren't even needed. They're needed because somebody feels like they should have it. The reason they aren't needed is when you don't have anything coming from outside in you have no listening port, your tack [ph] surface becomes zero, that's when you have the best security and that's really what should be done. Our firewall is very rich. We never lose any situation. We never have a case where someone said, your branch firewall is not right you know. Now our focus is now really creating lots of rules on branch firewall. Our focus really working on zero trust network type of approach that Gartner talks about a SASE can approach where you don't even bring people on the network. So in summary, we're trying to do things the new way where you don't control the network, you don't worry with network security you securely connect a user to an application and you're simply a switchboard in the middle of it. So very comfortable technology and the lead we are increasing. And next week you're going to see some significant big new areas of expansion that we'll be announcing at Zenith Live.

That's great. Thank you very much.

Thank you.

Our next question will come from Nick Yako with Cowen & Company. Please go ahead.

Thanks guys. Jay, you mentioned seeing more customers adopt both ZIA and ZPA out of the gate, which is great. So I guess, I'm just wondering if that's having an outside impact on the sale cycles?

So yes, bigger the products that you buy typically longer the sale cycle; or if you want to talk about general, the bigger your deal the longer the cell cycle, but I think our mix has to be -- a mix is not really I won't say that all mostly deals are becoming combined ZIA, ZPA, the transformation sale in general is complex. It's top down. You end up securing the support of not just head of network, head of security, head of architecture, so we have a large number of people who can do it well, but we need to grow that type of sales team along with some of the architects and all to really make sure we are effectively selling it and the most exciting thing I found about Dali, he had some of the same top-down selling mindset with value creation and with very good sales methodology. so I think we'll be doing a great job in scaling it to make sure our numbers keeps on growing.

Great. Thank you. And then the follow-up. As you continue to expand the the platform and really address more components of the security stack over time, how do you weigh layering in that new functionality into that transformational bundle first pricing this new functionality as a separate product or component like you've done with ZPA? Thank you.

Yes. I think those are the things you take the market, you look at on option rate, you look at other market kind of willing to pay and then you change your bundles over time. You has seen us change some of the bundles over the past couple of years. And I think there'll be some more changes over time. I think you'll see some large platforms being announced that are kind of significant beyond the traditional typical security we're talking about, But I think you'll be pleased with the evolution rather significant addition of the technology we are doing to further create distance between the cloud imitators and us.

And we'll take our next question from Keith Weiss with Morgan Stanley. Please go ahead.

Keith, are you there?

Sorry about that. I was on mute. Thank you for taking the question. So I was just asking, as we're going into the next fiscal year, you have a new CRO who needs time to kind of ramp up, but you also have much broader product portfolio, you're selling a much bigger vision into your customer. How should we think about the kind of degree of change we should expect in the Salesforce kind of as we enter the year versus prior years? Is there significant kind of restructuring that we should expect it sort of from the get-go or is that going to come later in the year once Dali has time to kind of ramp up and come up with a game plan.

Dali and I have been discussing it for quite a while. We don't really expect significant change in the sales teams. We do expect a significant change in the sales methodology, sales framework to be able to deliver the message consistently. Those are the kind of refinement we need to do, which need to be consistently gotten across. We overall have a good sales team. We need to make sure our enablement, our training, our metrics to exactly know what needs to be done is where the focus is. I mean think of we all know that when you go to a certain stage it's a zero to $200 million, $300 million, $400 million you have one set of stuff. As you go to the next big phase to a $1 billion kind of targets, you kind of make a lot of these things in place. And those are the type of things for the next level. We are honing on refining and scaling. And by the way all those factors -- sorry all those factors are built into Remos forecast for 2020.

If any, we'll take one last question please.

Certainly, we'll go next to Keith Bachman with BMO. Please go ahead.

Hi. Thank you. It's a good segue from the past question. Jay, I wanted to just push back a little bit. You mentioned that you still have 80% of the largest enterprise yet to penetrate and this is an evangelical sale. It requires, in many cases an architectural change. So I'm just wondering why you wouldn't need to lean on a much more significant salesforce in order to keep revenue growth rates and frankly penetration rates on new logos growing and less dependency on the SI community who I think is more about fulfilling fulfillment given the model that you have. So I'm just wondering why sales and market expense wouldn't need to keep growing at a pretty high rate given those attributes. And I'm just going to sneak in just one clarification you told us what the CRPO was $305 million, but I just wanted to see, could you just clarify what the growth rate of that was as well and that's it for me? Thank you.

Yes. I'll answer the growth rate that's 45% [ph] year-over-year.

So, regarding the first part of the question, I think if you looked at what I said early on - I said yes channel partners do help, but we do tons of heavy lifting transformation sales are actually high touch sales. So we are investing significantly in our sales and marketing. In fact, if you look at our 2020 plan, we haven't brought down sales and marketing as a percentage of revenue which typically we would year-over-year and that's keeping in mind that we need to keep on putting some more gas on it, and if I left another message impression then I didn't do a good job. We actually are driving sales with our own sales organizations and Channel is helping us, channel is facilitating us. We aren't getting channel leverage, but all of you should know when transformation happens channel can only do so much when technology become more mature and commoditize channel plays of much bigger role. So we are investing, but prudently right? There's only so much you can invest in terms a number of sales people sales and marketing total headcount we're adding this year or last year is pretty significant. So fully aligned with message you said. If I said any other otherwise it wasn't clear.

And this does conclude today's question-and-answer session. I will now turn the call back over to Jay Chaudhry with for any additional closing remarks.

We thank you for joining us for this call, and we look forward to seeing a number of you at our Zenith Live Conference as well as on analysts state otherwise we will talk to you next quarter. Thank you.

And once again, this concludes today's call. Thank you for your participation. You may now disconnect.