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8-K - 8-K - Zscaler, Inc.zs-20200526.htm


Exhibit 99.1

Zscaler Reports Third Quarter Fiscal 2020 Financial Results

Revenue grows 40% year-over-year to $110.5 million
Calculated billings grow 55% year-over-year to $131.3 million
Deferred revenue grows 42% year-over-year to $300.8 million
GAAP net loss of $19.3 million compared to GAAP net loss of $12.2 million on a year-over-year basis
Non-GAAP net income of $9.0 million compared to non-GAAP net income of $7.4 million on a year-over-year basis
SAN JOSE, California. - May 28, 2020 - Zscaler, Inc. (Nasdaq: ZS), the leader in cloud security, today announced financial results for its third quarter of fiscal year 2020, ended April 30, 2020.
"Our strong results are a reflection of our sales execution and the entire Zscaler team stepping up to help our customers succeed in these difficult times. The mitigation activities taken by every enterprise in response to the COVID-19 pandemic created an immediate need for strong security and access to the internet and business applications, all while working from anywhere," said Jay Chaudhry, Chairman and CEO of Zscaler. "The digital transformation that is driving our business is further accelerating, and we believe the Zscaler cloud security platform is best positioned to help our customers thrive no matter where their teams are working."

Third Quarter Fiscal 2020 Financial Highlights
Revenue: $110.5 million, an increase of 40% year-over-year.
Income (loss) from operations: GAAP loss from operations was $20.5 million, or 19% of total revenue, compared to $13.5 million, or 17% of total revenue, in the third quarter of fiscal 2019. Non-GAAP income from operations was $8.3 million, or 8% of total revenue, compared to $6.1 million, or 8% of total revenue, in the third quarter of fiscal 2019.
Net income (loss): GAAP net loss was $19.3 million, compared to $12.2 million in the third quarter of fiscal 2019. Non-GAAP net income was $9.0 million, compared to $7.4 million in the third quarter of fiscal 2019.
Net income (loss) per share: GAAP net loss per share was $0.15, compared to $0.10 in the third quarter of fiscal 2019. Non-GAAP net income per share was $0.07, compared to $0.05 in the third quarter of fiscal 2019.
Cash flow: Cash provided by operations was $20.8 million, or 19% of revenue, compared to $13.5 million, or 17% of revenue, in the third quarter of fiscal 2019. Free cash flow was $9.1 million, or 8% of revenue, compared to $4.6 million, or 6% of revenue, in the third quarter of fiscal 2019.
Deferred revenue: $300.8 million as of April 30, 2020, an increase of 42% year-over-year.
Cash, cash equivalents and short-term investments: $391.3 million as of April 30, 2020, an increase of $26.7 million from July 31, 2019.

Recent Business Highlights
Supported Zscaler customers, allowing their employees to work from home to maintain business continuity throughout the COVID-19 pandemic. Since February, Zscaler Private Access (ZPA) traffic grew over 10x and the Zscaler Cloud Security Platform reached a new milestone of securing 100 billion transactions per day.
In April 2020, Zscaler acquired Cloudneeti Corporation, a cloud security posture management (CSPM) company which prevents and remediates misconfigurations of applications in SaaS, IaaS and PaaS.
In May 2020, Zscaler acquired Edgewise Networks, a pioneer in securing application-to-application communications in public clouds and data centers. Edgewise customers measurably reduce the attack surface to lower the risk of
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application compromise and data breaches by simplifying the security of east-west communications through identity-based segmentation.
Launched the Zscaler Summit Partner Program to help customers and prospects achieve secure digital transformation by fostering tighter collaboration with partners. The program will create long-term partner growth by expanding opportunities and providing the training that partners need to become trusted advisors to customers.
Revealed results from the company’s second annual Internet of Things (IoT) ThreatLabZ research report, IoT Devices in the Enterprise 2020: Shadow IoT Threat Emerges. The research findings included a startling rise in employees bringing unauthorized devices into the enterprise.
Named one of the 2020 Bay Area’s Best Places to Work by the San Francisco Business Times and Silicon Valley Business Journal.

Financial Outlook
For the fourth quarter of fiscal 2020, we expect:
Total revenue of $117 million to $119 million
Non-GAAP income from operations of $2 million to $4 million 
Non-GAAP earnings per share of approximately $0.02 to $0.03, assuming approximately 140 million common shares outstanding
For the full year fiscal 2020, we expect:
Total revenue of $422 million to $424 million
Calculated billings of $529 million to $531 million
Non-GAAP income from operations of $24 million to $26 million
Non-GAAP earnings per share of $0.20 to $0.21, assuming approximately 138 million common shares outstanding
These statements are forward-looking and actual results may differ materially. Refer to the Forward-Looking Statements safe harbor below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.
Guidance for non-GAAP financial measures excludes stock-based compensation expense, amortization expense of acquired intangible assets, asset impairment related to facility exit, certain litigation-related expenses and income tax effects generated by intangible assets acquired in business acquisitions. We have not reconciled our expectations to non-GAAP income from operations and non-GAAP net income per share to their most directly comparable GAAP measures because certain items are out of our control or cannot be reasonably predicted. Accordingly, a reconciliation for non-GAAP income from operations and non-GAAP net income per share is not available without unreasonable effort.

Conference Call and Webcast Information
Zscaler will host a conference call for analysts and investors to discuss its third quarter fiscal 2020 earnings results and outlook for its fourth quarter of fiscal 2020 and full year fiscal 2020 today at 1:30 p.m. Pacific time (4:30 p.m. Eastern time).

Date:Thursday, May 28, 2020
Time:1:30 p.m. PT
Webcast:
https://ir.zscaler.com/
Dial-in number:918-922-3018
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Upcoming Conferences
Fourth Quarter of Fiscal 2020 Virtual Investor Conference Participation Schedule:
Cowen 2020 Technology, Media & Telecom Conference
Friday, May 29, 2020
Bank of America 2020 Global Technology Conference
Wednesday, June 3, 2020
Baird 2020 Virtual Global Consumer, Technology & Services Conference
Thursday, June 4, 2020
Morgan Stanley – “Zero Trust Architectures” Thematic Virtual Conference
Thursday, June 25, 2020

Zscaler's conference presentations are expected to be available via webcast on the Investor Relations section of the company's website. To hear these presentations and to access the most updated information, please visit the Investor Relations section of Zscaler’s website at https://ir.zscaler.com.
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Forward-Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties, including statements regarding our future financial and operating performance, including our financial outlook for the fourth quarter of fiscal 2020 and full year fiscal 2020. There are a significant number of factors that could cause actual results to differ materially from statements made in this press release, including but not limited to: the duration and global impact of COVID-19 on our business, operations and financial results and the economy in general; our ability as an organization to acquire and integrate other companies, products or technologies in a successful manner; our limited operating history; our ability to identify and effectively implement the necessary changes to address execution challenges; risks associated with managing our rapid growth, including fluctuations from period to period; our limited experience with new product and subscription and support introductions and the risks associated with new products and subscription and support offerings, including the discovery of software bugs; our ability to attract and retain new customers; the failure to timely develop and achieve market acceptance of new products and subscriptions as well as existing products and subscription and support; rapidly evolving technological developments in the market for network security products and subscription and support offerings and our ability to remain competitive; length of sales cycles; and general market, political, economic and business conditions.
Additional risks and uncertainties that could affect our financial results are included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth from time to time in our filings and reports with the Security Exchange Commission (SEC), including our Annual Report on Form 10-K for the fiscal year ended July 31, 2019 filed on September 18, 2019, as well as future filings and reports by us, copies of which are available on our website at ir.zscaler.com and on the SEC’s website at www.sec.gov. Additional information will also be set forth on our Quarterly Report on Form 10-Q that will be filed for the fiscal quarter ended April 30, 2020, which should be read in conjunction with this press release and the financial results included herein. You should not rely on these forward-looking statements, as actual outcomes and results may differ materially from those contemplated by these forward-looking statements as a result of such risks and uncertainties. Additional information will also be set forth in other filings that we make with the SEC from time to time. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we do not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.

Use of Non-GAAP Financial Information
We believe that the presentation of non-GAAP financial information provides important supplemental information to management and investors regarding financial and business trends relating to our financial condition and results of operations. For further information regarding why we believe that these non-GAAP measures provide useful information to investors, the specific manner in which management uses these measures, and some of the limitations associated with the use of these measures, please refer to the “Explanation of Non-GAAP Financial Measures" section of this press release.
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About Zscaler
Zscaler enables the world’s leading organizations to securely transform their networks and applications for a mobile and cloud-first world. Its flagship services, Zscaler Internet Access™ and Zscaler Private Access™, create fast, secure connections between users and applications, regardless of device, location, or network. Zscaler services are 100 percent cloud-delivered and offer the simplicity, enhanced security and improved user experience that traditional appliances are unable to match. Used in more than 185 countries, Zscaler operates a multi-tenant distributed cloud security platform, protecting thousands of customers from cyberattacks and data loss. Learn more at zscaler.com or follow us on Twitter @zscaler.
Zscaler™, Zscaler Internet Access™, and Zscaler Private Access™, ZIA™ and ZPA™ are either (i) registered trademarks or service marks or (ii) trademarks or service marks of Zscaler, Inc. in the United States and/or other countries. Any other trademarks are the properties of their respective owners.



Investor Relations Contact:

Bill Choi, CFA
Senior Vice President, Investor Relations
(669) 255-0767
ir@zscaler.com






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ZSCALER, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three Months EndedNine months ended
April 30,April 30,
2020201920202019
Revenue$110,524  $79,128  $305,382  $216,728  
Cost of revenue (1) (2)
24,579  14,960  64,375  42,330  
Gross profit85,945  64,168  241,007  174,398  
Operating expenses:
Sales and marketing (1) (2)
67,727  45,295  188,759  120,596  
Research and development (1) (2)
24,117  16,499  65,094  44,756  
General and administrative (1) (3) (4)
14,615  15,911  56,223  36,428  
Total operating expenses106,459  77,705  310,076  201,780  
Loss from operations(20,514) (13,537) (69,069) (27,382) 
Interest income1,528  2,081  5,405  5,595  
Other income (expense), net70  (144) 28  (82) 
Loss before income taxes(18,916) (11,600) (63,636) (21,869) 
Provision for income taxes421  636  1,931  1,510  
Net loss$(19,337) $(12,236) $(65,567) $(23,379) 
Net loss per share, basic and diluted
$(0.15) $(0.10) $(0.51) $(0.19) 
Weighted-average shares used in computing net loss per share, basic and diluted
129,682  124,672  128,538  122,644  
(1)  Includes stock-based compensation expense as follows:
Cost of revenue$1,614  $686  $4,575  $1,808  
Sales and marketing15,119  6,459  37,101  14,777  
Research and development6,738  4,194  17,689  11,387  
General and administrative4,299  1,936  10,647  6,116  
Total$27,770  $13,275  $70,012  $34,088  
(2)  Includes amortization expense of acquired intangible assets as follows:
Cost of revenue$348  $163  $758  $307  
Sales and marketing
  24   
Research and development285  —  1,280  95  
Total$641  $166  $2,062  $405  

(3) Includes asset impairment related to facility exit as follows:
$430  $—  $746  $—  

(4) Includes litigation-related expenses as follows:
$12  $6,164  $18,353  $10,106  

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ZSCALER, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
April 30,July 31,
2020 (*)2019
Assets
Current assets:
Cash and cash equivalents$124,592  $78,484  
Short-term investments266,722  286,162  
Accounts receivable, net105,583  93,341  
Deferred contract acquisition costs26,316  21,219  
Prepaid expenses and other current assets28,903  16,880  
Total current assets552,116  496,086  
Property and equipment, net63,297  41,046  
Operating lease right-of-use assets35,128  —  
Deferred contract acquisition costs, noncurrent58,024  48,566  
Acquired intangible assets, net10,146  8,708  
Goodwill13,350  7,479  
Other noncurrent assets3,903  2,277  
Total assets$735,964  $604,162  
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$9,392  $6,208  
Accrued expenses and other current liabilities14,366  12,810  
Accrued compensation34,215  21,544  
Deferred revenue274,726  221,387  
Operating lease liabilities12,939  —  
Total current liabilities345,638  261,949  
Deferred revenue, noncurrent26,065  29,815  
Operating lease liabilities, noncurrent27,909  —  
Other noncurrent liabilities1,558  3,840  
Total liabilities401,170  295,604  
Stockholders’ Equity
Common stock130  127  
Additional paid-in capital623,859  532,618  
Accumulated other comprehensive income827  268  
Accumulated deficit(290,022) (224,455) 
Total stockholders’ equity334,794  308,558  
Total liabilities and stockholders’ equity$735,964  $604,162  
(*) On August 1, 2019, we adopted Topic 842 using the transition option that allows to be applied prospectively at the beginning of the fiscal year of adoption. As such, the condensed consolidated balance sheets for prior periods are not comparable to our fiscal 2020 periods. The adoption of this standard resulted in the recognition of the operating lease right-of-use assets and operating lease liabilities related to our real estate and co-location arrangements.
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ZSCALER, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Nine Months Ended
April 30,
20202019
Cash Flows From Operating Activities
Net loss$(65,567) $(23,379) 
Adjustments to reconcile net loss to cash provided by operating activities
Depreciation and amortization expense12,278  7,331  
Impairment of assets746  —  
Amortization expense of acquired intangible assets2,062  405  
Amortization of deferred contract acquisition costs17,673  13,505  
Noncash operating lease costs9,649  —  
Stock-based compensation expense70,012  34,088  
Deferred income taxes(555) —  
Accretion of purchased discounts, net of amortization of investment premiums(463) (1,702) 
Other305  244  
Changes in operating assets and liabilities, net of effects of business acquisitions:
Accounts receivable(12,218) (9,540) 
Deferred contract acquisition costs(32,228) (21,700) 
Prepaid expenses, other current and noncurrent assets(13,365) (3,361) 
Accounts payable1,923  (611) 
Accrued expenses, other current and noncurrent liabilities660  (1,047) 
Accrued compensation12,671  (1,548) 
Deferred revenue49,581  47,519  
Operating lease liabilities(5,482) —  
Net cash provided by operating activities47,682  40,204  
Cash Flows From Investing Activities
Purchases of property, equipment and other assets(24,793) (16,698) 
Capitalized internal-use software(6,296) (1,713) 
Acquired intangible assets—  (1,480) 
Payments for business acquisitions, net of cash acquired(8,918) (823) 
Purchases of short-term investments(202,764) (272,324) 
Proceeds from maturities of short-term investments209,225  139,361  
Proceeds from sale of short-term investments14,084  —  
Net cash used in investing activities(19,462) (153,677) 
Cash Flows From Financing Activities
Payments of offering costs related to initial public offering—  (1,797) 
Proceeds from issuance of common stock upon exercise of stock options12,554  23,523  
Proceeds from issuance of common stock under the employee stock purchase plan5,334  8,691  
Repurchases of unvested common stock—  (22) 
Repayments of notes receivable from stockholders—  1,905  
Net cash provided by financing activities17,888  32,300  
Net increase (decrease) in cash, cash equivalents and restricted cash46,108  (81,173) 
Cash, cash equivalents and restricted cash at beginning of period78,484  136,147  
Cash, cash equivalents and restricted cash at end of period$124,592  $54,974  
Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets:
Cash and cash equivalents$124,592  $54,974  
Restricted cash, current and non-current—  —  
Total cash, cash equivalents and restricted cash$124,592  $54,974  

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ZSCALER, INC.
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands)
(unaudited)
Three Months EndedNine Months Ended
April 30,April 30,
2020201920202019
Revenue$110,524  $79,128  $305,382  $216,728  
Non-GAAP Gross Profit and Non-GAAP Gross Margin
GAAP gross profit$85,945  $64,168  $241,007  $174,398  
Add:
Stock-based compensation expense1,614  686  4,575  1,808  
Amortization expense of acquired intangible assets348  163  758  307  
Non-GAAP gross profit$87,907  $65,017  $246,340  $176,513  
GAAP gross margin78 %81 %79 %80 %
Non-GAAP gross margin80 %82 %81 %81 %
Non-GAAP Income from Operations and Non-GAAP Operating Margin
GAAP loss from operations$(20,514) $(13,537) $(69,069) $(27,382) 
Add:
Stock-based compensation expense27,770  13,275  70,012  34,088  
Litigation-related expenses12  6,164  18,353  10,106  
Amortization expense of acquired intangible assets641  166  2,062  405  
Asset impairment related to facility exit (1)
430  —  746  —  
Non-GAAP income from operations$8,339  $6,068  $22,104  $17,217  
GAAP operating margin(19)%(17)%(23)%(13)%
Non-GAAP operating margin%%%%
___________
(1) Consists of asset impairment charges related to the relocation of our corporate headquarters.
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ZSCALER, INC.
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, except per share amounts)
(unaudited)
Three Months EndedNine Months Ended
April 30,April 30,
2020201920202019
Non-GAAP Net Income per Share, Diluted
GAAP net loss$(19,337) $(12,236) $(65,567) $(23,379) 
Stock-based compensation expense27,770  13,275  70,012  34,088  
Litigation-related expenses12  6,164  18,353  10,106  
Amortization expense of acquired intangible assets 641  166  2,062  405  
Asset impairment related to facility exit (1)
430  —  746  —  
Provision for income taxes (2)
(490) —  (490) —  
Non-GAAP net income$9,026  $7,369  $25,116  $21,220  
GAAP net loss per share, diluted$(0.15) $(0.10) $(0.51) $(0.19) 
Stock-based compensation expense0.20  0.10  0.51  0.25  
Litigation-related expenses—  0.05  0.13  0.07  
Amortization expense of acquired intangible assets—  —  0.02  —  
Asset impairment related to facility exit (1)
—  —  0.01  —  
Provision for income taxes (2)
—  —  —  —  
Adjustment to total fully diluted earnings per share (3)
0.02  —  0.02  0.03  
Non-GAAP net income per share, diluted$0.07  $0.05  $0.18  $0.16  
Weighted-average shares used in computing non-GAAP net income per share, diluted137,873  136,538  137,218  135,159  
___________
(1) Consists of asset impairment charges related to the relocation of our corporate headquarters.
(2) We use our GAAP provision for income taxes for purposes of determining our non-GAAP income tax expense. The difference between our GAAP and non-GAAP income tax expense represents the effects of stock-based compensation expense recognized in foreign jurisdictions and any income tax benefits associated with business combinations. The income tax benefit related to stock-based compensation expense included in the GAAP provision for income taxes was not material for all periods presented. In the fiscal quarter ended April 30, 2020, we recorded a tax benefit of $0.5 million, associated with intangible assets recognized as a result of our acquisition of Cloudneeti Corporation.
(3) The sum of the fully diluted earnings per share impact of individual reconciling items may not total to fully diluted Non-GAAP net income per share due to the basic share counts used to calculate the GAAP net loss per share differ from the fully diluted share counts used to calculate the non-GAAP net income per share and due to rounding of the individual reconciling items. The GAAP net loss per share calculation uses a lower share count as it excludes potentially dilutive shares, which are included in calculating the non-GAAP income per share.





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ZSCALER, INC.
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands)
(unaudited)
Three Months EndedNine Months Ended
April 30,April 30,
2020201920202019
Calculated Billings
Revenue$110,524  $79,128  $305,382  $216,728  
Add: Total deferred revenue, end of period300,791  211,542  300,791  211,542  
Less: Total deferred revenue, beginning of period(280,022) (206,020) (251,202) (164,023) 
Calculated billings$131,293  $84,650  $354,971  $264,247  
Free Cash Flow
Net cash provided by operating activities$20,822  $13,483  $47,682  $40,204  
Less: Purchases of property, equipment and other assets
(9,694) (8,091) (24,793) (16,698) 
Less: Capitalized internal-use software
(2,023) (810) (6,296) (1,713) 
Free cash flow$9,105  $4,582  $16,593  $21,793  
As a percentage of revenue:
Net cash provided by operating activities19 %17 %15 %19 %
Less: Purchases of property, equipment and other assets
(9)%(10)%(8)%(8)%
Less: Capitalized internal-use software
(2)%(1)%(2)%(1)%
Free cash flow margin%%%10 %


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ZSCALER, INC.
Explanation of Non-GAAP Financial Measures
In addition to our results determined in accordance with generally accepted accounting principles in the United States of America (GAAP), we believe the following non-GAAP measures are useful in evaluating our operating performance. We use the following non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. In particular, free cash flow is not a substitute for cash used in operating activities. Additionally, the utility of free cash flow as a measure of our liquidity is further limited as it does not represent the total increase or decrease in our cash balance for a given period. In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. A reconciliation of the Company's historical non-GAAP financial measures to their most directly comparable financial measure stated in accordance with GAAP has been included in this press release. Investors are cautioned that there are a number of limitations associated with the use of non-GAAP financial measures and key metrics as analytical tools. Investors are encouraged to review these reconciliations, and not to rely on any single financial measure to evaluate our business.
Expenses Excluded from Non-GAAP Measures
Stock-based compensation expense is excluded primarily because they are non-cash expenses that management believes are not reflective of our ongoing operational performance. Amortization expense of acquired intangible assets is excluded because these are considered by management to be outside of the Company's core business operating performance. Asset impairments related to facility exit costs are excluded because such charges are not reflective of our ongoing operational performance. We also exclude certain litigation-related expenses consisting of professional fees and related costs incurred by us in defending against significant claims that we deem not to be in the ordinary course of our business and, if applicable, actual losses and accruals related to estimated losses in connection with these claims. There are many uncertainties and potential outcomes associated with any litigation, including the expense of litigation, timing of such expenses, court rulings, unforeseen developments, complications and delays, each of which may affect our results of operations from period to period, as well as the unknown magnitude of the potential loss relating to any lawsuit, all of which are inherently subject to change, difficult to predict and could adversely affect our results of operations. We estimate the tax effect of these items on our non-GAAP results and may adjust our GAAP provision for income taxes, if such effects have a material impact to our non-GAAP results.
Non-GAAP Financial Measures
Non-GAAP Gross Profit and Non-GAAP Gross Margin. We define non-GAAP gross profit as GAAP gross profit excluding stock-based compensation expense and amortization expense of acquired intangible assets. We define non-GAAP gross margin as non-GAAP gross profit as a percentage of revenue.
Non-GAAP Income from Operations and Non-GAAP Operating Margin. We define non-GAAP income from operations as GAAP loss from operations excluding stock-based compensation expense, amortization expense of acquired intangible assets, asset impairment related to facility exit and certain litigation-related expenses. We defined non-GAAP operating margin as non-GAAP income from operations as a percentage of revenue.
Non-GAAP Net Income per Share, Diluted. We define non-GAAP net income as GAAP net loss plus stock-based compensation expense, amortization expense of acquired intangible assets, asset impairment related to facility exit, certain litigation-related expenses, income tax effects generated by the effects of stock-based compensation expense recognized in foreign jurisdictions and any income tax benefits associated with business combinations. We define non-GAAP net income per share, diluted, as non-GAAP net income divided by the weighted-average diluted shares outstanding, which includes the dilutive effect of potentially diluted common stock equivalents outstanding during the period.
Free Cash Flow and Free Cash Flow Margin. We define free cash flow as net cash provided by operating activities less purchases of property, equipment and other and capitalized internal-use software. We define free cash flow margin as free cash flow divided by revenue. We believe that free cash flow and free cash flow margin are meaningful indicators of liquidity information to management and investors about the amount of cash generated from our operations that, after the investments in property, equipment and other and capitalized internal-use software, can be used for strategic initiatives.
Calculated Billings. We define calculated billings as total revenue plus the change in deferred revenue in a period. Calculated billings in any particular period aims to reflect amounts invoiced for subscriptions to access our cloud platform, together with related support services related to our new and existing customers. We typically invoice our customers annually in advance, and to a lesser extent quarterly in advance, monthly in advance or multi-year in advance.
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