Jay Chaudhry: As you know, every company has some kind of legacy solution for internet gateway or even VPN access. Those are the two starting points for us. ZIA starts with replacing some kind of secure web gateway and ZPA starts replacing some kind of VPN, then expands from there. So almost all of business we do starts by replacing something, except — well, upsell too. Actually, if you look at our upsell, that means we may have ZIA some pieces deployed. We may be upselling to replace of some vendor or we may be replacing VPN some vendor or some of other stuff. So almost all business is replacement for us. You can call some of the stuff expansion. For example, when customers want to have direct access to applications sitting in Azure and AWS without going through the data center, we’re still replacing some of the upselling in the data center and some of the direct connects they may have bought.
So, it’s replacement of a bunch of point products into a fewer interior offerings. That’s really where the savings come from, that’s where the simplicity and operational ease comes from.
Operator: Our next question comes from the line of Andrew Nowinski with Wells Fargo.
Andrew Nowinski: So I just wanted to ask about those ramps, deals that you talked about. Just wondering if you could quantify how much those deals would have added to billings in Q2 if they were normal deals versus ramping over time. And also, are customers contracted to spend a certain amount that was deferred, or can they still back out of that ramp piece of it? Thanks.
Remo Canessa: Yes. So, they’re contractually obligated to the ramps and the ramps are strategic. As Jay talked about, with large deployments, we are seeing more ramps. The impact on billings, probably a couple of percentage points is what you can think. But again, with large customers, large deployments buying more of our fillers, ramps were more in Q2.
Jay Chaudhry: If I may add, I mean, we look at this as a strategic investment on our part to help customers get started and actually manage your cash for investments in year one by deferring some of that stuff to future years.
Operator: Our next question comes from the line of Alex Henderson with Needham & Company.
Alex Henderson: So, I was actually interested in asking about the ramps as well. But I also wanted to put it in context to the duration in the calculated billings numbers. Can you give us some sense of the magnitude of each of those? I guess a couple of percent on the ramps. But if I look at the ramps, once you get all of that back in a couple of quarters, once they get past the initial start day, so isn’t that actually just a timing issue?
Remo Canessa: Yes. I mean, you’re absolutely right, Alex. I mean, the ramps are a timing issue, lower billings upfront and higher billings later based on the ramp. Related to the billing duration, there was a — it was slightly favorable in Q2. If you look at our billings, calculated billings, they’re at 34%, short-term billings were at 32%. That’s generally what you can think about the favorableness related to the billing duration.
Operator: Our next question comes from the line of Roger Boyd with UBS.
Roger Boyd: I wonder if I could poke at the efficiency versus capacity debate. I know you reiterated the $5 billion long-term goal, and Jay, your confidence in the market opportunity. But if you do see conditions improve, how do you think about sales capacity heading into fiscal ’24 and your ability to accelerate growth at an agile base? Thanks.
