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I would also like to inform you that we will be participating in the Citi Group's TMT conference in New York City on Friday, September 7th and the Deutsche Bank's technology conference in Las Vegas on Thursday, September 13th. Now, I'd like to turn the call over to Jay.

Jay Chaudhry -- Chairman and Chief Executive Officer

Thank you, Bill, and thank you, everyone, for your interest in Zscaler. I'm pleased to share with you our strong fourth quarter and full year fiscal 2018 results. We posted record revenue and record billings in the quarter as we continue to experience rapid growth. In Q4, our revenue grew 54% year-over-year to $56 million and billings grew 72% year-over-year to $95 million. It was an exceptionally strong end to the fiscal year as we closed a number of seven-figure deals. For the full year, our revenue grew 51% to $119 million and billings grew 65% to $258 million. In addition to our pipeline growth, we had healthy operating performance in the quarter as our operating margins improved 16 percentage points year-over-year and we generated positive free cash flow.

We ended fiscal 2018 with over 3,250 customers. Total global 2,000 customers increased to 300 as of July 31 up from over 200 a year go which reflects strong traction among large enterprises. We believe these results demonstrate Zscaler's increased adoption and a pivotal role on cloud platform plays to enable secure cloud transformation. It also shows strong sales and marketing execution. An increasing share of our sales are coming from our transformation bundle, which includes Cloud Firewall, IPS, and Sandboxing. Cloud and mobility are breaking the traditional perimeter where organizations build the hub-and-spoke network to backhaul branch office traffic all would wide area network to the data center. Then they built the mote of security appliances that established a perimeter around the corporate network to secure the network. Well, that's why we call it network security.

We believe that network security is irrelevant for the cloud. Applications can be anywhere. Users can be anywhere. But no shown of insight the network. Our outside the network is disappearing in the cloud world where internet is becoming the corporate network. Where would you build the mote? Speaking of firewall, of that proxy virtual machines on AWS doesn't make it cloud security. It is still network security. Design for the world of cloud, which has no walls. These scalers act as a policy engine deployed across 100+ data centers to securely connect the right user to the right applications. ZIA for internet and SASS. And ZPA for internal applications in your data center or the cloud. We believe we have the right architecture and are the best choice for securing the cloud and mobile fast world.

We are going after a $17.7 billion TAM that our analysts of IBC's data indicates our spent annually on network security products. Our strong business momentum is reflected in our financial results. I would like to highlights several noteworthy new customer wins during the quarter. Let me start with the largest deal in our company's history, which contributed $16.5 million to billings in Q4. The rapidly growing internet traffic to 60 gigabits per second throughput and need to inspect SSL traffic for security. This customer required a highly scalable internet gateway. To give you a reference point, maturity of fortune 100 enterprises need a few gigabits per second of sustained throughput. True to its name, Zscaler's scales well. We were the only solution that could meet the requirements and deliver good user experience. Zscaler cloud architecture allowed us to extend our cloud to their data center and deliver a hybrid solution.

A Fortune 100 communications services company with headquarters in Asia and presence in over 50 countries, purchased both ZIA and ZPA for 50,000 users to securely enable their business for the cloud. A very good example of customers embracing the entire Zscaler platform upfront. This customer acquired and restructured its entities and needed to standardize secure application access across four business units with different network and security infrastructure. ZPA is designed to do exactly this without having to integrate networks of acquired companies. This will also result in elimination of VPN infrastructure from multiple vendors leading to better user experience, cost savings, and simplification of infrastructure.

A leading European IT services company purchased our business bundle for over 100,000 users. They have traditional network and security infrastructure. Hub-and-spoke network with a handful of internet gateways. This customer had a CEO driven mandate to make business more agile and reduce costs. To achieve this, the IT team identified two initiatives. One, network and security transformation. And two, increased user cloud including a move to Office 365. The strategy they arrived at local internet breakout at every office and their solution? Zscaler to secure over 200 local breakouts around the globe plus security for the mobile workers to enable cloud transformation. Our service partner will deliver Zscaler as a managed service to this customer.

In parallel, this customer's systems integration business unit will be commercially offering Zscaler services for resale and consulting engagements. We also had a number of notable upsell wins in Q4. A top 10 bank in the US, which purchased our transformation bundle and DLP for 10,000 users six months ago. Purchased additional user licenses to cover all 55,000 employees. As the bank is embracing the cloud, including Office 365, they developed local internet breakout strategy for 2,800 branches and 200 back offices to replace their traditional perimeter security and hub-and-spoke network that had only two internet gateways. In addition, they wanted to enhance security. Security for mobile users, secure guest Wi-Fi, and inspection of SSL traffic for malware and data leakage. The natural solution? Zscaler transformation bundle along with SD ran devices.

Zscaler will be the only security check post for traffic headed to the internet from all branches and the data centers. While we are replacing traditional network security appliances, such as secure web gateway, outbound firewall, DNS, sandboxing, and DLP in current two data centers, it is mostly a greenfield opportunity. We are creating about 3,000 new secure local internet breakouts driven by M&A requirements and user unhappiness with their traditional VPN, they also bought ZPA for a subset of users. Our financial services customer that bought transformation bundle for 15,000 employees about two years purchased ZPA for all 15,000 users. While ZIA provided them secure and fast access to internet and SASS, ZPA would do the same for the internal applications some of which are in the data center while many are in agile NAWS.

This deal enables realization of their strategy part of a major-less enterprise with direct access to any service or application from anywhere on any device without backhauling traffic through the data center. The result? Fast user experience and lower cost. They will no longer need either a site-to-site VPN to assure our AWS or a remote access VPN. This eliminates all network security appliances, including traditional VPN except the inbound firewalls to the data center. A fortune 100 multinational oil and gas company in Europe that bought a small paid pilot of our transformation bundle one year ago, expanded the purchase to all 65,000 users. This customer is launching an initiative for global IT transformation. It is comprised of one, local internet breakouts in 450 locations across 65 countries. Two, cloud first approach to applications, such as Office 365. And three, minimal on-premise infrastructure. Another driver was to enhance security with SSL inspection and to secure hundreds of guest Wi-Fi locations.

Like many other deals, while we are replacing network security appliances in the current internet gateways, it is mostly a greenfield opportunity to create about 450 secure local internet breakouts. Let me make a few comments about ZPA, a complementary set of services for internal application access. We're very excited about rapid growth. ZPA was introduced nearly two years ago and was made available to all sales reps one year ago. In fiscal 2018, ZPA contributed approximately 10% to new and upsell business with almost half coming from new customers to Zscaler. We believe this new and upsell example demonstrates the continued adoption of the Zscaler platform as customers increasingly rely on us to enable their transformation journey are born in the cloud for the cloud platform is delivering value to our customers. Zscaler provides four compelling benefits to customers.

One, deliver a better user experience with local internet breakouts. Two, enhance security with cloud effect and full in-line inspection including SSL scanning at scale. Three, minimize cost of security appliances and MPLS network. And four, simplify infrastructure by reducing the need for hub-and-spoke networks and related hardware infrastructure. We feel that our go-to-market team is getting strong and is executing well on our vision. We are investing in our unique go-to-market capabilities, which enable us to sell top down at the C level. A strategic advantage for us is our channel partnerships with large system integrators and global service providers. During the fourth quarter, we upgraded our cloud with scores of features that strengthened our security, improved reporting, and enhance usability.

Notably, we took our data loss prevention, our DLP functionality to a new level. We introduced exact data match on EDN. We believe this is the industry's first multichannel DLP for the cloud that scales to billions of fields. Rather than looking for genetic match for any credit card or social security number, which is prone to false positives found in other DLP solutions, our DLPEDN can make sure that personally identifiable information like credit card numbers of millions of users at a bank or an insurance company don't leak out. We significantly enhanced our cloud IPS capabilities for track detection. The overall efficacy of our cloud IPS is far superior to traditional IPS because we natively inspect all traffic including SSL. Zscaler was designed as a proxy architecture that is required to inspect SSL traffic.

Most vendors attach IPS to firewalls, which are state for architecture and are designed to look at a subset of the data flow at a time. That does not work well for SSL inspection. We delivered significant enhancements to real-time interactive analytics. Rather than showing just security counters, like number of plats, Zscaler provides normalized risk score at the user level location or department level and the company level. This is so you can see the risk posture trends as well as how they are doing against their peer groups. Two weeks ago, we announced an acquisition on market leading, artificial intelligence, and machine learning technology and the development team of self-mode securities start-up, TrustPath. TrustPath developed AI algorithms to identify new threats and provide deep visibility resulting in enhanced security efficacy.

These innovations will be incorporated into our extensible cloud platform and derive intelligence from 50 billion transactions we process daily to identify anomalous traffic, build user behavior profiles, and detect sophisticated targeted attacks as they emerge. We are excited about our future because of what we enable for our customers on the cloud journey. In June, we had our first inaugural cloud summit, Zenith Live in Las Vegas. With hundreds of customers and partners attending, we had an inspiring lineup of keynote speakers to talk about the cloud transformation. Including, Scott Guthrie, the head of Microsoft's cloud and enterprise group and executives from Siemens, AT&T, and others.

We will be bringing Zenith Live to London next month on October 21st to 23rd. We are also excited about a major milestone, ZPA Gov. ZPA Gov, our ZPA version for the federal government has achieved fed ramp certification for the moderate security level and was granted a torch to operate by the Federal Communications Commission, FCC. ZPA Gov is the first zero trust remote access platform that has received fed ramp approval. This authorization enables us to expand into the federal market. In summary, we're very pleased with our record Q4 and fiscal '18 results. We believe we are in the early innings of a significant market opportunity to disrupt traditional network security. I would now like to turn the call over to Remo to walk through our financial results.

Remo Canessa -- Chief Financial Officer

Thank you, Jay. As Jay mentioned, we had a very strong fourth quarter in fiscal 2018. We are pleased with the results we have achieved. Revenue for the quarter was $56.2 million up 14% sequentially and 54% year-over-year. From a geographic perspective for the quarter, the Americas represent 48% of revenue, EMEA was 45%, and APJ was 7%. From inception, we've invested across all geographies and have built a strong international sales and operations team with an extensive global cloud infrastructure. We feel these investments have created a strategic advantage allowing Zscaler to provide our services to customers around the world. For the full year, revenue was $190.2 million up 51%. ZPA remains the fastest growing new product in our history.

ZPA contributed 10% of our new and upsell business in fiscal 2018 up from 4% in the prior year. Turning to billings and backlog, we define billings as the change and deferred revenue for the quarter plus total revenue recognized in that quarter. Billings grew 72% year-over-year to $95.4 million for the quarter and grew 65% to $257.6 million for the full year. This quarter we benefited from a higher mix of upfront greater than one-year billings including $16.5 million from won customers Jay previously mentioned. As a reminder, our contract terms are typically one to three years and we primarily invoice our customers one year in advance. Excluding upfront greater than one-year billings in both periods, billings would've grown slowly below 60%.

Total backlog, which represents remaining performance obligations, was $398 million on July 31st, up 81% from $220 million one year ago and 30% from $305 million last quarter. Based on our ending July 31st annual recurring revenue for ZIA, approximately 35% is from our high-end transformation bundle, which includes our next generation firewall and sandbox up from approximately 20% that we referenced during our IPO. In addition, ZPA, which was released last fiscal year, is additive as a cross sale to our existing customers. Our strong customer retention ability to upsell have resulted in a consistently high dollar base net retention rate which was 117% for the period ended July 31st. this compares to 115% a year ago and 120% 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 117% is outstanding and it will vary quarter to quarter. The billed gross margin was 80% up 2% compared to Q4 last year and down 1% sequentially. The year-over-year increase was driven by an increased mix of higher price bundles with more functionality as well as operational efficiencies. We feel 80% is a very strong gross margin and our focus is not to maximize our gross margins at this stage. We feel it's important to continue to invest in our platform and to drive customer satisfaction to drive topline revenue growth.

Turning to operating expenses, our total operating expenses grew 11% sequentially and 32% year-over-year to $47.4 million but decreased as a percentage of sales. Sales and marketing increased 8% sequentially and 34% year-over-year to $30.7 million. We've been building our sales and marketing teams investing in marketing programs to drive growth and awareness. We incur significant sales and marketing cost initially to sell our products but after the first year, our sales and marketing cost declines significantly as our commissions and marketing efforts are concentrated on the initial sale. R&D increased 15% sequentially and 24% year-over-year to $10.3 million as we continue to invest to enhance product functionality and to offer new products.

The growth in R&D primarily includes investments in building our teams and in addition, expenses to complete the fed ramp certification for ZPA. G&A increased 17% sequentially and 37% year-over-year to $6.4 million. These expenses exclude $1.4 million in litigation related expenses. The growth in G&A includes investments in building our teams, consulting, and other expenses we have made as we became a public company. Our fourth quarter operating margin was a -4%, which compares to a -20% in the same quarter last year. Net loss in the quarter was $1.4 million or pro forma net loss per share of $0.01. We ended the year with $299 million in cash, cash equivalents, and short-term investments. Free cash flow was positive $11.9 million in the quarter compared to -5.4 million for the same quarter a year ago and was positive 2.1 million for the full year compared to -14.2 million last year.

We started our ESPP program in March, which contributed approximately $3 million to our free cash flow in the quarter. The first dock issuance under the SPP program will be in December. This will reduce our free cash flow by approximately $7 million to $8 million in Q2 and will have no impact on our overall cash balance. Now moving onto guidance. As a reminder, these numbers are all non-GAAP which excludes stock-based compensation expenses and certain litigation-related expenses. For the first quarter, we expect revenue in the range of $58 million to $59 million. Operating loss in the range of $6 million to $7 million. Taxes of $600,000 and net loss per share in the range of $0.05 to $0.06 assuming approximately 121 million common shares outstanding.

For the full year 2019, we expect revenue in the range of $250 million to $260 million. Operating loss in the range of $16 million to $18 million. Taxes of $2.4 million and net loss per share in the range of $0.12 to $0.13 assuming approximately 124 million common shares outstanding. Our plan is not to give billing guidance on a go-forward basis. However, due to the large upfront billing from one customer in Q4 of 2018, we want to provide some modeling points for billings. Historically, Q2 and Q4 have been our strongest billing quarters with sequential declines in Q1 and Q3 respectively. For Q1 2019, the large upfront billing in Q4 will provide a difficult sequential comparison.

Excluding the effects of the $16.5 million from our Q4 billings, we expect the sequential percentage decline in Q1 '19 to be consistent to our previous Q4 to Q1 sequential declines. In the last two fiscal years, billings declined approximately 25% from Q4 to Q1. For fiscal 2019, we expect the billings year-over-year growth rate to be lower than the revenue growth rate with a difficult comparison in Q4 2019. If we exclude this large upfront billing of $16.5 million, total billings growth in fiscal 2019 would be comparable to the revenue growth implying billings of $320 million to $330 million for the year. We will not be updating those billings commentary in the future. We're very proud of what we've achieved and look forward to building on our opportunity. Now, I will hand the call back over to Jay.

Jay Chaudhry -- Chairman and Chief Executive Officer

Thank you, Remo. I would like to leave you with these key takeaways from our results. One, with multiple tailwinds, such as fast adoption, SD ran, and app migration to public clouds, the market is coming to us. We are winning bigger deals, including the biggest deal in our company's history. Two, while we replace security appliances in current internet gateways, majority of ZIA sales are coming from creating and securing new local internet breakouts, it is a greenfield opportunity. Three, our platform strategy is working well. Customers are purchasing our higher end transformation bundles and ZPA services as they increasingly rely on us to enable cloud transformation.

The Zscaler security cloud is delivering not just better and more pervasive security, but also dramatic return on investment for our customers, decreasing network infrastructure and bandwidth costs while providing better user experience. Four, we have purpose built our cloud platform to be extensible with the ability to quickly introduce new functionality such as DLPEDN and user behavior and analytics in our latest cloud update. 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.

Questions and Answers:

Operator

Thank you. Ladies and gentlemen, if you'd like to ask a question, please press *1 on your telephone keypad. If you're on a speakerphone, please pick up your handset and make sure your mute function has been turned off to allow your signals to reach our equipment. Again, that's *1 for questions. We'll go to Brad Zelnick with Credit Suisse.

Brad Zelnick -- Credit Suisse -- Analyst

Excellent. Jay, Remo, congratulations on a strong finish to a spectacular year. I've got one for Jay and one for Remo. Jay, we get asked by investors all the time: why can't the traditional network security players do what you're doing? And I think you've done a great job in your prepared remarks addressing this with examples of customer success and your performance this quarter would also suggest you're doing something very different.

But there's a lot of noise out there and I think we've seen this -- is an industry where the best tech doesn't always win. So from a go-to-market perspective, how do you cut through the noise when most likely the customer you're calling on already owns a box and has a relationship with a legacy network security provider that says they do something that sounds like what you do?

Jay Chaudhry -- Chairman and Chief Executive Officer

It's a good question, Brad. Thank you. You know, in the high-tech world there's always incremental changes going on every 10-15 years there are some disruptive technologies come because the market changes. We have seen that kind of disruption. I talked about network security becoming irrelevant and I think that's what customers are understanding it. We've always seen the same phenomena happen. Salesforce had to fight Siebel, work they had to fight people soft to really get the word out.

We have seen where proxy vendors talking about hybrid cloud offering like Zscaler for the last six years. We have seen firewall and other companies trying to do the same. I think we have a growing sales team, we have a very strategic channel, we have some very, very referencable customers who are helping us to spread the word out. So the momentum is there so I feel very comfortable that we'll see the same movie run in our case that we saw with other SASS vendors.

Brad Zelnick -- Credit Suisse -- Analyst

That's helpful context, Jay, thank you. And Remo, as I think about and look at the cash flow and margin upside, at least relative to our model, it makes me wonder about the investments that you're making this year, particularly in sale productivity in the context of the growth that you're putting up. So how do you think about sales productivity and measure it and how is it trending and what are you baking into your forecast for this years, specifically if you can comment on sales and marketing hiring targets that you're solving for in fiscal '19? Thanks so much.

Remo Canessa -- Chief Financial Officer

Thank you, Brad. A lot of questions. I'll try to answer most of them. With our performance that we've had for the first two quarters of the public company, I think you've seen the strength of our model. One of the things that Jay and I are acutely aware of is the largest market opportunity that we have. We're gonna continue to invest in sales and marketing.

Our long-term model that we've talked about is that we'll get to break-even operating profitability and free cash flow positive on sustained basis sometime in fiscal '20. So we're gonna continue to drive to that so we'll be hiring aggressively through fiscal '19 and also into fiscal '20. Related to sales productivity, sales productivity in the year for fiscal '18 was up versus fiscal '17. Our internal plans have sales productivity being slightly up to flattish in fiscal '19. The reason for that is we're gonna aggressively hire in the sales and marketing organizations. The basis that I use for sale productivity in the company is based on new ACV. So we look at new ACV per sales rep, and that's how we base sales productivity. And now I'll turn it over to Jay.

Jay Chaudhry -- Chairman and Chief Executive Officer

I think that's good. Number of people we are hiring in sales and marketing is increasing, we are being selective. It's a tough market but we have no problem attracting good talent.

Operator

Thank you. Our next question comes from Alex Henderson with Needham.

Alex Henderson -- Needham -- Analyst

Great. Let me start off with just a very simple one. Do you have the ending fully diluted share count for the period assuming solid profitability? What would be the share count?

Remo Canessa -- Chief Financial Officer

It would be in the 134-135 million range.

Alex Henderson -- Needham -- Analyst

More to the fundamentals and some more of a real question. Looking at ZPA, obviously very nice acceleration, 4-10% is outstanding. But when I met with your customers at your trade show, virtually every customer I talked to said he was aggressively moving to it. Could you talk a little bit about what the backlog of business pipeline of business looks like for ZPA? And second, what is the timeline from the beginning of the discussion to actually closing those type of transactions as you push on that opportunity?

Jay Chaudhry -- Chairman and Chief Executive Officer

ZPA has done well and we've seen tons of momentum. So we expect ZPA to grow at a faster rate than ZIA. But ZIA is growing very fast, too. It'll be very hard for ZPA to catch up with ZIA even though the market trend of both platforms is essentially the same. In terms of the sale cycle, it depends. We have two types of use cases in ZPA. One is what I call transactional. The customer saying, "I hate my VPN, could you replace it that's quick, that's faster?"

They'll be probably more so in the three to six, seven-month timeframe. The second is more transformational. I want to eliminate the old way of going to cloud. My applications are going to Azure AWS, Google; I want to go direct through Zscaler ZPA. Those things take a little bit longer because we have to educate the customer what architectural transformation. But we are bullish on numbers and we expect ZPA market share to grow as a part of the overall product mix.

Alex Henderson -- Needham -- Analyst

I was wondering if you had any statistics around the pipeline of what percentage of the pipeline has ZPA entered or is combined ZIA/ZPA?

Remo Canessa -- Chief Financial Officer

We're not gonna comment on our pipeline and break it out between ZPA and ZIA or our backlog. What's important to understand is, ZPA has momentum and it's doing well and we're expecting to grow as we go forward.

Alex Henderson -- Needham -- Analyst

One last cut at it then, could you talk about what percentage of your deals are directly related to digital transformation, local breakout initiatives?

Jay Chaudhry -- Chairman and Chief Executive Officer

If you are to look at one indicator of transformation-related deals, that would be the sale of transformation bundles even though there are some deals we start with, cloud transformation and they may still choose to buy a business bundle to start with for pricing and budget reasons. Remo, you have commented on the transformation bundle sales.

Remo Canessa -- Chief Financial Officer

The transformation bundle sales is like -- they're 35% of our business now and that's up from 20% of time of our public offering and that's based on ARR. We're seeing an uptick on transformation both with new customers and existing customers. So if you look at the split, I'd say it's fairly even between new and existing customers.

Jay Chaudhry -- Chairman and Chief Executive Officer

And if I were to say the number of deals that are started with cloud transformation use case by Zscaler, that's actually a good majority of them. But some of them will go into transformation bundle; other will go to business bundle and then we upsell from there. Honestly, my preference is actually to sell business bundle and take the deal sooner than try to sell the bigger deal but we take whatever works.

Operator

Thank you. We'll continue on to Gabriela Borges with Goldman Sachs.

Gabriela Borges -- Goldman Sachs -- Analyst

Great, good afternoon and congratulations on the quarter. Maybe one for Remo to start on the guidance for fiscal year '19. I'm hoping you could outline for us a little more on the puts and takes you're assuming for that mid-30% type growth rate coming off of such a strong year. You touch on the proactivity a little bit but any other factors that would be driving the deceleration would be really helpful.

Remo Canessa -- Chief Financial Officer

The guidance that we gave was $250 million to $260 million for the year, which is a 32-37% increase over fiscal '18 of 190 million. That from our perspective is outstanding. We are giving guidance that we feel is prudent and we're comfortable with the guidance that we're giving. The way we look at it is that we have an outstanding opportunity in front of us and we want to make sure we're looking forward and building our company for success. That's been our focus related to how we ran the business as a private company and how it'll be as a public company going forward.

Gabriela Borges -- Goldman Sachs -- Analyst

That makes sense, thank you. And the follow up is for Jay, which is when your transformation has been more on the SDWAN said, could you maybe talk about how often SDWAN is coming up as a catalyst or as one of the areas of ROI post a fee scale of deployment. I know it comes infrastructure transitions can sometimes be floor but given the ROI tap show this one seems like it might be progressing nicely. So any color there would be helpful. Thank you.

Jay Chaudhry -- Chairman and Chief Executive Officer

When you think about fundamental value propositions Zscaler brings to the table is enables secure, local internet breakouts. Now, we don't require SDWAN to do local internet breakouts because lots of our customers are already in plays had been using Zscaler without SDWAN. But SDWAN actually makes it easier for a customer to roll out and deploy hundreds of branches because these are cloud-managed boxes.

We are seeing more and more adoptions of SDWAN and when that thing happens, it actually helps accelerate our business so we see it very complementary and we are working with most of the SDWAN vendors. One toward selling, two actually integrating with them, so that deployment of Zscaler and SDWAN can be done quickly because the products are integrated. Momentum is growing and building and we like it.

Gabriela Borges -- Goldman Sachs -- Analyst

I appreciate the color. Congrats again.

Operator

We'll continue on and hear from Keith Weiss with Morgan Stanley.

Keith Weiss -- Morgan Stanley -- Analyst

Thank you guys for taking the question and a very nice quarter. I just wanted to dig down a little bit more to the competitive environment because from your side of the equation, we see a 400 sale happening, you guys are giving us the data on it that you're doing these sales, you're getting into areas outside of kind of that core value proposition we were talking about 3-4 years ago, talking about stuff like SDWAN and access.

We're also hearing other companies outside of the traditional competitive sets start to talk about assets and SDWAN and the like. It just seems like the competitive environment is broadening out a lot. Is that still -- is it just marketing or are you actually seeing that in reality? I actually see a broadening of the extended environment as who you're trying to sell against.

Jay Chaudhry -- Chairman and Chief Executive Officer

I look at SDWAN as a very complementary market. I think they will be a few SDWAN vendors who try to say I will not only do SDWAN; I'll put the full security stack in every branch office. We don't think that really works but that's why if you really look at real customers who have done SDWAN deployments, most of the time these show up as the default cloud-based business policy engine, so to speak. So that part is very natural for us. Was there a second part of the question? I didn't catch it.

Keith Weiss -- Morgan Stanley -- Analyst

No, it was just this or that -- are you seeing that broader competitive environment in the field? Does it change the way you have to circulate market and sales or change your sale cycle now that it's expanding out just to occasional sort of internet gateway vendors that you're competing against?

Jay Chaudhry -- Chairman and Chief Executive Officer

If you look at the evolution four, five, six years ago it used to be we competed against a traditional secure web gate vendors. Then as we got success, those vendor changes -- change them, sort of became hybrid secure web gateway vendors. And in the past year or so, we have been hearing about the firewall guys trying to say, keep on buying my firewalls but if you're under all, if you got a branch, I'll spin up these VMs and use me. And I'm sure there'll be some of the same message coming from SDWAN vendors down the road, some of them.

But I think it's a natural part of it. We actually like the fact that there are more vendors who are trying to make noise about the need for doing local internet breakouts. But being able to solve a proper solution where your users can be called to any plays policy that moves around logs and all that come together with full SSL inspection. It's a very hard business problem to solve. So we like the more noise because our big challenge has been awareness and we welcome it.

Keith Weiss -- Morgan Stanley -- Analyst

Got it, that's helpful. One for Remo, backlog number close to 400 million I think as of this quarter. Could you give us any kind of sense of the duration on that? How much of that is expected to be building voice over over the next 12 months?

Remo Canessa -- Chief Financial Officer

That'll be in our 10K and under ASC606. What that represents -- it's a build or unbuild revenue backlog and out of that 398 million, we expect 53% to be revenue this next fiscal year.

Operator

Our next question comes from Shebly Seyrafi with FBN Securities.

Shebly Seyrafi -- FBN Securities -- Analyst

Hello, everybody. Congratulations on the great quarter. My question is, it looks like with your guidance that the operating margin, which was -4% last quarter is gonna decline about maybe seven points sequentially to like -11%. And it looks like in the prior fiscal Q1 you were down one to four points sequentially. Just talk about your increased -- I think it's your increased investment in OpEx. What are your plans there, why are you being more aggressive right now and why is this guidance on operating margin a little bit more lower than normal?

Remo Canessa -- Chief Financial Officer

The key thing is that we see a huge market opportunity with our platform. We don't want to shortchange ourselves. So we are going to invest in our company. What we said before, and we're staying with it, is that in fiscal '20 we're gonna be at some point in fiscal '20 we're gonna be on a sustained basis, positive free cash flow and operating profitability. So that's what we're gonna do and along the way, we're gonna keep on investing and investing as much as we possibly can. Having said that, Jay and myself have been around. Jay's founded four companies; I've been CFO six public companies.

So we are like I think probably two of the most frugal people -- I know Jay is, and I think I put myself in the same category, incredibly frugal people. We're gonna try to maximize the value of the company and the shareholders by driving topline growth and the way to do that is to continue to invest. And we'll make prudent judgments along the way. We'll make those investments. In Q1, we also had our sales kickoff. So there was a significant expense for just coming through Q1 with their sales kickoff. We had about 450-500 of our employees at a kickoff. So that is gonna increase expenses during the quarter a little bit.

Shebly Seyrafi -- FBN Securities -- Analyst

Can you quantify that for us estimated?

Remo Canessa -- Chief Financial Officer

The estimated for the sales kickoff was around $2 million during the quarter in Q1.

Shebly Seyrafi -- FBN Securities -- Analyst

Okay. And then, next one from me is on ZPA. I think you said it was around 10% of your business. When you say business, you mean billings, you mean net new ACV? What do you mean by that?

Remo Canessa -- Chief Financial Officer

New ACV, whether it's a new or upsell.

Shebly Seyrafi -- FBN Securities -- Analyst

Okay. And you're not gonna give us any kind of revenue estimate on ZPA?

Remo Canessa -- Chief Financial Officer

So currently ZPA because it's based on a radical basis, it's still less than 5%.

Shebly Seyrafi -- FBN Securities -- Analyst

Okay. And last one, is the fed gov certification for ZPA, how important is that in your opinion?

Jay Chaudhry -- Chairman and Chief Executive Officer

It's very important because without it we couldn't play in the federal market so it opens up a market we couldn't play in. and in fact, we are pursuing the same thing with ZIA as well, which should be happening in the coming months so brand new opportunity in the fed market with ZPA and ZIA both.

Operator

Thank you. Our next question comes from Tal Liani with Bank of America.

Tal Liani -- Bank of America -- Analyst

Hi guys, thanks. Great quarter. I have two questions related to questions that were asked before. The first one is, how long does it take to translate the government certification or approval into revenues? Do you have to now start from scratch presenting the products and going through testing, etcetera so that means a long sale cycle or have you already done it and you were just waiting for approval so it could be a quick sale cycle? So that's the first question.

The second question -- I want to go back to the first question you were asked. And the question was, how much of a threat do you see from firewall companies? And I want to reverse it, how much of a threat do you represent to the firewall companies? And I know you were asked this question multiple times in the past but I still get this question from investors and I'm wondering if you can address it. Can you expand the address of the market to traditional firewalls with ZPA and ZIA or is it not the case for technical reasons? Thanks.

Jay Chaudhry -- Chairman and Chief Executive Officer

The first question, the fed ramp certification. Going through fed ramp certification for the cloud has been very painful because being the first one to get it done when no one really knows how to interpret some of these certifications was quite a lot of work. We spent months and months and lots of money to become the first vendor to get this thing done for ZPA. So that's point number one. Point number two, have we been talking to a number of federal agencies to understand the need and whatnot? The answer is yes and there's a lot of receptivity to the solution.

That leads to the third part of your question. Can sales happen really quickly? You know the federal market. Can you count on fast sales in the federal market? I don't think so. We think it's a big market for us. A lot of these federal sales are driven by their year-end and that is end of September. So while our federal market share today literally you can say zero or 1% of the total revenue -- it's nothing. We expect to start growing some revenues but it's hard to speculate. I think we'll get some revenue in fiscal '19 but we are not counting a big part in our plan being conservative, committing to the boards, could they be upside? Probably.

But that's where we are with federal. But bullish and optimistic. Your second question referred to firewall companies, or firewall companies being a threat to us. I think what we talked about before is we are not directly going after a replacement of firewalls as you saw me cover a number of use cases, a number of customer wins. It's mostly a greenfield opportunity because enterprises are creating new internet local breakouts and that's where we're going and that's also our focus is user traffic, traffic that's headed to the internet or the cloud. So they won't see a whole lot of impact with that.

Now, we have always said that and as I said during my comments we are not focused on inbound traffic coming to your data centers. So we are not replacing any of that inbound firewalls in your data centers. And that DMZ so complex that people would rather not mess with it. Now as more and more applications move to the cloud, internal applications go to Azure AWS. Our ZPA approach eliminates a need to do traditional VPNs and firewalls and the like. So I think in the long run we will be probably reducing the need for that kind of traffic. But there's no need for us to have a head-on competition and we are not trying to go after it directly.

Operator

Thank you. Our next question comes from Gary Powell with Deutsche Bank.

Gary Powell -- Deutsche Bank -- Analyst

Great. Thanks for taking the questions. And I've been juggling calls so hopefully this hasn't been asked and answered already but I'm just gonna give it a shot. From a competitive standpoint, have you seen any changes in the level of discounting at your clients based peers in the last 6-12 months? And does that even have an impact on your customer conversations?

Jay Chaudhry -- Chairman and Chief Executive Officer

So as we do more and more deals with cloud transformation, we really don't get into any big comps or real competition because it's a very different positioning. So are we seeing this big impact? We don't, no. We do know that some of the appliance vendors have standing orders for the field and say, if you see these killer out there, drop your pants and you can do whatever you want to do. But we haven't really lost any business because of that. And this is because of our positioning and this is because how we go to market.

Operator

We'll continue onto Sakit Kalia with Barclays.

Sakit Kalia -- Barclays -- Analyst

Hey, thanks for taking my questions and congrats on a very nice quarter as well. Maybe starting with you, Remo. First of all, thanks very much for the billings guide as for fiscal '19. If I think about some of the other drivers of cash flow next year, one item that's a little less predictable is litigation expense. We saw that that was slightly lower this quarter than last quarter. I know that can ebb and flow with activity but was just wondering if you had any thoughts on how that line out could trend throughout fiscal '19?

Remo Canessa -- Chief Financial Officer

I'm glad you asked that question. In Q4, we had $1.4 million in litigation expenses. We're expecting $3 million to $4 million in Q1 and for the full fiscal year, we're expecting $15-20 million. Again, that can ebb and flow but that's what we have in our internal plans.

Operator

Thank you. And we'll go to Fatima Boolani with UBS.

Fatima Boolani -- UBS -- Analyst

Good afternoon. Thank you for taking my question. Jay, you gave a lot of examples in your prepared remarks around strategic deals and specifically that $16.5 million deal and then just various examples of sort of wall-to-wall deployments for ZIA and ZPA. So I'm curious if you can speak to the enterprise ARR trends that you're seeing and sort of a frame for us how that's changed over the last year or so?

Remo Canessa -- Chief Financial Officer

By customer, our ARR has been going up every quarter. It increased in Q4 over Q3. It's on the low 300,000 range. And this is for customers greater than 3,000 users or more. So it's been consistently going up every quarter.

Operator

We'll now hear from Srini Nandury with Summit Insights Group.

Srini Nandury -- Summit Insights Group -- Analyst

Thank you for taking my question. Jay, can you talk about your TrustPath acquisition? What does it provide for Zscaler and then with the IPP services? Thank you.

Jay Chaudhry -- Chairman and Chief Executive Officer

As we have been collecting billions and billions of logs, it has been natural for us to do some of the data-mining machine learning type of activities. And TrustPath has actually helped things accelerate and get bigger and better benefits. The platform is accessible; we have the technology, we like it, so we will integrating more and more with it.

But you are not going to see a separately priced product that's coming out of it in the near term. You're gonna see the kind of analytics we provide the kind of security detection we do get much better. So the results -- I think they will not be an incremental thing one day and say TrustPath is part of it. I think our customer will see the benefit of better detection as will as better reporting, better analytics and more actual information they can use to make better decisions.

Operator

Thank you. At this time, I'd like to turn the floor back over the CEO Jay Chaudhry for any additional or closing remarks.

Jay Chaudhry -- Chairman and Chief Executive Officer

Thank you again for your interest in Zscaler. We'll see some of you at the upcoming conferences. Otherwise, talk to you in the next earnings call. Thank you again.

Operator

Thank you. Ladies and gentlemen, again, that does conclude today's conference. Thank you all again for your participation. You may now disconnect.

Duration: 60 minutes

Call participants:

Bill Choi -- Chartered Financial Analyst

Jay Chaudhry -- Chairman and Chief Executive Officer

Remo Canessa -- Chief Financial Officer

Brad Zelnick -- Credit Suisse -- Analyst

Alex Henderson -- Needham -- Analyst

Gabriela Borges -- Goldman Sachs -- Analyst

Keith Weiss -- Morgan Stanley -- Analyst

Shebly Seyrafi -- FBN Securities -- Analyst

Tal Liani -- Bank of America -- Analyst

Gary Powell -- Deutsche Bank -- Analyst

Fatima Boolani -- UBS -- Analyst

Srini Nandury -- Summit Insights Group -- Analyst

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