Qualys (QLYS) 1 Aug 182018 Q2 Earnings call transcript

Good day, everyone, and welcome to Qualys Second Quarter 2018 Earnings Conference Call. This call is being recorded. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions for asking a question will be given at that time. I would now like to turn the call over to Melissa Fisher, Chief Financial Officer. ma'am. ahead, go Please

welcome second and call. XXXX to afternoon quarter Qualys's earnings Good

me results and our to Philippe Joining discuss Chairman is today Courtot, our CEO.

the with that set that filings including Actual to our that to this information in undertake future and started, release to to or these XX-K. statements. our include as get Factors would statements press Form or events no forth latest differ statements forward-looking our operating call differ assumptions update materially financial you new and or we these statements we SEC, performance. future forward-looking relate we XX-Q today on results will may remarks today's materially could generally our Before that on in and cause future as events. are of obligation today of results I are a Any based remind like make result from

we reconciliation release. call, this earnings will press non-GAAP GAAP to and included today's is GAAP During measures of measures. in both A present financial non-GAAP

a remarks investor information over prepared supplemental call with our turn and available to the reminder, on like presentation With are press website. Philippe. accompanying the that, As I'd release,

drastically positioned spend. security customers position call. Melissa, their that details build a believe in at everyone, consolidate cloud-based our you, We to will and Melissa for those a through the revenues to app uniquely moment. compliance security Melissa a to as go both to are and Thank to and leading pleased the one helping a and results strong very platform enable now QX stack, welcome, are included earnings I their we transformation world, quarter our reduce reflect and report good securing leading These digital profitability. compliance safer and time.

platform endpoints, true to have our them year, and approach across assets, early clouds, single on-premise pane mobile glass environments. of allows view addition, next a In

secure through continuous well are our I a will response integrate continuous Qualys global breaking of visibility. global savings to DevOp any best one new a GA. the silos enjoy we CIOs of our is, not you IT Asset believe The and is in service cloud, earlier, processes Inventory way App you year, next a and that because detection mobile no our solution and new organizations Qualys, our security, the APIs. at early enabling with all scale, believe most customers single Cloud unified in delivering our view to with continue compliance, without in signed our an we now we release is as into built on a within their we and cannot QX, and down the to container on compliance in. of do including XXCrunch breed for – CMDB – source deliver investment will and Furthermore, our before two-way it API IT issues bit enables App security environments. updated Cloud IT As enables IT developed Such expect assets vexing for ownership what Platform, cost. a capabilities mentioned Questionnaires and significant Container truth In know. minority posture, environments, I solution We their providing and CMDBs. that asset the for and bought additional compound. with there first for to We to secure new on cornerstone announced cloud and deliver critical beta This We lowering synchronization security one about. of the results This has continued is endpoints, assets groundbreaking fact, solved global view as capabilities new of security now assets, app Similar product Assessment and and synchronization capability added agreement them. deployments provides and their their hybrid end. platform spoke on-premise and roadmap. security speak stake to we security as of go XXCrunch later Security uniquely is build into inventory into global as out-of-the-box applications to year GDPR build GA app innovate distribution it Security just customers hybrid a of streamline customers quickly IT we security will venture We

an showcased Security how we as uniquely scale, security online Conference sensors call as Analyst different Cloud the customer five also of millions were today: event, Day our the of great and what Qualys analyze able Investor enabling transparent which collect Platform key data Qualys accuracy, to We tenets immediacy, and well event, and from first held We successes. visibility, orchestration. is

is well Sector now vertical IT quarter market our governments, in Anna Carahsoft and synchronization. management appointed Wheeler, also go-to-market covering for and as digital Akamai, Container GA; follows. partnership we state including We in an capabilities announced solution to expanded market, technical Solutions. We federal solution, formerly Qualys provided strong Asset the and the Platform sell Public local increased federal of in-depth agencies distribute the with to at which the from our as Gov sessions as CMDB We Security, as see certificates FedRAMP-authorized and demand later VP Inventory our this as and federal

our federal agreed we our interchange to looking team, CIO/CISO government. to maintain internal than pursue Second Front this compliance with federal business believe and the While time. meet at are to as in an acquisition Systems we With have our of ever-growing security rather positioned partnership uniquely mutually fall, expanded the forward we requirements the

Platform CloudView. launch we to Additionally, done and continue the have CertView as successfully with awareness demand we the and market Cloud Qualys leverage of to broaden generate

additional Qualys to successful users platform We our we many which have CloudView distribute from solutions. response effort, more a release to to the seen great which generation CertView, of and sell can lead serves

activations, of are had over out already. which, active X,XXX XXX We over have users

to the across into MSPs Additionally, accelerate acquire soon, our their enables our to a summary, environment, about availability with cloud, roadmap our to market. uniquely our spend In and Community about as time assets, We're a Cloud IT, version continue we're view and consultants today. position and considerably provides which enthused general excited Qualys of visibility build and platform, endpoints, company their transformation companies, initiatives. reduce mobile provide our innovative the consolidate stack, was digital leadership which we full security our again SMBs, on-premise unified to of for can Edition, to compliance, we and organization, Platform released free find security including

Jason the turn of to to the I Miratech prior that, our (sic) I welcome Melissa to Relativity, call board before Holdings. financial the over our Reeds [Mitratech] So (sic) results, Prior of the of to that and SolarWinds. directors. Jason discuss to CFO CFO position, CFO to was would is [Ream] of he like

cloud-based XXXX of XX continue Commercial leveraged the thank Amer in business, Around Director SolarWinds, by vision Don departing strength IT platform powerful, I As Qualys because a provides market grow those to like at Qualys would of joined leadership the we shared a Officer. Qualys for Qualys Board time, who the software a leveraging management platform to security our Lead Qualys that the service. build which most model, recently our he his as same as years after serving a similar joined Deeba software market. go-to SME/SMB we to Dixon security. easy-to-use leverage to market position and our are built in Amer expect Independent both the Don and in products, to brand, experience Chief using also cost-efficient

Thanks, Philippe, afternoon. and good

Before like figures to stated are except note I unless otherwise. financial start, that for all I'd revenue, non-GAAP,

represents expanding of financial strong rose applications, and for or solutions reflected same enterprise continue this Qualys from Philippe quarter last for of up XX% XX% growth the year. highlights. percentage over XXXX the to demand were to customers second As operational with in following up set four Agents mentioned, purchased million, XX% quarter, X.X and The XX% The this growing Protection over our saw quarter, enterprise $XX.X deal quarter three months. from more both of Revenues we see We the Threat Cloud QX, rose a XX% last in a the increase with year growth Qualys to ago. continued customers Agent XX year more Average to XX% million percentage good Cloud or bookings. size were of ago. which from solutions year-over-year.

of products balance as approximately June have $XXX.X from June released and balance XXXX up as million XX% current than XX, XX% the of New contributed since of XXXX. bookings greater quarter, of XXXX, XXXX, total our XX, X% revenue a deferred strong QX in we in

XX% the XXXX margin, our second significant the industry-leading Our continues flow same of and million, representing compared $XX.X last scalable a EBITDA to year. cash XX% drive adjusted to model of quarter quarter for for as as reflected in margins

XXX, based EBITDA adjusted the amortization XX%, over XX% margin over to with second QX X,XXX adjusted India. of and quarter still of for purposes, by the million, commissions. employees, in would now the year-over-year ASC increased be specifically comparability for Operating flow XXXX have For we $XX.X cash of of impact XXX them

This in million under XXX,XXX obligations, including million principal million XXCrunch, the and on lease of expenditures, shareholder shares. capital investments quarter, payments capital by enhancing we in $XX.X on $X.X accelerated aggregate our on value and XMobility $X.X repurchase spending

fiscal our our million scalable revenue XXXX year Driven share marketplace repurchase to guidance model, a the of results, raising $XX.X great momentum have in range remaining authorization. We $XXX our are million. our $XXX.X and we million operational to by in

the XXXX to a and we in expenditures $X.XX We XXXX front-loaded. to fiscal second expect be EPS non-GAAP year are to capital half of raising $X.XX, guidance of also range

with continue User grow we and forward margins. In I to questions. revenues that our our we our boast high and expect in of around for quarter, Analyst year, XX delighted And to platform $X.X that, its be We million. we would expenditures For enhancement, conclusion, and hosting share increased can any of you the event range operational XX. our continuous expect happy our adoption with With Philippe and our June, be third are outlook were million you answer top-tier at million. online model, guidance we be your believe Conference, to full end of we to vision, looking the Investor in product map $XX.X and scalable road financial of November capital and the strategy, to $XX and to the at prior the to

the Analyst you. from question our First comes Thank (sic) And line Smith of [Analysis]. Howard first of

Your line is open.

the to something kind in you. prepared are where and thank I Congratulations on Philippe, explain Can it the clarify about XXX users progresses? I just users may activations Yes, of have remarks already. you versus active quarter. want follow-up. kind of you how and And talk X,XXX activations your a active

and join these then some like service to have you of all kind lot So people know, with you new them when market, as who forgot. a people you of bring

course, of so, the that putting And all try enough, is behind to need to to people use they remind activating methodology we are not it.

we takes to today, customers it becoming and those through with So also But them with time. about of X,XXX, have XXX connected heavy upsells. effectively this starting users which some are discuss

are really if this you time. qualified, least at at prefer, So they

at benefits result good becoming not the as really I'm various and, of So if more our it unique used you which for you to these other cloud look the continue activated with ones, platform. the metrics, success. we to And of very enjoying customers reason, have pretty have get sure, that, additional not a connecting as try active of traditional saw –

Okay.

that that both sounds of et Is expectations existing the full both it's meeting other is upselling can And ways to like then well the of... you of as working sell as cetera? it as lead customers kind your it So for the customers kind version, new kind products paid gen.

for coming And that them. platform. that existing And them, because godsend discuss more a with it's we them then, goes course, complementary the goodies these exactly. with is Exactly, they we Absolutely. already deployed our both. There the for upselling of can as fact it have customers, about see, validates It's can services Qualys them. to

I thank you. Well, again. And congratulations Great.

much. very you Thank

Thank you.

Henderson comes Needham. of line Alex question next from of Our the

Your open. line is

Park afternoon. This Thanks is taking my for good for Dan Alex. Hi, question. on

only you into highlighted market. you Day, about the X% Analyst penetration the had during know I So federal

Gov announced With with recently Platform you the successful big how the partnership think and this Carahsoft, could of do opportunity be? launch the expanded

At this point, this opportunity is significant.

only at we're look you roughly, today, X%. If

Your has XX% typical their typically business company federal. of about security in

to very Some because go of But too think XX% today, we're to I you get shooting little on to , then XX%, bit kind a I go which is revenue. depend our customers. think and much of unique up ahead already

Now, time. the question is

bidding We now have also has so capabilities also course, big particular Carahsoft, with are we formidable – established of in government, now which contracts. distribution a

our team. expanding We we'll team, have our expanded continue

We not very, now, unique our of name, customers which of today version could A, fully platform. cloud have these very that really and have who disconnected is one agencies happy very you

another cloud We big very integrator, as is private another have platform well. which

have Difficulty] fully is we [Technical is very FedRAMP be that these going And cloud getting which Amazon.gov for also federal, which are platform is the well. As to hosted other we is High. and which you do our thing to other government cloud providers to in in ready all significant know, FedRAMP-authorized (XX:XX). the also be And we're now now as doing

So that, will give obviously, on to opportunity us bid many contracts.

federal moving is clearly, As cloud to solution.

on not that. are of we're think But I need follow course, course capable sure – doing way their Of of solution specific cloud additional we well to certification. our and

near the High to us So, – is in well for going some be FedRAMP significant future. as

very you Thank Perfect. Okay. much.

you. Thank

Breza of Capital. of question comes Northland Robert next line from Our the

is line Your open.

Can on thanks you see Philippe are the question. spoken, Melissa, and the the taking about us medium capitalizing how Hi, Congratulations talk on maybe people what's term about over you you've the quarter. and you you're my that prepared Thanks. or in portion have maybe that in the to or leverage trending India. you as for there longer it? of base remarks spoken, how margins to maybe

So some remind let maybe more before what that specific Melissa is. in team give India detail, you me

very essentially decided something develop more more it unique we when ourselves ago So, our we so our is platform, and to years solution. many and best-of-breed re-architect integrate could

in made we India. So, investment big a

support, QA, customer and customer support we literally So XXX ops, today And where we cloned India people, essentially have in DevOps, we what Chief put Product structure the product management. we Officer, that's engineering, have and under Sumedh, our do.

pool a have talent. We attracted huge There is talent. significant of

developing have significantly and continuing we developing increasing are supporting in more applications. plans more as fact, In we products can and India our headcounts continue we to so

is but first And course, that that. with talent. have find company was really Melissa today, we formula, every could The priority to of the economics, So we're speak to happy talent. has number today the challenge about one the find attract very

which into which GA. We India two can now see as quite see, And have global a have for Networks since behind Asset companies, is also, you which our Inventory, were the we our today, a is team. that quarantine, second fantastic that IT successfully us, almost done you essentially Nevis technology thing is we does and the integration, the went

but other are now the companies year. part beta looking other have And because these So, like we people, that the are coming XX then, very next of XMobility, where moving we're is soon. GA technology to moving similar now technology are our their would have to we of built, small a to have that do currently, XX, this they the to very at And beta, at in of to millions. thrive. they us because down very where so U.S., one And announcement two into technology that we good expect also go who economics we paying few see early companies, home, in if the the significant stage, it's instead discussion significant them, to premature for can millions are hundreds with and are quite we of any make active feel we

so, on Melissa asking the more And give statistics with were for. colors you a that that, little you can bit

Yeah.

answer term the first longer Rob, it I'm So going thanks. question. then the near in and answer to term

for both a down growth proud comps the revenues industry-leading to second we since of we flat expect year. and And in we invest, revenue second be given We resulting tougher, have profitability first do plan great ahead in from opportunities So, to the first though, of operating half margins continue margins. terms half, are our we're us. our had half margins to of and half do the

market margins longer term, was XXXX to and XX% Over XX% new the growth, we're leverage ability presented what flow And as and an India a revenue cost Analyst low-XX margins Investor perspective from of a Day of XX%. between which expectation cash for only us our XX% mentioned, free go we allows and solutions. our getting EBITDA comp at to to mid-XXs it's and our and with not to perspective, between outlook we accelerate from significant

Congratulations. Great.

you. Thank Great.

Thank you very much.

Thank you.

Franchi from line Melissa Our Morgan of the Stanley. next question of comes

Your open. line is

Okay. on VM just a terms customer? you about wondering you're I'm Philippe, Thanks pricing customer for when adopts about terms the could if in the you core seeing of little a could value my then, maybe what contract see just product. a taking versus traditional Agent just talk question. Cloud of And like talk what in VM bit maybe if you

Melissa bit of So, can we kind a give after calculation but made I specifically. don't this specifically, if know color have more you

the to see as the price. in of more, much competition really try competition the far to course, us to know, don't not really deal. displace price going sometimes, or drop we of They as core a profitable. But our try It's win are the As is VM, you order pressure. to, to

and have that are customers, and And the more more sticky. are you our seen told, significantly three fact have the four as so that we in adopting that Melissa and which now, solution, more us makes it more for – numbers we

many also also free we we In it's are ago from make very we – successful. standpoint, aggressive services We are, against not them very us protected. sticky, were they of these a course, are few price addition, years think I that and quite being saw and delivering, a RapidX

significant that to cost maintain don't solutions And other effective our very have. price all So, we Qualys, I we because fundamentally. have think eliminate that easy costs. can overhead deploy we believe are we It's

think And our very, regarding very I we feel pricing. so, solid

Yeah.

to it. Melissa, points, help add think I'll few you data So a about

VM. the way the our VM, expand we pay expanding would with customers were as solution. we've let's start say, for discussed will Agent for they with time. paying, Agent, they're a in you if buy, and the $X.XX often – over Cloud $X Remember, So They into small new general, Cloud

talked customers being, to anecdotally, where they have have in see this we customers our deployed Management, Vulnerability we're fully last talked about endpoint. So we've about to starting not and exception as the Cloud Agent deployed play the quarter, wanted

Cloud need deployment that to that, they will For go a Cloud and they case. Agent the large VM so, Agent, straight in

endpoints their I could Compliance. company at And already last thing – call that Yeah. very IOCs. now do that that VM agent I Policy one more for That is company deployed the earning and one large have we to subject. in XXX,XXX looking on add mentioned endpoints the essentially who seriously

So, that's another.

multiple remember, course, Compliance enables I'm in additional you deploying Policy let And know to fact, have company first another another starting our at agent Of again. happy IOC And now stream now solutions. really evaluate of XXX,XXX agents about similar, looking VM and services. again our that to we and

cloud. we And agent see There's have see that maybe architecture all integration sustainable, for solid, endpoint, it's so, agent of providers, – no a Microsoft to the progression gain. of the Google course, and well. with The fantastic cloud. the now now our we but and slow the right and just the goes question with it It's a done we pretty that and our cloud are our as going into with about

color. thank Well, for you Great. the

you. Thank

Sure.

you. Thank

Erik the Our of Suppiger next question comes of JMP. from line

Your line is open.

contribution give Melissa, out pick then, a activated the that of first. a at from the did you new little got revenue. new two you XX% a I'll for next And taking or year? level about think start number Secondly, those the bit. question. services in I had to quarter? for were take of but that I could agents It's look the One, been services few the Do that are here. your expectations I up what you think for Thanks cloud you follow-up as said have the Yeah. over

Yeah. Thanks, Erik.

are So in well. solutions newer reality, doing our very

is that group to small which the in as on In over previously and with fact, for And profitable penetration start customers to XXX% over and way time, expand a that the you our grew Melissa, bookings metrics. mentioned about see our for tend it the is, growth source year-over-year. is that discussion of us, think I

our Philippe of solutions last to Cloud such that customer our with the So, this even adoption this from quarter multi-product or more quarter as last XX% and three from quarter, went going Agent quarter. customers. XX% XX%, XX% us base penetration mentioned, this to more And covered, as enterprise in sticky makes I metrics customers with

Okay.

sounds... it So,

Also...

sounds like move start as to that improve. penetration look as we will Is up rates forward those continue that... It to

fact even Yes, that of course, an XX% that me another increasing increasing make on the base. a our XX%, point, let Erik, it is base you But the will. see though is so it's that

in see a there, should you then of a up, So of and like will nice to shelfware. we more, acceleration. deal do realize you up other, have many kind of end going have customers are you as course, Again, customers you pick which push the already – start very into, course, everything end up to Qualys, in deploy to some don't into our

immense for and pay to them majority the over you and our all smaller them. what the customers start but not tendency of You then time, have use of deploy

get very to it's we're and then – additional the of cost know, additional because easier more very existing much because they set it try than cost to effective course, to happy service and customers. customers much you as to, services So it's and effective becomes all like

a ourselves so to our was it come – customers naturally, high we shelf. incent by we And describing, first rates don't companies, a we just unlike as other as shoving products, renewal have let in of natural so that course, Philippe result,

effective. on of can Evident.io did more a support and where easier on quite is us is this significantly platform, that we instant cost side, of – once and buy. India. then, try the to self-updating and the on managed distribution And that essentially centrally and platform that efficiently side the course, customer And search solution support and allows profitability everything where to is then Absolutely. that Yeah. services the very And is what the it's develop and they has, six can one you the are which engineers core with all in hand, then, to mention

very that's a very essentially. model have nobody built very, So have we that And believe we've we over efficient can why consciously. this margin time, that that it's

Okay.

sold And so, have that X.X on the XX over last we we million the Cloud Agent – months. question, we provided

So From that's on to base that a perspective, solutions rely Cloud we number technology base about. from can think a of that's the subscription our which the upsell other Agent. a

based in it Okay. at In there calculations, up off? a And OpEx our quarter your there reason anything your down why Is looks something like the on margin guidance, then, would And goes would comes OpEx notably. bit. that change quarter, is levels that? little that is those bump any fourth December remain that after would or

Yeah.

more Workday implementation in doing an we're So we half a second It's as this be the we're I continue It's G&A, invest we year, half senior-level systems first down operating from and said as expect in earlier, on We're areas. in of business. number as marketing do to sales margins planning hires to as as well adding. such putting in of tool. FP&A the

and is our also amount in which QX in marketing. Conference, We sales User spend. have significant also That's

bit seasonality sales R&D to in a products is for beta but also and example, GA. into and and spend hires in continued there some beta get it's So into of marketing, from of the

Thank good. you very Very much.

welcome. You're

of our from comes Thank the of Rob question Capital Markets. Owens KeyBanc you. next line And

Your line is open.

afternoon, good and guys. Thanks

afternoon. Good

even first revenue. quarterly the at look half about at it's talked look if growing you revenue, slower billings, and this the your rate model your we billings, As longer in billings whether at or I of than kind a year, of the term total acceleration

come in XXX recognized there? the MSSP something, Because that's realized down QX something of is I'm sure or you So help achieve ASC there? that more then, in what's growth rate would Thanks. period, Melissa, or from that And through does that acceleration that billings. number two, questions. to or couple that like get there higher held

Yeah.

there's just So to XXX, top amortization of on ASC It's the commissions. actually our really no impact line.

the question, delighted think I we billings current exceeded our that billings look, were consensus. to regards with

basis, it's the $XX.X this for billings quarter. was a FX. growth as the because as But said, is proxy current on annualized impacted deferred bookings not by duration revenue Our we've factors invoicing, of quarterly a timing growth that consistently and of million billings the current such

believe guidance momentum So that annual guidance. that we our best because trajectory of bookings for certainly we've inform proxy business consistently revenue said the that is current

Yeah.

total we annual everything not In of three-year of payment. us. some those, our not representing deal addition, these a the We course, business front. with got with we It's all we three-year incentivize. up quite sales absolutely our And, encourage at or and more But the them do don't deals. paid but three-year we these of are deals not to do to coming forces billings deal because do we do bring customers few commission

irregular. very to so go is the this at So we of cash, the have Why discounts when much would we and try give day. additional end

to our add on why the that's maybe, you And business. good that's something Melissa, the revenues of a total decision. that? not not want So deferred business all of billings are really And at representative

things. Yeah. two Well,

Philippe we includes deals come since deals. no was revenue discount prepaid bookings total which which total compare annualized revenue a on on metric, to the since prepaid as it's your an that. to portion, ability companies have distorts multi-year or deferred often to based recurring do your saying, based cash, So billings And non-current based need at is on annualized

at attract with question, think growth. regards more more other Analyst revenue solutions solutions platform have I ability easily to out, the as, additional do can our mid-XXs we with. also many new our to we the Rob, XXXX to part to existing low to Day to our to do them continue as Investor for our sell given we to ability and is our bring your The different increase come but to again, on customers, which of customers into outlook we have of we have see based expect our

gross Great. And a then, at this renewal line Thanks. renewal with with the those I net that a high both of What mentioned of products, And have rates new addition are how renewal these rates. point, and seeing from basis? rates? all are trend you what net guess, you you

Yeah.

what over that's expansion Investors our at it's provided been we nicely focus dollar – increasing net and updated we we event year. So our rates, the Analyst on, and which

XXX% So period, before. quarter last it's in the over the the LTM about XXX% year

prefer, you segmentation, the Yeah. that markets, may than that well point And And with we the also, and SMB. and rates Express another in certainly very where as SMB, the done sense we we we And, the Qualys have in Enterprise, a have a associated enterprise. are obviously, Express segmented on we product have that Lite. the today want the is Qualys the not these in have course, enterprise, business you high, SME/SMB, the especially SME Qualys of if renewal have

we these to that going opportunity. when and you really means to the up our growth number, all At this do that. see the have and to go-to-market essentially we these you because think unique gearing some business new as So this at try mix now free in now well stage. SME/SMB look number aggregate But than focus services, I not really is an on point we at our disclose see is time, that healthier we on essentially enterprise are services the we're even could which there accelerate

good. Thanks Sounds for your answers.

Sure.

Thank you.

line Auty the from comes of question JPMorgan. Sterling next of Our

Your line open. is

guys. Thanks. Yeah. Hi,

Hi.

necessary side spend going be have we especially you DoD incremental that the government? initiatives think that's cetera, when there through to to is the infrastructure support, fed the partners, about On et of going

be essentially, Not that FedRAMP subscription, really. Not example, High, typically it's we effort. on the se to have – course, is that cetera. do of what would a for And you big per need et

automatically you everything. platform for we course, initial we charge provide, perspective, example, of a we But platform, in remotely where overall charge when look disconnected platform Qualys have when than you more a – manage for that for So, cost.

also, not we So significant. leverage answer well. is your to the all And of as a in integrators question lot all,

So that Everything We services. professional don't services. do do as have subscription-based, professional you XXX%. don't we know, we is

don't this course, we So, cost, have of additional to carry.

Got the I it. Got quarter? prepared topline the in and missed what the And said then, it. in it but remarks, if FX expenses on on it impact the Melissa, you was

Yeah.

was hundred our of It a impacted revenues by dollars than XXX to couple a growth points online. our EPS, it impact rate. was basis So it of thousand positive about less $X.XX to – about

you. it. Got Thank

of Anne line Susquehanna the from Meisner comes Financial. question of next our And you. Thank

Your open. Anne, line is open. line your is

may You mute. on be

hear you Can now? me Sorry.

Yes.

we can, Anne. Yeah, Yeah.

question. the great. Hi. taking for Oh, Thanks

So, hoping the patch I Philippe. the for solution, believe, targeted the for is on was question second which, is to an half. get update management I

go-to-market going set team As the looking there a you and they're to the push with the patches used that's be that a by the would the you're on respect capability, for product Vulnerability are out of think to organization IT how themselves do you that Are focuses targeting? targeting kind you broader to prepared security you organization? at basically launch or buyer of same that be that Management, strategy allowed to

distinguish I think So, to here SMB enterprise. the need we versus the

the So, of what we effectively with believe year. management, this go is going which at the market end to to patch

may scanning, cetera. remember, As on the you passive et it we delayed priority we put because

– small, we So, for resources. realigning so we seen for a bit great in We we're a everything integrated, see always because no-brainer SME/SMB that as their engineering a our management always of have interest the are market. a the networks patch have seen kind becomes them,

the as On enterprise that they solutions. own little more problem patching. is complicated a patch The today have it's the all their management immediacy because bit enterprise, of

there immediacy. the today Microsoft. looking the infrastructure, but replacement existing tedious. have a today at to and we're solution their of So, solution patch current at are And pretty, for environments, you our this and multiple look, you for Unix patching pretty enterprise at vulnerabilities WannaCry, on across example, necessarily Because being certainly if not as

the no-brainer on immediacy case and of through integrated, a in to as And a we patch not use push when is are the the got think immediate we you And don't you're It's services. with course, integrate that's also many So, we them. But cost, would we course, of all that have some to see the patch button the that going essentially for that to through quickly. that done. of and because enterprise enter well. SME/SMB take systems either the significant you you've

much. Okay. Perfect. That's helpful. Thank you very

Thank you.

Stifel. question line from of Gur Talpaz next comes Our the of

open. is line Your

to follow-up Inventory? for Passive taking And I think maybe here one Discovery is and question, you that think launch to Passive important that maybe full this the an do you Network IT year, Thanks. on ultimately further, product Discovery give step update Philippe, Asset how Great. a us plan Network

absolutely is strategic. This

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answer passive your things. to does question few fundamentally, So scanning the is specifically, a that more

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end scaled I end back that events a have So we back day, Kafka on now, to X our mean, billion significant.

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in devices, as manufacturer are all We of we speak, a large company the car Europe. fingerprinting

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one Melissa, you. ask helpful really color. I That's you question And Yeah. here? can Thank

Yeah.

look sort there's year? past quarters If here, seen here the towards clear makeup billings you the trending in a the kind trend relative towards durations the terms over makeup, shortened mix at of current we of Have deferred few one makeup. of

Yeah.

would So, a of I say things. couple

we deals. earlier, intend all, don't first prepaid of because First go ourselves to we multi-year as after discussed

our You declining. non-current seen have

again, from revenue. current deferred So how And result, we – you're business. a our it a as the perspective, you're really in seeing that's growth manage seeing

their broken So, longer going I really know suspect they're like non-current. at metrics, all that's of based portions their on sound record, metric an you're annualized look be I'm is our many current you non-current multi-year and think, if I total. And because to true deals but and for annualized companies, deferred to revenue, need for have we to companies not to term going they're going compare a us, going do to

color Yeah. And here. let you another give me

who example, cash prepaid. For a do have three-year a to when has we customer and wants

to that. come have and like us to for they we'd a So discount say they

So we we say, can so, really? say And no.

give And is three-year, more cash, me we case, typical of payment. front, you get some then people that but which up which to for say or okay of good all the don't the still annual the It's course. don't back they enough, go in scenario, is

good so, discount. for for I And have price them. to years, is three And have the which they protection don't for us,

incentivize. and without we of have, have large we companies we to to today, by saying, why that the we the don't all see apps reason the way, that's because your starting all of are acquire We to want So see, solution will counting. some

So careful. again, we're very

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invoice. are this we we sending from prepaid, avoid lot that for so aggregate could with some more some monthly us invoices then, So got And demands now which do comes MSSP billings, there, they them to payments kind our a to because we've tendency is then partners. of more to more manage. quarterly that of instead of have have the also having That

year-over-year the duration will have your And just that a deeper, the thing is revenue. to your impact impact growth other – an Yeah. deferred go little there is on bit Gur, of an current

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proxy, quarterly on but... a a not great really it's basis So

yeah. – one Just

use to current is going than something just are, you total. better ...if

sales for ACV. force, just do of how you that kind incent on things? you doing And your Is

Right.

Yeah.

exactly That's right.

Yeah.

new but upsell. different, well essentially business. And course, of the have, XXX% as So or ACV. new we essentially, farmers our the the is incentivizing sales renewal incentivized team renewal the the which as on business it's are teams And sold forces both

same year, the Perhaps, contract not And and deferred, the total versus I get right, front. I Over one from to you're think they've your three contracts, going just to it represent mean, year a we're gotten that's $X, in – each for their company three-year three-year has years, you to want amount. value dollars up that a a it sells it's perspective, collected going few us. going to

Yeah.

how which also we model. that interesting thing are is is (XX:XX) strict tell our you Another with

some companies have CapEx. want We who absolutely

So, of that's course, they need. want they CapEx what because

essentially a is do we we create sort a solution. what of So CapEx

deliver we as we take only the service. the However, revenues

we deliver So we to XXX% and subscription-based license. perpetual of the don't CapEx of is any the we sort mix revenue as Everything kind we that do take service.

the appreciate for Thanks That's That's all. there. helpful. very I it. color deep

Gur. Thanks, Okay.

our of Thank question line you. Needham. comes And last Alex from the Henderson of

Your line is open.

I've the doing – value the it's versus at in – dollar time been the since this the you rupee the was see much. XX down for year. I beginning of the the first looking and I of X.X% years the Thank very

in improvement But And, Assuming be more to given will approach or roll you terms it margins? two, level at you exchange versus benefit? the currency. it what hedging How one, additional currency, to doing resources you the that if you do the Will to take from in XX% the that? rate it? some flat there, don't almost that rates are see that against rising expect obviously here of want R&D would end, year forecast a half, you stay be and although benefit something we use Indian back are how through we investment through probably in through

Yeah.

we head our expand and the to plan a very mean, I big machine. big today, time, So we have count have

all the it So goes think I benefits, right back.

you today, the between if of engineering you at look factor If ways in the a that XX. of differential the you one engineering, look have is

very now been between muscle Qualys. some a significantly obviously, give really so, can which relationship us that that subsidiary here. with house And more mastered people hire come and out They we Indian our We unique and have people, Qualys. we've and there,

really to want a So fact, Rima. they to show huge It's best a Human the Officer; our universities. HR, time absolutely is which Product to And Sumedh, square place how is universities, the Chief some both absolutely of the of the talent, a incredible. And – speaking pool credit have because by I Resources, myself, turned absolutely And of technical Pune footage. done India we and because very to not India. source them in much out them. huge way, go we Sumedh, time value to of to There in one this really is be a of be spent strong year both Pune, Rima, talent given minimum has our in Head they have our quite a I

our We India. campus that are our buildings, now now expanding sit we in further

is It's a square a versus in Valley. So difference $X.X difference, the huge huge here the $XX difference. foot Silicon

happening for the business obviously, business. what it's inside the rate, Yeah. what's And said, just to the there, with add business; not onto of the because actually finances for Philippe it's exchange plans expansion

I No, godsend. mean, good it's a it's...

Right.

question you was margins? the So to it you through would reinvest push will what it extent prefer to or

invest, I have big huge we opportunity. yeah, far, so Alex, is time. so mean, there

integrate that's another solutions. XX point some totally in to with going that in people XX, companies are at We acquire few time, our we comes and

a in outsourcers now very lot us. India do and as is partners. are customers Qualys location at Qualys the looking other also for there well. good all even We're job Indian to becoming Remember, are India. We of big a starting market

So, very a in having strong important. is presence India

a also see of their lot IT have now. companies India large You in

we're So, well-positioned. extremely

spend still Yeah. cost not we add the The are of just it's remember, on there total Alex, expenses. The one is of our thing portion It's (XX:XX). I'd (XX:XX) differential. meaningful a dollars

Great. Thank you.

Yeah.

Fischer time, for And over you. conference Melissa turn this I'd Thank no remarks. back any closing questions. the are further Ms. there to to like at

KeyBanc We in Citi's for Global seeing Technology September. Vail Conference of Amanda, call. the and all Thank thank in at second Leadership few earnings weeks Technology New you at you, our XXXX Forum a many quarter XXXX and attending you look in York to in forward

Thank Okay. you.

gentlemen, Ladies today's thank you conference. does for This program. in your participation and the conclude

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