Qualys (QLYS) 31 Jul 192019 Q2 Earnings call transcript

Good day, everyone, and welcome to the Qualys Second Quarter 2019 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 Vinayak Rao, Vice President, Corporate Development and Investor Relations. sir. ahead, go Please

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

me results and and CFO. our to Melissa Philippe our Joining discuss Chairman are today Courtot, our Fisher, CEO,

that would that from statements relate these differ operating to our to I performance. include or generally started, events statements. financial get today will we remind Before materially you future our future Actual remarks forward-looking may like or results

our press filings to differ or the materially set as release Factors and latest could undertake today's result in that future we our XX-K. cause new results including call make that and statements on as a of assumptions no and Any with of on statements forth SEC, we are to XX-Q obligation this information these in Form based today events. are forward-looking update

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

remarks, available a and are a As release, spreadsheet investor supplemental quarter, investors. historical our for also Starting on presentation we providing financial reminder, this accompanying an and website. analysts the press prepared are

With I’d like to the to over that, call Philippe. turn

call. and report revenue Vinnie you growth QX I Melissa terms earnings everyone to to are profitability. pleased Thank another and in our quarter solid welcome of and

strong also be precise. to million in are with to our million report very XX.X now, almost acceleration We pleased Cloud XX Agent subscriptions,

Management security, of Patch and Compliance, Certificate As and Cloud File we underpinning Compromise, and Indication is solutions seven Monitoring, of come. Inventory, to Management, the compliance have today; discussed our Management, Integrity before, IT more the Asset Vulnerability upcoming Policy Agent

four application agent has recognized continuation been our to we one were XXXX, one In and patents innovation companies the first and issued application. pending file cloud a patent of by

cumulatively host-less scope. four full which claims over perform and patents of agents, or agents agents, cover varying including security issued compliance endpoints include hosted assessments XXX and low-footprint The of

a visibility we effect, lost that so community growth and App Monday can IoT, cloud. IT, the we fragmented our service, to IT the we will rapid all as Cloud of that Agents Global we As offer to to Inventory to free and our due the make is goal and of discussed, move our announced nature to previously regain ubiquitous on Discovery Asset the

will have major industry next at and over this outstanding showcasing We be announcement, week the Hat existing our revolutionary we feedback and Black sign-ups with campaign. offering XXX combined Since awareness a from received customers luminaries.

as and fact, is challenges, the of cornerstone asset security not global cannot see. effectively know not secure you what the inventory of one you biggest for biggest, if do IT simply organization In the not or do

Discovery our instant offering service, can capabilities, Asset provides of free provide passive automatically global our visibility offering across IT device any sizes integrated cloud, this of an the that of endpoint, free build visibility namely, is asset container companies unprecedented all scanning known assets. continuous Including and inventory the to both unknown environments. in With Such connects and their that mobile network. and now, on-premise,

inventory, we asset it no to download because paid Agent our make required. Apps is IT for infrastructure implementing to organizations Cloud frictionless As global our subscribe additional

paid In our will to life utilizing as customers with Inventory I have cycle CMDB addition paid features Asset full to the previously software and the to free subscribe solutions, opportunity synchronization additional mentioned, their such inventory.

not breadth adoption the Furthermore, this shareholders. our solution cloud by of driving meaningful of offer same competition, and our platform our we our stickiness demand our of apps, model, of impenetrable from multi-product customers key solutions. our naturally to helps make both for do and free our increases us paid who the By platform value profitable which element a is leverage distributing growth, this generate

integrity monitoring we created quarter a this In reporting, as correlation saw our have File well added we API as those with integration, light solutions, now in for alerting requirements. event adoption newer solution, capabilities, rule-based terms growth and as continued version our for requiring of PCI only incident customer compliance

travel competing effortlessly a leverage FIM In single-pane deployed point and selected solution large order QX, have Cloud had over can to for vulnerabilities, configuration a Management in agency and online solution the they of they integrity. our Agents file Vulnerability now view Policy for Compliance, example, already Qualys a and

target recently, have a exposures, deploy vulnerabilities and we Patch remediation, console. enables release all across teams pipeline from to and also cloud We and on-premises endpoints, which which patches then in verify the one quickly Management, SecOps critical IT or assets healthy common

to solutions X.X IOC detection continued availability, including: the IOC quantum known suspicious which in with leap capabilities new progress global release but made and also on investigation only other in a App into general our quarter response devices. detection, not this identify that real-time IOCs, nearly We good of provides

agents detection commercial attack the missed enhanced platform. anti-virus includes: which file reputation detection the by using into directly threat additional X.X integrating often IOC feeds by threat of attacks feeds, extend

to response engine network. Second, behavior-based attributes behaving and scoring on in malware process including prioritize network which factors based response the state, additional how in prioritize connections analysis, the remediation, file is behavior to attack

platforms, QQL response operational and IT security analysts for two-second And a that visibility. of real-time orchestration really finally, with they third-party brings X.X systems, Indication systems and IOC new microservices for platform with to of at really IT automated Compromise. the integration allowing and easily intelligence rapid alerting our information to response threat actions threat and using Third, same platforms, incident Query automate search platforms. solution already SIEM, Ticketing identify to the This security top sharing rules handling/response configure API Language, use

expanding platform, three location locations operations, marks addition – the Cloud milestone global another for our now Qualys launch of of Canadian And includes Qualys' the this continents. the eight which finally new launch on

security our extensibility evolution. is to We the made our the capabilities in market few and architecture in cloud-based the companies continue well-positioned to one of of priority, platform. the believe because invest that and we Qualys of

this the small Automation and new of As to MSSP to monitoring quarter, mid-sized we highlighted see address hybrid integrate with needs Systems into selected quarter customers Coalfire management and we That’s Secure why Services. their Cloud capabilities a last emerging environments. security vulnerability continuous generation Qualys’ of

We campaigns. week our and invite next to Black to see you new Hat technologies

hold well will X.X product around luncheon our our IOC future analysts, data as as will technology investors a solution. the and which for showcase We lake

environments, with As bring we We have and solutions costly, quite correlate say, OT complex contextual discussed, and believe into require collect now large a on-premises, are data environments. because and and to and multiple we I mobile their points unique data this of cloud, across mobile, current have from OT sets and market, incident information. IoT should because organizations response and of advantage vendors they SIEMs already in and normalize IoT collect, trillions enrich, full we it disparate soon

pleased held extensive leveraging at and to of to at Eschelbeck, Webroot his Google, Cloud also are Advisory previously Privacy a as continue welcome we Sophos, cybersecurity the to Platform. renowned and unique Qualys. our Security leader, board. Gerhard experience forward Engineering We CTO Gerhard Vice President Qualys background former and and is grow positions to look We the

enabling importantly, including Cloud adoption our for are revenue new for Accelerating significant delighted their drastically free environments to accuracy, having not customers enables and prescription their security. data to conclusion, ultimately In greater uniform inventory. us view across for the and community overall customers global unlocks breadth visibility, of solutions opportunity solves a IT Agent to a more while our us scalability customers asset spend. offer of for our offer a problems clean painful we reduce The of

discuss financial With Melissa to results. that, to I’ll turn our the call over

afternoon. Philippe, good Thanks, and

on note to except like are that, based financial I'd start, otherwise. and year I unless non-GAAP stated Before prior revenue, for to period, figures comparisons the are growth rates all

revenues, We’re progress our also multi-product Evidence industry-leading for foundation adoption strong reflected enterprise lays gross for our the in as customers well our products dollar with $XXX,XXX as continued over number XX%. Cloud revenue delighted Agent growth of five in the our which with with and of retention is and growth which adoption, customers for the profitability. rate, future accelerated in

XX% of XX% and with customers to as more enterprise XXXX for $XX.X or highlights the rose revenues from solutions percentage and increased more or million; customers XX%; QX quarter Qualys with platform of XX%. four three the include; XX% operational of second accelerated from Our percentage the to solutions financial adoption grew Qualys to enterprise

which is XXXX. up This Agent Cloud over last months, of million the out customers. Agents XX XX.X million Cloud million were Platform the to X.X XX.X in accelerated from XX subscriptions QX Cloud single ended for by purchased months

deal products New total and customer the number since influenced orders. XX% by X%, bookings the of increased quarter, released size from total XXXX in higher in up average growth our of contributed XX%; approximately

grew $XX million, Adjusted Our XX% cash continues EBITDA QX scalable XX% platform significant generated the we margin XX% XXXX, superior for of $XX.X first XXXX representing generates to the of for half first margins over XXXX and versus free XXXX. of XX%. million, half drive EPS quarter flow. for the growth cash second a strong of million, and and quarter $XX.X model second of was the flow representing year-to-date of

shares. back and cash our payments continued under $X.X million principal repurchase from Qualys, generated operations In expenditures, outstanding into QX, we obligations, capital invest of to including lease including the to on XXX,XXX we $XX.X capital million

repurchase We our in remaining have share million authorization. $XX approximately

recurring remain We our model of driven our revenues applications. confident expanding and foundation of in by suite

guidance. fiscal We are of our maintaining the year revenue XXXX midpoint

million to year now of guidance revenue $XXX Our current is fiscal XXXX range million. a $XXX.X

a guidance from of a XXXX of year to range to $X.XX. fiscal raising to $X.XX are EPS range We $X.XX non-GAAP $X.XX

We XX.X%. XXXX fiscal of in year are to raising EBITDA margin the to be range XX% also our expectation

to of to we And third for expect quarter, the million. range in $X $X the capital million be expenditures

subscription, very four issuance are Agents technology We with patents. demonstrated about our innovative excited the of Cloud our acceleration the by of

adoption Looking launch opportunity asset app. to free discovery forward, the we Cloud inventory and Agent additional the accelerate of see with

many well make the to of growth future. accelerate expand paid to Agents revenue opportunity as which Our it Cloud the enable as subscriptions us frictionless margins provide our in

forward you to mentioned, of launch many products. seeing Black upcoming and look our campaigns Philippe product in As we for showcasing Hat at

to Philippe that, be With any happy I of your and answer would questions.

Instructions] comes Analysis. Smith [Operator the question first First Howard of line from from Our

Your question please.

results. questions Congratulations strategy. thank of Kind the go on two related Yes, on market to you. solid

the showed really to customers First of them of kind kind all, your at historically, let one you've adopt time. and products a of

and increasingly X now use adoptions. product? such terms organization, Qualys a where an Where that you to and being that you up some the product where it, try can as kind and to going do been plus in going dictating of You've C-level and bottoms almost you're you're C-level you all that sweet getting it selling on of are still are you by have

-- Yes, yes, good essentially so yes, question. very so

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-- should the second of course our that's of leg, so second And campaign. say, foot or I the

all it's starting. So

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come all your They at fingertips.

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So be. extremely to a that that's we're want think -- happy. finally arriving I long we road, to where very to was that And it but

Appreciate Thank Great. the color. you.

Thank you.

comes the next Ives from Our of question from line Dan Wedbush.

question, please. Your

qualitatively? Yeah, trajectory rest What have do of you terms or there in in thanks. of factored about the products in just terms type there talk the Can year? going of the new you into qualitatively traction of even guys

added in good we believe And is additional brought as I that mentioned with that a we significant our at detection we also we of really think Indication get very the of the Integrity already File have release, have now level. Compromise, to starting new traction. functionalities press So Monitoring,

we looking is So Patch of doing And really course, that. are our well. toward Management really

We have don't to have pent-up have a you is which deploy we and immediacy, really another out the on Because demand again, is everything what Patch console, of Management. same the offer. the you application big

would very more on course, coming-of-age. of services. we're working solutions. with happy I So these new they say are we're And

forward Indication of are also looking the very on We Compromise.

And also are see single really again, moving EDR the market a we in of things out of big have. lot new the endpoint coming you're going differentiation We to that platform. XXXX one into and that's

on add to that. just And

said, feel excited I our mentioned, really as was both to providing new features discovery for that well good Philippe resistance actually quarter, the asset Agent. and potentially as And eliminating a additional the SIEM of we're from as adoption download accelerate and the the inventory were an and Cloud opportunity we IOC of bookings with XX% app as because free Cloud them as percent products very added the this to IT about. release the So incentive about to we're Agent

additional frictionless it's subscribe to then paid And apps. for to users

the percent So we are see most But solutions a don't from still new we contribution And bookings Agent, not great as date, materially Policy VM, contributing Threat are of don't new material to Compliance historically said, assume Cloud that into opportunity. we products yet. a -- of revenues assume and a Protection. as

you then component of direct essentially now big will our be the will and discovery is offering. I quarantine beta upsell. competition our scanning, to there, is significant a And which upsell, passage Yes. add, ForeScout capabilities will in which the is of September the GA component if have we And or be prefer a from X, which on with the free

now what I'm have real industry we So hour the fantastic. to is in by value saying, something every receiving created of significant a have I done giving believe the market. market, messages disruption oh, from experts you

think are I so And happy. very we very,

Thank you.

Thank you.

Instinet. Eberle Our line Chris Nomura next of the from question comes from

please. question, Your

taking the for guys. questions. Yes. Thanks Hey,

increased net quarter, last of relative so Did like quarter of perspective pretty or just greater couple kind a up downloading part further of drove the lag you and see Cloud application? adoption? And Agent the that, the downloaded, to of just that once adoption then between the what's add anything to quarter. Cloud that X guys change this This seems million the start Agents big time the from move you quarter of a agent second a

Sure.

for without seen subscriptions this very million – actually acceleration. quarter. with you So would X.X Out our customer. acceleration, as the I the about we're Platform adds, in But saw Cloud We of have that, comments. excited my with a how highlighted Cloud even Agent were adoption

see So what hold in this, offer, taking the we marketplace. we really

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effort very big So we packaging. a put the on

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you So can been we as millisecond When now that, the know because scale. ElasticSearch query, later, XXX that. clusters. indexed anything if answers that's we data We've capture. to a is all what gearing Qualys That's see, We on that trillion XXX been got data we want indexed scenes. And to for device, behind a platform about our the all have about. you've everything, you look essentially in have our you X.X points milliseconds

of again, adoption and, frictionless So deployment as I there.. about we're that, and all think of a this scale, result getting ease

is as the talked in is leverage channel key something Philippe profitable a element remarks, platform reiterate to is we've about, said key our of to his distribution a just growth. which a ability theme And prepared which our

a free app that. the Discovery example of release of as and And so you Asset see perfect the Inventory

Agent customer think on it of last And you XX%, you us can said today? Cloud was that's the using the I update at percent base Got it. just quarter?

really talked only opportunity. sense deployment a still of as in of on we've quarter. Yeah, still it's in early again, about as in this meaningful the XX% It's endpoint. past, the And the

those cost Asset accelerate meaningful So within a that opportunity within at Discovery – there's And that potentially for XX% free I our of Inventory think customer – App that. still will base, the expansion. and

Great. Got it. Thanks.

Thank you.

of question Ruykhaver from the Baird. next line from comes Our Jonathan

please. question, Your

mentioned help endpoint, obstacles wondering you of maybe I'm understand afternoon. some the of us Yes. in terms if Melissa, you so could there. adoption Good just and

can But part for a challenges runway, there's I that. correct think You I on much what you've think endpoint so? of seems or runway? how you're what the XX like It more me application added months but are seeing, importantly, to just adoption?

think, are challenges are be behind I I believe, to starting the us.

As I these at that mentioned agents average. reduced agents, that two in now to we fact the earlier, nine enough if like was the see enterprises companies that, look and have Qualys beginning, interesting today agent. there the you an as the agent which CrowdStrike only were it Today, is some

those of examples few because a our quite replaced agent a have We few already. agents already

are -- IOC. of we as moving the you the next part of so early the with we year course, with enhancement and And into made as will during IOC, to the space, see also well, you CrowdStrike

I this barrier think fall So are now to down. starting

now in having we essentially requirement ability very tablets The which invest devices, customers, fact big part is also the especially Inventory, we mobile QX, and so phones. that, are going older Asset that their for agent to on at have to mobile, look an of another

both today, past, because that and people, our which them. furthermore, resistance, And and the three have Inventory Asset is the that IT the the of think they huge IT I now visibility, that now security serves compliance in the So was diminishing. Global

at differently. look they course, Of things

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the think I that really of Inventory, that Global think capabilities, happen. confident are to is are we scanning I that what So going the Asset including passive Cloud deployment, course, make we Agent IT very of as see global believe -- with will acceleration that we free

and there's I Inventory around guess a it market, that question, easy understand, monetization Philippe. visibility. been my clear The need second trying like very just Global the to service And Asset has leads was of strong, always an in type and Discovery it opportunity. to I'm the that seemed feedback

strategy? you're paid the to that it that giving we are now So look the initially demonstrating products that what as should success specific of kind free, of free

very that's so Yes, good question. a

a of has solved. that one -- which lot this on strategy because know in we really goodwill problem absolutely by industry that's giving was a provide that fact, been never the core our hand, really really -- a In is free have for our well of we we

services, File et Indication if you look thing, as Cloud second Management, Integrity our now X model look business named the detection them: today, earlier, today, from Vulnerability if But enables different of Agent currently mentioned Policy standpoint, a I cetera. Compromise, I Monitoring, you Compliance, and of

if to look so numbers like the today cost large at So -- you give a big going and at deployment. scale you I'm are we if

really the So about the -- Global these agent be return, again for cetera, will In will storing, to of cetera, about charge services $X.XX. of cost free for of give Inventory et updates, IT et value be Asset the aggregate $XX. us and net for that is

effectively across four a your at most. XX the I have in, would you say, years three XXx return investment to times, on So

end automatically the tells and you nothing provide at many is do. It's that a solution many that devices value the with to creating the instantly of what's have, have day, we you the potential that Global because have, how which database. Asset with that's, you IT so database categorize, you ourselves you our what And you, devices very unique many of Windows have here, deploys for Mac type how solution, our have, how Inventory customers,

and to reply ability job all the instances, of cetera. have your You et also find

is your that of fingertip. at All

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to just add to And on that.

call I in you older it products a that as and an both well and that. then, see is as what would that -- again, discovery companies to manifest I new. the Older because, endpoints would that also three you to the VMware say, being inventory think starting the new from see itself Policy of many revenue view, where financial resistance and adoption it of may could growth. accelerate again, haven't apps in on adopted. propel are is done And the this say way that putting because yet the do asset eliminates But point Compliance solutions reason agent I'll endpoints

have of we revenue vectors So multiple growth.

That’s you helpful. insight. Thank the you. very Thank for much

Thank you.

Company. comes Cowen and Our from Nick line the of question Yako next from

please. question Your

guys. Thanks

can the around remarks. You you campaign mentioned the in prepared the to app? awareness overall are there drive major more free of inventory asset awareness But a just any share details strategy

be I Yeah, yes. Oh, could specific.

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those or which suspect days. which compromised that we Those zero are compromised. are those vulnerable can identify to You

brings consolidate we're them, doing essentially that, transformation, with what your can save must the secure companies which as Google, significant you with of on you quarantine then, now, large Microsoft, you top amount is your to course, and of digital dollars. You what And Oracle. enables of architecture -- can with stack, do our

of everybody. with and all doing platform, are now well and We have we they’re building know, we’re our into you secure their customers. As Microsoft extremely own the them that their we with that help customers, environment security done for which

platform, We So a growth is essentially on the going company. demonstrating the highly the growth very building went didn’t on building But months today, that, XX not to and This years -- to that. the the come. we we we’re when week. profitable is that public, years, in again, That's, growth. sustainable that and companies put of focus what of And now you’re we different the said. effort. think I throughout really pieces and focus together, see And a happen we’re in

large great. that, Okay, Cloud you follow-on is as an do see And products drive single maybe size you discuss could deals to opportunity Agent of similar terms that the going purchase to a customer in then then forward? And that deploying?

really customers adopted bit disclose you big weary these has world a But really agent now because what always of kind don't the to this the mean, much I of obviously, a our we totally telling as are which little they know, provider, platform. own cloud their is, do. secure things

on of us, you you of really. there business and of more of additional is And more the millions the importantly, -- it’s can me there cloud now speak that more providers all all and those. for these build so But it. more -- services is And of it's course, top and more agents of

have Cloud we’re beauty around, the now just happy this we talent they now services agent that realize you we again, the have once so span is as our -- beginning, an today can when have Agents an can you but now realize have are IoT and moving well, can and of we enforcements. you do So, at multiple that into agent you X, you that OT while once across

can go into You responsive.

about all you always to gain the to insecurity. and It's you the believe we was need at to need And I one, -- second, possibilities. their eliminate then to need scale. you detect respond

cannot blogs. what’s just today context fact is That again, different you all this work our So real oh, I time in gives my anymore. look at across, say, the caught the on agent doesn't that environment us because significant. And

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we into getting what's So, really which I we of era think are we think But entering a our goal. I in very that's believe, are new Qualys close.

Okay, great. you. Thank

you. Thank

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

Your question, please.

away that you One, for Yes, a discovery sacrificing questions. free? A who And of is by much revenue service the good on congrats giving against? couple quarter. competing are asset

the who the told -- That's and question fact one you were to you a good are Cloud way, one really the first us Erik, the remember, accelerate in who by Agent. you

of really of giving about free charge. your should think services one You

we your waiting. was I So, fact, absolutely was -- and but I since that lead, really followed in

move reason that -- I early we was were for -- I really want why waiting we didn't The because Agent. Cloud

we with the create inventory create because to inventory libraries you the we themselves, problem needed automatically so So, customer and telling do their all the to the have the could that's CMDBs. everything,

everything to got You've yourself. do

it. completed we to that's waited that have we So, now why have piece and

there's question, there. solutions your I ones. can name of answer and plethora to many Flexera out a Like So, other

part Armis, a do you certain a have not all They is job, have problem You are the quite but are at look not good. few. them only they The environment. of that they the myopic. with of They

And on, if you take your you've have hat got global to security the view.

thing on say, could You my I my help that grid you cannot I've this. windows got just -- or got

CMDBs the is They together which never almost do cannot really were business You for and designed need that. impossible to grow that.

that's So, difference the where really is.

terms -- of what, hand, are could in -- away yes, ForeScout you giving entire what say, -- the you could we is on one So, doing.

are XX more. And And return. doing. the earlier. giving look get Flexera the But million, if away $XXX times is solution this that at $X.XX, mentioning as what it's can We then that was leverage we I our automated. have of beauty With not maybe is could the say, is you I

people. it's don't need don't it's platform. lot need support all of So, the need I salespeople; of -- all I machines. I lot a don't a in

a model. effective it's So, very

the model. people was lot the They granddaddy was realized were first of the have the And really few one It granddaddy. that to say cloud I go people days. always A VeriSign I very SaaS. -- back of early distribution that. to

If you people could there -- year look was renewals. of I I do could remember million I $X.X because what a salespeople, telesales that their see and

had I took So that's of -- and we some in model model and effective. is their so fact, a why which

XX%. at You are margin look gross they at their today,

leveraged the have they again, cloud. because -- So

we saying much is they a we complex more in I'm do more have do is not but what what simple, that variables. Now way.

we margin… not that XX% course, of going So to I'm saying are reach gross

margin. Operating

of under tell And leveraging The but model. margin, have -- -- is about operating foot all Operating again. to capable the I the the be that we the model you, is in middlemen cut And that's margin, is and which lot cost, what transformation platform is the because the still where yes. you model the of all is It's between. eliminating sorry The that's the cloud. spending a distribution about, channel. and digital can

here. nothing new there's So

that about cloud year X that same other one took million it ago? provider agents, the agents that took Okay. The X.X a One quick hosting is question. million

no. one. It's another No,

It's a one. different

to had -- quarter the took off Agent we tough to year the X Agent it think that comp? And million Is you had a which your that -- is Cloud Okay. about the, Cloud the one could I count of that September that in X if a Because roll down? think be September was case customer in going million. one quarter, come you where going count last

No. assume renewing. I would they that be mean, would we

plus subscription. be So that adding XX-month to in are X your point, we based on million not these rolling might but quarter,

the free And we with would agent. differentiate Yeah.

We also because, agents of differentiate which are going would we we of -- from sure sure we have course, should will to that essentially but the… we service, as free don't make lot the well a make come that

paid. Free versus the

ones. paid the versus Free

very Very good. Thank you much.

Thank you.

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

question, Your please.

Hi, guys.

growth. thinking real to is the to necessary top move it is the or primary have I'm acceleration line of really So that get the stock any kind thing in

doing. in what to It we've growth getting been an a looks the talked point. acceleration. back some fairly plus at like look about continuation guidance half You've The a much rate XX% doesn't of actually of

I bit an rate So necessary and -- are about growth your any would start relative acceleration pings of are to later And gradual show very what or target? that's case, get then environment to macro the we it about that be what to think XX% what relative very, the you headwinds and pongs of little but not longer-term a Is and that? could variable inflection slope be. other is date? accelerate? talk the to to do it back? the can is assume some How get to the things that And the holding a pickup at

Yeah.

Absolutely. no. -- yeah first, So

we of headwinds any us, first, front in don't So see really.

developing forth, there's in but front so nothing need course, headwind and continue as Of we that product to of see we us.

reemphasize absolutely subscription growth. to which at be that are I and the look Second, generate so I essentially you again our forth, like X%, XXX% is based, growth, X%, I doesn't -- want fact because that look when the when it compare just -- XX% when competitors quarter-to-quarter we could at of some

coming So coming a from? from, there. It’s of license sprinkle here course, adding that is perpetual of or spoons where few and

And that. so have of don't we any

little advantage course, model we essentially, to up the big to and So takes result have of more is. way And it profitable us is a that, that's significantly don't bit our essentially are we the growth the that that’s longer. for pick is do. something But

So more it takes a bit time. little

certain what needed been we again think So confident very to But we we are all we we growth. along pick patience. going are that's believe I up and have that that

before kind that, have our done, now last time we today so with growth growing been as well. forth the And we we all we and base discuss really mature so very has a in the footholds have we that install when time is of these to to enough have start things and to that huge the which growth have didn't contribute new because services

to Policy Web new course, becomes accelerated services. Application VM of generate harder But that Compliance, or it the the or now growth Scanning within with just

see the So to at is And new to we the and we going services today, contribution to out happy very XX% adoption. that for them always continue. this say, are that it's look

there. a we it's there's and no have strong So I customers. of very loyalty question mean, But our it's time. question from

what sticky may who call, adopted growth X us, have really X have who customers this XX%. Cloud XX%. solution, X you naturally significant, the which The have other believe as who with rate adopted XX%. point we remember is is is Agent I renewal Those will is Those make

of Agents very course, Inventory to make free Cloud these So are really going sticky. Asset us that’s global

makes of competitors, the of that it of breadth some way, of solutions a but in tactics have. the the which drop price So our have they us of don't immune we some

So are sleep our we losing all. not at

Alex. Yes, I'll on, just to add

of guidance in for guidance the the first be rate growth lower the is easier clear, to the the of back against half comps. the year growth and it's half Just rate year than

So supposed I'm isn't wondering as decelerating? to you're why still accelerating it's growth

Yes.

growth rate still but quarter, So second the than a the negative higher about do We from each previously expected. believe we the maintaining to have negatively we’re half have a be We healthy of we impacted Alex -- midpoint we impact X% guidance. our business. FX in by expect

are our last the bolstered rate growth year a where better -- for talked term was for we And versus previous explained reason, Philippe of by lack -- we from versus the been as we price fractionally had rate call growth as about what rate. solutions today that,

Compliance Cloud at Agent for or older or these protection Vulnerability Policy that were Management XX% products. priced threat and XX% of

today, of Now products. deal -- expect sizes similar coming the Threat Agent than newer to these Cloud The new/new. and more we -- usage solutions it's out Protection. the many we But of older or still sort Compliance, see VM call newer Policy primarily

well XX% solutions That's these and expect bookings, to impact have the I growth well sizes tie bookings as help both even as to the Agent adoption mostly rate. back and this free as deal new Discovery because Inventory And the that products. will and all we bigger why about FIM accelerate of a -- the together, added and it's we Cloud they larger potentially release our of so of on be Asset potentially can -- of still those broadly on are where newer excited IOC in newer so were and that even features the to as in additional products

the a extend just could I If little bit. question

growth of the time indication the of questions do get every When think the -- longer-term I that went there? I And talked XX% accelerated heard rate those basic field you think you versus 'XX? type this given we might you've think on growth an that about a kind out is stock. do are rate. So XXXX in we you mean

Right.

changed, framework spring New in the talked version could York. our total we generally basis, for expecting all Day So our is we Asset which But to and free solutions. spend annual VM. of versions and XX IP that our This customers be -- hasn't the just model that of also but of about we $X the on the which our update do of and long-term adopt include fully our target, Inventory, referenced Analyst not Investor an per does are paid Discovery times we'll of

provide of terms we period, guidance interim In after earnings. the for QX XXXX

And would earlier imprudent so to any than provide direction it be that.

help. thank very Well, the much you for

you. Thank Okay.

you. Thank

comes of Stanley. question the next from from Weiss Our Keith line Morgan

Your please. question

Filling in Melissa Excellent. taking the and one here. geography. on Thank OpEx for Franchi guys you, questions. on for your kind question One of

with or -- better or enough number of side any or paced those On to you be operating OpEx under people of equation, and extend the of on kind get pent-up outperforming has and that you line spending in the continued weren't definitely able of outperformance of to R&D leverage That's seeing, question wanted kind fast one. kind OpEx find or I up to well, your be that's spending the just margins? but of were OpEx, kind the helping projections, to that does the like kind target. in sales really really and seasonality, impressive of dept. is was margins the running unable you're And because -- salespeople to there Is check find

like the on growth growth. And that a performing sort has growth of year-to-date geographic well. that the you growth. really It's been particular about of look question of much little overseas? bit XX% growth Anything number XX% almost at dichotomy two, less been Europe really, if has at U.S. basis, better sort in explains

you. with very happy start OpEx. Keith, I'll we have to the So are

you. Thank

issue. -- timing -- the to so element spend our just guiding second half, are it's contracting can from we on there that an So for a so really of margins the is you guidance, OpEx, see for

So, and we operations expense in lower did headcount marketing. and on and basically come sales

so person hiring the see to expect and higher of we -- in so it's the Some didn't second on that the those is we pickup half. find right

also not driven to Some marketing example, needed it of a was campaign costs. blush, but spent consultant we our And our we to silly was got we've by and shows than third-party less and of it make just on for trade CEO. lot multitalented

us So save there's dollars leverage. also that so too, helped

very a Yes, penetration a in the the Absolutely. -- market U.S. this geography, compared very strong have on of you and evolution course, mean, of is have we Europe. the natural I when to today just as

of where is Europe -- Europe So natural U.S., in And is so deploying solutions again this optimistic what services more to essentially really expansion our with we again, essentially, in propel very, big, -- so of U.S. the in have when we mass cloud additional the the is need phenomenon, growth the new see we course, very we today, need we that's in and new people we where these and see the services so -- accelerated are something the adoption.

the customer customers and not, will the swallow. more, The have have again, because, cannot sales we'll And if than do will to if point can -- to repeat we deal of what really push It bigger reason got at absolutely we It don't our services force renew I longer, took very the we want us sure we products. other we and the in push level make customers. then some to also time, solution right bit little bring new to That's because our we also to course, into at that And need. a all model. to is thing our so consuming our incentivize -- don't you important we in takes these need time essentially they start not more.

software works. now is And way the this enterprise

wherein of time, the it them to subscription course, what find software want into can stock's in ours, see takes new shove the model and that much is music without lot exactly with out some customers for at but it then the than down-selling, will -- which you avoid. a quicker, to you pure because create point Of you long always a the starts customer other time there's support

these are So the dynamics essentially.

Thank you. Excellent.

you. Thank

Markets. line Our Matt next the from comes Hedberg Capital from question of RBC

please? question, Your

short-term a know referenced are in few quite calls. Thanks. prepared or in remarks I your guys. Hi, and prior questions bookings billings. in Melissa, getting But we you

did deferred? and bit about grew short-term the we I accelerate? as should this Could little XX% grew for than we in think revenue of look quarter. think last mean, short-term trends model you a talk it sort less it quarter deferred I this to I about it sequentially, progresses year. this think

Yes. Matt. Thanks,

we So had a healthy and quarter have good outlook. a we

As not scenarios which multiple time all out time. move the in does renewal same and we've the as the deals in at discussed, are happen date. There the anniversary

to purposes. hard normalize it's comparison So for

bookings because Which our best for revenue business to annual proxy certainly we form of guidance. as our current the is guidance the why point momentum, trajectory

maintaining ARR FX with guidance. we're of reduce I mentioned, but billings volatility the headwinds, year, introducing we should see next about our some because And As current do it speaking midpoint also we're metric. have associated you the

curious to the maybe, as looks it Got week, talk it. about broader And you WAF. can guys breach issue? like help was be it One Thanks. happening And then, thinking others? that how can about Philippe, may a of you I'm misconfigured this from sort a prevent Capital that

just and could they either because have, they essentially case. there. -- they That's Or thing I insider. as mean, an should Whenever the you and complicated inside is, credentials find you most this of Snowden there configuration of to find know here think there's -- not because, or of as the they course, that deal your this to more identify is -- get with ways the could combat, were know, a difficult I have. is you insider, kind vulnerabilities knowledge because they situation that's

the that's part. so tricky And

as very know. it's threats we combat insider all So difficult to

all but back again, to, -- hygiene. So I about go it's

we identify can across on you environments. at So different help all environment scale Qualys that's absolutely a vulnerabilities your huge these because where shines,

IT that with what's of charge, discussing large made again Asset decision behind to customers. we with Inventory board, free the our that's make So advisory the Global our

one also here. well the In fact, you customers could don't such need, look, do adopt, by give you you, on what how have. telling that the make will that then idea one we we free the you if if is something could but I came have as And us, this a way, know pain you hand, say, because, will mentioned encourage you point visibility from, to you Erik Suppiger that the you

So yes, look that. et you if a breach and Verizon if at [indiscernible] report, the this at objects vulnerabilities? identify cannot the cetera, you even and you every look we lot As -- the of put that's shiny around

if for connected do that to you're anybody breached. don't if configure know is to you don't But you have you it. that, and access properly, to then camera, vulnerabilities, if don't example, system going your still And if don't, you get your can network your

And critical now environment that is and becoming simple becoming whether it's very it it's or where our everything that -- connected in in everything, like with not. you

is so And my arrives. that -- so we God, this -- XG is until crucial. and visibility are entering Oh that wait

Everybody example, thing Bluetooth. how visibility. to for difficulty] there's surprised to On we your you, connect that experts see devices frame, the many will don't via our tell [technical one XXX% network

as with shortly. well. the course, we'll, we thing So But And will ecosystem do. making need visibility one that's of careful very XXX% your got contractors. And extend sure that you've then you introduce you And visibility. to that to that, your are

work. of a going it's lot visibility, without get you're So And to breached.

Got it, a thanks lot.

you. Thank

comes from next Our question KeyBanc Capital. Owens the from of line Rob

question, Your please.

this if my for appreciate move I I short-term But four thanks one and the deferred out taking at look XX%. at last three another. of And Melissa, between around commentary you've Great deals question. that and quarter grown and quarters, the consistent

do with we metric? base velocity that And low- -- a actually achieve XXXX And short-term see that that? of Thanks. the through target mid-XXs come up what setting that does inflect deferred growth. to At point kind of as to in business

Yeah, Rob. thanks,

in growth times. deferred but in there -- revenue talked is There revenue be is based XXXX. performance XXXX many as we on ultimately, So will performance bookings change pursue about

And the and that's how we mentioned, bookings same. you we communicate improve billings are ARR And, is thinking between correlation about are we externally as year. the looking for not with next And example, why we quarterly always to introducing quarterly guys. for

history Sure. quarter I that understand revenue. in And suggest four downward theoretically kind that of a But out mean, XX% of which three got that. draft I you've of

So we three of metric, even again unreliable at look over time, out an four quarters? if that becomes

be at look proxy going billings, if have Sorry, because normalization. to you bookings I LTM much LTM say, was more that's much going you closer to to

solution, is are And FIM we've had opposed today so been our et by things which the IOC, Patch fractionally fact to supported an what as impact cetera. higher has priced growth of priced that this and solutions generating more from Management, like the

even -- as is, about future products And that -- talked as opportunity kind as could of but driving the terms well that's we expansion so, on growth. really endpoint where in the to feel again, of older also revenue

Melissa. for thanks color, Great, the

Thank you.

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

Your question, please.

This for is actually Chris Gur. Speros on

talk On free Asset you service you already of had in -- Inventory that about group makeup the the call XXX the regards…? this can mentioned

mixture. a It's of It's customers, customers a mid even combination small and customers. large

we just the for But are very, customers, give we world. at targeting today. large XXX customers Fortune we the essentially, entire So customers, XX% you we the largest can I beginning, very us, small have can -- of the got could the we breakdown. mean very we so the serve are and in serve

all from walks come they life. of So

only And no have because again, because have everybody. they The the and few that need very company visibility small really Inventory for Global companies a is they IT Asset people. large

have And there -- what so to it. application or are for have they the small network, very little further if do even and do them to people the they cataloging

the So It's with IT, because guys, IT security the a they do they they they and in cloud and absolutely this with mobiles that. small have to do and deal now nightmare. with the companies, are the poor

or of that's think all I small Godsend so for And a large. them,

going new the Yes, the proportion deployed relative had you about where represents Agents net that's of the question group was great Agent makeup Cloud I was, a color the in there. that already just to talk can Cloud that deployment? regard that with the But proportion to

exactly prospects, general, every been would has I and in subscribe quarter Well, Cloud for of SME this to and we're applications. of the Discovery at for Agent low in the Agent than an paid new enterprise then net the Inventory again, let's -- it's We with that, we SMB, doing what's adds many provides business. look what’s where app release look a the about more say, adopted it at revolutionary in to to frictionless -- overall say, is it free incentive what the But is and track Cloud are, to-date. Asset adopt don't kind the the end,

Asset have to deployment what of deploy the What had asking percentage and the deployed guess Cloud I'm Agent the group I Inventory customers Asset were the percentage XXX that the them this of the percentage would Cloud of Yes, Inventory signing need Agent? but customers versus the signed is the up that of for up. already just

question. Got it. it, got That's a great

the gone Chris. with, get We can it's haven't announced we just through We on to all back you something so data. them Monday,

right. Thanks appreciate All it. Melissa. I

Yeah.

you. Thank

final from for Sterling JPMorgan. today the of Our line question Auty from comes

Your question, please.

oranges to what or the the Yeah, the portion thanks. Agents I core pricing? sure and Hi portion are want maybe terms guys. clarify paid Cloud just VM of want of here. in or I'm not in now What the what appears part mixing Agent, Cloud included applies to make subscription understand -- the are versus be to program? free I

all don't Agent let say, to subscriptions. an XX.X because the the just the Yeah, agent that Those numbers paid subscribe product me are associated million with we've agent. Cloud released, be so for you just it to subscriptions

use can the do can't on not you network. our VM – use because wouldn't leave VM, using traditional and need scanning the can from laptops you that with agent, technology for -- the that's Now example, an right, you you cloud endpoint, the

you'd want on endpoint you the VM if agent. give have laptop, use the to on an So, to

have so right. our about customer when we think like base, existing And I

on the a We Agent are and environment traditional to then can extended using of cloud relying also but you're you rolled or not because subscriptions more not still using you have just windows. over portion, all VM, the only Cloud to real-time many go them information, the for into scanning and VM scanning lot the a of their endpoints, because gives customers who of

Let me sense pause, – answers and that see far. if so that makes

Yes.

the then you’re attraction the well in GA first? going that And So the terms there as then followed of uplift? that expectation procurement simultaneous the is be Now to kind of FIM both helps. in terms in new of or and solutions, think is timing you by of Inventory definitely it do what think you there moves do -- terms going an of of – customer is as the think you of

Well, believe sorry. features, we we went new added add announced so, as inventory is with IOC going the IOC September X, to GA we solutions, into or FIM new know GA features.

data – Philippe, terms to yeah, It's which have timing we yet difficult the no or solutions ones not for because predict, – people always the In of like most the of substantial, I to adoption enough first? subscribe say. you? newer would would of, points

industries because it. rather than Yeah. FIM more little a And typically because also for do is they have different, regulated they're to bit

Patch this at What the So we is they a a the is to can different which all end little so service. of a day. the new rhythm, different bit Management, see

demand pretty We Management Patch a have big already. for

We So of the really IOC anybody we suspicious I instead words, devices. will identify rock big going just think other is We else, unlike new compromise. the match, off. that IOC is just because off. have you querying you the give IOC can who version doesn't are that, XXX% tell – solution take of is then this In we, We you can you, and malware give FIM, our now advantage us scanning anything real who because classified tell FIM world, family. you back taking Management an really assurance family compromised, that really of we that our of wherever identify the Patch instantly without can is end. believe us to can new generation, into a

and then can we But with we is at behavior of anything. action is then, know, come not could you will And we take as no also QX. only which the passive that, that out scanning in now device what’s and put a course, in look of be which see can then on quarantine, watch, because you don't suspect that course, identify can malware dormant, this of device, absolutely if coming in sense, and

to And its are think so we IOC I bringing who level. next

And so our we customers well well. very as received by

as you IOCs help the do to So again, well. agent I of also well because think these as agent the will our need that adoption

you. Got Thank it.

shape. feel we good So we're in

This hand in Vinayak for question-and-answer program session today's the to to the does you. Rao I'd further conclude back like program. remarks. Thank any

for quarter XXXX Thank our you attending call. all earnings second

on and Hat Melissa are for investors available we during Philippe X, a.m. a luncheon p.m. the As XX:XX is and X:XX product from mentioned, our Black August registration website. on to holding analysts Wednesday, and

you. We seeing Global also in in forward New Thank Conference Citi's to York you September. look Technology at

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

disconnect. Good day. You may now