Qualys (QLYS) 30 Oct 192019 Q3 Earnings call transcript

Good day, everyone and welcome to the Qualys Third 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 third 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,

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

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

investor the website. remarks, are release, prepared available supplemental and a reminder, financial As on historical press our presentation, spreadsheet

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

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

prior Cloud We are from also with quarter. subscriptions, Agent paid XX growth to almost now, report our very growth year pleased in million XX% strong

with Compromise, come. now Asset to security, File Vulnerability and Compliance, before, Patch and discussed Management, As Cloud available of Management upcoming the Certificate Inventory Monitoring, for Agent our namely Management, Indication and the Integrity compliance platform more is IT solutions technology seven Policy

because Management again from global we we and Container continue terms the feedback IT one is customers and quarter, saw IT and Global solutions, luminaries Patch of Asset Security. healthy Discovery very a positive asset strong newer we In a biggest pipeline Black Inventory from At this this in our Hat quarter We growth and service. to as received build inventory industry our App challenges. launched free FIM of

biggest their With the as of all can not as service identify IT see. secure you not or our visibility now, global the automatically cornerstone If build and is of networks. cloud, what environments free endpoints, inventory for as mobile you simply know sizes asset companies real-time across in their security challenge, do connects well everything to cannot containers organizations, that on-premises,

Only companies using the months customers approximately a two XXX have we new the after launch, service. half and with over X,XXX signed-up

out month rolling existing the have service free since XXX been also customers customers have last it. almost to We existing and using now

infrastructure Cloud additional result, is ubiquitous our required. goal no well and paid our on us apps to our to frictionless its a because make As the Agents way to subscription make now allows is

platform from stickiness customers Distributing the adoption key offer not fact such the profitable meaningful generate of our have helps to shareholders. one multi-product four paid both make demand to gross adopted growth, a solution solutions elements by naturally our more of value rate free impenetrable our for XX%. our do same retention who of This the who is or driving this of the increases customers underscored our our Furthermore, and apps is at platform dollar and of us the stands breadth competitors solutions. that of

how from to and that in in developing and November Microsoft Microsoft from is XXX industry At as in showcase QSC Crawford formerly Las will security The Cloud XX well user will and to Research plays Platform the and solutions conference the our significant expanding experts author Clarke, our of the on invest additional We White Richard capabilities Vegas Fifth Chinta Azure, conference attendees XX. roll new upcoming at as discuss it. the offerings we and as Scott of of continue of course Domain opportunity building the House, in Qualys Ramesh will czar to a our have Azure into such who listen

XForce and who Henderson Charles are to user efforts a IBM about will well. respond as talk they from quickly eliminating pen automate more very and Qualys their of Red And vulnerabilities big to testing

is You are share views them. security will becoming and who evolving from critical also our will and their experiences practices, their also how hear needs how customers fascinating presentations on their mission best Qualys for

and that Management to forthcoming Officer, Vulnerability offering and would it Data Sumedh, and / discuss Product its our which I Chief brings next we level and promoted SIEM Lake initiatives. that our will President generation showcase Our later, next recently unveil EDR

In addition, at the agenda Container Security as discuss have and to and Qualys. of the we’ll And among could go our website click; other threat we capabilities hunting to you look forthcoming updates you the with our innovative now solutions, well.

institutional I profitable to session investor and application sustainable well focus November conference would newest analyst and and session and will This dedicated driving invite the our growth customers. select during occur that how to XX. a as event like will conference our and can personally a growth of will on Qualys a include Q&A with on is user you Qualys both demonstration

now with we his as Support Pune, XXXX he Officer. announce in which to Sumedh Product and Finally, and out XXX at Operation. Field of employees, performance, President solutions, where than run his the was more R&D, would started to Worldwide Sumedh Sales delighted now Product Chief by Qualys promotion our promotion, and Ops, through as Product have expansion outstanding runs an QA, of build also and Customer am and I And Marketing security well Cloud Thakar. led our Officer, impressive delivers compliance of our Chief in operations platform, suite

our one promoted activities of customers in one program we And Americas. VP extremely Field the vulnerability came the growth, joined most MacCarthy lay and management future was as she was of our good program for continue where the recently running Field Operations. to Operations EVP Laurie at to Laurie Worldwide Qualys foundation CVS. XXXX we Laurie And for from also of

and In of addition, our Mustafa from was I Platform, if promoted sure I'm Bachwani Ops Ops. SVP, Hat. to of finally, Service. Customer in and of not we Dev know Mahudhawala Ops. correctly, welcome as our Qualys VP pronounce Mustafa Cloud addition VP Dilip coming Dev we how XXXX Dilip and the to Global Red it And joined is And

Our product to while spend. compliance lays reducing and team of and platform achievements our customers drastically to IT enable our management continued their stacks their foundation and progress security, expansion for consolidate the

the have it to importantly, we highly As profitable is and built. revenue model core growing recurring

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

afternoon. good and Philippe Thanks,

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

multi-product adoption, lays future our delighted and for leading We’re the foundation subscriptions Agent increasing with industry revenue which and profitability. growth Cloud

continued XXXX Qualys Our quarter XX.X customers solutions percentage adoption QX enterprise financial and XX%. XX% million. and XX% the for of highlights XX% solutions or Platform of grew Qualys from increase four the customers operational XX% from to or enterprise percentage increased third include, to rose of as to the to revenues more more three with with

were in single this increased XX.X the QX million Agent to from Agents platform purchased a Cloud last customer. ended the quarter additional up months, Cloud subscriptions months XX XXXX. for over by XX X cloud million million XX.X Paid

New the size deal in and X%. XX% products quarter, our continues up of average increase, from released since XXXX bookings growing contributed to approximately total XX%

superior to continues model margins platform scalable significant generate Our and Flow. drive cash

EBITDA for million, versus a margin the quarter representing XXXX third XX.X Adjusted of XX% was XX%.

headcount XXXX. lower in to continued non-salary quarter great as QX attracting to increase our talent we sequentially Pune well and We third-party lower headcount costs compared as expenses this benefited from and as

grew XX% third period generated flow invest capital under Qualys X.X to continued year. cash versus and QX million we the same million XX% generate quarter capital lease last operations XXXX In shares. strong free EPS our XX.X increased we QX, and year-to-date, cash and flow payments of for back to from we of outstanding expenditures, has repurchase obligations of XX.X free on cash our the including the million XXX,XXX including into principal

million repurchase applications. capacity. recurring current additional in remain in XXX driven open Our in Board an suite of repurchase share share and has authorized our market resulting of We foundation our year approximately expanding two program; by XXX revenues million model confident

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

We expect between to now EPS to to XX.X% in we for capital be in guidance $X.XX non-GAAP the to year fourth of expect a million, million Pune. phase $X.XX. of and expenditures XXXX the this to out EBITDA X.X to EBITDA Qualys million of be year which $X.XX raising includes a range to And build of the new approximately the XX X range margins We and first XX%. from $X.XX expand office year for XXXX fiscal quarter, a our are margin range fiscal expect of we

many our Discovery We which it us very as to This our adoption accelerate and Inventory robust the are margins well to provides the Asset expand early by future. as of enable in paid opportunity Global of application, subscriptions. growth excited revenue makes free the frictionless

at look you user As and Vegas. at Philippe of investor QSC mentioned, upcoming seeing Las conference the analyst to many session we forward our in

the turn I’ll that, With back call to Philippe.

we our our I attend with Laurie of our those events. In let And to for leisure. Sumedh, would would investor addition SME/SMB progress our said, as increased did, just in base are listen made for be and attend and are and attend. and Melissa. customer the investor adoption on you Melissa The really their expanding they webcasted Melissa, existing website it new happy person, in also reiterate peruse and solutions hope extending as could our summary, at who for conference invitation please the Cloud we or the the register own as well Platform cannot agenda Thanks Melissa me the user both and enterprise by all And customers. you one so session. both session in again,

happy to your and of any are answer With that, Melissa I questions.

And will come from First Analysis. line from [Operator first Smith Instructions] Howard of our question

You may begin.

you continued thank my on Congratulations the very for taking growth. Yes, profitable question.

little QX. the First cash up And terms I'm board of just policy the in or question return seemed the kind are using bit thinking about with shareholders is buyback in has way? activity share you and stepped a of shift any authorization there this and how wondering do to to

take Thanks one. Howard. that I'll

continues and to our that to from is the the objective share grants has repurchase as not – framework same. is So program employees minimize be a given the changed to that delusion

window you announced last being in back the If look year be the if our of shortest. year-end the the end up will you because up end quarter first half couple earnings the how we in second repurchase especially we at of years, see, the repurchasing being half, for loaded over

it a more of little think as a catch up. So bit

you've of the forward a rollout. be had of the tweaks you that versions of out And couple kind Philippe, helpful. the and of served offering rolled inventory That's great. and kind the these a you just how free Okay, think asset you results, see to you thinking I with then using to success spoke making you that support might it's going of free of as about any are general, types those of in programs? thinking upsell Previous

said at or everybody very across as absolutely goes and Global venture said in gives crucial. more in view something look is what because it's And is everything previously environment. your limited inventory you is it Yeah, to needs visibility way. And many The on entire very as and your forms opposed to becoming which obvious expands just is companies atheist had servers have. that's that cloud that IT discussed upsell. very that the do it very the that across environment. or it not with strategic strategic doesn't And that endpoints absolutely global It that has we windows unique go

there significant so And there, upsell is from then opportunity.

assistance. is You at now the really ability which your related inventory, our to the are IT to of directly life end for which example, have one Global look

of the read there's that So to get additional kind can information you features that. about

do You free the get from country. not asserted

also probably already. become by You interest and you that way naturally synchronize the CNBB, customers and now we can truth end source today today we have discovery of are doing now around strong see with which XXX and so the can very these service we the

issue, and inventory, – because there's which to upside IT also our capabilities Global the all want Cloud means then once Agent essentially, which things the put accuracy of There scales, certainly what or is to agent you is real that's have is requires you an declare they because significant the around you give absolutely changes see platform is is, becoming issue that. a do one of yes, anything want. And Agent become – that use a which has what already well device to strategic. as are opportunity received. and related one on scale what very time, an very many that it's to many, other and immediately that of issue you where always upsell absolutely able the Security we we Cloud of asset it that's real what and the know agent many, you time, the been exactly that both believe is that And obviously an be you now well it

this on we're rolling because you trickling continue. and of existing we certainty too quickly only The platform, our then have a all and that why will we reception did As so to our to know, is having it, adopting their month customers customers out much our we're ago. didn't fantastic too that about want load reason

you. thank Right,

line from of Ives you. from And Dan question our comes Thank Wedbush. next

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you. Yeah, thank

just in and of And where significantly product portfolio maybe the the talk market a approaches from five any their what that in terms have prone about Thanks. market? are So changes. sort of to the of of can and perspective, you're risk talk you product in that about seeing starting and competitors expand you broader some some kind

again In be you a scalability the to yes, cannot software cloud the terms need. a the of competition, and platform you gives that be be could has because platform the enterprise realizes It platform. today that everybody – of platform cloud an there the platform

And we've the big you we I'm well the technology. made all the in recall, newest thanks the the the and So Pune technology most XXXX. back of absolutely – so cloud the to sure of we through journey sense in been we're variations to market that went started inject we ahead as different in because investment able

close of that we're that million agents, all companies have in doing ahead We of other we XX millions know we've direction, architecture anything if valid And scale that agents, about we do. to also of else. of not today don't billions, that Kafka, believe agents. Elastic and to everybody Search, to yes, the Cassandra building moving hundreds today reality, we're scale. we We've we scales so it's are far have but But anybody essentially

maybe playing well bodes Azure how about that when talk success, you just I in Could the are and and especially and it of gaining how comes you think Thanks. those guys obviously about some more market especially how with channel, the with JET Microsoft more you dynamics out win – deals? cloud positioned, potentially just for those Thanks.

Yeah.

believed So in I recall that's the that another good question effectively. comment We you always already if in fact, XXXX, was had some that publicly. made, comment I of making

their essentially Agent all security are Cloud ensure that continue ensure to we millions We order also to architecture. exactly need Agents our using today to our major – In security players platform. to the the need All what of This them be and of is to visibility about. we cloud, the you Cloud cannot the all have and on. have that security bolting said the right do

have view last an I the center link, earnings think with agent has us third, or we've go click Microsoft, whereby and the the remarkable the security of the the This and the either to link an do customers and Azure the Microsoft call on there before, all the security Azure, if done totally third but Azure, [ph]. XXX% link of the security posture. to the Playbook on only our link, entire with view assets with is the agent you have or the compliance center, I click nothing with Azure center one integrated they the on embedded thanks click we've on can which on numediate security created cluster click something prefer second essentially As whereby have to then mentioned, Qualys with by and of

So the change? you nothing And a you policies. Do ever become business. the all this? have to one then big we see want the this done not? security install, click, then to where you environment security customers [indiscernible] then that update, click, of bring course, policies nothing want that? in Do And What the you decide do new are future. to you or that's thing your want is Do is who click, you. for because only your you And it's

of we're naturally well we're course, of of our contract, way, by is authorized. of very the go. not we integrated, agents then happy And the extremely our And want So positioned. now solution course, July totally they to heard because with as that have Microsoft, know, you I was course, that course

see now. now way so we this we to that the and saw we're future is the the why So happy is future happen

Thank you.

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

You may begin.

Great, you like free give download of us adoption of job of in guys. that – inventory the in applications an just paying look Hey the the asset the for early Nice that? thanks. now to have you market, some indication rates attach quarter. just Can some what

of me the They adoption Yeah, know, as And they the to way of our deliver always fact then proof do service. we time. And the our today that some take customers – concept. first adopt. with so remind as you we revenue the of takes a let start you And the deployment. all they model, in all do

with to these they prefer their do chunk of a of don't competitors, them that have upsell the can we've of starting already have. all our – have which discuss capabilities most if which adopted, like license goals. these inflates even they today we see So said, we customers big course, that being about that perpetual with But you that

When initial good signs everything And all trying really are about these customers what now have already seen all capabilities, integrated. back, done. very look we've so you that we is additional

don't application. you install means have to that another So

have managing have You'll it. person to another

Qualys is the done managing same team, be the which can that of currently Solutions. by All

very answer with the is So yes. We're it. happy

thank it, Got great, you.

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

You may begin.

Great, thanks my questions. for taking

percent new mixed were from products drivers? products in or the quarter. that key would you one bookings a saw two of that the highlight in You jump Any

solution. as new Yeah, remains policy compliance. cut and with jump VM really it's from the still remember, because delighted was renews in bookings someone the XX% does that solutions of a solution metric portion Nick. renewal mostly perfect Cloud Agent it from a we've when not policy XX% edge we're It quarter. compliance Hi, of which as include last percent discussed enabled into original And the a

see that metric of did a this amount renewal we quarter. high in so And

there had as We're starting Yeah, Nick, we fine monitoring. which to some good traction the is team, the from the well. do integrity monitoring,

embracing great. IT And federal Global revenue Okay, earlier that today, the market, then you just the you curious, I'm on what week earlier moving government market. opportunity now building asset that about question for of percent federal government the does this what is an cloud, discovery percent app forward? think cloud, And the announced how for around the and federal curious represent

in Yeah, cloud. so that convince apply been to trying has fact the the our government journey, to

although not of lot calculation a saying appetite. much was these you people about had Our there's

Finally changing. it's

today part very down think have you percentage, you a include revenues we a it's today round of of state. if if it. probably small that about And to So our federal I states of and federal X% break

customers, ready very to have the government good are about and And very rave so and now take. finally they essentially we're we see we to starting customers what savvy

ahead investments now game, It's invest because been always trying but either. you to want make balancing. of to So worth we've don't also we're invest to the some today again, going not

have to that you So as can. you as best time

we that be nice beating early interesting July But this again, at the that time, but to time in so it I some will an think to for the we're with think very and is year and with So team. opportunity investment the next on, not we're said and I it some the market. it take I we really where up see to Today contract make federal we of maybe takes federal any but revenues needs on again, really the additional counting think year, deployed but federal is but us, being end today, government. so there not would going significant could be that, seeing thing. grow now really really our fiscal essentially we get But in year, –

Thank you.

the Capital And question come Hedberg of Matt RBC Markets. line our next will from from

You may begin.

Hedberg. Stan it's Hey, for Matt Thanks taking questions. [ph] Bridges for our

more you Hat was Black around adopt and and you early to then and IT event new platform, Very that around strategy On about inventory noticeable the – launch, start the engagements bit little products a a go any awareness to asset Global but Could the think I us discovery that talk there or at through market and campaign. the and significant engage market marketing to CIOs. attended, from that? traditionally, a of

that the have Yeah, fact so today, absolutely in campaign. of fact leg to you're what so we now opportunity is in our see going that's second because the that

The where rightly we are first is see And This campaign you it and campaign. okay, was characterized it. as awareness an come you so guys. for

Now adopters. enough we have

preparing now the to going the going have campaign So going second ones done they're and achieved, and – speak, they're we're and they and benefits what we're describe are to have adopters panel about to see who to about and you're also interesting our going the going see And have answer some you an we're the where our of about question CIO. user your talking users of to some conference, and will it. that

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need. So different your – we'll mentality. and the implications that into them purchase, These make of that roadmap. a don't want other. change you you clearly your roadmap. of don't roadmap, these your they enterprise about are which is about go discuss see to their they more describe large one do and is for to go want that big that that details They now solution them which cloud cannot their and we well us, very engineers, well they goes formation and course, fits to the sure big care And with as very is companies taking so The very security as additional is it's it's DevOps who's component

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indicated Melissa, an quarter you or FX headwind nonetheless. about in points pressures one each to XXX to FX previously, the for very Maybe out? Thanks incremental call half second that Melissa, any changes basis here prophetic

projected. it's in to still we still so the but bit on than a points less more to margin, it's the than little QX growth basis we going be rate. originally little same, the expecting roughly roughly are Yeah, But XXX headwind

Thank you.

next line Talpaz our question from of the Stifel. And from Gur comes

may You begin.

Thank very Okay. much. you

you the the a few products? solutions. so how some path that's level the development percentage you comfort there. and pretty Over pretty for to about pretty about significant talk other pushing [indiscernible] [ph] half Can significant, past two bad EBR, talked out think months, differentiate be in you'll first these seems just the you do The broader markets solutions

you said one so look we for realized oh I So I longer technology about? course, I it my if god, the internet that figured years a using accuracy of absolutely I what of ago. digital so are and out at took everything. Yeah, quite few finally is cetera And $X.X scale, Linux Qualys because Facebook, reasons why and the to years have that IBM that a invested figured billion out transformation when fueling the should many in very ago. many, have But is similar Google, all et a did they registered fact the what

they could the essentially re-architect depend to in companies environment business they So software. that want enterprise these upon didn't

and to to was, technology search years – people acquire forth. was Steve Because many took the they then want left. opportunity god, will ago you me about I why a Mills, had a company install. it now however, same certain that my oh long them. that's because didn't a didn't essentially the it into early realize want But time and company And right thing. an I you an a open build present many, they too XX that enhancements the to coming at this answer billion? put have time Linux, they kill able the so didn't And I that, thought time $X.X with it, to as that's exactly His Google they discuss [indiscernible] and that invested because to I So would which say assume and up source and the took game scale huge and at all and today, have they're why? where technology Alexa switched now you have them so significant to bring competition, the

that the there be would containers they're ago. taking Today three world storm. We will even by years like explode

VMware already XX% using or the on our all replaced have virtual in utilization layer of and [ph]. We containers we have platform dependency

scale So like – breed. the we builders same of the the of like technology we're are the Google, Amazon, like

that's for move EDR, we goal, is what do, new this into and the that negatives. mind, elimination space whether SIM, like anything when that space, positives false of false So we and essentially, accuracy our and it's in us,

one through does we way create that because SIM a that of course, of XX of the data everywhere. interesting we telemetry to that of and that And in put if if logic, now we're in with we how compete have capture And when which go we're course, to significant false going position next the problem us today better So we a position. scale, generation even a compete will every look going at to are bigger have I of of significant elimination we market, positive will that because to SIM we is the SIM price course, that is certain that our already us a course, realized market very going course in because everywhere of again on puts the very a we're EDR unique you it get. which whereby, And prefer a million benefits, them, benefits. strategies with more do can unique same as using of allows the a course agents you And course, to Everything of then we puts in thing newer PPR. have better they and and technology of do nobody of the less.

hundreds rev under that architected I but to of to of not is answered if billions, question? or millions I rest millions XXs about the earlier, all scale. millions, agents your hope That's our that So of mentioned backend what of not agents.

Melissa, one Maybe for you Thank very follow-up that. putting on much.

of look efficient, have development market at new go the spend you event do now to capital very these your to think initiatives? support level been You've enough the and current of when you right you

our as Yeah, very strong margins flow the today. here of Gur. our leading thanks, cash industry, as well in quarter proud of as this well We're growth

QX, implied the see are you of and continue do that. from for to plan part invest we As guide these to projects can

but significant the also, talent, god, order a I standpoint, side you if admit And we also talent, my engineering pool just right a now, not to an because of or XXXX go huge of the to on only can we get decisions India, magnitude. today, like in advantage cost decision would profitability we're made to oh from look the that cost we was have the by

engineering. the for that's So

continue fact what could our that grow, you out haven't really well. you certainly of have and percentage, scale doing we as seen read percentage engineering to expensive So in maintain the we input we not course, do have the of engineering this should a the as power margin but

XX essentially of make one, people now advantage free sure model the these big And on course, distributing essentially kind we these support after that, we go. sequel have good then there The that the people, to onboarding we what to then of from services flip representative is Global of experience get ITS the customers the people a from other pause the call aggressive the young which the sell them it. not Where charts can get And very, very informing way, value account inventory here And have that itself. in marketing India, go is which on and is technical a the of of to the are model. Now, cost we're market, efforts which to we all have and is again we've but a in our schools. today nothing. being services they from technical more

signature just really this educated. model very platform, training, a have point. something So have whole in is all starting done to the customers it's install that to to is be frankly They for the very cases. of this anything. well, And And we're get fantastic because more other the and already to efficient the to don't is try make use investment safe example, is is libraries of and everything's they from for

even easier to becomes for it's all to essentially then of configure it prefer advantage for but customers solution or take easy, deploy and you if their needs. and So pretty easier implement

That's thank you both. very helpful,

the Thank Franchi Stanley. you. Morgan from of from And Melissa question come will line next our

You begin. may

guidance taking I for wanted my you about to you the ask QX. Melissa, question. for Thank

You modestly for FY lowered the the well high all. are things like end although of it guidance, pretty 'XX going you seems

and I'm wondering talk about puts and you the that's driving that So if takes in what's can just that outlook. embedded

in Yeah, have mentioned, match was position ads We where We as to Cloud in pricing, much our that so the couple leveraging we've a to increase see as well upsell headwind of thanks discussed sure, and we the driven in earlier the good Melissa. Agent the incremental did very opportunity we it us. end. high acceleration leadership because One the quarter. had with competitive expect down for It of sense by makes I were as fact FX front is, take multi-product factors. adoption. We a as delighted

Okay, I got growth, looking billings follow-up at a see it. you, for slowdown modestly, And then better. another just we billings did but current was

about durations maybe this quarter? So talk for can saw you you what

billings, manage don't our because but that. prepaid, Yeah, let We remember sales includes intend that you you're by really our so don't for multi-year force the driven that customers. to we be if total that to referring

multi-year dollar the in specifically quarter. increase long-term this deferred the in a bigger So the which had revenue, quarter ago a that affects then year they prepaid, value in

manage the initial about, there's the in a of doesn't renewal billings, to same talked happen deal. because which current terms signing it at don't we've the the scenarios of multiple we In as of time

of trajectory point because proxy bookings revenue momentum, guidance current And so our our we guidance best the there. as to for the annual our certainly business inform

you So another it's nice let back. add Melissa have that me to thing

And Melissa. you Thank very much. thank you, Thanks.

you. come will the Alex & Needham our Henderson question next Company. Thank of from from line And

may You begin.

Hi, for using if comment of this base percent Alex. wondering customer I taking Cloud our is Boyd Roger was on on questions. could Agent. what is Thanks our the you for

the I Agent. new think then it incremental penetration you last customers from out Cloud of seen deployment? And coming quarter off XX%? you the from trying customers growth have like said most is any started Or was

that XX% fully opportunity, Yeah, customers using so have there's it's customers only know the in now not that discuss, our environments. deployed are significant are Agent in still don't we it, not also base, Cloud who in but the a customer to their of

kind of of in customers. It said, a than new this bookings products higher where I buying such Cloud existing from? In actually, quarter, but percent varies from terms fractionally the quarter, quarter-to-quarter, as this of new Agent, the was was mostly bit

to up be the well. asset sense. Got version of as the quickly, then assume really that customers it customers inventory using tend maybe the to it you And fair that pick seeing are free is just try enterprise you're makes SMB or customers

life, because No, it's all mean, problem. walks a universal that's of I

finally. today, or enterprise, low guy, fact, PCs SMB, end Because do on that bigger they the So – XX still of fundamentally crumbling, in manually of The on need have happened has sort that's – that the now. so that's need in today, some enterprises enterprise spreadsheets, is low changing. of the coming, end in that market. the are fact the than cannot. the market, for and it's one probably PCs enterprise would especially the XX and large the enterprise the you maybe what enterprise the problem years The is – is that silos the the get the Again, message in ago, XX they can enterprise happening

jealous of the tools. So silos very, very their are

having the team, crumbling, these that do their under digital the silos are So and everybody window to inventory under today their own transformation. needs to tool now again, accelerate

and with, about that the today and tools visibility So become And years. own they're to you are the is replaced. C the CIOs. to that look in continue at getting mind of tenure sisters enterprise really we is not more today familiar find more and that still X.X that of have sells wants average large very on who resist high their they the starting tenure the the with do When

movement huge of they're and course, the changing things. a So behind, one obviously

Even look amazed at I you adoption own the Qualys be our people. the I discovery. of we today have we're real very time On of complexity have they and and because a networks, X,XXX demo, inventory our of couldn't at environment with bigger mid-market, we I the that think a the give have good using see company if I more complexity. agents own course believed would of

more be SMEs, now. they to want So it's for the a something much

really good it. the need But and because go On start to fund the to the enterprise, they know, are you and a silos momentum they've have got to they've got to do resisting.

to the to of program on. it using the just a of months, more of that about XX% add Philippe so we're said, this on and just using existing, – customers and in that it those seeing And couple enterprise so

Agent deploy agent very sign for may XX% of the already which it's add have closer the solutions, globally, Cloud early we an on because solutions, to some from many the and enterprise additional for asset paid new It's very and the early customers because data. So these free and amount. of to discovery once be using as sort easy these they them see of in inventory, then still small it's purpose they to positive of in a which enterprise it's existing that's

endpoints. talked turn compliance the to VM can we with they and environments extend full for the like on on Now about it their opportunity policy

you. thank Great, the appreciate color. I

line next question of the Sterling from JPMorgan. And from our come Auty will

You may begin.

is for this my you Thank Hi, question. Sterling. Sahil on taking for

was the quarter the in how backdrop? given So the macro EMEA business

still the good, you have Yeah, seek what to we we and good Europe, very as nothing a in in really report, Asia. adversity very know pickup penetration in was

about Brazil I in real so down. a cloud only the is well and of we is the premise. starting Latin own about slowdown it slow now doing to Asia, all where Europe we place so kind appealing see to the see US, today, the as – in is is That's own departs think America. it's my and I very be the more when

And for I prepared quarter. split the if the apologize remarks, you vulnerability but give do Thank management in this in missed the you. I had

be management vulnerability revenues. continuous The family of still XX% the about to

That's all you. my Thank side. from

Thank you.

question next from Securities. Rosenblatt And of will from the come line Kim Yun

begin. may You

Congrats on quarter. you. another Thank solid

back pretty who there for meaningful driving is that? going if seeing cloud some those Can is what consistently like not adoption, the that us for do uplift you what may with a versus customers kind describe cloud and of Just to pricing pricing that's going to fees just you it time. seems uplift well be agents

Yeah.

use nature the the don't purchase Cloud it standalone. Cloud of really people because application Agent people on for Agents depends So that the

Cloud renewed for about pay So then Agent additional would an customer what purpose doing VM in someone they talked policy on those or we've or compliance and about XX%. is a of a if the previous was applications, to added

they the if integrity that's subscribing a solution Agent, example, Cloud enabled by which price For file is solution. monitoring a were much higher to

it really of the on that using. the solution So depends nature they're

drive [indiscernible]? should inventory new better the Agent how asset it it Okay – I'm right trying help incremental product; seems like to Cloud adoption the and does new understand the

Yes, second the purpose. that's

of Agent where all purpose the market course, can other is these first that that course, we to the is then advantage The have. services much functionalities. the the all for of needed that have, us of now must access see the company with And Yes. Cloud we other give these visibility

it, so you Got great, thank much.

of our question the And Research. come from will or line next Arete from Patrick Colville

You begin. may

you side leading. on Thank Can profitability. my through operating print side, such possible the the to to in credible be the I puts the on question honest, you quarter and talk just then set kind on especially takes results performance. really strong a mean of of what and market a just congrats and for margin just margin taking happened solid profitability, gross it the

so I Yeah, we're of profitability. proud that repeat industry Patrick, very our leading

payroll to our from have to we're additional margin, and taxes, salary Pune, really, as offset software third were On of the mix really engineering we're in vacation capacity of expenses we like party getting talent. data by maintenance, is great as a things legal With they Pune, related increased a in gross regard consulting lot talked costs lower factors. center expected, non number but lower net such as areas, benefited lower services, was did travel. well about an which It and other we've hiring headcount it spend was, than hiring in accrual, the

touched And buybacks versus pretty because on something earlier, the but can about change I product briefly orders. that major you a was that ask

I've lower bought aggressive something the the the going the balance collectively had that mean quarter, done right, $XX and should counts? this forward in the bought buybacks math million double year. my more to on So cash sheet first which half back of you to if third its amount in the use is back whole expect we share on I is

is our dilution. we're objective know, you that And, shareholders. cash so minimize question. great so this for strong delighted do have Again, that can the to we the Yeah, we our

trying capacity our that's market. we that's, in actively M&A, the really so to – what are preserving And achieve primary continue we're be looking for because to we

indicative guess XX So what every to that not of to do quarter. I going million is would we're

our broad been average at doing If of been you the look has here, authorizing of sort we've what million. $XXX

think And more really way the so think to that's of it. I

and when amount we're we quarter, As I in said, timing do on buying ends depending it varying. up again, of the can each the

two we not one small because window would is a the bit had repeat the normal a quarter very little say, quarter. me thing previous that things I Let was

from So in long-term kind about up. Because in a a discussion we our fact goal catch this had way, just and from of allocation. we when discussed came it was a the capital have investors we

it's prefer exactly allocation. what us for And minimize could number is of strategy about – firstly, option we'll if our let talent, board And them. I looking to told essentially talent. that the for look said, incentivize continue and begin then requirement cash one we committed have what cash investors the First then of think discuss it literally this we your we're we about say then and then discuss me essentially, us maybe that. sales? we the to course, me say when because to discussion, the the I personally cash. long-term okay, with okay, answer and do the all, need So is going we – RSU we if say, the of so location course to you get to they let and because And dilution you and know another of capital that's you we

minimize goal and are the into about is stock, up about chocked So we through that it's that. the dilution the pumping just the SBC essentially not it’s do we to

we additional that some because we of made, no but gained past that's have buy now the the about and windows the market whatsoever authorized underlining today, in were also we to on open only the expanded in change capabilities essentially limited flexibility the the with today the philosophy. and change that limited Now

Well, you much. thank great, very

remarks. like at to over And questions further showing you. not I'd close Thank to I'm call any this for time. your Vinayak back the turn

New London, York you. Cowen's NASDAQ's Security also in third Thank and in Communications Networking Fargo's look for in Las Networking Growth our Vegas Needham's earnings We'll seeing Summit Conference November. at Cybersecurity New Wells at all in to forward One-on-One and in be you XXXX you Investor Conference call. We in in Annual and Midwest Thank Stifel's quarter & Chicago Conference December. York attending TMT Summit

concludes for Ladies conference you participating. and gentlemen, today's call. this Thank

You disconnect. now may