Qualys (QLYS) 4 Nov 212021 Q3 Earnings call transcript

Thank you for standing by. Welcome to the Qualys' Third Quarter 2021 Investor Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your first speaker, Mr. Relations. Investor King, Blair ahead, go sir. please Sir,

Good Thank third welcome Qualys' and XXXX you, earnings Rachael. quarter call. to afternoon

Joining me our today our to discuss our results CEO, Joo President are and Mi Kim, CFO. and Sumedh Thakar,

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

GAAP measures. I'd as investor a to we available press is earnings Investor turn are And will Sumedh. release. During to of the of prepared over website. section remarks press our release, included call Relations in non-GAAP on measures A and present reminder, that, this non-GAAP to GAAP presentation reconciliation today's call, both With and financial the the like Sumedh?

performance power Taking QX, on financial respond continued VMDR, to Thanks, first solid drive are Blair, to environment. report agent wins solutions and and look to a much welcome, solutions. further Cloud call. Qualys orchestration quarter and deployed Qualys our re-accelerate few and third our IT closer into and approach already We a not vulnerable, its remediate and part this strategic momentum, VMDR agenda to our platform of ability a their build from we them and quarter multi-national single Platform customers everyone, notable Continuing to our several advancing platform built-in also purchased of out The that the to to worldwide. Management growth by Patch another earnings year-over-year innovation. new our cloud our faster bank pleased rapidly while solution, consolidation detect the a patch XX VMDR which of but agent, of point siloed continuously validating reflecting in million a believe to a subscriptions of of across Highlighting misconfigurations these Detection among purchase. the to vulnerabilities or now new steady Response, solution prioritize solutions. and Further than Vulnerability top XX% assets only hybrid single competing several customers approach stood will their of is security quarter, Management, grew made adoption compromised, with risk together additional reduce of help are selected XX%

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existing of further customers validating expanded several paid enterprise their significantly our Beyond approach. respective platform, breadth on these new applications our wins, customer large platform

illustrate For example, Policy single platform of and selected are their to File security enterprise spanning compliance to with to a customers and cloud Fortune re-architect that stack effectively Integrity ready Container Compliance, in Security on-prem, quarter, and Qualys wins new environments. needs. their expansions customer security Monitoring endpoint and stack, meet of the is view best We glass cloud-native, assets solutions XXX pane their all legacy believe cost multi-solution consolidate VMDR, that these a and of consolidate when the

We recently product network. aligned are a an strong direct SaaS go-to-market winning focus which To with we complement business, motion right channel existing across our on working initiatives and our includes hired building endpoints, toward expanding Officer. marketing, digital our Chief seasoned partner and out in place, and customers a on focus with Product offerings having new environments, cloud, solutions container, mobile sales security the

join new around As in to to we world also CIO Chief the and I executives tools, a our call, accelerate these ensure look Officer consolidate security make improve to their we're have added business great continue as well. balance mentioned processes, And, experienced growth with prior continue top-of-mind Marketing to we It's our brought stacks. on right as systems, new that and to Qualys recently as customers profitability. to we find investments a to

Management to and the VMDR compliance simplify game costs. Patch help and customers QX, offering region, including announce Patch released Cloud is to operations on solution our extensive SYNNEX example to an further resellers application in to its lower the help enhancing TD the base selected an American channel as to and recently TD pleased our of remediation has As strategy, I'm focus Zero-Touch teams of security management Qualys our Platform SYNNEX changing North IT of patch security Qualys capabilities In automate extension we partner. its that vulnerabilities. currently as distribution

patching vulnerabilities, the to intervention team Cloud automated after enables Qualys policies Our vulnerabilities launched proposition for by set to VMDR by free up with it while the in ransomware. of market need extending vulnerabilities, for are risk-based this XX-day asset with comes fact. something pre-defined legacy misconfiguration broad vulnerability IT and in the reduces patch we measurable advance our customers. Garnering exposure risks attention, Risk the comprehensive current game the remote management, the Assessment when and leveraging detection, received to rapid correlate Ransomware positive a in workflow recently well inventory, In prioritized of Service. way. ransomware ransomware-specific a enterprises vulnerabilities Further executive IT curated environment bypassing track in patch unified Powered patching the on with real-time costs. we've looking service dashboards, window includes significantly CISOs Security feedback research our to vulnerability and management enabling and along value actionable as prioritize industry solution Platform and functionality and and remediation our in as award-winning management of measurable customers exploitation of from initial changes this single

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We will Conference, many and Security November at Qualys you registered our We sessions over other this conference, solutions attend. product informative to upcoming virtual showcase four people I attend have event these have X,XXX to be XXth presentations. will day as customer as live XXth already QSC. a encourage will to and new which from well and

with is picture, to prioritized strong. and product will can and Mi for register You to initiatives qualys.com/qsc. market With full expand our immediate investments XXXX. outlook on ultimately that, create for the addressable opportunities call I'll further and on and our our turn the year over advancing agenda quarter our market. Joo while differentiation results third focused executing that We're position financial new fourth Big competitive quarter conference Go-to-Market access the discuss at the

good afternoon. Thanks, Sumedh, and

highlights. start, comparisons in period, the report revenue and except for prior with another to non-GAAP in as growth Before of all like acceleration operational billings to revenue, and calculated and reflected I'd I note the to based financial financial quarter that, continued unless are pleased otherwise. year We're on stated rates current growth following LTM figures are growth solid profitability

the surpassed in We're inflection subscriptions in the that at up to current and million million ago. with Our the by growth months over now we of quarterly and for X% in to months, XX QX Agent million XX% QX that million. believe ended billings $XXX.X XX% point to up VMDR QX a adoption XX the calculated $XXX increased total are for from the XX% QX, Cloud XX%, growth and revenue penetration revenue on our customer year growing XXXX. at time, track twelve QX, up in first accelerate XX crossed LTM from Paid growth. we've XX%, continued from excited last With XX%

was approximately to and of our of mitigate drive XXX,XXX authorized repurchase a has $X.XX, cash a in line last QX, same versus was that and the cash Board dilution for million Our weighted including for quarter shares. drive XX% from the $XXX last seeing of We're cash pleased Including superior which million, this into Non-GAAP third believe third million was traction remain in We representing capacity. provides margin our to to Adjusted generate XX% $XXX XXXX million XX.X XXXX expenditures share margin, invest XX% $XX.X given that increase $X.XX period allows we last EBITDA model as us our million QX, program, down flow capital was EPS YTD XX% of to margin average year. the the our business. year $XXX of diluted versus we're year. announce growth XX.X repurchase our from significant last In million, quarter generated remaining free QX million year margins last The flow. and outstanding flow repurchase up drive $XX.X scalable well-positioned in with platform million a million, model share and from was share overall for business $X.X our we to on XXXX the back for in to we're confident cash $XX.X and outstanding third quarter operations in XX% continued the value. shareholder free Qualys year. the to representing shares continues

for raising our both be full year to delighted revenues guidance and earnings. XXXX are We

to We are million revenue range from in raising to the top full and prior be of for range of for the $XXX.X the year $XXX.X our now $XXX.X range to end million million of guidance million. $XXX bottom the

quarter, revenue full our $X.XX. represents million, from year range $X.XX range the raising now to in million which fourth in range of $X.XX growth. for the non-GAAP prior of expect guidance be And $X.XX the be are XX% We to a of the $XXX.X range to EPS $XXX.X to of to to we XX%

to million that, $X.XX. any the expenditures QX be to your happy the answer are million. of Sumedh questions. expected in to in capital to EPS non-GAAP of to range $X.XX $X expect range are be and I of With $X We

with [Operator Instructions] line your proceed from Please the Matt Your Capital Hedberg comes question. from of first question RBC Markets.

here It's revenue see in the Matt Thanks first about from the taking implies at revenue talk midpoint to quarter acceleration guide? half, our XX% fourth quarter. Can components this XX.X% bit guidance half of the in you and particularly little Dan It the second XX% is nice then fourth for Hedberg. with Bergstrom acceleration to leading the versus really at questions. the a here quarter

Yeah, to. happy

the what acceleration as the LTM about from span really talking seeing for this as revenue well So growth continued existing can tell a we're And billings, we've new. you the for is been while now. current as by customers

increase you from CSAM. take the products to Sumedh continued continue more product we're his the us. as a VMDR new pipeline, helping now, and of has additional very patch and important [ph] we at right as look at created adopt and if customer been trajectory stack customers in So looking a penetration and us that's cross-sell like it's mentioned spreads our VMDR like And product as land also to what to bookings been a portion perspective well strategically customers as adoption which during and introduced management, seeing

increasing from with pipeline with positioning the deals. market So that has overall, strengthened as that think as well product new and launches and helped customers our new existing our with has I spend our

Great. multi-product adoption couple of remarks traction and that the you new you platform what's the of initial mentioned are the vendor consolidation you calls, simple power that Could sale? VMDR about in customers, Is or in then that customers And it on as realizing the there. increasingly driving by mentioned the talk prepared last trend?

both I things. Yeah, those combination a it's of think

think, their is time so to to talk each with you the do in they the consolidate wasted get NEC, to, work other. trying solutions And vendors really many too I to want solutions and stack.

the unified that, the that just it's market that looking platform, put we does to well shorten what ability into only vulnerabilities as And of those when So potentially prioritization truly give of with a vulnerabilities, really time we different solution. is of provide what platform, then have the that's approach not exposure, that same give a not list take is you that's combination tools then amount where take other essentially but you the to look with they a the of that VMDR when at together, Qualys' to of have for. scanners you like the because as ability the patching do,

really and the window you So the right. much exposure big agents make the ability part that And is VMDR get of reduce faster. also and adoption approach, that can a of to quicker

them to VMDR and so they they when management. see to customers module certainly they ability agents, the on the have So a as on for File deploy turn already who have way then asset additional value can the that drive agent can you that is Monitoring, consumption cybersecurity quicker turn Integrity

so looking is the we see now solution really when coming us And their and new new security where re-architect customers, what are state are mental to look right in a vendor. they to they they are for

Qualys, they of other a And to so patch, to Integrity have that's our asset that VMDR, management, they're ability they're and buying but this something not that Monitoring from well have monitoring when is why right capabilities, as patch in bat File customers the buy Qualys integrity other see off just compliance to list new just as out the the inventory, top ability bat. file providing vulnerabilities, capabilities, built not see as including solutions and quarter, when also other policy we said right the only ability the quarter, they we last buying

customers. that that conversation So A seamless with of and we provides fact our desire our combination easy see to the with platform that we manner. in what see a in is that consolidate actually

you. thank Great,

you. Thank

Please line proceed Your question next Boulanger Point from with comes Curtis Summit of from the question. Capital. your

you my Hi. on your I taking to much capital very thoughts allocation. Thank question. get want for

market the in So Trust selling since Family the I shares been August. noticed open Courtot has

like and I you how tailwinds in and it's bit the stock. short cyber, are surprised on stock well a that little XX% higher. mean, explaining I'm a executing overhang been given bit is So, looks you're experiencing probably it interest an of the

Trust be So buyback little kind Courtot a I know with just comp. buybacks overhang? aggressive bit just a Family but from little the remove share authorization, tender to share to aggressive you I spoke more conducted a or you'd was Yeah, about bit if bit than get offer of wondering dilution share-based more getting offsetting willing maybe

cash that securities stock of our We a talking our believe about XXX is strategies nearing is we intention. perspective, it's that reasons million one over our basis XXX kind million our is do sheet us as as the so so this had it allocation is with of the for with and XXX QX. that great marketable management well. on actually been opportunity capital the Board why to the good And from our undervalued and Board has leverage with on authorized balance mark when and our actually We've question. left million Yes, additional regular slightly of a short-term cash

executing the revised We on be based spread. will

That's fantastic. Thank you.

Thank you.

question from JMP Securities. the with line comes questions. Please next of from Your proceed Erik your Suppiger

take light including differences Yeah, I'm or could customer take would you you've the any thanks observations a couple market looking taking in product, curious, call. profile take new that taking number to to curious, in logical terms the you're in executives particular go secondly, changes any - market? A have of that And I'm Is or just that in anything for questions. with to that One, any that into? the there on, away? XDR formulated strategies we you initially there of of direction brought a that CRO, are just

Yeah, great questions.

am I have excited seasoned leaders come definitely on I think, first, to these board.

here so strategies want to to that the that stated, management, are on the that us a we board between their to the we XDR product of starting I focus make and and from the endpoints, also engineering drive Integrity think consolidated to the to really SIM getting really I we have much deployed, then our CRO of we Qualys all that platform platform the of from closely the are that vulnerability are and we have good part that and and some CPO File already and innovation but the on that's additional continued and sales solution a on working SIM our ensure where events, enablement, with creating current to the someone data environments CMO ability already really have the and is their that's solutions think, as education have we through marketing brand approach into for the side, thoughts XDR want six the good excited lot all cloud of innovation, with him a that on Qualys and relationship has with And that continuing on that work helps getting are is see, are the is we so in team so Alan the have having EDR, the asset with sales innovation where as them. terms solutions our and many the of as bringing platform and so a year converting think on into and capabilities as will with focus other workflow is we differentiate and sources, for with And here. the we as see a and opportunities collect and ensuring to I the the rest products we new container SIM we coming the proceed all creating subscription. a through as focus to QX we well campaigns have to we've we teams lot a have new that continuing ourselves has good vendors been a better everything a from really then can data accounts. we well other established driven should driving as in how months between working already investments, of very there, sales quite work earnings. solution the start been need that to to really they who working platform, And different Qualys really five, needed lot issue the there's them end-to-end the product And now impact inventory, telemetry through these the deployed customer as an you pipe does that where then together the

products needed the of few a information to So for from and additional that. other amount third limited correlation firewalls is like solutions party

market and being enabling in capability by value being deployment account third lot their are able the data, customer the and existing and services is So required. going and solutions XDR get the to then a of to deployed a XDR get time working be of Qualys require them believe them lot we capability that very party this to get where and professional can differentiating in typical bring a

detection we market go it's where this do initial and on also mitigation be mid-market with it solution simplified is after [indiscernible] of So, going journey a will just the will where to clearly, vulnerabilities need very the a but that platform be not and we see focus single lower-end where on platform, we the threat patching. - risk customers a that does focus

and as these have they there's market, on across market, they manage a to solutions. of monitor are many solution mid-market resources lower don't mean, the cybersecurity for resources fewer a the general shortage - need of end deploy consolidated and more there the especially people certainly and so needs the where I but And

of I as data XDR already value is think Qualys that see is some where customers threat context is despite already and larger have platforms, and that well, with just them. we the because there are them use they to is the specific in cases, bringing, SIM Qualys very collected amount other we having XDR in valuable working intelligence

then and or solution. how So customers, larger next up as terms adopting the the see year end in how I shift that of mid-market they will evolves, of so the we to start going more think, will customers of the

you Thank very good. Very much.

you. Thank

the of Goldman with from proceed from Sachs. line Brian comes question. Please question your Essex next Your

changes if very commented I think it, it fall missed but questions on and initiatives, asked we the you spend in trajectory wondering of I any to about and before marketing the executive Hi, maintaining to was apologize for much good of the on I guess spending might if that given was and sense you profitability might I previous one drive incremental thank if maybe how for could were and afternoon taking growth. anticipate of sales the what relative I management, into question. there,

of said further our mind. very all formulate and be as time terms and in and along. it incremental as should closely we're every to in marketing, it and And taking that repeat the a bit spending. as the sales just think with our but time is CMO have little to us is an working because we quarter, of that ROI the that Yeah, we understand And, CRO, investment, that I'm plan, well CTO keeping do spend necessary, we we new takes sorry intention to in way, meaningful to is a right to for of increase course, everyone spend a new increase

provide will guidance be that revenue and quarter annual next now, guidance we going well the right planning we color the we're as will additional ETS. with providing budget So cycle at through the when said, as

of it. how months it, bookings other kind any of of That's VMDR us revenue Have the total your a VMDR again, rate. the a over but or if percentage bookings I installed you. Thank within give see incremental or base. Got penetration to metrics I to XX missed as kind last penetration Nice you apologize percentage the and helpful. of offered

that we about the quarterly renewal quarter. last up talked LTM that metrics of for I actually VM percent the solution, XX%, ones from significant. percentage a And the are makes is know VMDR as so that XX% up one of now bookings, went up the of that renewal that terms we're XX%, to about talking over it bookings, in with so Yeah, up

It's an seeing momentum that to of investors the you're uptick business see the we see quarters VMDR in make that we're we're some this is, contributed upsell earlier do inflection on do couple leading still to wanted that as rates customers a and really of track is We and that pattern, see continues the the of year relay momentum what this a to we sure to continuing So We're hoping retention to has of we color kind kind strong of of purchasing additional and bit solution. in to guidance and little a that a we will the see you acceleration in it. rate and point more tracking, business, as of where the indicators a message but that one next lead further revenue. that seeing communicate quarter. give full in little course, what believe we bit consistent a those

Thank helpful. That's much. very it. Got you

you. Thank

Your the with your from line proceed Hamza Stanley. Morgan Fodderwala Please next from question comes of question.

the for quarter? or to Joo just Apologies, taking just, bit at Hey, current the the But guys, question. billings if deferred from total answered. all, thanks in was my dialed either for any acquisition this one, I a revenue first a acquired for contribution little already cloud in revenue is so late, metric, question housekeeping Mi, there sort of

that outside had line to of it that. all, financials impact No, top it's at no so

curious, market. quarters wage lot a margin obviously, A And the like Thank of and it. as hiring are hiring, to the into there been it's on experience of then Got couple companies what's seeing past you. I'm it the a pressures. relates my very your environment, labor how up forward just of follow you're difficult outlook? kind lot reflecting in that

job lot I of good would company, see, will in few say, the getting have I a of the right. the we done, a hires last think in hired key if you months

at etc. think we I But to they for that's good interesting. feel to I hire at right we're are the board. continuing here, roles, we think then as across bring believe the coming and the inflated get opportunity, because right a be I that a our of them into seeing we're right show do the good growth looking where also have that them us do right development in certain we we are and able is even people, market us presence helps side. engineering But when talk think a think spread terms time what large as what leaders think in on is seeing people the in there market Qualys, And of So spending India, these can And is now on engineering the board, part teams and sometimes to results to can the have different with Qualys, the good yes, ways, I I are they out with opportunity product strong in when I it think the story well. we also

be able hire it continue us invest to the India right and good well. the locations and to So and more gives right talent opportunities find to different in resources as between talent

So terms withstand of to in us the scene pressure right of hiring from helps that that seeing now now. being and kind able the right market we're that we get in the

Yeah, terms event. of year-to-date far slightly achieving take lower our and you at QX margin, implied we've and than so primarily our look primarily forecasts, in if QX it's that a to due margin it's our what been

mentioned As that Vegas. in QSC is will be Sumedh live, Las it in person

sessions marketing we have incremental as but of We expanse QX. additional do some typically course we incur will available online that have well in

you Thank Okay.

go conference to you. showing I back questions. further no turn Please I'm Thank Thakar. would to like ahead. the Sumedh now

coming Thank that are today. much. Thank the and sharing believe you We offers. very joining platform really towards progress security the move We in we capitalize on to a to all of quarters. continued you look for consolidated that in market forward well us positioned sort solution

call. you Thank concludes for Qualys' participating. quarter Thank third you. investor This

now may You disconnect.