Qualys (QLYS) 5 May 222022 Q1 Earnings call transcript

Ladies and gentlemen thank you for standing by and welcome to the Qualys’ First Quarter 2022 Investor Call. [Operator Instructions] I would now like to hand the conference over to your speaker for today, Blair King, Investor Relations.

You may begin.

Thank you, Tamada. And good afternoon and welcome to Qualys’ first quarter 2022 earnings call.

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

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

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

over So to like the to with that, turn Sumedh. I'd call

another generation. our cash of Thank pleased strong momentum, reflecting call. we to continued you, to start and first are revenue acceleration flow report everyone, Blair. quarter And Building welcome, year to the very earnings growth quarter on our a good

over with the LogXshell systems Beyond as to of trends the our coupled platforms widespread organizations organizations time differentiation indexed analyzing are of on Not recently pushing highlighting a believe future cyberattacks and did threat-landscape. siloed, and millions fueling of researchers increase current security proof architecture. like their their integrated vulnerability, have the security surface the view conducted We assets world Strong cyberwarfare complexity to of growing security these notable which competitive attack headlines third-party continued move they the several and the ransomware study the platform Qualys the shed own response and and market risk datapoints and our are outdated, only at patch encouraging of matter trillions included also market to and in reduce of to a but around is had compliance vulnerable immediately dynamics highlights. and and speed get growth. concerns business lightning and move hours. issue to their mitigate inventory assess real-time to asset their in on software continued

of was customers unified a that Cloud vulnerability days together Our agent to to leaving a compared old their study the to approach compromising siloed attacks monitor without respond to this of toolset inventory, helping for they vulnerability and EDR same delay. vulnerable Qualys also single Platform’s average appreciated XX showed detection, our to an their with into had remediate reduce solutions. that in assets by multiple management them point and took during organizations bringing period. patch attempts asset At greatly time, significantly approach exposure

scans integrated globally, ability allowed million detection XX% positioned highlighting Asset software our agent speedy for single integrated comprehensive to Additionally, We Management impact again also uniquely technology depth market and are proactive this we as innovative, and was over response. products in to its their understand provided a Cybersecurity end-of-life, Qualys’ provide using for that risk their visibility XXX our reduction. believe customers encompassing security strategic and more vulnerable with study shown approach to of the by than capability in LogXshell the

of XX last Agent go-to-market this was Given market. subscriptions tight to given These is now Response, where QX, or the to team, transition by especially steady see over In the million the the in our VMDR, opportunities labor business, we Management, a growth as expect ahead, of double-digit year-over-year environment results XX% challenging and purchased of continue adoption continue prioritize our the investing despite Cloud our year and power VMDR. agent to hiring grew we XX% consolidation Detection deployed solution, which months. worldwide. XX validate security customer's single customers our to approach There a Vulnerability to building

transform and The is Asset This market IT out started example new accurate security respective this with with growth in VMDR, Patch EDR, with and Management, capabilities customer Management a prevention our as Qualys asset its to commitment solutions. onto uniquely a initiative based strategic quality chose on competing all today. next single inventory, customers agreement the of a quarter Our will new alerting integrated stood integration, solutions Cybersecurity customer Platform. cloud-based adding alternative part threat architecture. of asset several asset expand against debt, to platform journey and response natively that compliance Multi-Vector a underscore customer, to Qualys much enable ability of environments. who CMDB enhance technical agent with stack while Patch endpoints among I’ll customer to deployment market their that Cybersecurity the and share today Asset remediate context, monitor cloud making Management to vulnerabilities available environments. reduce security speaks defend offer to U.S. program across context entered customers unite vulnerabilities, and in single faster spanning capabilities platform Malware an start and Fortune success only container Ransomware with and and Their automate prioritize high today utilizes The and us I a patching XXX sizes the Cloud in you aware the on-prem, are Management continuously existing their a proactively because integrated their we detection visibility to significantly future multiple full to to events stories to with than into VMDR security the mapping

legacy how XXXX of better we’re expansions a single partners resonating detection leveraging from unified capabilities that these agent IT ready as we were speed win approach business its decision. uniquely factors and VMDR rearchitect dashboard security and This go-to-market benefiting and platform to increasingly along another a in to We complexity Leveraging stack. consolidate the with good channel new with of new example new wins investments single on-board security remediation costs natively believe integrated customers also channel making we consolidated our opportunities. in is illustrate leveraging a are its our to to our are and partnering leadership, part with Fortune operations. win, and their significantly This initiative. technical in is critical our logo and also agent of Patch purchasing customer selected vulnerability while automation Finally, and reduce compliance new The customer vendors two Management. cloud-based

In our fact, further programs we logo and recently worldwide. designed partner drive launched wins business new to new

threat our VMDR ability to adopt expansion landed, with threat trial Platform against upgrade criticality, to and of including X.X remove we before, misconfigurations threats, EDR said use has already enhanced applications traditional integrated introduced reduce simple As agent products natively Executing to This further a mean-time-to-respond. free. on vulnerability Unlike and A agenda, hassle currently solution. recently the is associated friction customers activity and our our I’ve make detecting as our to the the major next this may for and only customer mitigation as on solution Multi-Vector well hunting click Multi-Vector well goal after risk Qualys single at asset to multiple leverages EDR product unifies other patching button. has who the EDR endpoint system on capabilities. threat context approach focused for the Cloud vectors, our

of this for since and volume adoption and and the positive of more most receiving product customer's results. have shoulder-to-shoulder to pleased we're of evaluation for X.X also the uniquely further VMDR customers recent the completed believe already cyber handful the achieving are pleased the and capabilities specifically utilizing I'm strengthen our prediction its will prevention in for EDR impressive reduce new our time, excited first update. very We EDR from by a April, MITRE added Multi-Vector existing early by incidents, resilience. We the players introduction that the feedback extend ATT&CK capabilities solution, early existing with customers of

strengthen delivering Platform solid increasingly are Looking summary, our container differentiator More move specifically, companies capabilities results ICS/OT customers financial uniformly as and is robust a today's further on and and environments. solutions container response threat to detection our leader to applications building the environment. business we automation, we heightened in compliance competitive ahead, further cloud, In to momentum transformation our recognize strong fundamental Qualys cloud market and environment continue expand we'll and as in capabilities. to combating as in security in Cloud the in security invest differentiate

drive We solutions. challenges, built With value. instead to turn discuss risk that As disparate modern Mi natively full a is this exposure solve looking on integrated year capitalize shareholder that, results cloud-native a positioned Joo further of and second point on quarter collection platform customers the reduce to XXXX. and over integrated I'll our are through Qualys outlook to the our a with of to adoption platform their result, relying of security security increasingly uniquely first organically the for quarter to call and sustainable long-term, trend believe

Thanks afternoon. Sumedh, and good

operational up-sell figures that pleased in are in organic and our period. note year our growth expansion up cross are period, with last profitability reflected acceleration XXXX a and continued quarter start, and grew up highlights. the for year to QX, XXX% from financial XX% first growth to stated XXX% an continued in XX% as year-over-year otherwise. revenue, increase based was except ago. from on following performance Before report comparisons a Revenues sequential like and We're and success of financial XXX% year in all to quarter We ago non-GAAP I'd I land-to-expand net unless and which the driving dollar engine saw $XXX.X for to the prior revenue rates the rate, million, in strong healthy growth

and in the and we've With XX%. position, value year security continued growth both with size our single X% increase total for current several the deal proposition and XX% agent QX, QX to past average accelerating by our for and in LTM platform over helped LTM billings as demand same quarters. average strengthening growth solutions believe investments a enhanced in calculated market transformation with our up innovation made approach from grew our QX drive have We bookings customers Our customers LTM increasing existing ago. LTM growth and new

continued having growth spend of market attribute our $XXX,XXX quarter with innovation this excited the strong XX% to XX% up different, increased the or ago from last continued was adoption by and and from with success in at customer now no us. with customer strategy, position. large and year represents total And year of This VMDR XXX a solutions product penetration ago. quarter more customers This Qualys XX%, XX% adoption resulted period. spending We differentiation we're

critical cloud-based platform out risks. favor CIOs and a unified weaponized of a initiatives. looking legacy focused priority consolidated durable The solutions which industry-leading increasingly building point increasing are on and business with clearly are resonating to and cybersecurity increasing importance We at in phase due compliance vulnerabilities margin. and building to digital a with security remain investments and Our customers. growth CISOs in platform speed of transformation long-term

earnings QX, proven continuing capital was XX% of our the generate believe expenditures of XXXX $XX.X XXXX attractive representing quarter the and margins operations including first continued cash XXX,XXX the As as cash The quarter value. announce repurchase was a uncertainty to scalable cash the to at share we and free in cash program. free QX that business. to our Qualys and increase flow Leveraging and to million XX $XXX was has as from million shares repurchase $X.XX; volatility. of In levels and to shareholders demonstrated our mitigate XX.X pleased a to allow an $XX.X capacity. continue currently in agenda our million, of been our $XXX the our in and continues continued repurchase to year. model by representing business our diluted down significant flow we bolster The the current will to our quarter capital dilution start for million our resilience continue from of shareholder million, last this now increase our can guidance us confidence to result, $X.X superior an average we time provides million flow. scalable this Shifting million, million of has additional year, quarter $XXX business drive return invest remaining us this XX% excess drive time strong Including into sustainable to We're first for shares. to and share generated to share flow, on outstanding support for continues approximately year our weighted our generation the outstanding $XX.X with invest the opportunities for believe with million second on Sales of we cash Marketing to to Board in emphasis the authorized business. back to our right rest both model and long-term environment. We in to and of spend over margin; cash QX, while growth strategic ahead, and EPS strong the for continue remains margin. of time was the first XXXX platform And a Adjusted EBITDA

with to As initiatives, proposition We're enhance our Building on off strategy equally are top expanding million. year and focused headcount. prior the $XXX end I've the accelerating other term our guidance support and productivity. our $XXX.X management full to to year just to start $XXX and revenue functions in investment to both This adding full said is of product capabilities bottom revenue customers value strong million this sales before, about marketing the $XXX digital our guidance growth. year, the million, now mid-to-long not further enhancing channel, range million be of raising compares representing to of XX% for we sales

the This EBITDA back-half terms to our for to to prior implies the are investment full with labor more balancing year, weighted. investments in a raising anticipated margin guidance the with $X.XX the $X.XX guidance now range from our we of In timing market be low-XXs of to in EPS of of $X.XX be year profitability, the range $X.XX. our revised tight

of For the million, growth. to be to $XXX.X we the XX% in second revenues quarter, of range XX% million represents $XXX expect to range a which

expect in We the $X.XX be to range to of EPS $X.XX.

the full to is $X.X of look the to $X.X continue $XX this Our expect million range XXXX, to we for balance the as in million we in $XX approximately year, million. expenditures planned capital and we about market growing to QX conclusion, opportunity million of remain year to investment Sumedh back scalable to and on drive opportunity happy leveraging maintain of while With of profitability. to our and answer your industry-leading the that, large I excited top-line are durable questions. highly any a our model growth In

[Operator Wolfe you. first Thank Our with from comes the line of Instructions] Research. question [indiscernible]

line Your is open.

because guys start the track targets – guys off by I this the Yes. investments end back just weighted of QX? wanted Hi were that kind into And guys. I you guess still maybe mentioned on Are my I'm taking it you Is that hiring some you of those are on kind schedule to the design to the baked Thanks is trends. questions. for behind on asking will because you of investments? guys year. half of get meet or are be just you guidance at

now I – in marketing us seeing the people team, and ability meant. think the our which current perspective our we're sales is to leadership on really same has market building seeing environ that talk out attract sales everybody in think the right the challenges about But marketing I been else that. and we'll really focused more from we've our hiring given

made have progress. We

looking second what forward forward the is I the preliminary hiring back think we year. continue we to to focus continuing to build that that are doing half look in on out can so I the of having really

ability growth. our execute to very in follow-up To we remain Yes. confident and drive

we the investments knew more will terms from by half get-go weighted. investment In it back design be the of is and that

hiring as last and still and growing double-digit the head we communicated are spot On quarter. the marketing sales targeting we count

quarter. It's outperformance how just just in Very some they cash the up, quick about we should think for the give trends how free rest a maybe margins and guardrails? and us Can you the then flow additional should just follow awesome helpful. And obviously year? of

Yes.

low-XXs our probably the versus in bit half, the non-GAAP in terms price the first low-XXs XX%. it'll on and EPS what EBITDA a margins second In QX the will so is below of in – the the the in margin it based guidance, half be

is year projecting. the we're the ending in low-XXs So what

very much. you it. Thank Appreciate

Thank you.

from JMP Next line Walsh Securities. with the question comes Trevor of

open. line is Your

around A for us more Was was community? new it to partner be little of hedge through of call. sales question Can come that out. partner a doesn't some around maybe give hiring that you feedback from the a there maybe Thanks the that? that program on you context the kind it bit taking rolled great? impetus give Great. my kind maybe Can some quick for back-up. direct of context, have if a of You just would you more as us the

platform feedback us partners out our what take beneficial as hired who's would from Yes, on community the Really really we with SVP how been that to with a focused a for relationship yes. partner superior got we've and to take them the actually in really Sure. that's partnerships. in and of understanding and lot the can an we figure ability We believe from partners beneficial us. and our that is them to working

we have business can lot a we types really done that an of can focusing some with And that then leverage with program gotten but we the leverage review then of is the done on new different feedback, focus them. and a partners that so feel we've platform relationships sort of these working right. growth, with capabilities do partners we've partner with of that feedback, partners with And organizations. early a a and positive of course of lot review we global the the our the – And feel with of something to that

the relationships leverage and that taking figuring out right we're then go-to-market is them So direction really the with being able to now. their

on role telemetry, layer seeing that in Context just for looking some maybe – can, one have missed for then in XDR And the the network any more puzzle? – partner I maybe with again, you are more get that Awesome. but I'm you like there I organically see of providers your – own are messaging of that Intel out, to the that other if piece it, that far Or Great. maybe as to that maybe or with that that of piece? the of as layer through doing different coming vendors that do kind piece Where network tool? new

agents XDR great cloud, in also things. organic that two-main have really a platform. combination building the providing network the And our Context of API call question. about back our that's of that are that are One our connectors scanners, to that we active sensors Yes, is platform platform network passive already part are and sensors telemetry is the

the of done things is one to the bringing in all However, already collecting our Board that XDR with involved is given we have across Context from inventory an that perspective. platform risk the addition Context

reduce also us when that well, environment. together to put log telemetry can multiple as We are other their visibility from provide in different they're incidences the number we for partners more at network and helping of sort in to looking the collect happening to get of expanded have they that data the customers so ability things types of a comprehensive context,

that from on for the And provide sensors telemetry have also for where analysis data some it other collecting we makes Qualys so them them if gives deployed and this other of platform. then the leverage cases already the network our to vendors, take sort And ability network can sense. they in

Thanks lot. the Great. Appreciate a questions.

you. Thank

from Truist. question of line Next Fisher comes the Joe with

is line open. Your

follow quick just a to Thank up that. you. I had

tracking GA. Can that of guys? you little a how space is it's developing is bit and XDR that around us actually for Context been you how in give Now color

product the other Yes, have launches. Context feel as taking about is that good I XDR we new with think any we direction

what EDR of and and year from look to the additional closely working adoption getting this and to Similar – to to that we are and bringing forward that we've done with a with XTR. base continue through increase towards enhance feedback to from unique of we're approach continue with well, customer few capabilities. Context and this that those as adopters early getting going We to a feedback them sort

Thank you. Great.

you. Thank

from question comes Fodderwala next Hamza Morgan Our line Stanley. the of with

then of sales in in sitting the the that something Europe you to just particular Weiss today overall good, business this is remark platform, not spending kind maximum of you conflict demand growth broader sort your there in nice penetration are Keith penetration should – number but just consolidation remind So signals. for or in really an guys environment nice environment on and like prepared a looks wanted of remains In drive VMDR. better And kind us talked of of something Can that that's clarify direct on kind threat that's that it's seeing is as actually actually broad would security, of for of guys Is high go? like of It is Hamza. get? the for you kind broader I very impact? you the This in one sort you in kind heightened you your its where trends driving penetration theoretical the really the Excellent. VMDR question. of a play. sort driving that how think think of customer the about

take question. Yes, the I’ll first

comments My the as talked direct great necessarily around this the past question. about about that environment about and not are well. as the we've in think demand really we I

kind we able happen need expense to of do customers events look at do to program Our to those to this. see terms what potential they more step be security like to being a holistically of in when tend back avoid these

ten time remediate. overall automation. seeing critical security vendors that kind with is to leverage what it is window, what having that of helping reduce provide some that more really that reduce happening having And the long we everybody really offering, or And an it's conversations for severe, time, the are needs they are with that in them on potentially points something solutions, stack of so five, even more and to all of actively like their customers with a so we as the being organization part mitigate about vulnerabilities that reduce patch highlighted customers that are can [indiscernible] siloed did happen And data time not consolidation I exploited. study deck who hands our conversations is broadly platforms different to taking exposure in as

what so, we're quarter, are looking that are understanding tool is last [ph] business the encouraging to couple getting when that capabilities. are that in, a like quarters we platforms of seeing rather conversation we that forward I customers another trying. which customers come really And out of giving Obviously, we and are the see can is when Qualys at consolidating examples having looking list overall of pushing this at is what that new they looking we more multiple gave architecture, go is CVDs than figure do at that just big how architecture, an get I have to see, to

Right.

quickly How is at expense. that because has actually remediate they it's different in sure nation, cyberattacks you award their the able own And conversations that there that's to the and are to environment, and from release that fairly themselves because having make do a the are protect see state, [indiscernible], those we exposure? their risk we organization

much I how are and modern do say, they a good actually to that, real help do when So looking looking time provide are then you is they create capabilities. and visibility can remediation more that to stack

Got it. That's helpful. super

And trending now. right nicely VMDR up on your it's been question to to XX% penetration, a second

anywhere, between been have that historically had to there solutions. that for that more room to such our increase base definitely think customer XX% has penetration. I XX% is VM us But

currently with a some and XX% I seeing solution that beyond but so who up even that think us we're don't customers VM there going was see adoption definitely VMDR that, as And have can well. to we penetration

helpful. guys. super Thank That's it. Got you

Thank you.

of question next the Bollinger Our Curtis from with Capital. comes Summit line

Your line is open.

question. that taking for thanks Hi,

up could some trends seeing and You growth Thanks. out got strong how for key play of I expect revenue internationally trends you year-over-year. core was on with some rest you color the if quarter revenue this provide XX% these you're markets wondering from year. the

have momentum forecast separated good a seeing that's We I don't mean overall. out. we're a

If are international LTM revenue billing a the penetrated on opportunity front take international. what of there you're the opportunities, we're in less lot a Obviously and because in U.S. those or current more in look you at trajectory, just seeing markets. we're both is at looking

the seeing in with happy regions. we're so we're And that growth both

Thanks. great. That's

Thank you.

of Our next comes Capital. Loop Kim the with question line from Yun

open. Your line is

much for on they on Sumedh, business is and those usage deployment customers’ you. us environments adopters of hyperscaler Thank Azure environments? some And using Context XDR, hyperscaler and update give can your on of it your of like how to AWS, are just your or early GCP? you analyze your

Yes, on-prem, a endpoint the from a break usage necessarily out perspective. remote we cloud, don't versus versus

We visibility, have healthy your across we that's remote of value the the aspects think, visibility, bring And I that one. well your platform adoption I different environment. can Qualys your cloud that, into so really the actually as environment IT as that on-prem brings think employee server

environment help migrate the have the capability so And the who cloud, see are stuff an agents what do of on-prem environment, is the your Qualys is if we our bunch AWS, in Azure, from embedded with in running move so as to we workflow. to partnership rather Azure, Qualys where we have in customers cloud take so than, there capabilities you today Azure have workloads make customers we are into has in they partner capabilities them feel looking systems potential the right as trusted a

cloud through directly them multiple embedded help more and as providing existing new finding some at their we're cloud in be aspects, they different So, customers looking with as paradigm, to the from the capabilities provider cases. well, are them well partner working cloud moving as as security into and

who have they well are have unlike a employees And as that have don't values to they customers, remote, who the large on-prem. cloud, so that we're are usually customers cloud Qualys see happy most of see in as number quite who have

those are at particular early to customers is are they the not able are that together our again when in value but the focused the posture looking the which Qualys is may only cloud be that differentiates that there, visibility so context maybe may what of cloud XDR it's platform? not in also accessing context With and the that particular with activity, environment see a certain How maybe thing us at we from the that admin very and of environments. some looking That's exposure brings only the account. That's be same we laptop, on platform threats that I see really they single remote XDR and asset. that out employee bring that one seen account which the laptop, do is

and Thanks Joo around great. have context. Okay, VMDR assuming larger. that contract Obviously billing quick a question to continue deal adoption, platform for length Mi is the frequency. I'm I see size getting those, you around And

any that current billings? billings? trends you potential and around the any deviation between Just are total seeing And length contract calculated and

call over think – same. quarter contract the that's this and did one out remain does I have a it's been to year, Yun slightly been length, we

Okay, much. great. you so Thank That's it.

Thank you.

showing concludes you. I'm this conference. queue. no Ladies gentlemen, Thank the Thank participation. you and today's for in your further questions

You have disconnect. Everyone wonderful now day. a may