Qualys (QLYS) 7 May 242024 Q1 Earnings call transcript

Good day, and thank you for standby. Welcome to the Qualys First Quarter 2024 Investor Call. [Operator Instructions]. Please be advised that today's conference is being recorded.

I would now like to hand the conference over to speaker today, Blair King. ahead. go Please

welcome and First XXXX Quarter Good to Call. Earnings afternoon, Qualys'

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

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

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

with So you, turn over Sumedh. call to I'll that, the

generation, Thank flow success. quarter reflecting welcome call. customer our of [ you, earnings commitment ] profitability to another and cash Blair, ongoing and Qualys healthy strong delivered our quarter first and revenue operation growth, to

a [ We structural Enterprise customers cybersecurity. measure, in our reduce makes effectively serves risk environment, and on additives integrated growth focused customers This for ] accelerated a believe complexity us and as and foundational posture. designed are cyber regulatory with C-level management competitive cost of and necessity communicate [ security both solutions [ business advantage to and Trust seamlessly provides the for Given and platform intensifying future and requirement ]. outcome for Qualys organizations the the fortify security friction, risk the alongside platform ] to of threats scope boards an increasingly the for

As fueling external but VMDR patch and the increase especially with office the a cloud with management risk ] true and adoption, this logo in management, not platform only result, management asset also [ solution areas security. our is of new

capabilities In examples financial demonstrated security QX, to will retail health VMDR stack. technology, underscoring power expand deal share their verticals of with and Qualys' of our of all sizes. customers our care, large take consolidate strong to how continue services couple their to a the of I a platform, moment demand Further use

bookings [ to [ VMDS front, the a infrastructure ] in XXXX our high initiative adopting its vendors an mined services its TruRisk asset as in end-of-line On and company [ part business was transform marquee while and architecture, end-of-service a Forbes in monitor X-figure point platform. cybersecurity X customer ] solutions QX deployments expanded customer detect software replacing the and from single the to security of of subdomains IT its while VMDR The enterprise with patch management ]. customer with win leading

technologies. to external and ability container and customer on-prem holistic this through internal and for all comprehensive compared with scoring, natively environments risk enhance next-gen program significantly a and alternative its dashboard cloud patching and asset The integrated to across automated differentiators security key where platform its ticketing legacy criticality, unified

a visibility and existing to to and contextualized, customer across assets they further risk adopted value business score This XXX an company to TruRisk with replaced sale. our consolidating VMDM solution communicate increased manufacturing cybersecurity with asset is its The with initiatives, gain now tool platform, resilience disparate leveraging surface Enterprise in processes give connecting struggling and attack multiple subsidiaries customer needed by environments on increase win a aspects from prioritize multi-cloud single cloud modules management different management book demonstrates would to and Qualys better risk ] and and asset spanning its consolidate the its was how existing organizational of EAF and reduction this risk uniformly Qualys context. TotalCloud Qualys on and existing manage. Recognizing quantify into tools Forbes Enterprise Qualys standardized X-figure next business of helped and Qualys, peace management asset and platform. factors customer TruRisk [ on-prem Cisco This gain several mind.

Through program continue ] offering ecosystem VMDR expanded agenda ] Qualys. on verticals. with Investing in it beyond preferred [ pillar patch [ ESM include managed standardized the and ] that with be recently a and shell of our new America, as leading VMDR capability our investments, and Qualys business to mannering both to its bolsters as bring its continues for partner advance [ capacities, we solution patch our X federal to service key spanning sales its in and one cybersecurity go-to-market our partner these to Management providers our partner transformative Asset management, other evolving

capabilities portal the quality and month. for times already The announced XX to And significantly making to on nearly testament manage first sector remediation simplify our is looking later investment with these hosting our launch to wins new to latter partners and their and expand partner this forward customers. reduced recently are their X we're our we a of drill MSSP Cyber business, operations, Conference

well sizes. to of increasingly all expand reach customers are our to positioned We

program and value past strengthened our awareness, strengthening integrator, with which strategic TotalCloud a over expansion is brand position position customers. leading Additionally, believe its our system quarters solution to actively now the reflect our broad several to CNAPP market. in the alliance bringing the We continues we our of partner

solve customers less. drives understand sales security integrated through times natively platform and better more more modern transformation a outcomes, to solutions delivered costs tightly integrated to security With beginning Qualys how cybersecurity challenges, and are

$XXX,XXX XX% As ago a us spending year grew more XXX. or result, customers a QX with in from to

the at is driving inception Qualys' core innovation mission. our Since

VMDR beyond of platform, cyber building management that our with to threats marks holistically with next of the will aggregates remediation makes We with a management. button. -- on tourist upcoming are business enterprise phase the signals upgrade of quantifies factors resilience data platform of with in immediate and to VMDR customers immediate assets, solution top and seen click correlates the ATM excited risk normalized risk we and simple more have risk first- a goes holistic and context, vulnerability enable choice our the management success management expansion enterprise prioritize third-party TruRisk, of capability application, detects and visualizes, with frictionless which and

platform with all applications, our unified and capabilities single that integrated multi-cloud With Qualys again powerful is measure communicated across capabilities surface broadly including and cloud our new these IT, dashboard once attack remediates newest well natively armed assets. OT

remediation to into risk risk our their Moreover, insights are environment. our own preemptively solutions out-of-the-box comprehensive in actionable insights and organization's with actions converting platform our now reduce our across AI-powered data mapped internal detected optimized to

feedback ROI their The very many And doing. of for pace spend. measure to that with the the people event deployment agenda, I and respect of recent are about to from London excitement our ] the has the the that met reduction been capabilities at ability EMEA positive cybersecurity risk monitor we [ in QSC new rapid

the to Enterprise announce diligence to centric tactics pleased further identify into a over I'm holistic the we sources By combining on Prioritization business of risks view are to threat platform. recently ATT&CK tourist with we capabilities, framework, TruRisk our organizations XX ATT&CK advancing Qualys brought MITRE techniques. Matrix with MITRE predict Further and critical enabling attacker based and their now the attack in

proactively the single in out solution the combined contextualized enhanced integrated While Qualys and defense platform. this only manage enterprise prioritize, a quantification cyber believe advancement detection scale help ATT&CK a reduce and stands automated for -- organizations with risk as risk this quantification the and MITRE advancement, response to we risk threat-informed with framework

customers pace and the cloud unifying enforce principle and can [ infrastructure With CIM we organically this least ] and cloud solution. access innovation, management new of disruptive Continuing manage popular entities cloud privilege the to title CNAPP resources. and entitlements into of now our are capability,

and such built-in comprehensive one have with immediate newly and prioritization including most with for believe of additional security trip with time what time build ] a we we is dashboard through and as introduced detection remediation [ the security cloud-native market in actionable for container [ the created unified ] run capabilities. solutions management Combined threat capabilities

to our per with unmanaged entity. vulnerability securities reduce our detection now leadership immediate can subsidiary to X.X asset these solution ] at management -- confidence technology business and [ to acquired previously PIC ] continue Finally, management we risk platform, external work capabilities for differentiated entire third-party comprehensive technology the I'm cybersecurity new as across our [ evaluate highly gaps lightweight and and we with the announce organization inventory asset-based seamlessly ] external our pending integrations scanning, to success back pleased patent [ assets with risk or innovation leverage

our capabilities unique while and indicated Combining surface. approach in proactively tech EAF with derisk further to actionable to scoring dashboards to strengthens the enabling position manage attack the customers entire this market and TruRisk debt

is combat uniformly [ In security summary, company's in in ] today's heightened angulatory fundamental environment. recognized threat transformation

together natively of to platform the of exposure increasingly stitch instead TruRisk As through looking [ customers disparate reduce are risk invoice. solutions adoption the result, the integrated a through point of collection deploying ] a

approach our growth shareholder is a positioned ultimately and drive and with cyber long-term integrated and built a future profitability. eliminate well organically believe We growth foundation is to platform with Qualys that communicate for holistically cloud-native measure balanced risk, laying to to value

the call over to first Mi discuss full quarter quarter outlook XXXX. to year turn With our and for Joo that, will results second the I further and

good and Sumedh, Thanks, afternoon.

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

a increase making of grew quarter first year to ] million continuing contribution, XX% up with to channel [ Turning ago. compared revenues to to total XX% XX% results. Revenues $XXX.X its

of XX%. go was As XX%, were a by ecosystem to [ business, partners drive partner outside U.S. [ we able direct [ commitment which revenue to grew X%. ] ], ahead leverage grew growth result our of XX% growth, ], our domestic outpacing which the I channel to our grow continued

our revenue XX%, U.S. at XX% remain Looking and mix international to and roughly ahead, we expect respectively.

expanded to Turning and roles. land

the deal new many in with growth organizations We challenging, net last achieving from XXX% scrutiny business, continue Offsetting to consecutive quarter. was XXX% rate double-digit expansion positive the trend witness remaining dollar for resulting growth third down environment for in quarter. a upsell rate this persisting

new launch we systems. operations and in with to addition increasing use customer As XXXX, to to sales technology acquisition market in we share cycle of streamlining incentives prioritize better and campaigns plan and continue

up of cybersecurity made asset and In management new LTM bookings, bookings bookings and management, consistency QX. product terms combined XX% of in LTM patch of XX%

and manage innovation complex the the pace regulatory environment and success risk. underscoring holistically TruRisk our enterprise TotalCloud to of remediate X% of threat that security with our We increasingly up the bookings. With platform LTM our to CNAPP made assess, associated cloud rapid solutions attribute offering, an relevance

for representing Turning to investments. $XX a EBITDA margin QX XXXX a increased year compared XX% Operating in X% an increase and to driven million, was $XX.X quarter profitability. sales margin Adjusted of the to by million, by marketing expenses primarily ago. XX% first XX% in a

sales and productivity, As success wallet we long-term and intensity marketing we continue to and profitability. be believe to our customer ] able share and focus and drive increase growth [ investment will enablement, balancing on we

shares. For the year. the first of Qualys, we capital free a to million in to was operations from $X.X including our $XX.X generated prior outstanding cash margin into XX% back $XXX,XXX and In and of expenditures $XX the repurchase quarter cash ]%, XX% invest our million XXXX million, on representing X.XXX compared we to was flow QX, continued [

As of our the $XXX.X of share we in million the program. end repurchase quarter, had remaining

us guidance, to revenue. starting With with turn that, let

a the [ year to of to million million X% guidance rate of For to to growth range This XXXX, ], $XXX.X now expecting are last in our to $XXX quarter. compares million be the we represents $XXX.X full revenue $XXX of million which XX%. revenue

the For offset business we continued customer guidance the drive to representing upsell scrutiny, range by of to growth of assumes a new XXXX, in environment, rate revenue $XXX.X million the X% expect to $XXX.X resulting partially investments million, deal in growth. second be This quarter X%. to upper of in

guidance. to profitability Shifting

EBITDA expect mid-XXs. the low margin free the margin year in be XXs in we the cash flow XXXX, to For to full continue and

full to be up $X.XX from $X.XX. to expect We to of year in the the EPS prior range range $X.XX $X.XX of

XXXX, of expect to $X.XX. to in the range quarter of be second the For EPS we $X.XX

million. range expected million million the in quarter of second Our planned be the $X range are XXXX $XX in in the of XXXX million of $XX expenditure capital for to to $X to

maintaining federal our with sales a initiatives of disciplined we Consistent vertical the and XXXX, outline our focus prior guidance, economics. supporting while remainder and our enhancing partner unit on product marketing aimed to driving for investments expanding more to approach at pipeline, program, specific intend to

and well of functions, sales in and more we as [ an in as related As engineering a in with revenue, investment expense marketing percentage ] G&A. and to prioritize the expect increases support increase modest people

to profitability, QX, healthy in Sumedh, risk to in delivered happy for any value confident strategic growth top management maximizing line on In time be conclusion, and making With we're long-term long we remain our our platform, delivering agenda. growth and progress that, committed executing comprehensive ability deliver industry-leading immediate term in questions. answer our opportunity to With to of shareholder value. would and your I our customers,

[Operator question. Instructions]. One first moment

of question Genuity. first Walkley Mike Our Canaccord line come will from from the

on Daniel for Mike. It's

[ So bit it little seems dollar retention like XXX% ]. to came that down a

some [ or, on I some improvements color your in of you're make tough called guess, guys additions. improvements Total some and impacting you maybe you us ] the here? for changes just Can think I out the making provide environment new the business what's despite upsell to new

That's be is that this in security are about they some Qualys that, to additional management where to, are many with existing We customers bringing done bit who to the as work cases, with with the which of of the have continuing cases, and they see value. VMDR looking but going invested in Qualys optimize us time, cybersecurity at you a adjusting some platforms, With Management they talked licenses, bookings part question. have a percentage spend great might that and little in get up. sort continuing of of other Asset last patch

But to with is looking is it gives the products introduce them they now because whole right large that continue additional generating term smaller additional from will make an a to, longer take and the better good bring the where on keep first And new and increasing all, of working review help of us the we they're to future. just quantities in putting sure are us times currently, on product marketing that's to have where behind be our been decisions overall, opportunity opportunities. Qualys. So to that to in are it we customers longer long upsells in make like projects are some engine as

is The and where because for about help they interesting events policy lot which that. management, is [ Cisco recently we of programs then as risk overlooked risk ] and to with and come have launched ETM our a eliminate able doing talk of platform are talk risk cyber want We completely which quite all now. have Connect Cisco of and is language been really been have quantification to future helpful education look right how more being at really to our we is going Cisco, recently holistically quite the cyber the

upsells to do while existing that with So side. us better execute seeing there's for climate that doing that for a the things on seeing we now, we're few right execution, in But new good we we're are see business, tougher opportunity definitely customers.

you assumptions full a maybe, walk for spend? of guidance to follow-up, some decision within year Joo just could us as the you. Great. narrow through Maybe revenue maybe Mi, the And your quick

had ] then kind expansion we year improvement hoped having expansion Yes. rate of down for see is, your continued little way the into to or guidance ticked in underlying The to today. material we it QX. less that primary And Especially with we guidance. assumption anticipate the more continuing a midpoint revenue because any better in of bit is we had do challenges least dollar reason decided [ net at line anticipated don't dollar was with percentage. see course, at now the a revenue by the QX And because why the the full the right what we we do way and became

or of net a we're dollar is took percentage. assuming rate because that, that expansion So as down stays maybe

of today. On our smaller seeing But and the business were trends, new business, law in is the smaller of we see some business. the are a trend It portion though, numbers. to we pleased

the revenue. it to the it that rate uplift a even impact we growth at So terms if won't in see of continues material current have today,

next Baird. Shrenik our question One for line from And moment will the of from Kothari come question. next

and that you your for presence sector conference. sector expand public So the looking business and first public to expand Sumedh, mentioned hosting kind you're the of federal

it Just you on terms are expanding see traction discuss of curious, has trends What to like, far? the so the within the your can you platform the can there? sector? you of And elaborate expectations? that And how performed opportunity relative public like GovCloud you in seeing it

Yes. Great right advantage opportunity. investing is we towards take that so of are working definitely we the question. large, in the can and in really Look, way opportunity that federal

from have federal for leader a hired about. we're so happy recently And that perspective, that we

expanded our team. federal have We

We federal marketing. have hired somebody to focus on

putting which XXX more have a we over we're our can up of you already, conference capacity kind federal, for As from in what see, who really signed people we place anticipating first than perspective. were

signs the agency. government, We've we So are certain those had quarters. positive last have talked government about that wins really federal with few in

So extremely that a small and to the at have in our percentage opportunity we we good it's grow bookings, direction. that way look is an overall of

and And the investments. making is something so the market, takes we is it building time, partners. that it with with we're relationships the course, of But are as federal right

along taking up As with MDR. federal signed that's partner see, the our ] can our and [ we patch you policy management

Two agencies invested FedRAMP program. in we the

ATOs sale on with we government So ]. many ready we a high have that high right We FedRAMP FedRAMP a working now already certification. then final providing And already office track from our agencies we have were FedRAMP are to get number large PMO's moderate, of [ which the now.

anticipate their heavily that additional the looking agencies go sort opportunity more out into and are current on our towards modernize infrastructure we very our solutions. will give the to once of take year, you platform platform FedRAMP, SaaS to something and on-prem that so even which issue and GovCloud a is move go a a end certificate us And get that of federal of deeper

because And only for federal scanning have a with of providers provider management only FedRAMP management High, High that current so will patch change they And well, be out our the reason the that we be solution available will combined them the current the these enable Fedem vulnerability separate patch is doing to with tool. some as saw have to are us for and as wins together to customers. the

platform, even have us to that of we the et in is cetera. that government, combined that to draw confident enabled management, also patch feel in [ something direction ] well. to we agencies seen that some environment reduce continue expand federal into recent the looking tools And as well as have can federal So wins Qualys the as cloud our so their take the for are

area we traction in early this are early that an just the it's stages pleased continuing to we and of with are seeing that stage. So are we We're invest. investment, very at the that

for Got Helpful. Mi. Joo it. And quick follow-up

growth, So launch in increase are customer new is you more to logos, you focused your new more public where to incentives mentioned elaborate course, intensity count sector. the Can campaigns. plan who of S&M sales acquisition be investment investments, guys, -- targeting? And going towards you geared Is on going in? course, much you that it partnership head of in

like increasing intensity curious the Just there? how investment

Yes.

our the And momentum. why been business. side pleased a to enterprise And way that's really we're the it's where our strength on see and So of to the we've the our see grow because part is really it we right been traction the reason new priority where is. while continued has successful now, for

to However, support and and sales traction trying to to to is, planning are that's to growth. are support the one on more our reps number The to we way we continue one, both that And pleased that hire growth of see initiatives. enterprise SME invest we're SMB.

as planning to planned increase we year before. We by headcount marketing sales and are our digits double this had

hasn't that so And changed.

healthy for structure, channel, we just It different several and continues to us. continued in it's investments our sure local it's that well We're make be as increase whether increase seeing both the two, and it's that to MSSP in way direct drive it's portal and or continues in deal to really announced really the been kind our incentivize number force successful sales partner fronts, of growth. And to incentive the including as partner indirect reg. structured to new a -- revisiting direct

One our moment for next question.

will Bank. from line question come the Scotia Patrick Our from of Colville next

Vandi Colville. Joe for [ Patrick is on This ]

market as a So it separately? like typically solution is it you bundle? each traction. you the to seems solid opportunity Or big security for mentioned cloud And are buy CNAPP of Qualys. getting deciding solution kind customers a Are some selling

of that question, X CNAPP or part protection are else? demand area stronger then workload CSPM of you any And something maybe or example, within seeing for one

only. question. there Yes, Look, that's no is great there is out a I think organization that cloud

well. It them cloud licensing higher place. They Qualys time at it they get and platform our their expand seamless. combine in pricing. cloud of they from then on-prem risk are assets and so gives that's able one And capabilities do see the where as advantage makes their VMDR the benefit combine into the to to every to when have on same assets we really together the it on-prem infrastructure, And together. lot platforms is And a and use look the and cloud the exact for they more just ability the volume that

us a the starting that first And interesting customers and combined purchase in even in logo with -- to for solution are buy that's it's VMDR to upfront from see our new lands, so itself. why TotalCloud the

so what And days, encouraging it's while that's early us.

because good existing who those to to VMDR need the any work cases, have visibility In don't they with security we solution. continue in that they that. than broader is other capabilities cloud-only customers some We cases, are solutions a cloud, into expand cloud our displacing the have

the that or the with it FML ] can licenses. to allows flexible be so ] assets cloud [ environment, consume pricing [ the agents for solution, way cloud they cloud Our them so the ephemeral given that are

same for they [ use security use the the way [ content CPM they purchased that entity. And can ] for they same have use so ]. connects can cloud They ], it and [ can for that

announced expansion into cloud module So the recent another just the cloud we identity platform. that is native

organizations it's that those more are of part or also a Those are that are time. right TotalCloud. initially taking that in now on organizations are level at CSPM then journey for workload related on maturity in early who mature very and focusing going question the the are are looking things the who also the real other protection in part like detect cloud So

is SaaS Our ability uniquely expand to environments assessment. our also part ] of SaaS where TotalCloud for into SSP we can [ do

we And these access then now identity are cloud to as looking management our customers to getting forward entitlement well.

a are this we're we TotalCloud traction marketing the making there's push are focusing opportunities both seeing early in definitely pleased us create so that of now And driving that for lot enablement more we the in side, sales to with and perspective the are on conversations and sales our we but days force. from across

back about last That's next priorities down worth compared the It million looks step could. we year. of capital is should in to a quarter, last allocation over you think helpful. the bought one I a which bit of for Joo maybe How if year. Mi, and $XX quarter like And shares

what get on aggressive take share So would you see just to curious it buybacks.

you consistently can decreasing see been that the of our dilutive last the now. on the incrementally. of in based we of is in perspective also from And the as years, equity can grants grid we're making. has the sure making And the from that place couple sure, offset really dilution have we For think right we that it

anticipating the for utilization valuation a that way really about So makes of cash is M&A that and -- opportunities, are we looking us. the excess cash think more we we into XXXX, think at especially sense our and more

taking acquisition a potential and opportunistically taking And so leveraging action to targets at sheet. balance our we on then are be going look

our Research. our for question moment Tilton from One the next next of Wolfe question. Joshual from come line And will

Can the in in I that I'm background conference small hear me? call. you apologize cybersecurity

you. hear can We

for Two quick me. ones

then expectations relative maybe the that maybe The the shook one how for just the to the billings you year to is about see of the whether that relative the first rest -- great -- was revenue billing side of growth could out business. new quarter, and my the growth just And is you guidance how the customer on traction follow-up growing you talk in new customer gave?

called that can on coming through from growth. out so am kind X double-digit it? And How the partner the the -- where and we of is see coming guess can the new that? numbers. that see in think coming numbers. I direct where that growth guys customer -- side? durable a is disclosed of how the Is what quarters coming how I on looking do I you Like from maybe from you is this straight and that I for it color Just in partner more side? little that that is And how I better see

Yes.

continuing of see the But reflect rate expansion dollar offset the by business. it having honestly, current the In new QX, by traction terms net it's we that business today in does that down to fair partially representative better. momentum I think percentage of a the another billings, [ X% -- in do ] gone hoping because traction

guidance you would And guidance in roughly look the full for XX% today, for calculated to the we say would in year, X% for billings full terms current year. were with would if so which it of line I be our that is the revenue say to

new to and us, trend disclose by In like and about in us meaningful about decided talk we business, new business is to X seeing our majority reason we talk are this that thought that the why a quarters quarter terms is for something driven is of was consecutive of partners. the we channel

billings based if I you tell from from new magnitude were the to expansion think rest channel the on be that it, of net partners. probably X%, dollar at So look X%, And of of is growth coming rate growth would coming the business. the the current

today's questions in Thank queue. have great conference. conclude concludes you day. conference. now in disconnect. today's for this no further With and Everyone, And the you I'm showing a not does participation your program, that, may This the