Qualys (QLYS) 6 Aug 242024 Q2 Earnings call transcript

Good day, and thank you for standing by. Welcome to the 2024 Second Quarter Qualys Investor Call. [Operator Instructions]. After the speaker's presentation, there will be a question and answer session. [Operator Instructions]. today's being that advised be conference recorded. is Please hand over King, to would Relations. now first conference to like Blair I your the speaker Investor today, Please go ahead.

you, Qualys' welcome Call. Thank afternoon, XXXX Quarter Earnings to Good Marvin. Second and

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

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

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

we witnessed environment. optimized Blair, to spending earnings increasingly welcome In our organizations and you, QX, within quarter Thank tight an second spend IT already call.

has need. this fully is organically platform on trusted to opportunity. Given of and consolidate experienced security unique this to capitalize stacks, built platforms risk. Qualys automation on this achieve required Nevertheless, dynamic, address are leverage remediation to execution standardizing organizations a

quarter. several growing in upsell environment, new in made sales this have our including addressing do bookings team, and we building execution While meaningful our lower-than-expected on current which in momentum business, our resulted have we to partners, with work growing progress growth and marketing fronts, the

teams messaging sharpened upcoming improved to Product for to in Officer later tenure go-to-market with the month, this execution thank the I'd forward to I Officer us efficiencies oversee reaccelerate ability our at of success. in like confident With growth departure for activities our our his operational drive motion. At product marketing of Chief position directly term long growth plan [indiscernible], and to our marketing our product the in this alignment during and between his and time, product-led Qualys. to contribution I'm Chief

challenging I've a to for scrutiny, with message In has over face mission cybersecurity begun many of reflecting sluggish the us. Through natively are for and was organizations by presenting gap, their -- transformation which of a is the was in quarters, our many QX They quarter past management looking conversations deal customers clear. the integrated several that we CSOs are us, to have risk fortunate upsell had with journey continued Although solution. continued cost already increase pivot with Boards long-term Qualys' reduce and to executives. Against security QX macro to fueled quarter escalating threat to innovative measurable environment another solutions risk need skill our of market initiatives and technology, ongoing and backdrop, insights. to customer C-level reduction to this been innovation leadership while complexity Qualys, commitment success. bring rapid new customer a

frictionless driving and advantages, of result, strong ensuring into converting outcome we scale at immediate operational spend. record track competitive established value, while maximizing a on security ROI lifetime a As challenges have structural

exploitable our some popular development success, of respond organizations and pioneered pleased mitigate will we amongst on of X-defect these building subset security solution new example, a commenced to on beta automated vulnerability, deployed. This map touching quarters this element characteristics, business to be top security cannot announce to soon to intelligent For and for teams increasingly or and even capability own several tourist now our when we ] and true a category ago. of customers apply [ teams enable our Qualys I'm risk an objectives. response on organization's risk and broader time [indiscernible] operational mitigate remediation which unique risk-based power lines tourist road eliminate to cybersecurity nonexistent address based fixable, call is patch that solutions

With over agents. Qualys these capabilities, patches soon going ] and million year-to-date strong support new on [ customer GA's XX deployed

in customer newest the We operations we are once transforming our competitive which to AI, Total pleased again we LLM, coming magnifying innovation we address technologies are of that help the from further our risks Qualys to AI. our announce capability, security like customers are market. Continuing our increasingly confident our use latest while differentiation call

quickly a prevent customers' As AI usage comprehensive discover attack these new with LLM for for looking in are find LLM posture leakage data deploy and seamless within adaptive scan single a vulnerabilities vulnerabilities management for these of the entire AI organizations click to help assess prioritization environment comprehensively and models. With teams integration, button. AI surface technologies, remediation and across rapidly security security the assessment, risk capabilities

container, cloud the for other In our known platform, behavior an of for and extension are [ risk addition, top pleased announce which all ] ] normal ML technology, objects. function we and establishing in-use AI unknown a now [indiscernible] [ each our we images, to discovers SNAP leveraging and to host idn are baseline own and assesses

our believe real-time [indiscernible] us consumption remediation with combined attacks, compliant to detect run for actively zero-day within file activity, We cluster. and processes anomalous RO apart capability activities, new actionable threat uniquely tools and [ allow new and help container protection new a network with this from These factors observation system through Now environments. sets to qualification, secure enable automated immediate insights, response core at both and PCI unified and and in predictive prevent a ] dashboard prioritization scale. provide toxic compliance to is time of ensure legacy threat-based security organizations containerized cloud

[ total Turning the SNAP to ] milestone our and reduced our company. federal marking Fed for solution, cloud ] for agenda. [ moderate We EDR another key recently certification

[indiscernible] scanners and state our to several level. for this local pending to at only government applications expect high agencies making federal impact certification year, the later Qualys for key legacy the continue high modern alternative We on-prem

Our confidence business investments yield our to are presence drive vertical in new the time. and public over sector a growth address this starting to to results, establish incremental supporting

our holistically tight have to paths in reduce along at we our receiving and actively in attend very we several to especially and workshops use upcoming week third-party spending ] have requantification into respect track with approaches others multidimensional field of with into -- this had ability we go-to in currently world of several extension with to growth business. context Black are cost management importance durable first we detect, partners. The workflows engage for the to is our bring in cybersecurity management, on it's platform design [ vulnerabilities solution, this feedback with across customer environment. The And Finally, to dashboard great and This remediate conducting data is to management enterprise create later select year. solution context environments showcased the the risk new the a enterprises, past equal around and over for to quantify, complexity long-term innovative remain GA positive. private with beta many allow is see our These and a multi-cloud on the and evolving been our from cloud platform early CSOs automated on-prem of prioritize unified months. customers for risk

base, consolidate embracing already and for fewer management penetration and our significant technologies re-architect believe business deal to platform immediate our opportunity industry customer consolidate integrated ] to with as the and translated customers resources within update. ROI. We comes scrutiny an achieve many and term that recognition. long helps continued risk customers into stack, Moving over larger [ natively Qualys solution Qualys enviable outcomes less Qualys better of their With has VMDR deep help our

we for VMDR the the gold solution As risk VM second environments [ investments XXXX Europe recently consecutive as the further believe customer SC Qualys placement and We as in in announced, and the to Qualys standard vulnerability solution get validates platform true continue is future. management the the securing #X represent with our at for today best the Awards year. ]

to logo our new the Given Qualys' in adoption, management only of helping [ EAS security. platform increase our asset not and with especially is areas value for also cybersecurity Truist delivering blueprint but with fueling cloud ] greater management solution ads customers, VMDR patch

agency of a couple consolidate their [ previously of a risk federal customer customer share customers, QX, which use companies turn This and IT next-gen Qualys. a cases security improve wins teams. large me with was posture. In variety why to DevOps across of illustrates manage government multiple to using Qualys recent ] and a their security solutions new their Let new became security help management and legacy to tools

deployments. this products, multi-point associated using of frustrated complexity increasing on-prem agency the to costs with with addition In government was

cloud-based a also multiple to consoles, with competing many with sector management natively BOD is and guidelines. X using that solution, team Looking deployments replacing ready the feedback enterprise existing [ making cybersecurities win, is are and win cloud-native initial agencies CISA misdetection gate. solution. with greater VMDR May. In the SaaS which hyper-growth, very Pedram, [ ] new risk an restricted enterprise advantage the we turnout large to business, protect customer the their in integrated cybersecurity bookings customer to this and high-impact while that They tourist Qualys government provide of total second and investments Asset X multiple of platform multiproduct X-figure products vendors of Truist, standardizing workflows, high business, a is a testament true met and strategic high dashboards integrated These with with first complex ESM, migrate out their the including security risk times of to and through competitive This in into cloud them our with a now Patch scale modules ability company's replaced and Phase lack Management Qualys able that extended level struggled taking public encouraging on our competitive several at now management Management ] public conference a sector platform. platform. of deployment the remediation right insights integration, consolidating the held further they SNAP our customer automation Qualys we [ vendors pleased managing the with win natively security, we're This leverage highly this patch -- solution ES include expand VMDR federal Security evaluated, unified ] management. Through X-figure integrated that This and many themselves. and Cyber of from full to asset speed

customers police comprehensive complete delivered understand solutions integrated more remediation natively drives beginning and single have endpoints Now the solve costs transformation multisensor solution, are visibility their our With time user better on less. unsecurity platform, and they across and security to outcomes, seamlessly environments. automated and challenges. More with cybersecurity single more to how interface and saves multi-cloud platform

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

are also Beyond these increasingly gaining wins, our leverage Xwe partner from ecosystem.

of to continues rates pipeline grow, in QX. opportunities increased partner-led again Our with win business and partners our

brand anticipate rapid platform and to continue transform, further As posture. proposition leadership strengthening strengthen, thought deliver strategic security seeking our consolidate to and and continue our our and we the to customers our awareness market their expanding we underscores to increase ecosystem with value fortify will our integration summary, our innovation position, engine growing perception partner broadening reach. In our

turn term, in opportunity to outlook us second for the further extend discuss Joo call long invest in and we generate anticipate we XXXX. the can multiple growth quarter market Mi large the more Qualys Given third our year business, at drivers I'll competition. With the between that of cash will and initiatives quarter to grow our in results key that that, and front the detail gap full scale and and over in

afternoon. Sumedh, Thanks, and good

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

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

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

initiatives would our net for continued to dollar in fourth in QX, quarter. new calculated drive new Defender working like growth over consecutive X%. In ], billings, current from our foundation As and growth, were fielding gains our our former XXX% we performance as calculated change, that lower this be by understand the with building challenging solution, for integration achieved believe of current spend closely we're the XXX% Defender calculated total continue Microsoft and with this Defender environment, that of solutions Earlier on we QX have subsequent they will [indiscernible]. new for the expansion Conversely, billings from business to upsell cloud been cloud billings stronger on retiring model. Since security current to bookings momentum policy May embedded would inbound Microsoft Normalize our Microsoft X. the returns impacted see time. we customer and last strong our sunset declined quarter. in share rate to value With year, bookings users we to this a growth negatively transitioning that expansion on resulting for announced note been ensure and our them of we BYOL QX, have we [ double-digit to

In contribution of management of asset QX. patch management bookings up terms LTM to X% Solutions, of made new XX% combined bookings [indiscernible] cloud bookings, and XX% bookings. [indiscernible] product up cybersecurity and in made LTM of LTM total

profitability. in compared was driven in QX margin a the XX% primarily expenses sales increased million, in us. a $XX.X by and increase of a $XX marketing, ago. capturing Reflecting opportunities to million, to investments QX XX% and aimed margin model, front Operating our XX% a year to sustainable at in Turning XX% adjusted market by EBITDA business scalable representing

year. we and will focus continue drive success marketing able second we and long-term $X.XX returns. EPS increase capital of be quarter million productivity. the share wallet our million $XX million, invest we of believe intensity, our and cash and continue a to outstanding $XXX,XXX As QX, We to prior sales for cash XXXX the free to customer and was enablement, in and generated investment we $XX.X stock $X representing including on on was operations flow to our compared Qualys, XX% into XX% margin to from shares. expenditures In repurchase the

us As end share of had $XXX.X let remaining our to starting repurchase of guidance, turn quarter, the in we the that, revenue. million with program. With

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

to profitability and This the of X% no For our the half third quarter $XXX.X of representing of of $XXX.X scrutiny growth to deal million, this in XXXX, range we improvement continued a expect revenues assumes rate expansion net million to X%. year. Shifting rate guidance be guidance. back to to dollar through the

year range we the For mid- from year margin prior to to flow the the ] in margin EBITDA With full of high XX% [ full of range XXs. in up to XX% to $X.XX $X.XX. the cash XXXX, to EPS $X.XX, of be set $X.XX free expect and

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

of to $XX third quarter of prior $XX with XXXX range the in million $XX of and pipeline, to XXXX, Our specific in capital million. vertical. are for in expanding focus guidance, we Consistent range product and align partner of driving million expected sales planned our including initiatives on be investments supporting for to expenditures our intend and enhancing XXXX remainder the program the our the more federal to marketing

questions. increases related an sales your would people revenues, in to engineering With to that, As answer support in more and and marketing happy of prioritize as with as G&A. be of a we percentage increase and systems well Sumedh, in any investments expect and functions, I modest

[Operator Instructions].

of the from Fishbein of first line Our Truist. question comes Joel

very Joo if making the about talk really I forward? Can could sales Joo Sumedh growth? well. talk about specifics marketing That Mi, Congrats. then international you're and some drove about that Mi, more And what be internationally, going you the maybe, investments guess of great you growth as and in helpful. would

by and the rate a happy that's the as headwind we're as Yes, is U.S. on stronger region growth, The relative growth direct the well the so business. impacted that seeing the in Defender to been With U.S. international said, business that U.S. Microsoft to. demand a

share So rate we for. the just growth

we marketing on return the partner like side. that it it's and that well the a ROI, terms been has doing investments feel from the really made higher In sales on under investments of we

been you really choice we with when As enhancing to comes put our market and a our relationships revamp them tell, can Qualys initiatives resonating. go partners as it of has partner to and to it for to incentivize our why how working understand further and makes sense to propose vendor them

us, then the for #X is so And it's #X, investment primarily to course, partner. And of headcount. related our

and to by the grow digits with we're continuing to sales positive business XXXX, seeing we goal. the count and double marketing track We're that the that are As we're today. in targeting on momentum meet head in

as way Joel, the deal of a to that learnings the also Yes. highlights again, our we taking we Joo of side. us in more think our for been year being new have quarter our growing I'll also as to with be us we business we our I win increasing is well, started that teams the investment last that X-figure better much more in in opportunity investments of about year increasing new new train with customers has business XX% about as an including post-sales been things spending the have a upsell with Mi lot on really to QX, we're space said, from quarters tough led way excited new it terms the federal successful $XXX,XXX positive base them have example, our that because our as well growing hunters our well. I'm for in our et had the we're a the we our getting what that while we be our to And add federal we've the And to are last the quarter. business had a given sales pretty last existing new rates our that And because is excited in partners team -- able pipeline digits are to investing net with partners of enable -- in federal double able same their exciting. and as cetera, space, making way, customer few partners within investments business, which with of is and enabling were from

a positive trends. investments that those of to our are So lot the leading things are

think really and opportunity macro our I the way we security where to risk exactly. spend scrutiny lot question that we our with VM and to ] with to platform spend the on come quite get not see will and at that's going looking that customers our an really management able your able clearly, where are and to to And the customers marketing is money their being able our risk that teams this from to the [ that's align opportunities is. upsell is answer help. risk people what be sales better a on in the are from environment our team focusing cybersecurity big And we is team have their of the ATM [ ] product and to new face sales execute to better

next line Kothari comes Baird. Our Shrenik from question of of the

of of like Of trying a types guys kind with on if different ticking possible? highlighted up Can course, you some XX%, were you overall, Azure breakdown up of which the providers now or just more So kind channel of how details partner you marketplaces of Joo would the revenue is AWS, and nicely. say, contribution I to cloud mentioned, some partners Raco. help really making Mi, the for provide you of course,

us you more if I provide terms a those drivers? can then have And of in curious color follow-up. Just some

Yes. it you a to they lot us Shrenik, budget to because a very a don't of definitely tell and customers now, set execute channel but the that. in market, have break down bringing the currently with and bring us right are the way, that of very comprehensive project our the see closely who we or can can capabilities on we resellers rapidly I that really partners working opportunities that are have

released high folks service a to we're So now they us. In more the them MSSP as are joint sort being and good or see a providing some break deployments portal, with able who partnership security leveraging provide ADP a that differentiator continuing seeing Qualys customers as providers of around of to with last thing as GTM don't first exactly having quarter, the OCI like on same AWS a strong are we're service. really areas a should on but patch the some you as more well. And working just are where view really who the to of big closely the sort path it are now partners have service seeing is that that, give traction VM success management service but so And down management level And with well scanning side not a cloud we're as of our partners. we for credits as services from momentum. starting we we because that with a and we're on with nice, seeing with of working

quick That's Joo very it. follow-up. Sumedh. Mi, And Got helpful, one

enterprise platform you risk how development of monetizing highlighted Sumedh, you're and kind helping that of course, the Of offering.

the the VM of Just undercutting we players that pricing like, perhaps are there other on aggressive kind side, other curious, overall from in is there. core hearing given pricing

the you in to Just gross on of can show curious of retention environment? as us margins and quantitative like rates net were into that expected how provide dollar insights kind the you impact as upside And this some well? able well

Yes.

we're from last fully comes primarily to and It's that centers even assets up In very optimization the post data quarter. to XX% then XX% gross terms our addition XX% year last it due to the margin, of gross our were in pleased to right that depreciated we margin, seeing when now.

that leveraging make for as margins we makes sure and hardware the and getting today. our think well assets, and optimizing as you have sense business we're we're know, we just both on the As to cloud

to asked, I And VM question evolving really the the is on you looking that as for last on we've that talked about this focus quarters well. are remediation customers then think many look, and

that's important been is outcome? -- budgets cybersecurity when today's because looking the asked so not question getting the and articulate reducing, to to fix, get they able outcome, in what's really an to their CVs to most well, cyber them they at solutions optimize gives face looking looking we're they risk actually are not are risk on budget are challenges scan-only when you if budget how focusing And have this remediation. an at they only more professions balance management. And the how with in tied giving with risk should to if our much are out patch buy us with, we risk able that can why we more the capability how that's scanning in true What when that of eliminate solutions risk that -- terms increase things and is are being the mitigate for reducing? And the they customers you're came much you're from

when with we cyber us bookings see and deployed in seeing new are new risk. And is business that we're aspect why are really for to patch offer is coming a just That's market patch why really security to customers if today. Qualys net management in there management numbers really change good but you evolving, so we half with asset also people to success mitigate with VM the this vulnerability and M patches scanning ago our we that vulnerability differentiator when the the vulnerability the solution. And the the on things. to they're focus management, solution management is And the the them quarters remediation fix by of million a agents management patch looking few because offering new. first invested year, been actually is where no combining XX has unique with getting ability in highlights this their about assessment, that's nothing and VM in management combined of don't scanning because the we today

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

sounds down It XXX. dipped like NRR to

quarter. the that at -- feel last or in we whether second XXX And half, could other starting now? like pipeline perhaps there? you a you do from think does I curious, bottom see I'm the that's think drivers, rebound do it's

customers, with work think our I once have to they Qualys. we're we -- facing spend when on definitely do with scrutiny their additional

working Qualys great spend, they to the engagement, and lot they patch scanning So and management additional we spend their cases, more that's grow conversations. the In you leading solutions getting where and that's how we that's are spend balance for of side where with on now can where optimize in they some the right are they medicating see. How management side, the a some optimize asset from where can in future. their

continuous a little security, bit when as the you into in to especially continue in for customers is face they I cloud additional solutions, current we the harder of know, think what with to have with will to in translate quarter how -- will this is adopt these environment next because, know we additional to the cetera. the see the timing et quarter the that conversations this upsells are having

the about excited we pretty opportunity we're see. So that

of of have long coming are over how up sort we're management, in additional term, think existing on mind, management feel to the that questions to evolves. about now definitely in patch more security. watch cloud and which is, security customers is But quarters all couple overall to my AI rate risk have importantly, going customers going next -- I the like this we goods invest

in looking upsells they that we very be that risk new LLMs the those is which on to timing is positive our out we're AI additional get helping their into closely. to the of watching we're at solution lead September, really that those customers so something in very And are that going of announced and of identify conversations, going how all

then terms remind you again us become And That's officially the abate those when great. of in on can will billings? headwinds, Defender super not That's helpful. drag Microsoft and a

The sense that us in time hit so QX. May it first for effective the X, was

see QX. we that impact expect biggest to the is in So

Joo Or just quarters? saying, next headwind QX is going about In to other that Mi, late a that in in of headwind words, of so couple QX? you're then as think be big in the maybe what it's not -- as

billings, to That's It's enough schedule. QX. really have X% going happened, the would based for right. is look if this, been right. and then calculated our billing on QX that's X%. quarter be for at not a it normalized why And material biggest normalize decline it hadn't the That's us when approximately current you in take to QX a it

Genuity. question of comes next line Our from the Canaccord Kingsley of Crane

out job you've customers? the demand view at How foundational? to that remarkable this? with years. I building to how And you broadly, spend secular then done How past VM platform couple would VM this? describe then why you the moment? how in do a of So can is want is expand leverage ask existing cyclical you just the And

question. any for Yes, great exercise that See, continues risk very foundational VM any to management organization be has.

standard you there look requires regular every If cybersecurity patching single out and VM. at scanning for

reduce and past and on is of talked discovered I in earnings talked think the are to customers the -- by on as get as being evolving, the the are our in the customers we this things overall that calls actually focus it's I fixing focusing so really able VM the within VM. how outcome about have few a risk well have remains about on is we that do VM, by while being

between the they budgets stuff. of tight -- that we is focus remediate if they're what's they everything much that the on looking And they not are the how what able scrutiny they're they conversations, actually have base putting point and with customer balance the to actually are on see so scanning. to with our And scanning that

investment the they asset how do how as management scanning sector well the as do in the you so and into patch the between balance and management VM also cloud And expand environment. scanning

are so the And hear those conversations we lot more. a that

the I think management the priority to risk for the key for a as part that continues organization VM a customers of talked to. we key be

are and as we balance working they tight to think now I So right looking with that. -- budgets

lead scanning. seeded management patch have see as in that currently in is amounts. [indiscernible] a more the customers to cyber with good with estate this to they're of us because it for additional I think get this the we as products quarter future, giving like us these us But our with asset them cover management, opportunity buying smaller opportunity they

Great. That's more. And then said. well one

that's has So whether I cloud individual cloud rightly [ or like [indiscernible] app want selling ] CSPM. to about Post vendor outage, discussed concentration just wrongly. when security, dynamics something or widely talk total been

will So of space specifically security, out do opportunity much big you outage how how the an do given play is how the picture, see? cloud think nascent and you in

to being like customer agent the other the are we they the and on mitigating obviously security the is risk Look, ] questions how deployed customers are seen the services. that. the balance the valued for I've I way terms solution think think And of being of security deliver of versus concentrated you some do foundational not itself very the they the providers way Qualys where the that [ to as that is main in service I service deliver can the agent advantage only

operational services We have customers' that of ways capability a delivering pretty security comprehensive assess match to different deploying the risk. appetite of

cabin. snapshot We we scanning. have [ And have so agent ] less

have scanning. We agent-based

offsite scanning. have We

ways. different many there's So

is, And we course, that see got we so are with testing. questions we the Qualys lot what customers, of ensuring of ways that of a one best around obviously asked

which for the versus to with scanning. balance that's that about to to to that to And really fact about the give of our service. actually, only their agent happy having we technologies. an are of options way they only pretty and are risk take the deliver they they can them, they deploy we deploy agent-based where big We their have licensing want don't those confident that the roll where way want risk But very out update they agentless different scanning also

in can a think cloud, you is particular a of assessment I the so advantage and And CSP do that without deploying amount just APIs using of good scanning.

includes released the for choose. they a the ] solution. we asset, ability this of year so CNAP ago our when actually of scan total is and and -- same the cloud to pick The on X scans customers why [ is different can a about Flex And do license part types we which our

So if API absolutely installed. can assessment with they want, they an do nothing

that an automatically. can network agent they image scanner be can On live. an to not that an or is scan use environment use the They of workload, snapshot automatic can in a they installed use actually

assets. both not do about, in security, have will on mind, is So environment much your sensor up. basically I my the vendor concentration come types you see ways risk leveraging mind, so the different my the about might questions in that different different while It's assess you the which concentration. It's multiple in cloud in really vendor of your providing to

that. I right. congrats. agree All with Again,

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

headwind, on some Sumedh, was plan there you Defender that. not assuming did you Clearly, Great. that Okay. the anticipate. I issues for execution Microsoft am

directly Defender? on lower can that the And related were attach you to elaborate affected by the Microsoft are also, If bit? a products that what rate then

our was MDR. that Microsoft very sort scan-only of was capability, it right, not legacy which leveraging was the basic

access whether our them So those subside the that them with asset to to now customers new customers, releasing. are management, or scanning work all patch it's cybersecurity be to we those current it's is management, things customers able have did the assessment upsell it and to to with that to we AI whether a not cloud other whether

and scanning. So for which from in in of for right as what's scan-only solution, see that now are holistic we is really only fixing actual market customers happening outcome solution we're more it of using just us, their customers all And more environment, reduction comprehensive looking not was the VM us. in risk includes

risk say can solution will CBE a then -- reduce to really the that's should are more just that where is this fix so the a reporting. They don't opportunity and the fix is And customers see want things that. we want way that these you

can us, And opportunity anything and them these not reduce them. how so the their bigger we that's we keep where doing come just than from see if risk looking focus about they the customers picture the helping them on to can of at rather see vulnerabilities

aware anything Great. coming up? half with we be renewal Mi, especially to pricing, Okay. regard Joo of second season in that should

change competitive from no our a from standpoint perspective change and No from our own pricing.

the Our William of line Jonathan next question Blair. Ho of comes from

in little making sense sort it know paid -- translate off the the the into of way how I understanding little sort just or wanted bit it bit that about been time takes expected? the thinking a ultimately us need has a to of billings on the dig revenue, terms you it just sense and get you've that of of you're of that? investments to how a I maybe of some give been profitability to disappointing? with Can to Has been channel side. balance to a initial in more you investments of wanted

Great a Look, question, we been journey focusing ago, really, of different when on few John. years embarked this on a couple we've things.

not opportunities for partner past at I looking looking looking don't. rates, And of of business, them actually growth then said, X bringing in had pleased us better staff with for new quarters overall, have some at that But continuing and sometimes XX%. as straight the just by increase much coming which $XXX,XXX-plus them like from investments are in some the of at opportunities, the improvement customers really having we partners double-digit close we in work, environment

going investments have just net making is promising in new businesses on federal for in closing specifically continue is continuing said, working that's think opportunities. sales host our in next brought terms side. Like in continuing certification, of we're the partners. But to really that those new channel has investment team opportunity platform but we and I the terms through which need focus the those marketing improvements is cutting opportunities, the ] our on those our moderate, rates we are Fed the different in investment should good importantly, being for so a [indiscernible] couple things federal the made also our like the sort are quarters we on we we invest said, getting with with [ because the new significant in marketing because federal, to have year that. And think because do so now year. And capabilities are think upsell done no in investment really, similar further getting together opportunities, further our year see in advantage fairly waiting the very look with just investment. down and quarters, we a that training side conference a I additionally many position our looking really are companies in So channel are a many that seeing marketing us I in really of through deal what we're made for our what we reps we us modules investment this built, to actually to with unique for that the business have of end to first in just of sales And different to anticipating of also invest X-figure really have to we FedRAMP one. And over -- in give business we most more there's actually of and the to and us years which on I federal really investment this other of their the the forward we sales this and GPM that

and have to the business improvement are of new think we to I and business so learnings to so additional the are are macro our work learn post-sales take the looking some be our little to a to that to there certain tough these farmers how and these worked existing those a some bit able deals And things find apply able that be from now environment hunting do opportunities. -- of of and continue and bring in

the with the just closely on the upsell working way partner's the we are We are with the partner working as as omnibusiness side partner on well.

Excellent.

follow-up. quick a Just

where can the narrowing see these trying to of opportunities? you taking Is areas? Chief that understand how you take product I'm what Product responsibilities, you understand new Is sort approaching biggest the you additional as on as on about see responsibilities help just Officer opportunity. additional this focus? think So of this you and us

you Patch Chief Look, do like been we our for you you efficiency, bringing my closely out always hard all to Officer But Management know there solutions get what somewhere. are market Product little and securities which to the the -- it's if at. about guys look, bit a of we history, was -- always we looking listening customers us, me, is it's Yes. really have operational to innovation-driven,

look to our as being increase challenges next the the I of able to cybersecurity almost the overall of if the when because current flat cyber business. at you facing years, look so question, budget not risk the much well, how bringing in are environment, forward you at And is is look couple cyber articulate to provisionals

management risk coming you not appropriate you And so same how that with is a risk. And decide how may with -- [indiscernible] if in It's dollar can that in excited on down risk the you environment. In to [indiscernible] cases, which cannot patch you most don't a down maybe being have, know implement out you platform and reduce some you risk, given security that identify, beta amount can -- cannot as you control the controls we security let's it really articulate are there. place do value, is about because first and not much much to able the and of are can that, risk security the in to without our exactly solution to take investment, what from to is the risk. being there effective risk focus can that bring other some we're But -- spend, maybe in that here ATM I'm multiple to reduce risk. every you the terms the decide really that's better are which our that there, on dollar able And be to put enough business. our articulate exact versus cases, partners different

taking GTM And glad that the theme has so on from more I'm they as built a are and a good and side. focus first, look I product perspective, more at

we additional we and future coming So having execute also with are up align total and the focus opportunities. the together teams solutions conversations our opportunity, so risk work to risk our the cloud with it that to especially marketing the me my better with, gives create to product are able given total but solution, product with at opportunity being marketing to in cloud seeing teams being term, management, management are we look not product can articulation, and products that customers what we and marketing on able additional on short only our

forward look So what some this into of looking those I as Officer. things to, Chief are I'm really

from comes question line Kessinger of Davidson. Rudy next the of Our D.A.

Obviously, customers environment, on it's of guess basically the portion not just customer is who your sizable down guess but expansion your base, to contractions upsell. are tough rate the upsell could churn their you staying customers are who are it footprint? I almost guess that just would we could XXX%, no where out I down any with net to seeing XXX%, bottom? with but you I that. think go potentially reducing [indiscernible] they lower it Or than can would about

Great question, Rudy.

XX%. the So as gross we stayed mentioned, retention has around same overall, our

have about us, And they that the are customers, mentioned set I think earlier, to solutions for Qualys. of really so balance looking as from I it's

currently, solutions at because budgets they and focus sub-security Looking environment. tight. than how this from on and particular they sometimes rather Qualys are take patch by and server based those additional patch that impact asset -- my I can adopting the licenses like more management environment may decide on better management, a have would

immediate creates in there. also term the additional capabilities, that balancing in adopting further the So we right but about continues what can particular amount same. is now, gross their which -- spend that may a overall opportunity our we immediate at between a the and as not total And in are seeing it more of optimizing from It's costs retention capabilities. about perspective customers to future looking in different that be part opportunity, increase the upsell the

couple sort to tough because we those on overall going And next is conversations again, this -- are take and now coming had right this quarters. expansion think quarter close of I we'll having that going of opportunities the leading down, but rates to how in we're so industry see -- a we conversations the to this of are are they're

a we rate that we close our of something -- that exactly forward are When to few next eye we is quarters. timing So keeping again, also on. over expansion net the look improving of course, -- the

Owens Sandler. Piper comes the from Rob next line Our of question of

on on to from This scrutiny? Rob related enterprise provide economic the in you deal more Owens. see the customers? to color what related and demand is quarter backdrop for you also, SMB did Aidan Can And

macro have the I generally same be to as think we expected. continued

are We are budgets flat. -- it's generally

any We customers cases, the would are same? versus few we We -- has to would think solutions the this AI, trying which I from think keeping quarters. the additional should say, cybersecurity different to I some customers scrutiny, to just stayed macro faced seeing while product. Overall, just about looking quarter say, excited AI same. why is major is continue keep versus think we adopt about, and the security we're in what segment Or much? So difference we've too overall from and seeing -- saw we the really for between not the us, been from enterprise that last last don't I about spend as it's I should in say SMB expand the the

And or at continue to tough, quarter, think be so least the environment additional faced this we continues and face scrutiny I the projects. we to on

line the question from Research. Tilton Wolfe of next Our comes of Joshua

wanted This little dive to the impacted for Josh. partnership. a the deeper I the Microsoft customers is by sunsetting on of Patrick on

conversations those customers having with quarter. that you were mentioned throughout You the

Qualys can also, look to So talk just like? for then you to your the that solutions of directly? size over updated moving opportunity And your expectations use customers about those

just something said, in we -- May Mi actual happened. happened Joo actually right, as think when onset I the the recently [indiscernible]

not did out us, them those so mentioned earlier. have as can't couldn't had think customers, access we quite I we for it's to to reach we -- we

is of to have different us. or solution at, come to think they about talk I and transitioning as are they a looking sort it and customers sometimes option are the

and had not opportunity see opportunity. they times, we continue a QX, see lot from they we've So of what just how buy are conversations Azure the benefit the that think licenses they integration. I those us. customers always to I doing material any from thing see anything come talk guidance that have additional we'll may from we're with already at Qualys, but from -- -- many may assuming think they not a as because of that We additional thinking that we're environment coming expand that footprint point, to as know Azure what and Microsoft thing of the were in few for with actually with additional continue don't given of in come that to evolve and how QX, coming we've and sort us, may a and the this to Qualys

year? just a maybe how the color quick Is Okay. And trend then us you follow-up. there XQ any expect can give you billings or on for growth full

to guide billings trend ad be don't of that the rate. billings, We same growth revenue indicate current we more less or annual growth the but will the along did Yes. lines current

So be with the revenue assume half same guidance the less current I the or billings. growth in will for line would the more second

next Essex Our JPMorgan. the question comes of of line Brian from

marketing we should think faster-growing on about where how an I customers maybe XXX give and more your customer and was perspective? little smaller sales wondering count us and there and if that overall efforts customers you cohort from a focusing than of large dig that a customer could versus takes maybe in spending aggregate, in bit the indication you're puts

with just we their It's are continue For our can success the sales we've us. the we larger enterprise. there. seen as more more that's on spend focused seen tell And by success marketing we've customers, perspective, increase because to you -- and where

-- customers see and some have SME space. the or headwinds SMB on and smaller smaller we continuing are We to are the

XX% is XX%? growing the that customer is customers, revenue that from or customers XXX-plus those those And that growing are count that's

and the are both amounts at talent growing actually. customer The dollar XX%

about referenced count, the XX% customer is same. dollar the So that the amount is we the but

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

[indiscernible].

hear better? I earlier, but done can -- think me was having you this

[indiscernible]. your or up Breaking

Joo But the just billings Mi. current on for a question

commerce? mentioned without as a have in I would else customer so Microsoft any it it as headwind -- the quarter. I changes think give you this been -- was could -- partner X%. believe well Anything as that down you up the X% Microsoft if that, customer

the the hear slide Can you last about repeat quite customer? last the couldn't We part.

Microsoft if -- any [indiscernible]? customer, changes remains in ship a Nation

no our for to It's change. Azure line and customer expected impact Microsoft Microsoft respect top No, on this from both with as the year.

conference. showing you. further participation your questions today's you Thank the I'm Thank time. program. This does in conclude at no for this

disconnect. may You now