Qualys(US:QLYS)2024-11-06 02:33Financial Data and Key Metrics Changes - Revenues grew 8% to $153.9 million, with channel contributions increasing to 47% of total revenues compared to 43% a year ago [32] - Adjusted EBITDA for Q3 was $69.7 million, representing a 45% margin, down from 48% a year ago [35] - EPS for Q3 was $1.56, and free cash flow was $57.6 million, representing a 37% margin, compared to 64% in the prior year [37] - The net dollar expansion rate increased to 103%, up from 102% last quarter [33] Business Line Data and Key Metrics Changes - Patch Management and Cybersecurity Asset Management combined accounted for 15% of LTM bookings and 24% of LTM new bookings in Q3 [34] - The Cloud Security solution, TotalCloud CNAPP, made up 4% of LTM bookings [34] - The company saw a positive growth trend in new business, achieving a double-digit growth rate for the fifth consecutive quarter [33] Market Data and Key Metrics Changes - U.S. revenue grew 5%, while international revenue grew 14%, with the revenue mix being 58% U.S. and 42% international [32] - The company reported a broad-based upsell performance, contributing to the overall revenue growth [80] Company Strategy and Development Direction - The company is focusing on consolidating cybersecurity tools and enhancing its Enterprise TruRisk Platform to help customers manage cyber risk more effectively [29] - New product announcements, including the mROC and TruRisk Eliminate, are aimed at providing comprehensive risk management solutions [14][16] - The company is expanding its partner program to enhance service offerings and drive growth [28] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing budget scrutiny in the selling environment, but expressed optimism about long-term growth opportunities [33][84] - The company expects revenues for the full year 2024 to be in the range of $602.9 million to $605.9 million, representing a growth rate of 9% [38] - Management anticipates a lighter new business quarter in Q4 based on current pipeline conditions [90] Other Important Information - The company has made significant investments in sales and marketing to capture market opportunities, leading to a 12% increase in operating expenses [36] - Qualys was recognized by GigaOm as a leader in vulnerability management for the fourth consecutive year [18] Q&A Session Summary Question: Can you talk about changes implemented on the product marketing side? - Management highlighted the alignment of messaging around business risk and risk quantification, which has resonated well with customers [44] Question: Can you discuss the strength in net retention and future expectations? - Management reported an increase in net dollar expansion rate to 103% but assumed no material improvements for Q4 based on current deals [48] Question: Can you expand on channel momentum and its contribution to revenue? - Management expressed confidence in channel opportunities, noting that channel partners contributed significantly to revenue growth [50] Question: Were there any one-off deals impacting current billing performance? - Management indicated that any deal push or pull was typical and did not significantly impact the overall performance [57] Question: What drove the strength from a product perspective? - Management noted strong performance from new product capabilities, particularly in patch management and cybersecurity asset management [63] Question: Can you comment on the durability of current trends? - Management acknowledged the positive momentum but cautioned that macroeconomic factors could still impact deal cycles [84] Question: Is the guidance for Q4 based on observed trends or conservatism? - Management clarified that the guidance reflects a lighter pipeline than desired, not a negative trend [90]