Qualys(US:QLYS)2025-11-04 23:00Financial Data and Key Metrics Changes - Revenues grew 10% to $169.9 million in Q3 2025, with channel partners contributing 50% of total revenues compared to 47% a year ago [19][20] - Adjusted EBITDA for Q3 2025 was $82.6 million, representing a 49% margin compared to 45% margin a year ago [21] - EPS for Q3 2025 grew 19% to $1.86, with quarterly free cash flow at $89.5 million, representing a 53% margin compared to 37% in the prior year [22] Business Line Data and Key Metrics Changes - Patch Management and Cybersecurity Asset Management combined accounted for 17% of total bookings and 28% of new bookings on an LTM basis [21] - Cloud security solutions, specifically TotalCloud CNAPP, made up 5% of LTM bookings [21] Market Data and Key Metrics Changes - Revenue growth outside the US was 15%, outpacing domestic growth of 7%, with a revenue mix of 56% from the US and 44% from international markets [19] Company Strategy and Development Direction - The company is focusing on transitioning from attack surface management to risk surface management, utilizing AI-powered proactive risk management [4][5] - The Risk Operations Center (ROC) is being positioned as a new category in cybersecurity, centralizing threat response before business impacts occur [5][6] - The company plans to shift from reporting cybersecurity asset management LTM bookings to ETM customer penetration, indicating a strategic pivot towards ETM as a growth pillar [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the platform approach to cyber risk management, despite macroeconomic challenges affecting new business growth [23] - The company anticipates continued budget scrutiny in Q4 but expects to maintain a strong performance due to its innovative solutions [23] Other Important Information - The company has repurchased 10.4 million shares since the program's inception, returning $1.2 billion in cash to shareholders [22] - The introduction of the QFlex pricing model has seen notable customer interest, with one Global 10 customer increasing their annual bookings by over 50% [17] Q&A Session Summary Question: Can you elaborate on the pricing around ETM and the 100% upsell metric? - The ETM pricing includes cybersecurity asset management, and the upsell is expected to be significant as customers utilize ETM for inventory and exploit confirmation [24][25] Question: What are the developments in the federal market and the competitive environment? - The federal market is in early stages, with positive conversations about efficiency and consolidation. The competitive landscape includes players like CrowdStrike, but Qualys focuses on actionable risk management rather than just detection [26][29] Question: Were there any one-time benefits to revenue this quarter? - There were no specific one-time benefits; the quarter was solid in terms of execution [32] Question: What needs to happen for net dollar retention to increase? - The company is focused on demonstrating the value of ETM to existing customers, which could positively impact net dollar retention [33] Question: How is R&D spending prioritized across initiatives? - The company is leveraging AI to improve efficiency in R&D without significant increases in expenses, focusing on delivering capabilities across various initiatives [34][36] Question: How is the ROC solution being received by customers? - Customer feedback on the ROC solution has been positive, with a focus on business risk management rather than just technical scores [55][56]