Qualys(US:QLYS)2025-11-04 23:02Financial 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 [20][21] - Adjusted EBITDA for Q3 was $82.6 million, representing a 49% margin, up from 45% a year ago [21] - EPS for Q3 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] - TotalCloud CNAPP made up 5% of LTM bookings, reflecting the company's scalable and sustainable business model [21] Market Data and Key Metrics Changes - US revenue grew 7%, while international revenue grew 15%, with a revenue mix of 56% from the US and 44% from international markets [20] - Net dollar retention rate remained at 104%, indicating challenges in upselling despite improved gross retention [20] Company Strategy and Development Direction - The company is focusing on transitioning from traditional cybersecurity to risk surface management using AI-powered proactive risk management [5][6] - The Risk Operations Center (ROC) is being positioned as a central solution for organizations to manage cyber risks effectively, with a focus on consolidating security tools [6][9] - The company plans to shift reporting from cybersecurity asset management bookings to ETM customer penetration, indicating a strategic pivot towards ETM as a growth pillar [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate macroeconomic challenges, emphasizing the importance of aligning cybersecurity spend with business risk [23] - The company anticipates continued scrutiny of budgets in Q4, but expects to maintain growth momentum with a revenue guidance of $172 million to $174 million for Q4 2025 [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, with $205 million remaining in the repurchase program [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][18] Q&A Session Summary Question: Can you elaborate on the pricing around ETM and the 100% upsell metric? - Management clarified that ETM pricing includes cybersecurity asset management and focuses on optimizing cybersecurity spend through agentic AI capabilities [26][27] Question: What are the prospects in the federal market, especially with the recent shutdown? - Management noted early positive conversations in the federal space, emphasizing the need for efficiency and consolidation of security tools [32][36] Question: How is the competitive environment changing for Qualys? - Management highlighted that while competitors focus on discovering more CVEs, Qualys is concentrating on helping customers prioritize and remediate key vulnerabilities quickly [38][39] Question: Were there any one-time benefits to revenue this quarter? - Management confirmed that there were no specific one-time benefits, indicating solid growth from execution [42][43] Question: What needs to happen for net dollar retention to increase? - Management is focused on delivering value through ETM to existing customers, which could positively impact net dollar retention [44] Question: How is R&D spend prioritized across initiatives? - Management emphasized the focus on leveraging AI for efficiency gains in R&D, while continuing to invest in key areas [47][51]