Qualys(QLYS) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For the full year 2025, the company reported revenue growth of 10% to $669.1 million, with an adjusted EBITDA margin of 47% and net income increasing by 13% to $257.8 million [17][18] - In Q4 2025, revenues grew 10% to $175.3 million, with channel partners contributing 51% of total revenues, up from 48% a year ago [18][21] - Free cash flow reached $304.4 million, representing 45% of revenues, exceeding expectations [17] Business Line Data and Key Metrics Changes - CyberSecurity Asset Management combined with ETM accounted for 10% of total bookings and 13% of new bookings in 2025, up from 8% and 9% respectively [19] - Patch Management made up 8% of total bookings and 16% of new bookings in 2025, an increase from 7% and 16% [19] - TotalCloud represented 5% of total bookings in 2025, up from 4% the previous year [20] Market Data and Key Metrics Changes - The company experienced 15% growth outside the US, compared to 6% growth in the domestic market, with a revenue mix of 56% from the US and 44% from international markets [18] - The gross dollar retention rate remained above 90%, with a net dollar expansion rate of 103%, down from 104% in the previous quarter [18] Company Strategy and Development Direction - The company is focusing on unifying fragmented security stacks into a centralized risk fabric, leveraging agentic AI to enhance pre-breach risk management [4][5] - The introduction of an agentic AI risk management marketplace aims to provide organizations with autonomous experts to reduce remediation time and costs [6][9] - The company plans to accelerate ETM adoption through its VMDR customer base and position itself for larger upsell opportunities [9][15] Management's Comments on Operating Environment and Future Outlook - Management anticipates a low to mid-single-digit growth in security spending to persist in 2026, reflecting customer prioritization of security within IT budgets [18] - The company expects revenue for 2026 to be in the range of $717 million to $725 million, representing a growth rate of 7% to 8% [23] - Management expressed optimism about the potential for upsell opportunities and the impact of new product discussions with existing customers [46][77] Other Important Information - The company has authorized an increase of $200 million to its share repurchase program, bringing the total available amount for share repurchases to $360.5 million [22] - The company is focusing on enhancing its partner ecosystem, with an increase in partner-led deal registrations reflecting deeper alignment and execution across the channel [14] Q&A Session Summary Question: Can you talk about Q-Flex offerings and their impact on platform adoption? - The Q-Flex proposal allows customers to consolidate capabilities on a single platform at their own pace, enhancing flexibility and encouraging broader adoption [26][29] Question: What is the customer interest in AI and its impact on net retention? - The introduction of an AI agent marketplace allows customers to augment their security teams, potentially improving net retention as they leverage agentic AI capabilities [31][34] Question: How is Agent Val enhancing ETM efficacy and reducing man-hours? - Agent Val confirms exploitability in the environment, saving IT teams time by reducing false positives and enabling immediate remediation actions [41][42] Question: What are the growth levers for 2026? - The company is focusing on product innovation, partner engagement, and federal opportunities to drive growth, with expectations for continued upsell potential [46][77] Question: How does the acquisition of Armis by ServiceNow impact the competitive landscape? - The company believes that the lack of integrated patch management in competitors' offerings, like Armis, will allow it to maintain a competitive edge [52][60]