Qualys(QLYS)2024-05-07 23:15Financial Data and Key Metrics - Q1 2024 revenue grew 12% YoY to 69 million representing a 47% margin compared to 45% a year ago [31] - EPS for Q1 2024 was 83 5 million representing a 57% margin compared to 48% in the prior year [10] - Operating expenses in Q1 increased by 5% to 500 000 or more with Qualys in Q1 grew 19% YoY to 192 [92] Market Data and Key Metrics - Revenue growth outside the US was 13% ahead of domestic growth of 11% [95] - The US and international revenue mix is expected to remain roughly at 60% and 40% respectively [95] - Healthcare technology retail and financial services verticals demonstrated strong VMDR demand with large deal sizes in Q1 [26] Company Strategy and Industry Competition - Qualys is focusing on driving new customer acquisition campaigns and incentives while streamlining sales cycles and operations [9] - The company is investing in its partner program to bolster capacity and harness transformative solution sales [66] - Qualys is extending its technology leadership with new capabilities in External Attack Surface Management and third-party integration [7] - The company is advancing its TruRisk capabilities by integrating MITRE ATT&CK Matrix Prioritization into its platform [67] Management Commentary on Operating Environment and Future Outlook - Management noted a challenging upsell environment with a net dollar expansion rate of 104% down from 105% last quarter [9] - The company expects full-year 2024 revenue to be in the range of 608 5 million representing a growth rate of 8% to 10% [71] - Full-year 2024 EBITDA margin is expected to be in the low 40s and free cash flow margin in the mid-30s [32] - Management highlighted the importance of reducing risk exposure through the adoption of integrated risk management platforms [68] Other Important Information - Qualys repurchased 105 000 shares for 265 7 million remaining in the share repurchase program [10] - The company plans to increase investments in Sales & Marketing as well as related support functions systems and people [11] - Qualys is working towards FedRAMP High certification expected by the end of 2024 which will enable deeper penetration into federal agencies [77] Q&A Session Summary Question: Impact on upsell business and improvements [99] - The upsell environment remains challenging with longer review times and customers taking longer to make decisions on larger projects [74] - Management is focusing on generating additional opportunities and educating CISOs to improve upsell performance [74] Question: Federal business traction and GovCloud platform [101] - Qualys is investing in the federal market with recent hires and a planned public sector conference [56] - The company is working towards FedRAMP High certification which will enable deeper penetration into federal agencies [77] Question: Cloud security opportunity and CNAPP solution [61] - Cloud security is a significant opportunity with customers increasingly combining VMDR and TotalCloud solutions upfront [19] - Demand varies by maturity level with more mature organizations adopting workload protection and other advanced capabilities [42] Question: Capital allocation priorities [49] - Share buybacks are based on a grid to offset equity dilution with potential acquisition targets being considered opportunistically [82] Question: Billings growth and new customer growth [84] - Current billings growth of 8% reflects a net dollar expansion rate decline offset by new business traction [106] - New business growth is driven by channel partners with three consecutive quarters of double-digit growth [52] Question: Narrowing full-year revenue guidance band [14] - The decision to narrow the revenue guidance band was based on Q1 performance aligning with the mid-point of the guidance [36] - Management does not anticipate material improvement in the net dollar expansion rate [75]