Release Date: November 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Qualys Inc (QLYS, Financial) reported an 8% revenue growth to $153.9 million in Q3 2024, with channel contributions increasing to 47% of total revenues.
- The company launched the Enterprise Truist Management Solution, a cloud-based risk operation center, which consolidates data from multiple sources for comprehensive risk management.
- Qualys Inc (QLYS) achieved a significant win with a large federal government agency, displacing five existing vendors in a seven-figure deployment.
- The company's Total Cloud CNAP solution saw a mid-six figure booking upsell with a Global 200 financial services company, highlighting its scalability and integration capabilities.
- Qualys Inc (QLYS) maintained a strong net dollar expansion rate of 103%, indicating successful upsell performance and customer retention.
Negative Points
- Despite revenue growth, the adjusted EBITDA margin decreased to 45% from 48% a year ago, indicating increased operating expenses.
- The company anticipates ongoing budget scrutiny and a lighter new business pipeline for Q4 2024, which may impact future growth.
- Free cash flow margin dropped to 37% from 64% in the prior year, reflecting increased capital expenditures and share repurchases.
- Qualys Inc (QLYS) faces challenges in the federal sector due to the complexity and lumpiness of government contracts.
- The company noted that current billings growth was higher than bookings growth, indicating potential fluctuations and lumpiness in revenue recognition.
Q & A Highlights
Q: Can you discuss the changes in product marketing and their impact on the CNAP products?
A: Sumedh Thakar, President and CEO, explained that the focus has been on aligning messaging with business risk and risk quantification. This approach helps customers understand the risk across different modules and tools, leading to better consolidation and risk management. The CNAP products have performed well as a result of this strategy.
Q: What contributed to the strong net retention rate this quarter, and can we expect this trend to continue?
A: Joo Mi Kim, CFO, noted the upsell performance was a key factor in the improved net retention rate, which increased to 103%. While optimistic about long-term trends, the guidance assumes no material change in Q4 due to current deal visibility.
Q: How is the channel contributing to revenue growth, particularly with new platform offerings like MROC?
A: Sumedh Thakar highlighted the positive momentum with channel partners, emphasizing the strategy to enable partners to provide meaningful services, such as risk advisory and remediation services, which has contributed to revenue growth.
Q: Were there any significant deals that impacted the current billing performance this quarter?
A: Joo Mi Kim stated that while there were some deals pushed and pulled, it was within the normal course of business. The current billing growth was higher than booking performance due to billing schedules, and an LTM basis provides a more accurate view of business momentum.
Q: Can you elaborate on the federal sector's performance and future potential?
A: Sumedh Thakar mentioned that federal business is a focus area, with significant wins in Q3. The momentum is positive, driven by the consolidation of multiple tools into the Qualys platform, and investments in federal sales are expected to continue yielding results.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
