Qualys, Inc.

Thank you for standing by and welcome to QALYS first quarter 2021 investor call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference may be recorded. Should you require any further assistance, please press star 0. I would now like to hand the call over to your host, VP of Investor Relations and Corporate Development, Blair King. You may begin.

Thank you, Lateef. Good afternoon and welcome to Qualys' first quarter 2021 earnings call. Joining me today to discuss our results are Sumit Thakkar, our CEO, and Jomi Kim, our CFO. Before we get started, I would like to remind you that our remarks today will include forward-looking statements that generally relate to future events and or our future financial or operating performance. Actual results may differ materially from these statements. Factors that could cause results to differ materially are set forth in today's press release and in our filings with the SEC, including our latest Form 10-K and 10-Q. Any forward-looking statements that we make on this call are based on assumptions as of today, and we understand no obligation or we undertake no obligation to update these statements as a result of new information or future events. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in today's earnings press release. And as a reminder, the press release prepared remarks and investor presentation are all available on the investor relations section of our website. So with that, I'd like to turn the call over to Sumed.

Thank you, Blair, and welcome everyone to our Q1 earnings call. We are pleased to report another quarter of healthy revenue growth and profitability, reflecting good progress our strategic and financial agendas. Since taking on the role of interim CEO in February, I have been working closely with the Qualys team, our customers, as well as our board to ensure continued success of the company. As the newly appointed CEO, I am very excited to have the opportunity to lead Qualys on this next phase of its journey. I would like to thank Philippe for his leadership, making Qualys a significant force in the cybersecurity space, and I'm confident we will take the company to the next level of its growth. I'm now squarely focused on platform innovation and enhancing our go-to-market motion. We experienced another quarter of strong growth in our paid cloud agent subscription, which grew 58% year-over-year to 61 million, as well as continued momentum with VMDR with 34% purchasing VMD app. Our multifunction lightweight cloud agent is a core engine that helps customers consolidate multiple agents with a single quality solution. One of my key priorities is to ensure we are providing innovative, comprehensive, and integrated products to transform the way new and existing customers secure and protect their organization's IT infrastructure and applications with cloud-based IT security and compliance solutions. We believe Qualys VMDR, which is vulnerability management detection and response, is setting the gold standard for vulnerability management with our single agent approach to speedy detection and response. Attackers' rapid exploitation of vulnerabilities for malware and ransomware attacks continues to grow as witnessed with the recent high-profile proxy logon vulnerabilities impacting Microsoft Exchange servers. The threat actors raised to exploit a few days and installed the China Chopper web shell for further entry into organization's environment. The DeerCry ransomware hit soon after leveraging those same vulnerabilities. Qualys quickly released a 60-day free VMDR service to help organizations not only quickly detect the vulnerabilities, but also patch it with single click and further detect the ransomware with multi-vector EDR and take response actions, all using the single Qualys agent. This showcases the power of VMDR to not only report on vulnerabilities like other siloed point solutions, but also mitigate the risk immediately and was very well received by our customers who were able to patch high profile vulnerabilities in a matter of hours with our tightly integrated patch management solution in a single app workflow and stay ahead of the threat actors. While still a small portion of overall bookings we continue to see strong customer interest in our patch management solution, both in the mid-market as well as with large new and existing customers. In fact, in Q1, a leading large multinational firm selected our patch management application over several other competing solutions given its ability to easily and effectively patch remote endpoints without using the limited bandwidth available on the VPN gateways. With our recent announcement of extension of patch management for Linux systems, where very few enterprise patching solutions are available. We are looking forward to expanding the opportunity of Upsell to customers who already have cloud agents on these systems. Further pressing our advantage with agent consolidation, we continue to see customer interest in adding our multi-vector EDR to their VMDR and patch management deployment to reduce agent sprawl on their endpoints with single solution for risk mitigation and threat response. Our recent announcement of adding real-time anti-malware protection capability to our multi-vector EDR solution further solidifies our commitment to continuing to expand our addressable market opportunity. As an example, in Q1, a Fortune 500 company purchased our paid asset inventory module, VMDR, patch management, and EDR together to standardize their endpoint security on a single agent solution over multiple best-of-grade point solution agents. In terms of our newer paid solutions, we saw solid growth in the quarter with our container security solution led by Microsoft Azure for scanning container registries. In addition, we continue to see strong growth for our global IT asset discovery and inventory solution. In the quarter, two leading financial institutions selected our asset inventory paid modules in order to gain visibility of all of their known and unknown assets spanning multiple environments to identify the end-of-life of the installed software and synchronize with their ServiceNow CMDB. Looking into the remainder of 2021, we have a strong roadmap to expand our asset inventory, EDR, ICS, OT, cloud, and container security solutions. We also plan to introduce our extended detection and response platform, XDR. XDR is a next-generation security analytics and incident response solution which natively integrates and correlates security platform. This solution is currently in private beta with a few select design partner customers. With these continued innovations and others on our platform, we'll expand our addressable market while opening exciting new growth opportunities for the business. In addition, we continue to build strong strategic partnerships towards enhancing our global market with building in quality security solutions with cloud providers like Microsoft Azure and GCP, as well as displacing competing solutions with MSSP partners like HCL, where Qualys VMDR is now their default vulnerability management offering. Another key area of my focus is our go-to-market strategy and sales execution. Pairing industry-leading innovation with an amplified investment in our go-to-market initiatives underpin our confidence in driving profitable growth and long-term value creation for our customers and shareholders. Armed with industry-leading technology and substantial new platforms following the successful launch of VMDR and multi-vector EDR last year, as well as the upcoming release of our HDR solution, we are planning to make appropriate go-to-market investments in our business. We believe that we are well positioned to maximize the return on incremental investments, so I have been spending majority of my time with the sales and marketing teams as well as product management to execute on this plan. To that effect, one of my top priorities, as previously mentioned, was to look for a candidate for chief revenue officer to drive growth of our business. Today, I am pleased to announce that Alan Peters will be joining us as our new CRO starting next week. He will be responsible the leadership of worldwide sales and partner organizations, and continuing Qualys growth momentum. Alan has more than 20 years of executive sales experience building and scaling global teams in cybersecurity and SaaS companies, including previously serving as the CRO of Trustway. We also recently appointed Klaus Moser to assume the role of Executive Vice President for Field Operations for America and General Manager of our SME and SMB business. At the same time, we are also enhancing sales operations, digital marketing, and other sales enablement functions in the company with a balanced approach to sustain future growth and profitability. In conclusion, as I stated on our prior call, Qualys continues to move well beyond vulnerability management and increase its competitive advantage with the addition of newer solutions, including our soon-to-be-released XDR. Our strategic direction remains focused on leading with powerfully disruptive technologies. Paired with strong sales leadership and a focus and growing global go-to-market initiative, we believe we are well positioned to drive long-term value for both our customers and our shareholders. With that, I'll turn the call over to Jumi to further discuss our first quarter financial results and guidance for the second quarter and full year fiscal 2021.