Qualys, Inc.

Thank you for standing by, and welcome to the Qualys Inc. second quarter 2021 investor call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star zero on your touch-tone telephone. I would like to turn the conference over to your host, Mr. Blair King. Please go ahead, sir.

Thank you, Grace. Good afternoon, and welcome to Qualys' second quarter 2021 earnings call. Joining me today to discuss our results are Sumit Thakkar, our president and CEO, and Jumi 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 or 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-Q and 10-K. Any forward-looking statements that we make on this call are based on assumptions as of today, and 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. The 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 available on the investor relations section of our website. So with that, I'd like to turn the call now over to Sumedh. Sumedh?

Thank you, Blair, and welcome, everyone, to our second quarter earnings call. Q2 was another solid quarter with more customers upgrading to VMDR and increasing the deployment of our cloud agents on endpoints. We're delighted to share that we have continued to grow and operate effectively through the pandemic and management changes in the companies. Faced with the latest increase in malware and ransomware cyber attacks paired with heightened government scrutiny, our customers are turning to us to fortify their security posture, respond faster, and integrate patching and reduce legacy IT costs. Our highly scalable cloud-based platform allow enterprises to deploy multiple applications using a single agent, which differentiates us in the industry. Furthermore, our scalable platform enables us to handle more than 20 petabytes of data currently indexing over nine trillion data points on our Elasticsearch clusters, moving more than 28 billion messages a day on our Kafka bus, and pumping over one million writes per second on our Cassandra clusters. As a result, our solutions don't need to rely on collecting data from disparate point products to detect, remediate, and respond to security threats. The single agent approach provides better security and user experiences, and in turn underpins the continued acceleration of our cloud agent subscriptions, which grew 51% year-over-year to 64 million. We continue to expand the ubiquity of our agent with our VMDR solution, which continues to gain traction in the market with 28% customer penetration as of Q2. Additionally, validating our solution consolidation approach, our top new customers in Q2 not only purchased VMDR, but also started with a number of additional Qualys solutions out of the gate, such as asset management, patch management, multi-vector EDR, file integrity monitoring, policy compliance, web application scanning, and container security. We expect to further drive the VMDR adoption in the SMB segment with the new pricing and packaging we recently introduced, and given the desire of these smaller, resource-strapped customers to have a single risk-based vulnerability management tool with built-in remediation. We recently announced the launch of a very strategic initiative, which is our cybersecurity asset management, CSAM application. Accurate and up-to-date asset management in the continuously changing hybrid environment remains a major challenge for large and small businesses. Despite this, being a fundamental building block and compliance requirement, organizations struggle with asset management that is focused on cybersecurity. We believe that Qualys Cloud Platform, with our multiple sensors and scalable backend that collects, correlates, enriches, and categorizes large amounts of data, provides the ideal and robust solution for this challenge. By combining agent-based and agent-less data collection, active and passive scanning, and APIs, the Qualys Cloud Platform now provides comprehensive asset discovery across the entire infrastructure, including on-prem cloud container OT and IoT to add context for security-centric visibility with detection of security gaps, CMDB integration, alerting and response capabilities. It was particularly encouraging to see a top-tier financial institution select our CSAM application just days after its introduction in pursuit of agent consolidation, simplified operational workflows and a comprehensive view of the financial institution's IT asset infrastructure as it rebuilds the security architecture for the modern hybrid work environment. Exhibited virtually at Black Hat, we were pleased to see an overwhelming reception for this application by large enterprise customers worldwide. We continue to see customer interest in reducing agent sprawl with a single solution for risk management and threat response. So as an example, in Q2, A new Fortune 100 customer purchased VMDR policy compliance, patch management, cloud security, web application scanning, and container security together to standardize its security hygiene on a single agent solution over multiple best-of-three-point solutions. In terms of our other newer paid solutions, we saw continued customer interest in our container security solution as well as patch management application. In the quarter, several large new and existing enterprise customers selected our patch management application over competing solutions, given its ability to quickly patch remote endpoints easily and effectively without using the limited bandwidth available on VPN gateways. And finally, we are receiving positive customer feedback and support for our EDR solution. This application is a natural extension to our highly scalable cloud platform and strategically aligns our vision of a single agent. Looking into the remainder of 2021, we plan to introduce XDR, which is our extended detection and response and next generation security analytics and incident response solution, which natively integrates and correlates security telemetry across the security stack for an end-to-end platform and like EDR, another natural extension to our platform. This solution is currently in private beta with several design partner customers and the feedback we are getting has been very encouraging. As the adoption of cloud applications continues to proliferate in the industry, we continue to focus on enhancing our cloud-native security solutions. We are rapidly expanding the power of our platform through organic innovation and targeted acquisitions in this area. The total cloud acquisition we announced today will soon be integrated into several of our cloud platform modules, including our CloudView application and upcoming XDR solution to strengthen our cloud security posture management capability and enable users to easily create automated cloud workflows for rapid navigation. In addition, as I outlined on our last earnings call, another key area of focus for me is on our go-to-market strategy and sales execution. Here we continue to make appropriate investments in our business, and I'm pleased to say Alan Peters, who recently joined Qualys as our new CRO, is off to a great start. It's great to have him as part of the team, and we're looking forward to continuing our growth momentum under his leadership. In summary, we believe Qualys has a superior competitive position that provides a runway for long-term revenue growth and profitability while supporting industry-leading performance, ease of adoption for our customers, and speed of innovation for our R&D efforts, paired with the investments we are making in our go-to-market and sales enablement activities. We view these advantages as a major contributor to an already favorable competitive environment that the company has benefited from in replacing legacy point product deployments. With that, I will turn the call over to Juni to discuss our second quarter financial results and guidance for third quarter and full year 2021.