Qualys, Inc.

Thank you for standing by and welcome to Qualys' fourth 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 conference over to your host. Blair King, Investor Relations. Please go ahead.

Thank you, Lateef, and good afternoon and welcome to the QALYIS fourth 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'd like to remind you that our remarks today will include forward-looking statements that generally relate to future events 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 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'll 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 all available on the investor relations section of our website. So with that, I'd like to turn the call now over to Sumit.

Thank you, Blair, and welcome everyone to our fourth quarter earnings call. We are very pleased to report another quarter of strong financial performance Reflecting a year of progress in our efforts of advancing our go-to-market initiatives, significant platform innovation, and strong momentum heading into 2022. In Q4, cloud agent subscriptions grew 34% year-over-year to 75 million purchased over the last 12 months. There was also a steady adoption of our vulnerability management detection and response, or VMDR solution, which is now deployed by 36% of our customers worldwide. These results continue to validate our security consolidation approach and the power of single agent as customers increasingly transition to VMDR. Our go-to-market enhancements are starting to yield results as we are executing well to seize on heightened demand trends and opportunities we see in the market. The customer stories I will share with you today not only highlight our growing leadership among large enterprise customers, but also the growing desire among CISOs CIOs to consolidate their security stack and leverage automation in their security and compliance operations to achieve expedient remediation of risk in their organizations. Recent high-profile ransomware attacks and critical vulnerabilities like Lock4Shell and PawnKit have highlighted organizations' need for a scalable vulnerability management solution like Qualys' VMDR. That not only accurately detects these vulnerabilities, but also helps reduce exposure time with integrated asset discovery and remediation capabilities. Within days of Apache announcing lock for shell vulnerability, the Qualys research team, engineering team, and product teams released a free 30-day lock shell detection and remediation service, leveraging multiple Qualys capabilities like cybersecurity asset management, VMDR, patch management, and web application scanning. Since the Lock4Shell announcement in early December of last year, the Qualys cloud platform has detected millions of unique Lock4Shell vulnerabilities, underscoring the strategic relevance of our platform in our customer environment. Additionally, given the extensive impact of Lock4Shell to global organizations, our research team released multiple open source tools to help discover and remediate this vulnerability for the global community, further demonstrating both our leadership and commitment to the industry. A few illustrative events in the quarter include an existing Global Fortune 200 customer in the EMEA region, which standardized on Qualys' VMDR policy compliance, patch management, and asset inventory capabilities to cost-effectively consolidate its stack of legacy enterprise security and compliance solutions into a natively integrated platform linking multiple data center and endpoint environments. In addition, a new Fortune 600 Customer selected VMDR and cybersecurity asset management over several competing solutions. The ability to uniquely provide comprehensive asset discovery for security-centric visibility, CMDB synchronization, alerting, and accurate response capabilities once again stood out among vulnerability detection-only solutions in the market and was a key differentiator in our win. We believe these new wins and the early success we are experiencing with our newer applications characterize that when customers are ready to re-architect and consolidate their security stack, Qualys is the best cloud native multi-solution platform to meet their needs. Looking back at 2021, I believe the Qualys team has responded incredibly well to unexpected challenges and opportunities. demonstrating the transformative value of our newer solutions, the depth of our customer relationships, and the extraordinary abilities of our global and diverse team. We continue to broaden our platform and grow our business, building a strong team with additions of new executives, including a new CRO, CMO, CPO, and CIO. More recently, Bill Berty joined Qualys board in December. Bill has extensive go-to-market experience in enterprise software sales and marketing. And we believe he will be a great asset to the team as we build out our go-to-market motion in 2022. With this foundation in place, over the next several quarters, we plan to increase our sales and marketing investment with a focus on digital marketing programs to drive pipeline and customer reach, grow our sales team to further leverage our opportunity in the market, and expand our channel by recruiting and enabling partners. With respect to platform innovation, our goal is to remove friction for customers by making product expansion simple and hassle-free. A customer who may currently only use VMDR should be able to adopt all of our other applications with the click of a button. In 2021, we executed well against this objective while changing the game in security as we brought together asset inventory risk mitigation and threat detection and response into a natively integrated cloud-based platform. We believe these platform innovations have helped customers remediate vulnerabilities much faster than alternative siloed detection-only solutions. Further advancing our platform innovation agenda, I am pleased to announce that our context XDR solution is now GA. As many of you know, this is a natural extension to the Qualys Cloud Platform and our next-generation security analytics and incident response applications. Our context XDR application natively integrates and correlates asset and risk-based vulnerability contexts, patching, EDR, file integrity monitoring, and security telemetry with additional third-party data integration to provide high fidelity detection and response. Customers are telling us they want a simplified solution for security analytics and response. We believe this solution satisfies that demand as it leverages our scalable backend and its array of sensors which already collect and dish normalize and correlate trillions of data points across all environments on a single cloud agent for Qualys customers. While the overall market for this solution is still in the early innings, we are excited about this product and its potential, especially in light of the positive feedback we have received from customers who have been early adopters of our XDR capabilities. Looking ahead to 2022, we plan to maintain a dual innovation strategy. Primarily, we will continue to invest in internal R&D and scale our organization to further differentiate our automation detection and response capabilities. And we will further expand our product portfolio into EDR cloud container security and industrial control system security. Secondarily, making highly targeted and opportunistic acquisitions to enhance our platform and accelerate our time to market. As a reminder, in 2021, We completed the acquisition of TotalCloud to bring visual cloud remediation workflow technology to the Qualys cloud platform. To further support our growth agenda, we plan to invest more broadly in the business to expand our cloud platform presence and to enhance our business processes, tools, and systems to help drive better operational efficiency and business outcomes. In summary, we believe the Qualys Cloud Platform is the go-to solution for agent consolidation, cost saving, increased user productivity, and better cyber protection. We believe we are well positioned to continue our market momentum and expand our leadership as we build out our success, enhance our platform capabilities, and further extend our reach into new and adjacent markets. With that, I'll turn the call over to Jumi to further discuss our fourth quarter results and outlook for the first quarter and full year 2022.