Qualys, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the QALYS First Quarter 2022 Investors Conference Call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during this session, you will need to press star then one on your telephone. If you require any further assistance, please press star then zero. I would now like to turn the conference over to your speaker for today, Blair King, Investor Relations. You may begin.

Thank you, Tawanda, and good afternoon, and welcome to QALYPSE's first quarter 2022 earnings call. Joining me today to discuss our results are Sumit Pekar, our president and CEO, and Jimmy 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 future financial and 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 10Q and 10K. 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. A reconciliation of GAAP and non-GAAP measures is included in today's earnings press release. And finally, as a reminder, the press release prepared remarks and investor presentation are all available on the investor relations section of our website. So, I'd like now to turn the call over to Sunil.

Thank you, Blair, and welcome everyone to our first quarter earnings call. Building on our momentum, we are very pleased to report a good start to the year reflecting another quarter of continued revenue growth acceleration and strong cash flow generation. Behind these headlines are several encouraging market trends and notable business highlights. From market dynamics and continued competitive differentiation are fueling our growth. We believe the continued increase in the attack surface coupled with the growing concerns over cyber attacks like ransomware and cyber warfare is pushing organizations around the world to shed outdated siloed security and compliance systems and move to integrated security platforms to reduce the risk and response time as they future-proof their security architecture. Wallace researchers recently conducted a study on the widespread lock for share vulnerability, which included analyzing billions of assets and trillions of data points indexed on our platform, highlighting the complexity of the current threat landscape. Not only did organizations have to immediately assess their asset inventory and get a real-time view of their own and third-party vulnerable software, but also have to move at lightning speed to patch and mitigate the issues in a matter of hours. Our study showed that organizations took an average of 17 days to remediate this vulnerability, leaving them vulnerable to attacks during that period. At the same time, they also had to monitor their assets for compromised attempts and respond without delay. Qualys Cloud Platform's unified approach of bringing asset inventory, vulnerability detection, patch management, and EBR together in a single agent was greatly appreciated by our customers in helping to reduce their exposure significantly compared to siloed preset approach with multiple point solutions. Additionally, as shown in the study, encompassing more than 150 million scams globally, over 50% of vulnerable lock for show software was also end-of-life, again highlighting the strategic visibility provided by Qualysys integrated cybersecurity asset management capability that allowed our customers to understand the technology and its impact to their security for proactive risk reduction. We believe we are uniquely positioned in this market with our ability to provide innovative, comprehensive, and integrated products using a single-agent approach for speedy detection and response. Given the opportunities ahead, we continue to prioritize investing in our business, especially building our go-to-market team where we expect to see WG growth this year despite the challenging hiring environment given the tight labor market. In Q1, cloud agent subscriptions grew 26% year-over-year to $77 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 40% of customers worldwide. These results continue to validate our security consolidation approach and the power of a single agent as customers transition to VMDR. Our growth risk quarters speaks to the commitment customers are making to the Qualys Cloud platform. The customer stories I will share with you today underscore our success with customers of all sizes in their respective journey to uniquely unite asset inventory threat detection and prevention into a natively integrated cloud-based platform that immediately develops much faster than alternate solutions. I'll start with an existing US-based Fortune 200 customer who entered into a new agreement with us to expand their VMDR and patch management deployment while adding Firebase UDSS management capabilities stunning on-prem, cloud, and container environment. The ability to significantly enhance their security program with high-quality asset context, CMDB integration, alerting, and accurate response capabilities on a single integrated platform stood out among several competing solutions in the market today. The next example is of a new customer that started with cybersecurity asset management, EMDR, patch management, and multi-factor EDR. as part of a strategic initiative to transform its IT security architecture. This customer chose Qualys because we offer the only security and compliance stack available in the market today that utilizes a single agent to enable full asset visibility and context-aware mapping to prioritize vulnerabilities, to actively reduce technical debt, automate patching, and continuously monitor endpoints to define against future malware and ransomware events across multiple environments. Finally, in another new logo win, a Fortune 1000 customer selected VMDR along with patch management. This customer consolidated two vendors to significantly reduce complexity and legacy IT costs while uniquely leveraging automation in its security and compliance operations. The speed of vulnerability detection and remediation capabilities leveraging a single agent and a unified dashboard were critical factors in its purchasing decision. This is also a good example of how we are benefiting from the investments we are making to onboard new channel partners to win new business opportunities. We believe these new links and expansions illustrate that our natively integrated cloud-based platform and single-agent approach is increasingly resonating with customers ready to re-architect and consolidate their security stack, leveraging our technical leadership We are also better partnering with our channel as part of our little market initiative. In fact, we recently launched new partner programs designed to further drive our new business level and worldwide. As I've said before, our goal is to remove friction for customers to make product expansion simple and hassle-free. A customer who may currently use only VMDR has the ability to trial and adopt our other applications at the click of a button. Executing well against this agenda, we recently introduced our next major upgrade to our multi-vector EDR solution. This natively integrated solution in the Qualys Cloud Platform further leverages our single agent approach for enhanced threat hunting and risk mitigation capabilities. Unlike traditional EDR products focused on detecting threat activity on the endpoint after the threat has already landed, multi-vector EDR 2.0 unifies multiple context vectors, including asset pay fatality, vulnerability, and system misconfigurations associated with threats, as well as patching to reduce real-time correspondence. We are pleased to have completed the most recent microevent evaluation for the first time, shoulder to shoulder with existing EDR players and more specifically, achieving impressive results. We believe that for existing customers already utilizing our VMDR solution, the added capabilities of multi-vector EDR 2.0 will immediately reduce the volume of incidents, extend prediction and prevention capabilities, and further strengthen our customers' cyber resilience. I'm also very pleased by the early adoption of this product from a handful of our customers since its introduction in early April and excited by the positive feedback we are receiving for this new update. Looking ahead, as a leader in security and compliance solutions, we continue to invest in Qualys Cloud Platform to further differentiate our automation detection and response capabilities. More specifically, we will expand on our robust capabilities in cloud, container, and ICS-OT environment to further strengthen our competitive differentiator as customers increasingly move applications to cloud and containerized environments. In summary, we are delivering solid financial results and building strong business momentum in the market as companies uniformly recognize Security transformation is fundamental to combatting today's heightened tech environment. As a result, customers are increasingly looking to reduce their risk exposure through the adoption of a natively integrated security platform instead of relying on a collection of disparate point solutions. We believe that with our organically integrated cloud-native platform built to solve modern security challenges, Qualys is uniquely positioned to capitalize on this long-term, sustainable trend and drive shareholder value. With that, I'll turn the call over to Julie to further discuss our first quarter outlook, results and outlook for the second quarter and still year 2022.