Qualys, Inc.

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the QALYS third quarter 2022 investor conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone keypad. At this time, I would like to turn the conference over to Mr. Blair King. Sir, please begin.

Thank you, Howard. Good afternoon and welcome to QALYS' third quarter 2022 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 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 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. Reconciliation of gap to non-gap 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 third quarter earnings call. Qualys again delivered another quarter of strong revenue growth and cash flow generation while further executing on a focused investment strategy to deliver profitable growth. Given the accelerated growth in scope and complexity of cyber threats and an uncertain macroeconomic and geopolitical landscape, CISOs and CIOs continue to broadly prioritize natively integrated security solutions to both fortify their security posture and optimize budgets through a reduction of agents and response times to reduce risk and cut costs. As a result, Qualys experienced another quarter of steady VMDR adoption which is now deployed by 45% of our customers worldwide. Key competitive VMDR wins in the quarter include multiple customers, both down market and in the Forbes 1000. The strength of Qualys' VMDR solution has clear momentum in the market and is garnishing significant industry recognition. As recently announced, Qualys' VMDR application was voted the best vulnerability management solution at the 2022 FC Awards. This award evaluates vendors based on input from security practitioners worldwide and is held in high esteem. We believe Qualys' placement as the number one vulnerability management solution further validates our investment in the platform and represents the standard for securing customer environments today and in the future. With multiple long-term growth drivers in our business, I will take a moment to share some of the early successes we are seeing to broaden platform adoption with customers and partners. On the customer front, in a highly strategic competitive win, a large government agency entered into a seven-figure upsell agreement to expand its asset count with VMDR and patch management after selecting cybersecurity asset management policy compliance and multi-vector EDR as part of an initiative to transform its IT security architecture. This customer selected Qualys because we offer the only security and compliance stack available in the market today that utilizes a FedRAMP authorized platform and single lightweight agent to enable full asset visibility and context-aware mapping to prioritize vulnerabilities, proactively reduce technical debt, automate patching, and continuously monitor endpoints with high-fidelity telemetry to defend against future malware and ransomware events across multiple environments. In Q3, we also expanded our engagement with the Fortune 100 company in a competitive mid-six-figure upsell. The customer selected Qualys' cybersecurity asset management policy compliance and VMDR capabilities. The ability to significantly enhance its security program with comprehensive internal and external asset context, CMDB integrations, alerting prioritization, and accurate response capabilities with built-in ticketing and compliance monitoring on a single console while consulting agents were a key differentiator in this way. Beyond these wins, we continued to see new customers adopt cybersecurity asset management and patch management alongside VMDR. Instead of just being a one-dimensional tool used to detect and produce a list of vulnerabilities, these new competitive wins underpinned Wallace's ability to help customers not only detect but also prioritize risk across all assets while remediating vulnerabilities much faster than alternative siloed solutions. This is becoming an even stronger value proposition in the current microeconomic environment as customers increasingly seek multiple security offerings and capabilities out of a single Qualys platform. Investing in our partner ecosystem continues to be a key pillar in our go-to-market agenda. In the quarter, we expanded our relationships with several MSSPs and entered into a new partnership with the cyber insurance company, to enable reduced premiums for their customers using VMDR with TrueRisk. We also expanded our strategic alliance with IBM. Through this collaboration, Qualys solutions are being positioned as key platform for securing IBM's ZLinux mainframe infrastructure to bring highly accurate vulnerability detection and compliance capabilities to several of the world's largest financial institutions while utilizing the same Qualys agent. Additionally, we continue to see an increase in new customer deal registrations by our partners. We believe the expansion of our partner program since its launch in May reflects our strengthening brand awareness and strategic position in the market. A cornerstone of our strategy is engineering innovation, and we challenge ourselves every day to lead the industry. While we have been very focused on helping customers secure their cloud and container environment for some time now, our recent launch of TotalCloud further reflects the power of our platform by enabling cloud-native VMDR with FlexScan. By pairing agent and agentless zero-touch assessment options with high-efficacy vulnerability detection and prioritization capabilities, organizations can now extend the platform to continuously view all cloud assets, visualize the entire attack surface, and reduce risk by rapidly remediating and preventing misconfigurations and vulnerabilities from build to runtime. With Qualys agents already securing over 30 million workloads in the cloud, we believe this solution provides the most holistic, flexible, and accurate approach to modern cloud and container security available in the market today. We will showcase TotalCloud with FlexCan at our upcoming Qualys Security Conference in Las Vegas from November 7th to 10th. We already have over 900 people registered to attend, and we welcome all of you to access the agenda and register at qualys.com. At this conference, our product and engineering teams will showcase the innovation of Qualys platform, and our customers will talk about their success with Qualys, including focused conversations on how they have been able to save cost in their security program by moving to a unified Qualys platform with a single agent. With vulnerabilities proliferating at an unprecedented pace in the face of growing cybersecurity skill gap, now more than ever, architectures matter. With the recently announced acquisition of BlueHexagon, Qualys can now apply cloud-scale artificial intelligence and machine learning capabilities to the cloud platform, and it's more than 13 trillion data points collected from over 100,000 network scanners and over 90 million cloud regions. which makes this combination so significant is its ability to discover and identify relationships and patterns within our highly integrated data lake to rapidly predict and detect anomalous activities in customer environment that are invisible and undetectable in traditional security solutions. Specifically, upon integration, this capability will allow Qualys customers to detect active vulnerability exploitation, identify advanced network threats, and enable adaptive risk mitigation including real-time zero-day threat detection across all assets, applications, and environments. This is a uniquely powerful new addition to the Qualys Cloud platform, and we are pleased to welcome some of the best security minds and associated innovation in AI and ML to the Qualys family. In summary, we continue to pioneer and define a security cloud category built to solve modern security challenges. And given the large market opportunity in front of us with multiple growth engines in our business, we anticipate that we can grow at scale long-term, generate cash, and continue to invest in key initiatives that will further extend the gap between callers and the competition. With that, I will turn the call over to Jimmy to discuss in more detail our third quarter results and outlook for the fourth quarter and full year 2022.