Q2 2020 Qualys Inc Earnings Call
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Ladies and gentlemen, thank you for standing by and welcome to qualities incorporated second quarter 2020 Investor call. At this time, all participants are not listen only mode. After the speakers presentation. There will be a question and I suspicion, who asked the question doing that portion of the call you will need to press star one on yourself.
Phone. Please be advised that today's conference maybe recorded if you require any for assistance. Please press star ends here I'll now hand to conference over to your Speaker Today then route.
Good afternoon, and welcome to quoted second quarter, good Eattwenty earnings growth.
Joining me today to discuss the rebuild or could you go through our chairman and CEO and unique in our beautiful.
Before we get started I would like to remind due to the remarks today will include forward looking statements.
Generally relate to future events or future financial or operating performance.
Actually goes may differ materially from these statements.
Doctors that good cosmeceutical materially settled in today's press release, and they know filing for the city.
Including a latest on during Q and thank you.
Any forward looking statements at the make on this call based on assumptions as of today.
And we undertake no obligation to update the statement look drilled of new information of 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 todays earnings press release.
As a reminder.
Pithree prepared remark in that took a condition and supplemental historical financials cut sheet are available on other flight.
With that I'd like to turn the call over to sleep.
Thank you for New York and welcome everyone. Throughout Q2 earnings goal, we hope that you and your families or as the unsafe.
Our priority remains the as well being a four employees, while continuing to address and support the changing security needs if our customers.
Since mid March we've seen that qualys seamless transition to a rewrote workforce environment.
And I continue to effectively deliver on all aspects of our business, including part of the government operations and support services.
The unprecedented environment with the ongoing could be managing pandemic has created uncertainties for individuals and organizations across the globe.
As companies are experiencing a never before seen explosion of remote endpoints connected to critical assets of their organization.
Security of these endpoints is paramount.
Hi. This is Jim are responding to the challenge answering that employees are able to work productively and securely from remote location and it is becoming imminently clear.
That traditional enterprise security solutions deployed inside organizations networks are ineffective for protecting these remote and ports.
We believe that why this is one as a few companies well positioned in the security market evolution.
Due to our priority on investing in the extensibility and capabilities of our platform and our cloud based architecture.
But from the onset of covering 19 will address.
The needs of our existing customers by property, releasing a remote endpoint protection service that will add to that quickly address the challenge of securing these proliferating and pumps.
The service, which while providing a no customers or 60 days leverages the Qualys cloud agent and this cloud based architecture to deliver instant and continues visibility of remote computers as well as their installed applications.
Obtain real time view of all critical your abilities and this configuration and remotely deployed missing patches for critical Variabilities.
This patches of delivered securely and directly from brand or website and content delivery networks.
And sharing there is a little to no impact on external VPN badly.
In Q2, we advanced malware detection capabilities to the solution.
And customers that were already using the service would extend the fees. There 360 day license for an additional 30 days.
Malware detection user spy reputation and threat because indication to detect known malicious fives and endpoint servers and cloud workloads.
In addition, this service is now available to us federal agencies with a low cost 60 the pilot.
We currently have over 650 company, including nearly 300 customer prospect actively using this free offering.
These removed and competition services based on the Multifunction Qualys cloud agent, which instantly provides visibility during world and post the takes with images manages their security agent productivity and patches them quickly at no cost.
Our cloud agencies, the technology platform for seven of our security compliance and I'd solution.
Currency management policy compliance file integrity monitoring indication compromised cash management assets inventory and the upcoming certificate management and with more to come.
In Q2, we continue to see strong growth in our paid causation subscription with almost 43 million now representing 81% growth from the prior year quarter.
We have continued to make strong progress on our goal of achieving ubiquity forecast agent.
After organizations download our traditional once it's friction less for them to subscribe to our paid applications because no additional infrastructure is required to expand the solution with additional products.
Furthermore, these multi product adoption naturally increases the stickiness of our platform and helps makes us impenetrable to our competitors.
We do not offer the same rebuilt our competitors, who do not offers the same breadth of solution for ease of adoption.
This is demonstrated by the fact that the gross dollar retention rate of enterprise customers, who have adopted five solution low stands at 99%.
Our cloud are quite as cloud platform combined with the capabilities of the powerful lightweight cloud agent virtual scanners and network analysis passive scanning allowed us to create an effective and seamless guns management solution that incorporates the four key elements of discovery assessment.
Physician and patch management into a single application called VM, VR 13 management detection and response.
Which went into general availability in April.
The solution has been a huge success with our customers and is also driving further penetration of our college.
The architecture and inventory management through the next level by providing the power to continuously be segment, the beaches and ms. configuration across the and power global hybrid Ikea environments and responding in real time to remediate assets that are very similar or already compromise from a single test.
With building orchestration.
Currently 600 customers that have adopted the MTR, which includes approximately 200 new customers in fact.
Eight out of both our roughly 43 million pay television subscription have come from the MDR of which 5.8 million.
Where new agents subscription.
The MTR has not only help proliferate travel agent that also sets the foundation for further up sale of our paid for other paid applications.
We continue to see good adoption of our free global as an excessive inventory.
With almost 14000 company signed up and over 1250 companies actively using the service.
In terms of other newer solutions will continue to stories to to see strong customer adoption of our patch management solution. Both in the mid market segment as well as with large customers.
In Q2 large IP service firms selected our patch management application our severed competing solution.
Given its ability to easily and effectively patch remote and points without using limited bandwidth available on GTN gateways.
This quarter. We're also saw robust growth again for our container security application.
With a major enterprise video communication providers that have already deployed in the our across its and its infrastructure adopting the solutions.
In addition, our file integrity monitoring Tim.
Application continues to see solid momentum with a larger underline that in selected our film solution over competing point solution in order to a fortress can elaborate the quality validation that already deployed for variety management.
Now diving deeper.
Our office.
We are also early to recognize we were also early to recognize the importance of capturing.
All of the necessary to Demetri PR sensors.
And the Internet, while building the backend with scale and computing capabilities needed to and that such a large volumes of data today.
Let me handle more than nine terabyte of data indexing more than seven trillion datapoints on our Elasticsearch clusters, moving 14 billion messages a day on our cap kept us.
During 400 million object offset clusters and pumping the media rights for second in Arkansas, Sandra log analysis engine.
As a result are highly scalable cloud based platform enabled us to address all four new market segments large enterprise cloud providers next generation of managed security service providers and OTI energy environment, providing a single pane of glass view across encore.
These assets and funds cloud and mobile environment.
Last month, we introduced our multi vector DDR solution that goes well beyond the endpoints.
And not only allows for the reduction of first positive, but also makes it easier to activate the response and greatly reduce the response times and costs.
As an app.
Natively on the Qualys cloud platform, our multi Victor LDR Leverages power scan and accuracy to to provide unprecedented visibility cemetery decorating security data from endpoints, I think context, and correlating billions of global events with threat intelligence analytics and machinery.
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To strengthen our entrance into the our market we acquired the software assets.
Ill step security very innovative decreased dial that in India.
And all security employees have joined our call comes into the.
The team as unique expertise in threatened teaching and malware research as well as deep understanding of the multi vector attacks.
Also our threat answering products that will be fully integrated into the quality platform.
Traditional PDL submission singularly focused on hunting and investigating endpoints malicious activities and cyber attacks.
While this multi vector force provides critical context and field visits and full visibility into the entire.
Attack chain by providing a faster more automated and comprehensive response to protect against Ddos attacks.
While the latest we're delighted with the strong adoption of the MDR by both our customers and managed security service providers.
And now by the interest in multi vector, but by the interest multi Victor CDR is generating with them.
Moving from multi from the MDR to multi vector DDR is almost instantaneous as it only requires an update of our cloud agent, which is automatically done by our platform. Once the application is in April.
We're also pleased to announce that Infosys managed security services now adapted both the MTR and multi vector DDR and here's a quote from be shelf suddenly see so an edge of infosys cyber practice.
We're pleased to partner with qualities to deliver the NPL and multi vector ERP solutions via our globally distributed network of Infosys Cyber Defense Center.
The highly scalable.
While these cloud platform with the slides with agents and sensors and its fourth coming incidence response capabilities provides us with the intelligence analytics, we need to effectively public protect our clients and allows us to consolidate our securities back.
At Blackout, we also discussed our upcoming data Lake Slash seem solution that we expect to have in early data at the end of Twentytwenty.
This is an important new milestone and new opportunity for company as currency incidence response physicians have become quite complex and costly requiring organization to use multiple vendors to collect the data needed.
And bring and bring it into the same with fully concept contextual information.
Quite unique advantages that we can leverage our was scalable backend and it's our rate of sensors, which collect and rich normalized and correlate trillions of data points across on premise endpoint cloud mobility and sued OTI analogy environment.
On the hiring France, we're pleased to welcome back Junior Kim as Chief Financial Officer, Cordless extensive finest strategic planning an investor expertise will be instrumental as we continue to expand the credit score platforming daughter company.
Also delighted that then car I joined a qualys as Chief information Security Officer that is a proven information and risk executive and thought leader with more than 25 years of experience in existing long term security strategy at qualities responses of providing cyber security guidance.
And security strategies to Qualys customers, leading the scenario, so engine change and securing our infrastructure.
Finally, while also honor to welcome John Sungard into our board of directors, John that extensive experience in digital transformation and successfully transformed the infrastructure of both the DHS and the duty as well as modernize the cyber security operation.
We are grateful to gain is valuable insight and guidance as we continue to expand our cloud platform to deliver innovative security and compliance object.
In summary.
Because of the very nature of our business model, which is nearly 100% recurring.
And the fact that our solutions and become mission critical by the greater visibility than many other 60 companies.
In our industry, even in such difficult time, not to mention a highly profitable and cash generating business model.
Our product and platform achievements laid the foundation for continued progress to enable customers to consolidate the security capable stuck by drastically reducing the spam and importantly is core to the highly profitable recurring book and growing revenue model to happy with that.
I'll turn the call over to drew me to discuss our financial results results and guidance for the third quarter and fully fiscal year 2020.
Thank you.
Thanks.
Good afternoon.
We filed and I cannot advertising revenue, our financial sector, our non-GAAP, okay, great and income comparison preparing our parallel data other line.
Thank you and I know Rebanking, how data protection unoccupied accrue to us.
The strong adoption at the MTR, let's remains the foundation for future revenue.
The optimal profitability.
Hi cancer financial and operational highlights included.
For the second quarter, 2022% to 88.9 alone.
Please now at Q2, 2020, Catalina comparing like negatively impact.
Timing and amount of prepaid multifaceted questions offline for class restaurant iteration conversing with respect to conclude quarter coming to current market conditions.
Our average deal size increased 7%.
Our final adoption continued on.
I think we're confident as customer the three online consternation back closer to 4%, 10.4% on a percentage of enterprise customer that's part one part condition, okay, the 10% and 24%.
Page Coddington capsule increased 23 million over the lifetime line our company now that the timeline on that in Q1 2020.
And 19% at the end customer upper Aneel and acquire renewed on Kathy anti subscription at some point per site on Q1.
I cannot talk on model continues to track the carrier Micron and summary, and key cash flow.
Adjusted EBITDA for the second quarter after battling 20, but 22.8 million representing a 20% my time press of 22%.
Cancer as compared to 4%.
And our free cash flow at the second quarter 2020.
24.9, now representing a 20% my time on down 20%, primarily due to significant teaser Anthony and payment term preferred customer given the current macroeconomic environment.
Today, our free cash flow lighting up 20% plus app.
And just here, we continue to invest accounts, we generated from operations back into Apollo, including 4.3 million in capital expenditure per operation.
Creating principal payments under capitally opposition.
25.3 million to impressive 242500 per outstanding share.
We remain confident in our business model, Kevin by our foundation at nearly 100% recurring revenue.
Turning to the application.
We are delighted to be raising our full year 2020 guidance, however revenue and earnings.
We are raising the bottom on patent up our many cadone, California came out in the range at 339 to 350.5 million and hiring cap, we tested point to Kentucky nine now.
They're raising our full year non-GAAP EPS guidance came out in the range.
2.0 to two point of time and the pilings at 2.4 think ticker point pipeline.
We expect to maintain entertaining enlighten from 2020 and continue to cooking John Castile.
And I can't break out into revenue of 91 point.
92.2 million.
Every non-GAAP EPS of 55 cents typically Pakistan.
Benefit corridor, we said capital expenditure cutting earnings at 89 million, which includes approximately 2 million cut about that adequately headquarter.
Given the current making lately.
Turning to expand on our Canadian headquarter has compressed aditya line.
We now expect that 10 million of original plan spanned currently cotton happier.
Excellent mentioned, we're very excited at a robust any adoption at the MTR underlines, our multi factor into your application.
Thank you very well position during the period and 17 into the value provided by our card platform at 20, App I'd like to underlying highly scalable and profitable operational model.
With that sleep and I are happy to answer any other question.
Thank you ladies and gentlemen, if the other question at this time just press Star then one on your telephone keypad to withdraw your question press the pound our hash key please standby, while they compiled a keanu roster.
And our first question is how m- sitting there with JMP Securities. Please go ahead.
Hi, Thanks for taking the question.
Can you talk a little bit about linearity, how did the pandemic play out through the quarter.
Yeah I'm just a question 70, I wouldn't see any material highlighting I wouldn't have any or any electrolyte glassware.
Okay and then on the BMD are can you talk a little bit about how much adoption you've seen with them.
Using the patch management component to that.
Yes, so we had a big demand.
The second yes, no we have a big demand for patch management. So there's no question that this is application that is already.
Coming up and the MDR makes it much easier because obviously last mile is you patch and it's at your fingertips. So is there is very significant then we see by the way what is interesting is both.
On the on the mid market, but as well as with large enterprise in fact, I mentioned on the speech on the on the call that rather large.
Enterprise, which really adopted in a knowledge MDR, but they also adopted a big it's a big deployment of such managements.
And who who are you.
Placing or or who do you see on that patching patching centers front is that they fix.
Oh, it's interesting is that it's not so much of the displacements is effective become it starts more like adding for example is much easier of course, Jude with our solution to catch the endpoints. So in so we in fact, we believe in some cases they could continue using for example at CCM for other solutions.
On the endpoints is much easier to date with Qualys.
So.
And other patch management solution, but essentially adding to where they are doing and and we see more and more appetites either to essentially move to solution like Qualys, which integrates.
They are tar from discovering new assets to identifying the variances on those assets to prioritize the remediation and then really eight but also by the way the integration with some customers. They don't take the food such management solution that they take all the information that will provide them with the superseding patches and so forth.
So they can continue pushing that into their own.
Such management solution.
Good thank you.
Thank you. Our next question comes from Sadly pay Rafi with as Dan said clinical trial.
Yes. Thank you very much I want to drill down on the current billings.
It looks like it it grew by 13% year to year down from 15% the prior two quarters and I saw what you said in the script.
So.
What we current billings growth has been versus 13% reported.
Adulation not changed or decline.
Yeah.
Well, we ask you have how things ahead, and we're not difficult perfectly normal I frame, how confident are different and high because for example on one of the reason for why finally does not impact because every antonov time at the anniversary of MSR sale I could ask me tanker and sometimes that means highlighting.
I can't give us what iterations on line as well as another prepaying.
So I haven't negative impact thanks, Okay and that first year.
Yeah, Hi, I know you see that fluctuation.
Yeah, Okay consummated strengthening at 10% from last year and enhance our successes the quite why the trajectory other annual revenue guidance at a faster [laughter] non cat weather frame fucking confirming our guidance and if you take a look at our annual revenue heightened interest rate that [laughter].
[laughter] prior high end as our Kraton alone and I think actually came in better than September quarter, especially from now.
Yeah, I weren't broke myself, our current going to was up 7%. My guess attempts are first out but I'm trying to to see how do you expect these moving parts to linger looks like for the next few quarters and I just want to know when you think think things may normalize such that your current billings growth can go back to the historical.
Looking like 15% or so do you think of to work long or or or cap worldwide.
I think.
So Todd given the uncertainty at the environment basically where we're at this time frame leveraging our strong financial position to accommodate customized and are asking for shorter duration and my sense glycolate, selling which is another factor that will take into account and other sensor revenue has not been done [laughter].
Hi, Mike I'm like we know.
Okay last one from.
Spell security.
Do you have estimated incremental revenue and expenses for that company.
Yes, the bright spots security is a smaller tuck in acquisition like to let me Sandy flat, we don't we don't see material impact to our top line or aside from that acquisition.
Okay. Thank you.
[noise]. Thank you. Our next question comes from Hi, Alex Henderson with Needham. Please go ahead.
Thank you very much.
I was looking at the revenue.
So she added with the customers that have bought.
The highest number of units.
And it actually shows the revenue declining from 270 257.
Even as.
You are adding more revenue per customer and I was wondering if you were including.
Those statistics any of the free solutions that you're offering.
How is why is it did I see.
Average revenue declining on your top customers.
Yes average revenue on the top customers it could fluctuate depending on the category that as customers move into different category and another factor that we should consider it wouldn't be looking all there are no change to make sure that there are still relevant to customers. Thank that one of the.
Metrics that we highlighted before it's a multi product adoption, but with the launch at the MDR BMD arent really county, as summer, Tony and as a core product.
So what we said before it generally we expected to be revenue neutral impact because for example, PEPM only customers, we do expect them to see some uplift as they renew and to the MDR by some other customer I think he's still great cannot make several of our colleagues potash they may be spending.
Hi.
So are you including in that any of the free solutions or is that not included in the number solutions.
No. It only included on the T. solutions, and I think I'm not totally satisfied.
Great. So the second question would be.
You've obviously got a lot of free stuff out in the market today, you talked about patch management.
Free asset inventory.
A number of programs.
If you were to tallies all of those free customer subscriptions up.
What type of not are we talking about how big.
Chunk of business would that be and to what extent.
I am assuming that that predominantly starts to roll off the free into.
Some of the paid.
A pay version other what type of conversion rate do you expect and I think thats, mostly in the fourth quarter is it not supposed to that runs through September.
Right, so when things that island.
Hi to highlight is on the Petrobras and as a subscription business model is to really allow customers to buy at their own paid customers say trials and then I've often a stand at the time of renewal for existing and then for now we do realize that you know with our demo the product that we utilized it's great that we're seeing adoption Anthony.
Traction in terms of the after you said with respect to that end point, we're not protection as well as the asset and the discovery in inventory and we are tracking it but at the same time, we don't.
It's not that we sat every line on to convert to paid we when we wouldn't be surprised if some people concerning to use our free service, which is fine because we don't offer free service as a half baked offering.
And we really don't push products to customers see kind of the like based on the customer need we do expect some to convert I do think thats a little bit early given that a lot of the product or a fairly now.
So Doug yes, that's their clips on any of those products. So that would then.
Forced them to make a decision.
Yes, So let me add these you know on the only a couple of protection 60 different drivers as we do have a clip and in fact, we estimate we can see there is a very very happy customers. In fact, some of even deploys very large d. So we expect to see some of these customers convert to the bases corruption when the program.
We'll end up as you mentioned that would be at the end of September essentially.
We have other services, which I've been very successful like the blood related to Deventci with which the free global Igis adventure that we are using more for lead generation and that are now today through the integrated with the VMG are so of course, the global edges in venture it comes with the MTR. So thats all that says.
You can see which team that can differ the way one way of looking at distressed services, it's looking at them as lead generation integrating of course.
Exposing the powerful platform to customers and then of course, where the team.
To essentially as then to onboard them and that of course to talk to up sell them.
As well so yes. So this is part of our marketing strategy is a very cost effective.
Marketing strategy because of course.
For us the different we can deliver software at the four corners of the universe I would say thanks to our cloud based platform.
Very cost effective.
Okay. Thank you.
Thank you. Our next question companion can withdraw from black guaranteed.
Thank you I actually congrats on a pretty solid quarter and now we'll come to me.
One metric I really stands out in the quarter 50 acceleration in the adoption of the multiple products.
Growth in the percent of the percentage of the customers with two class C class.
For class by class.
Paul accelerated from prior trends not just for plus products.
Can you specifically point on anything particular tied to own an acceleration in the quarter and what do you expect in terms of the.
Trend going forward.
So that as a trend will continue what you'd see that with some of these it's a combination of you think good. Some of these products is the maturity that we are ritchie with this product.
We see that very clearly we'll file integrity monitoring.
We are also seeing here of course touch management has been also a very good.
Very good.
Let's take while waiting to get the the uniques and the and.
And the iOS.
Batch capabilities, which are coming in a couple of months. If I recall correctly is even he is that will boost further the adoption and so and and of course now what we see more and more is the interest in the platform itself, where you got all the solution for the integrated so the NDRC that you'd ships is a really huge.
Success and that does not only are essentially.
I've our customers have no reason to look for other submissions today, which also helped us in penetrating displacing current.
Competitors. So via video is a big success, and we anticipate with multi Victor Etiologies of course, Brian you will go GA at the end of the mode.
In the September operators that well already significant interest with multi Victor DDR and by the way remember one thing is that.
For all of our customers, which of the age of over stored moving to the they are all multi Victor CDR is a no brainer committed to try and try and buy essentially so that give us a huge advantage with all these agent but without deployed.
Okay, great. Thanks for that and obviously now with the.
The initial success, but without the MTR and obviously a lot of high profile product launches ahead.
Thank you.
Cleared out you have a platform strategy that is beyond your core DM footprint.
Can you update us on any major quota marking initiatives.
They have plans to support.
The product launches and where you are in terms of that product positioning today.
And then.
Now, we got any plans to increase sales and marketing tools to support these.
Perhaps any new selling and marketing marketing initiative to perhaps.
You know accelerate adoption in the marketplace and it really.
We will focus on maybe the initial land deals and whatnot.
Yes, though this is very good question. So in fact, our strategy since day, one was to really build that multi platform is this was it has been a huge huge undertaking as well, which we've been able to do because as a significant engineering team that we've now put in India will close to 900 people there was another.
Walk in the park varies was very complex wed to inject a lot of the newer technology like Elasticsearch et cetera.
So that's where our focus has been at the same terminal on the beefing up the computing power.
Of the platform, what's also acquired that imagery.
The problem today that you see with the with security is that in order for you to a context you need to build you need to bring data for murky for different application.
And you have not very much idea of our good that data is and as the problem that the steam today.
So no one is costly it's complex than to correlate to analyze turnbridge that data is not also.
But is it so that has been our overall strategy. So today facility.
Platform and with and clearly MDR showed that we could now serves integrated solution murky Victor DDR is as well our ability now to go well beyond what the current DDR submission elsewhere because were seeing a few more to the mature.
And our costs, while our next big thing is essentially do essentially moving to the same space, which as I mentioned earlier, our county to go little better in.
At the end of the year one of the linchpin of all of that is the unique and they said in a repeat that unique ability that causes us to automatically create the global adjusted inventory across on premise and point Cove containers et cetera.
Automatically that nobody you cannot secure what you don't know and at the start and I think that ability allows us to essentially really provide if you prefer the context and of course, our do we get value because a combination of agent, which brings information and our passive scanning all the networking.
This is bringing all that data into unsuccessful.
So now that we are starting two hours you prefer a solutions that carried significantly more dollars or when you look at the our market based for example.
Our marketplace is not so much the cost per endpoint, but is the fact that you have many of them.
And then when you look at the same it's a significantly bigger standpoint, so yes to answer your question regarding eyes, we delivered this year services, obviously expand.
Our our marketing and sales capabilities to bring these solutions to market and you have already large customer base, which is a huge advantage of course, because we can bring very cost effectively those solutions to our customers and the third element of our go to market is we believe that now today was aware that flat.
For that essentially becomes very attractive for the managed security service providers because today. They don't have the means anymore to take this to be the these kind of platforms, which is what they've been doing in the past they absolutely need to move beyond the monitoring to do the response, which is now with Qualys provides.
And so I think we have already a large large number of managed service providers, which are using qualys, they're all moving into the MTR and you saw the announcement that I made about Infosys, which is also adapting as well.
You know the our solution. So we see that as another channel. If you prefer to bring these solutions to market as the weather than being able to consume our incidence response solution. Because obviously this is the core of managed security service providers religious monitor energy to respond so.
So I think we're extremely well positioned from an architecture standpoint, well ahead of anything which is out there and of course now of course, we need to bring all that to market.
Great. Thanks for that detail, but one question I do have on that is not do you plan to maybe accelerate.
The sales headcount addition.
For full year.
Please note the big element he has a big advantage where is that is the bush and because now we're going to to be able to do bigger deals of course, you get more you can spend more as a result is not going to change really our profitability. When it comes with toward our salespeople against our model is try and buy very effective again I mentioned our old man.
The triggers channels, we see the very big Shannon So to bring all these new solutions to market.
And so that doesn't mean, we certainly need to put a lot of salespeople in the industry, but yes. We are incurred we are building expanding our sales force everywhere.
Okay, great. Thanks, so much.
Thank you. Our next question comes from Hampton further while a lot with Morgan Stanley.
Hi, Thank you for taking my question I believe I was wondering if your comment a little bit more on the competitive landscape.
Landscape and vulnerability management and the.
The sales cycle for Q2 could clearly I think.
Our solutions are concerned are.
And providing more visibility in efficiency in and more distributor work environment. The prioritization of that as it is clearly increasing but we're not fully.
Saying that reflected in result, quite yet so I'm wondering to your comment a little bit about other two aspect for the sales cycle as well as you know the competitive environment.
So this is accurate has that changed essentially if you look on the enterprise market is much more displacement market.
While on the of the on the mid market and then the spot enterprise.
It's a much more rapid market.
But this is likely that netspend ever did change.
What has changed today is with the interests of the MTR were totally differentiated our submission is that your competitors.
And today will be forthcoming entrance. If we do today are two main competitors now on that I should say, our tenable and lucky et cetera, so that advertisers.
Essentially the RV and property they don't have the platform that quality says.
[music].
Rapidseven acquired the company is absurd, you know, which essentially gave them a kind of listing platform and of course today qualys were entering that seem market and we don't see them very much in liver management.
We don't compete isn't that much more on that on the gym side. They are more essentially moving and their growth is coming from that lowenstein market that they have addressed so walk in Europe with of course, what we call. The next generation obscene, which goes well beyond the market where it goes really after the Jerry.
Large installations as well so our since scales will scale scaled significantly more so we see ourselves extremely well differentiated against these traditional competitors now at of course, a question becomes who can build out the club that platform that qualifies as did.
And our long are there and how long it will take them.
And if we look around we are really well ahead of everybody because we've been working at that for very long time. This didn't happen overnight and we really focus on that.
Today, we're very happy again with a view MDR interdiction demonstrated the power footwear, Doug now with multi vector DDR and very soon is when should be about incidence response submission, which is which is entering alpha now and that we plan to book base or is there at the everything.
Got it. Thank you and then just one quick follow up or Jimmie Blotter anyway, you could.
Quantify perhaps the impact of.
The shift toward lower duration than some of the renewal timing the impact the combined.
Yeah, we're tracking that internally I mean income Sunday circulation embrace my second well thanks.
Larry we've experienced a couple million unhappy that without that one other reasons why we're not actively managing the quarterly billing is because as you know we have the industry, leading margins with our operating cash flow like in a 33% and so that's why we wanted to make sure that we take this opportunity to leverage pass to help our customers.
It makes sense, we do anticipate abandoned attack and this is part of the recent by with highlighted that we actually had a great quarter with the Perkins came in higher than what me section I thought that means it's just not tracking or is not indicative of ecolink bookings performance. This quarter and then going forward, we expected to be similar because they don't.
Yeah, we think for us to not accommodate when when we feel that the customer traction yet.
Thank you very much.
Thank you. Our next question comes from Ryan FX with Goldman Sachs.
Brian I'll just yet.
Good afternoon. Thank you taking the question.
Only but just wondering if maybe give us a sense of conversations that you're having with customers, particularly after what we seen high demand for endpoint Downie firewall span are you seeing any derivatives spend now that these more desperate networks, mainly the focus on security posture now that they have addressed those kind of unusual concerns and I'm or.
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Oh I'm literature that could you repeat the question that Mr should understand the year. The question Gary just just trying to get a sense as the conversations you're having with customers from a budgeting and spending perspective, particularly after we've seen in our high demand for the obvious kind of work from home solutions like.
Now endpoint identity firewall. It's are you getting a derivative of that spans now that those issues may have been addressed yeah.
Okay makes sense, so I think today what happens is that.
The obviously the Karbinal ER as highlighted for lot of companies. The fact that their enterprise security solution that just don't don't have built or for that word where essentially everything is connected with everything across the internet and so of course central bicycling submissions were not designed for that.
So as early as so that became very visible.
First visibility is out you patches system.
Which is outside of your network.
Very with a lot of difficulties that you have to buy more bps for this for that so that really attribute for essentially given the wakeup call.
It's about time that people to rethink their security infrastructure and they're delivering on all these enterprise security solution not only is very costly so.
So the move to the cloud is really definitively is that big in our industry.
Theres no question just to be that our industry was very resisting the cloud because for security reasons. So for now today of course.
We can see that the mines are changing and with our customers the discussions that fisheries issue.
And so that's the number one priority there they kind of touchy job that many applications.
They have to manage didnt, even find the people to do that so they're all looking for solutions I quoted which consolidate essentially.
As as many solution as possible than that.
This was our vision, where you will get there that.
It took much longer than we thought and to be the platform that we did was far more complex than we thought that I think we kept on going if I Miss it so.
And and I think Thats true serves as serves us very well also see that our multi that our agents. The fact that our agent one single agent the future ones that one single agent one global view is what people are looking for.
And we see today a lot of interest in our multi Victor indeed.
The Victor DDR.
This is a marketplace, which of course is going very fast today because of the need you just described but it's and it's also.
A market that.
Needs also something that lot of consolidation as well so I think we're very well position.
Got it that's super helpful and I just wanted to follow up with no maybe one for Jimmy I think someone touched on question earlier about.
Particularly for enterprise customers with over four solutions that.
LTM revenue per customer coming down slightly but it looks like if you look at all the categories are coming down so I guess I'm just wondering is.
What are the other categories Howard those affected and what are the drivers of that maybe it's.
A customer growth issue or a mix issue, but just wanted to get a sense as the declines and the other categories as well.
Yes, so anyway to kind of out ahead of me some other contributor to the path that we saw that I'm not a smaller solution now with a new installations that are coming out that way I think any price similar to the on and we are expecting that ARPU to go up over time. So for example, we talked about patch management.
And then I see that well have a similarity ASI, whereas some of the smaller and smaller solutions that make launch by you know and enhance I continually monitoring if not as prices high.
Got it but I mean, if I look at this can I can I infer that I mean, it it looks like it applies that just overall revenue per customer has gone down is that does that not the case just mix issue or.
Oh, well that the average deal sizes, you mentioned and ethnic and I said it is up 7% everywhere.
Okay, all right. Thank you very much.
Thank you. Our next question comes from Girl Talcotts, let's see how.
Okay, great. Thanks for taking my questions I'm Felipe you noted that you added malware detection in this quarter a alongside the launch of FBR.
I want to understand more broadly what your confidence threshold here as in competing in more traditional endpoint markets and then I think beyond that what do you think in terms of customer interest thus far.
Oh no there is a very bigger there's a very big interest no. The malware detection that we added.
Without without 60 day of free and patent protection is detection nothing response, because we didn't have yet the capabilities of response in our age embedded into our agent and Thats, what is coming up with multi Victor E. R.
Which give you the food solutions and the differentiation between our solutions. Our submission. Another solution is that all endpoint solution. Today. They are essentially have only information about the endpoint now of course, because we are all that imagery. We can look beyond the endpoint and that is very important so today.
I think we have a solution that technically speaking a significant more more more advantages eliminating postponed achieve alone you to do threatened gene, which more easily because you've got access to all that information you won't have to go fishing as I used to call. It and so I think were very good solution.
Now the the big advantage, we have years that we've already large large usage of our cloud agent and for US to upgrade you know two for all customers to really look at the at the solution, it's very easy because its instant.
Update of the agent to give them that response capabilities as just discussed about that's essentially all what's needed and is pretty straightforward American pie automotive Victor.
And we coli multi vector ERP chose the attacks today are precisely multi vectors. So it's not only just the endpoint you need to know to what that device for next to because the device could be attack from another part of the network and that's why did that we view just of the view of the endpoint.
That's helpful. Thank you and give me maybe one for you just kind of building on the last question how should we think about products like EDI arent, Sam serving as an as a lift if you wanted to ask your average deal size.
Yeah. This is something that were very optimistic about we believe that legal entity. The MTR color by 80, Argentina liking and coming on after on when with our customer having already.
Cut agency thought that the endpoints you anything for the so I'll try not to higher increased the dollar retention rate and over our contract acceleration in revenue.
That's helpful. Thank you.
Thank you. Our next question from Matt had bag with RBC capital markets. Please go ahead.
Hey, guys. Thanks for taking my questions Felipe and maybe I missed it but or could you comment on on sort of some of the geographic trends.
In the domestically here and then overseas in terms of you know when economy start to reopen.
I think today, we see yeah, I think the us.
As you know.
Please turn to referendum vote for car market, we're not seen in fact, the much difference fundamentally between all the markets and we see very very good deductions in Europe, and Asia Pac as well.
So we have not seen really and the economy could impact and the reason is very simple.
And the and the reason is very simple.
You stated I think these never quite it's where nobody working our offices.
Honestly. However, this is our network that we need to continuously maintain because that's a networks that connects US together. So that network is essentially like the the nervous system.
So that's why the did the security market and you need to secure these networks. So that's why as a whole we have not seen significant reduction.
Is there in the demand what we see Conversely is lot of companies essentially asking for price concession payments et cetera.
Thats, what we see with your pour some companies, which are going to are getting bankrupt or will it go bankrupt.
That's of course, the dynamic now for us instead of speaking in terms of.
Reduction we try to essentially now changed the debate in saying by the way what about consolidating youre youre spending so much about dollars maintaining this this power solutions why don't you take a submission the quality.
And look where everything is integrated and of course overall total cost of ownership is drastically reduced because you only that many people to do that you'll have to worry about the integration between the different submission. It's all done for you and you don't have to worry about the infrastructure costs because of course. This is a cloud based solution.
So I think we're extremely well position.
Got it and then I know you've historically taken a very active role in sales effectively running sales for several years.
But I believe we promoted Lori to MVP worldwide filled out last year it as far as I can tell I don't think she's with the company more I'm wondering can comment on that if you sort of like this the overall sales initiative.
Well as you know so we have to do we have of course, you to revisit already and this like this is Paul as you know nothing that we have a very very long term employees at qualities, but everybody. This stage for ever obviously and so I think no. We're very well position here, we have insightful noted.
Somebody from within two to two take a role and that was doing very well and so I think again as I mentioned earlier, we're looking at expanding.
Our sales force.
Today, So I think we're well positioned again there.
Got it thanks.
And our next question it sounds scanning already with JP Morgan.
Yeah. Thanks, Hi, guys. I think you mentioned a couple of times on the call that bookings in the quarter were stronger than expected early in the colleagues in the Cuda you mentioned linearity was the same as it was last quarter. If that's the case, then I guess I wonder why wasn't revenue in the quarter actually stronger than the reported number.
Well I think here when we when we guided printer revenue. It was 80 to 80 point, Okay. Let me ask your potential revenue of 88.8 million imperative come in higher than what we had that down.
Is that what you night time.
Yes, but I guess I would call that.
More inline with the top end of the range or maybe where the bookings maybe just slightly above what you expected in the quarter.
Yes, and coupled with the fact that nothing has only into puking.
Really depend on that.
Some of our bookings actually how are these on a consumption model S. Now lets you know given our established partnerships. We do have come from Sandy scan on behalf of impacting connect that could be Bakken entry, but overall, if you were expecting our revenue today at the mine the midpoint of a revenue guidance range and assets ended up coming.
And a little bit higher at 18.8.
Got it and then one follow up on the BMD yarn and LDR can you remind us I think yes, and different pricing models, especially with the MDR how's the uptake under that pricing model and what should we take about the revenue contribution looking like for this year.
So the pricing model is deeper the as you know well now and that's a day's mother, which makes it very tempered.
Much simpler as you know for customers to procure then going through the or system that we had which was at a cost and then also IP based so I'm not sure that understand exactly your question.
In terms of the impact on what.
On revenue for the year, so given new product so not knowing how much contribution you expect the total revenue you know for for this year is that meaningful as a de Minimis is there's a slow ramp a fast ramp.
Oh, absolutely none of the MTR is moving very whether you look a huge reduction of the yards with mentioned in the numbers and no. This is a everybody's Rockies working two years yard and when we mention again in some cases, either either because for those customers, which have adopted already multiple solution to be a new York and they're pretty much.
Cheaper and then for those who have now essentially deploying new solution of course, it becomes a bit more expensive and or an old I mean that the as the business and what it does of course, we went to spend most of our customer base in a migrating to the are relatively quickly.
And we see that adoption is accelerating and what he does you spoke a day DHS makes us absolutely a much more sticky because of course now you're all of these solutions story integrated so within these are huge accessed the India you.
Two huge success.
Thank you.
Thank you and I'm not showing any kind of question from the Q I would like to kind of called back typically go tell pointing final remark.
Okay. So thank you did a thank you all and and again you know this as you know we're very excited as you see our new solution Caribbean yard been fantastic as I mentioned earlier solution, though we're now bringing.
They are multi vector etiology gets you are now moving into detection and response would be our view of the MTR TDR, but more to come and of course, you know we're looking forward to launching our new incidence response solution. So that we like to thank you for your time and again, thank you very much.
And with that ladies and gentlemen, we thank you for participating in today's call them healing now disconnect have a wonderful.
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