Q1 2021 Qualys Inc Earnings Call
Thank you for standing by and welcome to quality first 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 one on your telephone. Please be advised that today's conference maybe recorded should you require any further assistance. Please press star zero.
Crow.
I would now like to hand, the call over to your host VP of Investor Relations and corporate development Blair King you may begin.
Thank you Latif and good afternoon, and welcome to call US as first quarter 2021 earnings call.
Joining me today to discuss our results are to meet the car, our CEO and Julie 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-K and 10-Q any.
Forward looking statements that we make on this call are based on assumptions as of today and we understand no obligation. 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 to non-GAAP measures is included in today's earnings press release and as a reminder, the press release prepared remarks investor presentation are all available on the Investor Relations section of our website.
So with that I'd like to turn the call over to Sumit.
Thank you Blair and welcome everyone to our Q1 earnings call. We are pleased to report another quarter of healthy revenue growth and profitability, reflecting good progress on our both our strategic and financial agenda.
Since taking on the role of interim CEO in February I have been working closely with the quality of our customers as well as our board to ensure continued success of the company.
The newly appointed CEO I'm very excited about the opportunity to lead wallets on this next phase of its journey.
I would like to thankfully for his leadership, making call is significant significant force in the cyber security space and I'm confident we will take the company to the next level of its growth.
Now squarely focused on black from innovation and enhancing our go to market motion.
We experienced another quarter of strong growth.
Cloud agent subscription, which grew 58% year over year to 61 million.
As well as continued momentum with <unk> with 34% of customers eligible for renewal in Q1 purchasing BMD.
Our multifunction lightweight slower Adrian is a core engine that helps customers consolidate multiple agencies with a single quality solution.
One of my key priorities is to ensure we are providing an overdue comprehensive integrated products to transform the way in new and existing customers secured and protected the organizations IP infrastructure and applications with cloud based IP security and compliance solutions, we believe quality MTR, which is all Liberty management detection and response.
<unk> is setting the gold standard for Liberty management with our single agent approach to speed detection and response.
Attackers rapid exploitation of our liberties from malware and ransomware attacks continues to grow as witnessed with the recent high profile proxy Lagonda Liberty's impacting Microsoft exchange servers. The current actress raced to exploit large number of Unpacks, our worst Michael a few days and install the China channel for <unk> for further.
Entry into organizations environment.
The <unk> soon after leveraging those same while our rudi's quality quickly released a 60 day from <unk> to help organizations not only quickly detect the wall entities, but also Patrick with single click and further the debt.
Somewhere with my director Edr and take response actions all using the single quality agents.
This showcases the power of <unk> to not only report on while Liberty's like other Siloed point solutions, but also mitigate the risk immediately and was very well received by our customers. We're just patch high profile of vulnerabilities in a matter of hours with our tightly integrated patch management solution a single.
Workflow and stay ahead of the threat actors.
While still a small portion of overall bookings, we continue to see strong customer interest in our patch management solution. Both in the mid market as well as with large new and existing customers in fact in Q1.
Leading larger multinational firms selected our patch management application over several other competing solutions given its ability to easily and effectively got you to a more to endpoints without using the limited bandwidth available on the VPN gateways.
With our recent announcement of extension of patch management for Linux systems aware.
Very few enterprise packaging solutions that are available.
We're looking forward to expanding the opportunity of upsell to customers, who already have cloud agents on the systems.
Further pressing our advantage with Adrian consolidation, we continue to see customer interest in adding our director Edr from <unk> and patch management deployment.
Agents for all on their endpoints with a single solution for risk mitigation and current response.
Our recent announcement of adding real time and development prediction capability automobile Edr solution, Florida, solidifies, our commitment to continuing to expand our addressable market opportunity as an example in Q1, a fortune 500 company purchased our base assets inventory.
Inventory module, the MBR patch management, and Edr together to standardize their endpoint security on a single agent solution or multiple best of breed point solution Adrian.
In terms of our newer feed solutions, we saw solid growth in the order with our container security solution led by Microsoft Azure scanning container registries.
In addition, we continue to see strong growth from our global I guess I'd just go down from 90 solutions in the quarter, two leading financial institutions selected our asset inventory modules in order to gain visibility of all of the known and unknown assets spanning multiple environments to identify the end of life.
Install software and synchronized with their service <unk>.
Looking into the remainder of 2021 to be a strong roadmap to expand our assets inventory Edr Ics will be cloud and container security solutions.
We also plan to introduce our extended detection of this small platform xdr.
It isn't next generation security operating center incident response solution, which natively integrated and formulate security telemetry across the security stack from end to end platform. This solution is currently in fragrance, we start with a few select design partner customers with these continued innovations and others on our platform will expand.
Our addressable market, while opening exciting new growth opportunities for the business.
In addition, we continue to build strong strategic partnerships towards enhancing our go to market.
Building quality security solutions with cloud providers, like Microsoft Azure, and GCB as well as displacing competing solution with MSP partners like Hcl <unk> is now there'd be far below operating management offering.
Another key area of my focus is our go to market strategy and sales execution.
Adding industry, leading innovation with an amplified investment in our total marketing initiatives underpin our confidence in driving profitable growth and long term value creation for our customers and shareholders with industry.
<unk>, leading technology and substantial revenue platforms from the successful following the successful launch of <unk> and multi vector Edr last year as well as the upcoming release of our <unk> solution. We are planning to make appropriate go to market investments in our business.
We believe that we are well positioned to maximize the return on income.
Investments so I have been spending majority of my time with the sales and marketing team as well as far as management to execute on this plan.
To that effect from one of my top priorities. As previously mentioned was to look for a candidate for our Chief revenue officer to drive growth of our business today I am pleased to announce that.
<unk> will be joining us as our new CFO starting next week.
He will be responsible for all aspects of revenue performance with a focus on delivering sustainable customer value and business outcomes. The leadership of worldwide sales and partner organization and continuing quality growth and momentum.
<unk> has more than 20 years of executive sales experience building and scaling global teams in cyber security and SaaS companies.
Including previously serving as the CFO of <unk>.
We also recently appointed Klaus <unk> to assume the role of executive Vice Presidents of field operations from America, and general manager of our SME and SMB business.
At the same time, we are also enhancing sales operations.
<unk> digital marketing and other sales enablement function from the company with the balanced approach the sustained future growth and profitability.
In conclusion as I stated on our prior call. While this continues to move well beyond well operating management and increase its competitive advantage with the addition of some newer solutions, including our soon to be release Xdr.
Our strategic direction remains focused on gearing.
With powerfully disruptive technologies paired with strong sales leadership focus in growing global go to market initiatives. We believe we are well positioned to drive long term value for both our customers and our shareholders.
With that I will turn the call over to Jeremy to further discuss our first quarter financial results and guidance from the second quarter and full year fiscal 2019.
Thank you Dinesh and.
And good afternoon before I start as I say no debt except for revenue all five.
Financial figures are non-GAAP and grocery are based on comparisons to prior year period.
Moving on Hawaii.
We're pleased to report another strong quarter reflected in the following financial and operational highlights.
Revenue for the first quarter of 2021 grew 12% 96 eight value.
Please note our Q1 2021 calculated current billings was negatively impacted by a large late renewal.
Asking user ended the quarter at all the timing and amount of prepay multiyear subscription shorter duration and currency.
In Q2, we expect this to reverse to have a positive impact on calculated current billings.
Dennis.
Our average deal size increased 9%.
Okay cloud agent subscriptions.
$1 million over the last 12 months are from $56 million for the 12 months of net.
Q4 2020.
And 34% non strategic alliance customer with our vulnerability management solution offering you won this quarter purchased the MDI market, 35% in Q4.
The MTR contributed approximately 34% of total bookings over the last one line.
Our scalable platform model continues to drive superior margins and generate significant cash flow.
Adjusted EBITDA for the first quarter of 2021, with $44 6 million, representing a 46% margin versus 44%.
Non-GAAP EPS for the first quarter of 2000 from the line with Sandy Chen from <unk> Suisse.
Since last year.
And our free cash flow for the first quarter 2021 increased 14% to $51 6 million, representing a 53% margin.
In Q1, we continue to invest the cash we generated from operations back into call it including $6 3 million from capital expenditures for operation from $31 million to repurchase 259.
Standing here.
We remain confident in our business model driven by our foundation of nearly 100% recurring revenue.
Expanding suite of applications.
We are delighted to be raising our full year 2021 guidance for both revenue and non-GAAP EPS.
We are raising the bottom and top end of our revenue guidance for the full year to now being the range at.
Or are too high before $4 5 million from debt.
Higher range is 399 to 14 million.
We are raising our full year non-GAAP EPS guidance to now be the range of two seven to $2 72 from the prior range of $2 six zero day too.
Hi.
For the second quarter, we expect revenue to be no range $98 6 million from $99 2 million, which represented roughly 11% to 12%.
We expect non-GAAP EPS to be in the range of 67 to 69.
Q2 capital expenditures are expected to be in there.
67 net.
We remain confident in our financial model due to our strong competitive position from leading health platform.
The net day now you are happy to answer any other question.
As a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key once again Thats star one on your Touchtone telephone to ask a question. Please standby, while we compile the Q&A roster.
Our first question comes from the line of Matt Hedberg.
<unk> capital markets. Your line is open.
Yeah, Hey, it's Dan Bergstrom from Matt Hedberg. Thanks for taking our questions is there any additional color into that late renewal you could provide you said it would be a few percentage point benefit in the second quarter here is that just a late renewal or does that take into accounts some of the prepaid timing and duration as well.
It's in combination so when when we have a likely from Yolanda quarter, we usually call. It all day now with meaningful and not have a negative impact by a couple percentage point at the floor, we expect that to reverse and this is consistent with how our current billings has been in the past.
Take a look at our current selling because we don't manage to quarterly billings youll see some fluctuations.
So what we what we anticipate is the Q1 negative impact to more or less reverse in Q2. So we will see a higher current billings in Q2 relative to typical.
Great. That's helpful. And then maybe could you just talk to India. It's been in the headlines with COVID-19 here I know you've got over 900 employees. There I think everyone's been working remotely already I guess is that the cases or is there any incremental action. That's that's needed to happen here recently.
Yes, I think that's.
Very important aspect to address it when we do have a large presence in India.
We have been doing quite well working remotely for all of our employees over the last year flow. So.
Our employees have been already used to working remote environment in those states.
In their homes and obviously, we follow sort of monitoring the situation working from employees variety of systems.
No.
But at this point.
Don't see any.
The meaningful impact.
We are seeing from some outflow from our operation.
But.
Our.
Our Hearts go out to those who are impacted from COVID-19.
Thank you.
Thank you. Our next question comes from Yung Kim.
Loop capital markets. Your line is open.
So net and to me congrats on a solid start to the year.
Just wanted to be very specific on one question here first to start off the MTR upgrade rate.
Right.
Since all of the renewals that is seems to be stabilizing at 34% to 35% rate is that consistent with what you are expecting and perhaps Kansas numbers started downtick, starting next quarter and in the second half of the year.
And it works arise the renewal cycle and start targeting customers.
Moving to you last time.
Just overall, how should we think about the <unk> adoption rate.
Got to your cloud agent adoption and the overall platform strategy. Thanks.
Yes, I can make that go on the MDI, we released that.
Last year I think around Q2.
When the.
The initial push started as I think.
The way, we see the MBR, obviously is that it's a combination of from a menu of different capabilities that the customers need to adopt and they need to make the operational within that environment and so we are not pushing with our customers. So we're working with them to ensure that they are able to consume the MBR to really benefit them in terms of the reduction in the amount of diamond taking them.
The response.
Two.
To the attacks to the Volatilities that are coming up.
And I.
I don't expect that to go down.
Cause the way we're tracking this is that the numbers are the number of customers that were converted to the MTR debt were eligible for renewal in that quarter. So as you will see coming up in Q2.
We will see additional incremental.
Through the rest of the year, we'll see additional incremental convergence of customers as they get ready maybe their budget allocation their resources available debentures and the ADR. So we'll see.
Our hope is to see that number keeps going up.
Okay, Great and then a second question from.
Uh huh.
Can you just give us any qualitative.
Sense on how much of your business.
Driven by.
Security.
Hi.
Appointment on hyperscale environments, or securing deposits deployments on hyper scaler environments like AWS and Azure.
And is that business.
Primarily driven by your existing customers or.
Are you seeing a higher mix of new customers coming from those environments like this from traditional sales channel. Thanks.
Yes, I think it's a combination of a lot of our large customers today, we don't necessarily break them down that way, but a lot of our large customers today.
We do have a hybrid infrastructure. So while they may have certain business units are certain environment that they are running in the hyperscale environment with multi cloud deployment.
We are very strong we also they also have.
Other devices within the environment that could be remote endpoints, which we're seeing in large numbers as well.
Other types of devices that are also part of their overall license. So we're not necessarily tracking it that way, but then when you look at customers who are migrating to the cloud environment.
We want to ensure that from their auditors perspective that they are getting the same kind of high quality.
Our reported metrics ability too.
Six of these vulnerabilities in the cloud environment, just as they were getting from flawless and the on Prem environment. So we worked with them to help them kind of how quality part of the integration and our architecture being a cloud based architecture really lends itself to have that really easy integration than we already have a lot of boot and capable group using multiple of EBITDA.
And so.
We have quality integrated well with Azure.
As well as <unk> in those environments.
Through this sort of and.
But capability that we have.
Customers directly bringing workloads to Azure EMEA also deleveraging Dodgers scanning that is provided by Azure and that is in the Bakken flagged by quality. So there's also that additional.
Wade.
We are embedded into native cloud environments as well as the native cloud security solutions. In these cases are leveraging flawless in the Bakken.
Right.
The capabilities around scanning configuration assessment et cetera.
Okay, Great. That's very helpful. Thank you so much.
Thank you. Our next question comes from Sterling Auty of J P. Morgan Your line is open.
Hi, This is Matt on for Sterling.
I was hoping that you could just for a bit more color on what you are considering.
Our full year guidance. It just seems like from flying a bit of a slowdown in the second half of the year.
On the back of from new product development. So just hoping for what you are considering in that outlook.
Yeah, So when we take a look at.
Revenue trajectory and what we look at is our near term fees as well as some of the potential increase in return from the additional investments that we plan to make into free cash. So if you take a look at our annual revenue guidance last quarter, we had guided to 399 to 402, and we are raising debt at the midpoint by 3 million because of that.
Primarily because the business momentum that we see right now in Q1, we did outperform relative.
Guidance and taking a look at the full year hiring the.
Additional initiatives that we have in place with kind of what we see that will land at around 11% year over year friendly, but that said what it doesn't include a debt potential increase our meaningful uptick from the adoption of newer products such as for example of Edr, It's still relatively new and we didn't take into consideration potential.
Second uphill from to the idea that we don't currently see now so there is definitely upside that we haven't included in the guidance.
Okay, great. Thank you.
Okay.
Thank you. Our next question comes from Joel Fishbein of Truth. Your line is open.
Hey, good afternoon, thanks for taking the question.
Can you just give us a little bit more detail on some of the.
<unk> is around the go to market changes that you plan to be focused on over the net.
A couple of months.
To reinvigorate growth.
Yes, I think.
One aspect of the focus really is about ensuring that we are creating all of these additional capabilities in the platform to expand our Tam.
So I don't know if edr xdr, so we're ensuring that from that perspective, we're getting ready to have multiple capabilities that we can upsell to.
The customers that are coming onboard.
Leasing debt Thats all are examples that I gave there.
Customers really see the value in saying well why do I need to export the current agents once our ADR index Apache handover from all of these nice strength, therefore assets inventory I can leverage <unk> as.
The one Adrian Davies flow writing all of these give me maybe even a single solution.
What we're now focusing on with obviously from the Alamo onboard is to Inc.
We've had a model that where technical salespeople work closely with our customer to you on that as SaaS service to ensure success of the customers in this volatile day purchase initially and then work with them through the rest of the year to ensure that we find opportunities there to upsell. So that they can consolidate other existing solution sets that you have in that environment than sometimes.
Those solutions could be.
Made for a couple of years, so maybe it takes time for that opportunity to come up but.
With bringing on Alan wherever we can.
And our focus really on day one.
One additional business, we're going to focus on sales enablement, we're going to focus on digital marketing.
So a few different areas that we're going to focus on sales are you really our model that we have reached our customers appreciate for the way we work with them and then helping ensure that our sellers are getting additional.
Helped in terms of from being able to do.
Be enabling for selling these additional solutions that we are bringing out from a market. That's really the focus that I have been working closely with our.
Our product team as well as the <unk>.
All statements. In addition to sales and marketing directly we will also be in enhancing our product.
Product management organization to ensure that we can have product line.
Owners that can really be closely associated with the.
The specific business that has application security business or.
It's predictions as necessary.
Our relative to your production business, so that they can drive.
The sales aspect that much more closely to some marketing aspect and much more closely.
This is Steve.
Okay, and one follow up if I may.
You called out on the call.
A large deal with a customer I think in the I believe if I heard you right took edr xdr.
And a lot of other products can you give us any color around that.
Are the competitive dynamics around that and the pricing around that deal.
Yes.
The customer had a couple of other solutions individual debt they were leveraging and they were in the market to look for vulnerability management solution as they started looking at different capabilities of the MBR the ability to.
Mitigating the risk that the Liberty management product was bringing I think it was pattern might respond to them because.
As I gave that example tornadoes the time between the volume really coming out and the speed at which those one of the bodies that are being weaponize is extremely short and so other point solutions that they are looking at as we see vessels, leaving all of these solutions are really giving you a report and thats what they wanted to kind of look at it to say can I get something that also provide response capability.
And so once we worked with them on the POC.
Our model allows us to get the RFP youll see have them leverage that 60 day free service. So that they can see the value of the overall platform.
Quite.
Intrigued with our ability to also give them other additional things with the same user like end of life, and then helping them essentially.
Not have to install another separate our DVR agent because I've seen Hadrian debt was doing the packaging to mitigate the risk was also monitoring the system from <unk>.
And they're responding to that and so obviously the pricing that we put in place was a combination of the various module spec.
They would have otherwise purchased from quality, which is individual modules figured hasn't been what we wanted to be management cash management and Edr.
And.
We have obviously, we do volume based pricing and based on that we gave them a pricing debt.
Effectively they felt like from not just from a license perspective. So that's one price on quality sort of single agent relative to.
Four different.
<unk> software licensing from four different agents plus the cost of deploying those Adrian some debt.
Platforms, and then integrating all of them to get that single view I think the customer felt that this was a lot more cost effective and something that was much quicker to operationalize that having to do multiple point solutions.
Thank you so much.
Okay.
Thank you. Our next question comes from Hamzah <unk> of Morgan Stanley. Your line is open.
Hey, guys. Thank you for taking my question and congratulations on your Formula appointment as CEO.
Thank you.
So I had a.
A question sort of following up on the last one.
For the multi vectors VR and AR.
<unk> solution.
Rolling out.
Can you maybe comment on your ability to be able to garner deployment III from a variety of different attack surfaces.
Relative to some of your other competitors, who are also coming to this market with our approach and then also.
What sort of technologies would you say your your displacement right because you talked a lot about consolidating.
Current part from security solution, So I'm just curious.
Moving you often display.
We do go into a deal from a technology standpoint.
Yes, I think.
If you look at the we call. This architecture is that true.
And then third one day as we have as debt.
We have sensors that are embedded across the.
And that infrastructure no matter what type of infrastructure do so.
We don't have a approach which is very.
Agent less only our agent based only today, while this natively collected data from <unk>, we have non agency assets in the environment that are able to do the deep scans passive sensors are able to look at network Telemetric information.
To collect additional information on the connections are being made in that environment cloud connectors like we have we have container sensors that we're collecting information and then also layer seven.
Scanners that are providing information on what the obligations as well and all of the data comes into the centralized platform that we have and Thats really where we are coordinating this information in the Bakken as we have talked about previously we are really.
Gone through an <unk> architecture of the platform, making it highly scalable today with present.
And data points being indexed and elastic search so outside the dot com sales from while this is one sensors.
We already have a lot of visibility into what is happening on the assets, whether it's related to collecting.
Network connections or processes or.
Whether it's related to registry or files are finally, integrating monitoring alerts so thats already being done.
And that kind of is colored by the MTR Edr and those capabilities are the same agent.
The xdr side, what we are focusing on is in addition to all of the data that causes collecting night for example, while this can collect data about.
Rental revenue environment that can be compromise, which is typical of idiotic cannot do because they need an agent on the actual device and you cannot put them.
We cannot put an agent on a printer, but in addition to that debt our firewall logs proxy laws and a few other long sources that out of context to the potential of Diamondback may be going on.
HDR solution does is that it actually opens up our platform to big this additional telemetry data from multiple different.
Vendors that are providing this capability. So that this data can be adjusted into the flawless backend flow related with the large amount of DW already collected multiple sensors that we have and then provide a much more simplified visibility into that environment, because otherwise the customer has to buy a thing.
And does not come with any day type electro so they have to buy and different.
Solutions and deploy those integrate those and then start to see the value and one of the things that you've seen lost over the last year and this year is that we are also focusing a lot from providing the sponsor capabilities directly into the platform.
What that means is that the solar aspect, but once we collect the data we analyze that and Richard with information from third party sources, our platform. Our <unk> scanner appliance can start to take response actions immediately so that the customer doesn't have to go and we've got another set of solutions to now take response action. So in this process.
We typically end up.
Are you seeing.
Standard.
When Liberty management solutions that only day reporting, but they don't do patching you may have a separate batching solution that we end up displacing on the Edr side.
We're looking to get out of their standard endpoint protection capabilities that they have high flow to wireline delayed us.
Solutions, and then increasingly as our solutions, becoming mature and we start to see that we will be competing more and more with the other media players from the market.
We have established solutions.
The goal for us is due from.
The customers the broader visibility and not just EDF <unk>.
We actually will give you not just the tech part because we do have only gives you. The effect. We also give you the risk mitigation.
Onto the same solution and Thats sort of where we are looking to compete in that market and sort of just the feature of the feature comparison on a specific agent.
Got it and then just a quick follow up for that from a go to market perspective.
Julian to really gain traction.
Within the MSP ecosystem.
Does that seem to be.
You know a very important channel.
In order to drive more adoption from other things you are talking about with xdr in sort of incident response capabilities. So can you talk a little bit about from your go to market efforts there.
Sure I mean, we've always been very well partner with.
MSP partners and if you saw some of the recent I mean, we look at that turned out as operating the company with that they are looking to.
Moving towards more of a platform or stem cells. So they can put more resources from helping the customer with debt security issues a lot of them are trying to deploy these solutions. So traditionally.
MSS views, how we use the Q&A dollars from Sam in the net decline multiple solutions.
Wallace brings to them.
What we're working with a few of them is that good chunk of what they need.
From a security perspective to the right customers with services already on the policy platform. So that it is highly innovative monitoring whether it's container security cloud security a lot of those capabilities are already part of the Polish platform and now with HDR the ability to bring in the data the quality it does not collect natively.
<unk> going to be something that is very meaningful to them. So we have early conversations with MSP partners to start to leverage close even more strategic level, but if you look at.
Some of the recent.
Partnerships that we have done whether it's with.
Infosys or armor or some of them were already looking at debt platform looking at ways that they can.
Create more.
More of an integrated solution that they can leverage and then focus on providing the service to their customers. So I think that's where we are working with those MSP partners, who are sort of the new age MSP partners, who are looking to.
Great.
Our platform is the core of what Theyre doing.
Then I'll provide the service on top of debt.
Got it thank you.
Our next question comes from Alex Henderson of Needham. Please go ahead.
Thanks.
I was hoping you could explain.
The mechanics that occurred.
In the quarter that caused the B M D. R to go from 35% to 34% from <unk>.
We certainly wouldn't have expected.
Decline in that number.
I am assuming that it has something to do with the seasonality.
But.
If you could clarify the mechanics that caused that to happen it would be very helpful. Thanks.
Yeah Alex.
Just to clarify it's not a decline so we take a look at if you look at all.
Our core customers that are up for renewal in the respective quarter for example, Q4 last quarter.
Those customers who are up for renewal with the first time where are they.
<unk> had a chance to really upgrade to the MTR from BMS, so out of that Florida customers, 35% ended up renewing into the MTR in Q1, what happened what last year, we launched <unk> in Q1 two.
Our anniversary and so last year's six percentage of them actually had already convert into the MBR and added the remaining customer base.
Now that the Embraer has been at for a while we've been in discussions with them and taking a look at the entire customer to renew in Q1. There was you had purchased vulnerability management duration of 34% adopted the MTR. So if you think about it from that perspective. It really is customer specific in terms of what they need and this is why.
<unk> is the first year and everything we did share.
Chris any contribution to total bucking, taking a look at the LTM bookings that 34%.
Contribution is pretty significant if you take a look at it. It's that include total bookings, including other solutions that we have out.
So we are very pleased with the adoption.
We anticipate that percentage contribution to bookings to continue to increase and we will continue to share that metric going forward.
Or does this just mechanically there is the 34%.
Is that additive with the 6% from the prior year.
To get a net.
Contribution.
Customers that had the opportunity.
No no thats debt to total total end up flat okay. Okay.
Okay. The second second question I wanted to ask.
As you know you haven't really talked about your data Lake at all in this call are actually from the recent calls I was wondering if you could give us an update on where you are building out the data Lake where you are in terms of.
Satisfying yourself that.
Content that youre pulling up into the right content and delivers.
The proper degree of efficacy.
To what extent.
Timeline.
As stable improved or eroded relative to getting it.
To full maturity.
Yes, I think.
When we initially started talking about it as a data lake as you've seen that.
Feedback from our customers.
Essentially transform that into our xdr solution because customers don't want just to be delayed by one day, while this caper OLED indicated incremental Italy, and bringing that additional information. So our focus really has been on our edr solution actually is already.
Reported and deployed in a production environment as the price.
So where we are today is that while this internally we are obviously leveraging that to test it to make sure that it's working.
We anticipate.
As you can imagine this is a huge undertaking from engineering and but from perspective for us to grow in this area and to build that out and so there's a lot of learnings and they're building out a cloud based solution.
Instead, we can ingest how quickly we can and just how the speed of this thing is working out. So today, we have that are getting deployed as a flywheel.
All of this in a couple of other beta customers are already engaged with us.
Pulling the lever and we're learning through that process fixing any bugs that we may be coming up in Austin.
We love Atlanta from new sources.
And as we go through that and get additional insight we will bring on a few more beta customers over the next couple of months and then once we have that believes that we feel is good enough to have one for a more public beta.
<unk>.
You can start working on the Geo timelines I think we are today I feel like we're in a good place in terms of the roadmap and whether you have executed so far on <unk> and having that system already out there and then.
<unk> that we have to ensure that we are working with our customers to get it to the point, where we can get it out.
At some point this year, we just don't have an exact timeline yet solidified for the year.
When you say get it out the share you're talking about getting it out to the.
The more public beta than what you've done so far as opposed to fully complete done.
No issues whatsoever.
Okay.
Sustained mode at that point.
Hello.
Yes, both are our goal is to get the data out in the next couple of months and then.
Our goal is that by Q4, we also get this out.
Products that customers can start purchasing it.
And has the efficacy that.
No.
The data Lake in terms of the outcomes that it is predicting.
It's been proven out as.
Is reasonably high efficacy.
Yes, I think when we start right now.
Comparing with for our own internal environment, I think close to revenue we feel this is.
Something that customers can really good flow of MVC December total amount of efficacy that they are seeing with the added advantage of not having to integrate additional solutions.
In biomedical solution. So we feel we're on the right block here in terms of where we are and where we see the clarity of the whole map on the various other additional functionality that we will be fixing and delivering over the next few months.
Sentinel won in crowd strike have done acquisitions too.
Bring in.
And the ability to.
Yeah.
Upload more compressed data from their end points.
To even do searches on those.
On that data, while it is still compressed significantly lowering their costs.
Have you thought through or expect or do you expect to do something similar.
In terms of trying to bring your data ingestion costs down.
Yes, I mean, we've always had a very.
Bare metal strategy around.
Moving to operating elastic for the last multiple years and if you look at we've already indexing trillion data points on elastic search we have extremely high it from.
One <unk> per second on Cassandra debt you already achieved in our platform. So we feel pretty good about the scalability and the ability for the platform being just allowing our motto data, where we feel we differentiate ourselves in fact from what we see right now center secondly, one anchored on strike to focus on the endpoint and collecting the data from the endpoint in that.
Additional events I think into the platform, our xdr solution goes well beyond endpoint, so not only are.
Our solution will be collecting the same kind of data from the endpoint itself with the aging buckets the ability that we already have.
Collecting scan based information on devices that can have an agent like <unk> routers switches bring to us from any other devices less passive devices to see what network that limit really see from outside of the day.
Devices that don't have an agent collecting that and then bringing firewall logs and proxy loss type of EBITDA from alloy for firewalls and displays to enrich this information.
Give us a much broader visibility into their infrastructure and then you add on top of that we already have strong container security and.
Cloud security solutions that the endpoint Edr solutions necessarily only focus on the pet aspect of it so overall, bringing that and then adding the application context right. So a lot of the solutions focus only on the infrastructure context, but then if you are running a web application that has a sequel injection, while liberty that could it be compromise on election can be poor quality brings that.
As well so we feel that what we are doing is a much broader scope because we're collecting a lot of data outside of just the endpoint that you are traditional endpoint solutions are looking at.
Okay, one last comment congratulations on bringing in your your new chief revenue.
Officer and.
From our perspective, there was nobody else that could possibly be the right choice for the CEO and I'm glad the board.
The decision that debt and congratulations.
Being the permanent CEO is certainly well deserved.
<unk> done most of the hard lifting in constructing this thing simple.
Thank you very much.
Okay.
I'll pass it I'll pass it on thanks.
Thank you. Our next question comes from the line of Sibley Suraj.
That's true and Securities Your line is open.
Thank you very much so I wanted to be clear on the current billings.
Growth expectation for Q2, I think you said you expect it to accelerate a couple of points.
From Q1, so I assume that means 8% growth in Q2, and Mike just please confirm that and then secondly.
What do you think is a reasonable current billings growth rate in the second half and going forward do you think we go back to double digits.
Over the next several years.
Yeah, So Shelby just to clarify on the current billings, though because we don't manage to quarterly billings you'd like to give a little bit of color. When we see some meaningful fluctuations. So what we were guiding to it we don't guide to current billings growth rate per se, but in terms of Q1, we have some unexpected things are.
A couple of percentage point negative impact on current billings relative to bookings and we call that out and we expect that to reverse in Q2. So what it means if you think about that current billings growth in Q1 at six 5% compared to bill compared to actual bookings growth rate. It was it was lower we.
But that to reverse in Q2 compared to bookings, we expect billings to be higher so that was a client that we were more tied to again and in terms of the business momentum index actually supports high we keep all pointing to the annual revenue guidance and the trajectory of that guidance and where it is today as the best proxy for business momentum because our current booking.
Really inform our guidance.
Look at our revenue annual revenue guidance, we had guided to 399% for it to last quarter, we increased that at the midpoint by 3 million to now the implied growth rate for the total year is 11%.
Too bad in terms of your your kind of.
And to determine the current business outlook.
Hi.
Okay. Thank you very much and then.
I think you made the comment earlier that.
The BMD are the percentage of customers renewing renewing with the MBR is going to start increasing now even though it ticked down in Q1.
Do you have.
An idea of what kind of target you expect over the next several quarters do you think it goes debt metric goes over 50% for example.
Yes, I mean I think.
We certainly are working towards that and we don't I think the big part of really the deployment of the MTR softer in <unk>.
Q2 of last year, even though Q1, you had a little bit of that so I think as the first year anniversary of <unk> installs, which is still early stages.
We expect to bid.
Additionally, the MDF conversion on top of what we're going to work there in Q.
Q2 of last year.
So what that percentage is going to be I think we don't know right now where debt is something that with the right go to market motion with the changes that we're making we're hoping in the next few quarters will continue with that rate to start to keep picking up.
That opportunity for us to push more agents.
Okay and last one from me is the Xdr Sim a launch you expect I think you made the comment you expect customers to be able to purchase it in fiscal Q4 does that mean it goes GA in Q4 or debt.
Public beta in Q4.
No thats the <unk> for Q4, our plan for public three times in Q3, and then Q4.
Got it alright, thanks a lot.
Thank you at this time I would like to turn the call back over to CEO cement zecher for closing remarks.
Alright, Thank you for attending our earnings call and for all of your questions.
I couldn't be more honored to be leading this great company very excited.
Very well positioned in the marketplace to disrupt day, new applications on our cloud platform, including the MTR might be vectored ETR in the forthcoming xdr offering as well as other solutions that will further reflects our competitive position in the industry and expand our addressable market.
At the same time, we are ramping up our sales efforts and marketing activities to capitalize on these developments, while maintaining industry, leading profitability and driving long term value creation for our shareholders.
Lastly.
This space of bringing new solutions to market would not be possible without the innovation and tireless efforts of our talented engineering team continues to work hard despite the difficult situations faced by many especially in our India operation given the current pandemic impact over there I hope all of you and your families remain safe and healthy. Thank you very much.
This concludes today's conference call. Thank you for participating you may now disconnect.
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Yes.
Yes.
Okay.
Right.
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