Q3 2023 Qualys Inc Earnings Call
[music].
Speaker 1: Good day and thank you for standing by. Welcome to the Qualys Third Quarter 2023 Investor Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session.
Good day and thank you for standing by welcome to the wireless third quarter 2023 Investor Conference call at.
At this time all participants are in a listen only mode.
The speaker's presentation, there will be a question and answer session.
Speaker 1: To ask a question during that session, you will need to press star 1 1 on your phone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded, and I would now like to hand the conference over to your speaker today, Mr. Blair King. Sir, please go ahead.
To ask a question during the session you will need to press star one one on your phone.
And here an automated message advising raised to withdraw your question. Please press star one again.
Today's conference is being recorded and I would now like to hand, the conference over to your speaker today Mr.
<unk> Sir please go ahead.
Speaker 2: Thank you Chris good afternoon and welcome everyone to our third quarter 2023 earnings call joining me today to discuss our results are president and CEO and Jimmy camera 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.
Thank you Chris Good afternoon, and welcome everyone to her close this third quarter of 2023 earnings call.
Joining me today to discuss our results are she met the car president and CEO and Jimmy camera 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.
Speaker 2: Actual results may differ materially from these statements. The factors that could cause results to different materially are set forth in today's press release and our filings with the SEC. Including our latest Form 10-Q and 10-K .
<unk> results may differ materially from these statements and factors that could cause results to differ materially are set forth in today's press release and our filings with the SEC.
In our latest Form 10-Q and 10-K.
Speaker 2: Any forward looking statements that we make on this call are based on assumptions as of today. Can we undertake no obligation update these statements as a result of new information or future events?
Any forward looking statements that we make on this call are based on assumptions as of today and we undertake no obligation to update these statements as a result of new information or future events.
Speaker 2: During this call, we will present both gap and non-GAAP financial measures. The reconciliation of gap and on GAAP measures is included in today's earnings press release. And as a reminder, the press release prepared remarks and investor presentation are all available on the investor relation section of our website. So that I'd like to turn the call now over to smash.
In 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 now over to Smith.
Speaker 3: Thank you, Blair, and welcome to our third quarter earnings call. In Q3, we continue to deliver strong financial results reflecting our ongoing commitment to rapid innovation and customer success.
Thank you Blair and welcome to our third quarter earnings call. In Q3, we continued to deliver strong financial results, reflecting our ongoing commitment to rapid innovation and customer success.
Speaker 3: We experienced another quarter of steady VMDR adoption, which is now deployed by 54% of our customers worldwide.
We experienced another quarter of steady B M D. Our adoption, which is now deployed by 54% of our customers worldwide.
Speaker 3: Key competitive EMDR wins in Q3 include a leading multinational conglomerate, several global financial services, technology and manufacturing companies, a large government agency, and multiple new and other existing customers, both downmarket and in the global 2000s.
Key competitive MTR wells in Q3 included a leading multinational conglomerate several global financial services technology and manufacturing companies, a large government agency and multiple new and other existing customers both down market and in the global 2000.
Speaker 3: Adding to these wins, I will take a moment to share a couple of examples of how our customers and partners are expanding their use of Qolsys capabilities to further consolidate their security.
Adding to these wins I will take a moment to share a couple of examples of how our customers and partners are expanding their use of quality capabilities to further consolidate the security stack on the customer front, a fortune 100 biotech company was overwhelmed by the number of security tools are deployed and needed a solution that not only provide better security outcomes.
Speaker 3: On the customer front, a Fortune 100 biotech company was overwhelmed by the number of security tools it deployed and needed a solution to not only provide better security outcomes, but also consume fewer point products, agents and resources through a unified dashboard. In a mid-six-figure booking of sales, this customer...
But also consumed fewer point products agents and resources through a unified dashboard.
Six figure booking upsells this customer.
Speaker 3: who already deployed cybersecurity asset management with external attack surface management and VMDR.
Already deployed cyber security asset management with external surface management <unk> expanded its use of Emt I recruited to over 290000 assets, while adding our web application scanning patch management and total cloud seen absolution in doing so this customer consolidated three competing vendors across on Prem cloud and.
Speaker 3: expanded its use of VMDR with TrueDisk to over 290,000 assets while adding our web application scanning, path management, and total cloud CNAB solution.
Speaker 3: In doing so, this customer consolidated three competing vendors across on-prem cloud and multi-cloud environments through an organically integrated platform with our innovative technologies, unmatched platform effect and focus, reducing or focusing, reducing the skin friction, this win underscore quality stability to eclipse, fire load solutions, and advance our leadership in the industry.
Multi cloud environments through a and organically integrated platform with our innovative technologies unmatched platform effect and focus.
Using our focus on reducing risk and friction this win underscores qualities ability to eclipse Siloed solutions and advanced our leadership in the industry.
Speaker 3: Specifically highlighting the moment and we're seeing without total cloud scene absolution in a highly strategic and competitive and mid-six figure booking cross cell affords forced 200 existing VMDR and patch management customer selected total cloud to scale their container deployments in over 50,000 assets, monitoring millions of containers, images daily.
Specifically highlighting the momentum we're seeing with our <unk> solution in a highly strategic and competitive mid six figure bookings cross sell a fortune Forbes 200 existing the MBR and patch management customer selected <unk> cloud to scale their container deployments in over 50000 assets monitoring millions of containers images daily.
Speaker 3: Through its evaluation of competing cloud security providers, this customer determined that alternative point solutions added complexity to their operations lacked integration and missed detection, which hindered their ability to assess risk and consolidate the security.
Through its evaluation of competing cloud security pro from the.
This customer determined that our kind of two point solutions added complexity to their operations like integration and Mr. Detections, which hindered our ability to assess the risk and consolidate the security tools.
Speaker 3: Today through a highly scalable, natively integrated CNAP solution, the Qualys Cloud platform provides complete visibility of this customer's attack surface with advanced AI ML technologies to uniquely detect zero-day malware while prioritizing and remediating risk at scale in real time.
Today through a highly scalable natively integrated solution quality cloud platform provides complete visibility of this customer the attack surface with <unk>.
Advanced AI ml technologies to uniquely detect zero day malware, while prioritizing and remediate in risk at scale in real time.
Speaker 3: Our early wins in cloud and container environments are a testament to the extensibility of the Qualys cloud platform, its unified dashboard and our adaptive subscription model. Today, we have over 31 million agents already supporting workloads in the cloud. Qualys is well armed with an organically integrated Total Cloud C-NAP solution that unifies cloud workload protection.
Our early wins in cloud and container environment are a testament to the extensibility of the quality of our platform, it's unified dashboard and our adaptive subscription.
Today, we have over 31 million agents already supporting workloads in the cloud wireless as well.
With organically integrated total cloud solution that unified cloud workload protection.
Speaker 3: Cloud Security Posture Management CSPM, Cloud Detection and Response, Infrastructure as Code, and Container Security.
Cloud security posture management's ESPN cloud detection response infrastructure, a score and container security.
Speaker 3: Powered by AI threat detection and insight, Total Cloud was recognized by Keplinger Cole as a strong technology leader in cloud security ahead of several competing modern cloud point solutions and next-gen platforms. I'm quite pleased by the early momentum we are experiencing in the market with our Total Cloud and increasingly encouraging customer feedback.
Powered by AI and detection and insight total cloud was recognized by Kiplinger call as a strong technology leader in cloud security I heard of several competing Martin cloud point solutions and Mexican platforms I'm quite pleased by the early momentum we are experiencing in the market with our public cloud and increasingly encouraging customer feedback.
Speaker 3: Additionally, new customers continue to adopt cybersecurity asset management with external attack surface management and patch management alongside VMDR right out of the gate.
Additionally, new customers continue to adopt cyber security asset management with external attack surface management and patch management alongside of the MTR right out of the gate.
Speaker 3: We believe this further highlights Qualys' ability to help customers not only detect, but also quantify, prioritize, and remediate risk across all environments much faster than alternate siloed solutions.
We believe this further highlights quality ability to help customers not only detect but also quantified prioritize and remediate risk across all environments much faster than alternate Siloed solutions.
Speaker 3: On the partner front, in Q3, we continue to advance our evolving ecosystem with two leading global managed service providers, which also expanded their offerings beyond VMDR to include our cybersecurity asset management and patch management capabilities. These partners have indicated that they chose qualities over competing solutions due to the ease of orchestration, natively integrated platform and single agent approach to simplify their operations and significantly reduce remediation times for their customers.
On the partner front in Q3, we continued to advance our evolving ecosystem with two leading global managed service providers, which also expanded our offerings beyond <unk> to include our cyber security asset management and patch management capabilities. These partners have indicated they chose quality over competing solutions due to the ease of orchestration natively integrated platform.
And single agent approach to simplify their operations and significantly reduce regulation thanks for their customers.
Speaker 3: In addition, we expanded our relationship with another leading cloud provider, which is now taking the Qualys cloud platform available in its marketplace.
In addition, we expanded our relationship with another leading cloud provider, which is not taking the quality of care platform available in its marketplace.
Speaker 3: With wins such as this one I've shared today customer spending 500,000 or more with us in Q3 the 015% from a year ago to 1 summer.
With wins such as this one I will share today customer spending 500000 or more with us in Q3 grew 15% from a year ago to 174.
Speaker 3: With more and more customers beginning to perceive Qualys as a leading risk management platform that consolidates multiple security point solutions across all environments, we remain confident in our ability to drive long-term growth and gain market share, especially in light of the recent IDC study highlighting a 403% ROI for customers choosing to partner Qualys with the platform approach.
With more and more customers beginning to perceived quality is the leading risk management platform that consolidates multiple security solutions across all environments. We remain confident in our ability to drive long term growth and gain market share, especially in light of the recent IDC study, highlighting a 403% ROI for customers choosing to partner.
Quality with a platform approach.
Speaker 3: As I have said before, a cornerstone of our strategy is engineering innovation and with the customer first product led growth focus, we challenge ourselves every day to lead the industry. Executing else against this agenda, we will unveil our new platform approach at our upcoming QualiSecurity Conference in Orlando from November 6 to November 9.
As I have said before a cornerstone of our strategy is engineering innovation and with the customer first product led growth focus we challenge ourselves everyday to lead the industry executing against this agenda, we will unveil our new platform approach I know the upcoming Koala Security conference in Orlando from November six.
Speaker 3: This new approach will seamlessly integrate any number of third-party security tools into Qualis Cloud platform. Regardless of the variety of vendors utilized within an organization's infrastructure, Qualis will soon harness automated insights into critical areas of risk spanning on-prem cloud and multi-glare assets to uniquely enable comprehensive remediation, vice risk posture assessment with new ground-breaking remediation capability.
To November 9th this new approach will seamlessly integrate any number of third party security tools into quality cloud platform, regardless of the variety of lenders utilize within an organization of infrastructure wireless will soon hiring less automated insights into critical areas of risk spanning on prem cloud and multi cloud assets to uniquely enable comprehensive remediation.
So risk posture assessment with new groundbreaking remediation capability at this conference our product and engineering teams will further showcase additional innovations on the platform cloud platform, including our advanced shipments in delivering ml and AI based predictive insights first party Wilner began this configuration detection and response.
Speaker 3: At this conference, our product and engineering teams will further showcase additional innovations on the platform, including our advancements in delivering ML and AI based predictive insights for party, well-nobody and this configuration detection and response. The integration of software supply chain security into continuous integration and delivery CI CD pipelines and more.
The integration of software supply chain security into continuous integration and delivery see ICD pipelines and more.
Speaker 3: You can hear our customers speak firsthand about how our continuous innovation on the platform enables organizations to simultaneously reduce complexity and risk in their environment as they standardize on a trusted platform that delivers an immediate ROI and lower total cost of ownership relative to siloed traditional detection only technology.
Additionally.
You can hear our customers speak firsthand about how our continuous innovation on the platform enables organization.
Simultaneously reduce complexity and risk in the environment as they standardize on across our platform that delivers an immediate ROI and lower total cost of ownership relative to siloed traditional detection on new technologies.
Speaker 3: We have over 900 people registered to attend and look forward to seeing many of you there.
Over 900 people registered to attend and look forward to seeing many of you there.
Speaker 3: In summary, we are delivering strong profitability and cash flow while building business momentum in both our core and cloud-path expansion markets as companies uniformly recognize security transformation is fundamental to combating today's heightened threat and regulatory cable carcassiers are invested 5 funding as
In summary, we are delivering strong profitability and cash flow, while building business momentum in both our core and cloud expansion markets as companies uniformly recognized security transformation is fundamental to combating today's hiking correct and regulatory environment.
Speaker 3: As a results customer side increasingly looking to reduce their risk exposure through the adoption of thinking integrated risk management platforms spanning all environment instead of deploying a collection of disparate point solutions for different environments and hiring more people to manage those. We believe that our organically integrated cloud native platform builds to solve modern security challenges. Qualities is laying a foundation for future growth and well positioned to drive long-term shareholder value with a balanced approach to growth and profitability.
As a result customers are increasingly looking to reduce their risk exposure through the adoption of the integrated risk management platform spanning all environment and sort of deploying a collection of disparate point solutions for different environments and hiring more people to manage those we believe that our organically integrated cloud native platform built to solve modern sick.
The challenges quality is laying a foundation for future growth and well positioned to drive long term shareholder value.
<unk> approach to growth and profitability with that I will turn the call over to Jeremy to further discuss our third quarter results and outlook for the fourth quarter and full year 2023.
Speaker 3: With that, I will turn the call over to Julie to further discuss our third quarter results and outlook for the fourth quarter and full year 2020.
Speaker 4: Thanks tonight and good afternoon. Before I start I like to know that, except the revenues, all financial figures are non-gath, and growth rates are based on comparison to the prior year period, unless stated otherwise.
Thank you Shannon and good afternoon.
I'd like to note that except for revenue all financial figures are non-GAAP and growth rates are based on comparisons to the prior year period unless stated otherwise.
Speaker 4: Turning to third quarter results, revenues grew 13% to 142 million, with growth from channel partners outpacing direct at 17%, versus 10% growth from direct.
Turning to third quarter results revenues grew 13% to 142 million with growth from channel partner outpacing direct at 17% versus 10% growth in direct.
Speaker 4: Channel Weathering Contribution, named the scene as last quarter, at 43.
China revenue contribution the theme of last quarter at 43%.
Speaker 4: IPO grows in the US 14% with a head of our international business which grew 11%.
Growth in the U S of 14%.
Our international business, which grew 11%.
Speaker 4: US and international revenue mix named the same as last quarter at 60% and 40% respectively.
U S and international revenue mix remain the same as last quarter at 60% and 40% respectively.
Speaker 4: In Q3, we started to see some indication of stabilization in the selling environment, with customers confirming their prioritization of security within IT budgets, but believe ongoing budget scrutiny will linger for the foreseeable future.
Thank you <unk>, we started to see some indications of stabilization understanding environment with customers confirming the privatization of security within it.
I believe ongoing participant will linger for the foreseeable future.
Speaker 4: Reflecting the sentiment, our growth retention rate has remained largely unchanged at approximately 90%. But our net dollar of sanction rate came in lower at 106%, down from 108% last quarter.
Reflecting this settlement our gross retention rate has remained largely unchanged at approximately 90%, but our net dollar expansion rate came in lower at 106% down from one 8% last quarter.
Speaker 4: While we are continuing to re-emoons for improvement from smaller customers, larger customers spending $25,000 or more with us, with 15%.
While we have continued room for improvement from smaller customers larger customers and a $25000 or more with us with 13%.
Speaker 4: In terms of new product contribution to bookings, past management and cybersecurity asset management combined made up 11% of LPM booking and 19% of LPM new bookings in Q3.
In terms of new product contribution to Brooklyn.
Management, and cyber security asset management, combined made up 11% of LTM backing and 19% of LTM new bookings in Q3.
Speaker 4: In addition, we're pleased to share that we're seeing an increase in interest in that cloud security solution total cloud seeing up.
In addition, we're pleased to share that we are seeing an increase in Asia.
Cloud security solution total cost here.
Speaker 4: Cloud security solution made up 5% of LTM for Fins and Q3, showing return on the acquisition of total cloud and blue hexagon.
Cloud security <unk> made up 5% of LTM bookings in Q3, showing return on the application of total cloud.
Speaker 4: Since 2021, we acquired Total Cloud, a Cloud Workflow Management, and no Code Automation Platform, and Blue Hexagon, AIML Innovator, a Cloud Threat Detection and Response Solutions to augment our Cloud Security Solutions.
Colin.
In 2021, we acquire total cloud a cloud workflow management.
Automation hotline and Blue hexagon, AI ml innovator across threat detection and response solution to augment our cloud security solution.
Speaker 4: It's exciting to see our continued innovation and investment in our platform is driving adoption and starting to change the market perception of quality as a risk management platform that can help customers consolidate multiple security point solutions.
I think you see our continued innovation and investment in our pipeline, it's driving adoption.
Turning to change and market perception of call. It as a risk management platform that can help customers consolidate multiple security operation.
Speaker 4: We look forward to serving as a strategic partner to our customers as they evaluate their security vendor consolidation strategies.
We look forward to starting at a strategic partner to our customers.
The security vendor consolidation strategy.
Speaker 4: Now, turning to profitability, reflecting our scalable and sustainable business model. Adjusted EBITDA for the 3rd quarter of 2023 with $68.8 million, representing a 48% margin compared to a 44% margin a year ago.
Now turning to profitability, reflecting a scalable and sustainable business model adjusted EBITDA for the third quarter of 2023 was $68 8 million, representing a 48% margin compared to a 44% margin a year ago.
Speaker 4: We roughly maintain their operating expenses in Q3, only up by 2% to $55.1 million.
Be roughly maintained our operating expenses in Q3, only up by 2% typically $5 1 million.
Speaker 4: Sales and marketing was up by 9%. Same growth as what we saw in Q2.
Sales and marketing was up by 9% same growth that's what we saw in Q2.
Speaker 4: While we delayed some investments in response to the business climate and the arrival of our new CRO in July , we achieved greater operational efficiency through focused efforts and optimizing investments.
While we believe from investments in response to the business.
Arrival of our ECR in July we achieved greater operational efficiency through focused efforts on optimizing investment.
Speaker 4: This led to EBITDA margin exceeding our expectations in Q3 and further demonstrates our ability to maintain high operating leverage, remain capital efficient while continuing to innovate and invest in our long-term growth initiatives.
This led to EBITDA margin exceeding our expectations in Q3, and further demonstrates our ability to maintain high operating about grades remain capital efficient, while continuing to innovate and invest in our long term growth initiatives.
Speaker 4: With this performance, EPS for the third quarter of 2023 was 1.51, which came in higher than expected, partly due to the change in our tax estimate.
With the strong performance EPS for the third quarter of 2023, with one pipeline, which came in higher than expected, partly due to the change in our Capex estimate.
Speaker 4: In Q3, we recorded 16% tax rate, but if the tax rate had remained unchanged at 24%, EPS would have been 1.37. A tax rate guidance for both Q4 and full year 2023 is 21%.
Thank you three we recorded a 16% tax rate for the tax rate hardware remain unchanged at 24% EPS would have been 137.
<unk> guidance for both Q4 and full year 2023, 21%.
Speaker 4: Our free cash flow from third quarter of 2023 was 90.6 million, representing a 64% margin in the quarter and 50% year today.
Our free cash flow for the third quarter of 2023, with $90 6 million, representing a 64% margin in the quarter and 50% of year to date.
Speaker 4: In Q3, we continue to invest the cash we generated from operations back into QALYS, including $1.8 million in capital expenditures and $38.9 million to repurchase 273,000 of our outstanding shares.
Thank you three we continue to invest the cash we generated from operations back into call it including $1 8 million on capital expenditures and $38 9 million to repurchase 273000 <unk>.
Sure.
Speaker 4: As of the end of the quarter, we had $106.8 million remaining in our shareware purchase program.
After the end of the quarter, we had $106 8 million.
And our share repurchase program.
Speaker 4: With that, let's turn to guidance, starting with revenues. For the full year 2023, we've set revenues to be in the range of $554 million to $555 million, representing a growth rate of 13%.
With that let's turn to guidance starting with revenue for.
For the full year 2023, we expect revenues to be in the range up by 54 million to 555 million.
Presenting a growth rate of 13%.
Speaker 4: For the 4th quarter of 2023, we expect revenues to be in the range of 144.1M to 145.1M, representing a growth rate of 10 to 11%.
For the fourth quarter of 2023, we expect revenue to be in the range of $144 1 million to $145 1 million, representing a growth rate of 10% to 11%.
Speaker 4: With respect to margins, factoring in the better-than-expected profitability to date, we expect full-year 2023 EBITDA margin in the mid-40s and free cash flow margin in the mid-30s with full-year EPS in the range of 5.04 to 5.14, up from the prior range of 4.50 to 4.65.
With respect to Martin factoring in the better than expected profitability to date, we expect full year 2023, EBITDA margin and the net 40 and free cash flow margin in the mid 30 with full year EPS in the range of five point out four to $5 one for upfront the prior range.
<unk> five zero to four point decline.
Speaker 4: For the fourth quarter of 2023, we expect EPS in the range of 1.18 to 1.28.
For the fourth quarter of 2023, we expect EPS in the range of $1, one eight to $1 <unk>.
Speaker 4: In Q4, we expect to spend $2 million to $3 million in capital expenditures, applying approximately $9 million to $10 million total for the full year.
In Q4, we expect to spend $2 million to $3 million and capital expenditure, implying approximately nine to 10 million in total for the full year.
Speaker 4: We remain confident in our differentiated technology and ability to deliver on our growth opportunity long term while investing to maximize shareholder value. With that, Sumedh and I would be happy to answer any of your questions.
We remain confident in our differentiated technology and ability to deliver on our growth opportunity long term, while investing to maximize shareholder value.
With that Matt and I will be happy to answer any of your questions.
Thank you.
Speaker 1: As a reminder to ask a question, please press star 11 on your phone and wait for your name to be announced.
As a reminder to ask a question. Please press star one on your phone and wait for your name to be announced.
Speaker 1: To withdraw your question, please press star 1 1 again. Stand by as we compile the Q&A roster.
To withdraw your question. Please press star one again.
Standby as we compile the Q&A roster.
One moment please for our first question.
Yeah.
Speaker 1: And our first question will come from Mike Walkley of Pantacord Inuiti. Your line is open.
And our first question will come from Mike Walkley of Canaccord Genuity. Your line is open.
Speaker 2: Great. Thanks for taking my questions and congrats on the strong profits. I guess, you know, with 54% of your customers now adopting VMDR.
Great. Thanks for taking my questions and congrats on the strong <unk>.
<unk>.
I guess with 54% of your customers now adopting cmdr.
Speaker 5: You just help us think about net dollar retention trends going forward. I know it's early, but maybe you can share how some of your customers are reacting to your newer solutions such as context XDR and Total Cloud that could help drive net dollar in the future.
Can you just help us think about net dollar retention trends going forward I know, it's early but maybe you can share some of your customers are reacting to your newer solutions such as context xdr in total cloud that could help drive net dollar in the future.
Okay.
Thanks for that question.
Talked about earlier I think we're pretty excited about some other things that we are leaving especially with cloud et cetera of course, the environment continues to.
It can be challenging today, and so as our customers that we are working with the look at a platform approach. They look at their current optimization of what they are.
Speaker 3: buying from different vendors from qualis. We continue to have great conversations. We continue to see opportunities. We continue to be happy with how CSAM patch management are becoming part of the bookings and including new bookings and the opportunities that we see in the future with especially as everybody's moving into the cloud and the opportunities for us.
Buying from different vendors from quality, we continue to have great conversations we continue to see opportunities. We continue to be happy with policy Sam patch management are becoming part of the bookings, including new bookings and the opportunities that we see in the future with especially as everybody sort of moving into the cloud and opportunities for.
Speaker 3: a truly natively built cloud platform to be an area where customers will continue to work with us to deploy our solutions, to expand their VMDR offerings, so VMDR customers as they move into the cloud.
Truly natively built cloud platform to be an area of air.
Customers will continue to work with us to.
Our solutions to expand their BMD our offerings. So we have to our customers as they move into the cloud.
Speaker 3: with total cloud CNAP capabilities, get not only VMDR, but additional capabilities to really have one single pane of glass view for their entire cloud security. And this is the driving factor of many conversations that we are having now as they look forward to 2024 and looking into cloud security. And some of the early events that we are seeing is encouraging. And so I think that's...
With total cloud C&I capabilities get not only give the Alberta additional capabilities to really have one single pane of glass view for there.
<unk> cloud security and this is driving.
Driving factor of many conversations that we're having now as they look forward to 2024 and looking into cloud security and some of the early wins that we're seeing is encouraging and so I think this.
Speaker 3: the customers adopting VMDR and that we were pleased to see that continue to pick up and get to 54% and that of course gives us the ability to have our agents deployed in more environments and those agents being deployed does give the opportunity for us to do additional upsells on CSAM, patch management, EDR, etc., but also now with 31 million agents running in the public cloud environments, the opportunity for us to work with them on total cloud is something that we're excited about.
Okay.
Customers are adopting the MBR.
We're pleased to see that continue to pick up and get to 54% and that of course gives us the ability to have our agents to Florida.
Environments and those agents being deployed does give the opportunity for distributable additional absorption C. Sam Ash management, Edr et cetera. We're also.
Now with 31 million agents running in the public cloud environment, the opportunity for us to work with them focused cloud.
It's something that we're excited about.
Speaker 5: Great, thanks, and just a follow-up question, maybe on OPEX, just with the new CRO, I know you paused as you revisit the go-to-market strategy. How should we think about, you know, with your strong margins, maybe starting to invest in sales capacity as we exit this year or into next year? I guess another way, I'm trying to ask balancing the macro backdrop with the opportunity to maybe add sales capacity.
Alright. Thanks.
Just a follow up question on <unk>.
On Opex, just with the new <unk> I know you pause as you revisit the go to market strategy, how should we think about.
But youre strong margins may be starting to invest in sales capacity.
As we exit this year or into next year I guess, another way im trying to ask the balancing the macro backdrop with the opportunity to maybe add sales capacity.
Speaker 4: You know, with Dino on board, we are looking at all our investment opportunities for the remaining remainder of this year as well as next year. We think that based on what we see today, our sales and marketing expense to be relatively in line in terms of the growth year over year in Q4 as in Q3. So you're looking at, like, 9%, 10% around that kind of range ending the year and then for next year, we are going through the planning cycle right now to understand, you know, will we think that we should double down on investment and accelerate versus kind of.
Yeah.
On board.
Looking at all of our investment opportunities for the.
We neither of this year as well as next year, we think that based on what we see today, our sales and marketing expense to be relatively in line in terms of the growth year over year. In Q4, I think Q3. So you are looking at like 9%, 10% around that kind of range ending the year and for next year, we are going through the planning cycle right now to understand.
Well, we think that we should double down on investment in accelerating versus kind of.
Speaker 4: But with that said, given the underinvestment that we had this year, based on the ROI that we estimated, we do expect an acceleration in sales and marketing investments next year.
On hold on with that.
The Underinvestment that we had this year based on the ROI that we estimated we do expect an acceleration in sales and marketing investments next year.
Great. Thank you very much.
Speaker 1: Thank you. One moment, please for our next question.
Thank you.
One moment please for our next question.
Speaker 1: Our next question will come from the line of Matt Higberg of RBC Capital Market.
Our next question will come from the line of Matt Hedberg of RBC capital markets.
Speaker 6: Hi, this is Anishtha for Matt Hedberg. Thanks for taking my questions here. Maybe just to start with, can you talk about your high level thoughts on 2024 and what do you think would be the building blocks there? And then could revenue growth potentially accelerate in 2024, given EV accounts and the investments you've been making over the past year?
Your line is open.
Hi. This is finished off for Matt Hedberg, Thanks for taking my questions here.
Maybe just to start with can you talk about your high level thoughts on 2024, and what you think would be the building blocks.
And then good revenue growth potentially accelerates in 'twenty four given easier comps on the investments you've been making over the past year.
Speaker 4: Yeah, I think it's a little early for us right now. We are going through the planning cycle. I think taking a look at what we know today, Q4 is a huge quarter for us. So, what we're trying to do is understand the current dynamics and what it will translate to our Q4 bookings. And then we'll be able to share more color in 2024 in terms of where we think that we'll be able to land for revenue growth. And, but right now, what we see is, if you take a look at our trajectory and the growth, we do see that.
Yeah, I think it's a little early for US right now we are going through the planning cycle I think taking a look at what we know today Q4, I think each quarter for us. So we're we're trying to do is understand the current dynamics and what that will translate to our Q4 bookings and then we'll be able to share more color in 2020.
In terms of where we think that we'll be able to land for revenue growth.
But right now what we see is if you take a look at our trajectory and the growth we do see that even though the environment has stabilized.
Speaker 4: You know, even though the environment has stabilized, the market appears to be challenging for us with our net dollar expansion rate at 106%, we do see room where that could take up a few percentage points and in the coming quarters, but it's a little too early.
Market appears to be challenging for us with our net dollar expansion rate at 106%, we do see room, where that could tick off a few percentage points and in the coming quarters, but it's a little too early.
Speaker 6: Got it. And then can you talk about the federal vertical a little bit? I realize it's a small vertical for you, but it looks like you've been seeing traction with it over the past few quarters. So just given the federal year-end, how did that vertical perform in the quarter?
Got it and then can you talk about the federal vertical a little bit.
Related to small vertical for you but.
It looks like you've been seeing traction with data over the past few quarters.
So just given the federal year end holiday, how did that perform in the quarter.
Speaker 3: Yeah, great question. We do have increasing focus on our federal side of the business, as you said, you know, it's not a big part of our business today, but.
Yes, Great question, we do have.
<unk> focus on our federal.
Out of the business as you said.
Big part of our business today, but.
Speaker 3: What we're seeing is the federal agencies are also looking for a refresher looking for a new approach to managing that risk. They're having the same challenges that.
What we're seeing is the federal agencies are also looking for a refresh certainly looking for a new approach to managing the risks they are carrying the same challenges.
Speaker 3: too many vulnerability findings coming their way. And so when they kind of look at the policy platform and the ability for us to showcase the inventory, vulnerability management, risk management, and then remediation capabilities.
So when we leave on Liberty findings coming that way and so when they kind of look at the Polish platform and the ability for us to showcase the inventory vulnerability management risk management and remediation capabilities.
Speaker 3: Those are really resonating well with them and so as we recently got on a federal leader.
Those are really resonating well with them and so as we recently got on a federal leader.
Speaker 3: We're getting through the process of getting out a FedRAMP-High certification completed, which makes us one of the only FedRAMP-High-ready platforms for vulnerability and patch management. We do see, as we continue to make our investments in the federal government market, we do see a good opportunity for us in the next couple of years, really, too.
Getting through the process of getting out of fed ramp.
Certification completed which makes us one of the only program higher Eddie Blackstone's Liberty impact your management, we do see as we continue to make our investments.
The federal our go to market and we do see.
Good opportunity for us in the next couple of years certainly too.
Speaker 7: accelerate the growth for our federal business from where we are today. Got it. Thank you.
Accelerated growth for our federal business from where we are today.
Got it thank you.
Thank you.
And one moment please for our next question.
Speaker 1: The next question will come from the Jonathan Ho of William Blair. Your line is open.
Okay.
The next question will come from them, Jonathan Ho of William Blair. Your line is open.
Speaker 1: Pardon me, Jonathan Ho, your line is open.
Yeah.
Pardon me Jonathan Ho Your line is open.
Speaker 8: If your phone is on mute, please unmute your line. If you're using a headset, please put on your headphones.
If you're following us on mute. Please UN mute your line if you're using a headset. Please put on headphones.
Hello, Mr Hill Your line is open.
Can you hear me, yes, you are loud and clear.
Speaker 9: Okay, sorry. Just in terms of your channel partner progress, can you talk a little bit about what you're seeing there and maybe what some of the lower hanging fruit can be just given the hiring of your new CRO?
Okay Alright.
Yeah, just in terms of your channel partner progress can.
Can you talk a little bit about what youre seeing there and maybe what some of the lower hanging fruit can be just given the hiring of your new CFO.
Speaker 3: Look, we started down this investment about a year, a little bit over a year ago.
Look we started down this sort of investment about a year a little bit over a year ago.
Speaker 3: taking a different approach to how we're working with partners. So we're pleased with the early feedback we're getting. You see some of the mix of our business also changing over to the partner side. And I think we do see that there's a good amount of opportunity for us to invest and increase how we work with our partners.
Taking a different approach to how we're working with partners. So we're pleased with the early.
Feedback, we're getting you see some of the mix of our business also changing over to the partner side I think.
We do see that there is a good amount of opportunity for us to do it.
Western increase with how we work with our partners.
Speaker 3: So right now, as we look at the low-hanging fruit in terms of.
So right now as we.
As we look at.
The low hanging fruit in terms of better deal registration by the incumbency protection that we have provided is showing some of the early impact of partners building that trust with those things and working with us on some of these.
Speaker 3: impact of partners building their trust with us and working with us on some of these deals that we are working on. But then as we have DINO come on board and through the rest of the year we look through what are the more specific opportunities for the short term with certain partners to work on investing with them so that we can get that benefit not only in the short term but then also sort of continue our focus on the partner strategy for the longer term as well so this is definitely an area that DINO and I are very much in line with and looking forward to continuing our
Deals that we are working on.
Dennis.
We have dean will come onboard.
Through the rest of the year will look through what are the more specific opportunities for the short term with certain partners to work on.
Interesting with them, so that we can get that benefit.
In the short term, but then also sort of continue our focus on the partner.
Our strategy for the longer term as well. So this is definitely an area that Dino.
Speaker 3: that Dino and I are very much in line with and looking forward to continuing our focus and investment on the partner side of the house.
Much in line with them and looking forward to continuing our focused investment in the partner side of those.
Speaker 9: got it and just as a follow up, I guess I'm a little bit confused because in the prepared remarks, you talked a little bit about your indications that
Got it and just as a follow up I guess I'm, a little bit confused because in the prepared remarks, you talked a little bit about your indications that more and more customers are taking on a platform view of quality and sort of buying into the broader vision, but then we're seeing sort of the net retention shrink a little bit so.
Speaker 9: you know, more and more customers are taking on a platform view of Qualys and, you know, sort of buying into the broader vision, but then we're seeing sort of the net retention shrink a little bit. So, is this sort of customers are buying in, but because of budget constraints, you know, they're just sort of renewing what they have, you know, are they, you know, sort of reducing assets, I'm just, I'm just trying to understand sort of how, you know, those, those two data points align, thank you.
Is this sort of customers are buying in but because of budget constraints, there just sort of enjoying what they have.
Instead of reducing assets I'm, just I'm, just trying to understand sort of how those.
Those two data points align thank you.
Speaker 3: Great question. And I think it continues to be challenging for our customers as well in terms of managing the spend and managing the security spend and optimizing that. And so today, we continue to be happy with our overall retention rate, which is healthy. And so the customers are really excited to continue to work with quality. And then there are definitely opportunities that we work with our customer in terms of, maybe they want to optimize some of the spend on a certain area of the product. And then bring on other quality products for a platform approach, why is not maybe significantly increasing the spend in this year, but creating opportunity for in the future when those budgets open up to by additional licenses of additional capabilities that we...
Great question, and I think it continues to be challenging for our customers as well in terms of managing their spend and managing the security spend and optimizing that and so today.
We continue to be happy with our overall retention rate, which is healthy and so the customers are really excited to continue to work with <unk> and then there are definitely opportunities that we work with our customer in terms of.
Maybe they want to optimize some of their spend on a certain area of the product and then.
Bring on other quality products on our platform approach, while not maybe significantly increasing their spend in this year, but creating opportunity for <unk>.
The future lenders budgets open up to buy additional licenses of additional new capabilities that we are.
Speaker 3: Deploy with them in the current deployment that they have and so in some cases they are adding additional in some cases. They are
Deploy with them in the current.
Deployment that they have and so in some cases they are adding additional in some cases they are.
Speaker 8: leverage creating new opportunities for the newer products to be deployed right now in smaller quantities instead of maybe some of the existing products that they have. But the conversations are definitely more in the positive side of working towards bringing more quality solutions and then creating opportunities for us in the future as their budgets open up a little bit so that they can expand on those additional licenses as well. Great, thank you.
Leverage, creating new opportunities for the newer products to be deployed right now in smaller quantities and start off maybe some of the existing products that they have but.
But the conversations are definitely more on the positive side of it.
Working towards bringing more quality solutions, and then creating opportunities for us in the future of their budgets open up a little bit so that they can expand on those additional licenses as well.
Great. Thank you.
Thank you.
And again one moment please for our next question.
Okay.
Speaker 1: Our next question will come from Brian Colley, O Stevens. Your line is open.
Our next question will come from Brian Colley of Stephens. Your line is open.
Speaker 10: Hi, thanks for taking my questions. Can you just talk about how the competitive environment and how wind rates as well as pricing trended this quarter?
Alright, thanks for taking my questions.
Can you just talk about how the competitive environment.
And.
Our win rates as well as pricing trended this quarter.
Speaker 3: I don't think we've saw much of a change from what we've seen in the last couple quarters. I think we definitely continue to see the similar players that we've always seen in the core VM space. I think we see tremendous opportunity in the cloud security space where we are
I don't think we saw much of a change from what you've seen in the last couple of quarters. So that you can go we definitely continue to see the similar players that we've always seen in the <unk> space.
We see tremendous opportunity in the cloud security space, where we are.
Speaker 3: Looking at them, we talked a couple examples. We're displacing some cloud coin solutions that are out there. So we see opportunities there as well. I think overall, you know, wind rates are roughly about state the same from the last quarter. So we see.
Looking at then we talked a couple of examples where we're displacing some club.
Cloud point solutions that are out there so we see opportunities there as well I think overall.
When rates are roughly.
Roughly a large stable save them.
From the last quarter, so we see opportunity as customer budgets open up.
Speaker 3: as customer budgets open up and our execution also continues to improve with Dino coming on board.
And I would execution also continues to improve with Dino coming onboard.
Speaker 3: to be able to do better on that side as well. And I think we continue to see that similar discounting from competitors to try to get business and that's where the opportunity for us to go back and instead of just driving the price down bundle capabilities like Fibres Media FF management, FF management, FF management, but other competitors don't have.
To be able to do better on that side as well.
I think we continue to see that similar discounting from competitors trying to get business and that's where the opportunity for us to go back in and sort of just driving the price down bundling capabilities like cyber security asset management patch management that our competitors don't have is again clearly.
Speaker 3: is again, including the opportunities for us, which is reflected in the way in the LKM, 11% of overall bookings that already have, that already have.
These four elsewhere, which is reflected in the way in the LTM.
11% of our overall bookings that are already well known.
Speaker 3: CSAM and patch management, but also the fact that the new business, the bookings coming from new business, the IT and bookings there, about 19% of that is coming from these additional capabilities. So we are being able to take advantage of the broader platform, play in competitive and discounted situations. So we can complete effectively.
Demand that already have <unk>, but also the fact that new business.
Our bookings are.
Coming from new business ATM looking ahead about 19% of that is coming from these additional capabilities. So we are.
Being able to take advantage of the broader platform play.
Incompetent they've been discounted situations. So we can compete effectively.
Speaker 10: God, thank you. And then Jumee won't for you.
Got it. Thank you and then Jim maybe one for you.
Speaker 10: You know, you had talked about villains kind of staying in a similar range.
You had talked about billings kind of staying in a similar range.
Speaker 10: as you saw last quarter and obviously you came in above that at 14% more oath and curious, kind of where, what area is kind of surprised you the most there and then also how should we think about Billings growth in the fourth.
<unk>.
As you saw last quarter, and obviously came in above that at 14% growth I'm curious kind of where.
What areas kind of surprised you. The most there and then also how should we think about billings growth in the fourth quarter.
Speaker 11: Yeah, for its buildings, it does have a tendency to fluctuate and there are multiple different reasons why it might not exactly align with their bookings or business trajectory, but looking at it on an LTN basis, you're looking at it was 11% on an LTN basis growth last quarter and it ticked up to 12%. And I think if they're they reflect what we're seeing in the market today in terms of our business, and for next quarter we don't see a materially changing from that rate. Got it. Thank you.
Yeah.
It does have a tendency to fluctuate and there are multiple different reasons why might not exactly align with our bookings our business trajectory, but looking at it on an LTM basis.
Looking at 11% on an LTM basis growth last quarter, and it ticked up to 12%.
And I think if they are they reflect what we're seeing in the market today in terms of our business over for next quarter, we don't see a materially changing from that rate.
Got it thank you.
Thank you.
And one moment for our next question.
Speaker 1: The next question will come from Yankeen, a loop capital markets. Your line is open.
Okay.
The next question will come from John Kim.
Capital markets. Your line is open.
Speaker 1: Part of me, Yan Kim, your line is open.
Pardon me.
Kim Your line is open.
Speaker 1: If your phone is on mute, please unmute your line. If you're using a headset, please put on your headphone.
If your phone is on mute. Please UN mute your line is it using a handset please put on headphones.
Speaker 1: The Unkinked Your Line is Open. You may Proceed.
Young Kim your line is open.
You May proceed.
Speaker 1: 1 more please I will go to the next question.
Maam. Please go to the next.
Question.
Okay.
Again, one moment please for our next question.
Speaker 1: The next question will come from Rudy Kissinger of DA Davidson. Your line is open.
The next question will come from Rudy Kessinger of D. A Davidson your line is open.
Speaker 5: Hey, guys, thanks for taking my questions. To me, I just want to go back clarify. I heard you're prepared remarks. You said free cash flow for the full year in the mid 30% range. I just want to make sure that's accurate. That would imply breaking even cash flow to the negative 15 million cash flow in Q4. Did you mean mid 30s for Q4?
Hey, guys. Thanks for taking my questions Jimmy I, just wanted to go back to clarify.
<unk> remarks, you said free cash flow for the full year in the mid 30% range I just want to make sure thats accurate.
Breakeven cash flowed up to negative $15 million cash flow in Q4 did you mean mid thirties for Q4.
Speaker 4: So it's about mid to high 30. So I'm expecting about only a few million if we cash for Q4. So you're looking at about maybe 205 million range for the full year. And that's partly due to this for all the tax payments to Q4. Q4.
Yeah.
So it's about mid to high 30.
Expecting about it only a few million dollars of free cash flow for Q4, I think we're looking at about like maybe like a $5 million range for the full year.
And that's primarily due to deferral of the tax payment to Q4.
Okay.
Speaker 12: Got it. Okay. And then just trying to understand the puts and takes your Q4 revenue guide. I mean, with the Q3 guide prior to your guide, you wouldn't apply to Q4 revenue guide before. You'd be revenue by about a million on the quarter. You saw it, it calculated, Billings pretty celebrated a few points to 14%. And then you effectively lowered the Q4 implied revenue guide by about half a million. And so did just what sort of the outperformance in Q3 and why isn't it reflected in a higher Q4 revenue guide.
Hi.
Got it Okay and then just just trying to understand the puts and takes in your Q4 revenue guide I mean with the Q3 guide prior full year Guide you had implied Q4 revenue guide before you beat revenue by about $1 million in the quarter you soccer calculated billings.
Tolerate a few points to 14% and then you're effectively lowered the Q4 implied revenue guide by about $5 million and so did just what drove the outperformance in Q3 and why isn't that reflected in the higher Q4 revenue guidance.
Speaker 4: Yeah, the outperforming is in 2, 3. I mean, it's a small outperforming if you take a look at it from the booking trajectory because I think our booking performance is more fairly reflected by the LTM current billing throws. So you're looking at 11% to 12%. And that was better than what we had expected from basically on the new and that definitely helps with our current billing in terms of the 14% that we posted in 2, 3.
Yeah, the outperformance in Q3 and yet it's a small outperformance if you take a look at it from the bookings trajectory because I think our bookings performance is more accurately reflected by the LTM current billings growth. So you are looking at 11% to 12% and that was better than what we had expected from basically on the new.
And that definitely helped with our current billings.
In terms of the 14% that we posted in Q3.
Speaker 12: Would respect your revenue, it's not that much of a decline. If you think they'll look at the different in terms of what was implied in Q4 versus the outperforming Q3, and there's really nothing more to it than that. Okay, got it. Thanks for taking my question.
With respect to revenue.
Not that much of the decline if you take a look at the difference in terms of what was implied in Q4 versus the outperformance in Q3, and there's really nothing more to it than that.
Okay.
Okay got it thanks for taking my questions.
Thank you.
One moment please for our next question.
Speaker 1: The next question will come from Joshua Tilton of Wolf Research. Your line is open.
The next question will come from Joshua Tilton of Wolfe Research. Your line is open.
Hey, guys can you hear me.
Speaker 13: Great. I apologize if somebody addressed this already. I'm kind of bounced around on a few tonight But I remember last quarter you kind of gave like some soft Guardrails around what you thought three Q Carned Billings growth could be based off of what two Q was I'm wondering if you can kind of give us some soft guardrails and what you think four Q Carned Billings could be Based off the strong performance you saw in three Q
Yes.
Great I apologize if somebody addressed this already im kind of bounce around on you Tonight.
I remember last quarter, you kind of gave like some soft guardrails around what you saw at <unk> current billings growth could be based off of what <unk> was I'm wondering if you could kind of give us some soft guard rails on what you think <unk> current billings could be based off the strong performance you saw in <unk>.
Speaker 4: Yeah, we think that's going to be more like deadline with Q3. So what we tend to look at is, I mean, current billing, we understand it's a proxy for a bookings performance and there it tends to be a month A. So what you're looking at is as a Q2 LTM current billing growth was 11%, Q3 trended up a little bit higher than what we had expected in landing at 12% and we've expected to be approximately that range ending the year in Q4 for the current billing growth for the full year to be around that 12% range.
Yeah, we think that's going to be more or less in line with Q3. So what we tend to look at is any current billings, we understand as a proxy for our bookings performance and there tends to be lumpy, though when you are looking at it.
Our Q2 LTM current billings growth was 11% in Q3 trended up a little bit higher than what we had expected lending at 12% and we expect it to be approximately that range ending the year in Q4 for the current billings growth for the full year to be around that 12% range.
Speaker 13: Sorry, just to confirm you expect the, you expect Q4 to land in a way that the LTM current feelings growth is in the 12%.
Sorry, just to confirm you expect the you expect Q4 to land in a way that the LTM current billings growth is in the 12% range.
Speaker 4: Right. So what that basically means is that you floor around the same like maybe 13 to 14% current billing's growth for Q4.
Right.
Basically it means that Q4 around the same maybe 13% to 14% current billings growth for Q4.
Speaker 13: Okay, super helpful. And then my second question is kind of a follow up to this, but based off of what you just said, I feel like I sort of already know the answer. It's been kind of a weird year. Deals have been delayed, the sales cycles are elongated.
Okay Super helpful. And then my second question is kind of a follow up to this but based off of what you just said I feel like it's sort of already know the answer it's been kind of a weird year.
Deals have been delayed sales cycles or elongated scrutiny, whatever you want to call it.
Speaker 13: scrutiny, whatever you want to call it. How do we think about
How do we think about.
Speaker 13: For like how do we think about the quarters benefits from maybe some deals that slip from the from Q1 and Q2 Driving some of the strong performance we saw or would you really characterize that 14% growth is as as true three Q performance? That makes sense?
Like how do we think about the quarters benefit for maybe some deals that slipped.
From Q1 and Q2.
Driving some of the strong performance, we saw or would you really characterize that 14% growth is.
As true <unk> performance that makes sense.
Yes, so I think the current billings.
Speaker 4: What's really true from a business performance perspective because Billings is also impacted by the timing of the employees thing, I would point to the LTM growth rate and that that fairly reflects it. So as of Q2 it was 11% and Q3 was slightly better at 12%. And we think that that's just that fairly reflects what we're seeing in the market today. And we don't see any material improvements for Q4. It will be a large quarter for us, but based on what we see today, we expect continue challenging environment and we'll wait to see how that plays out, to better understand what we think that will be able to achieve in 2024.
Really true from a business performance perspective, because billings is also impacted by the timing of invoicing I would point to that LTM growth rate and that that theyre only reflects as of Q2. It was 11% in Q3 was slightly better at 12% and we think that that's just up there really reflects what we're seeing in the market today, and we don't see any material.
Improvements for Q4, it will be a large quarter for us based on what we see today, we expect continued challenging environment and we'll wait to see how that plays out to better understand what we think that we'll be able to achieve in 2024.
Speaker 1: super helpful. Thank you so much, guys. Thank you.
Super helpful. Thank you so much guys.
Thank you.
And one moment for our next question.
Speaker 1: And again, we have Young Kim of Loop Capital Markets. Your line is open. Young Kim, your line is open. Young Kim.
And again, we have young Kim of loop capital markets. Your line is open.
Yung Kim your line is open.
Again, if your phone is on mute please UN mute your line.
Mr. Kim Your line is open.
Lamar Please let me move on to next question.
And one moment please for our next question.
Yeah.
Speaker 1: The next question will come from the line of Brian Essex of JP Morgan. Your line is open.
The next question will come from the line of Brian Essex of Jpmorgan. Your line is open.
Speaker 5: Hey, this is Doug on For Brian . Thank you so much for taking my question. Maybe just one from the details that you can give on that new logo growth in the quarter.
Hey, this is Doug on for Brian. Thank you. So much for taking my question, maybe just one from me any details that you can give on net new logo growth in the quarter.
Net new growth.
Speaker 11: It did come in better than what we had expected, but it still remains to be challenging. So our customer count still is kind of flawed. And so what we're trying to do for the next year is to make sure that we leverage our channel partnerships to focus on the new business growth. OK, great. Thank you so much.
It did come in better than what we had expected, but it still remains to be challenging. So our customer can still is kind of flat and so we were trying to do.
And set up for the next year is to make sure that we leverage our channel partnerships to focus on the new business growth.
Okay, great. Thank you so much.
Thank you.
One moment please for our next question.
Speaker 1: On the next question, we'll come from Matt Fulcman of Morgan Stanley . Your line is open.
Our next question will come from Matt Saltzman of Morgan Stanley. Your line is open.
Speaker 5: Right, thanks for taking the question. Sue Madd, quick one for you. It's a bit of a philosophical one, but when you think about the cloud security and CNAP opportunity, there's a fair amount of debate amongst security practitioners around what's the best way to tackle the cloud security issue, whether it's agent-based, whether it's agent-less. I'm just curious if you can talk a little bit about the benefits you see from the agent-based approach that a quality leads on. Thanks.
Great. Thanks for taking the question so mad quick one's for you.
Bit of a philosophical one, but when you think about the cloud security and opportunity.
Theres, a fair amount of debate amongst security practitioners around what's the best way to tackle the cloud security issue, whether agent base, whether it's agent less I'm. Just curious if you could talk a little bit about the benefits you see from the agent based approach that costly.
Speaker 3: Well, see, that's the beauty that we are not taking one or the other. Actually, that's the part of what we have released with our Toyota Cloud CNAP solution is with the ability for us to do flex scan, which actually allows customers to use either an agent-based or an agent-less approach.
Thanks.
Well I think thats the beauty of that we're not taking one or the other it is actually that's part of what we are pleased with our <unk> solution is this ability for us to reflect scan, which actually allows customers to use either Adrian based automaker and dealers approach and so we don't get into this debate about what's better because I think if you look at the history of flawless we.
Speaker 3: And so we don't get into this debate about what's better because I think if you look at the history of Paulus, we no cloud better than anybody given that we actually been in the cloud for 20 years. And so we understand that really well. And we went from an agent less scanning solution for many years to adding agent-based capabilities.
No cloud better than anybody given that we actually being in the cloud for 20 years, and so we understand that really well.
We went from 800 less scanning solution for many years to adding agent based capabilities.
Speaker 3: and not replacing the agent less scanning in. So today, if you're really being honest about what really is needed for security perspective, it is a combination of agent-based wherever you want to get a lot more details. Then agent less, it's an operational impact, where you want to reduce the operational impact in trading off by doing an agent less assessment.
And not replacing the agent less scanning and so today if you.
Are you being honest about what is needed for security perspective. It is a combination of agent based.
Where you get want to get a lot more details.
And then agent less where it's an operational impact what you wanted to reduce the operational impact and trading off by doing an AWS assessment, but with our <unk> solution and we give our customers the ability to pick which are what works the best for them.
Speaker 3: With our total cloud scene absolution, we give our customers the ability to pick whichever works the best for them. And for C-Lick, for the most important part of our customers is to understand that nobody is a cloud-only company.
And firstly look for the most important part of our customers is to understand that nobody has a cloud only.
Speaker 3: Everybody has cloud, they have some on-prem, they have office environments, they have laptops. So focus for everybody is how do I get a single unified view of cloud, non-cloud, everything together. And for that, today's cloud solutions really need to be...
Company everybody is cloud they have 100, some odd DRAM they have office environments. They have laptops. So focus for everybody is how do I get a single unified view of cloud and non cloud everything together and for that todays cloud solutions really needs to be truly cloud native and truly organically developed and so instead of going out and <unk>.
Speaker 3: truly cloud native and truly organically developed. And so instead of going out and acquiring multiple different cloud solutions.
Adding multiple different cloud solutions.
Speaker 3: trying to switch them together and calling it cloud native. What we have focused on is really expand what we have done for all these years in the cloud platform, our own cloud platform and then expand that into a truly organically natively integrated solution that does both agent-based agentless, snapshot, everything in a single platform. So customers don't have to pick and choose and have this for the software conversation every time.
So we think the system together and calling a cloud native.
What we are focused on is really expand what we have done for all these years in the cloud platform our onto our platform and then expand that into a truly organically natively integrated solution that does both Adrian based agent less snapshot everything in a single platform. So customers don't have to pick.
Pick and choose and how this philosophical conversation every time.
Great. Thanks, Thats Super helpful.
Thank you.
Hello, Amit.
Yeah.
Speaker 1: And I'm seeing no further questions in the queue. That will conclude today's conference call. Thank you all for participating. You may now disconnect and have a pleasant day.
And Im seeing no further questions in the queue.
That will conclude today's conference call. Thank you all for participating you may now disconnect.
Pleasant day.
Okay.
[music].
Okay.
[music].
Sure.
Okay.
[music].
<unk>.
Yes.
[music].