Q1 2024 Qualys Inc Earnings Call

May 7, 2024

Operator: Good day, and thank you for standing by. Welcome to the Qualys first quarter 2024 investor call. At this time, all participants are in a listen-only mode.

Good day, and thank you for standing by to the college first quarter 'twenty 'twenty four investor call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question answer session to ask a question. During this session you will need to press star one one on.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised.

Your telephone you then here in under a minute message advising your hand as rates to withdraw. Your question. Please press star. One again, please be advised that today's conference is being recorded I would now.

Operator: To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would like to hand the conference over to your speaker today, Blair King. Please go ahead.

Speaker Change: I'd like to hand, the conference over to your speaker today.

King: King. Please go ahead.

Blair King: Good afternoon, and welcome to Qualys' first quarter 2024 earnings call. Joining me today to discuss our results are Sumedh Thakar, our president and CEO, and Joo Kim, our CFO. Before we get started, I would like to remind you that our remarks today will include forward-looking statements that generally relate to future events or our future financial or operating performance. However, actual results may differ materially from these statements.

King: Good afternoon, and welcome to <unk> first quarter 2024 earnings call joining.

King: Joining me today to discuss our results are submit the car, our 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 our future financial or operating performance.

Blair King: The factors that could cause results to differ materially are set forth in today's press release and our filings with the SEC, including our latest Form 10-Q and 10-K. Any forward-looking statements that we make on this call are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events. During this call, we will present both GAAP and non-GAAP financial measures. Reconciliation of GAAP to non-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 in the investor relations section of our website. So with that, I'll turn the call over to you, Sumedh.

King: Actual results may differ materially from these statements.

King: That could cause results to differ materially are set forth in today's press release, and our filings with the SEC.

Jimmy Camera: Our latest Form 10-Q and 10-K.

King: 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.

King: 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 <unk>.

King: As a reminder, the press release prepared remarks investor presentation are available on the Investor Relations section of our website.

King: With that I'll turn the call over to Keith Smith.

Sumedh S. Thakar: Thank you, Blair, and welcome to our first quarter earnings call. Qualys delivered another quarter of healthy revenue growth, strong profitability, and cash flow generation, reflecting our ongoing commitment to rapid innovation and customer success. Given the accelerated growth in the scope and complexity of cyber threats alongside an intensifying regulatory environment, boards and C-level executives are increasingly focused on the business outcome of cybersecurity. This requirement makes seamlessly integrated security solutions a necessity for customers to effectively measure, communicate, and fortify their security posture.

Keith Smith: Thank you Blair and welcome to our first quarter earnings call. While this delivered another quarter of healthy revenue growth strong profitability and cash flow conversion, reflecting our ongoing commitment to evaporate innovation and customer success.

Keith Smith: Given the accelerated growth in scope and complexity of cyber threats alongside an intensifying regulatory environment boards and C level executives are increasingly focused on the business I would almost cyber security.

King: This requirement makes seamlessly integrated security solutions, a necessity for customers to effectively measure and communicate and fortify the security posture. We believe the quality enterprise storage platform designed to reduce friction risks on cost provides organizations are the foundation of the risk management platform for the future and serves as a structure.

Sumedh S. Thakar: We believe the Qualys Enterprise TrueRisk platform, designed to reduce friction, risk, and cost, provides organizations with a foundational risk management platform for the future and serves as a structural competitive advantage for both our customers and for Qualys. As a result, our VMDR solution with TrueRisk is fueling new logo lines but also increasing platform adoption, especially in the areas of cybersecurity asset management with external attack surface management, patch management, and cloud security.

King: In particular with one base for both our customers and book Wallets.

King: As a result of our <unk> solution with true risk is not only fueling new local lines, but also into this platform adoption, especially in the areas of.

King: Cyber security asset management with external index for Pest management patch management and cloud security in.

Sumedh S. Thakar: In Q1, healthcare, technology, retail, and financial services verticals all demonstrated strong VMDR demand with large deal sizes. Further underscoring the power of our platform, I will take a moment to share a couple of examples of how our customers and partners continue to expand their use of Qualys's capabilities to consolidate their security stack. On the customer front, a high-six-figure bookings enterprise customer win in Q1 was with a leading business services company in the Forbes 1000.

King: In Q1, healthcare technology retail and financial services verticals, all demonstrated strong MDI demand with larger deal sizes.

King: Further underscoring the power of our platform I will take a moment to share a couple of examples of how our customers and partners continued to expand their use of quality capability to consolidate their security stack.

King: On the customer front, our marquee high six figure bookings enterprise customer win in Q1 was with a leading business services company and the <unk> thousand.

Sumedh S. Thakar: The customer expanded its VMDR with TruViz and batch management deployments while adopting cybersecurity asset management with EASM as part of an initiative to detect end-of-life and end-of-service software, monitor subdomains of its infrastructure, and transform its IT security architecture while replacing point solutions from pre-vendors with a single platform. The ability for this customer to significantly enhance its security program with comprehensive internal and external asset criticality, holistic risk scoring, ticketing, and automated patching across its on-prem cloud and container environments through a natively integrated platform and unified dashboard were all key differentiators compared to alternative next-gen and legacy technologies.

King: The customer expanded its <unk> and <unk> deployments with our while adopting cyber security asset management of the ASM as part of an initiative to detect end of life and our service software monitor sub domains of its infrastructure and transform its IP security architecture, while replacing point solutions from.

King: Three vendors with a single platform.

King: The ability for this customer to significantly enhance the security program with comprehensive internal and external asset criticality holistic risk, scoring ticketing and automated patching or could also it's on brand cloud and container environments through a natively integrated platform and unified dashboard, where all key differentiators compared to automate that.

King: Nextgen.

King: Legacy technologies.

Sumedh S. Thakar: The next one demonstrates how Qualys helped an existing Forbes 100 manufacturing company standardize on the Qualys Enterprise Stories platform and consolidate risk factors from different Qualys modules into a single risk score with business context. This existing VMDR and Total Cloud customer was struggling with connecting disparate asset management tools and business processes across several subsidiaries and environments and needed to gain better visibility into the attack surface to uniformly contextualize, communicate, and manage risk.

King: The next win demonstrates how quality helps.

King: Existing Forbes 100 manufacturing companies standardize on wireless enterprise storage platform and consolidate risk factors from different wireless modules into a single risk score with business context. This existing <unk> customer was struggling with connecting disparate asset management tools and business processes across several subsea.

King: The reason I environments and needed to gain better visibility in goods attack surface to uniformly contextualized communicate and manage risk.

Sumedh S. Thakar: Recognizing the increased value they would gain by further consolidating on Qualys, this customer replaced its existing asset management tool and adopted our cybersecurity asset management with EASM solution in a six-figure bookings upsell. This customer is now leveraging multiple aspects of the Qualys Enterprise Tourist Platform, spanning on-premises cloud and multi-cloud assets, to quantify and prioritize risk reduction initiatives, increase organizational resilience, and give its CISO peace Investing in our partner program continues to be a key pillar of our go-to-market agenda as it bolsters our capacity, harnesses transformative solution sales, and brings new business to quality.

King: Recognizing the increased value they would gain by further consolidating on quality. This customer replaces the existing asset management tool and adopted our cyber security asset management for the year with some solution.

King: Figure bookings up so this customer is now leveraging multiple aspects of close on progress towards platform spanning on Prem cloud and multi cloud assets to quantify and prioritize risk reduction initiatives increased organizational resilience and give it seasonal peace of mind.

King: Investing in our partner program continues to be a key pillar of our go to market agenda as it bolsters our capacity would be harness transformative solutions sales and bring new business to quality.

Sumedh S. Thakar: Through these investments, we continue to advance our evolving partner ecosystem with two leading managed service providers in America. One recently expanded its offering beyond VMDR to include our patch managing capability, and the other standardized on Qualys as its preferred partner for VMDR cybersecurity effect management with EASM and patch management, spanning both its federal and commercial verticals. The latter of these two wins is a testament to the investment we are making to expand our federal business, and we're looking forward to hosting our first public sector cyber risk conference later this month.

King: Through these investments we continued to advance our evolving button ecosystem with two leading managed service providers in America, one that recently expanded its offering beyond <unk> to include our advanced monitoring capability.

King: The other standardize on quality as its preferred partner for our <unk> hybrids will give you a second management with ESI and patch management spanning both its federal and commercial verticals.

King: The latter of these two wins that estimate to the investment we are making to expand our federal business and we're looking forward to hosting our first public sector cyber risk conference later this month.

Sumedh S. Thakar: And with nearly 50 partners already on our recently announced new MSSP partner portal to simplify their operations, launch and manage Qualys's capabilities, and significantly reduce remediation times for their customers, we are increasingly well-positioned to expand our reach to customers of all sizes. Additionally, we strengthened our alliance with a leading system integrator, which is now actively bringing our Total Cloud CNAP solution to its customers. We believe the broad expansion of our partner program over the past several quarters continues to reflect our strengthening brand awareness, strategic position, and value position in the market.

King: And with.

King: Nearly 50 partners already on our recently announced new MSP partner portal to simplify their operations launch and manage quality capability and significantly reduce remediation banks for their customers. We are increasingly well positioned to expand our reach to customers of all sizes.

King: We strengthened our alliance with a leading system integrator.

King: <unk> is now actively bringing our total cloud <unk> solution to its customers.

King: We believe the broad expansion of our partner program over the past several quarters continues to reflect our strengthening brand awareness.

King: <unk> position in value position in the market.

Sumedh S. Thakar: With tightly integrated solutions delivered through a natively integrated platform to solve modern security challenges, more and more Qualys customers are beginning to understand how cybersecurity transformation drives better security outcomes, saves time, and costs less. As a result, customers spending $500,000 or more with us in Q1 grew 19% from a year ago to 192%.

King: With a tightly integrated solutions delivered through a natively integrated platform the solid modern security challenges more and more wireless customers are beginning to understand how cyber security transformation drive spectrum.

King: The outcomes sales times and costs less as a result customer spending $500000 or more with us in Q1 grew 19% from a year ago to 192.

Sumedh S. Thakar: Since our inception, driving innovation has been at the core of Qualys's mission. We are excited about our upcoming enterprise risk management application, which marks the next stage of expansion of our platform, building on top of the success we have seen with VMDR and TrueRisk. The ETM capability will enable VMDR customers to upgrade to a more holistic cyber risk management platform that goes beyond vulnerability management. The enterprise risk management solution holistically aggregates and normalizes trillions of first and third-party data signals, correlates risk factors with assets, threats, and business context, detects, visualizes, quantifies, and prioritizes, and makes remediation frictionless with immediate and immediate with a simple click of a button.

King: Since our inception driving innovation in the quarter, while the submission we are excited with our upcoming and robust risk management application, which marks the next phase of expansion of our platform building on top of the success, we've seen with <unk> with tourists the EDM capability will enable the MD our customers' job.

King: Greg do a more holistic cyber risk management platform that goes beyond one Liberty management that goodbye to risk management solution Holistically aggregates abnormally trillions of first and third party data signals correlates to risk factors with assets and business context detects visualize us quantify them prioritize and makes it everyday.

King: Friction less immediate.

King: Any immediate with simple click of a button with these newest capabilities all natively integrated on a single unified dashboard Wallace is once again, well armed with powerful new platform capabilities that broadly measure communicated intermediate risk across Baghdad attack surface, including <unk>.

Sumedh S. Thakar: With these new capabilities all natively integrated on a single unified dashboard, Qualys is once again well armed with powerful new platform capabilities that broadly measure, communicate, and remediate risk across the entire attack surface, including IT, OT, applications, cloud, and multi-cloud assets. Moreover, our comprehensive AI-powered insights are now converting detected risk into optimized remediation actions across our platform solutions with our out-of-the-box, instant, and actionable insights mapped to an organization's own data to preemptively reduce risk in their environment.

King: OTT applications cloud and multi cloud efforts. Moreover, our comprehensive AI powered insights are knock on working detected risk and to optimize it emulation actions across our platform solutions with our out of the box and staring to an actionable insights map to it organizations owned data to preemptively reduce risk in the environment.

Sumedh S. Thakar: The feedback from many of the CISOs I met at our recent QSC-MEI event in London has been very positive with respect to the deployment agenda, the excitement about the rapid pace of new capabilities that we are delivering, and their ability to monitor and measure risk reduction ROI for cyber security. Further advancing our TrueRisk capabilities, I am pleased to announce we recently brought MITRE ATT&CK matrix prioritization into the Qualys Enterprise TrueRisk By combining over 25 sources of threat intelligence with the MITRE ATT&CK framework, we are now further enabling organizations with a holistic attacker-centric view to predict and identify critical risks to their business based on ATT&CK tactics and techniques.

King: The feedback from many of the <unk>.

King: Our recent UFC EMEA event in London has been very positive.

King: With respect to the deployment agenda excitement about the rapid pace of new capabilities that we're delivering and the ability to monitor and measure of risk reduction in Ottawa for the cyber security space.

King: Further advancing our <unk> capabilities I am pleased to announce we recently brought in Mike Dunn attack matrix organization into the quality enterprise storage platform.

King: By combining over 25 sources of threat intelligence with Am I better back framework. We are now further enabling organizations with the holistic attackers centric view to predict and identify critical risks to their business based on the tactics and techniques.

Sumedh S. Thakar: With this advancement, we believe Qualys stands out as the only enterprise-scale solution to combine contextualized risk quantification and the MITRE ATT&CK framework to help organizations proactively prioritize, manage, and reduce cyber risk with enhanced detection, integrated risk quantification, and automated response for a threat-informed defense in a single platform. Continuing the pace of disruptive innovation, we are now organically unifying Cloud Entitled Management, CIEM, into our With this new capability, customers can manage cloud identities, entitlements, and enforce the principle of least-privileged access to cloud infrastructure and resources.

King: While this advancement with this advancement, we believe quality stands out as the only enterprise scale solution. The combined contextualize the risk quantification and the micro back framework to help organizations for actively prioritize manage and reduce cyber risk with enhanced reduction integrated risk quantification and automated response.

King: For a threat informed defense in a single platform.

King: Continuing the pace of disruptive innovation, we are.

King: Ill now organically unifying flowers and territory management.

King: Into our <unk> solution with this new capability customers can manage Florida entities, the entire government and enforced the principle of least privilege access to cloud infrastructure and resources combined with additionally, newly introduced capabilities such as container security and coordinated spot for management. We have created what we believe is one of the.

Sumedh S. Thakar: Combined with additionally newly-introduced capabilities such as Container Runtime Security and Kubernetes Posture Management, we have created what we believe is one of the most comprehensive cloud-native security solutions in the market with a unified, actionable dashboard for immediate threat prioritization and remediation for a build-through runtime with a built-in Threat Detection Table.

King: The most comprehensive cloud native security solutions in the market with a unified actionable dashboard for immediate threat prioritization and remediation for.

King: Through runtime with built in protection debit Moody's.

Sumedh S. Thakar: Finally, as we continue to extend our technology leadership across the entire platform, I'm pleased to announce our cybersecurity risk management 3.0 solution with highly differentiated new capabilities in external attack surface management and third-party integration for comprehensive asset inventory. With these innovations, security teams can now leverage our patent-pending technology to reduce accuracy and detection gaps with immediate lightweight vulnerability scanning, seamlessly attribute previously unmanaged external assets to the organization with confidence, and evaluate asset-based business risk per subsidiary or acquired entity.

King: Finally, as we continue to extend our technology leadership across the entire platform I am pleased to announce our cyber security risk management through all solution with highly differentiated new capabilities and external reduction first management and third party integrations were comprehensive asset inventory with these innovations securities can now leverage our patent pending.

King: Technology to reduce accuracy.

King: <unk> gaps with.

King: Immediate lightweight vulnerability scanning.

King: Seamlessly attribute previously on manage external assets to the organization with confidence and evaluate asset based business risk while subsidiary our acquired entity.

Sumedh S. Thakar: Combining this unique approach to EASM with integrated tourist scoring capabilities and actionable dashboards to proactively manage tech debt further strengthens our position in the market while enabling customers to de-risk the entire attack surface. In summary, a company's uniformly recognized security transformation is fundamental in combating today's heightened threat and regulatory environment.

King: Binding this unique approach to ESN with indicated through the scoring capabilities and actionable dashboards to proactively manage piggyback further strengthens our position in the market, while enabling customers to reduce their entire attack surface.

King: And somebody.

King: Company's uniformly recognized security transformation is fundamental incumbent in today's heightened threat and regulatory environment. As it is our customers are increasingly looking to reduce the risk exposure through the adoption of natively integrated risk management platform and sort of deploying a collection of disparate point solution stitched together through the invoice.

Sumedh S. Thakar: As a result, customers are increasingly looking to reduce risk exposure through the adoption of natively integrated risk management platforms instead of deploying a collection of disparate point solutions stitched together through the invoice. We believe that with our organically integrated cloud native platform built to holistically measure, communicate, and ultimately eliminate cyber risk, Qualys is laying a foundation for future growth and is well positioned to drive long-term shareholder value with a balanced approach to growth and profitability. With that, I will turn the call over to Juny to further discuss our first quarter results and outlook for the second quarter and full year 2021. Thanks for tonight and good afternoon.

King: We believe that with our organically integrated cloud native platform built to Holistically measure communicating directly aluminum cyber risk. While this is laying a foundation for future growth and is well positioned to drive long term shareholder value with a balanced approach to growth and profitability.

King: With that I will turn the call over to Jamie to further discuss our first quarter results and outlook for the second quarter and full year 2020.

Joo Mi Kim: Before I start, 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. Now, on to the first quarter results. Revenues grew 12% to $145.8 million, with Channel continuing to increase its contribution, making up 45% of total revenues, compared to 43% a year ago. As a result of our continued commitment to leverage our partner ecosystem to drive growth, we were able to grow revenues from channel partners by 18%, outpacing Direct, which grew 7%. By Geo, 13% growth outside the U.S. was ahead of our domestic business, which grew 11%.

Jamie: Thank you, Mike and good afternoon before I start and then see note that except for revenue.

Jamie: We have taken with our non-GAAP and growth rates are based on comparisons with prior year period unless stated otherwise.

Jamie: Turning to first quarter results revenue grew 12% to $145 8 million with channel continuing to increase the contribution making up 45% of total revenue.

King: 43% a year ago.

King: As a result of our continued commitment to leverage our partner ecosystem to drive brand, we were able to grow revenue from channel partners by 18%.

King: <unk> go App, which grew 7%.

King: 13% growth outside the U S.

King: Ahead of our domestic business, which grew 11%.

Joo Mi Kim: Looking ahead, we expect our U.S. and international revenue mix to remain roughly at 60% and 40%, respectively. Turning to land and expand results, we continue to witness field scrutiny persistent for many organizations with the upsell environment remaining challenging, resulting in a 104% net dollar expansion rate, down from 105% last quarter. Offsetting this was a positive growth trend in new business, achieving double-digit growth rates for the third consecutive quarter. As we continue to prioritize increasing market share in 2024, we plan to launch new customer acquisition campaigns and incentives, in addition to streamlining the sales cycle and operations with better use of technology and systems.

King: Looking ahead, we expect our U S and international revenue mix to remain roughly at 60% and 40% respectively.

King: Okay.

Speaker Change: Thank you Landon and results, we continue to witness deal scrutiny participant for many organizations with the upsell environment remaining challenging resulting in 104% net dollar expansion rate down from one 5% last quarter.

King: Offsetting this was a positive growth trend in music.

King: Achieving double digit growth rate for the third consecutive quarter.

King: I think continue to prioritize increasing market share in 2024, we plan to launch new customer acquisition campaign and in Sanchez. In addition to streamlining sales cycle and operation with better use of technology and system.

Joo Mi Kim: In terms of product contribution to bookings, patch management and cybersecurity asset management combined made up 13% of LTM bookings and 23% of LTM new bookings in Q1. Furthermore, with the rapid pace of innovation associated with our Total Cloud CNAP offering, our cloud security solutions made up 4% of LTM bookings. We attribute the success to an increasingly complex threat and regulatory environment that underscores the relevance of our enterprise true risk platforms to holistically assess, manage, and remediate risk.

King: In terms of product contribution to bookings.

King: Mcmahon and cyber security asset management, combined made up 13% of LTM backing and 23% of LTM new bookings in Q1.

King: With the rapid pace of innovation associated with our total cloud <unk> offering our cloud security solutions made up 4% of LTM bookings.

King: We attribute the success to an increasingly complex threat and regulatory environment that underscoring the relevance of our enterprise platform to holistically at that manage and remediate risk.

Joo Mi Kim: Turning to profitability, adjusted EBITDA for the first quarter of 2024 was $69 million, representing a 47% margin compared to a 45% margin a year ago. Operating expenses in Q1 increased by 5% to $56.8 million, primarily driven by an 11% increase in sales and marketing investment.

King: Turning to profitability adjusted EBITDA for the first quarter of 2024 was $69 million, representing a 47% margin compared to a 45% margin a year ago.

King: Operating expenses in Q1 increased by 5% to $56 8 million, primarily driven by an 11% increase in sales and marketing investments.

Joo Mi Kim: As we continue to increase our investment intensity and focus on sales and marketing enablement, customer success, and productivity, we believe we will be able to drive wallet share and long-term returns while balancing growth and profitability. EPS for the first quarter of 2024 was $1.45, and our free cash flow was $83.5 million, representing a 57% margin compared to 48% in the prior year. In Q1, we continue to invest the cash we generate from operations back into Qualys, including $2.1 million in capital expenditures and $18 million to repurchase $105,000 of our outstanding shares. As of the end of the quarter, we had $265.7 million remaining in our share repurchase program.

King: As we continue to increase our investment in company and focus on sales and marketing and implement customer success and productivity. We believe we will be able to drive wallet share and long term, while balancing growth and profitability.

King: EPS for the first quarter of 2024 with $1 49.

King: Free cash flow was $83 5 million, representing a 57% margin compared to 48% in the prior year.

King: In Q1, we continue to invest the cash we generated from operations back into quality, including $2 1 million on capital expenditures and $18 million to repurchase 105000 of our outstanding shares.

King: I've got that ended the quarter, we had $265 7 million remaining in our share repurchase program.

Joo Mi Kim: With that, let us turn to guidance, starting with revenue. For the full year 2024, we are now expecting our revenue to be in the range of $601.5 million to $68.5 million, which represents a growth rate of 8 to 10 percent. This compares to revenue guidance of $600 million to $610 million last quarter.

Speaker Change: With that let me turn to guidance starting with revenue.

Speaker Change: For the full year 2024, we are now expecting our revenue to be in the range of $601 5 million to $6 $8 5 million, which represents a growth rate of 8% to 10%.

Speaker Change: This compares to revenue guidance of 600 million to 610 million last quarter.

Joo Mi Kim: For the second quarter of 2024, we expect revenues to be in the range of $147.5 million to $149.5 million, representing a growth rate of 8 to 9 percent. This guidance extends continued deal scrutiny, resulting in a tougher upsell environment, partially offset by investments in the business to drive new customer growth. Shifting to profitability guidance, for the full year 2024, we continue to expect EBITDA margin to be in the low 40s and free cash flow margin in the mid 30s.

Speaker Change: For the second quarter of 2024, we expect revenue to be in the range of $147 5 million to $149 5 million, representing a growth rate of 8% to 9%.

Speaker Change: This guidance assumes continued deal scrutiny, resulting in a tougher upsell environment, partially offset by investments in the business to drive new customer growth.

Speaker Change: Shifting to profitability guidance for the full year 2024, we continue to expect EBITDA margin to be in the low <unk> and free cash flow margin in the mid 30.

Joo Mi Kim: We expect full-year EPS to be in the range of 5.06 to 5.30, up from the prior range of 4.95 to 5.27. For the second quarter of 2024, we expect EPS to be in the range of 1.27 to 1.35. Our planned capital expenditures for 2024 are expected to be in the range of $13 to $18 million, and for the second quarter of 2024, in the range of $4 to $6 million.

Speaker Change: We expect full year EPS to be in the range of five.

Speaker Change: 2530.

Speaker Change: From the prior range of $4 95 to five to seven.

Speaker Change: For the second quarter of 2024, we expect EPS to be in the range of one seven to one three times.

Speaker Change: Our planned capital expenditure in 2024 are expected to be in the range of $13 million to $18 million.

Speaker Change: For the second quarter of 2024, and the range of $46 million.

Joo Mi Kim: Consistent with prior guidance for the remainder of 2024, we intend to align our product and marketing investments to focus on specific initiatives aimed at driving more pipeline, enhancing our partner program, expanding our federal vertical, and supporting sales while maintaining a disciplined approach to unit economics. As a percentage of revenues, we expect to prioritize an increase in investment in sales and marketing, as well as related support functions, systems, and people, with more modest increases in engineering and G&A.

Speaker Change: Consistent with prior guidance for the remainder of 2024, we intend to align our product and marketing investments to focus on specific initiatives aimed at driving more pipeline enhancing our partner program expanding our federal vertical and supporting sales, while maintaining a disciplined approach to unit economics.

Speaker Change: As a percentage of revenue with respect to prioritize an increase in investment in sales and marketing, that's wallach and related support functions dispense and people with more modest increases in engineering and G&A.

Joo Mi Kim: In conclusion, in Q1, we delivered healthy top-line growth and industry-leading profitability while making progress in executing our long-term strategic agenda. With our comprehensive risk management platform, delivering immediate time to value for our customers, we're confident in our ability to deliver on our growth opportunity over the long term and remain committed to maximizing shareholder value. With that said, Sumedh and I would be happy to answer any of your questions. Thank you. And as a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Speaker Change: In conclusion in Q1, we delivered healthy topline growth and industry, leading profitability, while making progress in executing our long term strategic agenda.

Speaker Change: With a comprehensive risk management platform delivering immediate time to value for our customers. We are confident in our ability to deliver on our growth opportunity long term and remain committed to maximizing shareholder value.

Speaker Change: With that Matt and I will be happy to answer any of your questions.

Speaker Change: Okay.

Matt: Thank you.

Speaker Change: And as a reminder to ask a question you wanted to press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Operator: Please stand by while we compile the Q&A roster. One moment for our first question. Our first question will come from Mike Walkley from Canaccord Genuity. Your line is open. Hey, guys, good afternoon. It's Daniel from Canaccord.

Speaker Change: Please stand by while we compile the Q&A roster.

Speaker Change: A moment for our first question.

Speaker Change: Yes.

Speaker Change: Our first question will come from the line of Mike Walkley from Canaccord Genuity. Your line is open.

Speaker Change: Hey, guys. Good afternoon, it's Daniel on for Mark Thanks for taking the question.

Daniel J.W. Park: Thanks for taking the question. So it seems like that dollar retention came down a little bit to 104%. I think you guys called out the tough upsell environment, despite the new, or I guess improvements and new additions. Can you just provide maybe some color for us on what's impacting your upsell business and some of the changes you're making to make some improvements here? That's a great question.

Daniel: So it seems like that dollar retention came down a little bit larger 104% margin you guys called out the tough selling environment, despite the new or just improvements in new additions.

Daniel: Just provide maybe some color for us on whats impacting Europe saw business some of the changes you mentioned.

Speaker Change: Make some improvements here.

Sumedh S. Thakar: So existing customers who have invested in Qualys and other security platforms are continuing to work with us to, in many cases, sort of optimize the spend that they have done with Qualys, continuing to get additional value. We talked a little bit about this last time. In some cases, they might be looking at adjusting some of the VMDR licenses but including patch management and cybersecurity asset management as part of that, which is where you see the percentage of bookings that are going up.

Speaker Change: That's a great question, so with existing customers, who have invested with callers and other security platforms. They are continuing to work with us to in many cases sort of optimize the spend that they have done with quality, it's continuing to get additional value, we talked a little bit about this last time in some cases they might be looking at.

Speaker Change: At adjusting some of the MTR licenses, but bringing in patch management and cyber security asset management, thus far, though Doug which is where do you see the percentage of bookings that are going up so.

Sumedh S. Thakar: So overall, in the longer term, it's good because it gives us an opportunity to introduce additional products in smaller quantities right now that will help us get the upsells to be better and higher in the future. But currently, the review times are long, as they have been, and customers just continue to take longer to make decisions on larger projects where they're looking to bring on a whole new product from Qualys. And that's where we are working with them to, first of all, make sure that we are putting some of our marketing engine behind, generating additional opportunities. We are doing a lot of CISO education right now.

Speaker Change: Overall in the longer term is good because it gives us an opportunity to introduce additional products in smaller quantities right now that will help us get dumped soc to be better.

Speaker Change: An increasing in the future.

Speaker Change: Currently it is.

Speaker Change: The review times are long as they have been and customers just continue to take longer to make decisions on larger projects, where they're looking to bring on like a whole new product from flawless and.

Speaker Change: And Thats, where we are working with them to.

Speaker Change: First of all to make sure that we have but they knew some of our marketing engine behind generating additional opportunities. We are doing a lot of <unk>.

Speaker Change: So education right now, let's see so connect programs here recently launch have been quite helpful. As we talk the language of risk management, which is really with our ETF platform is quite.

Joo Mi Kim: The CISO Connect programs we have recently launched have been quite helpful as we talk the language of risk management, which is really where our ETM platform is quite interesting for the CISOs, which is all of our CISO events recently have been completely overbooked because they really want to come in and talk more about how Qualys is going to help them with cyber risk quantification and be able to look at cyber risk holistically and then eliminate that. So there's a few things that we're doing on that side, but right now, while new business, we're seeing good execution, we do definitely see opportunity for us to execute better in the tougher climate that we're seeing for upsells with existing hardware. Great.

Speaker Change: Interesting for the <unk>, which is all over to OCC rents recently have been completely overblown because they really wanted to come in and talk more about how policy is going to help them with cyber risk quantification and being able to.

Speaker Change: Cyber risk Holistically and then eliminate that so there's.

Speaker Change: There is a few things that we're doing on that side of it right now while new business. We're seeing good execution, we do definitely see opportunity for us to execute better in the.

Speaker Change: And the tougher climate that we're seeing for upsells with existing customers.

Operator: And just as a quick follow-up, maybe Juby, for you, maybe, could you maybe walk us through some of the assumptions within your decision to narrow the full year revenue guidance band? Yeah, the primary reason why we decided to narrow it was just because, you know, Q1, it came in more or less in line with what we had anticipated at the midpoint of the revenue guidance. And the way we see it right now is, you know, of course, we had hoped to do a little bit better with the net dollar expansion rate having ticked down by a percentage.

Speaker Change: Great.

Speaker Change: Just a quick follow up maybe Germany for you maybe could you maybe walk us through some of the assumptions were vendor decision to narrow the full year revenue guidance.

Germany: Yeah the primary.

Germany: The reason why we decided to narrow it was just because Q1 came in more like in line with what we had anticipated at the midpoint of the.

Germany: Our revenue guidance and the way we see it right now it now of course, we had hoped to hear a little bit better with our net dollar expansion rate, having ticked down by a percentage in the underlying assumption for the full year revenue guidance is that we don't anticipate any material improvement in our net dollar.

Shrenik Kothari: And the underlying assumption for the full-year revenue guidance is that we don't anticipate any material improvement in the net dollar expansion rate today, especially because we do see continued challenges kind of continuing into Q2. So because of that, we're assuming that the net dollar expansion rate stays as is or maybe takes down a percentage. On the new business though, we are seeing some trends, and we're pleased to see the traction in the business today, but by the law of smaller numbers, it is a smaller portion of our business. So even if it continues at the current growth rate that we see today, it won't have a material impact in terms of the uplift to revenue. Right. Thank you very much.

Germany: Engine right today.

Germany: Especially because we do see continued challenges kind of at least continuing into Q2, so because of our assuming that.

Germany: Curious stays as is or maybe tick down a percentage on the new business. So we are seeing some trends and we are pleased to see the traction in the business today, but law of smaller numbers. It is a smaller portion of our business. So even if it continues at the current growth rate that we see today it won't have a material impact in terms of the uplift to revenue.

Speaker Change: Great. Thank you very much.

Sumedh S. Thakar: One moment for our next question, and our next question will come from Shrenik Kothari. From Baird, your eye is open. Hey, thanks for taking my question. So for Sumedh, you mentioned that you're looking to expand the federal business and expand the public sector presence and kind of hosting your first public sector conference. Just curious, like, can you elaborate on the traction of the GovCloud platform so far? What trends are you seeing there, and how has it performed relative to expectations? And can you discuss the opportunity that you see in terms of expanding it within the public sector? Yeah, a great question.

Speaker Change: One moment for our next question.

Speaker Change: And our next question comes from the line of <unk> <unk>.

Baird: From Baird. Your line is open.

Baird: Hey, Thanks for taking my question.

Baird: So far so mad.

Baird: You mentioned that Youre looking to expand the federal business and expand the public sector.

Baird: And kind of hosting your first public sector conference.

Baird: Just curious like can you elaborate on the on the traction of the golf cloud platform. So far what <unk> seen there and how has it performed relative to your expectations and then discuss like the opportunity.

Baird: And that you see.

Baird: Tom's of expanding it within the public sector.

Sumedh S. Thakar: Look, the opportunity in the federal government is definitely large, and we are really working towards investing in the right way so that we can take advantage of that opportunity. And so, from that perspective, we have recently hired a leader for the federal government that we're happy about. We have expanded our federal team. We have hired somebody to focus on federal marketing. As you can see, we're really putting in place our first conference for federal, and already we have over 200 people who have signed up, kind of more than we were anticipating from a capacity perspective. So those are really positive signs.

Speaker Change: Yes, great question look the opportunity and the Fabulous definitely large and we are really working towards investing in the right way. So that we can take advantage of that opportunity and so from that perspective, yes. We recently hired a leader for federal that were happy about we have expanded our federal team, we hired somebody to focus on federal marketing.

Speaker Change: As you can see we're putting in place our first conference, where federal which already we have over 200 people who signed up.

Speaker Change: More than what we were anticipating from a capacity perspective. So those are really positive signs in the last few quarters, we've talked about certain wins that we've had with <unk>.

Sumedh S. Thakar: In the last few quarters, we've talked about certain wins that we have had with, So, the way we look at that is it's an extremely small percentage of our overall bookings, and we have a good opportunity to grow in that direction, and so we're making the right investments. But, of course, as it is with the federal market, it is something that takes time, and we are building relationships with partners. As you can see, we signed up a federal partner that's taking Qualys and our batch management along with VMDR.

Speaker Change: Government and federal government agencies, so the way we look at diabetes.

Speaker Change: It's an extremely small percentage of our overall bookings and we have a good opportunity to grow in that direction and so we're making the right investments but of course.

Speaker Change: As it is with the federal market.

Speaker Change: It is something that takes time and we are building the relationships with partners as you can see we signed up our federal partner, that's taking policy and a bunch of punishment along with the MTR to agencies, we invested in the federal program. So we have.

Sumedh S. Thakar: Two agencies, we invested in the FedRAMP program. So we already have FedRAMP Moderate, which we have a large number of ATOs from many government agencies that are providing us with ATOs. And then we are on track now, working with the PMO's office to get our FedRAMP High final certification. We are already FedRAMP High ready right now, and once we get our FedRAMP High, we're ready to go.

Germany: Already federal moderate, which we have a large number of deals for many government agencies that are providing us a deal.

Germany: And then we are on track now working with the BMO is also is to get our federal Pi final certification, we already fed ramp higher Eddie.

Germany: Right now and so once you get a refrigerant pi.

Germany: <unk>.

Sumedh S. Thakar: Certification, which we anticipate towards the end of the year, that is something that will give us an even additional opportunity to take our GovCloud platform deeper into more agencies that are looking to go and modernize their infrastructure and go into a federal, sort of a fast platform and move out of current, you know, very heavily on-premise solutions. And so with FedRAMP High, that will enable us to be the only FedRAMP High vulnerability and patch management combined solution together that will be available for these customers.

Germany: Certification by which we anticipate towards the end of the year.

Germany: That is something that will.

Germany: Give us even additional opportunity to take our golf platform deeper into more agencies that are looking to go and modernize their infrastructure and go into federal sort.

Germany: <unk> or <unk>.

Germany: <unk> platform and move out of current.

Germany: Very heavily on Prem solutions, and so with the fed ramp higher that will enable us to be the only factor in Pi.

Germany: While Liberty and patch management combined solution together that will be available for these customers and as we saw with some of our federal grants as well the reason for them to change.

Sumedh S. Thakar: And as we saw with some of our federal links as well, the reason for them to change out the current provider is because the current providers are only doing scanning, and they have to have a separate patch management tool.

Germany: Change out their current provider.

Germany: Is because the current providers are only doing scanning and they have their own separate best measurement tools that you wouldnt in the federal government. Some of the recent wins that we have seen have enabled us to feel confident in our direction. So that we can continue to take the quality combined platform with best management et cetera, and is this something that federal agencies also look.

Sumedh S. Thakar: So even in the federal government, some of the recent wins that we have seen have enabled us to feel confident in our direction so that we can continue to take the Qualys combined platform with patch management, et cetera. And that is something that federal agencies are also looking for to reduce their tool sprawl as well as expand into the cloud environment as well. So it's an area that we are continuing to invest in. We're just at the very early stages of that investment, and we are pleased with the traction that we are seeing at this early stage. Got it. It's helpful. Thanks for the detailed color, Sumedh.

Germany: Four two to reduce their their tool sprawl.

Speaker Change: Well have expanded into the <unk>.

Germany: Loud environment as well so it's an area that we are continuing to invest we're just at the very early stages of that investment and we are pleased with the traction that we're seeing in this early stage.

Speaker Change: Got it helpful. Thanks for the detailed color somewhere then quick follow up for <unk>. So you mentioned that you guys of course plan to launch new customer acquisition campaigns.

Joo Mi Kim: And a quick follow-up for Jumi. You mentioned that you guys, of course, plan to launch new customer acquisition campaigns. Can you elaborate, you know, who are you targeting and where is the increase in investment intensity in S&M going to go? Is it going to be more focused on the kind of sales incentives geared towards new logos, more headcount growth, partnership investments? Of course, the public sector.

Speaker Change: And can you elaborate.

Speaker Change: Who are you targeting.

Speaker Change: The increase in investment intensity and send them going and is it going to be more focused on sales.

Speaker Change: Sales incentives geared towards new logos.

Speaker Change: Headcount growth.

Speaker Change: Partnership investments of course help et cetera. So just curious Nick how are you.

Joo Mi Kim: So just curious, like, how are you increasing the investment intensity there? Yeah, so our priority has been for a while to grow our new business. And it's part of the reason why we were really pleased to see the continued traction and the momentum.

Speaker Change: And restaurant density there.

Joo Mi Kim: And the way we see it right now, where we've been really successful is on the enterprise side, because that's where our strength is. However, we're pleased to see traction on both the enterprise and SME and SMB sides. And the way we are planning to continue to invest to support that growth is, number one, we are planning to hire more sales reps to support that growth. And that's one of our initiatives; we are planning to increase our sales and marketing headcount by double digits this year, as we had planned before. So that hasn't changed.

Nick: Yes, so our priority has been for a while to grow our new business and it's part of the reason why we were already PTC and our continued traction and the momentum and the way we see it right now where we've been really successful on the enterprise side, because that's where our strength is however, we're pleased to see traction on both the enterprise and SME and SMB.

Joo Mi Kim: And number two, our partner channel, it's been really successful for us; we're seeing an increase in investment on several different fronts, including the MSSP portal that we just announced, as well as deal registration. It continues to be healthy and continues to increase. And our continued kind of, you know, we've been the incentive structure, whether it's partner or direct, to make sure that it's structured in a way to incentivize both direct and indirect sales for it to really drive new local growth. I got it.

Speaker Change: To increase our sales and marketing head count by double digits. This year as we had planned before so that hasn't changed and number two our partner channel. Its been really successful for us we're seeing increase in investment and several different brands, including the MSP corridor that we just announced as well as deal Raj.

Joo Mi Kim: Continues to be healthy and continues to increase and a continued kind of revisiting the incentive structure, whether its partner or a direct to make sure that it is structured in a way to incentivize both direct and indirect sales for it to really drive annual local crowd.

Speaker Change: Got it thanks, so much I appreciate it.

Speaker Change: Okay.

Joo Mi Kim: Thanks, Julie. One moment for our next question. Our next question comes from Patrick Colvo from Scotiabank. Your line is open.

Speaker Change: One moment for our next question.

Germany: Our next question comes from the line of Patrick Colville from Scotiabank. Your line is open.

Operator: Hi, this is Joe Vandrick on behalf of Patrick Colville. So it seems like cloud security is a big opportunity for Qualys. And you've mentioned the CNAP solution getting some solid market traction. Are you typically selling it as a bundle, or are customers kind of deciding to buy each solution separately? And then, part two of that question, are you seeing stronger demand within any one area of CNAP? For example, you know, CSPM or workload protection or maybe something else. Yeah, that's a great question.

Joo Mi Kim: Hi, This is Joe <unk> on for Patrick Colville.

Patrick Colvo: So it seems like cloud security is a big opportunity for quality and you've mentioned the scene absolution getting some solid market traction.

Joe: Typically selling it as a bundle or are customers kind of deciding to buy each solution separately and then.

Operator: Part two of that question are you seeing stronger demand within any one area of snap.

Joe: For example.

Joe: SPM or workload protection or maybe something else.

Joe Vandrick: Look, I think there is no organization out there that is cloud-only. And so every time they look at their infrastructure, they have to put cloud and non-cloud assets together. And that's really where we see the advantage for Qualys is when they combine the VMDR capabilities on on-premises assets and then are able to use the exact same platform and expand that licensing into the cloud as well. It just makes it a lot more seamless.

Operator: Yes, that's a great question look I think there is no organization out there better cloud only and so every time they look at their infrastructure they have to do cloud and non cloud assets together and Thats really where we see the advantage for quality when they combined that the MTR capabilities on on Prem assets, and then are able to use the exact same platform.

Joe: And expanding that licensing into the cloud as well, it's just makes it a lot more seamless they get the benefit of higher volume pricing.

Sumedh S. Thakar: They get the benefit of higher volume pricing, and it gives them the ability to combine the risk from their cloud and on-prem platforms together in one place. And that's why it's interesting for us to see that even in our new logo lands, customers are starting to buy the total cloud solution combined with VMDR upfront in the first purchase itself. And so while it's early days, that's quite encouraging for us. We continue to work with our existing customers who have VMDR to expand those capabilities into the cloud. In some cases, they don't have any good cloud security solution.

Joe Vandrick: And it gives them the ability to combine the risk from their cloud and on brand Black folds together in one place and so from a and that's why it's interesting for us to see that.

Sumedh S. Thakar: Even in our new logo lines customers are starting to buy that board with lower solution combined with the MTA upfront in the first purchase itself and so while it's early days thats quite encouraging for US we continue to work with our existing customers, who have the MTR to expand those capabilities into our cloud and in some cases, they don't have any good cloud security solution.

Sumedh S. Thakar: In other cases, we are displaceing some of the cloud-only solutions because they need visibility that is broader than that. Our pricing for the cloud solution, given that the assets are so ephemeral, and agents are so ephemeral in the cloud environment, allows them to be flexible with the way that they can consume cloud licenses. And so that way, they can use it for CSPM. They can use the same credits that they have purchased for container security. They can use the same for cloud identity.

Sumedh S. Thakar: Other cases, we are displacing some of the cloud only solutions because they need a global visibility that is broader than that our pricing for the cloud solution given that the assets hustle ephemeral Adrian sorry sort of embedded in the cloud environment.

Sumedh S. Thakar: It allows them to be flexible with the way that they can consume the cloud licenses and so that way. They can use force ESPN that can use the same vendors that they are purchased for container security. They can use the same for cloud and NPD. So there'll be some cloud and then to be module that we just announced another expansion into their cloud native platform and so.

Sumedh S. Thakar: So the recent cloud identity module that we just announced is another expansion into the cloud-native platform. And so it's a maturity-level question for organizations. Organizations that are very early in the journey right now are focusing initially on the CSPM part of total cloud, while those who are more mature are also taking the workload protection part.

Sumedh S. Thakar: It's a maturity.

Sumedh S. Thakar: Level question for organizations our organizations that are very early in the journey right now are focusing initially on the CSP part of Google Cloud.

Sumedh S. Thakar: Those who are more mature are also taking the workload protection part and then those who are going beyond that are also looking at other things like our ability to detect malware in the cloud in real time, our ability to expand our uniquely into.

Sumedh S. Thakar: And then those who are going beyond that are also looking at other things like our ability to detect malware in the cloud in real time, our ability to expand uniquely into SaaS environments for SSPM, which is also part of our total cloud where we can do SaaS posture assessment, and then now we are looking forward to getting these customers access to our cloud identity entitlement management as well. And so there's a lot that we are now focusing on driving both from a marketing and sales enablement perspective for us to create more opportunities on the total cloud side.

Sumedh S. Thakar: Into SaaS environments for SPM, which is also part of our total, Florida, where we can to SaaS posture assessment.

Sumedh S. Thakar: And then now we are looking.

Sumedh S. Thakar: Forward to.

Sumedh S. Thakar: Getting these customers access to our Florida and into be a document management as well. So there's a lot that we are now focusing on driving growth from marketing and sales enablement perspective for us to create more opportunities on the cloud side, but we definitely are pleased with the conversations and traction that we're seeing in the early.

Sumedh S. Thakar: But we definitely are pleased with the conversations and traction that we're seeing in the early days of this push that we are making across our Salesforce. That's helpful. Thanks, Sumedh. And maybe one for Jumi, if I could.

Sumedh S. Thakar: Days of this push that we're making across our sales force.

Speaker Change: That's helpful. Thanks, and then.

Speaker Change: And maybe one for excuse me if I could.

Joo Mi Kim: How should we think about capital allocation priorities over the next year? Looks like you bought back about $18 million worth of shares in the quarter, which is a bit of a step down compared to last quarter and last year. So just curious what it would take to see you get more aggressive on share buybacks. We're sure that FIBAG is based on the grid that we have in place right now, and that we really think of it from the perspective of making sure that we can offset the equity dilution from the grants that we're making.

Speaker Change: How should we think about capital allocation priorities over the next year.

Joo Mi Kim: Like you bought back about $18 million worth of shares in the quarter, which is a bit of a step down compared to last quarter and last year. So just curious what it would take to see you get more aggressive on share buybacks.

Joo Mi Kim: Our share of that buyback is based on the rate that we have in place right now and now we would like to go back on the suspected.

Joo Mi Kim: Making sure that we can offset the equity dilution from the grants that were making and as you can see in the last couple years, alright, dilutive wassa has been decreasing consistently incrementally into the way, we think about our cash.

Joo Mi Kim: And as you can see, in the last couple of years, our diluted share also has been decreasing consistently and incrementally. So the way we think about our cash and the utilization of active cash is really looking into 2024. We are anticipating more and more opportunities, especially at valuations that we think make sense for us. And so we are going to be taking a look at potential acquisition targets opportunistically and then, on leveraging our balance. Got it, thank you.

Joo Mi Kim: And the utilization of excess cash is really looking out into 2024, we are anticipating more and more M&A opportunity, especially at a valuation that we think that makes sense for us and so we are going to be taking a look at potential.

Joo Mi Kim: Potential acquisition target Opportunistically, and then taking action on leveraging our our balance sheet.

Speaker Change: Got it thank you.

Operator: Thank you. One moment for the next question. And our next question will come from Joshua Tilton from Wolf Research. Your line is open. Hey guys, can you hear me?

Speaker Change: Thank you.

Speaker Change: One moment for your next question.

Operator: And your next question will come from the line of Joshua Tilton from Wolfe Research. Your line is open.

Joshua Alexander Tilton: I apologize for the background noise. I'm at this small cybersecurity conference called RSS. We can hear you. Two quick ones for me.

Joshua Alexander Tilton: Hey, guys can you hear me I apologize for the background noise I missed this small cyber security conference called RSA.

Joshua Alexander Tilton: We can hear you.

Operator: The first one is just, could you maybe talk about how the billings growth in the quarter, whether that was, how that, you know, shook out relative expectations and how you see billings maybe growing for the rest of the year relative to the revenue guidance you just gave. And then my follow-up is, great traction on the new customer, the new growth customer side of the business. I think you called out three straight quarters of double-digit growth. How do we see that?

Joshua Alexander Tilton: Two quick ones for me.

Joshua Alexander Tilton: The first one is just could you maybe talk about the billings growth in the quarter whether that was.

Operator: We shook out relative to expectations and how you see billings lately growing.

Operator: For the rest of the year relative to the revenue guidance, we just gave.

Operator: Yes.

Operator: My follow up is.

Operator: Great traction on the new <unk>.

Operator: Customer growth customer side of the business I think you called out.

Operator: Straight quarters of double digit growth.

Operator: Yes.

Operator: How do we see that like where am I looking for that and what you guys disclosed that I can kind of see this coming through in the numbers.

Joo Mi Kim: Like, where am I looking for that in what you guys disclose so I can kind of see this coming through in the numbers? And how, and I guess, is that on the partner side? Is that coming from the partner side? Is that coming from the direct side?

Joo Mi Kim: And al and I guess is that on the partner is that coming from the partner side is that coming from the direct side.

Joo Mi Kim: Just maybe a little bit more color on where that new customer growth is coming from, how durable it is, and how I can better see it in the numbers. It'd be helpful. Yeah, in terms of current billing, 8%, we were hoping to do better, but honestly, I think that it's a fair representative of the business momentum that we see today because it does reflect the net dollar expansion rate having gone down by another percentage in Q1, offset partially by the traction, and continuing traction in the new business.

Joo Mi Kim: Just maybe a little bit more color on where that new.

Joo Mi Kim: Customer growth is coming from how durable is it and how I can better see it.

Joo Mi Kim: And the numbers that would be helpful. Thank you.

Joo Mi Kim: Yes in terms of current drilling 8%, we are hoping to do better but honestly I think that it is a fair representative the business momentum that we see today because it does reflect the net dollar expansion rate, having gone down by another percentage in Q1, and offset partially by the traction continued traction and then <unk>.

Joo Mi Kim: And so I would say that if you were to look for guidance in terms of the calculated current billing for the full year, we would say it would be roughly in line with our revenue guidance today, which is 8% to 10% for the full year. In terms of their new business, the reason why we decided to talk about new business this quarter is because we are seeing a trend like three consecutive quarters. It is something that we thought was meaningful enough for us to talk about and disclose.

Speaker Change: And so I would say that no.

Joo Mi Kim: If you were to look for guidance in terms of the calculated current billings for the full year, we would say would be roughly in line with our revenue guidance today, which is 8% to 10% for the full year.

Joo Mi Kim: In terms of the new business.

Joo Mi Kim: The reason why we decided to talk about new business. This quarter is because we are seeing a trend like three consecutive quarters is something that we felt with meaningful enough for us to talk about and disclose and majority of that is driven by our channel partner to the project coming from channel partners and I think that if you were to look at the magnitude of it you can probably tell based on the current billings.

Joo Mi Kim: And the majority of that is driven by our channel partners. So the growth is coming from channel partners. And I think that if you were to look at the magnitude of it, you can probably tell based on the current billing growth of 8%, and the net dollar expansion rate of 4%; the rest would be coming from new business. Super helpful, thanks guys.

Joo Mi Kim: Growth of 8% net dollar expansion rate of 4% and the rest will be coming from from the new business.

Speaker Change: Super helpful. Thanks, guys.

Speaker Change: Thank you.

Speaker Change: And I'm not showing no further questions in the queue with that this concludes today's conference. Thank you for your participation in today's conference. This does conclude the program and you may now disconnect everyone have a great day.

Operator: Thank you. And I'm not showing no further questions in the queue. With that, this concludes today's conference. Thank you for your participation in today's conference. This does conclude the program and you may now disconnect. Everyone have a great day. ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? [inaudible] ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Good day and thank you for standing by.

Operator: Welcome to the Qualys first quarter 2024 investor call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised.

Operator: Okay.

Operator: [music].

Operator: Okay.

Operator: [music].

Operator: Yes.

Operator: [music].

Operator: To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Blair King.

Speaker Change: Good day and thank you for standing by welcome to the call. Its first quarter 2024 investor call. At this time, all participants are not listen only mode. After the speaker's presentation. There will be a question answer session.

Operator: Ask a question during the session you will need to press star one one on your telephone you didn't hear an automated message advising your hand is right to withdraw your question. Please press star one again.

Speaker Change: Please be advised that today's conference is being recorded I would now like.

Operator: To hand, the conference over to your Speaker today, Larry King. Please go ahead.

Blair King: Good afternoon, and welcome to qualify as first quarter 2024 earnings call.

Blair King: Joining me today just to discuss our results are soon that the car, our president and CEO and Jimmy Kim our CFO.

Blair King: Before we get started I would like to remind you that our remarks. Today will include forward looking statements that generally relate to future events or our future financial or operating performance.

Blair King: Actual results may differ materially from these statements.

Blair King: Because that could cause results to differ materially are set forth in today's press release, and our filings with the SEC.

Blair King: Our latest Form 10-Q and 10-K.

Blair King: 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.

Blair King: 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.

Blair King: Reconciliation of GAAP and non-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 relations section of our website. So with that, I'll turn the call over to you, Sumedh.

Sumedh: As a reminder, the press release prepared remarks investor presentation are available on the Investor Relations section of our website.

Blair King: With that I'll turn the call over to Keith Smith.

Sumedh S. Thakar: Thank you, Blair, and welcome to our first quarter earnings call. Qualys delivered another quarter of healthy revenue growth, strong profitability, and cash flow generation, reflecting our ongoing commitment to rapid innovation and customer success. Given the accelerated growth and scope and complexity of cyber threats alongside an intensifying regulatory environment, boards and C-level executives are increasingly focused on the business outcome of cybersecurity. This requirement makes seamlessly integrated security solutions a necessity for customers to effectively measure, communicate, and fortify their security posture.

Sumedh: Thank you Blair and welcome to our first quarter earnings call <unk> delivered another quarter of healthy revenue growth strong profitability and cash flow conversion, reflecting our ongoing commitment to rapid innovation and customer success.

Sumedh S. Thakar: Given the accelerated growth in scope and complexity of cyber threats alongside an intensifying regulatory environment boards and C level executives are increasingly focused on the business outcome of cyber security.

Sumedh S. Thakar: This requirement makes seamlessly integrated security solutions and necessity for customers to effectively measure communicate and fortify their security posture. We believe the quality of enterprise storage platform designed to reduce friction risks on cost provides organizations with the foundation of this measure platform for the future and serves as a structure.

Sumedh S. Thakar: We believe the Qualys Enterprise TrueRisk platform, designed to reduce friction, risk, and cost, provides organizations with a foundational risk management platform for the future and serves as a structural competitive advantage for both our customers and for Qualys. As a result, our VMDR solution with TrueRisk is not only fueling new logolands but also increasing platform adoption, especially in the areas of cybersecurity asset management with external attack surface management, patch management, and cloud security.

Sumedh S. Thakar: Competitive advantage for both our customers and for quality.

Sumedh S. Thakar: As a result of our <unk> solution with true risk is not only fueling new localized but also increases platform adoption, especially in the areas of cyber security asset management with Exxon at XO Pest management patch management and cloud security.

Sumedh S. Thakar: In Q1, healthcare, technology, retail, and financial services verticals all demonstrated strong VMDR demand with large deal sizes. Further underscoring the power of our platform, I will take a moment to share a couple of examples of how our customers and partners continue to expand their user quality capabilities to consolidate their security stack. On the customer front, a marquee high six-figure bookings enterprise customer win in Q1 was with a leading business services company in the Forbes 1000.

Sumedh S. Thakar: In Q1, healthcare technology retail and financial services verticals, all demonstrated strong MDI demand with larger deal sizes.

Sumedh S. Thakar: Underscoring the power of our platform I will take a moment to share a couple of examples of how our customers and partners continue to expand their use of quality this capability to consolidate their security stack.

Sumedh S. Thakar: On the customer front, our marking high six figure bookings enterprise customer win in Q1 was with a leading business services company in the Forbes 2000.

Sumedh S. Thakar: The customer expanded its <unk> tourist and patch management deployments with our while adopting cyber security asset management of the ASM as part of an initiative could detect end of life or end of service software monitor sub domains of its infrastructure and transform its IP security architecture, while replacing point solutions from.

Sumedh S. Thakar: Key vendors with a single platform.

Sumedh S. Thakar: The ability for this customer to significantly enhance the security program with comprehensive internal and external asset criticality holistic risk, scoring ticketing and automated matching across its on prem cloud and container environments through a natively integrated platform and unified dashboard, where all key differentiators compared to alternative.

Sumedh S. Thakar: Nextgen and <unk>.

Sumedh S. Thakar: Legacy technologies.

Sumedh S. Thakar: The next win demonstrates how quality helps.

Sumedh S. Thakar: Existing Forbes 100 manufacturing companies standardize on wireless enterprise storage platform and consolidate risk factors from different wallets modules into a single risk score with business context.

Sumedh S. Thakar: This existing Vmware and talk about customer was struggling with collecting desperate asset management tools and business processes across several subsidiaries and environments and needed to gain better visibility into the attack surface to uniformly contextualized communicate and manage risk.

Sumedh S. Thakar: Recognizing the increased value they would gain by further consolidating on Qualys, this customer replaced its existing asset management tool and adopted our Cybersecurity Asset Management with EASM solution in a six-figure bookings upsell. This customer is now leveraging multiple aspects of Qualys Enterprise across its platform, spanning on-premises cloud and multi-cloud assets to quantify and prioritize risk reduction initiatives, increase organizational resilience, and give its CISO peace Investing in our partner program continues to be a key pillar of our go-to-market agenda as it bolsters our capacity, harnesses transformative solution sales, and brings new business to quality.

Sumedh S. Thakar: Recognizing the increased value they would gain by further consolidated on callers this customer replaces existing asset management tool and adopted our cyber security asset management for the year with Es and solution in a six figure bookings up. So this customer is now leveraging multiple aspects of quasi progressed towards platform spanning on prem cloud and multi cloud.

Sumedh S. Thakar: Assets to quantify and prioritize risk reduction initiatives increased organizational resilience and give it see saw peace of mind.

Sumedh S. Thakar: Investing in our partner program continues to be a key pillar of our go to market agenda as it bolsters our capacity would be harness transformative solutions sales and bring new business to quality.

Sumedh S. Thakar: Through these investments we continue to advance our evolving patent ecosystem with two leading managed service providers in America, one that recently expanded its offering beyond <unk> to include other parts monitoring capability.

Sumedh S. Thakar: The other standardized on quality as its preferred partner for our <unk> side, but to give you a break management with ESI and patch management spanning both its federal and commercial verticals.

Sumedh S. Thakar: The latter of these two wins is a testament to the investment we are making to expand our federal business, and we're looking forward to hosting our first public sector cyber risk conference later this month. And with nearly 50 partners already on our recently announced new MSSP partner portal to simplify their operations, launch, and manage Qualys's capability, and significantly reduce remediation times for their customers, we are increasingly well-positioned to expand our reach to customers of all sizes.

Sumedh S. Thakar: The latter of these two wins that estimate to the investment we are making to expand our federal business and we're looking forward to hosting our first public sector cyber risk conference later this month.

Sumedh S. Thakar: And with.

Sumedh S. Thakar: Nearly 50 partners already on our recently announced new MSP partner portal to simplify their operations launch and manage quality capability and significantly reduce remediation banks for their customers. We are increasingly well positioned to expand our reach to customers of all sizes.

Sumedh S. Thakar: Additionally, we strengthened our alliance with a leading system integrator, which is now actively bringing our Total Cloud CNAP solution to its customers. We believe the broad expansion of our partner program over the past several quarters continues to reflect our strengthening brand awareness, strategic position, and value position in the market. With tightly integrated solutions delivered through a natively integrated platform to solve modern security challenges, more and more Qualys customers are beginning to understand how cybersecurity transformation drives better security outcomes, saves time, and costs less. As a result, customers spending $500,000 or more with us in Q1 grew 19% from a year ago to 192%.

Sumedh S. Thakar: Similarly, we strengthened our alliance with a leading system integrator.

Sumedh S. Thakar: <unk> is now actively bringing our total cloud <unk> solution to its customers.

Sumedh S. Thakar: We believe the broad expansion of our partner program over the past several quarters continues to reflect our strengthening brand awareness strategic position and value positioned in the market.

Sumedh S. Thakar: With a tightly integrated solutions delivered through a natively integrated platform. The solve modern security challenges more and more wireless customers are beginning to understand how cyber security transformation <unk> secured the outcomes sales times and costs less as a result of customer spending $500000 or more with us in Q1 grew 19% from.

Sumedh S. Thakar: A year ago to 192.

Sumedh S. Thakar: Since our inception driving innovation is at the core of wallet submission. We are excited with our upcoming and robust risk management application, which marks the next phase of expansion of our platform building on top of the success, we've seen with <unk> with tourists. The APM capability will enable the MTR customers to upgrade.

Sumedh S. Thakar: Two a more holistic cyber risk management platform that goes beyond well operating management that goodbyes to risk management solution <unk> aggregator normally this trillions of first and third party data signals correlates to the risk factors with assets and business context, the tax visualize us quantify them prioritize it and makes it everyday.

Sumedh S. Thakar: Friction less immediate.

Sumedh S. Thakar: Any immediate with simple click of a button with these newest capabilities all natively integrated on a single unified dashboard call is once again, well armed with powerful new platform capabilities that broadly major communicated intermediate risk across that that attack surface, including <unk>.

Sumedh S. Thakar: OTT applications cloud and multi cloud FX. Moreover, our comprehensive AI powered insights on.

Sumedh S. Thakar: Now can working detected risks and to optimize the remediation actions across our platform solutions with our out of the box and strained and actionable insights map to it organizations owned data to preemptively reduce risk in the environment.

Sumedh S. Thakar: The feedback from many of the CISOs I met at our recent QSC EMEA event in London has been very positive with respect to the deployment agenda, the excitement about the rapid pace of new capabilities that we are delivering, and their ability to monitor and measure risk reduction ROI for the cybersecurity sector. Further advancing our TrueRisk capabilities, I am pleased to announce we recently brought MITRE ATT&CK matrix prioritization into the Qualys Enterprise TrueRisk platform.

Sumedh S. Thakar: The feedback from many of the seasonal as I met at our recent UFC EMEA event in London has been very positive with.

Sumedh S. Thakar: With respect to the deployment agenda excitement about the rapid pace of new capabilities that we're delivering and the ability to monitor and measure risk reduction ROI for the cyber security space.

Sumedh S. Thakar: Further advancing our tourist capabilities I am pleased to announce we recently brought in Mike Dunn attack matrix organization into the call it enterprise towards platform.

Sumedh S. Thakar: By combining over 25 sources of threat intelligence with the MITRE ATT&CK framework, we are now further enabling organizations with a holistic attacker-centric view to predict and identify critical risks to their business based on ATT&CK tactics and techniques. With this advancement, we believe Qualys stands out as the only enterprise-scale solution to combine contextualized risk quantification and the MITRE ATT&CK framework to help organizations proactively prioritize, manage, and reduce cyber risk with enhanced detection, integrated risk quantification, and automated response for a threat-informed defense in a single platform.

Sumedh S. Thakar: By combining over 25 sources of tracking diligence with them either back framework. We are now further enabling organizations with the holistic attack data centric view to predict and identify critical risks to their business based on the tactics and techniques.

Sumedh S. Thakar: While this advancement with this advancement, we believe quality stands out as the only enterprise scale solution. The combined contextualize the risk quantification and the micro back framework to help organizations for actively prioritize manage and reduce cyber risk with enhanced detection integrated risk quantification and automated response.

Sumedh S. Thakar: As for a threat informed defense in a single platform.

Sumedh S. Thakar: Continuing the pace of disruptive innovation, we are now organically unifying Cloud Entitled Management (CIEM), into our Total Cloud CNAP solution. With this new capability, customers can manage cloud identities, entitlements, and enforce the principle of least-privileged access to cloud infrastructure and resources. Combined with additionally newly introduced capabilities, such as container and time security and Kubernetes partial management, we have created what we believe is one of the most comprehensive cloud native security solutions in the market, with a unified actionable dashboard for immediate threat prioritization and remediation for a build through runtime with built-in trip detection capabilities.

Sumedh S. Thakar: Continuing the pace of disruptive innovation, we are all now organically unifying cloud entitled management into our total clarity <unk> solution with this new capability customers can manage Florida entities entertainment and enforced the principle of least privilege access to cloud infrastructure and resources combined with additional.

Sumedh S. Thakar: The newly introduced capabilities, such as container advanced security and coordinates buffer management. We have created what we believe is one of the most comprehensive cloud native security solutions in the market with a unified actionable dashboard for immediate threat prioritization and remediation for bid through run time with built in with their production capabilities.

Sumedh S. Thakar: Yeah.

Sumedh S. Thakar: Finally, as we continue to extend our technology leadership across the entire platform I am pleased to announce our cyber security risk management trade are all solution with highly differentiated new capabilities and external reduction first management and third party integrations were comprehensive asset inventory with these innovation security teams can now leverage our patent pending.

Sumedh S. Thakar: <unk> technology to reduce accuracy.

Sumedh S. Thakar: Detection gaps with.

Sumedh S. Thakar: Immediate lightweight vulnerability scanning.

Sumedh S. Thakar: Seamlessly attribute previously managed external assets to the organization with confidence and evaluate asset based business risk while subsidiary our acquired entity.

Sumedh S. Thakar: Binding this unique approach to ESI with indicated through the scoring capabilities and actionable dashboards to proactively managed tech debt further strengthens our position in the market, while enabling customers to derisk the entire attack surface.

Sumedh S. Thakar: In summary, our comp.

Sumedh S. Thakar: <unk> uniformly recognized security transformation is fundamental in combat in today's heightened threat and regulatory environment. As a result customers are increasingly looking to reduce the risk exposure through the adoption of natively integrated risk management platform.

Sumedh S. Thakar: As a result, customers are increasingly looking to reduce risk exposure through the adoption of natively integrated risk management platforms instead of deploying a collection of disparate point solutions stitched together through the invoice. We believe that with our organically integrated cloud native platform built to holistically measure, communicate, and ultimately eliminate cyber risk, Qualys is laying a foundation for future growth and is well positioned to drive long-term shareholder value with a balanced approach to growth and profitability. With that, I will turn the call over to Jimmy to further discuss our first quarter results and outlook for the second quarter and full year 2020. Thanks, and good afternoon.

Jimmy: Deploying a collection of disparate point solution stitched together through the invoice.

Jimmy: We believe that with our organically integrated cloud native platform built to Holistically measure communicating directly eliminate cyber risk wireless is laying a foundation for future growth and is well positioned to drive long term shareholder value with a balanced approach to growth and profitability.

Jimmy: With that I will turn the call over to Jamie to further discuss our first quarter results and outlook for the second quarter and full year 2020.

Joo Mi Kim: Before I start, I'd like to note that acceptable revenue, all financial figures are non-GAAP, and growth rates are based on comparison to the prior year period, unless stated otherwise. Turning to the first quarter, Revenues grew 12% to $145.8 million, with Channel continuing to increase its contribution, making up 45% of total revenues, compared to 43% a year ago. As a result of our continued commitment to leverage our partner ecosystem to drive growth, we were able to grow revenues from channel partners by 18%, outpacing Direct, which grew 7%. By Geo, 13% growth outside the U.S. was ahead of our domestic business, which grew 11%.

Jimmy: Thank you, Mike and good afternoon.

Jimmy: Alright, and then can note that except for revenue.

Joo Mi Kim: Just sticking with our non-GAAP and growth rates are based on comparisons to the prior year period unless stated otherwise.

Joo Mi Kim: Turning to first quarter results revenue grew 12% to $145 8 million net channel continuing to increase the contribution making up 45% of total revenue.

Joo Mi Kim: 43% a year ago.

Joo Mi Kim: As a result of our continued commitment to leverage our partner ecosystem to drive growth, we were able to grow revenue from channel partners by 18% outpacing direct which grew 7%.

Joo Mi Kim: 13% growth outside the U S.

Joo Mi Kim: Domestic business, which grew 11%.

Joo Mi Kim: Looking ahead, we expect our U S and international revenue mix to remain roughly at 60% and 40% respectively.

Joo Mi Kim: Okay.

Joo Mi Kim: Turning to mandate and resolve.

Joo Mi Kim: Let me deal scrutiny, particularly for many organizations with the upsell environment remaining challenging resulting in 104% net dollar expansion rate down from one 5% last quarter.

Joo Mi Kim: Offsetting this was a positive growth trend.

Joo Mi Kim: Achieving double digit growth rate for the third consecutive quarter.

Joo Mi Kim: I think continuing to prioritize increasing market share in 2024, we plan to launch new customer acquisition campaign and in Sanchez and addition to June lining sales cycle and operation with better use of technology and system.

Joo Mi Kim: In terms of product contribution to your banking partner.

Joo Mi Kim: Management, and cyber security asset management, combined made up 13% of LTM backing and 23% of LTM new bookings in Q1.

Joo Mi Kim: With the rapid pace of innovation associated with our Total Cloud CNAP offering, our cloud security solutions made up 4% of LTM bookings. We attribute the success to an increasingly complex threat and regulatory environment that underscores the relevance of our enterprise true risk platforms to holistically assess, manage, and remediate risk. Turning to profitability, adjusted EBITDA for the first quarter of 2024 was $69 million, representing a 47% margin compared to a 45% margin a year ago. Operating expenses in Q1 increased by 5% to $56.8 million, primarily driven by an 11% increase in sales and marketing investments.

Joo Mi Kim: With the rapid pace of innovation associated with our total cloud <unk> offering a cloud security solution made up 4% of LTM backing.

Joo Mi Kim: We attribute this success to an increasingly complex threat and regulatory environment that underscoring the relevance of our enterprise platform.

Joo Mi Kim: We assess manage and remediate risk.

Joo Mi Kim: Turning to profitability adjusted EBITDA for the first quarter of 2024 was $69 million, representing a 47% margin compared to a 45% margin a year ago.

Joo Mi Kim: Operating expenses in Q1 increased by 5% to $36 8 million, primarily driven by an 11% increase in sales and marketing investment.

Joo Mi Kim: As we continue to increase our investment intensity and focus on sales and marketing enablement, customer success, and productivity, we believe we will be able to drive wallet share and long-term returns while balancing growth and profitability. DPS for the first quarter of 2024 was $1.45, and our free cash flow was $83.5 million, representing a 57% margin compared to 48% in the prior year. In Q1, we continue to invest the cash we generate from operations back into Qualys, including $2.1 million in capital expenditures and $18 million to repurchase $105,000 of our outstanding shares. As of the end of the quarter, we had $265.7 million remaining in our share repurchase program.

Joo Mi Kim: As we continue to increase our investment in company and focus on sales and marketing, enabling customer success and productivity. We believe we will be able to drive wallet share and long term, while balancing growth and profitability.

Joo Mi Kim: EPS for the first quarter of 2024 with $1 45, and our free cash flow was $83 5 million, representing a 57% margin compared to 48% in the prior year.

Joo Mi Kim: In Q1, we continue to invest the cash we generated from operations back into call it including $2 1 million on capital expenditures.

Joo Mi Kim: $10 million to repurchase.

Joo Mi Kim: 105000 of our outstanding shares.

Joo Mi Kim: I've got that ended the quarter, we had $265 7 million remaining in our share repurchase program.

Speaker Change: With that let me turn to guidance starting with revenue.

Joo Mi Kim: For the full year 2024, we are now expecting our revenue to be in the range of $601 5 million to $6 $8 5 million, which represents a growth rate of 8% to 10%.

Joo Mi Kim: This compares to revenue guidance of 600 million to 610 million last quarter.

Joo Mi Kim: For the second quarter of 2024, we expect revenues to be in the range of $147.5 million to $149.5 million, representing a growth rate of 8 to 9 percent. This guidance assumes continued deal scrutiny, resulting in a tougher upsell environment, partially offset by investments in the business to drive new customer growth. Shifting to profitability guidance, for the full year 2024, we continue to expect EBITDA margin to be in the low 40s and free cash flow margin in the mid 30s.

Joo Mi Kim: For the second quarter of 2024, we expect revenue to be in the range of $147 5 million to $149 5 million, representing a growth rate of 8% to 9%.

Joo Mi Kim: This guidance assumes continued deal scrutiny, resulting in a tougher upfront environment, partially offset by investments in the business to drive new customer growth.

Joo Mi Kim: Shifting to profitability guidance for the full year 2024, we continue to expect EBITDA margin to be in the low 40, <unk> and free cash flow margin in the mid 30.

Joo Mi Kim: We expect full year EPS to be in the range of five point out too.

Joo Mi Kim: 2530 up from the prior range of $4 95 to five to seven.

Joo Mi Kim: For the second quarter of 2024, we expect EPS to be in the range of $1 87 to 139.

Joo Mi Kim: Our planned capital expenditure in 2024 are expected to be in the range of $13 million to $18 million.

Joo Mi Kim: For the second quarter of 2024 in the range of $46 million.

Joo Mi Kim: Consistent with prior guidance for the remainder of 2024, we intend to align our product and marketing investments to focus on specific initiatives aimed at driving more pipeline, enhancing our partner program, expanding our federal vertical, and supporting sales while maintaining a disciplined approach to unit economics. As a percentage of revenues, we expect to prioritize an increase in investment in sales and marketing, as well as the related support functions, systems, and people, with more modest increases in engineering and G&A.

Joo Mi Kim: Consistent with prior guidance for the remainder of 2024, we intend to align our product and marketing investment.

Joo Mi Kim: Specific initiatives aimed at driving more pipeline enhancing our partner program expanding our federal vertical.

Joo Mi Kim: <unk> sales, while maintaining a disciplined approach to unit economics.

Joo Mi Kim: As a percentage of revenue, we expect to prioritize an increase in investment in sales and marketing as well as related support functions. This bank and people with more modest increases in engineering and G&A.

Joo Mi Kim: In conclusion, in Q1, we delivered healthy top-line growth and industry-leading profitability while making progress in executing our long-term strategic agenda. With our comprehensive risk management platform, delivering immediate time to value for our customers, we're confident in our ability to deliver on our growth opportunity over the long term and remain committed to maximizing shareholder value. With that said, Sumedh and I would be happy to answer any other questions. Thank you. And as a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Joo Mi Kim: In conclusion in Q1, we delivered healthy topline growth and industry, leading profitability, while making progress in executing our long term strategic agenda.

Joo Mi Kim: With our comprehensive risk management platform delivering immediate time to value for our customers. We are confident in our ability to deliver on our growth opportunity long term and remain committed to maximizing shareholder value.

Sumedh: So, Matt and I will be happy to answer any other questions.

Speaker Change: Thank you and.

Joo Mi Kim: And as a reminder to ask a question you may need to press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Operator: Please stand by while we compile the Q&A roster. One moment for our first question. Our first question will come from Mike Walkley from Canon Corp. Genuity. Elan is open. Hey, guys, good afternoon. It's Daniel.

Speaker Change: Please stand by while we compile the Q&A roster one moment for our first question.

Operator: Our first question will come from the line of Mike Walkley from Canaccord Genuity. Your line is open.

Daniel J.W. Park: I'm from Mike. Thanks for taking the time to answer the question. So it seems like that dollar retention came down a little bit to 104%. I think you guys called out the tough upsell environment, despite the new or, I guess, improvements and new additions. Can you just provide maybe some color for us on what's impacting your upsell business and some of the changes you're making to make some improvements? That's a great question. So existing customers who have invested in Qualys and other security platforms are continuing to work with us to, in many cases, sort of optimize the spend that they have done with Qualys, continuing to get additional value. We talked a little bit about this last time.

Operator: Hey, guys. Good afternoon, it's Daniel on for Mark Thanks for taking the question.

Mike Walkley: So it seems like that dollar retention came down a little bit charge or a 104% Mark and you guys called out the top selling environment.

Daniel J.W. Park: Quite the new I guess improvements and new additions.

Speaker Change: Provide maybe some color for us on whats impacting Europe saw business. Some of the changes you mentioned too.

Daniel J.W. Park: Make some improvements here.

Speaker Change: That's a great question, so with existing customers, who have invested with callers.

Daniel J.W. Park: And other security platforms. They are continuing to work with us to in many cases sort of optimize the spend that they have done with quality continuing to get our additional value we talked a little bit about this last time in some cases, they might be looking at adjusting some of the MTR licenses, but bringing in patch management and cyber security.

Sumedh S. Thakar: In some cases, they might be looking at adjusting some of the VMDR licenses but including patch management and cybersecurity asset management as part of that, which is where you see the percentage of bookings that are going up. So overall, in the longer term, it's good because it gives us an opportunity to introduce additional products in smaller quantities right now, and that will help us get the upsells to be better and increase in the future. But currently, the review times are as long as they have been, and customers just continue to take longer to make decisions on larger projects where they're looking to bring on a whole new product from Qualys.

Sumedh S. Thakar: Management is part of that which is where do you see the percentage of bookings that are going up so.

Sumedh S. Thakar: Overall in the longer term is good because it gives us an opportunity to introduce additional products in smaller quantities right now that will help us get the <unk> to be better.

Sumedh S. Thakar: An increasing in the future, but currently it is.

Sumedh S. Thakar: Our review times are long as they have been and customers continue to take longer to make decisions on larger projects, where they're looking to bring on like a whole new product from callers.

Sumedh S. Thakar: And that's where we are working with them to, first of all, make sure that we are putting some of our marketing engine behind, generating additional opportunities. We are doing a lot of CISO education right now. The CISO Connect programs we have recently launched have been quite helpful as we speak the language of risk management, which is really where our ETM platform is quite interesting for the CISOs. All of our CISO events recently have been completely overbooked because they really want to come in and talk more about how Qualys is going to help them with cyber risk quantification and being able to look at cyber risk holistically and then eliminate that.

Sumedh S. Thakar: And Thats, where we are working with them to first of all to make sure that we are putting some of our marketing engine behind generating additional opportunities. We are doing a lot of <unk>.

Sumedh S. Thakar: So education right now versus organic programs Vod simply launch have been quite helpful. As we talk the language of risk management, which is really where our EDM platform is quite.

Sumedh S. Thakar:

Sumedh S. Thakar: Interesting for the C stores, which is all over to OCC regs recently have been completely overblown, because we really wanted to come in and talk more about how policies werent help them with cyber risk quantification and being able to Luca cyber risk Holistically and then eliminate that so.

Sumedh S. Thakar: So there's a few things that we're doing on that side. But right now, while new business is seeing good execution, we do definitely see opportunity for us to execute better in the tougher climate that we're seeing for upsells with existing hardware.

Sumedh S. Thakar: There's a few things that we're doing on that side of it right now, while new business, where youre seeing good execution, we do definitely see opportunity for us to execute better in the in.

Sumedh S. Thakar: In the tougher climate that we're seeing for upsells with existing customers.

Joo Mi Kim: And just as a quick follow-up, maybe Juby, for you, maybe, could you maybe walk us through some of the assumptions within your decision to narrow the full year revenue guidance band? Yeah, the primary reason why we decided to narrow it was just because, you know, Q1, it came in more or less in line with what we had anticipated at the midpoint of the revenue guidance. And the way we see it right now is, you know, of course, we had hoped to do a little bit better with the net dollar expansion rate having to go down by a percentage.

Sumedh S. Thakar: Great.

Sumedh S. Thakar: Just a quick follow up maybe Germany for you maybe could you maybe walk us through some of your assumptions were vendor decision to narrow the full year revenue guidance.

Juby: Yes. The primary reason why we decided to narrow it was 50 closing out Q1. It came in more like in line with what we had anticipated at the midpoint.

Joo Mi Kim: Our revenue guidance and the way we see it right now it now of course, we had hoped to do a little bit better with our net dollar expansion rate, having kicked down by a percentage in the underlying assumption for the full year revenue guidance is that we don't anticipate any material improvement in our net dollar.

Joo Mi Kim: And the underlying assumption for the full-year revenue guidance is that we don't anticipate any material improvement in the net dollar expansion rate today, especially because we do see continued challenges kind of continuing into Q2. So because of that, we're assuming that the dollar expansion rate stays as is or maybe takes down a percentage.

Joo Mi Kim: Engine right today.

Joo Mi Kim: Especially because we do see continued challenges kind of at least continuing into Q2, so because of our assuming that net dollar expansion rate stays as is or maybe tick down a percentage on the new business. So we are seeing some trends and we are pleased to see the traction in the business today, but law of smaller numbers. It is a smaller portion.

Joo Mi Kim: On the new business, though, we are seeing some trends where we're pleased to see the traction in the business today, but by the law of smaller numbers, it is a smaller portion of our business. So even if it continues at the current growth rate that we see today, it won't have a material impact in terms of the uplift to revenue. Right. Thank you very much.

Joo Mi Kim: Our business so even if it continues at the current growth rate that we see today it won't have a material impact in terms of the outlet to revenue.

Speaker Change: Great. Thank you very much.

Operator: One moment for our next question, and the next question will come from the line of Shrenik Kothari. From Baird, your eye is open. Hey, thanks for taking my question. So for Sumedh, you mentioned that you're looking to expand the federal business and expand the public sector presence and are kind of hosting your first public sector conference. Just curious, can you elaborate on the traction of the GovCloud platform so far? What trends are you seeing there? And how has it performed relative to your expectations? And can you discuss the opportunity that you see in terms of expanding it within the public sector? Yeah, great question.

Speaker Change: One moment for your next question.

Operator: And our next question will come from the line of <unk> <unk>.

Speaker Change: From Baird. Your line is open.

Shrenik Kothari: Hey, Thanks for taking my question.

Operator: So far so Matt.

Operator: You mentioned that Youre looking to expand the federal business.

Shrenik Kothari: Expand the public sector presence in kind of hosting your first public sector conference.

Operator: Just curious like can you elaborate on the on the traction of the golf cloud platform. So far what trends are you seeing there and how has it performed relative to your expectations and then discuss like the opportunity.

Speaker Change: Let me see.

Operator: In terms of expanding it within the public sector.

Shrenik Kothari: Look, the opportunity in the federal government is definitely large, and we are really working towards investing in the right way so that we can take advantage of that opportunity. And so, from that perspective, we have recently hired a leader for the federal government that we're happy about. We have expanded our federal team. We have hired somebody to focus on federal marketing. As you can see, we're really putting in place our first conference for federal, and already we have over 200 people who have signed up, kind of more than what we were anticipating from a capacity perspective. So, those are really positive signs in the last few quarters. We've talked about certain wins that we have had together.

Sumedh: Yes, great question look the opportunity and the Fabulous definitely large and we are really working towards investing in the right way. So that we can take advantage of that opportunity and so from that perspective, yes. We recently hired a leader for federal that we're happy about where we expanded our federal team, we hired somebody to focus on federal marketing.

Shrenik Kothari: As you can see where you're putting in place our first conference where federal which already we have over 200 people, who signed up kind of.

Shrenik Kothari: More than what we were anticipating from a capacity perspective. So those are really positive signs in the last few quarters, we've talked about certain wins that we've had with <unk>.

Sumedh S. Thakar: So, the way we look at that is it's an extremely small percentage of our overall bookings, and we have a good opportunity to grow in that direction, and so we're making the right investments. But, of course, as it is with the federal market, it is something that takes time, and we are building relationships with partners. As you can see, we signed up a federal partner that's taking Qualys and our patch management along with BMDR, two government agencies.

Shrenik Kothari: Government and federal government agencies, so the way we look at diabetes.

Shrenik Kothari: It's an extremely small percentage of our overall bookings and we have a good opportunity to grow in that direction and so we're making the right investments but of course.

Sumedh S. Thakar: As it is with the federal market.

Sumedh S. Thakar: It is something that takes time and we are building the relationships with partners. As you can see we signed up of adult partner, that's taking policy and a bunch of punishment along with the MTR to agencies, we invested in the <unk> program. So we have.

Sumedh S. Thakar: We invested in the FedRAMP program, so we already have FedRAMP Moderate, and we have a large number of ATOs from many government agencies that are providing us with ATOs. And then we are on track now, working with the PMO's office to get our FedRAMP High final certification. We are already FedRAMP High ready right now, and once we get our FedRAMP High, we're ready to go.

Sumedh S. Thakar: Already federal moderate, which we have a large number of deals from many government agencies that have been providing as they deal.

Sumedh S. Thakar: And then we are on track now working with the PMO office to get our federal Pi final certification, we already fed ramp higher Eddie.

Sumedh S. Thakar: Right now and so once you get a federal Pi.

Sumedh S. Thakar: <unk>.

Sumedh S. Thakar: Certification by which we anticipate towards the end of the year.

Sumedh S. Thakar: That is something that will.

Sumedh S. Thakar: Give us even additional opportunity to take our golf platform deeper into more agencies that are looking to go and modernize their infrastructure and go into federal sort.

Sumedh S. Thakar: <unk> or <unk>.

Sumedh S. Thakar: <unk> platform and move out of current.

Sumedh S. Thakar: Very heavily on Prem solutions, and so with the fed ramp higher that will enable us to be the only factor in Pi.

Sumedh S. Thakar: While Liberty and patch management combined solution together that will be available for these customers and as we saw with some of our federal business as well the reason for them to.

Sumedh S. Thakar: Two.

Sumedh S. Thakar: Change out their current provider.

Sumedh S. Thakar: Is because the current providers are only doing scanning and they have their own separate best measurement tools that you wouldnt in the federal government. Some of the recent wins that we have seen have enabled us to feel confident in our direction. So that we can continue to take the quality combined platform with patch management et cetera, and is this something that federal agencies also look.

Sumedh S. Thakar: So even in the federal government, some of the recent wins that we have seen have enabled us to feel confident in our direction so that we can continue to take the Qualys combined platform with batch management, et cetera. And that is something that federal agencies are also looking for to reduce their tool sprawl as well as expand to the cloud environment as well. So it's an area that we are continuing to invest in. We're just at the very early stages of that investment, and we are pleased with the traction that we are seeing at this early stage. Got it, helpful. Thanks for the detailed explanation, Sumedh.

Sumedh S. Thakar: Four to reduce their.

Sumedh S. Thakar: <unk> as well as expand into the cloud environment as well. So it's an area that we are continuing to invest we're just at the very early stages of that investment and we are pleased with the traction that we're seeing in this early stage.

Speaker Change: Got it helpful. Thanks for the detailed color somewhere then quick follow up for question. Tony. So you mentioned that you guys of course plan to launch new customer acquisition campaigns.

Joo Mi Kim: And quick follow-up for Jumi. You mentioned that you guys, of course, plan to launch new customer acquisition campaigns. Can you elaborate, you know, who are you targeting and where is the increase in investment intensity in S&M going? Is it going to be more focused on some kind of sales incentives geared towards new logos, more headcount growth, partnership investments, of course, the public sector?

Interviewer: And can you elaborate.

Joo Mi Kim: Who are you targeting.

Jumi: The increase in investment intensity and send them going and is it.

Joo Mi Kim: <unk> been more focused on.

Jumi: Sales incentives geared towards new logos.

Joo Mi Kim: Headcount growth.

Joo Mi Kim: Partnership investments of course public sector. So just curious like how are you.

Joo Mi Kim: Increasing and restaurant density there.

Joo Mi Kim: So just curious, like, how are you increasing the investment intensity there? Yeah, so our priority has been for a while to grow our new business. And that's part of the reason why we were really pleased to see the continued traction and the momentum. And the way we see it right now, where we've been really successful is on the enterprise side, because that's where our strength is.

Jumi: Yes, so our priority has been for a while to grow our new business and it's part of the reason why we were already PTC and our continued traction and the momentum and the way we see it right now where we've been really successful on the enterprise side, because that's where our strength is however, we're pleased to see traction in both enterprise and SMB.

Joo Mi Kim: And the way we are planning to continue to invest to support that growth is number one we are planning to hire more sales reps to support that growth and that's one of our initiatives. We are planning to increase our sales and marketing head count by double digits. This year as we had.

Joo Mi Kim: However, we're pleased to see traction in both the enterprise and SME and SMB markets. And the way we are planning to continue to invest to support that growth is, number one, we are planning to hire more sales reps to support that growth. And that's one of our initiatives; we are planning to increase our sales and marketing headcount by double digits this year, as we had planned before. So that hasn't changed.

Joo Mi Kim: <unk> before so that hasn't changed and number two and our partner channel its been really successful for us we're seeing increase in investment and several different brands, including the MSP corridor that we just announced as well as deal wedge and it continues to be healthy and continues to increase and I'll continue to kind of.

Joo Mi Kim: We did in the incentive structure, whether its partner or a direct to make sure that it is structured in a way to incentivize the build.

Joo Mi Kim: Direct and indirect sales for it to really drive annual local crowd.

Joo Mi Kim: And number two, our partner channel, has been really successful for us. We're seeing an increase in investment on several different fronts, including the MSSP portal that we just announced, as well as deal registration. It continues to be healthy and continues to increase. And our continued kind of, you know, we've been in the incentive structure, whether it's partner or direct, to make sure that it's structured in a way to incentivize both direct and indirect sales for it to really drive new local growth. Got it. Thanks, Truman.

Speaker Change: Got it thanks, so much I appreciate it.

Operator: One moment for our next question. Our next question will come from Patrick Colvo from Scotiabank. Your line is open.

Speaker Change: One moment for our next question.

Patrick Colvo: Our next question comes from the line of Patrick Colville from Scotiabank. Your line is open.

Operator: Hi, This is Joe is Andrew <unk> on for Patrick Colville.

Patrick Colvo: So it seems like cloud security is a big opportunity for quality and you've mentioned the scene absolution getting some solid market traction are you typically selling it as a bundle or are customers kind of deciding to buy each solution separately and then.

Operator: Part two of that question are you seeing stronger demand within any one area of snap.

Operator: For example.

Operator: SPM or workload protection or maybe something else.

Speaker Change: Yes, that's a great question look I think.

Operator: There is no organization out there that is cloud only and so every time they look at their infrastructure. They have to do cloud and non cloud efforts together and Thats really where we see the advantage for quality when they combine the BMD Arctic capabilities on on Prem assets, and then are able to use the exact same platform and expand that licensing into the cloud as well. It's just makes it a.

Joe Vandrick: A lot more seamless they get the benefit of higher volume pricing and it gives them the ability to combine the risk from their cloud and on brand Black folds together in one place and so from and that's why it's interesting for us to see that.

Sumedh S. Thakar: Even in our new logo lands customers are starting to buy that order of lower solution combined with <unk> upfront in the first purchase itself and so while it's early days thats quite encouraging for US we continue to work with our existing customers who have the MTR to expand those capabilities into our cloud in some cases, they don't have any good cloud security solutions.

Sumedh S. Thakar: In other cases, we are displacing some of the cloud only solutions because they are they need a global visibility that is broader than that our pricing for the cloud solution given that the assets Russell ephemeral Adrian Cytosorb, primarily in the cloud environment.

Sumedh S. Thakar: It allows them to be flexible with the way that they can consume the cloud licenses and so that way. They can use force ESPN that can use the same countries that they are purchased for container security. They can use the same for cloud and NPD. So there'll be some cloud they're going to be module that we just announced another expansion into their cloud native platform and so.

Sumedh S. Thakar: It's a maturity.

Sumedh S. Thakar: A level question for organizations our organizations that are very early in the journey right now are focusing initially on the CSP part of Google Cloud.

Sumedh S. Thakar: Who are more mature are also taking the workload protection part and then those who are going beyond that are also looking at other things like our ability to detect malware in the cloud in real time, our ability to expand our uniquely into.

Sumedh S. Thakar: Into SaaS environments for SPM, which is also part of our total, Florida, where we can to SaaS posture assessment.

Sumedh S. Thakar: Then now we are looking forward to.

Sumedh S. Thakar: Getting these customers access to our cloud and it may be a document management as well. So there's a lot that we are now focusing on driving growth from marketing and sales enablement perspective for us to create more opportunities in the Adobe cloud side, but we definitely are pleased with the conversations and traction that we're seeing in the early <unk>.

Sumedh S. Thakar: As of this push that we're making across our sales force.

Speaker Change: That's helpful. Thanks.

Speaker Change: And maybe one for you excuse me if I could.

Joo Mi Kim: How should we think about capital allocation priorities over the next year? Looks like you bought back about $18 million worth of shares in the quarter, which is a bit of a step down compared to last quarter and last year. So just curious what it would take to see you get more aggressive on share buybacks. I'm sure that FIBAG is based on the grid that we have in place right now, and that we really think of it from the perspective of making sure that we can offset the equity dilution from the grants that we're making.

Speaker Change: How should we think about capital allocation priorities over the next year.

Joo Mi Kim: It looks like you bought back about $18 million worth of shares in the quarter, which is a bit of a step down compared to last quarter and last year. So just curious what it would take to see you get more aggressive on share buybacks.

Speaker Change: Yes sure.

Joo Mi Kim: That is based on the rate that we have in place right now and now we would like to go back on perspective.

Joo Mi Kim: Making sure that we can offset the equity dilution from the grants that were making and as you can see in the last couple of years, Alright, dilutive Wassa has been decreasing consistently incrementally into the way, we think about our cash.

Joo Mi Kim: And as you can see, in the last couple of years, our diluted share also has been decreasing consistently and incrementally. So the way we think about our cash and the utilization of excess cash is really looking into 2024. We are anticipating more and more and many opportunities, especially at valuations that we think make sense for us. And so we are going to be taking a look at potential acquisition targets opportunistically, and then

Joo Mi Kim: And the utilization of that cash is really looking into 2024, we are anticipating more and more M&A opportunity, especially at a valuation that we think that makes sense for us and so we are going to be taking a look at potential.

Joo Mi Kim: Potential acquisition target Opportunistically, and then take any action on leveraging our balance sheet.

Speaker Change: Got it thank you.

Joo Mi Kim: Leveraging our balance. Got it. Thank you. Thank you. One moment for the next question. And our next question will come from Joshua Tilton from Wolf Research. Your line is open. Hey guys, can you hear me?

Speaker Change: Thank you.

Speaker Change: One moment for your next question.

Joo Mi Kim: And your next question will come from the line of Joshua Tilton from Wolfe Research. Your line is open.

Operator: I apologize for the background noise. I'm at this small cybersecurity conference called RSS. We can hear you. Two quick ones for me.

Joshua Alexander Tilton: Hey, guys can you hear me I apologize for the background noise I'm, Mr. Small cyber security conference called RSA.

Joshua Alexander Tilton: We can hear you.

Joshua Alexander Tilton: The first one is just, could you maybe talk about how the billings growth in the quarter, whether that was, how that, you know, shook out relative expectations and how you see billings maybe growing for the rest of the year relative to the revenue guidance you just gave. And then my follow-up is, great traction on the new customer, the new growth customer side of the business. I think you called out three straight quarters of double-digit growth. How do we see that?

Joshua Alexander Tilton: Two quick ones for me.

Joshua Alexander Tilton: The first one is just can you maybe talk about how the billings growth in the quarter, whether that was that.

Joshua Alexander Tilton: I shook out relative to your expectations and how you see <unk> growing.

Joshua Alexander Tilton: For the rest of the year relative to the revenue guidance you just gave and then.

Joshua Alexander Tilton: My follow up is.

Speaker Change: <unk> I'm going.

Joshua Alexander Tilton: <unk>.

Joshua Alexander Tilton: The new customer growth customer side of the business I think you called out.

Joshua Alexander Tilton: Great quarters of double digit growth.

Joshua Alexander Tilton: How do we see that like where am I looking for that.

Joo Mi Kim: Like, where am I looking for that in what you guys disclosed that I can kind of see that's coming through in the numbers? And how, and I guess, is that on the partner side? Is that coming from the partner side? Is that coming from the direct side?

Joshua Alexander Tilton: You guys disclosed that I can kind of see this coming through in the numbers.

Joo Mi Kim: And how I guess is that on the partner is that coming from the partner side is that coming from the direct side.

Joo Mi Kim: Just maybe a little bit more color on where that new customer growth is coming from, how durable it is, and how I can better see it in the numbers would be helpful. Yeah, in terms of current billing, 8%, we were hoping to do better, but honestly, I think that it's a fair representative of the business momentum that we see today because it does reflect the net dollar expansion rate having gone down by another percentage in Q1, offset partially by the traction, and continuing traction in the new business.

Joo Mi Kim: Just maybe a little bit more color on where that.

Joo Mi Kim: New customer growth is coming from variable is it and how I can better.

Joo Mi Kim: And the numbers that would be helpful. Thank you.

Joo Mi Kim: Yes in terms of current billing 8%.

Joo Mi Kim: Hoping to do better, but honestly I think that it is a fair representative at the business momentum that we see today because it does reflect the net dollar expansion rate, having gone down by another percentage in Q1, and offset partially by the traction continuing traction in our new business.

Joo Mi Kim: And so I would say that, you know, if you were to look for guidance in terms of the calculated current billing for the full year, we would say it would be roughly in line with our revenue guidance today, which is 8% to 10% for the full year. In terms of new business, the reason why we decided to talk about new business this quarter is because we are seeing a trend like three consecutive quarters. It is something that we thought was meaningful enough for us to talk about and disclose.

Speaker Change: I would say that no.

Joo Mi Kim: You were to look for guidance in terms of the calculated current billings for the full year, we would say it would be roughly in line with our revenue guidance today, which is 8% to 10% for the full year.

Joo Mi Kim: In terms of the new business.

Joo Mi Kim: The reason why we decided to talk about new business. This quarter is because we are seeing a trend like three consecutive quarters is something that we felt like meaningful enough for us to talk about and disclose and majority of that is driven by our channel partner to the project coming from channel partners and I think that if you were to look at the magnitude of it you can probably tell based on the current.

Joo Mi Kim: And the majority of that is driven by our channel partners. So the growth is coming from channel partners. And I think that if you were to look at the magnitude of it, you could probably tell based on the current billing growth of 8% and the net dollar expansion rate of 4%; the rest would be coming from new business.

Joo Mi Kim: Billings growth of 8% net dollar expansion rate of 4%, Nebraska will be coming from from the new business.

Operator: Super helpful, thanks guys. Thank you. And I'm not showing any further questions in the queue. With that, this concludes today's conference. Thank you for your participation in today's conference. This does conclude the program, and you may now disconnect. Everyone have a great day.

Speaker Change: Super helpful. Thanks, guys.

Joo Mi Kim: Yes.

Speaker Change: Thank you and I'm not showing no further questions in the queue with that this concludes today's conference. Thank you for your participation in today's conference. This does conclude the program and you may now disconnect everyone have a great day.

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