Qualys, Inc. Common Stock Canaccord Genuity's 46th Annual Growth Conference

Thanks again for joining. Thanks for having us.

I think we're very pleased with our execution in the quarter, and we continue to focus on profitable growth. We are a product-led, innovation-led company, and so a lot of what we innovated around remediation Patch Management has really been the key focus for a lot of the conversations with customers. We're looking forward to now working with our customers to make sure that their post-Mythos focus on risk remediation is something that we can work with them, and we can convert that into good opportunities for us, given that the last four or so years, we have done a really solid job with Patch Management, which is the area of focus. Just excited about what we're doing right now and the feedback that we're getting from our customers. The goal is to continue to focus on executing that.

I think, like we said, at a high level, the focus for customers has really been the remediation part with TruRisk Eliminate and Patch Management. What we're seeing is, to be able to do a good job of that, customers are also looking at ETM as a way to really prioritize, hyper prioritize, the findings that they need to fix immediately. What we really saw was the customers that were already up for renewal in Q2, we have been having conversations with them. When Mythos came about, they were able to go back and work with their teams and get some additional budget to essentially make those renewals and upsells be bigger than sort of what we had anticipated at the beginning of the quarter because of the conversation we had and the maturity of the tool set.

Really at a high level, that's what kind of drove that. We're looking forward to continuing similar conversations as we get into Q3, Q4 as well.

Yeah. For us, we believe that ETM will be the primary engine to drive growth in the near term and in the foreseeable future. With that said, given that it's relatively new to our customers, we don't think it's going to be contributing much to our revenue, at least on a material basis. This is part of the reason why we decided to share the Net Dollar Expansion Rate of customers who had either ETM or CSAM subscriptions at a year ago period. Because if you take a look at that cohort of customers and how they continue to grow with Qualys, as we take you through that journey, hopefully, you'll be able to see the progress that we're making, and it will really be a best indicator of the success that we're seeing in the ETM initiatives today.

With that rate at around 107% for this quarter as well as last quarter, we're very pleased with the amount they spend, and as they continue to grow with us, whether it be just a VMDR cross-selling to ETM or adding Patch Management on top of that's validated by the percentage contribution by the product bookings. If you take a look at it on an LTM basis, ETM and CSAM currently make up 12% of total bookings, up from 9% a year ago. The same thing with Patch Management. It currently makes up 9% of total bookings, up from 7% a year ago. You can see that our newer products are really helping to drive our growth acceleration in the top line today.

Yeah, I think we kind of saw this whole need for remediation was going to accelerate, and we stayed ahead of that, and we're excited to see that there is an opportunity right now for us to work with the customers to have them adopt that additional patching capability, remediation capability. A lot of the innovation that we have done around AI with our recent launch of Agent Val for validation, which is also something that we did very different from every other VM tool. More recently at Black Hat, we launched Agent Insta, which is essentially the ability to get detections of latest vulnerabilities that are coming out within an hour of them coming out. A lot of that is being looked at very positively by the customer.

There's an opportunity to move those customers from VMDR customer cohort, where they're scanning but doing a lot of prioritization themselves to upgrade to ETM, which then will allow them to do the prioritization, and then the ability to use TruRisk Eliminate to do the actual remediation. We're looking forward to working through the conversations that we are currently having. We also announced the launch of Total AI 2.0, which is really an area that is up and coming now. When we talk about security for AI and AI for security, this is the focus on saying, how do we also leverage our position with these customers where we are so widely deployed in a lot of large enterprises to be able to give them visibility into Shadow AI, as an example.

I think as we look at the next few years, we feel like the focus on remediation that has come about, opportunity with the federal government, the capabilities around Total AI that we are adding, are things that make us feel like this is something that we can continue to focus on and set ourselves up for continued growth and potentially acceleration of that growth.