Financial Data and Key Metrics Changes - Revenues grew 10% to $159.9 million, with channel contributions increasing to 49% of total revenues from 45% a year ago [19][20] - Adjusted EBITDA for Q1 was $74.8 million, representing a 47% margin, consistent with the previous year [22] - Free cash flow was $107.6 million, maintaining a 57% margin compared to the prior year [22][23] - EPS for Q1 was $1.67, with full-year EPS guidance raised to $6.00 - $6.30 from a prior range of $5.50 - $5.90 [23][24] Business Line Data and Key Metrics Changes - Patch management and cybersecurity asset management accounted for 15% of total bookings and 24% of new bookings on an LTM basis [21] - Total Cloud CNAP made up 5% of LTM bookings, reflecting customer demand for comprehensive risk management [21] Market Data and Key Metrics Changes - U.S. revenue grew 6%, while international revenue grew 16%, indicating stronger performance outside the U.S. [20] - Customers spending $500,000 or more increased by 6% year-over-year to 2,003 [15] Company Strategy and Development Direction - The company is focusing on a partner-first strategy to drive growth, emphasizing the consolidation of security tools and risk management [60][73] - Qualys aims to enhance its Total AI and TruRisk capabilities to address evolving threats associated with AI technologies [10] - The company is advancing its managed risk operations (MROC) services to provide a centralized approach to pre-breach risk management [16] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing macroeconomic uncertainty affecting customer spending and decision-making cycles, leading to a more cautious outlook [28][29] - Despite challenges, the company remains confident in its long-term growth potential and ability to gain market share [15][18] - Guidance for full-year revenue growth is set at 7% to 8%, with expectations of increased scrutiny on new business growth [24][25] Other Important Information - The company has made progress towards achieving FedRAMP high certification, which is expected to fuel growth [17] - Qualys has repurchased 9.6 million shares since February 2018, returning nearly $1.1 billion to shareholders [23] Q&A Session Summary Question: Thoughts on the macro environment and customer spending - Management observed that cybersecurity remains a priority, but there is increased scrutiny on spending and longer decision cycles [28] Question: Customer journey with the Risk Operations Center (ROC) - The ROC consolidates risk signals from multiple tools, providing actionable insights and remediation plans, which helps customers save time and resources [31][32] Question: Impact of macro challenges on deals - No material deals were pushed or pulled; however, there was some pushback on anticipated upsell rates from existing customers [37] Question: Competitive landscape and response to competitors expanding into network-based VM - Management expressed confidence in Qualys's focus on prioritizing and remediating vulnerabilities rather than just identifying them [39][40] Question: Growth in Total Cloud CNAP and audit readiness - The Total Cloud CNAP is still in early stages but has seen growth, with audit readiness becoming a significant area of focus for customers [78][81]

Table of Contents (Exact name of registrant as specified in its charter) __________________ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Delaware 77-0534145 (State or other jurisdiction of incorporation or organization) Washington, D.C. 20549 __________________ FORM 10-Q __________________ x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended March 31, 2025 o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Ac ...

Financial Data and Key Metrics Changes - Revenues grew by 10% to $159.9 million, with channel contributions increasing to 49% of total revenues compared to 45% a year ago [19][20] - Adjusted EBITDA for Q1 was $74.8 million, representing a 47% margin, consistent with the previous year [23] - Free cash flow was $107.6 million, maintaining a 57% margin compared to 57% in the prior year [23] - EPS for Q1 was $1.67, with full-year EPS guidance raised to a range of $6.00 to $6.30, up from the prior range of $5.50 to $5.90 [24][25] Business Line Data and Key Metrics Changes - Patch management and cybersecurity asset management combined accounted for 15% of total bookings and 24% of new bookings on an LTM basis [21] - Total Cloud CNAP made up 5% of LTM bookings, reflecting customer demand for comprehensive risk management solutions [21][22] Market Data and Key Metrics Changes - U.S. and international revenue mix was 57% and 43%, respectively, with international growth outpacing domestic growth [20] - Customers spending $500,000 or more grew by 6% year-over-year to 2,003 [14] Company Strategy and Development Direction - The company is focusing on a partner-first strategy to drive growth, emphasizing the consolidation of security tools and risk management solutions [62] - The introduction of the Risk Operations Center (ROC) aims to help organizations manage cyber risks proactively, reducing the chance of breaches [7][10] - The company is expanding its Total AI and TruRisk capabilities to address evolving threats associated with AI technologies [9] Management's Comments on Operating Environment and Future Outlook - Management noted that while cybersecurity remains a priority, there is increased scrutiny on spending and longer decision-making cycles due to macroeconomic uncertainty [28][29] - The company expects revenue growth for the full year 2025 to be in the range of 7% to 8%, with a cautious outlook on new business growth [25][58] Other Important Information - The company has made progress towards achieving FedRAMP high certification, which is expected to fuel growth [16] - The company has repurchased 9.6 million shares since the start of its repurchase program, returning nearly $1.1 billion in cash to shareholders [23] Q&A Session Summary Question: Thoughts on the macro environment and customer spending - Management observed that cybersecurity remains important, but there is more scrutiny on spending and longer decision cycles [28][29] Question: Customer journey with the ROC - The ROC consolidates risk signals from multiple tools, providing actionable insights and remediation plans, which helps customers save time and resources [30][32] Question: Impact of macro challenges on deals - No material deals were pushed or pulled; however, there was some pushback on upsell rates from existing customers [37] Question: Competitive landscape and response to competitors - Management expressed confidence in their approach to vulnerability management, focusing on prioritizing and remediating significant risks rather than just identifying vulnerabilities [40][41] Question: Growth in Total Cloud CNAP and audit readiness - The Total Cloud CNAP is still in early stages but has seen growth, with a focus on helping customers prepare for audits and manage risks effectively [76][79]

Financial Data and Key Metrics Changes - Revenues grew 10% to $159.9 million, with channel contributions increasing to 49% of total revenues from 45% a year ago [19][20] - Adjusted EBITDA for Q1 was $74.8 million, representing a 47% margin, consistent with the previous year [22] - Free cash flow was $107.6 million, maintaining a 57% margin compared to the prior year [22][23] - EPS for Q1 was $1.67, with full-year EPS guidance raised to $6.00 - $6.30 from a prior range of $5.50 - $5.90 [23][24] Business Line Data and Key Metrics Changes - Patch management and cybersecurity asset management accounted for 15% of total bookings and 24% of new bookings on an LTM basis [21] - Total Cloud CNAP made up 5% of LTM bookings, reflecting customer demand for comprehensive risk management [21] Market Data and Key Metrics Changes - International revenue grew 16% compared to 6% growth in the U.S., with a revenue mix of 57% U.S. and 43% international [20] - Customers spending $500,000 or more increased by 6% year-over-year to 2,003 [15] Company Strategy and Development Direction - The company is focusing on a partner-first strategy to drive growth, with an emphasis on consolidating security tools and enhancing risk management capabilities [18][62] - Qualys aims to expand its Total AI and TruRisk capabilities to address evolving threats associated with AI technologies [10] - The company is advancing its managed risk operations (MROC) services and plans to certify additional strategic partners [16][62] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing macroeconomic uncertainty affecting customer spending and decision-making cycles, leading to a more scrutinized budget environment [28][29] - Despite challenges, the company remains confident in its long-term growth potential and ability to gain market share [15][18] - Guidance for full-year revenue growth is set at 7% to 8%, with expectations of continued adoption of cloud-native security solutions [24][25] Other Important Information - The company has repurchased 9.6 million shares since February 2018, returning nearly $1.1 billion to shareholders [23] - Qualys is on track to achieve FedRAMP high certification, which is expected to fuel growth [17] Q&A Session Summary Question: Thoughts on the macro environment and customer spending - Management observed that cybersecurity remains a priority, but there is increased scrutiny on spending and longer decision cycles [28] Question: Customer journey with the Risk Operations Center (ROC) - The ROC consolidates risk signals from multiple tools, providing actionable insights and remediation plans, which helps customers save time and resources [31][32] Question: Impact of macro challenges on deals - No material deals were pushed or pulled; however, there was some pushback on anticipated upsell rates from existing customers [37][38] Question: Competitive landscape and response to competitors expanding into network-based VM - Management expressed confidence in Qualys's focus on prioritizing and remediating vulnerabilities rather than just identifying them [40] Question: Growth in Total Cloud CNAP and audit readiness - The Total Cloud CNAP is still in early stages but has seen growth, with audit readiness becoming a significant area of focus for customers [78][80]

Qualys Enterprise TruRisk Platform - Qualys is transforming its focus to deliver desired business outcomes leveraging risk analytics with the Qualys Enterprise TruRisk Platform[10, 12] - The Qualys Enterprise TruRisk Platform offers comprehensive risk reduction by eliminating cyber risk, saving time, reducing MTTR, and consolidating the IT-security stack[20, 21] - The platform provides one view across the entire global hybrid-IT environment, allowing customers to consolidate their stack for better security outcomes, with no hardware to buy or manage[31] Market Opportunity and Customer Base - Qualys estimates its current total addressable market at $55 billion in CY2025E, expanding to $79 billion in CY2028E[35] - Qualys has a blue-chip global customer base of over 10,000 subscription customers[37] - 72% of the Forbes Global 50, 55% of the Forbes Global 500, and 33% of the Forbes Global 2000 are Qualys' subscription customers[37] Financial Performance - Qualys' 2024 revenues reached $608 million, with an adjusted EBITDA of $283 million, representing a 47% adjusted EBITDA margin[45] - The company's Q1 2025 revenues were $160 million, with an adjusted EBITDA of $75 million, maintaining a 47% adjusted EBITDA margin[45] - Qualys generated $232 million in free cash flow in 2024[50] - The company's adjusted EBITDA margin of 47% in 2024 is higher than the peer median of 25% for select security and SaaS companies[53]

Financial Performance - Revenues for Q1 2025 increased by 10% to $159.9 million compared to $145.8 million in Q1 2024[3] - GAAP net income for Q1 2025 rose by 20% to $47.5 million, or $1.29 per diluted share, compared to $39.7 million, or $1.05 per diluted share, in Q1 2024[6] - Operating cash flow for Q1 2025 increased by 28% to $109.6 million, representing 69% of revenues compared to 59% in Q1 2024[8] - Non-GAAP net income for Q1 2025 was $61.4 million, or $1.67 per diluted share, compared to $54.7 million, or $1.45 per diluted share, in Q1 2024[6] - GAAP operating income for Q1 2025 increased by 16% to $51.8 million, representing 32% of revenues compared to 31% in Q1 2024[5] - Net income for the same period rose to $47,534 thousand, representing a net income margin of 30%, up from 27% in the prior year[33] - Basic net income per share increased to $1.30 for the three months ended March 31, 2025, compared to $1.08 in the same period of 2024[35] Guidance and Expectations - The company raised its full year 2025 revenue guidance to a range of $648 million to $657 million, reflecting a growth of 7% to 8% over 2024[12] - The company expects Q2 2025 revenues to be in the range of $159.7 million to $162.7 million, representing 7% to 9% growth over Q2 2024[11] Cash Flow and Assets - Non-GAAP free cash flows for the three months ended March 31, 2025, were $107,550 thousand, compared to $83,454 thousand in the same period of 2024[37] - Cash and cash equivalents increased to $290,671 thousand as of March 31, 2025, up from $232,182 thousand at the end of 2024[29] - Total assets reached $996,471 thousand as of March 31, 2025, compared to $973,537 thousand at the end of 2024[29] - Total liabilities were $498,436 thousand as of March 31, 2025, slightly up from $496,421 thousand at the end of 2024[29] Revenue and Deferred Revenue - Current deferred revenue as of March 31, 2025, was $366,824 thousand, compared to $332,128 thousand in the same period of the previous year[39] - Revenues for the three months ended March 31, 2025, increased to $159,899 thousand, a growth of 10% compared to $145,805 thousand in the same period of 2024[27] Adjusted Metrics - Adjusted EBITDA for Q1 2025 increased by 8% to $74.8 million, maintaining a margin of 47% of revenues[7] - Adjusted EBITDA for the three months ended March 31, 2025, was $74,752 thousand, maintaining 47% as a percentage of revenues, consistent with the previous year[33] Stock-Based Compensation - Stock-based compensation totaled $18,820 thousand for the three months ended March 31, 2025, down from $19,031 thousand in the same period of 2024[35] New Initiatives - The company introduced the Managed Risk Operation Center (mROC) to help partners expand revenue streams through a unified managed service[15] - Qualys launched TotalAppSec, a comprehensive application risk management solution, enhancing its cybersecurity offerings[15]

Core Insights - The rapid adoption of AI is leading organizations to implement solutions without adequate security controls, raising concerns about potential security breaches, with 72% of CISOs expressing worry about generative AI risks [1] - Qualys TotalAI is designed to address AI-specific security challenges, ensuring that only trusted models are deployed, thus balancing innovation with risk management [2][3] Group 1: Qualys TotalAI Features - TotalAI goes beyond basic assessments by testing models for vulnerabilities such as jailbreak risks, bias, and sensitive information exposure, aligning with OWASP Top 10 for LLMs [2] - The platform provides visibility, intelligence, and automation to protect AI workloads throughout their lifecycle, enhancing operational resilience and brand trust [3] - TotalAI detects 40 different attack scenarios, including advanced jailbreak techniques and bias amplification, to strengthen model resilience against exploitation [6] Group 2: Availability and Resources - Qualys TotalAI is now available for a 30-day trial, allowing organizations to explore its capabilities [4] - Qualys, Inc. is a leading provider of cloud-based security solutions, serving over 10,000 subscription customers globally, including many from the Forbes Global 100 and Fortune 100 [5]

Industry Overview - Cybersecurity has transitioned from a back-office concern to a boardroom priority due to the increasing frequency and sophistication of cyberattacks, with global cybercrime costs projected to rise from $9.22 trillion in 2024 to $15.63 trillion by 2029 [1] - The global cybersecurity market is expected to grow from $193.73 billion in 2024 to $562.72 billion by 2032, reflecting a compound annual growth rate (CAGR) of 14.3% [2] - The growth in the cybersecurity market is driven by increasing enterprise IT complexity, rising regulatory scrutiny, and the need for real-time protection of data, identities, and infrastructure [2] Technological Advancements - Artificial intelligence (AI) is revolutionizing the cybersecurity landscape, enabling more efficient detection, prevention, and response to cyber threats [3] - AI can analyze large volumes of data, detect anomalies, and identify potential breaches in real time, providing a proactive approach to security [3] Company Highlights - Companies like Fortinet, Zscaler, Okta, and Qualys are heavily investing in AI-driven security solutions to enhance their capabilities and position themselves for long-term growth in the expanding cybersecurity market [4] - Okta specializes in identity and access management (IAM) and is ramping up its AI capabilities to address the complexities of digital identities [6] - Qualys focuses on vulnerability management and cloud security, integrating advanced AI models into its platforms for faster detection and remediation of security threats [10][11] - Fortinet offers a comprehensive suite of cybersecurity solutions, differentiating itself with high-performance security at lower costs, and has integrated AI-driven analytics into its services [13][14][15] - Zscaler is a pioneer in zero-trust security, enhancing its platform with AI-powered security analytics to improve threat detection and response [16][17][18] Financial Performance - Okta reported 19,650 customers at the end of fiscal Q4 2025, with a 7% year-over-year increase in customers with over $100,000 in Annual Contract Value (ACV) [8] - Qualys' AI-powered platform is expected to drive customer adoption and revenue growth, positioning it well in the market [12] - Fortinet has consistently delivered profitability and strong free cash flow, reflecting its growing market share and demand for AI-enhanced security solutions [15] - Zscaler has maintained robust financial performance with expanding revenues driven by demand for its AI-enhanced offerings [18]

Core Insights - Enterprises are facing an increasing compliance burden, with nearly 70% of service organizations subject to at least six regulatory frameworks, leading to resource strain and higher costs [1] - Misconfigurations complicate compliance efforts, often resulting in non-compliance and regulatory penalties, highlighting the need for automated compliance management solutions [1] - Qualys Policy Audit offers a solution by automating evidence mapping to various compliance frameworks, ensuring continuous compliance and reducing audit failures [3] Compliance Challenges - Organizations struggle with complex regulations, limited staff, and tight budgets, making compliance costly and prone to errors [3] - Time-consuming tasks such as auditing and reporting are susceptible to human error, necessitating a more efficient approach [1] Qualys Policy Audit Features - Qualys Policy Audit provides comprehensive coverage across 450 technologies, over 1,000 out-of-the-box policies, and more than 90 frameworks, ensuring organizations remain audit-ready [3] - The solution reduces audit failure rates by up to 95%, helping organizations mitigate risks of fines and penalties [6] - Automated ITSM workflows enhance communication between teams, ensuring timely information flow and streamlined compliance tracking [6] New Offerings - Qualys is introducing Audit Fix, which allows users to proactively address audit findings before they escalate into compliance issues, utilizing predefined scripts and policies [4] - Customizable remediation workflows integrated into Policy Audit significantly reduce breach exposure and accelerate compliance efforts [4] Availability and Resources - Qualys Policy Audit will be available in Q2, with a 30-day trial offered on their website [5] - Additional resources include a blog and a webinar focused on the new standard for audit readiness [5] Company Overview - Qualys, Inc. is a leading provider of cloud-based security and compliance solutions, serving over 10,000 subscription customers globally, including many Fortune 100 companies [6][7] - The Qualys Enterprise TruRisk Platform automates vulnerability detection and compliance across various IT environments, enhancing overall security posture [8]

Core Viewpoint - Qualys, Inc. will report its financial results for Q1 2025 on May 6, 2025, after market close [1] Group 1: Financial Reporting - The financial results for the first quarter of 2025 will be announced after market hours on May 6, 2025 [1] - A conference call and live webcast will be held at 5:00 p.m. Eastern Time on the same day to discuss the results [2] Group 2: Company Overview - Qualys, Inc. is a leading provider of cloud-based security, compliance, and IT solutions with over 10,000 subscription customers globally, including many from the Forbes Global 100 and Fortune 100 [3] - The company offers a platform that automates security and compliance solutions, leading to improved agility and cost savings for organizations [3] Group 3: Product and Technology - The Qualys Enterprise TruRisk Platform utilizes a single agent for continuous security intelligence and automates vulnerability detection and compliance across various IT environments [4] - Qualys has established strategic partnerships with major cloud service providers like Amazon Web Services, Google Cloud Platform, and Microsoft Azure [4]