Slide 1: Investor presentation
Investor presentation Securing the Digital Transformation Building a safer world - one app at a time Philippe Courtot, Chairman and CEO Melissa Fisher, CFO October 30th, 2019
Slide 2: Safe Harbor
Safe Harbor This presentation includes forward-looking statements within the meaning of the federal securities laws. Forward-looking statements generally relate to future events or our future financial or operating performance. Forward-looking statements in this presentation include, but are not lim
Slide 3: Market and Investment Opportunity
Market and Investment Opportunity The Power of the Qualys Cloud Platform One stack to consolidate traditional enterprise IT/security/compliance solutions and secure the Digital Transformation 2
Slide 4: Investment Highlights
Investment Highlights Industry-leading Cloud Security and Compliance Platform Multiple levers of recurring revenue growth Scalable business model and industry-leading profitability Uniquely positioned to capitalize on stack consolidation and move to the cloud 3
Slide 5: Expanding Market Opportunity
Expanding Market Opportunity Driven by Increasing Apps on Qualys’ Cloud Platform 12% CAGR $21.3B CAGR $2.8B 8% IT Asset Management 14% Cloud Security $12.1B $10.0B 6% Endpoint Management (1) $1.9B 8% Web Security: SaaS (2) $5.3B $0.6B $0.7B 16% Network and Edge $1.3B $0.5B $2.5B 10% Security Policy
Slide 6: Blue Chip Global Customer Base
Blue Chip Global Customer Base 72% of the Forbes Global 50, 46% of Global 500, and 25% of Global 2000 standardized on Qualys 12,200+ Customers DAIMLER Note: Customers include active users 5
Slide 7: Scalable Go-to-market Model
Scalable Go-to-market Model Market segmentation & key strategic partners 2018 ENTERPRISE SME & SMB REVENUES Large enterprise Small / medium business DIRECT (Over 5,000 employees) (Up to 5,000 employees) 59% New Existing New Existing customers customers customers customers CHANNEL 41% 6
Slide 8: Attractive Value Proposition for Partners
Attractive Value Proposition for Partners High-margin recurring revenue with no capex /maintenance costs Outsourcing VAS MSSPs Telcos Resellers Consultants Providers 7
Slide 9: Global Presence
Global Presence 12,200+ 130+ 8 87 48 Customers Countries Shared Platforms Private Clouds Locations Qualys’ Shared Platforms Qualys’ Locations Note: Customers include active users 8
Slide 10: Qualys Cloud Platform and Roadmap
Qualys Cloud Platform and Roadmap 9
Slide 11: Global Visibility Across Hybrid IT Environments Enables Superior Security
Global Visibility Across Hybrid IT Environments Enables Superior Security Scalable, extensible, self-updating & centrally managed Active Scanners Cloud Agents 3+ billion 50,000+ 27.9 million 2+ trillion IP Scans/Audits a Year Scanner appliances Cloud Agents across Security Events collected in server
Slide 12: Qualys Cloud Platform
Qualys Cloud Platform Scalable, Extensible, Micro-services, DevOps Integrated Suite of … Applications 11
Slide 13: Cloud Platform Enables Vendor and Stack Consolidation
Cloud Platform Enables Vendor and Stack Consolidation Vulnerability Management Compliance Monitoring Web App Security New Services 12
Slide 14: Increasing Number of Apps Delivered Through the Qualys Cloud Platform
Increasing Number of Apps Delivered Through the Qualys Cloud Platform ** * Free Service ** Paid and Free Service 13
Slide 15: Qualys Ubiquity Play
Qualys Ubiquity Play Introducing our Global IT Asset Discovery and Inventory as a Free Service Qualys Global IT Asset Inventory (AI) gives you a “single source of truth” for IT assets of all types, whether on-prem (devices and applications), mobile endpoints, clouds, containers, OT and IoT. “You can
Slide 16: Qualys Ubiquity Play
Qualys Ubiquity Play Single source of truth for IT and Security teams managing assets in hybrid environments. Free Features: • Real-time inventory of known and unknown assets across global IT footprint • Search across millions of assets and obtain full visibility of any device in seconds • Instantly
Slide 17: Additional Apps to Come
Additional Apps to Come 2019 2020 Certificate Management Secure Access Control Automated renewing and management of Respond to threats automatically by controlling digital certificates access to critical resources Cloud Security Management Secure Enterprise Mobility Remediation and management of clo
Slide 18: Introducing New Expansion of the Qualys Cloud Platform Data Lake Initiative
Introducing New Expansion of the Qualys Cloud Platform Data Lake Initiative Note: Target Beta time frame 1H 2020 17
Slide 19: Scalable Business Model
Scalable Business Model Strong and Consistent Performance 2015-2018 CAGR 30% 26% 19% Revenue Adj. EBITDA FCF 18
Slide 20: Strong Organic Revenue Growth
Strong Organic Revenue Growth Outperforming market and gaining share ($ in millions) 19% 16% CAGR $279 $231 $237 $198 $205 $164 Revenues 2015 2016 2017 2018 Q3 2018 Q3 2019 YTD YTD 19
Slide 21: Adoption of New Solutions Fuels Growth and Profitability
Adoption of New Solutions Fuels Growth and Profitability ($ in millions) Quarterly revenues vs. customers 19 APPS $100 VM, PC, PCI, WAS, WAF, CM, FIM, SAQ, AI, TP, SYN, CRA, CI… 4 APPS $50 VM, PC, PCI, WAS 2 APPS VM, PCI $0 2008 2013 2018 Quarterly revenues Customers 20
Slide 22: New Apps Enabled by Cloud Agents
New Apps Enabled by Cloud Agents (Units in millions) Number of Cloud Agents Sold 27.9 23.6 17.9 16.2 LTM LTM LTM LTM Q4 2018 Q1 2019 Q2 2019 Q3 2019 21
Slide 23: Platform Adoption Accelerating
Platform Adoption Accelerating 72% 46% 26% 13% 72% 69% 64% 46% 59% 39% 30% 26% 23% 20% 14% 13% 6% 9% 6% 2% Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 FY16 FY17 FY18 FY19 FY16 FY17 FY18 FY19 FY16 FY17 FY18 FY19 FY16 FY17 FY18 FY19 2+ solutions 3+ solutions 4+ solutions 5+ solutions % of Enterpri
Slide 24: Multiplier Effect
Multiplier Effect Enterprise customers with 4+ solutions spend over 5x that of 1-solution customers ($ in thousands) 5+X $300 $273 $258 $268 $223 of 1-solution Avg. LTM revenues $206 $209 $192 average per customer $200 $158 $100 $52 $49 $52 $49 $0 LTM LTM LTM LTM Q3 2016 Q3 2017 Q3 2018 Q3 2019 Ente
Slide 25: Multi-Product Adoption Drives Increased Stickiness
Multi-Product Adoption Drives Increased Stickiness 99% 97% 91% 2 Products 3 Products 4 Products 2018 Enterprise Gross Dollar Retention Rate Note: Dollar Retention Rate is the retention rate of prior year Enterprise ARR (excluding upsell and downsell) averaged over the last four quarters 24
Slide 26: Increasing Number of Large Customers
Increasing Number of Large Customers ($ in millions) 89 80 $100 67 $99 Aggregate Revenues $80 Customers 60 47 $60 $75 34 40 $40 $48 20 $20 $32 $0 0 LTM LTM LTM LTM Q3 2016 Q3 2017 Q3 2018 Q3 2019 Note: Customer count is defined as customers with greater than $500K in annual revenue 25
Slide 27: Cloud Platform Enables Scalable Operational Model
Cloud Platform Enables Scalable Operational Model Revenue per % of Customer Support, S&M headcount Operations, and R&D headcount in India $1.2M $1.2M $1.1M 69% $1.0M 58% 46% 36% 2015 2016 2017 2018 2015 2016 2017 2018 High sales leverage Leveraging low cost geos 26
Slide 28: Expanding Margins
Expanding Margins ($ in millions) 24% 26% 40% CAGR 44% $140 41% 37% $120 $112 34% 34% $103 $100 $85 $83 $80 $68 $60 $57 $40 $20 $0 2015 2016 2017 2018 Q3 2018 Q3 2019 YTD YTD Adjusted EBITDA Adjusted EBITDA margin (%) 27
Slide 29: Increasing Free Cash Flow
Increasing Free Cash Flow ($ in millions) 36% 30% 36% CAGR 45% 38% 35% 23% $101 $106 28% $80 $78 $46 $45 2015 2016 2017 2018 Q3 2018 Q3 2019 YTD YTD Free cash flow Free cash flow margin (%) Note: 2017 non-GAAP Free cash flow normalized for headquarters office facility costs (net) 28
Slide 30: Industry-leading Margins
Industry-leading Margins Q2 CY2019 Adjusted EBITDA margin vs. QLYS select Security and SaaS peers 42% Security SaaS Peer Median: 12% 29
Slide 31: Industry-leading Performance
Industry-leading Performance Q2 CY2019 Rule of 40 vs. select Security and SaaS peers Security QLYS SaaS 58% Rule of 40 30
Slide 32: Unique Advantages of the Qualys' Cloud Platform
Unique Advantages of the Qualys’ Cloud Platform Single-pane-of-glass-view across on-premises assets, endpoints, containers and cloud environments No hardware to Lower Easy to deploy Unprecedented buy or manage operating costs and maintain scaling Nothing to install or manage, With everything in the
Slide 33: Appendix
Appendix © Qualys. WannaCry and Shadow Brokers ~ Actions Add Widget Friterby Asset Tags MISSING MS17-010 PATCH WANNACRY RANSOMWARE DOUBLEPULSAR. WINDOWS HOSTS PENDING DETECTED - AUTH ONLY BACKDOORS REBOOT - AUTH ONLY 28 0) 0) 17 ve All Windo vs All Windows Systems vs All Windows Systems. ve All Wind
Slide 34: Increasing Number of Apps Delivered Through the Qualys Cloud Platform
Increasing Number of Apps Delivered Through the Qualys Cloud Platform IT SECURITY GLOBAL IT ASSET MANAGEMENT Vulnerability Management Patch Management Asset Inventory ** Continuously detect and protect Streamline and accelerate vulnerability Maintain full, instant visibility of against attacks, anyt
Slide 35: Reconciliation of Adjusted EBITDA
Reconciliation of Adjusted EBITDA ($ in millions) Q3 2018 Q3 2019 2015 2016 2017 2018 YTD YTD Net income $15.9 $19.2 $40.4 $57.3 $42.9 $48.7 Depreciation and amortization of property 14.0 16.6 19.8 25.2 18.9 18.9 and equipment Amortization of intangible assets 0.4 0.4 0.8 3.7 2.4 4.6 Interest expens
Slide 36: Reconciliation of Non-GAAP Free Cash Flow
Reconciliation of Non-GAAP Free ($ in millions) Cash Flow Q3 2018 Q3 2019 2015 2016 2017 2018 YTD YTD GAAP Cash flows provided by operating activities $66.0 $68.1 $107.6 $125.5 $98.8 $126.9 Purchases of property and equipment (20.1) (23.2) (37.8) (22.8) (19.5) (19.5) Capitalized software development
Slide 37: Revenue by Geographic Area
Revenue by Geographic Area ($ in millions) 3Q 2018 3Q 2019 2015 2016 2017 2018 YTD YTD United States 115.4 139.7 162.7 185.9 137.5 152.5 70% 71% 70% 67% 67% 64% Foreign 48.9 58.2 68.1 93.0 67.2 84.4 30% 29% 30% 33% 33% 36% Total Revenues $164.3 $197.9 $230.8 $278.9 $204.7 $236.9 36