Qualys, Inc. · NASDAQ:QLYS
Qualys — Q1 2019 Earnings Presentation
35 slides from Qualys's earnings presentation, May 1, 2019
Slide 1: Investor presentation: Securing the Digital Transformation
Investor presentation Securing the Digital Transformation Building a safer world - one app at a time Philippe Courtot, Chairman and CEO Melissa Fisher, CFO May 1st, 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 Uniquely positioned to capitalize on stack consolidation and move to the cloud Multiple levers of recurring revenue growth Scalable business model and industry-leading profitability Industry-leading Cloud Security and Compliance Platform 3
Slide 5: Large Expanding Market Opportunity
Large 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 P
Slide 6: Blue Chip Global Customer Base
Blue Chip Global Customer Base 70% of the Forbes Global 50, 47% 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+ 7 78 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+ 17.9 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 Unified approach to Detection, Prevention & Response Integrated Suite of … Applications Analytics and Reporting Engines Distributed Sensors Hardware Virtual Cloud Agent Passive API Environments On- Endpoints Cloud Premises 11
Slide 13: Cloud Platform Serves as a Scalable Distribution Channel
Cloud Platform Serves as a Scalable Distribution Channel Scalable, Extensible, Micro-services, DevOps Scanner VM PC WAS WAF FIM Service Qualys Streaming Data Backbone Cloud Agent Asset Service Indexing Reporting Analytics IOC Tagging Service Service 12
Slide 14: Micro-Service Architecture
Micro-Service Architecture 13
Slide 15: Cloud Platform Enables Vendor and Stack Consolidation
Cloud Platform Enables Vendor and Stack Consolidation IT Security Compliance Monitoring Web App Security New Services 14
Slide 16: Increasing Number of Apps Delivered Through the Qualys Cloud Platform
Increasing Number of Apps Delivered Through the Qualys Cloud Platform * Free Services 15
Slide 17: Additional Apps to Come in 2019
Additional Apps to Come in 2019 Passive Network Analysis Continuous and unobtrusive detection of every IT asset and its activity on the network Secure Access Control Respond to threats automatically by controlling access to critical resources Certificate Management Automated renewing and management
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 Q1 2020 17
Slide 19: Scalable Business Model
Scalable Business Model © Qualys. Asset Inventory IRD INVENTORY ‘uals dem (quays_Jos) @ orven20180.. 7 ° GATEGORY BREAKDOWN OPERATING SYSTEM DISTRIBUTION TOP HARDWARE MANUFACTURER I Computers | Networking Total 272 view oat n x(t Wm Windows 165 Lanove Ld & vee we a 1 Network 0 28 uum 8 “ © iced § om
Slide 20: Adoption of New Solutions Apps Fuels Growth and Profitability
Adoption of New Solutions Apps 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 $0 2008 2013 2018 Quarterly revenues Customers 19
Slide 21: Number of Cloud Agents Sold
New Apps Enabled by Cloud Agents (Units in millions) Number of Cloud Agents Sold 17.9 16.2 14.5 8.7 LTM LTM LTM LTM Q2 2018 Q3 2018 Q4 2018 Q1 2019 20
Slide 22: Strong and Consistent Organic Revenue Growth
Strong and Consistent Organic Revenue Growth Outperforming market and gaining share ($ in millions) 19% CAGR $279 $231 Revenues $198 $164 16% $65 $75 2015 2016 2017 2018 Q1 2018 Q1 2019 21
Slide 23: Increasing Adjusted EBITDA & Free Cash Flow
Increasing Adjusted EBITDA & Free Cash Flow ($ in millions) 41% 56% 40% 47% 38% 37% 35% 36% 34% 34% $112 28% 23% $101 $85 $80 $68 $57 $46 $45 $36 $35 $31 $25 2015 2016 2017 2018 Q1 Q1 2015 2016 2017 2018 Q1 Q1 2018 2019 2018 2019 Adjusted Adjusted EBITDA margin Free Free cash flow margin EBITDA (%)
Slide 24: Platform Adoption Accelerating
Platform Adoption Accelerating 70% 42% 22% 11% 70% 67% 62% 42% 59% 34% 27% 21% 22% 16% 9% 11% 3% 7% 3% 0% Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 FY16 FY17 FY18 FY19 FY16 FY17 FY18 FY19 FY16 FY17 FY18 FY19 FY16 FY17 FY18 FY19 2+ solutions 3+ solutions 4+ solutions 5+ solutions % of Enterpris
Slide 25: Multiplier Effect
Multiplier Effect Enterprise customers with 4+ solutions spend over 5x that of 1-solution customers ($ in thousands) $300 $279 $266 5+X Avg. LTM revenues $218 $216 of 1-solution $205 average per customer $200 $170 $172 $148 $100 $51 $51 $50 $52 $0 LTM LTM LTM LTM Q1 2016 Q1 2017 Q1 2018 Q1 2019 Ente
Slide 26: Multi-Product Adoption Drives Increased Stickiness
Multi-Product Adoption Drives Increased Stickiness 99% 97% 91% 2 Products 3 Products 4 Products 2018 Enterprise Gross Dollar Retention Rate Note: Dollar Retention Rate is the retention rate of prior year Enterprise ARR (excluding upsell and downsell) averaged over the last four quarters 25
Slide 27: Increasing Number of Large Customers
Increasing Number of Large Customers ($ in millions) 75 80 75 $80 57 $84 60 Aggregate Revenues Customers $60 42 $61 40 $40 29 $39 20 $20 $27 0 $0 LTM LTM LTM LTM Q1 2016 Q1 2017 Q1 2018 Q1 2019 Note: Customer count is defined as customers with greater than $500K in annual revenue 26
Slide 28: 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% $1.0M 58% 46% 36% 2015 2016 2017 2018 2015 2016 2017 2018 High sales leverage Leveraging low cost geos 27
Slide 29: Industry-leading Margins
Industry-leading Margins 2018 Adjusted EBITDA margin vs. QLYS select Security and SaaS peers 40% Security SaaS Peer Median: 12% Source: Morgan Stanley 28
Slide 30: Industry-leading Performance
Industry-leading Performance 2018 Rule of 40 vs. select Security and SaaS peers QLYS 61% Security SaaS Rule of 40 Source: Morgan Stanley 29
Slide 31: Unique Advantages of the Qualys' Cloud Platform
Unique Advantages of the Qualys’ Cloud Platform Single-pane-of-glass-view across on-premises assets, endpoints, containers and cloud environments No hardware to Lower Easy to deploy Unprecedented buy or manage operating costs and maintain scaling Nothing to install or manage, With everything in the
Slide 32: Appendix
Appendix © Qualys. WannaCry and Shadow Brokers ~ AED OREM For by Asso Togs MISSING MS17-010 PATCH WANNACRY RANSOMWARE DOUBLEPULSAR WINDOWS HOSTS PENDING DETECTED - AUTH ONLY BACKDOORS. REBOOT - AUTH ONLY 28 0 0 17 ve All Windows Systems ve All Windows Systems ve All Windows Systems (oe 34081 (0.00%)
Slide 33: Increasing Number of Apps Delivered Through the Qualys Cloud Platform
Increasing Number of Apps Delivered Through the Qualys Cloud Platform IT SECURITY GLOBAL IT ASSET MANAGEMENT Vulnerability Management Patch Management Asset Inventory Continuously detect and protect Streamline and accelerate vulnerability Maintain full, instant visibility of against attacks, anytime
Slide 34: Reconciliation of Adjusted EBITDA
Reconciliation of Adjusted EBITDA ($ in millions) Q1 Q1 2015 2016 2017 2018 2018 2019 Net income $15.9 $19.2 $40.4 $57.3 $9.1 $13.3 Depreciation and amortization of property 14.0 16.6 19.8 25.2 6.4 6.4 and equipment Amortization of intangible assets 0.4 0.4 0.8 3.7 0.6 1.5 Interest expense 0.0 0.0 0
Slide 35: Reconciliation of Non-GAAP Free Cash Flow
Reconciliation of Non-GAAP Free ($ in millions) Cash Flow Q1 Q1 2015 2016 2017 2018 2018 2019 GAAP Cash flows provided by operating activities $66.0 $68.1 $107.6 $125.5 $43.0 $44.3 Purchases of property and equipment (20.1) (23.2) (37.8) (22.8) (6.0) (8.6) Capitalized software development costs (0.1