“Our planned capital expenditures in Q2 is approximately $5.5 million to $6.5 million and for the full year 2022, we continue to expect investment in the range of $25 million to $30 million.”

In context

“Joo Mi Kim (CFO): Thanks Sumedh, and good afternoon. 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. We're pleased to report continued organic revenue growth acceleration and strong profitability as reflected in the following financial and operational highlights. Revenues for the first quarter of 2022 grew 17% to $113.4 million, up from 12% growth in the year-ago period. We saw continued success in our land-to-expand engine with a healthy cross and up-sell performance driving an increase in our year-over-year and sequential net dollar expansion rate, which was 110% in Q1, up from 108% last quarter and 103% a year ago. Our LTM average deal size continued to increase for both new and existing customers with total average increasing by 17% in Q1, the same as LTM growth in Q4 and up from 5% LTM growth a year ago. With accelerating demand for security transformation solutions and our strengthening market position, our Q1 LTM calculated current billings grew 22%. We believe the investments we've made in platform innovation and our single agent approach have enhanced our value proposition with customers and helped drive bookings growth over the past several quarters. This quarter was no different, and we're excited by the continued adoption of VMDR with total customer penetration now at 40%, up from 36% last quarter and 24% a year ago. Continued adoption of Qualys solutions increased large customer spend with 128 customers spending $500,000 or more with us. This represents 17% growth from the year-ago period. We attribute this success to our innovation strategy, which has resulted in strong product differentiation and market position. Our investments in building a unified cloud-based platform are clearly resonating with customers. CIOs and CISOs are increasingly looking to phase out legacy point solutions in favor of a consolidated security and compliance platform due to increasing cybersecurity risks, the speed at which critical vulnerabilities are weaponized and the increasing importance and priority of digital transformation initiatives. We remain focused on building a long-term business with durable growth and industry-leading margin. As a result, our scalable platform model continues to drive superior margins and significant cash flow. Adjusted EBITDA for the first quarter of 2022 was $54.3 million, representing a 48% margin; EPS for the first quarter of 2022 was $0.89; and our free cash flow for the first quarter of 2022 was $71.4 million, representing a 63% margin. We believe we can continue to generate attractive levels of free cash flow while continuing to invest in the business. In Q1, we continued to invest the cash we generated from operations back into Qualys including $7.6 million on capital expenditures and $46.6 million to repurchase 368,000 of our outstanding shares. We're pleased to announce that our Board has authorized an additional $200 million increase to our share repurchase program. The resilience of our sustainable and scalable business model has been proven over time as currently demonstrated by our continued strong earnings and cash flow generation at this time of uncertainty and volatility. Leveraging our excess cash to continue to return capital to shareholders will allow us to mitigate our share dilution and drive shareholder value. Including $225 million remaining as of Q1, this provides approximately $425 million in share repurchase capacity. The weighted average diluted shares outstanding in Q1 was 40 million, down from 40.4 million last year. Shifting now to guidance for the second quarter and the rest of the year, our strong start to the year continues to bolster our confidence in both our strategic agenda and business environment. With current opportunities ahead, we continue to believe this remains the right time for us to increase our spend with an emphasis on Sales and Marketing to support long-term growth in the business. As I've said before, this investment strategy is not about just adding headcount. We're equally focused on enhancing our channel, accelerating digital marketing initiatives, expanding product management capabilities and other sales support functions to further enhance both our value proposition with customers and mid-to-long term sales productivity. Building off our strong start to the year, we are raising the bottom and top end of our revenue guidance for the full year to now be in the range of $484 million to $486.5 million, representing 18% growth. This compares to prior full year revenue guidance of $482 million to $485 million. In terms of profitability, balancing a tight labor market with our anticipated investment for the year, we are raising our full year EPS guidance to now be in the range of $3.13 to $3.17 from the prior range of $2.87 to $2.92. This revised guidance implies an EBITDA margin in the low-40s with the timing of our investments to be more back-half weighted. For the second quarter, we expect revenues to be in the range of $117 million to $117.8 million, which represents a range of 17% to 18% growth. We expect EPS to be in the range of $0.78 to $0.80. Our planned capital expenditures in Q2 is approximately $5.5 million to $6.5 million and for the full year 2022, we continue to expect investment in the range of $25 million to $30 million. In conclusion, as we look to the balance of this year, we remain excited about our opportunity to drive durable top-line growth on the back of a large and growing market opportunity while leveraging our highly scalable model to maintain industry-leading profitability. With that, Sumedh and I are happy to answer any of your questions.”