“Starting with revenues, for the full year 2023, we are reaffirming our revenue guidance range of $553 million to $557 million, which represents a growth rate of 13% to 14%.”

In context

“Joo Mi Kim (CFO): Thanks, Sumedh, and good afternoon. Before I start, I’d like to note that, except for revenues, all financial figures are non-GAAP and growth rates are based on comparisons to the prior year period, unless stated otherwise. Turning to first quarter results, revenues grew 15% to $130.7 million with channel continuing to increase its contribution, making up 43% of total revenues compared to 41% a year ago. Revenues from channel partners grew 18%, outpacing direct, which grew 13%. By geo, growth in the US of 16% was approximately in line with our international business, which grew 15%. Looking ahead to the balance of 2023, we expect our US and international revenue mix to remain at roughly 60% and 40%, respectively. In Q1, we saw continued strength in customer dollar retention and upsell in line with expectations with our net dollar expansion rate on a constant currency basis at 109%, flat from last quarter, but down slightly from 110% last year. While there remains room for improvement from smaller customers spending less than $25,000 with us, we are pleased with the strong revenue growth of 18% from larger customers. In terms of new product contribution to bookings, Patch Management and CyberSecurity Asset Management combined made up 10% of LTM bookings and 16% of LTM new bookings in Q1. We attribute this success to an increasingly complex threat environment that highlights the relevance of the Qualys Cloud Platform to holistically assess, manage and remediate risk. Reflecting our scalable and sustainable business model, adjusted EBITDA for the first quarter of 2023 was $58.7 million, representing a 45% margin, compared to a 48% margin a year ago. Operating expenses in Q1 increased by 20% to $54.1 million, primarily driven by the growth in sales and marketing investments, including higher headcount and related costs. During the remainder of 2023, we believe it's prudent to take an opportunistic approach in executing against our investment plan while not losing sight of the importance of optimizing our prior investments to drive long-term profitable growth. EPS for the first quarter of 2023 was $1.09, and our free cash flow for the first quarter of 2023 was $62.8 million, representing a 48% margin. In Q1, we continued to invest the cash we generated from operations back into Qualys, including $4 million on capital expenditures and $66.6 million to repurchase 584,000 of our outstanding shares. As of the end of the quarter, we had $187.9 million remaining in our share repurchase program. Now, let us turn to our guidance. Starting with revenues, for the full year 2023, we are reaffirming our revenue guidance range of $553 million to $557 million, which represents a growth rate of 13% to 14%. For the second quarter of 2023, we expect revenues to be in the range of $135.2 million to $136.2 million, representing a growth rate of 13% to 14%. This guidance assumes no material change in our net dollar expansion rate in 2023, but continued challenges in new customer growth. We believe our value proposition remains strong with solid demand from our existing customers but anticipate the current macro environment will moderate returns in 2023, despite having increased our sales and marketing headcount by over 20% in 2022. With that said, given the long-term growth opportunities ahead of us, and our industry-leading margins and planned further room for investment, we will continue to responsibly invest in operations, people, and systems by recognizing the importance of optimization. As a result, we continue to expect full-year 2023 EBITDA margin to be in the low 40s with full-year EPS in the range of $4.13 to $4.28, up from the prior range of $4.10 to $4.18. For the second quarter of 2023, we expect EPS in the range of $0.98 to $1.03. Our planned capital expenditures in 2023 look to be in the range of $15 million to $20 million. And for the second quarter of 2023 in the range of $3 million to $5 million. Consistent with prior guidance, for the remainder of 2023, we intend to align our product and marketing investments to focus on specific initiatives to drive more pipeline and support sales in response to the current macro conditions. In doing so, we plan to prioritize investments in sales and marketing as well as related support functions in systems over our investment in engineering. As we endeavor to sharpen our execution by focusing on sales and marketing enablement and productivity, we believe we will be able to drive wallet share and long-term returns while balancing growth and profitability. In conclusion, in Q1, we delivered healthy top-line growth and industry-leading profitability with our comprehensive risk management solution attracting industry attention and delivering immediate time to value for our customers. We are confident in our ability to deliver on our long-term growth opportunities while investing responsibly to maximize shareholder value. With that, Sumedh and I would be happy to answer any of your questions.”