“Looking ahead, we expect our U.S. and international revenue mix to remain roughly at 60% and 40%, respectively.”

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 periods unless stated otherwise. Turning to first quarter results. Revenues grew 12% to $145.8 million with the channel continuing to increase its contribution, making up 45% of total revenues compared to 43% a year ago. As a result of our continued commitment to leverage our partner ecosystem to drive growth, we were able to grow revenues from channel partners by 18%, outpacing direct, which grew 7%. By deal, 13% growth outside the U.S. was ahead of our domestic business, which grew 11%. Looking ahead, we expect our U.S. and international revenue mix to remain roughly at 60% and 40%, respectively. Turning to land and expand results. We continue to witness deal scrutiny persisting for many organizations with the upsell environment remaining challenging, resulting in a 104% net dollar expansion rate down from 105% last quarter. Offsetting this was a positive growth trend in new business, achieving double-digit growth rate for the third consecutive quarter. As we continue to prioritize increasing market share in 2024, we plan to launch new customer acquisition campaigns and incentives in addition to streamlining sales cycles and operations with better use of technology and systems. In terms of product contribution to bookings, patch management and CyberSecurity Asset Management combined made up 13% of LTM bookings and 23% of LTM new bookings in Q1. With the rapid pace of innovation associated with our TotalCloud CNAPP offering, our cloud security solutions made up 4% of LTM bookings. We attribute the success to an increasingly complex threat and regulatory environment that underscores the relevance of our Enterprise TruRisk platform to holistically assess, manage, and remediate risk. Turning to profitability. Adjusted EBITDA for the first quarter of 2024 was $69 million, representing a 47% margin compared to a 45% margin a year ago. Operating expenses in Q1 increased by 5% to $56.8 million, primarily driven by an 11% increase in sales and marketing investments. As we continue to increase our investment intensity and focus on sales and marketing enablement, customer success, and productivity, we believe we will be able to drive wallet share and long-term returns while balancing growth and profitability. EPS for the first quarter of 2024 was $1.45, and our free cash flow was $83.5 million, representing a 57% margin compared to 48% in the prior year. In Q1, we continued to invest the cash we generated from operations back into Qualys, including $2.1 million on capital expenditures and $18 million to repurchase 105,000 of our outstanding shares. As of the end of the quarter, we had $265.7 million remaining in our share repurchase program. With that, let us turn to guidance, starting with revenue. For the full year 2024, we are now expecting our revenue to be in the range of $601.5 million to $608.5 million, which represents a growth rate of 8% to 10%. This compares to revenue guidance of $600 million to $610 million from last quarter. For the second quarter of 2024, we expect revenue to be in the range of $147.5 million to $149.5 million, representing a growth rate of 8% to 9%. This guidance assumes continued deal scrutiny, resulting in a tougher upsell environment, partially offset by investments in the business to drive new customer growth. Shifting to profitability guidance. For the full year 2024, we continue to expect EBITDA margin to be in the low 40s and free cash flow margin in the mid-30s. We expect full-year EPS to be in the range of $5.06 to $5.30 up from the prior range of $4.95 to $5.27. For the second quarter of 2024, we expect EPS to be in the range of $1.27 to $1.35. Our planned capital expenditures in 2024 are expected to be in the range of $13 million to $18 million and for the second quarter of 2024 in the range of $4 million to $6 million. Consistent with prior guidance, for the remainder of 2024, we intend to outline our product and marketing investments to focus on specific initiatives aimed at driving more pipeline, enhancing our partner program, expanding our federal vertical, and supporting sales while maintaining a disciplined approach to unit economics. As a percentage of revenue, we expect to prioritize an increase in investment in sales and marketing as well as the related support functions and personnel, with more modest increases in engineering and G&A. In conclusion, in Q1, we delivered healthy top-line growth and industry-leading profitability, while making progress in executing our long-term strategic agenda. With our comprehensive risk management platform, delivering immediate time to value for our customers, we're confident in our ability to deliver on our growth opportunity long term and remain committed to maximizing shareholder value.”