Qualys, Inc. (NASDAQ:QLYS) Q3 2023 Earnings Call Transcript

Brian Colley: Got it. Thank you. And then Joo Mi, maybe one for you. You had talked about billings kind of staying in a similar range as you saw last quarter, and obviously, you came in above that at 14% growth. I’m curious kind of where — what areas kind of surprised you the most there? And then also, how should we think about billings growth in the fourth quarter?

Joo Mi Kim: Yes. As far as billings, it does have a tendency to fluctuate there are multiple different reasons why it might not exactly align with our bookings or business trajectory. But looking at it on an LTM basis, you’re looking at — it was 11% on an LTM basis growth last quarter, and it picked up to 12%. And I think it barely reflects what we’re seeing in the market today in terms of our business. And for next quarter, we don’t see a materially changing from that rate.

Brian Colley: Got it. Thank you.

Operator: Thank you. And one moment for our next question. The next question will come from Yun Kim of Loop Capital Markets. Your line is open. Pardon me, Yun Kim, your line is open. [Operator Instructions] Yun Kim your line is open. You may proceed. One moment please I will go to the next question. The next question will come from Rudy Kessinger of DA Davidson. Your line is open.

Rudy Kessinger: Hey, guys. Thanks for taking my questions. Joo Mi, I just want to go back and clarify, I heard your prepared remarks. You said free cash flow for the full year in the mid-30% range. I just want to make sure that’s accurate. That imply breakeven cash flow to negative $15 million cash flow in Q4. Did you mean mid-30s for Q4

Joo Mi Kim: No, it’s about mid- to high 30s. So I’m expecting about only a few million in free cash flow for Q4. So you’re looking at about like maybe $205 million range for the full year. And that’s primarily due to deferral of the tax payments to Q4.

Rudy Kessinger: Okay. Got it. Okay. And then just trying to understand the puts and takes of your Q4 revenue guide, I mean, with the Q3 guide prior full year guide, you had implied a Q4 revenue guide before. And you beat revenue by about $1 million in the quarter. You saw current calculated billings reaccelerated a few points to 14%. And then you effectively lowered the Q4 implied revenue guide by about $0.5 million. And so did just what drove the outperformance in Q3 and why isn’t it reflected in a higher Q4 revenue guidance?

Sumedh Thakar: Yes. The outperformance in Q3 and small outperformance if you take a look at it from the bookings trajectory, because I think our bookings performance is more fairly reflected by the LTM current billings growth. So you’re looking at 11% to 12%. And that was better than what we had expected from basically on the new and that definitely helps with our current billings in terms of the 14% that we posted in Q3. With respect to revenue, it’s not that much of a decline. If you take a look at the difference in terms of what was implied in Q4 versus the outperformance in Q3. And then there’s really nothing more to within that.

Rudy Kessinger: Okay. Got it. Thanks for taking the questions.

Operator: Thank you. One moment please for our next question. The next question will come from Joshua Tilton of Wolfe Research. Your line is open.

Joshua Tilton: Hey guys. Can you hear me?

Joo Mi Kim: Yes.

Joshua Tilton: Great. I apologize if somebody addressed this already have kind of bounced around in the few tonight. But I remember last quarter you kind of gave like some soft guardrails around what you thought 3Q current billings growth could be based off of what 2Q was. So I’m wondering if you can kind of give us some soft guard rails on what you think 4Q current billings could be based off the strong performance you saw in 3Q.