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- **ETM Strategic Upsell**: ETM integrates CSAM, Agentic AI, and exploit validation, enabling 100%+ upsell from VMDR. Early wins show $600K+ annual bookings from consolidating tools.
- **Proactive Risk Management**: ROC uses AI to validate exploitable risks and automate fixes, reducing SOC alert fatigue. TruConfirm and Eliminate drive measurable risk reduction.
- **Financial Strength**: 10% revenue growth, 49% EBITDA margin, $89.5M free cash flow. FY2025 guidance reflects confidence in ETM and federal expansion.
- **Competitive Edge**: Focus on remediation vs. CVE discovery. Q-Flex model accelerates adoption of advanced ETM features.
- **Federal Growth**: High 6-figure federal upsell and 20% ROCon attendance growth highlight long-term opportunity in government sector.

**【CEO Summary Section】**
- **ETM Growth Driver**: CEO emphasizes ETM (Enterprise TruRisk Management) as a key growth driver, with potential 100% upsell from VMDR by integrating Cybersecurity Asset Management, Agentic AI, and exploit validation. Early wins include a Global 700 customer consolidating tools onto Qualys, leading to a mid-6-figure upsell.
- **ROC Innovation**: Risk Operations Center (ROC) uses AI to centralize threat response, processing petabytes of data daily. Features like TruConfirm validate exploitable vulnerabilities, while TruRisk Eliminate automates remediation even without patches. This proactive approach differentiates Qualys from CTEM-only competitors.
- **Q-Flex Model Success**: Q-Flex pricing allows customers to test multiple modules, driving a 50%+ increase in annual bookings for a Global 10 customer. This model accelerates adoption of advanced ETM features.
- **Federal Expansion**: High 6-figure upsell with a large government agency migrating from legacy tools to a unified Qualys platform, including 17 modules. Federal business is a long-term growth opportunity with FedRAMP compliance.

**【CFO Financial Commentary】**
- **Revenue Performance**: Q3 revenue $169.9M (+10% YoY), with channel sales at 50% (vs. 47% YoY). International growth 15% vs. 7% U.S. Net dollar expansion rate 104%, steady but below target. Adjusted EBITDA $82.6M (49% margin), up from 45% YoY. Free cash flow $89.5M (53% margin), up from 37% YoY.
- **Guidance**: FY2025 revenue $665.8M-$667.8M (+10%), EPS $6.93-$7.00. Q4 revenue $172M-$174M (+8%-9%). Focus on ETM penetration and federal growth.
- **Investment Strategy**: Sales & marketing up 9%, balanced with cost control to maintain 49% EBITDA margin. Share buybacks continue, with $49.4M repurchased in Q3.

**【Q&A Highlights】**
- **ETM Upsell Potential**: CEO confirms ETM includes CSAM and Agentic AI, enabling 100%+ upsell from VMDR. Customers value AI-driven remediation over mere visibility. Early POCs converting to commercial deals at 28/28 rate.
- **Competitive Position**: Qualys leads in patch management (140M patches deployed) and proactive risk reduction. Competitors focus on CVE discovery, while Qualys prioritizes actionable fixes. Gartner ranks Qualys #1 in vulnerability management.
- **AI Efficiency**: R&D uses AI tools to boost engineer productivity 20%-25%, reducing QA hiring needs. Internal AI adoption extends to sales and customer support, enhancing efficiency without R&D expense growth.
- **Federal Momentum**: Despite budget scrutiny, federal wins (e.g., $700K+ deal) suggest long-term opportunity. ROC's business quantification of risk resonates with CFOs and boards, driving attendance at ROCon up 20% YoY.


Qualys, Inc. (QLYS) Q3 2025 Earnings Call Transcript

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QLYS

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