Good day, everyone, and welcome to Qualys's Third Quarter 2015 Investor Conference Call. This call is being recorded. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions for asking a question will be given at that time. I would now like to turn the call over to Don McCauley, CFO of Qualys. Please go head, sir.

Well, thank you, and welcome, everyone, to Qualys third quarter 2015 investor conference call. I'm Don McCauley, CFO, and I'm here with Philippe Courtot, our Chairman, President and CEO. We would like to remind you that during this call, we expect to make forward-looking statements within the meaning of the Federal Securities laws. Forward-looking statements generally relate to future events or our future financial or operating performance. Forward-looking statements in this presentation include but are not limited to the following list: statements related to our business and financial performance and expectations for future periods including the rate of growth of our business, our expectations regarding capital expenditures including investments in our cloud infrastructure and the intended uses and benefits of those expenditures, trends related to the diversification of our revenue base, our ability to sell additional solutions to our customer base and the strength and demand for those solutions, our plans regarding the development of our technology and its expected timing, our expectations regarding the capabilities of our platform and solutions, the anticipated need of our customers, our strategy, the scalability of our strategy and our ability to execute our strategy and our expectations regarding our market position, the expansion of our platform and our delivery of new solutions, the expansion of our development operations and support teams in India, the expansion of our partnerships and the related benefits of those partnerships, our ability to effectively manage cost, our plans to expand our sales force, our plans to explore strategic acquisitions, and finally, our expectations for the number of weighted average diluted shares outstanding and the effective GAAP and non-GAAP income tax rate for the fourth quarter and full year 2015. Our expectations and beliefs regarding these matters may not materialize and actual results in future periods are subject to…

Thanks, Philippe. Again, as previously mentioned, our third quarter 2015 results were excellent. Revenues in the third quarter grew to $42.5 million, which represented 24% growth over the third quarter of 2014. Our current deferred revenue balance is $91.9 million as of September 30, 2015, which is also 24% greater than the balance one year ago. Similar to many other companies, both our revenues and our current deferred revenue balances faced a considerable headwind due to the strengthening of the U.S. dollar compared to last year. Now, a quick review of some other revenue metrics. For the third quarter, the U.S. represented 70.5% of revenues, compared to 70% a year ago. Also, we derived 78.5% of third quarter revenues from subscription store Vulnerability Management solution compared to 81% in the third quarter last year. GAAP gross profit increased by 25% to $33.7 million in the third quarter of 2015 compared to $26.9 million in the prior year. GAAP gross margin was 79% for the third quarter of 2015 compared to 78% a year earlier. Non-GAAP gross margin was 80% for the third quarter of 2015 compared to 79% in the third quarter last year. Adjusted EBITDA for the third quarter increased by 67% to $15.1 million compared to $9 million a year earlier. Adjusted EBITDA as a percentage of revenues increased to 36% in the third quarter of 2015 compared with 26% in the same quarter of 2014. Net cash from operations in the first nine months of 2015 increased by 68% to $41.7 million compared to $24.9 million in the first nine months of 2014. Free cash flow for the first nine months increased by 82% to $26.7 million compared to $14.7 million last year. In the third quarter of 2015, capital expenditures were $4.5 million compared to $3.7…

And our first question today comes from Sterling Auty with JPMorgan. Your line is now open.

Yeah. Thanks. Hi, guys. Wondering in terms of looking at the results for the quarter, and more importantly, the guidance for the December quarter, relative to your previous outlook, what's the area that you're seeing, I guess, slower growth than what you originally anticipated? Is it the newer stuff? Because it looked like the VM growth held in, in the quarter. Or is there something happening on the VM side relative to what your previous outlook had incorporated?

Yeah. Hi, Sterling. This is Don. As Philippe mentioned, our growth of our newer services which previously had been growing at 50%-plus, they're now approximately 40% whereas VM stayed the same at 19%.

But is there a particular reason why in terms of – is it you've reached a certain penetration within your customers that you're starting to see a deceleration? Or is there any change in the competitive landscape that's caused that change in trajectory? Philippe F. Courtot - Chairman, President & Chief Executive Officer: No. This is Philippe. These are – this is not the case. In fact, it's more the fact that today we are doing bigger upsells, so the timing of these upsells affect, obviously, the growth within the quarter. We're doing between $250,000 to even $1 million upsell now on Policy Compliance and on our Web Application Scanning. So the timing of those when they arrive in the quarter, obviously, can have an impact. They have an impact, but can have an impact. So we don't see any – nothing to do with the competition. In fact, we'll see significant opportunity to displace more rapidly solutions like Symantec CCS and others of this Policy Compliance application where Qualys is the far better solution. And our agent, by the way also, is extremely well received to precisely displace and compete against these solutions.

Okay. And last question would be on the sales and marketing side. Can you give us a sense of – did you hit the head count hiring plans that you had put into place, because it came in several million dollars lower than what we anticipated? I didn't know how much of that would be variable comp versus maybe just timing of hiring? Philippe F. Courtot - Chairman, President & Chief Executive Officer: So first of all, we put the emphasis last quarter on expanding our management. And this is something that we have done rather than hiring more sales people, we strengthened significantly the management in many aspects, both in our enterprise business as well as in our SMB business. We have also the RSA this year was, of course, in the previous quarter which is typically your very big expense. And we're now gearing up to essentially launch quite significant marketing campaigns on the Cloud Agents.

Okay. Thank you.

And our next question comes from Phil Winslow with Credit Suisse. Your line is now open. Philip A. Winslow - Credit Suisse Securities (USA) LLC (Broker): Hi. Thanks, guys. Just as a follow-up on to Sterling's question. Obviously, he focused on the new products, but I wanted to touch on – I know in the year, you'd mentioned some acceleration of the business, but can you figure it how actually a pretty healthy growth relatively limited the acceleration this quarter as you mentioned. What dynamics are you seeing there? And what was the currency effect on that versus the other dynamics that are going on in the space? Philippe F. Courtot - Chairman, President & Chief Executive Officer: Oh, yes. So effectively, the currency has been a significantly drag on our VM business, because as you know, our model instead of being the perpetual license is a subscription based. Of course, the dollar, the euro and the currency has an impact of a few percent to our renewal base. So this is quite significant, of course, in terms of revenues. We see that marketplace continuing to be very strong with Qualys. I'm sure all of you know that the company which whom we were competing the most fiercely at the very high end of the marketplace, namely the McAfee MVM. McAfee – in fact, Intel announced that they are retiring this product. So that in fact, will accelerate we believe our ability to displace some of the large MVM deployment, which still exists. And in fact, we're already working on those. So that I think is a very good plus. And so, of course, generally speaking, we see that VM business totally invigorated by our Cloud Agents as now our, as I mentioned in the introduction, our customers can now scan the endpoints on the laptops, which you have significantly more units there than the servers. So we're essentially limited in the past with our traditional scanning technology to servers essentially. So that also expands our ability of both the VM as well as the Policy Compliance application. So now, we see bottom line, the VM continuing to be very strong. We have introduced a significant breakthrough products with both the Agents and our AssetView, which allows our customers to create customizable dashboard, which are dynamic. So they can essentially be at their fingertips, the security and compliance posture of their enterprise at the scale that none of our competitors can essentially follow.

Hey Phil, I just have a follow-up point on the beginning of your question. Just to clarify for you and everyone else, the growth rate of our VM business hit 20% in the fourth quarter last year. And the quarter before that and the three quarters since that has been 19%. So this has been basically a stable environment. This is not a declining environment. This is a stable 19%-growth environment for the last five quarters including the last three quarters. Philip A. Winslow - Credit Suisse Securities (USA) LLC (Broker): Great. Thanks, guys.

And our next question comes from Steve Ashley with Robert W. Baird. Your line is now open. Steven M. Ashley - Robert W. Baird & Co., Inc. (Broker): Perfect. Thank you very much. I'd just like to ask about the Cloud Agent business. Was there revenue in the period? And when you report your VM growth of 19%, is the Cloud Agent revenue included in that? Thank you. Philippe F. Courtot - Chairman, President & Chief Executive Officer: So we had some revenue in the period. As you know, this is pretty early days for the Cloud Agent. We expect, of course, to see more coming. I think it has been very well received with a lot of interest in the product, a lot of trials for the Cloud Agent. These are not insignificant upsell for existing customers as, again, because of the volume that I mentioned earlier. And to answer your second question, the way we account the Cloud Agent is we have multiple opportunities of revenues on the Cloud Agent. So we have the VM components, which of course we charge for, that goes with the VM, the Policy Compliance component that we also charge for and goes to the Policy Compliance, and then there's a slew of forthcoming new services which we expect to bring to market pretty quickly first with the File Integrity Monitoring, which is essentially competing against Tripwire. We have a huge demand for that so that will be part of the new service. But also we'll introduce early next year the ability to provide indication of compromises which we'll also charge for as an additional service. And that also we'll count as new services. Steven M. Ashley - Robert W. Baird & Co., Inc. (Broker): Terrific. And then one housekeeping. Don, can we get the number of sales reps you ended the period with? Thank you.

We added five more from last quarter. I think that brings us to 144. Steven M. Ashley - Robert W. Baird & Co., Inc. (Broker): Perfect. Thanks.

Our next question comes from Matt Hedberg with RBC Capital Markets. Your line is now open.

Hi, guys. Thanks for taking my questions. I wanted to follow up on Sterling's question also. You guys had strong billings performance in the quarter and I understand, Don, you mentioned that your product sales are slowing slightly. This still doesn't make sense why Q4 revenues guided lower given the billings in the quarter. I'm curious, was there a change in duration, either the quarter or your outlook?

No, there wasn't. Matt, there wasn't a change in duration. Philippe F. Courtot - Chairman, President & Chief Executive Officer: It's solely the timing of big deals. Of course, I'd say, if a big deal arrives early in the quarter it contributes obviously to more revenues than if it arrives at the end of the quarter.

So Philippe, I guess drilling on that, is that sort of a commentary in terms of where you think some of the large deals in Q4 may likely come later in the quarter, more of a backend loaded quarter than maybe we were thinking? Philippe F. Courtot - Chairman, President & Chief Executive Officer: Correct.

Okay. And then I guess you touched on your Analyst Day you brought in a new head of Sales and a new head of EMEA. As we look forward to 2016, are there any changes that you guys expect to make given the sales leadership? Or should it be more or less sort of what we've come to expect on an annual basis in terms of potential sales changes? Philippe F. Courtot - Chairman, President & Chief Executive Officer: I'm not so sure that I understand the question. You mean changing into the sales organization or changing...

I guess maybe like if territories get reorganized or anything that your new head of Sales might do sort of kicking off the new fiscal year. Philippe F. Courtot - Chairman, President & Chief Executive Officer: In fact, we already did that in parallel. So the organizational changes have already taken place. So today, we're essentially done with that. So we have the new management, we did all that within Q3 almost in parallel and then today sort of hiring more sales people. So we're very stable and solid in terms of management. And it's going to be more head count, both on the new business side as well as on the renewal and upsells since we have so much opportunities on the upsell side, we're increasing also the head count there as well.

Got it. Thanks, guys.

And our next question comes from Erik Suppiger with JMP. Your line is now open.

Yeah. Thanks for taking the question. On the new services, just to be clear, was it both the Web App Scanning and the Policy Compliance that decelerated to 40%? Is there any reason why they would've both decelerated simultaneously? Philippe F. Courtot - Chairman, President & Chief Executive Officer: Essentially there was – just to be specific, there's two – on both cases, there were two large sales which got delayed.

Say that again. There were two what? Philippe F. Courtot - Chairman, President & Chief Executive Officer: Two large upsells in both categories which were delayed.

Okay. And one was in each, Web App Scanning and one was Policy Compliance? Philippe F. Courtot - Chairman, President & Chief Executive Officer: Absolutely.

Okay. And then in terms of the McAfee solution, they've partnered with the Rapid7. How do you look at your opportunity to capture some of that business given their partnership? Philippe F. Courtot - Chairman, President & Chief Executive Officer: I think the partnership is something which, put yourself in the shoes of the customer, which has had a – which has essentially have seen McAfee not supporting the product for quite a while and definitely we're commenting another solution. What we see today is that the market is coming – people will go and try to evaluate the solution. At the high end of the marketplace, which is essentially where most of the McAfee was we are in an extremely strong position because we scale unlike our competitors, and at the more mid-range of the marketplace. We're now essentially preparing, as I mentioned, we'll probably do large replacement campaign anytime soon, and so this is the way see the market. So all of the large accounts have already connected with us, and these companies, they are not going to follow the recommendation of Intel for sure. And they all are evaluating various assumptions for them.

Okay. Then lastly, on the hiring front, you added five sales reps in the quarter. Given some of the management additions that you've had, do you think you're going to be accelerating the sales rep hiring going forward? Philippe F. Courtot - Chairman, President & Chief Executive Officer: Definitely. We have already started. So we're really interviewing significantly as we speak.

Very good. Thank you.

Our next question comes from Srini Nandury with Summit Research. Your line is now open.

All right. Thank you for taking my call. Okay, so I just want to understand your Federal business a little bit. I know that you just hired Mark Hutnan recently, and I just wanted to understand if you have system to operate with the Federal business, and how much is – how big is your Federal business as a percentage of your revenue? Philippe F. Courtot - Chairman, President & Chief Executive Officer: So our Federal business has been extremely small part as a security company, which is about 1% of our revenues. So as you can see, it's probably negligible. We have quite a few good customers in that space which were early adopters like the SEC, like the IRS, and a few other agencies. Now, today, we're expecting to be – in the process of being federal compliance. We see the federal marketplace has warmed up to our cloud architecture, and so this is why we believe now is the time for us to really be very aggressive in the Federal markets. We are in fact already handling a few large opportunities as we speak, and we'll continue to develop our federal team. So we're very happy to have Mark joining us. He's a very experienced person in that space, and so we're ready for it.

Okay. If I may, can you talk about the IT spending environment from your perspective, and more importantly, of the sales cycles. Have you seen any changes in your sales cycles in the last quarter or so? And also, can you talk about the average deal size that you're seeing. Thank you. Philippe F. Courtot - Chairman, President & Chief Executive Officer: No, no – yes. So in terms of the sales cycle, we've not seen essentially the sales cycle changing. As you know, we are addressing three markets with a package of solutions with Express Lite for the SMB, Express for the SME for the midmarket and Enterprise for the large enterprise. The selling cycle has been remaining about the same in these three categories. The difference, as you alluded to, is the fact that we're now doing significantly bigger deals and bigger upsell. So that's the big difference.

Okay. Thank you, gentlemen.

Our next question comes from Michael Kim with Imperial Capital. Your line is now open.

Hi. Good afternoon, guys. Just going back to the Cloud Agent platform, hoping you provide an update on the deployment to some of the customers that you mentioned at the analyst day, Visa, Cisco and the cloud provider, if they've expanded on those deployments and also with the trials, are they primarily existing customers looking for an upsell opportunity or is that an opportunity to capture new customers? Philippe F. Courtot - Chairman, President & Chief Executive Officer: So all the companies we mentioned, they all have deployed, essentially very successfully, so we're very happy with that. We have, as I've mentioned earlier, a lot of trials, both from existing customers as well as new customers. The new customers really appreciate the value that we bring for both VM and Policy Compliance. So let me remind you what these values are. With these Cloud Agents, you don't have to worry about Scanning Windows, which has always been a kind of a pain. You don't have to worry about credentials. So you could identify what you have on devices and their vulnerabilities. So that's another very big advantage. And finally, what you have is the real-time component. With the Scanning Windows you were depending on scanning your system every week. In fact, we have today customers, believe it or not, scanning a million IP every day. So of course, this agent eliminates all of that and gives you the ability to fundamentally scan these at real-time. So we anticipate over time that most of our customers, wherever they can put an agent will use our Agent as the technology to identify the vulnerabilities on those devices and only use the scanning technology to essentially for those devices like printers, et cetera, where you cannot put an agent. And as you may know, also if you were at the conference, we're also introducing in beta what we call the passive scanning. So with these three technologies combined, with the scanning technology we can look at the device from the outside, with the agent, we can look at the device from the inside. And now with our passive technology, we can look at what's coming in and out of the device. And the beauty of our architecture is that instead of having three different applications like you find with enterprise software solution, we bring all that data into that one central place, which is our cloud platform, which we can deliver either as a shared platform or as an on-premise solution. And now, you can correlate all of that information in real-time, and as well as essentially creating the customizable views and dashboards and alerts. So this is what we have done, and it's absolutely well received from all of our customers today, and prospects.

And as you're going through some of the trials, have you gotten a little better sense on the pricing that you might be able to see as a premium relative to the VM or PC, Policy Compliance? Philippe F. Courtot - Chairman, President & Chief Executive Officer: So currently today, we believe we could sustain about (34:05) in the beginning essentially giving some promotion. But ultimately, we see that we could get the premium on the vulnerability scanning, both for Policy Compliance and for VM as in fact we create this, it's a significantly more value for the customers. So we believe we can maintain about a 20% premium over the traditional scanning solutions.

Got it. And then just going back to the core Vulnerability Management business and the consistency in the growth this year, has that been driven by share gains primarily or scope extension by existing customers or any extension in use case Continuous Monitoring? Philippe F. Courtot - Chairman, President & Chief Executive Officer: I think the Continuous Monitoring doesn't really drive that much revenue by itself, but it absolutely makes the Vulnerability Management application much more, if you prefer, more effective as you can now create alerts. The big driver is the combination of a lot of new customers and starting bigger than in the past. In the past, we're starting, for example, to do the perimeter and then was taking some time for the company to really believe in the model and then adopt us in the inside. Today, we see companies from the get go which are really taking both inside and the outside and that obviously makes a bigger deal. So it's a kind of a mix of customers, some existing customers, for example, who have a big bank which is moving from the outside to the inside and that, of course, will create a big upsell, as well as, as I mentioned earlier, new customers which are starting both from the – for the perimeter and for the inside at the same time.

Okay. Great. Thank you very much.

And our next question comes from Mike Cikos with Macquarie. Your line is now open. Michael Cikos - Macquarie Capital (USA), Inc.: Hi, guys. Question for you on the two larger upsells that were delayed. One for the WAS product and one for the PC. Were you expecting both of those upsells to close during the third quarter or the fourth quarter? And I guess, have those upsells now closed at this time? Philippe F. Courtot - Chairman, President & Chief Executive Officer: So we had in fact, one of each in a way, so and none of them have closed at this time. Michael Cikos - Macquarie Capital (USA), Inc.: So I'm sorry, you expected both of those to close you said, or just one of those? Philippe F. Courtot - Chairman, President & Chief Executive Officer: No, what I mentioned is one was we're expecting to have in the previous quarter and the other one in the current quarter. And they both have not closed yet. Michael Cikos - Macquarie Capital (USA), Inc.: Okay. And I guess, with – this is the second time you guys have had to take down your full year revenue guidance. And both of them, we can attribute in part to the FX, but also to win these larger deals are starting to come in. I guess the question then is, are you guys rethinking or changing your approach to guidance now just so that you guys don't have to keep coming out and doing this? Or is there any change in the process that you guys have for when you set your guidance?

No, Mike, there's no change in the methodology that we use. We have a very granular bottoms-up approach to look at our business and forecast it out. Michael Cikos - Macquarie Capital (USA), Inc.: Okay. Okay. And then just the last question, if I could, was regarding the pricing of the Cloud Agents. I know you had said you expect that you can come in a premium for these agents, if I recall, at 20% compared to the traditional scanning solutions. I guess the question is, are these Cloud Agents being priced on a per device basis or per IP address? Philippe F. Courtot - Chairman, President & Chief Executive Officer: Yes, but it's the same. It's is the same because each – yeah, it's per device, but it's equivalent to per IP, yes. Michael Cikos - Macquarie Capital (USA), Inc.: Okay. Okay. Thank you.

And our next question comes from Robert Breza with Wunderlich. Your line is now open.

Hi, thanks for taking my questions. Most of my questions have been asked already. Just Don, real quickly, when you look out FY 2016, you didn't mention taxes in your prepared remarks. Can you just talk to us on a non-GAAP basis how you're thinking about taxes? Thanks.

Yeah, at this point, Rob, I expect, I don't have any reason to think the rates we're using right now are going to change.

Perfect. Thanks, Don.

Yeah. Yeah.

And our next question comes from Gur Talpaz with Stifel. Your line is now open. Christopher Speros - Stifel, Nicolaus & Co., Inc.: Hi, guys. This is Chris Speros on for Gur. First of all, thanks for taking our question. Second of all, in regards to your Continuous Monitoring cloud service, could you guys highlight some recent successes and describe the overall state of the pipeline? Philippe F. Courtot - Chairman, President & Chief Executive Officer: The Continuous Monitoring is an extension to the VM. Essentially, it allows customers essentially define a certain kind of circumstances where they believe it's the combination of, for example, (39:37) with the severity number five, that creates an alert. And so then from – with these alerts you now – we move that alert into their incident response system. It's a very natural extension of our Vulnerability Management. Currently, today, we see customers have been using it much more for the perimeter. And we're starting to see an adoption for doing the same thing for your internal devices. Christopher Speros - Stifel, Nicolaus & Co., Inc.: All right. Sounds good. Thank you, guys.

And our next question comes from Rob Owens with Pacific Crest. Your line is now open.

Hey, guys. This is Ben on for Rob. Thanks for taking my questions. First question I have was just kind of around you talked about a deal getting pushed from Q3. I wanted to ask about the linearity of business for the rest of the business throughout Q3, was it pretty linear relative to what you've seen in the past? Or do you see some shifts on kind of when deals were coming in?

It was a normal quarter, Ben... Philippe F. Courtot - Chairman, President & Chief Executive Officer: Yeah.

...in terms of the pattern of business.

Okay. Great. And then also wanted to – I know in the past you've talked about some of your existing customers coming up and asking for upsells to the point where it kind of surprised you to the degree of what they wanted to buy as far as additional VM solutions. I wondered if you could talk a little bit as far as what type of visibility you're seeing into these VM upsells. Are you easily able to telegraph which customers are looking for broader deployments? Are you actually seeing significant amount of upsells that are coming as kind of a surprise they're coming to you? Philippe F. Courtot - Chairman, President & Chief Executive Officer: So in fact, we have a very good visibility on those upsells on the VM side. And the reason is because again, you have some customers, which are still only doing the perimeter, and this is when it's obviously a question of time before they go and expand Qualys inside, which are typically much bigger deals. And then on the other customers, it's essentially much smaller growth. So this is also more statistically predictable, because we can know how much of their total environment they're currently scanning, and we currently of course are discussing with them understanding their plan of expansion. Those which are in – so this is very predictable, both of them. What is not predictable, and we have quite a few of those is when the company today acquires another company, definitely there is an opportunity of having now Qualys being used into – with us in the new company that acquires. So there's in a lot of big mergers and because we have a large presence data already of the high end of the marketplace and this is where essentially a lot of that activity is taking place, this is really favoring us.

Great. Thank you.

Our next question comes from Alban Cousin with Arete Research. Your line is now open.

Hi. Thanks for taking for my question. I may have missed that earlier, but Don, would it be possible to spell out the effect of FX? Some of your peers have been able to say that the euro weakness, it has impacted their fund base a bit also. I was wondering whether you could do the same for Qualys.

Yeah, we could do that. For Q3 revenues, our forecasted Q4 revenues and also our deferred revenue balance at September 30, approximately 2.5% impact.

Thanks.

And our next question comes from John Lucia with JMP Securities. Your line is now open.

Hey, guys. Thanks for taking my questions. The first question is, I think you said that 60% of your customers have purchased more than one solution at this point. That stood at 54% at the end of 2014 and 30% at the end of 2013. It seems to be slowing from the pace that you had in 2014 going into this quarter. Can you just talk about what's causing that slowdown in terms of upsells?

Yeah. Yeah. Hey, John. This is Don. We actually mentioned this a quarter ago in our call kind of preemptively. Today, waiting for the kind of the Agent and the File Integrity Monitoring and some of these other products to kick in, which is just getting started, revenues comprised principally of Vulnerability Management, Policy Compliance and Web Application Scanning, and numerically, we give this metric we're counting customers. And our SMB customers by and large don't buy compliance very much. Compliance is more of an enterprise-focused product, and the smaller customers generally aren't too compliance-oriented. So kind of naturally, until we get some other products joining the mix, it's inevitable that the metric will start to level off.

Okay. That makes sense. And then I've one more question. What was total head count in the quarter? And then did hiring come in below in line with or ahead of your expectations, and then also the same for turnover?

Yeah, so our total head count was 497 in the quarter. I already gave the sales head count. I don't think we really get into what we budget and so forth. We're always looking for good people. So I don't think we've previously given head count targets or turnover figures. Nothing unusual going on this quarter though. We're always looking for good people, and we were able to add quite a few this quarter.

Okay. Philippe F. Courtot - Chairman, President & Chief Executive Officer: And the one point that I could add is that, one point here in terms of – we're also expanding big time in India, as Don mentioned, where we're moving into new beautiful offices in Pune. We see these – we have a unique ability to really attract a lot of good talent there, and we're very happy and that allows us to continue investing in our R&D without, of course, while maintaining if you prefer our cost structure. It's not, in fact, improving our cost structure.

Okay. Makes sense. Thank you.

And our next question comes from Jeff Cardon with Wasatch Advisors. Your line is now open.

Hi. Thank you. I just want another clarification on the deal that won't come through in the fourth quarter. Are they in the backlog number now, and that's one of the reasons the backlog accelerated? Or have they not been signed yet?

Yeah, so we don't actually have a – you're talking about deferred revenues?

Yeah. Sorry.

Yeah, so deferred revenues are actually deals that closed that we billed the customers. So we're not – when we say a deal closed, it would be in deferred revenues. These are not in deferred revenues at September 30.

And have they been signed? Philippe F. Courtot - Chairman, President & Chief Executive Officer: Oh, as I mentioned earlier, no. Not yet, as I mentioned earlier.

Okay. Thank you.

I'm not showing any further questions at this time. I would now like to turn the call back to Philippe Courtot, CEO of Qualys, for closing remarks. Philippe F. Courtot - Chairman, President & Chief Executive Officer: Okay. Thank you, operator. In summary, our new offerings, including AssetView and Cloud Agents, are game changer for Qualys. They significantly expand our market opportunity and allow us to play a very important role in the convergence of IT and security. We're now better equipped than ever to capitalize on our scalable business model and outstanding team which together allows us to continue accelerating the adoption for offering on a global scale. Thank you for attending our earnings call today. Should you have any follow-up questions, Don and I are available to you. We're looking forward to speaking with you next quarter. Thank you very much.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone, have a wonderful day.