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Qualys Announces First Quarter 2024 Financial Results

Revenue Growth of 12% Year-Over-Year
GAAP EPS: $1.05; Non-GAAP EPS: $1.45
Raises 2024 GAAP EPS Guidance to $3.26-$3.50
Raises 2024 Non-GAAP EPS Guidance to $5.06-$5.30

FOSTER CITY, Calif., May 7, 2024 /PRNewswire/ -- Qualys, Inc. (NASDAQ: QLYS), a pioneer and leading provider of disruptive cloud-based IT, security and compliance solutions, today announced financial results for the first quarter ended March 31, 2024. For the quarter, the Company reported revenues of $145.8 million, net income under United States Generally Accepted Accounting Principles ("U.S. GAAP") of $39.7 million, non-GAAP net income of $54.7 million, Adjusted EBITDA of $69.0 million, GAAP net income per diluted share of $1.05, and non-GAAP net income per diluted share of $1.45.

"We delivered another quarter of healthy revenue growth and strong profitability," said Sumedh Thakar, president and CEO of Qualys. "By leveraging the advanced automation in the Qualys Enterprise TruRisk Platform, we offer customers and partners a highly differentiated and natively integrated solution to holistically measure, communicate, and ultimately work to eliminate cyber risk. Our continuous innovation to further strengthen our platform and TruRisk capabilities across on-prem, cloud, and multi-cloud environments enables a solution for modern security challenges at scale, further extends our leadership, and we believe strategically positions Qualys as the foundational risk management platform for the future and durable long-term growth."

First Quarter 2024 Financial Highlights

Revenues: Revenues for the first quarter of 2024 increased by 12% to $145.8 million compared to $130.7 million for the same quarter in 2023.

Gross Profit: GAAP gross profit for the first quarter of 2024 increased by 14% to $118.6 million compared to $103.7 million for the same quarter in 2023. GAAP gross margin was 81% for the first quarter of 2024 compared to 79% for the same quarter in 2023. Non-GAAP gross profit for the first quarter of 2024 increased by 14% to $121.4 million compared to $106.1 million for the same quarter in 2023. Non-GAAP gross margin was 83% for the first quarter of 2024 compared to 81% for the same quarter in 2023.

Operating Income: GAAP operating income for the first quarter of 2024 increased by 27% to $44.8 million compared to $35.2 million for the same quarter in 2023. As a percentage of revenues, GAAP operating income was 31% for the first quarter of 2024 compared to 27% for the same quarter in 2023. Non-GAAP operating income for the first quarter of 2024 increased by 24% to $64.6 million compared to $52.0 million for the same quarter in 2023. As a percentage of revenues, non-GAAP operating income was 44% for the first quarter of 2024 compared to 40% for the same quarter in 2023.

Net Income: GAAP net income for the first quarter of 2024 increased by 37% to $39.7 million, or $1.05 per diluted share, compared to $29.1 million, or $0.77 per diluted share, for the same quarter in 2023. As a percentage of revenues, GAAP net income was 27% for the first quarter of 2024 compared to 22% for the same quarter in 2023. Non-GAAP net income for the first quarter of 2024 was $54.7 million, or $1.45 per diluted share, compared to $41.2 million, or $1.09 per diluted share, for the same quarter in 2023. As a percentage of revenues, non-GAAP net income was 38% for the first quarter of 2024 compared to 32% for the same quarter in 2023.

Adjusted EBITDA: Adjusted EBITDA (a non-GAAP financial measure) for the first quarter of 2024 increased by 18% to $69.0 million compared to $58.7 million for the same quarter in 2023. As a percentage of revenues, Adjusted EBITDA was 47% for the first quarter of 2024 compared to 45% for the same quarter in 2023.

Operating Cash Flow: Operating cash flow for the first quarter of 2024 increased by 28% to $85.5 million compared to $66.8 million for the same quarter in 2023. As a percentage of revenues, operating cash flow was 59% for the first quarter of 2024 compared to 51% for the same quarter in 2023.

First Quarter 2024 Business Highlights

  • Unveiled TotalCloud 2.0 with TruRisk Insights, bringing together cloud infrastructure, SaaS apps, and externally exposed assets for a unified view of risk across multi-cloud environments.
  • Expanded Qualys' partnership with Oracle to include VMDR and TotalCloud, which are both now integrated natively with Oracle Cloud Infrastructure (OCI), and available on the Oracle Cloud Marketplace.
  • Orange Cyberdefense expanded its partnership with Qualys to strengthen its managed cybersecurity portfolio and deliver an end-to-end vulnerability intelligence service.
  • Qualys' enhanced CyberSecurity Asset Management solution now detects unmanaged and untrusted devices in real time through passive discovery functionality within the Qualys Cloud Agent. This enhancement reinforces the solutions leadership in internal and external attack surface management.
  • Qualys VMDR and TotalCloud were named finalists for the SC Awards Europe in categories of Best Vulnerability Management and Best Cloud Security solutions, highlighting their excellence and contributions to shaping the future of technology and cybersecurity in the UK and Europe.

Financial Performance Outlook

Based on information as of today, May 7, 2024, Qualys is issuing the following financial guidance for the second quarter and full year fiscal 2024. The Company emphasizes that the guidance is subject to various important cautionary factors referenced in the sections entitled "Legal Notice Regarding Forward-Looking Statements" and "Non-GAAP Financial Measures" below.

Second Quarter 2024 Guidance: Management expects revenues for the second quarter of 2024 to be in the range of $147.5 million to $149.5 million, representing 8% to 9% growth over the same quarter in 2023. GAAP net income per diluted share is expected to be in the range of $0.82 to $0.90, which assumes an effective income tax rate of 22%. Non-GAAP net income per diluted share is expected to be in the range of $1.27 to $1.35, which assumes a non-GAAP effective income tax rate of 21%. Second quarter 2024 net income per diluted share estimates are based on approximately 37.7 million weighted average diluted shares outstanding for the quarter.

Full Year 2024 Guidance: Management now expects revenues for the full year of 2024 to be in the range of $601.5 million to $608.5 million, representing 8% to 10% growth over 2023. This compares to the previous guidance range of $600.0 million to $610.0 million. GAAP net income per diluted share is expected to be in the range of $3.26 to $3.50, up from the previous guidance range of $3.11 to $3.43. This assumes an effective income tax rate of 22%. Non-GAAP net income per diluted share is expected to be in the range of $5.06 to $5.30, up from the previous guidance range of $4.95 to $5.27. This assumes a non-GAAP effective income tax rate of 21%. Full year 2024 net income per diluted share estimates are based on approximately 37.7 million weighted average diluted shares outstanding.

Qualys has not reconciled non-GAAP net income per diluted share guidance to GAAP net income per diluted share guidance because Qualys does not provide guidance on the various reconciling cash and non-cash items between GAAP net income and non-GAAP net income (i.e., stock-based compensation, amortization of intangible assets from acquisitions and non-recurring items). The actual dollar amount of reconciling items in the second quarter and full year 2024 is likely to have a significant impact on the Company's GAAP net income per diluted share in the second quarter and full year 2024. A reconciliation of the non-GAAP net income per diluted share guidance to the GAAP net income per diluted share guidance is not available without unreasonable effort.

Investor Conference Call

Qualys will host a conference call and live webcast to discuss its first quarter financial results at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) on Tuesday, May 7, 2024. To access the conference call by phone, please register here. A live webcast of the earnings conference call, investor presentation and prepared remarks can be accessed at https://investor.qualys.com/events-presentations. A replay of the conference call will be available through the same webcast link following the end of the call.

Investor Contact

Blair King
Vice President, Investor Relations and Corporate Development
(650) 538-2088
ir@qualys.com

About Qualys

Qualys, Inc. (NASDAQ: QLYS) is a pioneer and leading provider of disruptive cloud-based Security, Compliance and IT solutions with more than 10,000 subscription customers worldwide, including a majority of the Forbes Global 100 and Fortune 100. Qualys helps organizations streamline and consolidate their security and compliance solutions onto a single platform for greater agility, better business outcomes, and substantial cost savings.

The Qualys Enterprise TruRisk Platform leverages a single agent to continuously deliver critical security intelligence while enabling enterprises to automate the full spectrum of vulnerability detection, compliance, and protection for IT systems, workloads and web applications across on premises, endpoints, servers, public and private clouds, containers, and mobile devices. Founded in 1999 as one of the first SaaS security companies, Qualys has strategic partnerships and seamlessly integrates its vulnerability management capabilities into security offerings from cloud service providers, including Amazon Web Services, the Google Cloud Platform and Microsoft Azure, along with a number of leading managed service providers and global consulting organizations. For more information, please visit www.qualys.com.

Qualys, Qualys VMDR® and the Qualys logo are proprietary trademarks of Qualys, Inc. All other products or names may be trademarks of their respective companies.

Legal Notice Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements generally relate to future events or our future financial or operating performance. Forward-looking statements in this press release include, but are not limited to, quotations of management and statements related to: the benefits of our existing, new and upcoming products, features, integrations, acquisitions, collaborations and joint solutions, and their impact upon our long-term growth; our ability to advance our value proposition and competitive differentiation in the market; our ability to address demand trends; our ability to maintain and strengthen our category leadership; our ability to solve modern security challenges at scale; our strategies and ability to achieve and maintain durable profitable growth; our guidance for revenues, GAAP EPS and non-GAAP EPS for the second quarter and full year 2024; and our expectations for the number of weighted average diluted shares outstanding and the GAAP and non-GAAP effective income tax rate for the second quarter and full year 2024. Our expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks include our ability to continue to develop platform capabilities and solutions; the ability of our platform and solutions to perform as intended; customer acceptance and purchase of our existing solutions and new solutions; real or perceived defects, errors or vulnerabilities in our products or services; our ability to retain existing customers and generate new customers; the budgeting cycles and seasonal buying patterns of our customers; general market, political, economic and business conditions in the United States as well as globally; our ability to manage costs as we increase our customer base and the number of our platform solutions; the market for cloud solutions for IT security and compliance not increasing at the rate we expect; competition from other products and services; fluctuations in currency exchange rates; unexpected fluctuations in our effective income tax rate on a GAAP and non-GAAP basis; our ability to effectively manage our rapid growth and our ability to anticipate future market needs and opportunities; and any unanticipated accounting charges. The forward-looking statements contained in this press release are also subject to other risks and uncertainties, including those more fully described in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

The forward-looking statements in this press release are based on information available to Qualys as of the date hereof, and Qualys disclaims any obligation to update any forward-looking statements, except as required by law.

Non-GAAP Financial Measures

In addition to reporting financial results in accordance with GAAP, Qualys provides investors with certain non-GAAP financial measures, including non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, non-GAAP net income per diluted share, Adjusted EBITDA (defined as earnings before interest expense, interest income and other income (expense), net, income taxes, depreciation, amortization, and stock-based compensation) and non-GAAP free cash flows (defined as cash provided by operating activities less purchases of property and equipment, net of proceeds from disposal).

In computing non-GAAP financial measures, Qualys excludes the effects of stock-based compensation expense, amortization of intangible assets from acquisitions, non-recurring items and for non-GAAP net income, certain tax effects. Qualys believes that these non-GAAP financial measures help illustrate underlying trends in its business that could otherwise be masked by the effect of the income or expenses that are excluded in non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, non-GAAP net income per diluted share, Adjusted EBITDA and non-GAAP free cash flows.

Furthermore, Qualys uses some of these non-GAAP financial measures to establish budgets and operational goals for managing its business and evaluating its performance. Qualys believes that non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, non-GAAP net income per diluted share, Adjusted EBITDA and non-GAAP free cash flows provide additional tools for investors to use in comparing its recurring core business operating results over multiple periods with other companies in its industry.

Although Qualys does not focus on or use quarterly billings in managing or monitoring the performance of its business, Qualys provides calculated current billings (defined as total revenues recognized in a period plus the sequential change in current deferred revenue in the corresponding period) for the convenience of investors and analysts in building their own financial models.

In order to provide a more complete picture of recurring core operating business results, the Company's non-GAAP net income and non-GAAP net income per diluted share include adjustments for non-recurring income tax items and certain tax effects of non-GAAP adjustments to achieve the effective income tax rate on a non-GAAP basis. The Company's non-GAAP effective tax rate may differ from the GAAP effective income tax rate as a result of these income tax adjustments. The Company believes its estimated non-GAAP effective income tax rate of 21% in 2024 is a reasonable estimate under its current global operating structure and core business operations. The Company may adjust this rate during the year to take into account events or trends that it believes materially impact the estimated annual rate. The non-GAAP effective income tax rate could be subject to change for a number of reasons, including but not limited to, significant changes resulting from tax legislation, material changes in geographic mix of revenues and expenses and other significant events.

The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of the non-GAAP financial measures discussed in this press release to the most directly comparable GAAP financial measures is included with the financial statements contained in this press release. Management uses both GAAP and non-GAAP information in evaluating and operating its business internally and as such has determined that it is important to provide this information to investors.

 

Qualys, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except per share data)

 
 

Three Months Ended
March 31,

 

2024

 

2023

Revenues

$         145,805

 

$         130,683

Cost of revenues (1)

27,198

 

26,954

Gross profit

118,607

 

103,729

Operating expenses:

     

Research and development (1)

27,530

 

27,795

Sales and marketing (1)

29,408

 

25,628

General and administrative (1)

16,908

 

15,128

Total operating expenses

73,846

 

68,551

Income from operations

44,761

 

35,178

Other income (expense), net:

     

Interest income

6,123

 

2,397

Other expense, net

(1,399)

 

(216)

Total other income, net

4,724

 

2,181

Income before income taxes

49,485

 

37,359

Income tax provision

9,754

 

8,254

Net income

$           39,731

 

$           29,105

Net income per share:

     

Basic

$               1.08

 

$               0.79

Diluted

$               1.05

 

$               0.77

Weighted average shares used in computing net income per share:

     

Basic

36,955

 

37,068

Diluted

37,723

 

37,669

(1) Includes stock-based compensation as follows:

     

Cost of revenues

$             2,020

 

$             1,592

Research and development

5,303

 

4,960

Sales and marketing

3,739

 

2,454

General and administrative

7,969

 

7,027

Total stock-based compensation, net of amounts capitalized

$           19,031

 

$           16,033

 

Qualys, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(in thousands)

 
 

March 31,
2024

 

December 31,
2023

Assets

     

Current assets:

     

Cash and cash equivalents

$         273,783

 

$         203,665

Restricted cash

 

1,500

Short-term marketable securities

179,887

 

221,893

Accounts receivable, net

115,629

 

146,226

Prepaid expenses and other current assets

36,112

 

26,714

Total current assets

605,411

 

599,998

Long-term marketable securities

89,693

 

56,644

Property and equipment, net

30,191

 

32,599

Operating leases - right of use asset

31,371

 

22,391

Deferred tax assets, net

66,565

 

62,761

Intangible assets, net

8,943

 

9,715

Goodwill

7,447

 

7,447

Noncurrent restricted cash

1,200

 

1,200

Other noncurrent assets

20,961

 

19,863

Total assets

$         861,782

 

$         812,618

Liabilities and Stockholders' Equity

     

Current liabilities:

     

Accounts payable

$                645

 

$                988

Accrued liabilities

48,246

 

43,096

Deferred revenues, current

332,128

 

333,267

Operating lease liabilities, current

10,046

 

11,857

Total current liabilities

391,065

 

389,208

Deferred revenues, noncurrent

31,311

 

31,671

Operating lease liabilities, noncurrent

27,784

 

16,885

Other noncurrent liabilities

7,420

 

6,680

Total liabilities

457,580

 

444,444

Stockholders' equity:

     

Common stock

37

 

37

Additional paid-in capital

610,923

 

597,921

Accumulated other comprehensive loss

(1,007)

 

(1,704)

Accumulated deficit

(205,751)

 

(228,080)

Total stockholders' equity

404,202

 

368,174

Total liabilities and stockholders' equity

$        861,782

 

$        812,618

 

Qualys, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)

 
 

Three Months Ended
March 31,

 

2024

 

2023

Cash flow from operating activities:

     

Net income

$           39,731

 

$           29,105

Adjustments to reconcile net income to net cash provided by operating activities:

     

Depreciation and amortization expense

5,239

 

7,444

Provision for credit losses

193

 

119

Stock-based compensation, net of amounts capitalized

19,031

 

16,033

Accretion of discount on marketable securities, net

(1,915)

 

(259)

Deferred income taxes

(4,111)

 

(4,241)

Changes in operating assets and liabilities:

     

Accounts receivable

30,404

 

19,890

Prepaid expenses and other assets

(10,126)

 

(1,289)

Accounts payable

(335)

 

(1,215)

Accrued liabilities and other noncurrent liabilities

8,892

 

(2)

Deferred revenues

(1,498)

 

1,228

Net cash provided by operating activities

85,505

 

66,813

Cash flow from investing activities:

     

Purchases of marketable securities

(61,340)

 

(46,010)

Sales and maturities of marketable securities

71,463

 

69,709

Purchases of property and equipment

(2,051)

 

(4,037)

Net cash provided by investing activities

8,072

 

19,662

Cash flow from financing activities:

     

Repurchase of common stock

(18,029)

 

(66,551)

Proceeds from exercise of stock options

2,770

 

2,328

Payments for taxes related to net share settlement of equity awards

(11,808)

 

(5,105)

Proceeds from issuance of common stock through employee stock purchase plan

3,608

 

2,988

Payment of acquisition-related holdback

(1,500)

 

Net cash used in financing activities

(24,959)

 

(66,340)

Net increase in cash, cash equivalents and restricted cash

68,618

 

20,135

Cash, cash equivalents and restricted cash at beginning of period

206,365

 

176,419

Cash, cash equivalents and restricted cash at end of period

$         274,983

 

$         196,554

 

Qualys, Inc. 

RECONCILIATION OF NON-GAAP DISCLOSURES

ADJUSTED EBITDA

(unaudited)

(in thousands, except percentages)

 
 

Three Months Ended
March 31,

 

2024

 

2023

Net income

$        39,731

 

$        29,105

Net income as a percentage of revenues

27 %

 

22 %

Depreciation and amortization of property and equipment

4,467

 

6,672

Amortization of intangible assets

772

 

772

Income tax provision

9,754

 

8,254

Stock-based compensation

19,031

 

16,033

Total other income, net

(4,724)

 

(2,181)

Adjusted EBITDA

$        69,031

 

$        58,655

Adjusted EBITDA as a percentage of revenues

47 %

 

45 %

 

Qualys, Inc. 

RECONCILIATION OF NON-GAAP DISCLOSURES

(unaudited)

(in thousands, except per share data)

 
 

Three Months Ended

March 31,

 

2024

 

2023

GAAP Cost of revenues

$           27,198

 

$           26,954

Less: Stock-based compensation

(2,020)

 

(1,592)

Less: Amortization of intangible assets

(747)

 

(747)

Non-GAAP Cost of revenues

$           24,431

 

$           24,615

GAAP Gross profit

$         118,607

 

$         103,729

Plus: Stock-based compensation

2,020

 

1,592

Plus: Amortization of intangible assets

747

 

747

Non-GAAP Gross Profit

$         121,374

 

$         106,068

GAAP Research and development

$           27,530

 

$           27,795

Less: Stock-based compensation

(5,303)

 

(4,960)

Less: Amortization of intangible assets

(25)

 

(25)

Non-GAAP Research and development

$           22,202

 

$           22,810

GAAP Sales and marketing

$           29,408

 

$           25,628

Less: Stock-based compensation

(3,739)

 

(2,454)

Non-GAAP Sales and marketing

$           25,669

 

$           23,174

GAAP General and administrative

$           16,908

 

$           15,128

Less: Stock-based compensation

(7,969)

 

(7,027)

Non-GAAP General and administrative

$             8,939

 

$             8,101

GAAP Operating expenses

$           73,846

 

$           68,551

Less: Stock-based compensation

(17,011)

 

(14,441)

Less: Amortization of intangible assets

(25)

 

(25)

Non-GAAP Operating expenses

$           56,810

 

$           54,085

GAAP Income from operations

$           44,761

 

$           35,178

Plus: Stock-based compensation

19,031

 

16,033

Plus: Amortization of intangible assets

772

 

772

Non-GAAP Income from operations

$           64,564

 

$           51,983

GAAP Net income

$           39,731

 

$           29,105

Plus: Stock-based compensation

19,031

 

16,033

Plus: Amortization of intangible assets

772

 

772

Less: Tax adjustment

(4,796)

 

(4,736)

Non-GAAP Net income

$           54,738

 

$           41,174

GAAP Net income per share:

     

Basic

$               1.08

 

$               0.79

Diluted

$               1.05

 

$               0.77

Non-GAAP Net income per share:

     

Basic

$               1.48

 

$               1.11

Diluted

$               1.45

 

$               1.09

Weighted average shares used in GAAP and non-GAAP net income per share:

     

Basic

36,955

 

37,068

Diluted

37,723

 

37,669

 

Qualys, Inc.

RECONCILIATION OF NON-GAAP DISCLOSURES

FREE CASH FLOWS

(unaudited)

(in thousands)

 
 

Three Months Ended
March 31,

 

2024

 

2023

GAAP Cash flows provided by operating activities

$           85,505

 

$           66,813

Less:

     

Purchases of property and equipment, net of proceeds from disposal

(2,051)

 

(4,037)

Non-GAAP Free cash flows

$           83,454

 

$           62,776

 

Qualys, Inc. 

RECONCILIATION OF NON-GAAP DISCLOSURES

CALCULATED CURRENT BILLINGS

(unaudited)

(in thousands, except percentages)

 
 

Three Months Ended
March 31,

 

2024

 

2023

GAAP Revenue

$      145,805

 

$      130,683

GAAP Revenue growth compared to same quarter of prior year

12 %

 

15 %

Plus: Current deferred revenue at March 31

332,128

 

296,516

Less: Current deferred revenue at December 31

(333,267)

 

(293,728)

Non-GAAP Calculated current billings

$      144,666

 

$      133,471

Calculated current billings growth compared to same quarter of prior year

8 %

 

9 %

 

Cision View original content:https://www.prnewswire.com/news-releases/qualys-announces-first-quarter-2024-financial-results-302137711.html

SOURCE Qualys, Inc.

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Contact Information
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919 E Hillsdale Blvd, 4th Floor
Foster City, CA 94404 USA
(650) 801 - 6100 | ir@qualys.com

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