Fourth Quarter 2015 Financial Highlights
Revenues: Revenues for the fourth quarter of 2015 increased by 22% to
Deferred Revenues: Current deferred revenues increased by 21% to
Gross Profit: GAAP gross profit for the fourth quarter of 2015 increased by 22% to
Operating Income: GAAP operating income for the fourth quarter of 2015 was
Net Income: GAAP net income for the fourth quarter of 2015 was
Adjusted EBITDA: Adjusted EBITDA (a non-GAAP financial measure) for the fourth quarter of 2015 increased by 53% to
Full Year 2015 Financial Highlights
Revenues: Revenues for 2015 increased by 23% to
Gross Profit: Gross profit for 2015 increased by 25% to
Operating Income: GAAP operating income for 2015 increased by 168% to
Net Income: GAAP net income for 2015 was
Adjusted EBITDA: Adjusted EBITDA (a non-GAAP financial measure) for 2015 increased by 79% to
Cash Flows: The Company generated
Fourth Quarter 2015 Business Highlights
Customers:
- New customers included: Biogen, Boyd Gaming,
Capital Group , Chicago Bridge & Iron, CNO Financial Group, Cotiviti, Delphi,Dentons , Discovery Communications,HCA Healthcare , Herbalife, Hindustan Unilever, Jive Software, Kingfisher,National Financial Partners , Norfolk Southern andUniversity Hospitals Health System .
New Services:
- Released Qualys Cloud Agents to general availability on Windows and in beta on Linux and Mac OS.
- Introduced AssetView, a revolutionary inventory service with
ElasticSearch backend that allows customers to see and search, in seconds, across millions of assets. - Launched major technology integrations with Splunk and ServiceNow:
- Splunk Integration allows customers to perform security analytics and reporting within Splunk by correlating data from
Qualys with other security incidents. - ServiceNow Integration allows customers to synchronize their CMDB with asset information from
Qualys scans.
- Splunk Integration allows customers to perform security analytics and reporting within Splunk by correlating data from
- Released multiple platform and product enhancements spanning
Qualys' entire suite of services, including Vulnerability Management, Policy Compliance, Security Assessment Questionnaire, Web Application Scanning and Malware Detection.
Partnerships:
- Expanded partnerships with multiple security service providers including AT&T, EIQ Network,
Optiv ,Solutionary and others.
Financial Performance Outlook
First Quarter 2016 Guidance: Management expects revenues to be in the range of
Full Year 2016 Guidance: Management expects revenues to be in the range of
Investor Conference Call
About
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, statements related to: the growth of our business, including renewals, adoption of our existing solutions and our new offerings to both existing and new customers; the capabilities of our platform; our strategy and our business model, the scalability of our strategy, and ability to execute such strategy; our guidance for revenues, GAAP EPS and non-GAAP EPS for the first quarter and full year 2016, and our expectations for the number of weighted average diluted shares outstanding and effective income tax rate for the
first quarter and full year 2016. 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, seasonal buying patterns and length of our sales cycle; 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 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; any unanticipated accounting charges; and general market, political, economic and business conditions in
Non-GAAP Financial Measures
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP,
Beginning in 2015, due to the recognition of deferred tax assets in 2014 and 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 tax adjustments required to achieve the effective tax rate on a non-GAAP basis, which could differ from the GAAP effective tax rate. The Company believes the non-GAAP effective tax rate, which is 36% in 2016, is a reasonable estimate under its global operating structure. The Company intends to re-evaluate the non-GAAP effective tax rate on an annual basis. However, it 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 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.
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||
| (Unaudited) | ||||||||||||||||||
| (in thousands, except per share data) | ||||||||||||||||||
| Three Months Ended | Year Ended | |||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||||
| Revenues | $ | 44,445 | $ | 36,573 | $ | 164,284 | $ | 133,579 | ||||||||||
| Cost of revenues (1) | 9,002 | 7,521 | 33,885 | 28,963 | ||||||||||||||
| Gross profit | 35,443 | 29,052 | 130,399 | 104,616 | ||||||||||||||
| Operating expenses: | ||||||||||||||||||
| Research and development (1) | 7,532 | 7,015 | 29,451 | 26,320 | ||||||||||||||
| Sales and marketing (1) | 13,068 | 11,938 | 49,569 | 48,049 | ||||||||||||||
| General and administrative (1) | 7,147 | 5,888 | 26,573 | 21,000 | ||||||||||||||
| Total operating expenses | 27,747 | 24,841 | 105,593 | 95,369 | ||||||||||||||
| Income from operations | 7,696 | 4,211 | 24,806 | 9,247 | ||||||||||||||
| Other income (expense), net: | ||||||||||||||||||
| Interest expense | (2 | ) | - | (6 | ) | (9 | ) | |||||||||||
| Interest income | 184 | 87 | 570 | 452 | ||||||||||||||
| Other expense, net | (365 | ) | (655 | ) | (850 | ) | (1,077 | ) | ||||||||||
| Total other expense, net | (183 | ) | (568 | ) | (286 | ) | (634 | ) | ||||||||||
| Income before income taxes | 7,513 | 3,643 | 24,520 | 8,613 | ||||||||||||||
| Provision for (benefit from) income taxes | 2,089 | (22,270 | ) | 8,655 | (21,631 | ) | ||||||||||||
| Net income | $ | 5,424 | $ | 25,913 | $ | 15,865 | $ | 30,244 | ||||||||||
| Net income per share: | ||||||||||||||||||
| Basic | $ | 0.16 | $ | 0.77 | $ | 0.47 | $ | 0.92 | ||||||||||
| Diluted | $ | 0.14 | $ | 0.69 | $ | 0.42 | $ | 0.81 | ||||||||||
| Weighted average shares used in computing net income per share: | ||||||||||||||||||
| Basic | 34,294 | 33,449 | 34,050 | 32,979 | ||||||||||||||
| Diluted | 38,146 | 37,630 | 38,184 | 37,170 | ||||||||||||||
| (1) Includes stock-based compensation as follows: | ||||||||||||||||||
| Cost of revenues | $ | 245 | $ | 275 | $ | 1,250 | $ | 757 | ||||||||||
| Research and development | 1,352 | 919 | 4,936 | 2,470 | ||||||||||||||
| Sales and marketing | 1,061 | 555 | 3,867 | 2,407 | ||||||||||||||
| General and administrative | 2,158 | 1,700 | 7,441 | 4,915 | ||||||||||||||
| Total stock-based compensation | $ | 4,816 | $ | 3,449 | $ | 17,494 | $ | 10,549 | ||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||||||||||||
| (Unaudited) | ||||||||||||||||||
| (in thousands) | ||||||||||||||||||
| Three Months Ended | Year Ended | |||||||||||||||||
| December 31, | ||||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||||
| Net income | $ | 5,424 | $ | 25,913 | $ | 15,865 | $ | 30,244 | ||||||||||
| Available-for-sale investments: | ||||||||||||||||||
| Change in net unrealized gain (loss) on investments, net of tax | (238 | ) | (7 | ) | (202 | ) | - | |||||||||||
| Less reclassification adjustment for net realized gain (loss) included in net income | (10 | ) | 18 | (19 | ) | (28 | ) | |||||||||||
| Other comprehensive income (loss), net | (248 | ) | 11 | (221 | ) | (28 | ) | |||||||||||
| Comprehensive income | $ | 5,176 | $ | 25,924 | $ | 15,644 | $ | 30,216 | ||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
| (Unaudited) | ||||||||||
| (in thousands) | ||||||||||
| 2015 | 2014 | |||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 91,698 | $ | 76,504 | ||||||
| Short-term investments | 87,268 | 50,714 | ||||||||
| Accounts receivable, net | 42,325 | 32,993 | ||||||||
| Prepaid expenses and other current assets | 7,945 | 6,528 | ||||||||
| Total current assets | 229,236 | 166,739 | ||||||||
| Long-term investments | 43,277 | 39,448 | ||||||||
| Property and equipment, net | 31,329 | 26,618 | ||||||||
| Deferred tax assets, net | 16,079 | 22,639 | ||||||||
| Intangible assets, net | 1,360 | 2,001 | ||||||||
| 317 | 317 | |||||||||
| Other noncurrent assets | 1,916 | 2,262 | ||||||||
| Total assets | $ | 323,514 | $ | 260,024 | ||||||
| Liabilities and Stockholders' Equity | ||||||||||
| Current Liabilities: | ||||||||||
| Accounts payable | $ | 2,368 | $ | 5,661 | ||||||
| Accrued liabilities | 11,786 | 10,353 | ||||||||
| Deferred revenues, current | 98,025 | 81,147 | ||||||||
| Total current liabilities | 112,179 | 97,161 | ||||||||
| Deferred revenues, noncurrent | 14,564 | 10,064 | ||||||||
| Other noncurrent liabilities | 1,205 | 972 | ||||||||
| Total liabilities | 127,948 | 108,197 | ||||||||
| Stockholders' equity: | ||||||||||
| Common stock | 34 | 34 | ||||||||
| Additional paid-in capital | 223,228 | 195,133 | ||||||||
| Accumulated other comprehensive income (loss) | (211 | ) | 10 | |||||||
| Accumulated deficit | (27,485 | ) | (43,350 | ) | ||||||
| Total stockholders' equity | 195,566 | 151,827 | ||||||||
| Total liabilities and stockholders' equity | $ | 323,514 | $ | 260,024 | ||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
| (Unaudited) | ||||||||||||
| (in thousands) | ||||||||||||
| Year Ended |
||||||||||||
| 2015 | 2014 | |||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net income | $ | 15,865 | $ | 30,244 | ||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
| Depreciation and amortization expense | 14,360 | 11,897 | ||||||||||
| Bad debt expense | 851 | 470 | ||||||||||
| Loss on disposal of property and equipment | 5 | 324 | ||||||||||
| Stock-based compensation | 17,494 | 10,549 | ||||||||||
| Amortization of premiums and accretion of discounts on investments | 594 | 565 | ||||||||||
| Excess tax benefits from stock-based compensation | (487 | ) | (259 | ) | ||||||||
| Impairment of intangible assets | 255 | - | ||||||||||
| Deferred income taxes | 6,564 | (22,599 | ) | |||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Accounts receivable | (10,183 | ) | (4,882 | ) | ||||||||
| Prepaid expenses and other assets | (1,011 | ) | (3,456 | ) | ||||||||
| Accounts payable | (3,293 | ) | 2,332 | |||||||||
| Accrued liabilities | 3,339 | 1,622 | ||||||||||
| Deferred revenues | 21,378 | 14,817 | ||||||||||
| Other noncurrent liabilities | 229 | (201 | ) | |||||||||
| Net cash provided by operating activities | 65,960 | 41,423 | ||||||||||
| Cash flows from investing activities: | ||||||||||||
| Purchases of investments | (146,707 | ) | (157,660 | ) | ||||||||
| Sales and maturities of investments | 105,509 | 157,339 | ||||||||||
| Purchases of property and equipment | (20,051 | ) | (13,914 | ) | ||||||||
| Capitalized software development costs | (99 | ) | (98 | ) | ||||||||
| Net cash used in investing activities | (61,348 | ) | (14,333 | ) | ||||||||
| Cash flows from financing activities: | ||||||||||||
| Proceeds from exercise of stock options | 10,095 | 7,639 | ||||||||||
| Excess tax benefits from stock-based compensation | 487 | 259 | ||||||||||
| Principal payments under capital lease obligations | - | (805 | ) | |||||||||
| Net cash provided by financing activities | 10,582 | 7,093 | ||||||||||
| Effect of exchange rate changes on cash and cash equivalents | - | (48 | ) | |||||||||
| Net increase in cash and cash equivalents | 15,194 | 34,135 | ||||||||||
| Cash and cash equivalents at beginning of period | 76,504 | 42,369 | ||||||||||
| Cash and cash equivalents at end of period | $ | 91,698 | $ | 76,504 | ||||||||
| RECONCILIATION OF NON-GAAP DISCLOSURES | |||||||||||||||
| EBITDA AND ADJUSTED EBITDA | |||||||||||||||
| (Unaudited) | |||||||||||||||
| (in thousands) | |||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||
| Net income | $ | 5,424 | $ | 25,913 | $ | 15,865 | $ | 30,244 | |||||||
| Depreciation and amortization of property and | |||||||||||||||
| equipment | 3,843 | 2,972 | 13,974 | 11,504 | |||||||||||
| Amortization of intangible assets | 93 | 99 | 386 | 393 | |||||||||||
| Interest expense | 2 | - | 6 | 9 | |||||||||||
| Provision for (benefit from) income taxes | 2,089 | (22,270 | ) | 8,655 | (21,631 | ) | |||||||||
| EBITDA | 11,451 | 6,714 | 38,886 | 20,519 | |||||||||||
| Stock-based compensation | 4,816 | 3,449 | 17,494 | 10,549 | |||||||||||
| Other expense, net | 181 | 568 | 280 | 625 | |||||||||||
| Adjusted EBITDA | $ | 16,448 | $ | 10,731 | $ | 56,660 | $ | 31,693 | |||||||
| RECONCILIATION OF NON-GAAP DISCLOSURES | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| (in thousands, except per share data) | |||||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||||
| GAAP gross profit | $ | 35,443 | $ | 29,052 | $ | 130,399 | $ | 104,616 | |||||||||
| Plus: | |||||||||||||||||
| Stock-based compensation expense | 245 | 275 | 1,250 | 757 | |||||||||||||
| Non-GAAP gross profit | $ | 35,688 | $ | 29,327 | $ | 131,649 | $ | 105,373 | |||||||||
| GAAP income from operations | $ | 7,696 | $ | 4,211 | $ | 24,806 | $ | 9,247 | |||||||||
| Plus: | |||||||||||||||||
| Stock-based compensation expense | 4,816 | 3,449 | 17,494 | 10,549 | |||||||||||||
| Non-GAAP income from operations | $ | 12,512 | $ | 7,660 | $ | 42,300 | $ | 19,796 | |||||||||
| GAAP net income | $ | 5,424 | $ | 25,913 | $ | 15,865 | $ | 30,244 | |||||||||
| Plus: | |||||||||||||||||
| Stock-based compensation expense | 4,816 | 3,449 | 17,494 | 10,549 | |||||||||||||
| Tax adjustments | (2,399 | ) | (23,741 | ) | (6,638 | ) | (23,741 | ) | |||||||||
| Non-GAAP net income | $ | 7,841 | $ | 5,621 | $ | 26,721 | $ | 17,052 | |||||||||
| Non-GAAP net income per share: | |||||||||||||||||
| Basic | $ | 0.23 | $ | 0.17 | $ | 0.78 | $ | 0.52 | |||||||||
| Diluted | $ | 0.21 | $ | 0.15 | $ | 0.70 | $ | 0.46 | |||||||||
| Weighted average shares used in computing non-GAAP net income per share: | |||||||||||||||||
| Basic | 34,294 | 33,449 | 34,050 | 32,979 | |||||||||||||
| Diluted | 38,146 | 37,630 | 38,184 | 37,170 | |||||||||||||
| RECONCILIATION OF NON-GAAP DISCLOSURES | ||||||||
| FREE CASH FLOWS | ||||||||
| (Unaudited) | ||||||||
| (in thousands, except per share data) | ||||||||
| Year Ended |
||||||||
| 2015 | 2014 | |||||||
| GAAP cash flows provided by operating activities | $ | 65,960 | $ | 41,423 | ||||
| Less: | ||||||||
| Purchases of property and equipment | (20,051 | ) | (13,914 | ) | ||||
| Capitalized software development costs | (99 | ) | (98 | ) | ||||
| Non-GAAP free cash flows | $ | 45,810 | $ | 27,411 | ||||
Investors Contact:
Chief Financial Officer
+1 (650) 801-6181
dmccauley@qualys.com
Media Contact:
+1 (415) 618-8750
jchristiansen@sardverb.com / disaacs@sardverb.com
Source:
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