Third Quarter 2014 Financial Highlights
Revenues: Revenues for the third quarter of 2014 increased by 24% to
Deferred Revenues: Current deferred revenues increased by 21% to
Gross Profit: GAAP gross profit for the third quarter of 2014 increased by 26% to
Operating Income: GAAP operating income for the third quarter of 2014 was
Net Income: GAAP net income for the third quarter of 2014 was
Adjusted EBITDA: Adjusted EBITDA (a non-GAAP financial measure) for the third quarter of 2014 increased by 59% to
Third Quarter 2014 Business Highlights
Customers:
- New customers included: Allergan, BAE Systems,
Benjamin Moore , Best Buy,BP Iraq , Corning,Indiana University , Intuit, Jabil Circuit, Merck, National Australia Bank, Saudi Basic Industries andToyota Motor Manufacturing North America . Qualys hosted its 12th annualQualys Security Conference inLas Vegas where over 600 customers and partners shared best practices and discussed how to deliver continuous security for the global enterprise in order to better defend against cyber threats.
New Products and Functionalities:
- Unveiled
Qualys' next generation cloud platform at theQualys Security Conference and showcased major innovations such as:- New agent technology for scanning offline systems.
- Log management solution for websites that comes fully integrated with Web Application Scanning and Web Application Firewall which helps customers improve web log management and improve protection for their websites.
- Released detection for the Bash Shellshock vulnerability with special reports and workflows to help customers with detection and protect their IT environments and web applications against this critical threat.
- Bolstered the Continuous Monitoring for the Perimeter solution with enterprise alerting capabilities through seamless integration with incident response systems.
- Released Web Application Scanning 3.6 with new workflows to help customers manage the scanning of large numbers of websites and to support high-volume fully-automated web application scanning across their web application portfolio.
- Expanded Policy Compliance solution with new controls and policies adding coverage for new technologies, regulations and standards to help customers further automate their compliance initiatives.
Industry Recognition:
- Recognized by IDC as the leader in device vulnerability assessment for the sixth consecutive year.
- Both Qualys Vulnerability Management and Qualys Web Application Scanning have been identified as finalists in the annual
Information Security Magazine Reader's Choice Awards.
Strategic Alliances and Partnerships:
- Selected by Tech Mahindra, a leading Indian outsourcer, to help expand their global IT security portfolio and enhance their managed services offering.
- Joined the
Center for Internet Security's cyber hygiene campaign to provide web application security audits to state governments.
Financial Performance Outlook
Fourth Quarter 2014 Guidance: Management expects revenues to be in the range of
Full Year 2014 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 value proposition of our platform, our ability to continue to innovate, to enhance our offerings and develop new offerings, our strategy and ability to execute such strategy, our guidance for revenues, GAAP EPS and non-GAAP EPS for the fourth quarter and full year 2014; and our expectations for the number of weighted average diluted shares outstanding for the fourth quarter and full year 2014. 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; our ability to retain existing customers and generate new customers; the market for cloud solutions for IT security and compliance not increasing at the rate we expect; competition from other products and services; and general market, political, economic and business conditions. 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
Non-GAAP Financial Measures
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP,
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 | Nine Months Ended | |||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||||
| Revenues | $ | 34,348 | $ | 27,749 | $ | 97,006 | $ | 78,923 | ||||||||||
| Cost of revenues (1) | 7,421 | 6,415 | 21,442 | 18,134 | ||||||||||||||
| Gross profit | 26,927 | 21,334 | 75,564 | 60,789 | ||||||||||||||
| Operating expenses: | ||||||||||||||||||
| Research and development (1) | 6,490 | 5,151 | 19,305 | 15,739 | ||||||||||||||
| Sales and marketing (1) | 11,774 | 10,411 | 36,111 | 30,739 | ||||||||||||||
| General and administrative (1) | 5,156 | 4,277 | 15,112 | 12,226 | ||||||||||||||
| Total operating expenses | 23,420 | 19,839 | 70,528 | 58,704 | ||||||||||||||
| Income from operations | 3,507 | 1,495 | 5,036 | 2,085 | ||||||||||||||
| Other income (expense), net: | ||||||||||||||||||
| Interest expense | (2 | ) | (7 | ) | (9 | ) | (37 | ) | ||||||||||
| Interest income | 127 | 115 | 365 | 273 | ||||||||||||||
| Other income (expense), net | (141 | ) | (84 | ) | (279 | ) | (370 | ) | ||||||||||
| Total other income (expense), net | (16 | ) | 24 | 77 | (134 | ) | ||||||||||||
| Income before provision for income taxes | 3,491 | 1,519 | 5,113 | 1,951 | ||||||||||||||
| Provision for income taxes | 283 | 210 | 639 | 372 | ||||||||||||||
| Net income | $ | 3,208 | $ | 1,309 | $ | 4,474 | $ | 1,579 | ||||||||||
| Net income per share: | ||||||||||||||||||
| Basic | $ | 0.10 | $ | 0.04 | $ | 0.14 | $ | 0.05 | ||||||||||
| Diluted | $ | 0.09 | $ | 0.04 | $ | 0.12 | $ | 0.04 | ||||||||||
| Weighted average shares used in computing net income per share: | ||||||||||||||||||
| Basic | 33,120 | 32,088 | 32,820 | 31,789 | ||||||||||||||
| Diluted | 37,080 | 36,247 | 37,006 | 35,704 | ||||||||||||||
| (1) Includes stock-based compensation as follows: | ||||||||||||||||||
| Cost of revenues | $ | 175 | $ | 103 | $ | 482 | $ | 307 | ||||||||||
| Research and development | 599 | 253 | 1,551 | 697 | ||||||||||||||
| Sales and marketing | 561 | 363 | 1,852 | 804 | ||||||||||||||
| General and administrative | 1,159 | 902 | 3,215 | 2,000 | ||||||||||||||
| Total stock-based compensation | $ | 2,494 | $ | 1,621 | $ | 7,100 | $ | 3,808 | ||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||||||||||||||
| (Unaudited) | |||||||||||||||||||
| (in thousands) | |||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||||||||
| Net income | $ | 3,208 | $ | 1,309 | $ | 4,474 | $ | 1,579 | |||||||||||
| Change in foreign currency translation loss, net of zero tax | (101 | ) | (12 | ) | (142 | ) | (73 | ) | |||||||||||
| Available-for-sale investments: | |||||||||||||||||||
| Change in net unrealized gain (loss) on investments, net of zero tax | (44 | ) | 52 | (11 | ) | 37 | |||||||||||||
| Less: reclassification adjustment for net realized gain included in net income | (27 | ) | (1 | ) | (28 | ) | (9 | ) | |||||||||||
| Net change, net of zero tax | (71 | ) | 51 | (39 | ) | 28 | |||||||||||||
| Other comprehensive income (loss), net | (172 | ) | 39 | (181 | ) | (45 | ) | ||||||||||||
| Comprehensive income | $ | 3,036 | $ | 1,348 | $ | 4,293 | $ | 1,534 | |||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
| (Unaudited) | ||||||||||
| (in thousands) | ||||||||||
2014 |
2013 |
|||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 88,285 | $ | 42,369 | ||||||
| Short-term investments | 25,133 | 54,827 | ||||||||
| Accounts receivable, net | 30,278 | 28,581 | ||||||||
| Prepaid expenses and other current assets | 5,901 | 4,679 | ||||||||
| Total current assets | 149,597 | 130,456 | ||||||||
| Long-term investments | 37,896 | 35,608 | ||||||||
| Property and equipment, net | 24,776 | 23,075 | ||||||||
| Intangible assets, net | 2,099 | 2,394 | ||||||||
| Goodwill | 317 | 317 | ||||||||
| Other noncurrent assets | 726 | 753 | ||||||||
| Total assets | $ | 215,411 | $ | 192,603 | ||||||
| Liabilities and Stockholders' Equity | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 1,898 | $ | 1,930 | ||||||
| Accrued liabilities | 9,101 | 9,037 | ||||||||
| Deferred revenues, current | 74,337 | 67,505 | ||||||||
| Capital lease obligations, current | - | 805 | ||||||||
| Total current liabilities | 85,336 | 79,277 | ||||||||
| Deferred revenues, noncurrent | 8,965 | 8,889 | ||||||||
| Other noncurrent liabilities | 1,417 | 1,320 | ||||||||
| Total liabilities | 95,718 | 89,486 | ||||||||
| Stockholders' equity: | ||||||||||
| Common stock | 33 | 32 | ||||||||
| Additional paid-in capital | 188,923 | 176,641 | ||||||||
| Accumulated other comprehensive loss | (1,269 | ) | (1,088 | ) | ||||||
| Accumulated deficit | (67,994 | ) | (72,468 | ) | ||||||
| Total stockholders' equity | 119,693 | 103,117 | ||||||||
| Total liabilities and stockholders' equity | $ | 215,411 | $ | 192,603 | ||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
| (Unaudited) | ||||||||||||
| (in thousands) | ||||||||||||
| Nine Months Ended | ||||||||||||
| 2014 | 2013 | |||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net income | $ | 4,474 | $ | 1,579 | ||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
| Depreciation and amortization expense | 8,826 | 7,050 | ||||||||||
| Bad debt expense | 346 | 211 | ||||||||||
| Loss on disposal of property and equipment | 1 | 12 | ||||||||||
| Stock-based compensation | 7,100 | 3,808 | ||||||||||
| Amortization of premiums and accretion of discounts on investments | 427 | 188 | ||||||||||
| Excess tax benefits from stock-based compensation | (131 | ) | (59 | ) | ||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Accounts receivable | (2,042 | ) | (688 | ) | ||||||||
| Prepaid expenses and other assets | (1,238 | ) | 229 | |||||||||
| Accounts payable | (48 | ) | (939 | ) | ||||||||
| Accrued liabilities | 364 | (549 | ) | |||||||||
| Deferred revenues | 6,907 | 4,732 | ||||||||||
| Other noncurrent liabilities | 99 | (383 | ) | |||||||||
| Net cash provided by operating activities | 25,085 | 15,191 | ||||||||||
| Cash flows from investing activities: | ||||||||||||
| Purchases of investments | (117,279 | ) | (113,689 | ) | ||||||||
| Sales and maturities of investments | 144,218 | 113,524 | ||||||||||
| Purchases of property and equipment | (10,252 | ) | (10,364 | ) | ||||||||
| Release of restricted cash | - | 114 | ||||||||||
| Net cash provided by (used in) investing activities | 16,687 | (10,415 | ) | |||||||||
| Cash flows from financing activities: | ||||||||||||
| Proceeds from exercise of stock options | 5,046 | 3,374 | ||||||||||
| Excess tax benefits from stock-based compensation | 131 | 59 | ||||||||||
| Principal payments under capital lease obligations | (805 | ) | (920 | ) | ||||||||
| Net cash provided by financing activities | 4,372 | 2,513 | ||||||||||
| Effect of exchange rate changes on cash and cash equivalents | (228 | ) | (56 | ) | ||||||||
| Net increase in cash and cash equivalents | 45,916 | 7,233 | ||||||||||
| Cash and cash equivalents at beginning of period | 42,369 | 34,885 | ||||||||||
| Cash and cash equivalents at end of period | $ | 88,285 | $ | 42,118 | ||||||||
| Non-cash investing and financing activities: | ||||||||||||
| Purchases of property and equipment included in accrued liabilities | $ | - | $ | 731 | ||||||||
| Vesting of early exercised common stock options | $ | 41 | $ | 204 | ||||||||
| RECONCILIATION OF NON-GAAP DISCLOSURES | ||||||||||||||
| EBITDA AND ADJUSTED EBITDA | ||||||||||||||
| (Unaudited) | ||||||||||||||
| (in thousands) | ||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||
| Net income | $ | 3,208 | $ | 1,309 | $ | 4,474 | $ | 1,579 | ||||||
| Depreciation and amortization of property and equipment | 2,946 | 2,452 | 8,532 | 6,731 | ||||||||||
| Amortization of intangible assets | 98 | 105 | 294 | 319 | ||||||||||
| Interest expense | 2 | 7 | 9 | 37 | ||||||||||
| Provision for income taxes | 283 | 210 | 639 | 372 | ||||||||||
| EBITDA | 6,537 | 4,083 | 13,948 | 9,038 | ||||||||||
| Stock-based compensation | 2,494 | 1,621 | 7,100 | 3,808 | ||||||||||
| Other (income) expense, net | 14 | (31 | ) | (86 | ) | 97 | ||||||||
| Adjusted EBITDA | $ | 9,045 | $ | 5,673 | $ | 20,962 | $ | 12,943 | ||||||
| RECONCILIATION OF NON-GAAP DISCLOSURES | |||||||||||||
| (Unaudited) | |||||||||||||
| (in thousands, except per share data) | |||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||
| GAAP gross profit | $ | 26,927 | $ | 21,334 | $ | 75,564 | $ | 60,789 | |||||
| Plus: | |||||||||||||
| Stock-based compensation | 175 | 103 | 482 | 307 | |||||||||
| Non-GAAP gross profit | $ | 27,102 | $ | 21,437 | $ | 76,046 | $ | 61,096 | |||||
| GAAP income from operations | $ | 3,507 | $ | 1,495 | $ | 5,036 | $ | 2,085 | |||||
| Plus: | |||||||||||||
| Stock-based compensation | 2,494 | 1,621 | 7,100 | 3,808 | |||||||||
| Non-GAAP income from operations | $ | 6,001 | $ | 3,116 | $ | 12,136 | $ | 5,893 | |||||
| GAAP net income | $ | 3,208 | $ | 1,309 | $ | 4,474 | $ | 1,579 | |||||
| Plus: | |||||||||||||
| Stock-based compensation | 2,494 | 1,621 | 7,100 | 3,808 | |||||||||
| Non-GAAP net income | $ | 5,702 | $ | 2,930 | $ | 11,574 | $ | 5,387 | |||||
| Non-GAAP net income per share: | |||||||||||||
| Basic | $ | 0.17 | $ | 0.09 | $ | 0.35 | $ | 0.17 | |||||
| Diluted | $ | 0.15 | $ | 0.08 | $ | 0.31 | $ | 0.15 | |||||
| Weighted average shares used in computing non-GAAP net income per share: | |||||||||||||
| Basic | 33,120 | 32,088 | 32,820 | 31,789 | |||||||||
| Diluted | 37,080 | 36,247 | 37,006 | 35,704 | |||||||||
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