"Our strong fiscal first quarter results were driven by continued growth of customer and partner commitments to our pure SaaS security and compliance platform as the market is now clearly shifting away from traditional enterprise security and compliance products," said
Courtot continued, "At the
First Quarter 2016 Financial Highlights
Revenues: Revenues for the first quarter of 2016 increased by 23% to
Deferred Revenues: Current deferred revenues increased by 15.5% to
Gross Profit: GAAP gross profit for the first quarter of 2016 increased by 25% to
Operating Income: GAAP operating income for the first quarter of 2016 was
Net Income: GAAP net income for the first quarter of 2016 was
Adjusted EBITDA: Adjusted EBITDA (a non-GAAP financial measure) for the first quarter of 2016 increased by 35% to
First Quarter 2016 Business Highlights
Customers:
- New customers included:
Cox Automotive ,Avery Dennison ,AECOM Technology Corporation , ED&F MAN , Admiral Group Plc, Roche Holdings AG,Main Line Health , Huawei Technologies Co.,Library of Congress , MTN Group,ICBC Standard Bank ,Blue Cross and Blue Shield of Massachusetts ,South Carolina Dept of Employment , HCL Technologies LTD,Nissan Motors Limited and theAccord Group .
New Services:
- Continued Qualys Cloud Agents expansion for new operating systems including LINUX and Mac OS adding to the platform's existing support for Windows. This technology enables visualization of all IT assets with Qualys AssetView™ and eases expansion of vulnerability management and policy compliance programs to endpoints, mobile IT assets and elastic cloud environments.
- Introduced Qualys ThreatPROTECT™ leveraging Qualys Vulnerability Management to help customers visualize risk and prioritize threats to improve remediation efforts and reduce risk from the most critical vulnerabilities.
- Launched Qualys Security Assessment Questionnaire (SAQ) as an extension to Qualys Policy Compliance solution to assist customers with streamlining compliance questionnaires and collecting evidence for various compliance efforts and regulatory mandates including PCI, HIPAA, SOX and others.
- Introduced a new enterprise version of the Qualys Private
Cloud Platform or ePCP targeted for the midmarket that is fully packaged as a 1-U appliance fully managed byQualys and delivering to customers the entireQualys suite while allowing to keep their data on on-premise.
Strategic and Channel Partnerships:
- Announced OEM partnership with
HEAT Software to embed their best-of-breed patching solution, PatchLink technology, within Qualys Cloud Agents to distribute patches and allow customers to perform remediation at the endpoints.
Industry Recognition:
- Qualys Web Application Scanning (WAS) named a winner in the 2016 SANS Awards.
- Qualys Vulnerability Management (VM) highlighted as a leader in the 2016 SANS Awards.
New CFO Appointed:
Qualys announced today in a separate press release (here) the appointment ofMelissa Fisher as Chief Financial Officer. Fisher will lead all elements of the company's finance, accounting, investor relations, treasury, and tax functions. Fisher brings nearly 20 years of technology industry and public markets experience toQualys . She was most recently the Vice President of FP&A, Investor Relations andTreasury atZynga (NASDAQ : ZNGA).
Financial Performance Outlook
Second Quarter 2016 Guidance: Management expects revenues to be in the range of
Full Year 2016 Guidance: Management continues to expect 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 effect of new structures to our standard contract terms; the expansion of our partnerships and the related benefits of such partnerships; the threat environment in which we operate and any changes thereto; 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 second quarter and full year 2016, and our expectations for the number of weighted average diluted shares outstanding and effective income tax rate for the second 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,
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 | ||||||||||
| 2016 | 2015 | |||||||||
| Revenues | $ | 46,248 | $ | 37,493 | ||||||
| Cost of revenues (1) | 9,416 | 7,964 | ||||||||
| Gross profit | 36,832 | 29,529 | ||||||||
| Operating expenses: | ||||||||||
| Research and development (1) | 7,834 | 7,150 | ||||||||
| Sales and marketing (1) | 13,933 | 11,443 | ||||||||
| General and administrative (1) | 7,468 | 6,016 | ||||||||
| Total operating expenses | 29,235 | 24,609 | ||||||||
| Income from operations | 7,597 | 4,920 | ||||||||
| Other income (expense), net: | ||||||||||
| Interest expense | (13 | ) | -- | |||||||
| Interest income | 250 | 101 | ||||||||
| Other expense, net | (69 | ) | (178 | ) | ||||||
| Total other income (expense), net | 168 | (77 | ) | |||||||
| Income before income taxes | 7,765 | 4,843 | ||||||||
| Provision for income taxes | 2,982 | 1,841 | ||||||||
| Net income | $ | 4,783 | $ | 3,002 | ||||||
| Net income per share: | ||||||||||
| Basic | $ | 0.14 | $ | 0.09 | ||||||
| Diluted | $ | 0.13 | $ | 0.08 | ||||||
| Weighted average shares used in computing net income per share: | ||||||||||
| Basic | 34,619 | 33,775 | ||||||||
| Diluted | 37,838 | 38,235 | ||||||||
| (1) Includes stock-based compensation as follows: | ||||||||||
| Cost of revenues | $ | 379 | $ | 328 | ||||||
| Research and development | 1,295 | 1,152 | ||||||||
| Sales and marketing | 1,249 | 811 | ||||||||
| General and administrative | 1,774 | 1,584 | ||||||||
| Total stock-based compensation | $ | 4,697 | $ | 3,875 | ||||||
| CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||||
| (Unaudited) | ||||||||||
| (in thousands) | ||||||||||
| Three Months Ended | ||||||||||
| 2016 | 2015 | |||||||||
| Net income | $ | 4,783 | $ | 3,002 | ||||||
| Available-for-sale investments: | ||||||||||
| Change in net unrealized gain (loss) on investments, net of tax | 229 | 29 | ||||||||
| Less: reclassification adjustment for net realized gain (loss) included in net income | 12 | (4 | ) | |||||||
| Net change, net of tax | 241 | 25 | ||||||||
| Other comprehensive income, net | 241 | 25 | ||||||||
| Comprehensive income | $ | 5,024 | $ | 3,027 | ||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
| (Unaudited) | ||||||||||
| (in thousands) | ||||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 112,471 | $ | 91,698 | ||||||
| Short-term investments | 93,238 | 87,268 | ||||||||
| Accounts receivable, net | 42,414 | 42,325 | ||||||||
| Prepaid expenses and other current assets | 7,448 | 7,945 | ||||||||
| Total current assets | 255,571 | 229,236 | ||||||||
| Long-term investments | 34,614 | 43,277 | ||||||||
| Property and equipment, net | 31,786 | 31,329 | ||||||||
| Deferred tax assets, net | 17,165 | 16,079 | ||||||||
| Intangible assets, net | 1,267 | 1,360 | ||||||||
| 317 | 317 | |||||||||
| Other noncurrent assets | 1,942 | 1,916 | ||||||||
| Total assets | $ | 342,662 | $ | 323,514 | ||||||
| Liabilities and Stockholders' Equity | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 4,393 | $ | 2,368 | ||||||
| Accrued liabilities | 11,513 | 11,786 | ||||||||
| Deferred revenues, current | 101,557 | 98,025 | ||||||||
| Total current liabilities | 117,463 | 112,179 | ||||||||
| Deferred revenues, noncurrent | 13,092 | 14,564 | ||||||||
| Other noncurrent liabilities | 1,611 | 1,205 | ||||||||
| Total liabilities | 132,166 | 127,948 | ||||||||
| Stockholders' equity: | ||||||||||
| Common stock | 35 | 34 | ||||||||
| Additional paid-in capital | 233,133 | 223,228 | ||||||||
| Accumulated other comprehensive income (loss) | 30 | (211 | ) | |||||||
| Accumulated deficit | (22,702 | ) | (27,485 | ) | ||||||
| Total stockholders' equity | 210,496 | 195,566 | ||||||||
| Total liabilities and stockholders' equity | $ | 342,662 | $ | 323,514 | ||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
| (Unaudited) | ||||||||||||
| (in thousands) | ||||||||||||
| Three Months Ended | ||||||||||||
| 2016 | 2015 | |||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net income | $ | 4,783 | $ | 3,002 | ||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
| Depreciation and amortization expense | 3,834 | 3,182 | ||||||||||
| Bad debt expense | 80 | 175 | ||||||||||
| Loss on disposal of property and equipment | -- | 4 | ||||||||||
| Stock-based compensation | 4,697 | 3,875 | ||||||||||
| Amortization of premiums and accretion of discounts on investments | 208 | 168 | ||||||||||
| Excess tax benefits from stock-based compensation | (3,095 | ) | (91 | ) | ||||||||
| Deferred income taxes | (1,086 | ) | 1,362 | |||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Accounts receivable | (169 | ) | (5,914 | ) | ||||||||
| Prepaid expenses and other assets | 573 | (670 | ) | |||||||||
| Accounts payable | 2,026 | (3,609 | ) | |||||||||
| Accrued liabilities | 2,822 | 1,690 | ||||||||||
| Deferred revenues | 2,059 | 6,782 | ||||||||||
| Other noncurrent liabilities | 406 | 70 | ||||||||||
| Net cash provided by operating activities | 17,138 | 10,026 | ||||||||||
| Cash flows from investing activities: | ||||||||||||
| Purchases of investments | (49,450 | ) | (31,781 | ) | ||||||||
| Sales and maturities of investments | 52,176 | 25,977 | ||||||||||
| Purchases of property and equipment | (4,181 | ) | (6,148 | ) | ||||||||
| Capitalized software development costs | (118 | ) | (99 | ) | ||||||||
| Net cash used in investing activities | (1,573 | ) | (12,051 | ) | ||||||||
| Cash flows from financing activities: | ||||||||||||
| Proceeds from exercise of stock options | 2,113 | 3,448 | ||||||||||
| Excess tax benefits from stock-based compensation | 3,095 | 91 | ||||||||||
| Net cash provided by financing activities | 5,208 | 3,539 | ||||||||||
| Net increase in cash and cash equivalents | 20,773 | 1,514 | ||||||||||
| Cash and cash equivalents at beginning of period | 91,698 | 76,504 | ||||||||||
| Cash and cash equivalents at end of period | $ | 112,471 | $ | 78,018 | ||||||||
| Non-cash investing and financing activities: | ||||||||||||
| Vesting of early exercised common stock options | $ | -- | $ | 6 | ||||||||
| RECONCILIATION OF NON-GAAP DISCLOSURES | ||||||||
| EBITDA AND ADJUSTED EBITDA | ||||||||
| (Unaudited) | ||||||||
| (in thousands) | ||||||||
| Three Months Ended | ||||||||
| 2016 | 2015 | |||||||
| Net income | $ | 4,783 | $ | 3,002 | ||||
| Depreciation and amortization of property and equipment | 3,724 | 3,084 | ||||||
| Amortization of intangible assets | 110 | 98 | ||||||
| Interest expense | 13 | -- | ||||||
| Provision for income taxes | 2,982 | 1,841 | ||||||
| EBITDA | 11,612 | 8,025 | ||||||
| Stock-based compensation | 4,697 | 3,875 | ||||||
| Other (income) expense, net | (181 | ) | 77 | |||||
| Adjusted EBITDA | $ | 16,128 | $ | 11,977 | ||||
| RECONCILIATION OF NON-GAAP DISCLOSURES | |||||||||
| (Unaudited) | |||||||||
| (in thousands, except per share data) | |||||||||
| Three Months Ended | |||||||||
| 2016 | 2015 | ||||||||
| GAAP gross profit | $ | 36,832 | $ | 29,529 | |||||
| Plus: Stock-based compensation | 379 | 328 | |||||||
| Non-GAAP gross profit | $ | 37,211 | $ | 29,857 | |||||
| GAAP income from operations | $ | 7,597 | $ | 4,920 | |||||
| Plus: Stock-based compensation | 4,697 | 3,875 | |||||||
| Non-GAAP income from operations | $ | 12,294 | $ | 8,795 | |||||
| GAAP net income | $ | 4,783 | $ | 3,002 | |||||
| Plus: Stock-based compensation | 4,697 | 3,875 | |||||||
| Less: Tax adjustment | (1,504 | ) | (1,332 | ) | |||||
| Non-GAAP net income | $ | 7,976 | $ | 5,545 | |||||
| Non-GAAP net income per share: | |||||||||
| Basic | $ | 0.23 | $ | 0.16 | |||||
| Diluted | $ | 0.21 | $ | 0.15 | |||||
| Weighted average shares used in computing non-GAAP net income per share: | |||||||||
| Basic | 34,619 | 33,775 | |||||||
| Diluted | 37,838 | 38,235 | |||||||
| RECONCILIATON OF NON-GAAP DISCLOSURES | |||||||||
| FREE CASH FLOWS | |||||||||
| (Unaudited) | |||||||||
| (in thousands) | |||||||||
| Three Months Ended | |||||||||
| 2016 | 2015 | ||||||||
| GAAP cash flows provided by operating activities | $ | 17,138 | $ | 10,026 | |||||
| Less: | |||||||||
| Purchases of property and equipment | (4,181 | ) | (6,148 | ) | |||||
| Capitalized software development costs | (118 | ) | (99 | ) | |||||
| Non-GAAP free cash flows | $ | 12,839 | $ | 3,779 | |||||
Investor Contact:
ICR for
(650) 801-6100
ir@qualys.com
Media Contact:
LEWIS for
qualys@teamlewis.com
(781) 418-2406
Source:
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