Second Quarter 2014 Financial Highlights
Revenues: Revenues for the second quarter of 2014 increased by 23% to
Deferred Revenues: Current deferred revenues increased by 22% to
Gross Profit: GAAP gross profit for the second quarter of 2014 increased by 23% to
Operating Income: GAAP operating income for the second quarter of 2014 was
Net Income: GAAP net income for the second quarter of 2014 was
Adjusted EBITDA: Adjusted EBITDA (a non-GAAP financial measure) for the second quarter of 2014 increased by 62% to
Second Quarter 2014 Business Highlights
Customers:
- New customers included: Albemarle Corporation, BARCO, Blue Cross Blue Shield of
Nebraska andTennessee , CMS Energy Corporation, FireEye,LeasePlan Corporation N.V. ,Lloyds Register , Markel Corporation, NASDAQ, Office Depot, Philips ElectronicsUK Ltd,Reed Smith ,Travelport, LP andZiff Davis .
New Products and Functionalities:
During the second quarter of 2014,
- Expanded Qualys Continuous Monitoring solution with the ability to seamlessly integrate vulnerability alerts into incident response systems such as HP Arcsight and Splunk, empowering organizations to proactively address critical vulnerabilities in their perimeter by providing information to first responders. This allows customers to immediately mitigate risk within their global perimeter.
Qualys is showcasing these new capabilities for Continuous Monitoring atBlack Hat USA 2014August 6-7, 2014 inLas Vegas . - Released the "Multi-Scan" feature enhancement to Qualys Web Application Scanning which enables customers to perform high volume and fully automated web application scanning across their complete web applications portfolio.
- Released a new map, or network discovery, function in Qualys Vulnerability Management with the ability to search the network for active assets, discover the relationships between interconnected networks, and help ensure that newly discovered assets are authorized and regularly assessed.
- Released the new Qualys Enterprise Scanner Appliance with higher performance and parallelization capabilities allowing customers to increase scanning speed for enterprise networks. The new scanner also allows customers to scan air-gap networks, a key requirement for government and defense customers.
- Introduced Qualys Policy Compliance support for new regulations to address a wide spectrum of recommendations helping financial institutions adhere to recent Internet Banking Technology Risk Management guidelines all over the world.
Industry Recognition:
- Honored by
SC Magazine as Best Risk/Policy Management Solution for Qualys Policy Management Solution. - Recognized by Gartner as a formidable challenger in the 2014 Magic Quadrant for Application Security Testing for Qualys Web Application Solution.
Strategic Alliances and Partnerships:
- Joined the
Open Web Application Security Project (OWASP) as the first Premier Corporate Member. OWASP is an open community of over 42,000 participants dedicated to enabling organizations to conceive, develop, acquire, operate and maintain applications that can be trusted. - Joined forces with the
Council on CyberSecurity to help promote the adoption of cyber-security best practices.
Financial Performance Outlook
Third 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: our plans for continued investments in core technologies and new cloud offerings and the intended benefits of these investments; the expected functionality and benefits of our solutions; our belief that we will continue to gain new customer adoption of our core Vulnerability Management solution, our Web Application Scanning solution and our Policy Compliance solution and expand our platform among existing customers; our expectations regarding bringing new capabilities and solutions to market
in 2014; our belief that we will continue to leverage our cloud platform to grow revenues and increase value to our customers and shareholders; our belief that customers will increasingly adopt our Web Application Scanning and Policy Compliance solutions; our expectation that our Continuous Monitoring and Web Application Firewall solutions will be adopted by our customers on an accelerated basis; our guidance for revenues, GAAP EPS and non-GAAP EPS for the third quarter and full year 2014; and our expectations for the number of weighted average diluted shares outstanding for the third 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 | Six Months Ended | |||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||||
| Revenues | $ | 32,302 | $ | 26,291 | $ | 62,658 | $ | 51,174 | ||||||||||
| Cost of revenues (1) | 7,175 | 5,924 | 14,021 | 11,719 | ||||||||||||||
| Gross profit | 25,127 | 20,367 | 48,637 | 39,455 | ||||||||||||||
| Operating expenses: | ||||||||||||||||||
| Research and development (1) | 6,411 | 5,291 | 12,815 | 10,588 | ||||||||||||||
| Sales and marketing (1) | 11,845 | 10,160 | 24,337 | 20,328 | ||||||||||||||
| General and administrative (1) | 5,081 | 4,053 | 9,956 | 7,949 | ||||||||||||||
| Total operating expenses | 23,337 | 19,504 | 47,108 | 38,865 | ||||||||||||||
| Income from operations | 1,790 | 863 | 1,529 | 590 | ||||||||||||||
| Other income (expense), net: | ||||||||||||||||||
| Interest expense | (3 | ) | (12 | ) | (7 | ) | (30 | ) | ||||||||||
| Interest income | 130 | 81 | 238 | 158 | ||||||||||||||
| Other income (expense), net | (37 | ) | 33 | (138 | ) | (286 | ) | |||||||||||
| Total other income (expense), net | 90 | 102 | 93 | (158 | ) | |||||||||||||
| Income before provision for income taxes | 1,880 | 965 | 1,622 | 432 | ||||||||||||||
| Provision for income taxes | 174 | 92 | 356 | 162 | ||||||||||||||
| Net income | $ | 1,706 | $ | 873 | $ | 1,266 | $ | 270 | ||||||||||
| Net income per share: | ||||||||||||||||||
| Basic | $ | 0.05 | $ | 0.03 | $ | 0.04 | $ | 0.01 | ||||||||||
| Diluted | $ | 0.05 | $ | 0.02 | $ | 0.03 | $ | 0.01 | ||||||||||
| Weighted average shares used in computing net income per share: | ||||||||||||||||||
| Basic | 32,818 | 31,777 | 32,668 | 31,636 | ||||||||||||||
| Diluted | 36,839 | 35,393 | 36,966 | 35,353 | ||||||||||||||
| (1) Includes stock-based compensation as follows: | ||||||||||||||||||
| Cost of revenues | $ | 158 | $ | 111 | $ | 307 | $ | 204 | ||||||||||
| Research and development | 517 | 236 | 952 | 444 | ||||||||||||||
| Sales and marketing | 718 | 158 | 1,291 | 441 | ||||||||||||||
| General and administrative | 1,087 | 733 | 2,056 | 1,098 | ||||||||||||||
| Total stock-based compensation | $ | 2,480 | $ | 1,238 | $ | 4,606 | $ | 2,187 | ||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||||||||||||||
| (Unaudited) | |||||||||||||||||||
| (in thousands) | |||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||||||||
| Net income | $ | 1,706 | $ | 873 | $ | 1,266 | $ | 270 | |||||||||||
| Change in foreign currency translation loss, net of zero tax | (50 | ) | (51 | ) | (41 | ) | (61 | ) | |||||||||||
| Available-for-sale investments: | |||||||||||||||||||
| Change in net unrealized gain on investments, net of zero tax | 27 | (15 | ) | 39 | (15 | ) | |||||||||||||
| Less: reclassification adjustment for net realized gain included in net income | (7 | ) | (2 | ) | (7 | ) | (8 | ) | |||||||||||
| Net change, net of zero tax | 20 | (17 | ) | 32 | (23 | ) | |||||||||||||
| Other comprehensive loss, net | (30 | ) | (68 | ) | (9 | ) | (84 | ) | |||||||||||
| Comprehensive income | $ | 1,676 | $ | 805 | $ | 1,257 | $ | 186 | |||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
| (Unaudited) | ||||||||||
| (in thousands) | ||||||||||
2014 |
2013 |
|||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 41,672 | $ | 42,369 | ||||||
| Short-term investments | 67,673 | 54,827 | ||||||||
| Accounts receivable, net | 28,062 | 28,581 | ||||||||
| Prepaid expenses and other current assets | 5,502 | 4,679 | ||||||||
| Total current assets | 142,909 | 130,456 | ||||||||
| Long-term investments | 34,415 | 35,608 | ||||||||
| Property and equipment, net | 24,012 | 23,075 | ||||||||
| Intangible assets, net | 2,198 | 2,394 | ||||||||
| Goodwill | 317 | 317 | ||||||||
| Other noncurrent assets | 721 | 753 | ||||||||
| Total assets | $ | 204,572 | $ | 192,603 | ||||||
| Liabilities and Stockholders' Equity | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 1,735 | $ | 1,930 | ||||||
| Accrued liabilities | 8,389 | 9,037 | ||||||||
| Deferred revenues, current | 71,853 | 67,505 | ||||||||
| Capital lease obligations, current | 270 | 805 | ||||||||
| Total current liabilities | 82,247 | 79,277 | ||||||||
| Deferred revenues, noncurrent | 8,781 | 8,889 | ||||||||
| Other noncurrent liabilities | 1,423 | 1,320 | ||||||||
| Total liabilities | 92,451 | 89,486 | ||||||||
| Stockholders' equity: | ||||||||||
| Common stock | 33 | 32 | ||||||||
| Additional paid-in capital | 184,387 | 176,641 | ||||||||
| Accumulated other comprehensive loss | (1,097 | ) | (1,088 | ) | ||||||
| Accumulated deficit | (71,202 | ) | (72,468 | ) | ||||||
| Total stockholders' equity | 112,121 | 103,117 | ||||||||
| Total liabilities and stockholders' equity | $ | 204,572 | $ | 192,603 | ||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
| (Unaudited) | ||||||||||||
| (in thousands) | ||||||||||||
| Six Months Ended | ||||||||||||
| 2014 | 2013 | |||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net income | $ | 1,266 | $ | 270 | ||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
| Depreciation and amortization expense | 5,782 | 4,493 | ||||||||||
| Bad debt expense | 153 | 68 | ||||||||||
| Loss on disposal of property and equipment | 1 | 9 | ||||||||||
| Stock-based compensation | 4,606 | 2,187 | ||||||||||
| Amortization of premiums on investments | 325 | 115 | ||||||||||
| Excess tax benefits from stock-based compensation | (54 | ) | - | |||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Accounts receivable | 367 | 1,549 | ||||||||||
| Prepaid expenses and other assets | (787 | ) | 429 | |||||||||
| Accounts payable | (207 | ) | 477 | |||||||||
| Accrued liabilities | (618 | ) | 1,170 | |||||||||
| Deferred revenues | 4,240 | 2,545 | ||||||||||
| Other noncurrent liabilities | 101 | (442 | ) | |||||||||
| Net cash provided by operating activities | 15,175 | 12,870 | ||||||||||
| Cash flows from investing activities: | ||||||||||||
| Purchases of investments | (76,907 | ) | (75,048 | ) | ||||||||
| Sales and maturities of investments | 64,960 | 100,624 | ||||||||||
| Purchases of property and equipment | (6,495 | ) | (6,238 | ) | ||||||||
| Release of restricted cash | - | 114 | ||||||||||
| Net cash (used in) provided by investing activities | (18,442 | ) | 19,452 | |||||||||
| Cash flows from financing activities: | ||||||||||||
| Proceeds from exercise of stock options | 3,082 | 2,163 | ||||||||||
| Excess tax benefits from stock-based compensation | 54 | - | ||||||||||
| Principal payments under capital lease obligations | (536 | ) | (655 | ) | ||||||||
| Net cash provided by financing activities | 2,600 | 1,508 | ||||||||||
| Effect of exchange rate changes on cash and cash equivalents | (30 | ) | (96 | ) | ||||||||
| Net (decrease) increase in cash and cash equivalents | (697 | ) | 33,734 | |||||||||
| Cash and cash equivalents at beginning of period | 42,369 | 34,885 | ||||||||||
| Cash and cash equivalents at end of period | $ | 41,672 | $ | 68,619 | ||||||||
| Non-cash investing and financing activities: | ||||||||||||
| Purchases of property and equipment included in accrued liabilities | $ | - | $ | 2,450 | ||||||||
| Vesting of early exercised common stock options | $ | 35 | $ | 144 | ||||||||
| RECONCILIATION OF NON-GAAP DISCLOSURES | ||||||||||||||||
| EBITDA AND ADJUSTED EBITDA | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| (in thousands) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Net income | $ | 1,706 | $ | 873 | $ | 1,266 | $ | 270 | ||||||||
| Depreciation and amortization of property and equipment | 2,879 | 2,267 | 5,586 | 4,279 | ||||||||||||
| Amortization of intangible assets | 98 | 107 | 196 | 214 | ||||||||||||
| Interest expense | 3 | 12 | 7 | 30 | ||||||||||||
| Provision for income taxes | 174 | 92 | 356 | 162 | ||||||||||||
| EBITDA | 4,860 | 3,351 | 7,411 | 4,955 | ||||||||||||
| Stock-based compensation | 2,480 | 1,238 | 4,606 | 2,187 | ||||||||||||
| Other (income) expense, net | (93 | ) | (114 | ) | (100 | ) | 128 | |||||||||
| Adjusted EBITDA | $ | 7,247 | $ | 4,475 | $ | 11,917 | $ | 7,270 | ||||||||
| RECONCILIATION OF NON-GAAP DISCLOSURES | |||||||||||||
| (Unaudited) | |||||||||||||
| (in thousands, except per share data) | |||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||
| GAAP gross profit | $ | 25,127 | $ | 20,367 | $ | 48,637 | $ | 39,455 | |||||
| Plus: | |||||||||||||
| Stock-based compensation | 158 | 111 | 307 | 204 | |||||||||
| Non-GAAP gross profit | $ | 25,285 | $ | 20,478 | $ | 48,944 | $ | 39,659 | |||||
| GAAP income from operations | $ | 1,790 | $ | 863 | $ | 1,529 | $ | 590 | |||||
| Plus: | |||||||||||||
| Stock-based compensation | 2,480 | 1,238 | 4,606 | 2,187 | |||||||||
| Non-GAAP income from operations | $ | 4,270 | $ | 2,101 | $ | 6,135 | $ | 2,777 | |||||
| GAAP net income | $ | 1,706 | $ | 873 | $ | 1,266 | $ | 270 | |||||
| Plus: | |||||||||||||
| Stock-based compensation | 2,480 | 1,238 | 4,606 | 2,187 | |||||||||
| Non-GAAP net income | $ | 4,186 | $ | 2,111 | $ | 5,872 | $ | 2,457 | |||||
| Non-GAAP net income per share: | |||||||||||||
| Basic | $ | 0.13 | $ | 0.07 | $ | 0.18 | $ | 0.08 | |||||
| Diluted | $ | 0.11 | $ | 0.06 | $ | 0.16 | $ | 0.07 | |||||
| Weighted average shares used in computing non-GAAP net income per share: | |||||||||||||
| Basic | 32,818 | 31,777 | 32,668 | 31,636 | |||||||||
| Diluted | 36,839 | 35,393 | 36,966 | 35,353 | |||||||||
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