Qualys Announces First Quarter 2024 Financial Results

About this update from Qualys, Inc.

Revenue Growth of 12% Year-Over-YearGAAP 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 [email protected] 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 % 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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