Industry Overview - The pace of technological change is accelerating, particularly in quantum computing, raising concerns about cybersecurity threats, specifically the potential for quantum-powered attacks to break current encryption methods in seconds, referred to as "Q-Day" [1] - Regulators and privacy watchdogs are urging organizations to adopt quantum-resistant encryption before 2035, indicating that quantum computing is an immediate concern rather than a distant risk [1] - The Post-Quantum Cryptography market is projected to grow at a 41.47% CAGR, reaching approximately US$17.69 billion by 2034, while the Quantum Computing Software market is expected to expand at a 40% CAGR, reaching about US$31.8 billion [2] Company Developments - Scope Technologies Corp. is actively engaging in the quantum security space, recently announcing a $1.5 million private placement financing, which includes a $1 million strategic investment from First Majestic Silver Corp. [3] - The funds will be utilized to repay a prior loan and accelerate the development of Scope's upcoming QSE mobile app, which will offer quantum-resistant messaging and file-sharing capabilities [4] - Scope has secured a master reseller agreement with Coegi Cloud AB in Sweden and a channel partnership with COGITO, expanding its reach across Europe, North America, and Asia [5] - The company launched an upgraded Quantum Preparedness Assessment (QPA) tool that uses AI-driven automation to help businesses assess their exposure to quantum threats, aligning with upcoming updates to the HIPAA Security Rule [6] Competitive Landscape - Qualys, Inc. has launched its Managed Risk Operations Center (mROC) Partner Alliance to help organizations turn risk data into actionable insights, addressing a significant challenge in cybersecurity [9][10] - CyberArk Software Ltd. highlighted the growing issue of machine identity security, reporting that 72% of organizations experienced certificate-related outages, emphasizing the need for comprehensive security strategies [11][12] - Cisco Systems, Inc. and NVIDIA Corporation have introduced the Cisco Secure AI Factory, an infrastructure solution designed to secure AI workloads, integrating security at every layer [13][14]

Financial Performance - Revenues for 2024 reached $607,571 thousand, a 9.6% increase from $554,458 thousand in 2023[317]. - Gross profit for 2024 was $496,089 thousand, up 10.9% from $446,973 thousand in 2023[317]. - Net income for 2024 increased to $173,680 thousand, representing a 14.6% growth compared to $151,595 thousand in 2023[320]. - Basic net income per share rose to $4.72 in 2024, up from $4.11 in 2023, reflecting a 14.8% increase[317]. - Total revenues for the year ended December 31, 2024, reached $607.6 million, up 9.6% from $554.5 million in 2023[403]. - The net income for the year ended December 31, 2024, was $173.7 million, up 14.6% from $151.6 million in 2023[458]. - Revenue from the United States for the year ended December 31, 2024, was $354.6 million, while foreign revenue was $253.0 million[459]. Assets and Liabilities - As of December 31, 2024, Qualys reported total assets of $973.5 million, an increase from $812.6 million in 2023, representing a growth of approximately 20%[313]. - The company had $575.3 million in cash, cash equivalents, and marketable securities as of December 31, 2024, with no material decrease in fair value expected from a hypothetical 100 basis point increase in interest rates[293]. - The company reported a net accumulated deficit of $189.2 million in 2024, reduced from $228.1 million in 2023, indicating an improvement in financial health[313]. - The Company had total long-lived assets of $71.3 million as of December 31, 2024, compared to $55.0 million in 2023[459]. - The total fair value of marketable securities due within one year was $185,571,000, while those due after one year through five years totaled $186,367,000 as of December 31, 2024[385]. Cash Flow and Investments - Cash flow from operating activities for 2024 was $244,094 thousand, slightly down from $244,605 thousand in 2023[323]. - The company repurchased common stock worth $139,875 thousand in 2024, compared to $170,800 thousand in 2023[323]. - The Company has total purchase commitments of $56.4 million as of December 31, 2024, with $25.1 million due in 2025[415]. - The company incurred advertising costs of $2.9 million in 2024, which is a decrease from the previous years[361]. Stock-Based Compensation - The total stock-based compensation expense for the year ended December 31, 2024 was $77.1 million, an increase of 11.8% from $69.1 million in 2023[439]. - The intrinsic value of options exercised in 2024 was $24.0 million, compared to $41.7 million in 2023, indicating a decrease of 42.0%[431]. - The aggregate fair value of RSUs vested in 2024 was $56.2 million, up from $55.7 million in 2023, reflecting a 0.9% increase[435]. - The company recognized stock-based compensation expenses related to PRSUs of $12.4 million in 2024, a significant increase from $7.4 million in 2023[440]. - The number of shares authorized for issuance under the 2021 Employee Stock Purchase Plan was 600 thousand, with 59 thousand shares issued in 2024[428][429]. Research and Development - The company anticipates continued investments in sales and marketing, infrastructure, and research and development to support growth and innovation[290]. - Research and development expenses for 2024 were $111,852 thousand, a slight increase from $110,472 thousand in 2023[317]. Deferred Revenues and Contracts - Deferred revenues increased to $395.7 million in 2024 from $364.9 million in 2023, indicating a growth of approximately 8.4%[313]. - The Company recognizes revenue from subscriptions ratably over the contract terms, which generally last one year, with some contracts extending up to five years[352]. - Deferred revenues as of the balance sheet date consist of customer contracts billed or cash received that will be recognized in the future, with the current portion expected to be recognized within one year[358]. Foreign Currency and Derivatives - Qualys has designated cash flow hedge forward contracts with notional amounts of €51.4 million, £20.3 million, and Rs.4,381.0 million to mitigate foreign currency risks[291]. - The company utilizes derivative financial instruments to reduce foreign currency exchange risks, primarily through foreign currency forward contracts with maturities of 13 months or less[350]. - The total foreign exchange losses, net for the year ended December 31, 2024, were $3,192,000, compared to losses of $697,000 in 2023[393]. Tax and Compliance - The effective tax rate for the Company was 17.2% for the year ended December 31, 2024, compared to 15.1% in 2023[449]. - The Company reported a deferred tax asset of $94.6 million as of December 31, 2024, compared to $72.4 million in 2023[450]. - The unrecognized tax benefits increased to $12.1 million as of December 31, 2024, from $11.9 million in 2023[452].

Core Insights - Qualys is a cloud-based enterprise cybersecurity company that has been under observation for a significant period, with previous coverage in April of the last year [1]. Group 1 - The company has been noted for its potential investment opportunities, with the possibility of initiating a long position through stock purchases or call options within a short timeframe [1].

Financial Performance - Qualys, Inc. reported fourth-quarter earnings of $1.60 per share, exceeding the analyst consensus estimate of $1.35 per share [1] - The company achieved quarterly sales of $159.191 million, surpassing the analyst consensus estimate of $156.192 million [1] Strategic Insights - The CEO of Qualys highlighted the increasing adoption of the Qualys Enterprise TruRisk Platform by customers, indicating a transformation in their security stacks [2] - The company noted the success of newer product initiatives such as Cybersecurity Asset Management, Patch Management, and TotalCloud, contributing to its innovation and competitive edge [2] - Qualys anticipates FY25 adjusted earnings between $5.50 and $5.90 per share, with revenue projected between $645 million and $657 million [2] Market Reaction - Following the earnings announcement, Qualys shares fell by 3.4%, trading at $136.00 [3] - Analysts adjusted their price targets for Qualys, with Scotiabank lowering its target from $150 to $140, while Canaccord Genuity maintained a Buy rating but reduced its target from $170 to $163 [4]

Core Viewpoint - Qualys, Inc. reported strong fourth-quarter results for 2024, exceeding earnings expectations, but shares fell due to lower-than-expected guidance for 2025 [1][4]. Financial Performance - Fourth-quarter 2024 non-GAAP earnings were $1.60 per share, surpassing the Zacks Consensus Estimate of $1.35 and management's guidance of $1.28-$1.38 [1][2]. - Year-over-year earnings improved from $1.40 in the same quarter last year, driven by higher revenues, improved efficiency, and lower diluted shares outstanding, despite increased taxes [2]. - Full-year 2024 revenues increased 10% year over year to $607.6 million, exceeding the Zacks Consensus Estimate of $604.5 million [8]. Revenue Breakdown - Fourth-quarter revenues from channel partners grew 18%, while direct sales increased by 3%, with channel partners contributing 48% to total revenues [5]. - U.S. sales grew 7% year over year, contributing approximately 58% to total revenues, while international sales increased 15%, accounting for 42% of total revenues [6]. Profitability Metrics - Non-GAAP gross profit for the fourth quarter rose 11% to $130.2 million, with a gross margin of 84%, an increase of 100 basis points [7]. - Non-GAAP operating income grew 16% to $70.7 million, with an operating margin improvement of 200 basis points to 44% [7]. Cash Flow and Share Repurchase - The company ended the quarter with cash and cash equivalents of $381.4 million and generated an operating cash flow of $47.7 million in Q4 and $244.1 million for the full year [9]. - Qualys repurchased stocks worth $42.3 million in Q4 and $139.9 million for the full year 2024, with $143.4 million remaining under the share repurchase program [10]. Guidance for 2025 - For Q1 2025, Qualys expects revenues between $155.5 million and $158.5 million, indicating year-over-year growth of 7-9%, with non-GAAP earnings projected between $1.40 and $1.50 [11]. - For the full year 2025, the company anticipates revenues in the range of $645-$657 million, reflecting a year-over-year growth of 6-8%, with non-GAAP earnings per share projected between $5.50 and $5.90 [12].

Financial Data and Key Metrics Changes - For the full year 2024, the company reported a revenue growth of 10% to $607.6 million, with an adjusted EBITDA margin of 47% and net income increasing by 16% to $229 million [31][32] - In Q4 2024, revenues grew 10% to $159.2 million, with channel contributions rising to 48% of total revenues from 44% a year ago [32][33] - Free cash flow reached $231.8 million, representing 38% of revenue, and EPS for Q4 was $1.60 [31][36] Business Line Data and Key Metrics Changes - Patch management and cybersecurity asset management combined accounted for 15% of total bookings and 24% of new bookings in 2024 [34] - Cloud security solutions contributed 4% to 2024 bookings, indicating a growing focus on cloud security [34] Market Data and Key Metrics Changes - International revenue grew by 15%, outpacing domestic growth of 7%, with the US and international revenue mix at 58% and 42%, respectively [33] - The growth retention rate remained approximately at 90%, and the net dollar expansion rate was 103%, unchanged from the prior quarter [33] Company Strategy and Development Direction - The company is focusing on evolving its platform to provide a comprehensive risk analytics and quantification solution, integrating AI models and allowing customers to leverage existing security tools [10][11] - The introduction of the Enterprise True Risk Management (ETM) platform aims to enhance risk quantification and remediation capabilities, positioning the company as a leader in proactive risk management [96][98] - The company plans to continue its partner-first strategy, emphasizing collaboration with partners to drive growth and enhance service offerings [25][50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the market position and growth opportunities, particularly in the federal sector with anticipated FedRAMP high certification in 2025 [28][90] - The selling environment for 2025 is expected to remain stable, with ongoing budget scrutiny, but the company anticipates continued demand for cybersecurity solutions [33][39] Other Important Information - The board authorized an increase of $200 million to the share repurchase program, bringing the total available amount for share repurchases to $343.4 million [38] - The company is investing in federal go-to-market strategies and expanding its federal team to capitalize on modernization opportunities within government agencies [90] Q&A Session Summary Question: Thoughts on creative packaging opportunities - Management acknowledged the need for customers to articulate cybersecurity spend in terms of business risk and is exploring packaging opportunities around the adoption of ETM [46] Question: Changes expected in sales motion after CRO departure - Management plans to focus on execution and partner-oriented go-to-market strategies, leveraging existing sales leadership to drive business forward [50][56] Question: Early customer feedback on Total AI - Early feedback on Total AI has been positive, with customers expressing interest in leveraging AI security capabilities [66][67] Question: Factors driving better-than-expected Q4 performance - Management noted that better linearity in renewals and invoicing cycles contributed to Q4 revenue performance, despite a weaker pipeline [76][77] Question: Expectations for new logo bookings growth in 2025 - Management anticipates weaker growth in new logo bookings for 2025, focusing on partner-led strategies to drive new customer acquisition [83] Question: Opportunities in the federal vertical - Management is optimistic about opportunities in the federal sector, especially with the anticipated FedRAMP high certification, which could modernize federal cybersecurity solutions [90][91] Question: Go-to-market strategy for ETM - Management highlighted that ETM differentiates itself by providing comprehensive risk quantification and remediation, allowing for easier integration with existing tools [95][98]

Group 1: Earnings Performance - Qualys reported quarterly earnings of $1.60 per share, exceeding the Zacks Consensus Estimate of $1.35 per share, and up from $1.40 per share a year ago, representing an earnings surprise of 18.52% [1] - The company has surpassed consensus EPS estimates in all four of the last quarters [2] - Qualys posted revenues of $159.19 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 1.99% and increasing from $144.57 million year-over-year [2] Group 2: Stock Performance and Outlook - Qualys shares have increased approximately 4.1% since the beginning of the year, compared to the S&P 500's gain of 3.1% [3] - The future performance of Qualys stock will largely depend on management's commentary during the earnings call and the earnings outlook [3][4] - The current consensus EPS estimate for the upcoming quarter is $1.45 on revenues of $157.9 million, and for the current fiscal year, it is $6.04 on revenues of $652.1 million [7] Group 3: Industry Context - The Zacks Security industry is currently ranked in the top 8% of over 250 Zacks industries, indicating a favorable outlook for stocks within this sector [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [5][6]

Qualys (QLYS) Q4 2024 Earnings Call February 06, 2025 05:00 PM ET Company Participants Blair King - Vice President, Investor Relations & Corporate DevelopmentSumedh Thakar - President and CEOJoo Mi Kim - CFOMichael Richards - Equity Research Senior AssociateMark Heatzig - Equity Research AssociateYun Kim - Managing DirectorCharlotte Bedick - Associate Vice President - Equity Research Conference Call Participants Kingsley Crane - Director, Senior AnalystRudy Kessinger - Managing Director - Senior Equity Rese ...

Investor Presentation Security and Compliance for the Digital Transformation Sumedh Thakar, President and CEO Joo Mi Kim, CFO February 6, 2025 Safe harbor This presentation includes forward-looking statements within the meaning of the federal securities laws. Forward-looking statements generally relate to future events or our future financial or operating performance. Forward-looking statements in this presentation include, but are not limited to, the following list: Our expectations and beliefs regarding t ...

Revenue Growth - Q4 2024 revenue increased by 10% year-over-year to $159.2 million, compared to $144.6 million in Q4 2023[3] - Full year 2024 revenue also grew by 10% to $607.6 million, up from $554.5 million in 2023[9] - For Q1 2025, management expects revenues to be between $155.5 million and $158.5 million, representing 7% to 9% growth year-over-year[20] - Full year 2025 revenue guidance is projected to be between $645.0 million and $657.0 million, indicating 6% to 8% growth over 2024[21] - Revenues for Q4 2024 reached $159.191 million, a 10% increase from $144.570 million in Q4 2023[38] - Non-GAAP calculated current billings for the three months ended December 31, 2024, were $192,827,000, a 13% increase from $170,658,000 in the same quarter of 2023[50] Profitability - GAAP net income for Q4 2024 rose by 8% to $44.0 million, or $1.19 per diluted share, compared to $40.6 million, or $1.08 per diluted share, in Q4 2023[6] - Non-GAAP net income for Q4 2024 was $59.4 million, or $1.60 per diluted share, compared to $52.8 million, or $1.40 per diluted share, in Q4 2023[6] - Net income for the full year 2024 was $173.680 million, compared to $151.595 million in 2023, representing a 15% year-over-year growth[38] - Non-GAAP net income per diluted share for Q4 2024 was $1.19, compared to $1.08 in Q4 2023, indicating a 10% increase[38] - The net income as a percentage of revenues for the twelve months ended December 31, 2024, was 29%, compared to 27% in 2023, indicating improved profitability[44] Cash Flow and Assets - Operating cash flow for Q4 2024 increased by 41% to $47.7 million, representing 30% of revenues, compared to 23% in Q4 2023[8] - Cash and cash equivalents rose to $232.182 million in 2024, up from $203.665 million in 2023, a 14% increase[40] - Total assets increased to $973.537 million in 2024 from $812.618 million in 2023, marking a 20% growth[40] - The net cash provided by operating activities for the twelve months ended December 31, 2024, was $244,094,000, nearly unchanged from $244,605,000 in 2023[42] - The company reported a net increase in cash, cash equivalents, and restricted cash of $27,017,000 for the twelve months ended December 31, 2024[42] Expenses and Compensation - Operating expenses for Q4 2024 totaled $80.741 million, compared to $75.971 million in Q4 2023, reflecting a 6% increase[38] - Stock-based compensation for the twelve months ended December 31, 2024, totaled $77,133,000, up from $69,079,000 in 2023, indicating an increase of approximately 11.5%[44] Industry Recognition and Product Development - The company received multiple industry recognitions, including being named a leader in various cybersecurity solution categories by Gartner and KuppingerCole[16] - Qualys launched several new products, including the Risk Operations Center and TruRisk Eliminate, enhancing its cybersecurity offerings[21] Future Projections - The company expects a non-GAAP effective income tax rate of 21% for 2025, which may be adjusted based on various factors[34] - Deferred revenues increased to $371.457 million in 2024 from $333.267 million in 2023, indicating strong future revenue potential[40] - Adjusted EBITDA for the twelve months ended December 31, 2024, was $282,842,000, compared to $259,139,000 in 2023, reflecting a year-over-year increase of about 9.2%[44] - Free cash flows for the twelve months ended December 31, 2024, were $231,760,000, slightly down from $235,819,000 in 2023[48] - The company announced a $200 million increase to its share repurchase program[1]