Industry Overview - The cybersecurity market is projected to witness a CAGR of 12.63% from 2025 to 2030, driven by the rise of complex attacks such as credential theft and social engineering [2] Company Profiles CrowdStrike - CrowdStrike specializes in endpoint protection and extended detection and response (XDR) through its Falcon platform, which is recognized as the industry's first multi-tenant, cloud-native security solution [4] - The Falcon platform offers 29 cloud modules categorized under Endpoint Security, Security & IT Operations, and Threat Intelligence, with subscription-based sales increasing from 72% in fiscal 2017 to 95% in fiscal 2025 [5] - Despite robust revenue growth, CrowdStrike's growth rate has decelerated from over 35% year-over-year until fiscal 2024 to 29% in fiscal 2025, with further estimates suggesting a decline to around 21% for fiscal 2026 and 2027 [6] - Rising costs are a concern, with R&D expenses increasing 12-fold and S&M expenses nearly ninefold to $1.52 billion in fiscal 2025 from $173 million in fiscal 2019 [7] - The Zacks Consensus Estimate for CrowdStrike's fiscal 2026 earnings indicates a year-over-year decline of 10.9% [8] Qualys - Qualys is a leading provider of Vulnerability Management, Detection and Response (VMDR) solutions, with a growing customer base and a net dollar retention rate of 104% [11] - The company has expanded its portfolio with new product launches, including the Risk Operations Center and enhancements to its TotalAI solution [12] - Qualys' channel partner program has driven revenue growth, with channel revenues increasing 17% year-over-year compared to 4% growth from direct customers [13] - International revenue growth is at 15% year-over-year, representing 43% of total revenues, allowing for organic expansion without acquisition costs [14] - The Zacks Consensus Estimate for Qualys' 2025 earnings is pegged at $6.35 per share, indicating a year-over-year increase of 3.6% [14] Valuation and Performance - Year-to-date, CrowdStrike shares have appreciated 25.1%, while Qualys shares have declined by 7.9% [17] - Qualys is trading at a forward sales multiple of 6.82X, below the industry average of 11.97X, while CrowdStrike is trading at a forward sales multiple of 19.98X, indicating overvaluation [20] - Qualys holds a Zacks Rank 1 (Strong Buy), making it a more attractive investment compared to CrowdStrike, which has a Zacks Rank 4 (Sell) [24]

Qualys (QLYS) FY Conference Summary Company Overview - **Company**: Qualys (QLYS) - **Date of Conference**: August 12, 2025 - **Key Speakers**: CEO Sumedh Thakkar, CFO Jimmy Kim Key Points Financial Performance - **Growth**: Reported a 10% growth with a 45% EBITDA margin, indicating strong financial health [4][5] - **Net Retention Rate**: Increased from 103% to 104%, reflecting positive customer engagement and renewal rates [5] Market Dynamics - **Macro Environment**: The macroeconomic environment remains stable, with customers taking time to consider larger purchases [4] - **Vulnerability Management Evolution**: The shift towards unified risk management platforms is gaining traction as organizations face overwhelming amounts of vulnerability findings [7][10] Product Development and Strategy - **Unified Platform**: Qualys is transitioning to a unified platform for risk management, integrating vulnerability management, asset management, and patch management [7][10] - **Agentic AI Capabilities**: Introduction of agentic AI to enhance operational efficiency and reduce manual efforts in risk management [20][22] - **Federal Market Focus**: Qualys has achieved FedRAMP High certification, positioning itself to capture growth in the federal sector, which has historically been less than 5% of revenue [35][36] Competitive Landscape - **Consolidation in Security Tools**: Customers are overwhelmed by the number of security tools, leading to a demand for consolidation while maintaining best-of-breed solutions [11][14] - **Partnership Strategy**: Transitioning from a 60/40 direct to partner sales model to a 51/49 mix, emphasizing the importance of partners in scaling the business [39] Future Outlook - **Growth Projections**: Anticipated growth rate for the second half of the year is projected at 5-7%, with a full-year growth expectation of 6-8% [45] - **Investment in R&D**: R&D expenses grew by 15% year-over-year in Q2, reflecting ongoing investment in new products and market strategies [28] Additional Insights - **Talent Acquisition**: The company has successfully leveraged its engineering team in Pune, India, to maintain a competitive edge in talent acquisition and product development [31][32] - **Managed Risk Operations Center (MROC)**: Launched to provide partners with a new offering in risk management, allowing them to generate more service revenue [42][43] Conclusion - Qualys is positioned for continued growth through strategic investments in technology, partnerships, and a focus on federal opportunities, while navigating the complexities of the cybersecurity landscape and evolving customer needs [47][48]

Core Insights - Qualys' Threat Research Unit (TRU) won two prestigious Pwnie Awards for "Epic Achievement" and "Best Remote Code Execution (RCE)" at DefCon 2025, highlighting its leadership in cybersecurity research and commitment to responsible vulnerability disclosure [1][2] Group 1: Awards and Recognition - The Pwnie Awards recognize extraordinary contributions to identifying and resolving critical vulnerabilities, with Qualys' TRU team being acknowledged for uncovering significant vulnerabilities in OpenSSH [2] - The specific vulnerabilities recognized include CVE-2024-6387, a rare signal handler race condition leading to exploitable heap corruption, and CVE-2025-26465, a machine-in-the-middle attack affecting FreeBSD [5] Group 2: Company Leadership and Strategy - Qualys emphasizes its legacy of groundbreaking vulnerability research, which differentiates it in a competitive market, and aims to provide premium research that enhances security teams' understanding of exploit impacts [2][3] - The TRU team has been nominated for 14 Pwnie Awards over the last five years, winning four, reinforcing Qualys' position as a trusted innovator in securing modern digital infrastructure [2] Group 3: Collaboration and Community Impact - The collaboration with open-source maintainers and the security community was crucial for rapid patches and strengthening security baselines, reflecting a shared commitment to a safer internet [3] - Qualys' approach to responsible disclosure benefits both customers and the broader cybersecurity ecosystem, ensuring effective resolution of vulnerabilities [2][3] Group 4: Company Overview - Qualys, Inc. is a leading provider of cloud-based security, compliance, and IT solutions, serving over 10,000 subscription customers globally, including many from the Forbes Global 100 and Fortune 100 [4] - The Qualys Enterprise TruRisk Platform automates vulnerability detection, compliance, and protection across various IT environments, showcasing the company's innovative capabilities [5]

Core Insights - Qualys, Inc. (QLYS) shares rose 8.3% after reporting better-than-expected Q2 2025 results, with non-GAAP earnings of $1.68 per share, exceeding the Zacks Consensus Estimate of $1.47 and management's guidance of $1.40-$1.50 [1][11] Financial Performance - Q2 revenues increased by 10% year over year to $164.1 million, surpassing the Zacks Consensus Estimate of $161.2 million, driven by a strong partner ecosystem [3][11] - Non-GAAP gross profit rose 10% year over year to $137.8 million, maintaining a gross margin of 84% [6] - Non-GAAP operating income grew 6% to $70.1 million, with an operating margin of 43%, reflecting increased investments in sales, marketing, and R&D [6] - Adjusted EBITDA increased by 5% to $73.4 million, with a margin decline to 45% from 47% [7] Revenue Breakdown - Sales from channel partners grew 17%, accounting for 49% of total revenues, while direct sales contributed 51% with a growth of 4% [4][11] - U.S. sales increased by 7%, contributing approximately 57% to total revenues, while international sales rose by 15%, making up 43% of revenues [4] Cash Flow and Share Repurchase - The company ended the quarter with cash and cash equivalents of approximately $621 million, down from $640 million year over year [8] - Operating cash flow for Q2 was $33.8 million, with free cash flow at $32.4 million [8] - Qualys repurchased stocks worth $49.2 million in Q2 and $89.5 million in the first half of 2025, with $254.6 million remaining under the share repurchase program [9] Guidance Updates - Qualys raised its 2025 EPS guidance to $6.20-$6.50 and revenue forecast to $656 million-$662 million, indicating an 8-9% year-over-year improvement [12][13] - For Q3, the company expects revenues between $164.5 million and $167.5 million, with non-GAAP earnings projected at $1.50-$1.60 [14]

Core Viewpoint - Qualys reported quarterly earnings of $1.68 per share, exceeding the Zacks Consensus Estimate of $1.47 per share, and showing an increase from $1.52 per share a year ago, indicating a positive earnings surprise of +14.29% [1] Financial Performance - The company achieved revenues of $164.06 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.80% and up from $148.71 million year-over-year [2] - Over the last four quarters, Qualys has consistently exceeded consensus EPS and revenue estimates [2] Stock Performance and Outlook - Qualys shares have declined approximately 3.1% since the beginning of the year, contrasting with the S&P 500's gain of 7.6% [3] - The company's future stock performance will largely depend on management's commentary during the earnings call and the trends in earnings estimate revisions [3][4] Earnings Estimates - The current consensus EPS estimate for the upcoming quarter is $1.49, with expected revenues of $163.06 million, and for the current fiscal year, the EPS estimate is $6.17 on revenues of $652.15 million [7] Industry Context - The Security industry, to which Qualys belongs, is currently ranked in the top 41% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Another company in the same industry, Zscaler, is expected to report quarterly earnings of $0.80 per share, reflecting a year-over-year decline of -9.1%, with revenues projected to be $706.19 million, up 19.1% from the previous year [9]

Financial Data and Key Metrics Changes - Revenues grew 10% to $164.1 million, with channel partners contributing 49% of total revenues compared to 46% a year ago [22] - Adjusted EBITDA for Q2 was $73.4 million, representing a 45% margin compared to a 47% margin a year ago [24] - Free cash flow was $32.4 million, representing a 20% margin compared to 33% in the prior year [25] - EPS for Q2 grew 11% to $1.68 [25] Business Line Data and Key Metrics Changes - Patch management and cybersecurity asset management combined made up 16% of total bookings and 26% of new bookings on an LTM basis [24] - Cloud security solutions, Total Cloud SINA, accounted for 5% of LTM bookings [24] Market Data and Key Metrics Changes - 15% growth outside the U.S. was ahead of domestic business growth, which was 7% [23] - The number of customers spending $500,000 or more grew 7% from a year ago to 212 [12] Company Strategy and Development Direction - The company is pioneering a new risk operation center category in cybersecurity, focusing on proactive risk management rather than just detection [7] - The introduction of a fully reimagined agentic AI platform aims to manage cyber risk across multi-vendor environments [8] - The company is expanding its partner ecosystem and driving deep technology integrations to enhance growth [18] Management's Comments on Operating Environment and Future Outlook - The management noted ongoing macroeconomic uncertainty but expressed optimism about improving net dollar expansion rates [31][32] - The guidance for full-year 2025 revenues is expected to be in the range of $656 million to $662 million, representing a growth rate of 8% to 9% [26] - The company plans to continue investing in sales and marketing and engineering to drive long-term growth [28] Other Important Information - The company received FedRAMP High authorization, positioning it as a modern alternative for federal, state, and local agencies [17] - The launch of a new pricing model allows customers to purchase Qualys units, providing access to the entire platform [20] Q&A Session Summary Question: Insights on the macro environment and guidance conservatism - Management indicated that the environment remains stable but challenging, with customers being cautious about spending [31] Question: Performance of mROC messaging - The mROC concept is resonating well with customers, providing a proactive risk management solution that differentiates from traditional offerings [34] Question: Bridging revenue and billings growth - Management noted that current billings could indicate bookings performance, with expectations of 6% to 8% growth for the year [40] Question: Expectations for the federal vertical in Q3 - Management expects FedRAMP High to create opportunities over the next few quarters, although immediate impact is not anticipated [44] Question: Impact of Flex pricing on larger commitments - Early feedback on the new pricing model has been positive, allowing customers to access multiple modules without purchasing additional SKUs [51] Question: Drivers of revenue outperformance - Management attributed revenue outperformance to improved execution and a more conservative guidance framework due to macro uncertainties [58] Question: Improvement in gross retention and net retention - The improvement is attributed to both reduced macro headwinds and effective execution in customer discussions [78]

Financial Data and Key Metrics Changes - Revenues grew 10% to $164.1 million, with channel contributions increasing to 49% of total revenues from 46% a year ago [21][22] - Adjusted EBITDA for Q2 was $73.4 million, representing a 45% margin compared to 47% a year ago [23] - Free cash flow was $32.4 million, representing a 20% margin compared to 33% in the prior year [24] - EPS for Q2 grew 11% to $1.68 [24] Business Line Data and Key Metrics Changes - Patch management and cybersecurity asset management combined accounted for 16% of total bookings and 26% of new bookings on an LTM basis [23] - Cloud security solutions, Total Cloud SINA, made up 5% of LTM bookings [23] Market Data and Key Metrics Changes - International revenue grew by 15%, outpacing domestic growth of 7% [22] - The number of customers spending $500,000 or more grew 7% year-over-year to 212 [12] Company Strategy and Development Direction - Qualys is pioneering a new risk operation center category in cybersecurity, focusing on proactive risk management rather than just detection [6][7] - The company is expanding its ETM solution and introducing identity security management to address the evolving cybersecurity landscape [10][11] - A new flexible pricing model, Qualys units (QLUs), allows customers to access the entire platform and utilize modules of their choice [18] Management's Comments on Operating Environment and Future Outlook - The management noted ongoing macroeconomic uncertainty but expressed optimism about improving net dollar expansion rates, which increased to 104% [32][33] - The company expects revenue growth for the full year 2025 to be in the range of $656 million to $662 million, representing an 8% to 9% growth rate [25][26] - Management emphasized the importance of continued investment in sales and marketing to drive growth and capitalize on market opportunities [27] Other Important Information - Qualys received FedRAMP High authorization, positioning it as a modern alternative for federal, state, and local agencies [16] - The company is focusing on expanding its partner ecosystem to drive growth and enhance its market presence [17] Q&A Session Summary Question: Insights on the macro environment and guidance conservatism - Management acknowledged a stable but challenging environment, with customers being cautious about spending [32] Question: Performance of mROC messaging - Management noted that partners are excited about the proactive risk management capabilities offered by mROC, differentiating it from traditional SOC services [35] Question: Bridging revenue and billings growth - Management indicated that current billings growth is expected to align with revenue growth guidance of 6% to 8% [41] Question: Expectations for the federal vertical post-FedRAMP High - Management expressed optimism about future opportunities in the federal sector, although immediate impacts are not expected [46][48] Question: Impact of Qualys Flex pricing - Management reported positive feedback on the new pricing model, which allows customers to access multiple modules without purchasing additional SKUs [51] Question: Revenue outperformance and guidance - Management attributed revenue outperformance to a more conservative initial guidance due to macro uncertainties, but noted strong execution in the first half of the year [58]

[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q%20Filing%20Information) This section provides key filing details for the Form 10-Q, including the reporting period, registrant information, registered securities, and outstanding common stock - Quarterly Report for the period ended June 30, 2025[2](index=2&type=chunk) - Registrant: QUALYS, INC. (Commission file number 001-35662), incorporated in Delaware[2](index=2&type=chunk) Securities Registered | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |---|---|---| | Common stock, $0.001 par value per share | QLYS | The NASDAQ Stock Market LLC | - As of July 24, 2025, **36,095,879** shares of common stock were outstanding[5](index=5&type=chunk) [Risk Factor Summary](index=3&type=section&id=RISK%20FACTOR%20SUMMARY) This section summarizes the primary risks facing the company, encompassing operational, technological, and legal challenges that could impact financial performance - Key risks include variability in quarterly/annual operating results, failure to anticipate market needs and enhance solutions, inability to scale platform, challenges in renewing subscriptions and attracting new customers, and potential for research and development efforts to not yield significant benefits[9](index=9&type=chunk) - Operational risks involve security incidents, long and unpredictable sales cycles, adverse economic conditions, service disruptions from shared cloud platforms, and intense market competition[9](index=9&type=chunk) - Technology and legal risks include undetected software errors, privacy and data handling concerns (especially with AI/machine learning), reliance on open source and third-party software, and failure to protect intellectual property rights[9](index=9&type=chunk)[10](index=10&type=chunk) [PART I – FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This part presents the company's comprehensive financial information, including detailed statements, notes, management's discussion, and market risk disclosures [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents Qualys, Inc.'s unaudited condensed consolidated financial statements and detailed notes [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity at specific reporting dates Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | |---|---|---| | **Assets** | | | | Total current assets | $542,972 | $585,691 | | Total assets | $999,505 | $973,537 | | **Liabilities & Equity** | | | | Total current liabilities | $416,815 | $428,390 | | Total liabilities | $491,338 | $496,421 | | Total stockholders' equity | $508,167 | $477,116 | - Total assets increased by **$25.97 million** from December 31, 2024, to June 30, 2025, while total liabilities slightly decreased[13](index=13&type=chunk) - Stockholders' equity increased by **$31.05 million**, indicating improved financial health[13](index=13&type=chunk) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section outlines the company's financial performance over specific periods, detailing revenues, gross profit, operating income, and net income Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |---|---|---|---|---| | Revenues | $164,062 | $148,708 | $323,961 | $294,513 | | Gross profit | $135,185 | $122,293 | $266,158 | $240,900 | | Income from operations | $51,407 | $48,068 | $103,162 | $92,829 | | Net income | $47,290 | $43,772 | $94,824 | $83,503 | | Basic EPS | $1.30 | $1.19 | $2.61 | $2.26 | | Diluted EPS | $1.29 | $1.17 | $2.59 | $2.22 | - Revenues increased by **10.3%** for the three months ended June 30, 2025, and by **10.0%** for the six months ended June 30, 2025, compared to the respective prior year periods[15](index=15&type=chunk) - Net income grew by **8.0%** for the three months and **13.6%** for the six months ended June 30, 2025, year-over-year[15](index=15&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the company's comprehensive income, including net income and other comprehensive income (loss) components Condensed Consolidated Statements of Comprehensive Income (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |---|---|---|---|---| | Net income | $47,290 | $43,772 | $94,824 | $83,503 | | Other comprehensive income (loss), net of tax | $(4,222) | $473 | $(5,503) | $1,170 | | Comprehensive income | $43,068 | $44,245 | $89,321 | $84,673 | - Other comprehensive income (loss) significantly decreased in 2025, primarily due to net changes in unrealized gains/losses on cash flow hedges[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details the company's cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |---|---|---| | Net cash provided by operating activities | $143,359 | $135,329 | | Net cash provided by (used in) investing activities | $(86,140) | $3,361 | | Net cash used in financing activities | $(95,418) | $(62,650) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $(38,199) | $76,040 | - Operating cash flow increased by **$8.03 million** year-over-year for the six months ended June 30, 2025[20](index=20&type=chunk) - Investing activities shifted from a net cash inflow of **$3.36 million** in 2024 to a net cash outflow of **$86.14 million** in 2025, primarily due to increased purchases of marketable securities[20](index=20&type=chunk) - Financing activities used more cash in 2025, mainly due to higher common stock repurchases[20](index=20&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section tracks changes in the company's stockholders' equity, reflecting net income, stock-based compensation, and share repurchases - Total stockholders' equity increased from **$477.1 million** at December 31, 2024, to **$508.2 million** at June 30, 2025[21](index=21&type=chunk) - Key changes include net income contributions, stock-based compensation, and share repurchases[21](index=21&type=chunk) - Repurchase of common stock for the six months ended June 30, 2025, amounted to **$89.5 million**, compared to **$53.0 million** in the same period of 2024[21](index=21&type=chunk)[22](index=22&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the condensed consolidated financial statements, covering accounting policies and specific financial items [NOTE 1. Description of Business and Summary of Significant Accounting Policies](index=11&type=section&id=NOTE%201.%20Description%20of%20Business%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note describes Qualys's business and outlines the significant accounting policies used in preparing the financial statements - Qualys, Inc. is a leading provider of cloud-based IT, security, and compliance solutions, enabling organizations to identify security risks and achieve compliance[25](index=25&type=chunk) - The financial statements are unaudited and prepared in accordance with U.S. GAAP for interim financial information, with certain disclosures condensed or omitted[26](index=26&type=chunk) - New accounting pronouncements include ASU 2023-09 (Improvements to Income Tax Disclosures, effective FY2025) and ASU 2024-03 (Expense Disaggregation Disclosures, effective FY2027), with the company analyzing their impact[29](index=29&type=chunk)[31](index=31&type=chunk) [NOTE 2. Fair Value of Financial Instruments](index=12&type=section&id=NOTE%202.%20Fair%20Value%20of%20Financial%20Instruments) This note details the fair value measurements of financial instruments, categorizing them by input levels and discussing derivative instruments - Fair value measurements are categorized into Level 1 (quoted prices in active markets) and Level 2 (observable inputs other than active market quotes)[34](index=34&type=chunk)[35](index=35&type=chunk) Fair Value of Financial Assets and Liabilities (in thousands) | Category | June 30, 2025 Fair Value | December 31, 2024 Fair Value | |---|---|---| | Total assets | $468,437 | $382,033 | | Total liabilities | $6,636 | $1,339 | - The company uses foreign currency forward contracts as designated cash flow hedges and non-designated instruments to manage foreign currency risk[46](index=46&type=chunk)[49](index=49&type=chunk) Derivative Financial Instruments Fair Value (in thousands) | Derivative Type | June 30, 2025 | December 31, 2024 | |---|---|---| | Assets: Designated cash flow hedge | $184 | $2,495 | | Assets: Non-designated | $9 | $80 | | Liabilities: Designated cash flow hedge | $6,471 | $1,315 | | Liabilities: Non-designated | $165 | $24 | [NOTE 3. Accumulated Other Comprehensive Income (Loss)](index=17&type=section&id=NOTE%203.%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) This note provides a breakdown of accumulated other comprehensive income (loss), highlighting changes in available-for-sale securities and cash flow hedges Accumulated Other Comprehensive Income (Loss) (in thousands) | Metric | Balances at Dec 31, 2024 | Balances at June 30, 2025 | |---|---|---| | Available-for-sale debt securities | $391 | $658 | | Cash Flow Hedges | $1,026 | $(4,744) | | Total | $1,417 | $(4,086) | - AOCI shifted from a net gain of **$1.417 million** at December 31, 2024, to a net loss of **$(4.086) million** at June 30, 2025, primarily due to a significant change in unrealized losses on cash flow hedges[54](index=54&type=chunk) - Reclassification of AOCI from cash flow hedges resulted in a net gain of **$2 thousand** for the three months ended June 30, 2025, and a net loss of **$(168) thousand** for the six months ended June 30, 2025, impacting revenues and operating expenses[56](index=56&type=chunk) [NOTE 4. Property and Equipment, Net](index=19&type=section&id=NOTE%204.%20Property%20and%20Equipment,%20Net) This note details the company's property and equipment, net of accumulated depreciation and amortization Property and Equipment, Net (in thousands) | Category | June 30, 2025 | December 31, 2024 | |---|---|---| | Total property and equipment | $263,649 | $261,121 | | Less: accumulated depreciation and amortization | $(237,487) | $(230,772) | | Property and equipment, net | $26,162 | $30,349 | - Net property and equipment decreased by **$4.19 million** from December 31, 2024, to June 30, 2025, mainly due to depreciation[57](index=57&type=chunk) - Depreciation and amortization expenses were **$3.4 million** and **$6.9 million** for the three and six months ended June 30, 2025, respectively, primarily recorded in cost of revenues[58](index=58&type=chunk) [NOTE 5. Revenue from Contracts with Customers](index=19&type=section&id=NOTE%205.%20Revenue%20from%20Contracts%20with%20Customers) This note provides details on revenue recognition from customer contracts, including deferred revenue and expected future revenue from performance obligations - Revenues recognized from deferred revenue balances were **$111.4 million** and **$254.1 million** for the three and six months ended June 30, 2025, respectively[59](index=59&type=chunk) Expected Revenue from Remaining Performance Obligations (in thousands) | Year | Amount | |---|---| | 2025 (remaining six months) | $141,886 | | 2026 | $187,212 | | 2027 | $90,501 | | 2028 | $11,715 | | 2029 | $1,648 | | 2030 and thereafter | $281 | | Total | $433,243 | Revenues by Sales Channel (in thousands) | Channel | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | |---|---|---| | Direct | $83,854 | $165,582 | | Partner | $80,208 | $158,379 | | Total | $164,062 | $323,961 | - Amortization expense for deferred costs to obtain contracts was **$2.1 million** and **$4.1 million** for the three and six months ended June 30, 2025, respectively, recorded in sales and marketing expense[64](index=64&type=chunk) [NOTE 6. Intangible Assets, Net](index=21&type=section&id=NOTE%206.%20Intangible%20Assets,%20Net) This note outlines the company's intangible assets, including developed technology and patent licenses, and their associated amortization - Intangible assets primarily consist of developed technology and patent licenses, amortized on a straight-line basis[66](index=66&type=chunk) Intangible Assets, Net (in thousands) | Category | June 30, 2025 Net Book Value | December 31, 2024 Net Book Value | |---|---|---| | Developed technology | $5,493 | $6,772 | | Intangible assets not subject to amortization | $40 | $40 | | Total intangible assets, net | $5,533 | $6,812 | - Amortization expense for intangible assets was **$0.7 million** and **$1.3 million** for the three and six months ended June 30, 2025, respectively, mainly in cost of revenues[67](index=67&type=chunk) Expected Future Amortization Expense (in thousands) | Year | Amount | |---|---| | 2025 (remaining six months) | $1,278 | | 2026 | $2,477 | | 2027 | $1,738 | | Total | $5,493 | [NOTE 7. Leases](index=22&type=section&id=NOTE%207.%20Leases) This note details the company's lease arrangements for offices, equipment, and cloud facilities, including lease expenses and future payment maturities - The company leases offices, computer equipment, and cloud platform facilities under non-cancelable operating leases through 2034[69](index=69&type=chunk) - Lease expense was **$4.5 million** and **$8.7 million** for the three and six months ended June 30, 2025, respectively[69](index=69&type=chunk) - The company early renewed its headquarters lease in Foster City, California, extending it through April 30, 2034, with an aggregate base rent of **$30.4 million**[70](index=70&type=chunk) Maturities of Operating Lease Liabilities (in thousands) | Year | Amount | |---|---| | 2025 (remaining six months) | $4,912 | | 2026 | $12,711 | | 2027 | $12,456 | | 2028 | $12,255 | | 2029 | $10,320 | | 2030 and thereafter | $18,021 | | Total minimum lease payments | $70,675 | | Present value of net minimum lease payments | $55,347 | [NOTE 8. Commitments and Contingencies](index=23&type=section&id=NOTE%208.%20Commitments%20and%20Contingencies) This note discusses the company's contractual commitments and potential contingent liabilities, including indemnification obligations - The company enters into contracts requiring indemnification for directors, executive officers, and potentially customers/resellers against third-party claims, particularly for intellectual property infringement or product defects[73](index=73&type=chunk) - To date, no material liability has been incurred or recorded in connection with such indemnifications[73](index=73&type=chunk) [NOTE 9. Stockholders' Equity and Stock-based Compensation](index=23&type=section&id=NOTE%209.%20Stockholders'%20Equity%20and%20Stock-based%20Compensation) This note details changes in stockholders' equity, stock-based compensation plans, and share repurchase programs - The Restated 2012 Equity Incentive Plan was amended on June 12, 2024, increasing shares reserved for issuance by **1,092 thousand**, with **2,170 thousand** shares available for future grants as of June 30, 2025[76](index=76&type=chunk)[77](index=77&type=chunk) - Under the 2021 Employee Stock Purchase Plan (ESPP), **37 thousand** shares were issued during the six months ended June 30, 2025, with **398 thousand** shares remaining available[80](index=80&type=chunk) Stock Option Activity (in thousands, except price) | Metric | Balance as of Dec 31, 2024 | Balance as of June 30, 2025 | |---|---|---| | Outstanding Options | 1,314 | 1,252 | | Weighted Average Exercise Price | $113.07 | $119.34 | | Aggregate Intrinsic Value | $40,141 | $33,004 | Stock-based Compensation Expenses (in thousands) | Expense Category | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | |---|---|---| | Cost of revenues | $1,980 | $4,070 | | Research and development | $4,963 | $10,067 | | Sales and marketing | $3,083 | $6,283 | | General and administrative | $8,020 | $16,446 | | Total | $18,046 | $36,866 | - Unrecognized stock-based compensation expenses totaled **$16.7 million** for options, **$75.8 million** for RSUs, **$7.5 million** for PRSUs, and **$0.3 million** for ESPP purchase rights as of June 30, 2025, to be recognized over weighted-average periods of 0.1 to 2.6 years[90](index=90&type=chunk) - The board authorized an additional **$200.0 million** for the share repurchase program on February 6, 2025, increasing the total authorization to **$1.4 billion**. As of June 30, 2025, **$254.6 million** remained available[91](index=91&type=chunk)[92](index=92&type=chunk)[154](index=154&type=chunk) [NOTE 10. Income Taxes](index=26&type=section&id=NOTE%2010.%20Income%20Taxes) This note provides information on the company's income tax provision, effective tax rate, and unrecognized tax benefits Income Tax Provision and Effective Tax Rate | Period | Income Tax Provision (in thousands) | Effective Tax Rate | |---|---|---| | Three Months Ended June 30, 2025 | $11,523 | 19.6% | | Three Months Ended June 30, 2024 | $10,412 | 19.2% | | Six Months Ended June 30, 2025 | $22,296 | 19.0% | | Six Months Ended June 30, 2024 | $20,166 | 19.5% | - The increase in income tax provision for both periods was primarily due to higher pretax income and a decrease in excess tax benefits from stock-based compensation, partially offset by increased foreign derived intangible income benefit and R&D tax credit[96](index=96&type=chunk)[97](index=97&type=chunk) - Unrecognized tax benefits were **$13.2 million** as of June 30, 2025, with **$6.0 million** potentially impacting the effective tax rate if recognized[98](index=98&type=chunk) - The One Big Beautiful Bill Act (OBBBA), enacted July 4, 2025, allows immediate expensing of domestic R&D and certain capital expenditures, but is not expected to materially impact the 2025 effective tax rate[99](index=99&type=chunk)[121](index=121&type=chunk) [NOTE 11. Segment and Geographic Area Information](index=27&type=section&id=NOTE%2011.%20Segment%20and%20Geographic%20Area%20Information) This note presents financial information by operating segment and geographic area, detailing revenue and long-lived assets distribution - The company operates in one operating segment, with the CEO acting as the CODM, assessing performance and allocating resources on a consolidated basis[100](index=100&type=chunk) Revenue by Geographic Area (in thousands) | Region | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | |---|---|---| | United States | $92,793 | $184,020 | | Foreign | $71,269 | $139,941 | | Total revenues | $164,062 | $323,961 | Long-Lived Assets by Geographic Area (in thousands) | Region | June 30, 2025 | December 31, 2024 | |---|---|---| | United States | $53,452 | $47,916 | | India | $18,883 | $21,076 | | Rest of world | $2,505 | $2,325 | | Total long-lived assets | $74,840 | $71,317 | [NOTE 12. Net Income Per Share](index=29&type=section&id=NOTE%2012.%20Net%20Income%20Per%20Share) This note provides details on the calculation of basic and diluted net income per share, including weighted average shares outstanding Net Income Per Share (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |---|---|---|---|---| | Net income | $47,290 | $43,772 | $94,824 | $83,503 | | Basic EPS | $1.30 | $1.19 | $2.61 | $2.26 | | Diluted EPS | $1.29 | $1.17 | $2.59 | $2.22 | | Basic weighted average shares | 36,253 | 36,915 | 36,359 | 36,935 | | Diluted weighted average shares | 36,519 | 37,464 | 36,651 | 37,594 | - Basic EPS increased to **$1.30** (QoQ) and **$2.61** (YoY) for the three and six months ended June 30, 2025, respectively[103](index=103&type=chunk) - Potentially dilutive shares not included in diluted EPS calculation due to anti-dilutive effect totaled **1,048 thousand** for the three months and **1,041 thousand** for the six months ended June 30, 2025[103](index=103&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition, operational results, macroeconomic impacts, key metrics, and liquidity [Overview](index=31&type=section&id=Overview) This section provides an overview of Qualys's business, its cloud-based solutions, and primary revenue drivers - Qualys is a leading provider of cloud-based IT, security, and compliance solutions, delivered via its Enterprise TruRisk Platform[108](index=108&type=chunk) - Solutions help customers identify and manage IT/OT assets, prioritize vulnerabilities, quantify cyber risk, and implement remediation actions across various environments (on-premises, cloud, containers, mobile)[108](index=108&type=chunk)[109](index=109&type=chunk) - Revenue is primarily derived from renewable annual subscriptions, with growth from existing customer renewals/additional purchases and new customer acquisition[110](index=110&type=chunk) - Approximately **57%** of revenues for the six months ended June 30, 2025, came from U.S. customers, with sales through direct and channel partners[111](index=111&type=chunk) [Impacts of Current Macroeconomic Environment](index=31&type=section&id=Impacts%20of%20Current%20Macroeconomic%20Environment) This section discusses how macroeconomic factors like inflation, interest rates, and geopolitical conflicts may affect the company's business - Macroeconomic factors like inflation, high interest rates, market volatility, and geopolitical conflicts could adversely affect the business by reducing IT security spending and extending sales cycles[112](index=112&type=chunk) - The company continues to evaluate the nature and extent of these impacts on its business, financial position, results of operations, and cash flows[112](index=112&type=chunk) [Key Components of Results of Operations](index=32&type=section&id=Key%20Components%20of%20Results%20of%20Operations) This section describes the primary components of the company's financial results, including revenue, cost of revenues, operating expenses, and income tax provision - Revenues are primarily from renewable annual subscriptions to cloud-based IT, security, and compliance solutions, invoiced upfront and recognized ratably[113](index=113&type=chunk)[114](index=114&type=chunk) - Cost of revenues includes personnel expenses, shared cloud platform costs, depreciation, amortization of software/licenses, and maintenance support, expected to increase with business growth[115](index=115&type=chunk) - Operating expenses (R&D, Sales & Marketing, G&A) are expected to increase in absolute dollars due to continued investment in personnel, new solutions, marketing programs, and compliance[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk) - Other income (expense), net, includes interest income from investments and foreign exchange gains/losses[119](index=119&type=chunk) - Income tax provision is subject to federal, state, and foreign income taxes, with estimates affected by pretax income, jurisdictional mix, non-deductible expenses, and tax credits[120](index=120&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the company's financial performance, including revenue growth, expense trends, and profitability metrics Selected Condensed Consolidated Statements of Operations Data as a Percentage of Revenues | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |---|---|---|---|---| | Revenues | 100% | 100% | 100% | 100% | | Gross profit | 82% | 82% | 82% | 82% | | Income from operations | 31% | 32% | 32% | 32% | | Net income | 29% | 29% | 29% | 28% | Revenue Growth (in thousands, except percentages) | Period | 2025 Revenue | 2024 Revenue | Change ($) | Change (%) | |---|---|---|---|---| | Three Months Ended June 30 | $164,062 | $148,708 | $15,354 | 10% | | Six Months Ended June 30 | $323,961 | $294,513 | $29,448 | 10% | - Revenue growth for both periods was driven by increased demand for subscription services, with **95%** (QoQ) and **90%** (YoY) from existing customers, and the majority of the increase from foreign customers (**62%** QoQ, **64%** YoY) and partners (**77%** QoQ, **83%** YoY)[123](index=123&type=chunk)[124](index=124&type=chunk) - Cost of revenues increased by **$2.5 million** (**9%**) QoQ and **$4.2 million** (**8%**) YoY, primarily due to higher personnel costs and shared cloud platform expenses, partially offset by lower depreciation[126](index=126&type=chunk)[127](index=127&type=chunk) - R&D expenses rose by **$3.1 million** (**12%**) QoQ and **$4.8 million** (**9%**) YoY, mainly due to increased personnel costs and shared cloud platform expenses[128](index=128&type=chunk)[129](index=129&type=chunk) - Sales and marketing expenses increased by **$3.7 million** (**11%**) QoQ and **$6.9 million** (**11%**) YoY, driven by higher personnel costs (headcount, commissions) and marketing activities[130](index=130&type=chunk)[131](index=131&type=chunk) - General and administrative expenses increased by **$2.8 million** (**18%**) QoQ and **$3.3 million** (**10%**) YoY, primarily due to higher personnel costs (incentive compensation, headcount) and license/professional service expenses[132](index=132&type=chunk)[133](index=133&type=chunk) - Total other income, net, increased by **$1.3 million** (**21%**) QoQ and **$3.1 million** (**29%**) YoY, mainly due to favorable foreign currency changes, partially offset by decreased interest income[134](index=134&type=chunk)[135](index=135&type=chunk) - Income tax provision increased by **$1.1 million** (**11%**) QoQ and **$2.1 million** (**11%**) YoY, driven by higher pretax income and reduced excess tax benefits from stock-based compensation[136](index=136&type=chunk)[137](index=137&type=chunk) [Key Operating and Non-GAAP Financial Performance Metrics](index=37&type=section&id=Key%20Operating%20and%20Non-GAAP%20Financial%20Performance%20Metrics) This section presents key operating metrics and non-GAAP financial measures, such as net dollar expansion rate and Adjusted EBITDA, used to assess performance - Net dollar expansion rate was **104%** as of June 30, 2025, up from **102%** as of June 30, 2024, indicating strong customer retention and growth[141](index=141&type=chunk) - Adjusted EBITDA is a non-GAAP measure used to evaluate operational performance, excluding certain non-cash and non-recurring items[142](index=142&type=chunk)[143](index=143&type=chunk) Adjusted EBITDA Reconciliation (in thousands, except percentages) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |---|---|---|---|---| | Net income | $47,290 | $43,772 | $94,824 | $83,503 | | Adjusted EBITDA | $73,431 | $69,934 | $148,183 | $138,965 | | Adjusted EBITDA as a percentage of revenues | 45% | 47% | 46% | 47% | [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's liquidity position, cash flow activities, and capital resources, including share repurchase programs - As of June 30, 2025, total liquidity from cash, cash equivalents, and marketable securities was **$621.2 million**, with **$105.1 million** held outside the U.S.[146](index=146&type=chunk) Summary of Cash Flows (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |---|---|---| | Net cash provided by operating activities | $143,359 | $135,329 | | Net cash provided by (used in) investing activities | $(86,140) | $3,361 | | Net cash used in financing activities | $(95,418) | $(62,650) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $(38,199) | $76,040 | - Operating activities generated **$143.4 million** in cash for the six months ended June 30, 2025, an increase from **$135.3 million** in the prior year[146](index=146&type=chunk)[147](index=147&type=chunk) - Investing activities used **$86.1 million** in cash, primarily for marketable securities purchases, a significant shift from a net inflow in the prior year[146](index=146&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk) - Financing activities used **$95.4 million**, mainly due to increased share repurchases (**$89.5 million**) and tax payments related to equity awards[146](index=146&type=chunk)[150](index=150&type=chunk) - The company expects existing liquidity and operating cash flow to be sufficient for operations for the next twelve months and beyond[151](index=151&type=chunk) - Operating lease obligations totaled **$70.7 million** as of June 30, 2025, with **$12.7 million** due within the next 12 months[152](index=152&type=chunk) - The share repurchase program has **$254.6 million** remaining available as of June 30, 2025, following an additional **$200.0 million** authorization on February 6, 2025[154](index=154&type=chunk) [Recent Accounting Pronouncements](index=40&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to Note 1 for details on recently issued accounting pronouncements and their potential impact - Refer to Note 1 for a discussion of recently issued accounting pronouncements[155](index=155&type=chunk) [Critical Accounting Estimates](index=40&type=section&id=Critical%20Accounting%20Estimates) This section confirms no material changes to critical accounting estimates compared to the prior annual report - No material changes to critical accounting estimates were reported compared to the Annual Report on Form 10-K for the fiscal year ended December 31, 2024[156](index=156&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details market risks, including foreign currency and interest rates, and mitigation strategies [Foreign Currency Risk](index=41&type=section&id=Foreign%20Currency%20Risk) This section outlines the company's exposure to foreign currency fluctuations and its use of hedging strategies to mitigate this risk - The company is exposed to foreign currency fluctuations, particularly EUR, GBP, INR, and CAD, as **27%** of expenses and **25%** of revenues for the six months ended June 30, 2025, were in foreign currencies[211](index=211&type=chunk)[158](index=158&type=chunk) - Foreign currency forward contracts are used to hedge forecasted revenue, operating expenses, and foreign currency denominated assets/liabilities[158](index=158&type=chunk) - An immediate **10%** adverse change in foreign exchange rates is not expected to materially impact financial condition, operating results, or cash flows due to hedging[158](index=158&type=chunk) [Interest Rate Sensitivity](index=41&type=section&id=Interest%20Rate%20Sensitivity) This section assesses the company's sensitivity to interest rate changes, particularly concerning its cash, cash equivalents, and marketable securities - As of June 30, 2025, the company held **$621.2 million** in cash, cash equivalents, and marketable securities, primarily in money market funds, U.S. Treasury/government agency securities, commercial paper, corporate bonds, and asset-backed securities[159](index=159&type=chunk) - A hypothetical **100 basis point** increase in interest rates would not result in a material decrease in the fair value of marketable securities[159](index=159&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Management evaluates disclosure controls and procedures and reports on internal control changes [Evaluation of Disclosure Controls and Procedures](index=41&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section reports on the effectiveness of the company's disclosure controls and procedures as evaluated by management - As of June 30, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level[160](index=160&type=chunk) - Disclosure controls are designed to ensure timely recording, processing, summarizing, and reporting of information required by the Exchange Act[160](index=160&type=chunk) [Changes in Internal Control over Financial Reporting](index=41&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section confirms that no material changes to internal control over financial reporting occurred during the period - No changes in internal control over financial reporting were identified during the period that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[161](index=161&type=chunk) [PART II – OTHER INFORMATION](index=42&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This part includes additional information not covered in the financial statements, such as legal proceedings, risk factors, and equity security details [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) This section reports on legal proceedings, confirming no material losses as of June 30, 2025 - As of June 30, 2025, the company has not incurred a material loss from any ongoing legal proceedings[163](index=163&type=chunk) - Litigation is unpredictable, and significant charges related to legal matters could materially impact financial results if estimates or assumptions change[163](index=163&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) This section details significant risks and uncertainties that could adversely affect the company's business and stock [Risks Related to Our Business and Industry](index=42&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Industry) This section outlines risks associated with the company's business and industry, including operational variability, market needs, security, economic conditions, competition, and international operations - Operating results may vary due to demand fluctuations, customer renewals, sales cycle length, competition, economic conditions, and security incidents[165](index=165&type=chunk)[167](index=167&type=chunk) - Failure to anticipate market needs, enhance solutions, or develop new ones timely could harm competitiveness and financial condition[168](index=168&type=chunk)[169](index=169&type=chunk)[172](index=172&type=chunk) - Platform, products, website, and internal systems are vulnerable to security incidents, cyber-attacks, and technical errors, potentially leading to liability, reputational damage, and lost sales[178](index=178&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk)[181](index=181&type=chunk) - Adverse economic conditions, reduced IT spending, and geopolitical conflicts could negatively impact demand for solutions and increase operating costs[184](index=184&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk) - Intense competition from established and emerging vendors, including those with greater resources, could impact market position and pricing[191](index=191&type=chunk)[192](index=192&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk) - International operations (significant portion of customers, partners, and **78%** of employees outside U.S.) expose the company to foreign currency fluctuations, regulatory changes, political instability, and other global risks[206](index=206&type=chunk)[208](index=208&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk) [Risks Related to Intellectual Property, Legal, Tax and Regulatory Matters](index=55&type=section&id=Risks%20Related%20to%20Intellectual%20Property,%20Legal,%20Tax%20and%20Regulatory%20Matters) This section addresses risks concerning intellectual property, legal compliance, tax changes, and evolving regulatory environments, including data privacy and AI governance - Undetected software errors or flaws could harm reputation, decrease market acceptance, or result in liability[232](index=232&type=chunk) - Solutions collecting personal information raise privacy and data handling concerns, leading to increased costs, liability, or inhibited sales due to evolving global regulations (GDPR, CCPA, CPRA, UK GDPR)[234](index=234&type=chunk)[235](index=235&type=chunk)[236](index=236&type=chunk)[237](index=237&type=chunk)[238](index=238&type=chunk) - Use of AI/machine learning technologies in solutions could lead to harm, including technical errors, increased cybersecurity risks, legal liability, and reputational damage due to evolving regulatory and ethical concerns[239](index=239&type=chunk) - Reliance on third-party open source software components carries risks of non-compliance with licenses, potentially restricting sales or requiring proprietary code disclosure[240](index=240&type=chunk)[241](index=241&type=chunk) - Failure to protect proprietary technology and intellectual property rights (trade secrets, patents) could substantially harm business and operating results[244](index=244&type=chunk)[245](index=245&type=chunk)[247](index=247&type=chunk)[248](index=248&type=chunk) - Changes in income tax provision or adverse outcomes from tax examinations could harm operating results, with tax rates affected by earnings mix, non-deductible expenses, and new legislation (e.g., TCJA, Pillar Two)[256](index=256&type=chunk)[257](index=257&type=chunk) [Risks Related to Ownership of Our Common Stock](index=62&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Common%20Stock) This section covers risks associated with owning the company's common stock, including market volatility, guidance discrepancies, future share sales, and dividend policy - Stock price is subject to significant market volatility due to various factors, including company announcements, market conditions, and analyst estimates, potentially leading to litigation[258](index=258&type=chunk) - Actual operating results may differ significantly from guidance, which is inherently speculative and based on assumptions that may not materialize[259](index=259&type=chunk)[261](index=261&type=chunk)[263](index=263&type=chunk) - Future sales of shares by existing stockholders, including from option exercises and RSU releases, could cause the stock price to decline[264](index=264&type=chunk)[265](index=265&type=chunk) - The share repurchase program may not be fully consummated or enhance stockholder value, and repurchases could affect stock price and diminish cash reserves[266](index=266&type=chunk) - The company does not intend to pay dividends, limiting stockholder returns to stock value[267](index=267&type=chunk) [General Risk Factors](index=63&type=section&id=General%20Risk%20Factors) This section addresses general risks such as anti-takeover provisions, disruptive technologies, future profitability, accounting estimates, and internal control effectiveness - Anti-takeover provisions in charter documents and Delaware law could make an acquisition more difficult and prevent management replacement[268](index=268&type=chunk)[269](index=269&type=chunk) - Disruptive technologies could supplant cloud-based solutions, weakening sales and harming operating results[270](index=270&type=chunk) - The company may not maintain profitability in the future due to continued investments and unforeseen expenses[271](index=271&type=chunk) - Financial results rely on estimates and judgments related to critical accounting policies, which if incorrect, could harm operating results and stock price[273](index=273&type=chunk)[275](index=275&type=chunk) - Failure to maintain an effective system of internal control over financial reporting could impair the ability to produce timely and accurate financial statements or comply with regulations[277](index=277&type=chunk)[278](index=278&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=65&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's common stock repurchases during the three months ended June 30, 2025 Common Stock Repurchases (Three Months Ended June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Dollar Value of Shares that May Yet Be Purchased | |---|---|---|---| | April 1 - April 30, 2025 | 147,276 | $121.94 | $285,863,910 | | May 1 - May 31, 2025 | 125,985 | $134.28 | $268,946,181 | | June 1 - June 30, 2025 | 102,158 | $140.16 | $254,628,186 | | Total | 375,419 | | | - The share repurchase program had an aggregate authorization of **$1.4 billion** as of June 30, 2025, with **$254.6 million** remaining available[280](index=280&type=chunk) [Item 3. Defaults upon Senior Securities](index=66&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) This section confirms no defaults occurred on senior securities during the reporting period - No defaults upon senior securities were reported[281](index=281&type=chunk) [Item 4. Mine Safety Disclosures](index=66&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section confirms no mine safety disclosures are required or reported - No mine safety disclosures were reported[282](index=282&type=chunk) [Item 5. Other Information](index=66&type=section&id=Item%205.%20Other%20Information) This section reports on other information, specifically securities trading plans of directors and executive officers - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[283](index=283&type=chunk) [Item 6. Exhibits](index=67&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate documents, agreements, and certifications - Exhibits include Certificate of Amendment to the Amended and Restated Certificate of Incorporation (3.1), Lease Agreement Second Amendment (10.2), and CEO/CFO Certifications (31.1, 31.2, 32.1, 32.2)[284](index=284&type=chunk) [Signatures](index=68&type=section&id=SIGNATURES) This section contains the official signatures attesting to the accuracy and completeness of the report - The report was signed on behalf of Qualys, Inc. by Joo Mi Kim, Chief Financial Officer, on August 5, 2025[287](index=287&type=chunk)[288](index=288&type=chunk)

Qualys Enterprise TruRisk Platform - Qualys is transforming its focus to leverage risk analytics for desired business outcomes with the Qualys Enterprise TruRisk Platform[12] - The Qualys Enterprise TruRisk Platform offers comprehensive risk reduction by eliminating cyber risk, saving time, reducing MTTR, and consolidating the IT-security stack[19, 20] - The Qualys Enterprise TruRisk Platform provides a single view across the entire global hybrid-IT environment, consolidating the stack for better security outcomes, with no hardware to buy or manage[30] Market Opportunity and Customer Base - Qualys estimates its current total addressable market at $55 billion in CY2025E, expanding to $79 billion in CY2028E[34] - Qualys has a blue-chip global customer base, including over 10,000 subscription customers[36] - Qualys serves 72% of the Forbes Global 50, 55% of the Forbes Global 500, and 33% of the Forbes Global 2000[36] Financial Performance - Qualys' revenues grew from $490 million in 2022 to $608 million in 2024, with a 11% CAGR[44] - Adjusted EBITDA increased from $219 million in 2022 to $283 million in 2024, representing a 14% CAGR[44] - The Adjusted EBITDA margin was 47% in 2024[44] - Free cash flow was $232 million in 2024, with a free cash flow margin of 38%[49]

Exhibit 99.1 Qualys Announces Second Quarter 2025 Financial Results Revenues: Revenues for the second quarter of 2025 increased by 10% to $164.1 million compared to $148.7 million for the same quarter in 2024. Revenue Growth of 10% Year-Over-Year Raises 2025 Revenue Guidance to $656-$662 million FOSTER CITY, Calif., – August 5, 2025 – Qualys, Inc. (NASDAQ: QLYS), a leading provider of disruptive cloud-based IT, security and compliance solutions, today announced financial results for the second quarter ended ...