I last wrote about Qualys (NASDAQ: QLYS ) stock on September 17, giving it a Buy rating. Since then, it has gained over 23% due to a strong Q3 earnings report and news that the company is exploringI objectively search for undervalued stocks of any size across a wide variety of industries using quantitative methods that I've thoroughly backtested for success. I believe the numbers are more important than the story (most of the time), as they tend to paint a more realistic picture of the company’s prospects. ...

Qualys, Inc. QLYS reported better-than-expected third-quarter financial results and raised its FY24 guidance on Tuesday.Qualys reported quarterly earnings of $1.56 per share which beat the analyst consensus estimate of $1.33 per share. The company reported quarterly sales of $153.87 million which beat the analyst consensus estimate of $150.70 million.“Q3 was another strong quarter of rapid innovation for Qualys, reflecting our ongoing commitment to technology leadership, cybersecurity transformation, and su ...

Qualys (QLYS) reported third-quarter 2024 non-GAAP earnings of $1.56 per share, which surpassed the Zacks Consensus Estimate of $1.33 and came above management’s guidance of $1.28-$1.36.The bottom line also witnessed a robust improvement from the year-ago quarter’s earnings of $1.51. The robust year-over-year growth was primarily driven by higher revenues, improved efficiency and increased financial income.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.Qualys’ third-quarter revenues ...

Financial Data and Key Metrics Changes - Revenues grew 8% to $153.9 million, with channel contributions increasing to 47% of total revenues compared to 43% a year ago [32] - Adjusted EBITDA for Q3 was $69.7 million, representing a 45% margin, down from 48% a year ago [35] - EPS for Q3 was $1.56, and free cash flow was $57.6 million, representing a 37% margin, compared to 64% in the prior year [37] - The net dollar expansion rate increased to 103%, up from 102% last quarter [33] Business Line Data and Key Metrics Changes - Patch Management and Cybersecurity Asset Management combined accounted for 15% of LTM bookings and 24% of LTM new bookings in Q3 [34] - The Cloud Security solution, TotalCloud CNAPP, made up 4% of LTM bookings [34] - The company saw a positive growth trend in new business, achieving a double-digit growth rate for the fifth consecutive quarter [33] Market Data and Key Metrics Changes - U.S. revenue grew 5%, while international revenue grew 14%, with the revenue mix being 58% U.S. and 42% international [32] - The company reported a broad-based upsell performance, contributing to the overall revenue growth [80] Company Strategy and Development Direction - The company is focusing on consolidating cybersecurity tools and enhancing its Enterprise TruRisk Platform to help customers manage cyber risk more effectively [29] - New product announcements, including the mROC and TruRisk Eliminate, are aimed at providing comprehensive risk management solutions [14][16] - The company is expanding its partner program to enhance service offerings and drive growth [28] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing budget scrutiny in the selling environment, but expressed optimism about long-term growth opportunities [33][84] - The company expects revenues for the full year 2024 to be in the range of $602.9 million to $605.9 million, representing a growth rate of 9% [38] - Management anticipates a lighter new business quarter in Q4 based on current pipeline conditions [90] Other Important Information - The company has made significant investments in sales and marketing to capture market opportunities, leading to a 12% increase in operating expenses [36] - Qualys was recognized by GigaOm as a leader in vulnerability management for the fourth consecutive year [18] Q&A Session Summary Question: Can you talk about changes implemented on the product marketing side? - Management highlighted the alignment of messaging around business risk and risk quantification, which has resonated well with customers [44] Question: Can you discuss the strength in net retention and future expectations? - Management reported an increase in net dollar expansion rate to 103% but assumed no material improvements for Q4 based on current deals [48] Question: Can you expand on channel momentum and its contribution to revenue? - Management expressed confidence in channel opportunities, noting that channel partners contributed significantly to revenue growth [50] Question: Were there any one-off deals impacting current billing performance? - Management indicated that any deal push or pull was typical and did not significantly impact the overall performance [57] Question: What drove the strength from a product perspective? - Management noted strong performance from new product capabilities, particularly in patch management and cybersecurity asset management [63] Question: Can you comment on the durability of current trends? - Management acknowledged the positive momentum but cautioned that macroeconomic factors could still impact deal cycles [84] Question: Is the guidance for Q4 based on observed trends or conservatism? - Management clarified that the guidance reflects a lighter pipeline than desired, not a negative trend [90]

Core Viewpoint - Qualys reported quarterly earnings of $1.56 per share, exceeding the Zacks Consensus Estimate of $1.33 per share, and showing an earnings surprise of 17.29% [1][2] Financial Performance - The company achieved revenues of $153.87 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 2.20% and increasing from $142 million year-over-year [2] - Over the last four quarters, Qualys has consistently surpassed consensus EPS estimates [2] Stock Performance - Qualys shares have declined approximately 36.5% since the beginning of the year, contrasting with the S&P 500's gain of 19.8% [3] Future Outlook - The company's earnings outlook will be crucial for assessing future stock performance, with current consensus EPS estimates at $1.27 for the upcoming quarter and $5.57 for the current fiscal year [4][7] - The Zacks Rank for Qualys is currently 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Security industry, to which Qualys belongs, is currently ranked in the top 8% of over 250 Zacks industries, suggesting a favorable environment for stock performance [8]

Revenue Performance - Revenues for the three months ended September 30, 2024, increased by $11.9 million (8%) compared to the same period in 2023, driven by increased demand for subscription services [116]. - Of the total revenue increase, 93% came from existing customers prior to July 1, 2024, while 7% was from new customers added in the same period [116]. - For the nine months ended September 30, 2024, total revenues reached $448.4 million, an increase of $38.5 million (9%) from $409.9 million in the same period of 2023 [116]. - In the three months ended September 30, 2024, 53% of total revenue was generated from direct customers, while 47% came from partners [116]. - Approximately 59% of revenues for the nine months ended September 30, 2024, were derived from customers in the United States [103]. - Revenues increased by $38.5 million for the nine months ended September 30, 2024, compared to the same period in 2023, with 78% from existing customers and 22% from new customers [117]. Expenses and Profitability - Operating expenses for the three months ended September 30, 2024, were 52% of revenues, compared to 50% in the same period of 2023 [114]. - The gross profit margin for the three months ended September 30, 2024, was 81%, consistent with the same period in 2023 [114]. - The income tax provision for the three months ended September 30, 2024, was 4% of income before taxes, compared to 1% in the same period of 2023 [114]. - Cost of revenues increased by $2.1 million for the three months ended September 30, 2024, primarily due to shared cloud platform costs and personnel costs [119]. - Research and development expenses increased by $1.1 million for the three months ended September 30, 2024, mainly due to increased headcount [123]. - Sales and marketing expenses rose by $4.8 million for the three months ended September 30, 2024, driven by personnel costs and increased travel expenses [125]. - General and administrative expenses increased by $2.5 million for the three months ended September 30, 2024, primarily due to higher personnel costs and software expenses [127]. - Net income for the three months ended September 30, 2024, was $46,212 thousand, a slight decrease from $46,515 thousand in the same period of 2023, representing a net income margin of 30% compared to 33% in 2023 [141]. - Adjusted EBITDA for the nine months ended September 30, 2024, was $208,647 thousand, up from $193,300 thousand in 2023, maintaining an adjusted EBITDA margin of 47% [141]. Cash Flow and Investments - Cash and cash equivalents, along with marketable securities, totaled $573.0 million as of September 30, 2024, including $122.4 million held outside the United States [142]. - Net cash provided by operating activities for the nine months ended September 30, 2024, was $196,372 thousand, compared to $210,766 thousand in 2023 [142]. - The company used $59,509 thousand in investing activities during the nine months ended September 30, 2024, compared to $47,499 thousand in 2023 [144]. - Share repurchases amounted to $97.2 million during the nine months ended September 30, 2024, down from $147.7 million in the same period of 2023 [145]. - The company has $185.7 million remaining under its share repurchase program, which has a total authorization of $1.2 billion [149]. - The company generated $180.4 million of cash from net income adjusted for non-cash items during the nine months ended September 30, 2024, compared to $168.4 million in 2023 [143]. Market Outlook and Challenges - The company expects to continue investing in research and development to enhance existing solutions and develop new capabilities, which will likely increase R&D expenses [109]. - The company continues to face macroeconomic challenges, including inflationary pressures and high interest rates, which could impact future business performance [104]. - The company expects revenue growth from new and existing customers to continue, driven by strong market demand [118]. - Net dollar expansion rates were 103% and 106% as of September 30, 2024, and September 30, 2023, respectively [136]. Financial Instruments and Obligations - Fixed operating lease payment obligations were $56.8 million as of September 30, 2024, with $13.6 million expected to be paid within the next 12 months [147]. - As of September 30, 2024, the company had designated cash flow hedge forward contracts with notional amounts of €46.4 million, £18.0 million, and Rs.4,273.0 million to mitigate foreign currency risks [153]. - Total other income, net increased by $2.9 million for the three months ended September 30, 2024, mainly from increased interest income and foreign currency gains [129]. - Income tax provision increased by $4.6 million for the three months ended September 30, 2024, due to higher pretax income and decreased excess tax benefits [131].

Core Insights - Qualys, Inc. reported a revenue growth of 8% year-over-year for Q3 2024, with revenues reaching $153.9 million compared to $142.0 million in Q3 2023 [3][35] - The company raised its 2024 revenue guidance to a range of $602.9 million to $605.9 million, reflecting a 9% growth over 2023 [12] - GAAP net income for Q3 2024 was $46.2 million, or $1.24 per diluted share, a slight decrease from $46.5 million, or $1.24 per diluted share, in Q3 2023 [6][27] Financial Performance - Gross profit for Q3 2024 increased by 8% to $125.0 million, maintaining a GAAP gross margin of 81% [4] - Non-GAAP net income for Q3 2024 was $58.0 million, or $1.56 per diluted share, up from $56.7 million, or $1.51 per diluted share, in Q3 2023 [6] - Adjusted EBITDA for Q3 2024 rose by 1% to $69.7 million, with an adjusted EBITDA margin of 45% [7][31] Operating Metrics - GAAP operating income for Q3 2024 increased by 3% to $45.0 million, representing 29% of revenues, down from 31% in Q3 2023 [5] - Operating cash flow decreased by 34% to $61.0 million, accounting for 40% of revenues, compared to 65% in Q3 2023 [8] Business Highlights - The company launched several new capabilities, including the Enterprise TruRisk Management solution and Qualys TotalAI, enhancing its strategic position in cybersecurity [2][9] - Qualys' VMDR was recognized as a leading vulnerability management solution for the fourth consecutive year in the 2024 GigaOm Radar Report [9] Guidance - For Q4 2024, Qualys expects revenues between $154.5 million and $157.5 million, indicating a growth of 7% to 9% year-over-year [11] - The company anticipates GAAP net income per diluted share for Q4 2024 to be in the range of $0.84 to $0.94 [11]

Core Insights - Qualys VMDR has been recognized as a "Leader" in Continuous Vulnerability Management for the fourth consecutive year by GigaOm [1][2] - Qualys Web Application Security has also been named a "Leader" in the GigaOm Radar Report for Application Security Testing [5] Group 1: Qualys VMDR Recognition - Qualys VMDR is the only vendor to be classified as both "Outperformer" and "Leader" in the Continuous Vulnerability Management category in the 2024 GigaOm Radar Report [1][2] - The report evaluated over 20 vendors based on "Maturity versus Innovation" and "Feature Play vs Platform Play," with Qualys consistently ranking as a top leader [2] Group 2: Performance Metrics - VMDR achieved a risk-based assessment score of 5/5, highlighting its sophisticated approach that includes asset criticality, risk factors, vulnerability assessment data, and threat intelligence from 25 different feeds [3] - The platform excels in comprehensive vulnerability management, asset discovery, compliance monitoring, and web application security, making it particularly valuable for industries with stringent regulatory compliance needs [3] Group 3: Features and Capabilities - Qualys VMDR offers strong capabilities in cloud-native and serverless function scanning through its TotalCloud cloud-native application protection platform (CNAPP) module, providing various scanning options [3] - The flexibility of Qualys VMDR allows it to address a wide range of use cases through multiple deployment options and a comprehensive solution portfolio [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 [6][7] - The company has established strategic partnerships and integrates its vulnerability management capabilities with major cloud service providers such as Oracle, AWS, Google Cloud, and Microsoft Azure [7]

FOSTER CITY, Calif., Oct. 22, 2024 /PRNewswire/ -- Qualys, Inc. (NASDAQ: QLYS), a pioneer and leading provider of disruptive cloud-based IT, security and compliance solutions, today announced that the company will report its financial results for the third quarter 2024 after the market closes on Tuesday, November 5, 2024.Qualys will host a conference call and live webcast to discuss its third quarter 2024 financial results at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) on Tuesday, November 5, 2024. To a ...

Qualys (QLYS) shares have plunged 35.2% year to date. It has significantly underperformed the broader tech sector and the S&P 500's return of 23.4% and 20.8%, respectively, over the same time frame. At the closing price of $127.13 on Oct. 4, 2024, Qualys currently trades near its 52-week low of $126 and nearly 38% lower than its 52-week high of $206.4. Reason Behind Qualys' Underperformance The underperformance of Qualys' shares can be attributable to highly volatile market conditions amid the ongoing macro ...