Qualys(QLYS) - 2023 Q2 - Quarterly Report

Financial Performance - For the six months ended June 30, 2023, revenues increased to 100% with a gross profit margin of 80%, up from 79% in the same period of 2022[122] - The cost of revenues decreased to 20% for the six months ended June 30, 2023, compared to 21% for the same period in 2022, indicating improved operational efficiency[122] - Operating expenses as a percentage of revenues decreased to 51% for the six months ended June 30, 2023, down from 51% in the same period of 2022, reflecting effective cost management[122] - Net income for the six months ended June 30, 2023, was 24%, an increase from 22% in the same period of 2022, demonstrating strong profitability growth[122] - Revenues for the three months ended June 30, 2023, increased by $17.3 million (14%) to $137.2 million compared to the same period in 2022, driven primarily by increased demand for subscription services[123] - For the six months ended June 30, 2023, revenues increased by $34.6 million (15%) to $267.9 million compared to the same period in 2022, with 92% of the increase coming from existing customers[124] - Net income for the six months ended June 30, 2023, was $64.5 million, up from $52.0 million in the same period of 2022, with net income as a percentage of revenues increasing from 22% to 24%[145] - Adjusted EBITDA for Q2 2023 was $65.8 million, representing 48% of revenues, compared to $54.4 million or 45% of revenues in Q2 2022[145] Operational Efficiency - The company anticipates continued revenue growth from existing customers and the addition of new customers to its cloud platform[107] - The company expects to continue expanding its shared cloud platform infrastructure and hiring additional employees, which will increase the cost of revenues in absolute dollars[113] - Cost of revenues for the three months ended June 30, 2023, increased by $1.6 million (6%) to $26.7 million, primarily due to higher shared cloud platform costs and personnel costs[125] - Research and development expenses for the three months ended June 30, 2023, increased by $2.6 million (11%) to $27.4 million, driven by increased headcount[128] - Sales and marketing expenses for the three months ended June 30, 2023, increased by $2.5 million (11%) to $26.2 million, primarily due to increased personnel costs[130] - General and administrative expenses for the three months ended June 30, 2023, increased by $0.7 million (5%) to $14.1 million, mainly due to higher personnel costs[132] Cash Flow and Liquidity - Cash and cash equivalents, along with marketable securities, totaled $388.1 million as of June 30, 2023, including $55.0 million held outside the United States[146] - Net cash provided by operating activities for the six months ended June 30, 2023, was $118.3 million, compared to $112.9 million in 2022[146] - The company generated $101.1 million of cash from net income adjusted for non-cash items during the first half of 2023, an increase from $84.7 million in the same period of 2022[147] - Share repurchases amounted to $108.8 million in the first half of 2023, with an additional $100.0 million authorized for the share repurchase program[151] - The company expects existing cash and cash equivalents, along with expected cash flow from operations, to be sufficient to fund operations for the next twelve months[150] - The company generated $7.7 million in cash from sales and maturities of marketable securities during the first half of 2023, compared to a net cash outflow of $3.2 million in 2022[148] Market and Economic Conditions - The macroeconomic environment, including inflation and rising interest rates, poses risks that could impact customer spending on IT security solutions[110] - Approximately 60% of revenues for the six months ended June 30, 2023, were derived from customers in the United States, indicating a strong domestic market presence[108] - A hypothetical 100 basis point increase in interest rates would decrease the fair value of the company's marketable securities by $1.1 million[158] Other Financial Metrics - Total other income (expense), net increased by $3.7 million for the three months ended June 30, 2023, primarily due to an increase in interest income of $3.0 million[134] - Income tax provision increased by $4.8 million (86%) for the three months ended June 30, 2023, primarily due to an increase in pre-tax income[136] - The net dollar expansion rate was 108% as of June 30, 2023, compared to 110% as of June 30, 2022[141] - Adjusted EBITDA is monitored as a non-GAAP financial measure to evaluate ongoing operational performance and establish budgets[142]