SOURCE: Qualys

Qualys

February 08, 2017 16:15 ET

Qualys Announces Fourth Quarter and Full Year 2016 Financial Results

2016 Revenue Growth of 20% Year-Over-Year; Q4 Growth of 18% Year-Over-Year; 2016 GAAP EPS of $0.50; Q4 of $0.15; 2016 Non-GAAP EPS of $0.86; Q4 of $0.23

REDWOOD CITY, CA--(Marketwired - Feb 8, 2017) - Qualys, Inc. (NASDAQ: QLYS), a pioneer and leading provider of cloud-based security and compliance solutions, today announced financial results for the fourth quarter and full year ended December 31, 2016. For the quarter, the Company reported revenues of $52.2 million, GAAP net income of $5.9 million, non-GAAP net income of $8.8 million, Adjusted EBITDA of $18.5 million, GAAP earnings per diluted share of $0.15 and non-GAAP earnings per diluted share of $0.23. For the full year ended December 31, 2016, the Company reported revenues of $197.9 million, GAAP net income of $19.2 million, non-GAAP net income of $32.8 million, Adjusted EBITDA of $68.0 million, GAAP earnings per diluted share of $0.50 and non-GAAP earnings per diluted share of $0.86.

"Fourth quarter 2016 was a solid finish to our strong fiscal year during which we increased revenues by 20%, maintained industry-leading margins, and deployed 2 million paid Cloud Agents. Throughout 2016, we continued to expand our cloud platform capabilities with new offerings and strategic partnerships that make us more strategic to customers, positioning Qualys for continued profitable growth," said Philippe Courtot, chairman and CEO, Qualys, Inc. "The security industry is seeing a rapid transformation from legacy point products to integrated and automated capabilities that seamlessly work together as a platform. As a pioneer and innovator in this shift, customers worldwide are turning to the Qualys Cloud Platform to enable their digital transformation; this was most recently reflected in an IDC report, which showed that Qualys has taken the #1 market-share position over IBM and HP in the $1.6 billion WorldWide Vulnerability Assessment Market with 70% of Forbes Global 50 and 68% of Fortune 50 now standardized on Qualys."

Fourth Quarter 2016 Financial Highlights

Revenues: Revenues for the fourth quarter of 2016 increased by 18% to $52.2 million compared to $44.4 million for the same quarter in 2015.

Gross Profit: GAAP gross profit for the fourth quarter of 2016 increased by 14% to $40.5 million compared to $35.4 million for the same quarter in 2015. GAAP gross margin percentage was 78% for the fourth quarter of 2016 compared to 80% in the prior year's fourth quarter. Non-GAAP gross profit increased by 15% to $41.1 million compared to $35.7 million in the same quarter in 2015. Non-GAAP gross margin percentage was 79% for the fourth quarter of 2016 compared to 80% in the fourth quarter of 2015.

Operating Income: GAAP operating income for the fourth quarter of 2016 was $8.8 million compared to $7.7 million in the same quarter in 2015. Non-GAAP operating income for the fourth quarter of 2016 was $13.8 million compared to $12.5 million in the same quarter in 2015.

Net Income: GAAP net income for the fourth quarter of 2016 was $5.9 million, or $0.15 per diluted share, compared to $5.4 million, or $0.14 per diluted share, for the same quarter in 2015. Non-GAAP net income for the fourth quarter of 2016 was $8.8 million, or $0.23 per diluted share, compared to non-GAAP net income of $7.8 million, or $0.21 per diluted share, for the same quarter in 2015.

Adjusted EBITDA: Adjusted EBITDA (a non-GAAP financial measure) for the fourth quarter of 2016 increased by 12% to $18.5 million compared to $16.4 million for the same quarter in 2015. As a percentage of revenues, Adjusted EBITDA was 35% for the fourth quarter of 2016 compared to 37% for the fourth quarter of 2015.

Fourth Quarter 2016 Business Highlights

  • FedRAMP Authority to Operate. Qualys Cloud Platform was granted an Authority to Operate (ATO) by the U.S. Department of Health and Human Services under the Federal Risk and Authorization Management Program (FedRAMP).
  • Partnership with Deutsche Telekom. Announced a new partnership with Deutsche Telekom to add the Qualys Private Cloud Platform to its portfolio of Telekom Security Managed Services.
  • Ranked No.1 market leader in Worldwide Vulnerability Assessment Market by a leading industry analyst firm IDC, surpassing all competing security vendors.
  • Analysts & Investors Day. Qualys' Executive Team discussed the company's vision, strategy, product roadmap and investment highlights as well as showcased forthcoming, ground-breaking new services.

New Customers in Fourth Quarter 2016

  • Agrium, Allen & Overy, Capital One, COUNTRY Financial, Cushman & Wakefield, Delta Air Lines, FMR LLC (Fidelity Management and Research), Juniper Networks, Lockheed Martin Corporation, Micron Technology.

Full Year 2016 Financial Highlights

Revenues: Revenues for 2016 increased by 20% to $197.9 million compared to $164.3 million for 2015.

Gross Profit: GAAP gross profit for 2016 increased by 19% to $155.5 million compared to $130.4 million for 2015. GAAP gross margin percentage was 79% for 2016 compared to 79% for 2015. Non-GAAP gross profit increased by 19% to $157.3 million for 2016 compared to $131.6 million for 2015. Non-GAAP gross margin percentage was 79% for 2016 compared to 80% for 2015.

Operating Income: GAAP operating income for 2016 was $30.1 million compared to $24.8 million for 2015. Non-GAAP operating income for 2016 was $51.0 million compared to $42.3 million for 2015.

Net Income: GAAP net income for 2016 was $19.2 million, or $0.50 per diluted share, compared to $15.9 million, or $0.42 per diluted share, for 2015. Non-GAAP net income for 2016 was $32.8 million, or $0.86 per diluted share, compared to non-GAAP net income of $26.7 million, or $0.70 per diluted share, for 2015.

Adjusted EBITDA: Adjusted EBITDA (a non-GAAP financial measure) for 2016 increased by 20% to $68.0 million compared to $56.7 million for 2015. As a percentage of revenues, Adjusted EBITDA was 34% for 2016 compared to 34% for 2015.

Full Year 2016 Business and Product Highlights

  • Released Qualys ThreatPROTECT as an extension to Qualys Vulnerability Management to assist customers with prioritizing vulnerabilities based on level of threat as measured by multiple threat indicators.
  • Sold 2 million Cloud Agents providing customers with real-time visibility across on-premise devices, cloud applications and endpoints.
  • Released Qualys Security Assessment Questionnaire (SAQ) 2.0 allowing organizations to better consolidate and orchestrate assessments of third-party business processes and vendor risk by centrally capturing all relevant information from technical and human sources, drastically reducing associated time and cost.
  • Unveiled midmarket Private Cloud Platform Appliance (PCP-A). The new form-factor extends the Qualys Private Cloud Platform to medium-sized companies needing to retain data on-premise or within local geographies previously not served by Qualys.
  • Achieved FedRAMP Compliance for Qualys Cloud Platform, allowing federal agencies previously not served by Qualys a path to quickly adopt the Qualys Cloud Platform and integrated suite of offerings for continuous security and compliance.
  • Expanded Qualys Consultant suite with new packages and flexible pricing options, enabling consultants to simplify client engagements, increase productivity and reduce cost.
  • Expanded Qualys Cloud Platform to support Microsoft Azure with a new Azure-certified virtual scanner appliance allowing organizations to assess the security and compliance posture of their Azure virtual machines from the Qualys console.
  • Announced Global Strategic Partnerships with Deutsche Telekom, HP Enterprise, NTT Security US and Wipro that will integrate the Qualys Cloud Platform as part of their managed services to enable customers for better visibility of IT assets across hybrid public and private clouds.

New Customers in 2016

  • Avery Dennison, Blue Cross and Blue Shield of Massachusetts, Computershare, Cox Automotive, CSC (Computer Sciences Corp), Dominos Pizza Enterprises, First Citizens Bancshares, First Data NJ, Fortinet, HCL Technologies LTD, HP Inc, Huawei Technologies Co., Informatica, Library of Congress, MTN Group, Nationstar Mortgage, Nissan Motors Limited, Nordea Bank Norge, Republic Airways Holdings, Reynolds America, Roche Holdings AG, South Carolina Dept of Employment, The Valspar Corporation, WageWorks, and Wake Forest Baptist Medical.

Financial Performance Outlook

First Quarter 2017 Guidance: Management expects revenues to be in the range of $52.0 million to $53.0 million, 12% to 15% growth over first quarter 2016 or estimated 16% to 18% growth normalized for the impact of FX and the MSSP (Managed Security Service Provider) contract. GAAP net income per diluted share is expected to be in the range of $0.38 to $0.41, which assumes an effective income tax rate of (145%). Non-GAAP net income per diluted share is expected to be in the range of $0.17 to $0.19, which assumes an effective non-GAAP income tax rate of 36%. First quarter 2017 EPS estimates are based on approximately 39.3 million weighted average diluted shares outstanding for the quarter.

Full Year 2017 Guidance: Management expects revenues to be in the range of $224 million to $228 million, 13% to 15% growth over the full year 2016 or estimated 16% to 18% growth normalized for the impact of FX and the MSSP contract. GAAP net income per diluted share is expected to be in the range of $1.00 to $1.06 which assumes an effective income tax rate of (30%). Non-GAAP net income per diluted share is expected to be in the range of $0.81 to $0.86, which assumes an effective non-GAAP income tax rate of 36%. Full year 2017 EPS estimates are based on approximately 39.6 million weighted average diluted shares outstanding.

Investor Conference Call

Qualys will host a conference call and live webcast to discuss its fourth quarter and full year 2016 financial results at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) on Wednesday, February 8, 2017. To access the conference call, dial (877) 881-2609 in the U.S. or +1 (970) 315-0463 for international participants with conference ID # 50052119. The live webcast of Qualys' earnings conference call can also be accessed at http://investor.qualys.com/events.cfm. A replay of the conference call will be available through the same webcast link following the end of the call.

About Qualys, Inc.

Qualys, Inc. (NASDAQ: QLYS) is a pioneer and leading provider of cloud-based security and compliance solutions with over 9,300 customers, excluding security consulting firms, in more than 100 countries, including a majority of each of the Forbes Global 100 and Fortune 100. The Qualys Cloud Platform and integrated suite of solutions help organizations simplify security operations and lower the cost of compliance by delivering critical security intelligence on demand and automating the full spectrum of auditing, compliance and protection for IT systems and web applications. Founded in 1999, Qualys has established strategic partnerships with leading managed service providers and consulting organizations including Accenture, BT, Cognizant Technology Solutions, Deutsche Telekom, Fujitsu, HCL Technologies, HPE, Infosys, NTT, Optiv, SecureWorks, Tata Communications, Verizon and Wipro. The company is also a founding member of the Cloud Security Alliance (CSA). For more information, please visit www.qualys.com.

Qualys, the Qualys logo and QualysGuard are proprietary trademarks of Qualys, Inc. All other products or names may be trademarks of their respective companies.

Legal Notice Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements generally relate to future events or our future financial or operating performance. Forward-looking statements in this press release include, but are not limited to, statements related to: the growth of our business, including renewals and market share gains, adoption of our existing solutions and our new offerings to both existing and new customers; the capabilities of our platform; the expansion of our certifications and partnerships and the related benefits of such certifications and partnerships; our strategy and our business model, the scalability of our strategy, and ability to execute such strategy; our guidance for revenues, GAAP EPS and non-GAAP EPS for the first quarter and full year 2017, and our expectations for the number of weighted average diluted shares outstanding and effective income tax rate for the first quarter and full year 2017. Our expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks include our ability to continue to develop platform capabilities and solutions; the ability of our platform and solutions to perform as intended; customer acceptance and purchase of our existing solutions and new solutions; real or perceived defects, errors or vulnerabilities in our products or services; our ability to retain existing customers and generate new customers; the budgeting cycles, seasonal buying patterns and length of our sales cycle; our ability to manage costs as we increase our customer base and the number of our platform solutions; the market for cloud solutions for IT security and compliance not increasing at the rate we expect; competition from other products and services; fluctuations in currency exchange rates, unexpected fluctuations in our effective tax rate on a GAAP and non-GAAP basis, our ability to effectively manage our rapid growth and our ability to anticipate future market needs and opportunities; any unanticipated accounting charges; and general market, political, economic and business conditions in the United States as well as globally. The forward-looking statements contained in this press release are also subject to other risks and uncertainties, including those more fully described in our filings with the Securities and Exchange Commission, including our Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, filed with the Securities and Exchange Commission on November 4, 2016. The forward-looking statements in this press release are based on information available to Qualys as of the date hereof, and Qualys disclaims any obligation to update any forward-looking statements, except as required by law.

Non-GAAP Financial Measures

In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Qualys monitors operating measures of non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, and non-GAAP net income per diluted share. In computing these non-GAAP financial measures, Qualys excludes the effects of stock-based compensation expense and non-recurring expenses. Qualys also monitors Adjusted EBITDA (defined as earnings before interest, taxes, depreciation, amortization, stock-based compensation, other (income) expense, net and non-recurring expenses) and free cash flow (defined as cash provided by operating activities less purchases of property and equipment, and capitalized software development costs). Estimated impact of the MSSP contract signed in Feb 2016 refers to the difference between the estimated revenue recognized under the new terms in the MSSP contract and the estimated revenue that would have been recognized without the MSSP contract, assuming an appropriate renewal rate. The percentage impact is the net benefit, only in the contract year in which it occurred. Qualys believes that these non-GAAP operating metrics help illustrate underlying trends in its business that could otherwise be masked by the effect of the income or expenses, as well as the related tax effects, that are excluded in non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, non-GAAP net income per diluted share and Adjusted EBITDA.

Furthermore, Qualys uses these operating measures to establish budgets and operational goals for managing its business and evaluating its performance. Qualys monitors free cash flow as a liquidity measure to provide useful information to management and investors about the amount of cash generated by the Company that, after the acquisition of property and equipment and capitalized software development costs, can be used for strategic opportunities, including investing in its business, making strategic acquisitions and strengthening the balance sheet. Qualys also believes that non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, non-GAAP net income per diluted share, Adjusted EBITDA and free cash flow provide additional tools for investors to use in comparing its recurring core business operating results over multiple periods with other companies in its industry. Non-GAAP net income per diluted share for the twelve months ended December 31, 2016 excludes approximately $0.7 million of non-recurring expenses related to the remittance of payroll taxes from year 2013 through May 2016. During this same period, the Company has not excluded amounts related to other non-recurring items from non-GAAP net income per diluted share because the Company has considered such amounts to be immaterial in any given quarter during such period.

We have not reconciled non-GAAP net income per diluted share guidance to GAAP net income per diluted share because we do not provide guidance on the various reconciling cash and non-cash items between GAAP net income and non-GAAP net income (i.e., stock-based compensation and non-recurring expenses). The actual dollar amount of reconciling items in the first quarter and full year 2017 is likely to have a significant impact on the Company's GAAP net income per diluted share in the first quarter and full year 2017, respectively. Accordingly, a reconciliation of the non-GAAP net income per diluted share guidance to the corresponding GAAP net income per diluted share is not available without unreasonable effort.

In order to provide a more complete picture of recurring core operating business results, the Company's non-GAAP net income and non-GAAP net income per diluted share include tax adjustments required to achieve the effective tax rate on a non-GAAP basis, which could differ from the GAAP effective tax rate. The Company believes the non-GAAP effective tax rate, which is 36% in 2017, is a reasonable estimate under its global operating structure. The Company intends to re-evaluate the non-GAAP effective tax rate on an annual basis. However, it may adjust this rate during the year to take into account events or trends that it believes materially impact the estimated annual rate. The non-GAAP effective tax rate could be subject to change for a number of reasons, including but not limited to, significant changes resulting from tax legislation, material changes in geographic mix of revenues and expenses and other significant events.

The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of the non-GAAP financial measures discussed in this press release to the most directly comparable GAAP financial measures is included with the financial statements contained in this press release. Management uses both GAAP and non-GAAP information in evaluating and operating its business internally and as such has determined that it is important to provide this information to investors.

   
Qualys, Inc.  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(Unaudited)  
(in thousands, except per share data)  
   
    Three Months Ended     Year Ended  
    December 31,     December 31,  
    2016     2015     2016     2015  
Revenues   $ 52,224     $ 44,445     $ 197,925     $ 164,284  
Cost of revenues (1)     11,677       9,002       42,473       33,885  
  Gross profit     40,547       35,443       155,452       130,399  
Operating expenses:                                
  Research and development (1)     8,885       7,532       35,267       29,451  
  Sales and marketing (1)     15,346       13,068       57,970       49,569  
  General and administrative (1)     7,505       7,147       32,108       26,573  
    Total operating expenses     31,736       27,747       125,345       105,593  
Income from operations     8,811       7,696       30,107       24,806  
Other income (expense), net:                                
  Interest expense     (3 )     (2 )     (26 )     (6 )
  Interest income     417       184       1,320       570  
  Other expense, net     (530 )     (365 )     (972 )     (850 )
    Total other income (expense), net     (116 )     (183 )     322       (286 )
Income before income taxes     8,695       7,513       30,429       24,520  
Provision for income taxes     2,788       2,089       11,205       8,655  
Net income   $ 5,907     $ 5,424     $ 19,224     $ 15,865  
Net income per share:                                
  Basic   $ 0.17     $ 0.16     $ 0.55     $ 0.47  
  Diluted   $ 0.15     $ 0.14     $ 0.50     $ 0.42  
Weighted average shares used in computing net income per share:                                
  Basic     35,762       34,294       35,247       34,050  
  Diluted     39,002       38,146       38,369       38,184  
                                 
                                 
(1) Includes stock-based compensation as follows:                                
                                 
  Cost of revenues   $ 540     $ 245     $ 1,858     $ 1,250  
  Research and development     1,305       1,352       5,678       4,936  
  Sales and marketing     1,411       1,061       4,870       3,867  
  General and administrative     1,771       2,158       7,743       7,441  
    Total stock-based compensation   $ 5,027     $ 4,816     $ 20,149     $ 17,494  
                                 
   
Qualys, Inc.  
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME  
(Unaudited)  
(in thousands)  
   
    Three Months Ended     Year Ended  
    December 31,     December 31,  
    2016     2015     2016     2015  
Net income   $ 5,907     $ 5,424     $ 19,224     $ 15,865  
  Available-for-sale investments:                                
    Change in net unrealized (loss) on investments, net of tax     (168 )     (238 )     (57 )     (202 )
    Less: reclassification adjustment for net realized gain (loss) included in net income, net of tax     (5 )     (10 )     112       (19 )
    Net change     (173 )     (248 )     55       (221 )
      Other comprehensive income (loss), net     (173 )     (248 )     55       (221 )
Comprehensive income   $ 5,734     $ 5,176     $ 19,279     $ 15,644  
                                 
   
Qualys, Inc.  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(Unaudited)  
(in thousands)  
   
    December 31,  
    2016     2015  
Assets                
Current assets:                
  Cash and cash equivalents   $ 86,737     $ 91,698  
  Short-term investments     157,119       87,268  
  Accounts receivable, net     47,024       42,325  
  Prepaid expenses and other current assets     9,808       7,945  
    Total current assets     300,688       229,236  
Long-term investments     45,725       43,277  
Property and equipment, net     39,401       31,329  
Deferred tax assets, net     16,590       16,079  
Intangible assets, net     987       1,360  
Goodwill     317       317  
Restricted cash     1,200       -  
Other noncurrent assets     2,096       1,916  
    Total assets   $ 407,004     $ 323,514  
Liabilities and Stockholders' Equity                
Current liabilities:                
  Accounts payable   $ 2,051     $ 2,368  
  Accrued liabilities     13,317       11,786  
  Deferred revenues, current     114,964       98,025  
    Total current liabilities     130,332       112,179  
Deferred revenues, noncurrent     15,528       14,564  
Other noncurrent liabilities     2,731       1,205  
    Total liabilities     148,591       127,948  
Stockholders' equity:                
  Common stock     36       34  
  Additional paid-in capital     266,794       223,228  
  Accumulated other comprehensive loss     (156 )     (211 )
  Accumulated deficit     (8,261 )     (27,485 )
    Total stockholders' equity     258,413       195,566  
    Total liabilities and stockholders' equity   $ 407,004     $ 323,514  
                 
   
Qualys, Inc.  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
(Unaudited)  
(in thousands)  
   
    Year Ended December 31,  
    2016     2015  
Cash flows from operating activities:                
  Net income   $ 19,224     $ 15,865  
  Adjustments to reconcile net income to net cash provided by operating activities:                
    Depreciation and amortization expense     16,994       14,360  
    Bad debt expense     199       851  
    Loss on disposal of property and equipment     55       5  
    Stock-based compensation     20,149       17,494  
    Amortization of premiums and accretion of discounts on investments     1,000       594  
    Excess tax benefits from stock-based compensation     (8,700 )     (487 )
    Impairment of intangible assets     -       255  
    Deferred income taxes     (440 )     6,564  
    Changes in operating assets and liabilities:                
      Accounts receivable     (4,898 )     (10,183 )
      Prepaid expenses and other assets     (2,107 )     (1,011 )
      Restricted cash     (1,200 )     -  
      Accounts payable     (1,220 )     (3,293 )
      Accrued liabilities     9,696       3,339  
      Deferred revenues     17,903       21,378  
      Other noncurrent liabilities     1,455       229  
        Net cash provided by operating activities     68,110       65,960  
Cash flows from investing activities:                
  Purchases of investments     (222,953 )     (146,707 )
  Sales and maturities of investments     149,708       105,509  
  Purchases of property and equipment     (23,245 )     (20,051 )
  Capitalized software development costs     -       (99 )
        Net cash used in investing activities     (96,490 )     (61,348 )
Cash flows from financing activities:                
  Proceeds from exercise of stock options     15,157       10,095  
  Excess tax benefits from stock-based compensation     8,700       487  
  Payments for taxes related to employee net share settlement of equity awards     (438 )     -  
        Net cash provided by financing activities     23,419       10,582  
Effect of exchange rate changes on cash and cash equivalents     -       -  
Net (decrease) increase in cash and cash equivalents     (4,961 )     15,194  
Cash and cash equivalents at beginning of period     91,698       76,504  
Cash and cash equivalents at end of period   $ 86,737     $ 91,698  
                 
 
Qualys, Inc.
RECONCILIATION OF NON-GAAP DISCLOSURES
EBITDA AND ADJUSTED EBITDA
(Unaudited)
(in thousands)
 
    Three Months Ended   Year Ended
    December 31,   December 31,
    2016   2015   2016     2015
Net income   $ 5,907   $ 5,424   $ 19,224     $ 15,865
  Depreciation and amortization of property and equipment     4,586     3,843     16,621       13,974
  Amortization of intangible assets     44     93     373       386
  Interest expense     3     2     26       6
  Provision for income taxes     2,788     2,089     11,205       8,655
EBITDA     13,328     11,451     47,449       38,886
  Stock-based compensation     5,027     4,816     20,149       17,494
  Other (income) expense, net     113     181     (348 )     280
  One-time tax related expense     -     -     716       -
Adjusted EBITDA   $ 18,468   $ 16,448   $ 67,966     $ 56,660
                           
   
Qualys, Inc.  
RECONCILIATION OF NON-GAAP DISCLOSURES  
(Unaudited)  
(in thousands, except per share data)  
   
    Three Months Ended     Year Ended  
    December 31,     December 31,  
    2016     2015     2016     2015  
GAAP Cost of revenues   $ 11,677     $ 9,002     $ 42,473     $ 33,885  
    Less: Stock-based compensation     (540 )     (245 )     (1,858 )     (1,250 )
Non-GAAP Cost of revenues   $ 11,137     $ 8,757     $ 40,615     $ 32,635  
                                 
GAAP Gross profit   $ 40,547     $ 35,443     $ 155,452     $ 130,399  
    Plus: Stock-based compensation     540       245       1,858       1,250  
Non-GAAP Gross profit   $ 41,087     $ 35,688     $ 157,310     $ 131,649  
                                 
GAAP Research and development   $ 8,885     $ 7,532     $ 35,267     $ 29,451  
    Less: Stock-based compensation     (1,305 )     (1,352 )     (5,678 )     (4,936 )
Non-GAAP Research and development   $ 7,580     $ 6,180     $ 29,589     $ 24,515  
                                 
GAAP Sales and marketing   $ 15,346     $ 13,068     $ 57,970     $ 49,569  
    Less: Stock-based compensation     (1,411 )     (1,061 )     (4,870 )     (3,867 )
Non-GAAP Sales and marketing   $ 13,935     $ 12,007     $ 53,100     $ 45,702  
                                 
GAAP General and administrative   $ 7,505     $ 7,147     $ 32,108     $ 26,573  
    Less: Stock-based compensation     (1,771 )     (2,158 )     (7,743 )     (7,441 )
    Less: One-time tax related expense     -       -       (716 )     -  
Non-GAAP General and administrative   $ 5,734     $ 4,989     $ 23,649     $ 19,132  
                                 
GAAP Operating expenses   $ 31,736     $ 27,747     $ 125,345     $ 105,593  
    Less: Stock-based compensation   $ (4,487 )   $ (4,571 )   $ (18,291 )   $ (16,244 )
    Less: One-time tax related expense     -       -       (716 )     -  
Non-GAAP Operating expenses   $ 27,249     $ 23,176     $ 106,338     $ 89,349  
                                 
GAAP Income from operations   $ 8,811     $ 7,696     $ 30,107     $ 24,806  
    Plus: Stock-based compensation     5,027       4,816       20,149       17,494  
    Plus: One-time tax related expense     -       -       716       -  
Non-GAAP Income from operations   $ 13,838     $ 12,512     $ 50,972     $ 42,300  
                                 
GAAP Net income   $ 5,907     $ 5,424     $ 19,224     $ 15,865  
    Plus: Stock-based compensation     5,027       4,816       20,149       17,494  
    Plus: One-time tax related expense     -       -       716       -  
    Less: Tax adjustment     (2,152 )     (2,399 )     (7,261 )     (6,638 )
Non-GAAP Net income   $ 8,782     $ 7,841     $ 32,828     $ 26,721  
                                 
Non-GAAP Net income per share:                                
Basic   $ 0.25     $ 0.23     $ 0.93     $ 0.78  
Diluted   $ 0.23     $ 0.21     $ 0.86     $ 0.70  
                                 
Weighted average shares used in computing non-GAAP net income per share:                                
  Basic     35,762       34,294       35,247       34,050  
  Diluted     39,002       38,146       38,369       38,184  
                                 
   
Qualys, Inc.  
RECONCILIATON OF NON-GAAP DISCLOSURES  
FREE CASH FLOWS  
(Unaudited)  
(in thousands)  
   
    Year Ended December 31,  
    2016     2015  
GAAP Cash flows provided by operating activities   $ 68,110     $ 65,960  
  Less:                
    Purchases of property and equipment     (23,245 )     (20,051 )
    Capitalized software development costs     -       (99 )
Non-GAAP Free cash flows   $ 44,865     $ 45,810  
                 
   
Qualys, Inc.  
RECONCILIATON OF U.S. GAAP REVENUE GROWTH AND CURRENT DEFERRED REVENUE GROWTH TO NON-GAAP NORMALIZED GROWTH  
(Unaudited)  
(in thousands)  
   
Reconciliation of U.S. GAAP Revenue Growth to Non-GAAP Normalized Growth  
   
    Three Months Ended December 31, 2016     Year Ended
December 31, 2016
 
Revenues   $ 52,224     $ 197,925  
Y/Y Revenue Change as reported under U.S. GAAP     17.5 %     20.5 %
Less: Estimated Impact of MSSP Contract Signed in Feb 2016     0.8 %     2.0 %
Less: Estimated Foreign Exchange Impact     (1.2 )%     (1.6 )%
Estimated Normalized Revenue Growth     17.9 %     20.2 %
                 
    Three Months Ended March 31, 2017     Year Ended December 31, 2017  
Revenue Guidance Range   $ 52,000     $ 53,000     $ 224,000     $ 228,000  
Y/Y Revenue Change as Reported Under U.S. GAAP     12.4 %     14.6 %     13.2 %     15.2 %
Less: Estimated Impact of MSSP Contract Signed in Feb 2016     (2.1 )%     (2.2 )%     (1.5 )%     (1.6 )%
Less: Estimated Foreign Exchange Impact     (1.1 )%     (1.1 )%     (1.5 )%     (1.5 )%
Estimated Normalized Revenue Growth     15.6 %     17.9 %     16.2 %     18.3 %
                                 
Reconciliation of U.S. GAAP Current Deferred Revenue Growth to Non-GAAP Normalized Growth
 
   
    Year Ended
December 31, 2016
 
Current Deferred Revenue   $ 114,964  
Y/Y Current Deferred Revenue Change as reported under U.S. GAAP     17.3 %
Less: Estimated Impact of MSSP Contract Signed in Feb 2016     (4.2 )%
Less: Estimated Foreign Exchange Impact     (1.2 )%
Estimated Normalized Current Deferred Revenue Growth     22.6 %

Contact Information

  • Investor and Media Contact:
    Joo Mi Kim
    Vice President, FP&A and Investor Relations
    (650) 801-6100
    ir@qualys.com