8-K
false 0001107843 0001107843 2020-08-10 2020-08-10

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)

August 10, 2020

 

 

Qualys, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-35662   77-0534145

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

919 East Hillsdale Boulevard

Foster City, California 94404

(Address of principal executive offices, including zip code)

(650) 801-6100

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Common stock, $0.001 par value per share   QLYS   NASDAQ Stock Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 2.02

Results of Operations and Financial Condition.

On August 10, 2020, Qualys, Inc. (“Qualys”) issued a press release announcing its financial results for the quarter ended June 30, 2020. In the press release, Qualys also announced that it will hold a conference call on August 10, 2020, to discuss its financial results for the quarter ended June 30, 2020. The full text of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

This information is intended to be furnished under Item 2.02 of Form 8-K, “Results of Operations and Financial Condition” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit
No.

  

Description

99.1    Press release issued by Qualys, Inc. dated August 10, 2020
104    Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document)


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  QUALYS, INC.
By:  

/s/ Philippe F. Courtot

 

Philippe F. Courtot

Chairman and Chief Executive Officer

Date: August 10, 2020

EX-99.1

Exhibit 99.1

 

Qualys Announces Second Quarter 2020 Financial Results

Revenue Growth of 13% Year-Over-Year

GAAP EPS: $0.64; Non-GAAP EPS: $0.74

Raises 2020 Revenue Guidance to $359-$360.5 million

Raises 2020 GAAP EPS Guidance to $1.78-$1.83

Raises 2020 Non-GAAP EPS Guidance to $2.60-$2.65

Foster City, Calif., – August 10, 2020 – Qualys, Inc. (NASDAQ: QLYS), a pioneer and leading provider of disruptive cloud-based IT, security and compliance solutions, today announced financial results for the second quarter ended June 30, 2020. For the quarter, the Company reported revenues of $88.8 million, net income under United States Generally Accepted Accounting Principles (“U.S. GAAP”) of $26.3 million, non-GAAP net income of $30.3 million, Adjusted EBITDA of $42.8 million, GAAP net income per diluted share of $0.64, and non-GAAP net income per diluted share of $0.74.

“The unprecedented shift towards remote working caused by the COVID-19 pandemic has created significant new IT and cybersecurity challenges. With most employees working from home, there has been not only an explosion of remote endpoints accessing organizations’ critical assets and data, but also an increase in cyberattacks that are targeting these remote endpoints to exploit vulnerabilities. Qualys is uniquely positioned with its robust scalable cloud platform to enable organizations to both continuously monitor and quickly patch vulnerabilities. We have seen a strong uptake of our free Remote Endpoint Protection offering, with over 650 companies, including nearly 300 customer prospects, actively using the service, and we added additional malware detection capabilities to it this quarter. In addition, we have also seen a strong customer response to our Vulnerability Management, Detection and Response (VMDR®) application, with over 600 customers using VMDR, of which approximately 200 are new to our cloud platform. VMDR is helping make our Cloud Agents ubiquitous and, in turn, driving our multi-product adoption higher,” said Philippe Courtot, chairman and CEO of Qualys. “The recent introduction of our Multi-Vector EDR solution and our upcoming Data Lake / SIEM offering presents a significant extension of our cloud platform that will help our customers to further consolidate their IT, security and compliance stack during these challenging times.”

Second Quarter 2020 Financial Highlights

Revenues: Revenues for the second quarter of 2020 increased by 13% to $88.8 million compared to $78.9 million for the same quarter in 2019.

Gross Profit: GAAP gross profit for the second quarter of 2020 increased by 14% to $69.9 million compared to $61.4 million for the same quarter in 2019. GAAP gross margin was 79% for the second quarter of 2020 compared to 78% for the same quarter in 2019. Non-GAAP gross profit for the second quarter of 2020 increased by 14% to $72.0 million compared to $63.4 million for the same quarter in 2019. Non-GAAP gross margin was 81% for the second quarter of 2020 compared to 80% for the same quarter in 2019.


Operating Income: GAAP operating income for the second quarter of 2020 increased by 58% to $25.5 million compared to $16.1 million for the same quarter in 2019. As a percentage of revenues, GAAP operating income was 29% for the second quarter of 2020 compared to 20% for the same quarter in 2019. Non-GAAP operating income for the second quarter of 2020 increased by 35% to $36.5 million compared to $27.0 million for the same quarter in 2019. As a percentage of revenues, non-GAAP operating income was 41% for the second quarter of 2020 compared to 34% for the same quarter in 2019.

Net Income: GAAP net income for the second quarter of 2020 was $26.3 million, or $0.64 per diluted share, compared to $16.2 million, or $0.39 per diluted share, for the same quarter in 2019. As a percentage of revenues, GAAP net income was 30% for the second quarter of 2020 compared to 21% for the same quarter in 2019. Non-GAAP net income for the second quarter of 2020 was $30.3 million, or $0.74 per diluted share, compared to non-GAAP net income of $22.9 million, or $0.55 per diluted share, for the same quarter in 2019. As a percentage of revenues, non-GAAP net income was 34% for the second quarter of 2020 compared to 29% for the same quarter in 2019.

Adjusted EBITDA: Adjusted EBITDA (a non-GAAP financial measure) for the second quarter of 2020 increased by 28% to $42.8 million compared to $33.4 million for the same quarter in 2019. As a percentage of revenues, Adjusted EBITDA was 48% for the second quarter of 2020 compared to 42% for the same quarter in 2019.

Operating Cash Flow: Operating cash flow for the second quarter of 2020 decreased by 21% to $29.2 million compared to $36.9 million for the same quarter in 2019. As a percentage of revenues, operating cash flow was 33% for the second quarter of 2020 compared to 47% for the same quarter in 2019.

Second Quarter 2020 Business Highlights

Select New Customers:

BlueScope Steel, Bunzl plc, Carrier Global, Dodge & Cox, Edelman Financial Engines, Eni S.p.A, Fidelity National Financial, Florida Department of Transportation, Royal Group, Scholastic, TOMS, UNICEF, Visionworks, and Vistra.

Business Highlights:

 

   

Announced general availability of Qualys VMDR, which provides the ability to discover, assess, prioritize and patch critical vulnerabilities in real time, all from a single solution.

 

   

Added malware detection to our free Remote Endpoint Protection solution, which helps businesses secure remote workers, and also made it available to federal agencies via a no-cost 60-day pilot.

 

   

Delivered Vulnerability Management and Container Security to Microsoft Azure Security Center for virtual machines and containers.

 

   

Announced general availability of Qualys Cloud Agent on Google Cloud, providing customers with visibility of their workloads and virtual machines in Google Cloud with essentially no software to install or maintain.

 

   

Selected by Armor, a global provider of cybersecurity software, to embed Qualys VMDR into Armor Anywhere, an industry-leading cloud security platform.

 

   

Welcomed back Joo Mi Kim to serve as our Chief Financial Officer, named John Zangardi, former Homeland Security CIO, to our Board of Directors, and appointed Ben Carr as Chief Information Security Officer.

Financial Performance Outlook

Based on information as of today, August 10, 2020, Qualys is issuing the following financial guidance for the third quarter and full year fiscal 2020. The Company emphasizes that the guidance is subject to various important cautionary factors referenced in the section entitled “Legal Notice Regarding Forward-Looking Statements” below, including risks and uncertainties associated with the COVID-19 pandemic.


Third Quarter 2020 Guidance: Management expects revenues for the third quarter of 2020 to be in the range of $91.6 million to $92.2 million, representing 11% to 12% growth over the same quarter in 2019. GAAP net income per diluted share is expected to be in the range of $0.40 to $0.42, which assumes an effective income tax rate of 24%. Non-GAAP net income per diluted share is expected to be in the range of $0.65 to $0.67, which assumes a non-GAAP effective income tax rate of 21%. Third quarter 2020 net income per diluted share estimates are based on approximately 41.0 million weighted average diluted shares outstanding for the quarter.

Full Year 2020 Guidance: Management expects revenues for the full year 2020 to be in the range of $359.0 million to $360.5 million, representing 12% growth over 2019. GAAP net income per diluted share is expected to be in the range of $1.78 to $1.83, which assumes an effective income tax rate of 15%. Non-GAAP net income per diluted share is expected to be in the range of $2.60 to $2.65, which assumes a non-GAAP effective income tax rate of 21%. Full year 2020 net income per diluted share estimates are based on approximately 41.0 million weighted average diluted shares outstanding.

Investor Conference Call

Qualys will host a conference call and live webcast to discuss its second quarter 2020 financial results at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) on Monday, August 10, 2020. To access the conference call, dial (877) 881-2609 in the U.S. or (970) 315-0463 for international participants with conference ID #4853148. A live webcast of the earnings conference call, investor presentation, prepared remarks, and supplemental historical financial spreadsheet can be accessed at https://investor.qualys.com/events-presentations. A replay of the conference call will be available through the same webcast link following the end of the call.

Investor Contact

Vinayak Rao

Vice President, Corporate Development and Investor Relations

(650) 801-6210

ir@qualys.com

About Qualys: One Cloud Platform – One Agent – One Global View

Qualys, Inc. (NASDAQ: QLYS) is a pioneer and leading provider of disruptive cloud-based IT, security and compliance solutions with over 15,700 active customers in more than 130 countries, including a majority of each of the Forbes Global 100 and Fortune 100. Qualys helps organizations streamline and consolidate their IT, security and compliance solutions in a single platform and build security into digital transformation initiatives for greater agility, better business outcomes and substantial cost savings. The Qualys Cloud Platform and its integrated Cloud Apps deliver businesses critical security intelligence continuously, enabling them to automate the full spectrum of auditing, compliance and protection for IT systems and web applications across on premises, endpoints, cloud, containers, and mobile environments. Founded in 1999 as one of the first SaaS security companies, Qualys has established strategic partnerships with leading cloud providers like Amazon Web Services, Microsoft Azure and the Google Cloud Platform, and managed service providers and consulting organizations including Accenture, BT, Cognizant Technology Solutions, Deutsche Telekom, DXC Technology, Fujitsu, HCL Technologies, IBM, Infosys, NTT, Optiv, SecureWorks, Tata Communications, Verizon and Wipro. The Company is also a founding member of the Cloud Security Alliance. For more information, please visit www.qualys.com.

Qualys and the Qualys logo 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: our expectations regarding our Qualys Cloud Platform innovation and the capabilities of our platform; our expectations regarding the growth, benefits and market acceptance of our Vulnerability Management, Detection, and Response application and its ability to complement our product portfolio; the benefits of our new and upcoming products, features, integrations, collaborations and joint solutions; our strategy and our business model and our ability to execute such strategy; our guidance for revenues, GAAP EPS and non-GAAP EPS for the third quarter and full year 2020; and our expectations for the number of weighted average diluted shares outstanding and the GAAP and non-GAAP effective income tax rate for the third quarter and full year 2020. 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; the impact of the recent COVID-19 pandemic and related public health measures on our business; 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 income 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 March 31, 2020, filed with the Securities and Exchange Commission on May 7, 2020.

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 GAAP, Qualys provides investors with certain non-GAAP financial measures, including 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 (defined as earnings before interest expense, interest income and other income (expense), net, taxes, depreciation, amortization, stock-based compensation, non-recurring expenses, and acquisition-related expenses that do not reflect ongoing costs of operating the business) and non-GAAP free cash flows (defined as cash provided by operating activities less purchases of property and equipment and principal payments under capital lease obligations).

In computing non-GAAP financial measures, Qualys excludes the effects of stock-based compensation expense, non-recurring expenses and acquisition-related expenses that do not reflect ongoing costs of operating the business. Qualys believes that these non-GAAP financial measures 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, Adjusted EBITDA and non-GAAP free cash flows.


Furthermore, Qualys uses some of these non-GAAP financial measures to establish budgets and operational goals for managing its business and evaluating its performance. Qualys 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 non-GAAP free cash flows provide additional tools for investors to use in comparing its recurring core business operating results over multiple periods with other companies in its industry.

Although Qualys does not focus on quarterly billings, Qualys provides calculated current billings (defined as total revenues recognized in a period plus the sequential change in current deferred revenue in the corresponding period) to assist investors and analysts in assessing its operating performance.

Qualys has not reconciled non-GAAP net income per diluted share guidance to GAAP net income per diluted share guidance because Qualys does 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 third quarter and full year 2020 is likely to have a significant impact on the Company’s GAAP net income per diluted share in the third quarter and full year 2020. Accordingly, a reconciliation of the non-GAAP net income per diluted share guidance to the GAAP net income per diluted share guidance 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 income tax rate on a non-GAAP basis, which could differ from the GAAP effective income tax rate. The Company believes its estimated non-GAAP effective income tax rate of 21% in 2020 is a reasonable estimate under its global operating structure. The Company 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 income 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 June 30,     Six Months Ended June 30,  
     2020      2019     2020     2019  

Revenues

   $ 88,830      $ 78,929     $ 175,093     $ 154,272  

Cost of revenues (1)

     18,891        17,537       37,386       35,246  
  

 

 

    

 

 

   

 

 

   

 

 

 

Gross profit

     69,939        61,392       137,707       119,026  

Operating expenses:

         

Research and development (1)

     18,058        17,695       36,041       33,532  

Sales and marketing (1)

     15,783        17,165       34,013       34,480  

General and administrative (1)

     10,590        10,424       21,714       20,855  
  

 

 

    

 

 

   

 

 

   

 

 

 

Total operating expenses

     44,431        45,284       91,768       88,867  
  

 

 

    

 

 

   

 

 

   

 

 

 

Income from operations

     25,508        16,108       45,939       30,159  

Other income (expense), net:

         

Interest expense

     —          (28     (3     (70

Interest income

     1,392        2,198       3,316       4,249  

Other income, net

     194        231       59       8  
  

 

 

    

 

 

   

 

 

   

 

 

 

Total other income, net

     1,586        2,401       3,372       4,187  

Income before income taxes

     27,094        18,509       49,311       34,346  

Provision for income taxes

     775        2,277       4,298       4,848  
  

 

 

    

 

 

   

 

 

   

 

 

 

Net income

   $ 26,319      $ 16,232     $ 45,013     $ 29,498  
  

 

 

    

 

 

   

 

 

   

 

 

 

Net income per share:

         

Basic

   $ 0.67      $ 0.41     $ 1.15     $ 0.75  
  

 

 

    

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.64      $ 0.39     $ 1.10     $ 0.71  
  

 

 

    

 

 

   

 

 

   

 

 

 

Weighted average shares used in computing net income per share:

         

Basic

     39,161        39,198       39,137       39,143  
  

 

 

    

 

 

   

 

 

   

 

 

 

Diluted

     40,919        41,530       40,928       41,570  
  

 

 

    

 

 

   

 

 

   

 

 

 

(1)  Includes stock-based compensation as follows:

 

         

Cost of revenues

   $ 583      $ 552     $ 1,197     $ 1,097  

Research and development

     3,253        2,704       6,690       5,044  

Sales and marketing

     1,513        1,063       3,073       2,131  

General and administrative

     4,095        4,016       8,481       8,508  
  

 

 

    

 

 

   

 

 

   

 

 

 

Total stock-based compensation

   $ 9,444      $ 8,335     $ 19,441     $ 16,780  
  

 

 

    

 

 

   

 

 

   

 

 

 


Qualys, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands)

 

     June 30,
2020
     December 31,
2019
 

Assets

     

Current assets:

     

Cash and cash equivalents

   $ 113,909      $ 87,559  

Short-term marketable securities

     233,922        211,331  

Accounts receivable, net

     75,938        78,034  

Prepaid expenses and other current assets

     24,338        18,692  
  

 

 

    

 

 

 

Total current assets

     448,107        395,616  

Long-term marketable securities

     97,483        119,508  

Property and equipment, net

     63,098        60,579  

Operating leases - right of use asset

     42,930        40,551  

Deferred tax assets, net

     16,971        18,830  

Intangible assets, net

     13,755        16,795  

Goodwill

     7,447        7,447  

Restricted cash

     1,200        1,200  

Other noncurrent assets

     16,024        15,082  
  

 

 

    

 

 

 

Total assets

   $ 707,015      $ 675,608  
  

 

 

    

 

 

 

Liabilities and Stockholders’ Equity

     

Current liabilities:

     

Accounts payable

   $ 1,395      $ 848  

Accrued liabilities

     24,810        22,784  

Deferred revenues, current

     199,732        192,172  

Operating lease liabilities, current

     9,161        7,663  
  

 

 

    

 

 

 

Total current liabilities

     235,098        223,467  

Deferred revenues, noncurrent

     19,070        20,935  

Operating lease liabilities, noncurrent

     45,050        44,015  

Other noncurrent liabilities

     23        388  
  

 

 

    

 

 

 

Total liabilities

     299,241        288,805  

Stockholders’ equity:

     

Common stock

     39        39  

Additional paid-in capital

     384,202        362,408  

Accumulated other comprehensive income

     2,435        1,162  

Retained earnings

     21,098        23,194  
  

 

 

    

 

 

 

Total stockholders’ equity

     407,774        386,803  
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 707,015      $ 675,608  
  

 

 

    

 

 

 


Qualys, Inc.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

(in thousands)

 

     Six Months Ended June 30,  
     2020     2019  

Cash flow from operating activities:

    

Net income

   $ 45,013     $ 29,498  

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization expense

     15,633       15,809  

Bad debt expense

     299       86  

Loss on disposal of property and equipment

     —         183  

Stock-based compensation

     19,441       16,780  

Accretion of discounts on marketable securities

     (21     (1,060

Deferred income taxes

     1,269       3,047  

Changes in operating assets and liabilities:

    

Accounts receivable

     1,797       12,555  

Prepaid expenses and other assets

     (6,725     (6,896

Accounts payable

     220       (1,189

Accrued liabilities

     (972     (85

Deferred revenues

     5,695       12,397  

Other noncurrent liabilities

     —         150  
  

 

 

   

 

 

 

Net cash provided by operating activities

     81,649       81,275  
  

 

 

   

 

 

 

Cash flow from investing activities:

    

Purchases of marketable securities

     (162,912     (184,829

Sales and maturities of marketable securities

     164,109       193,270  

Purchases of property and equipment

     (11,568     (14,138

Business combinations

     —         (1,850
  

 

 

   

 

 

 

Net cash used in investing activities

     (10,371     (7,547
  

 

 

   

 

 

 

Cash flow from financing activities:

    

Proceeds from exercise of stock options

     20,430       8,991  

Payments for taxes related to net share settlement of equity awards

     (11,115     (7,411

Principal payments under finance lease obligations

     (61     (836

Repurchase of common stock

     (54,182     (24,117
  

 

 

   

 

 

 

Net cash used in financing activities

     (44,928     (23,373
  

 

 

   

 

 

 

Net increase in cash, cash equivalents and restricted cash

     26,350       50,355  

Cash, cash equivalents and restricted cash at beginning of period

     88,759       42,226  
  

 

 

   

 

 

 

Cash, cash equivalents and restricted cash at end of period

   $ 115,109     $ 92,581  
  

 

 

   

 

 

 


Qualys, Inc.

RECONCILIATION OF NON-GAAP DISCLOSURES

ADJUSTED EBITDA

(Unaudited)

(in thousands)

 

     Three Months Ended June 30,     Six Months Ended June 30,  
     2020     2019     2019     2018  

Net income

   $ 26,319     $ 16,232     $ 45,013     $ 29,498  

Depreciation and amortization of property and equipment

     6,366       6,354       12,593       12,769  

Amortization of intangible assets

     1,520       1,520       3,040       3,040  

Provision for income taxes

     775       2,277       4,298       4,848  

Stock-based compensation

     9,444       8,335       19,441       16,780  

Other income, net

     (1,586     (2,401     (3,372     (4,187

Acquisition-related expenses (1) (2)(3)

     —         1,059       20       1,253  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 42,838     $ 33,376     $ 81,033     $ 64,001  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

For six months ended June 30, 2020, includes $0.02 million of compensation related to acquisitions in 2019 and 2018.

(2)

For three months ended June 30, 2019, includes $0.1 million, $0.9 million and $0.04 million of compensation related to acquisitions in 2019, 2018 and 2017, respectively.

(3)

For six months ended June 30, 2019, includes $0.5 million, $2.1 million and $0.1 million of compensation related to acquisitions in 2019, 2018 and 2017, respectively, offset by $1.4 million of reversals of previous obligations.


Qualys, Inc.

RECONCILIATION OF NON-GAAP DISCLOSURES

(Unaudited)

(in thousands, except per share data)

 

     Three Months Ended June 30,     Six Months Ended June 30,  
     2020     2019     2020     2019  

GAAP Cost of revenues

   $ 18,891     $ 17,537     $ 37,386     $ 35,246  

Less: Stock-based compensation

     (583     (552     (1,197     (1,097

Less: Acquisition-related expenses (1)

     —         (3     —         (3

Less: Amortization of intangible assets

     (1,495     (1,495     (2,990     (2,990
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Cost of revenues

   $ 16,813     $ 15,487     $ 33,199     $ 31,156  
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Gross profit

   $ 69,939     $ 61,392     $ 137,707     $ 119,026  

Plus: Stock-based compensation

     583       552       1,197       1,097  

Plus: Acquisition-related expenses (1)

     —         3       —         3  

Plus: Amortization of intangible assets

     1,495       1,495       2,990       2,990  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Gross Profit

   $ 72,017     $ 63,442     $ 141,894     $ 123,116  
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Research and development

   $ 18,058     $ 17,695     $ 36,041     $ 33,532  

Less: Stock-based compensation

     (3,253     (2,704     (6,690     (5,044

Less: Acquisition-related expenses (1)

     —         (1,052     (20     (1,246

Less: Amortization of intangible assets

     (25     (25     (50     (50
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Research and development

   $ 14,780     $ 13,914     $ 29,281     $ 27,192  
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Sales and marketing

   $ 15,783     $ 17,165     $ 34,013     $ 34,480  

Less: Stock-based compensation

     (1,513     (1,063     (3,073     (2,131

Less: Acquisition-related expenses (1)

     —         (4     —         (4
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Sales and marketing

   $ 14,270     $ 16,098     $ 30,940     $ 32,345  
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP General and administrative

   $ 10,590     $ 10,424     $ 21,714     $ 20,855  

Less: Stock-based compensation

     (4,095     (4,016     (8,481     (8,508
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP General and administrative

   $ 6,495     $ 6,408     $ 13,233     $ 12,347  
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Operating expenses

   $ 44,431     $ 45,284     $ 91,768     $ 88,867  

Less: Stock-based compensation

     (8,861     (7,783     (18,244     (15,683

Less: Acquisition-related expenses (1)

     —         (1,056     (20     (1,250

Less: Amortization of intangible assets

     (25     (25     (50     (50
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Operating expenses

   $ 35,545     $ 36,420     $ 73,454     $ 71,884  
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Income from operations

   $ 25,508     $ 16,108     $ 45,939     $ 30,159  

Plus: Stock-based compensation

     9,444       8,335       19,441       16,780  

Plus: Acquisition-related expenses (1)

     —         1,059       20       1,253  

Plus: Amortization of intangible assets

     1,520       1,520       3,040       3,040  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Income from operations

   $ 36,472     $ 27,022     $ 68,440     $ 51,232  
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Net income

   $ 26,319     $ 16,232     $ 45,013     $ 29,498  

Plus: Stock-based compensation

     9,444       8,335       19,441       16,780  

Plus: Acquisition-related expenses (1)

     —         1,059       20       1,253  

Plus: Amortization of intangible assets

     1,520       1,520       3,040       3,040  

Less: Tax adjustment

     (6,997     (4,205     (10,567     (7,349
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Net income

   $ 30,286     $ 22,941     $ 56,947     $ 43,222  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Net income per share:

        

Basic

   $ 0.77     $ 0.59     $ 1.46     $ 1.10  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.74     $ 0.55     $ 1.39     $ 1.04  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares used in non-GAAP Net income per share:

        

Basic

     39,161       39,198       39,137       39,143  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     40,919       41,530       40,928       41,570  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) 

Relates to compensation expense from the acquisition of Adya, Layered Insight, 1Mobility and NetWatcher.


Qualys, Inc.

RECONCILIATION OF NON-GAAP DISCLOSURES

FREE CASH FLOWS

(Unaudited)

(in thousands)

 

     Six Months Ended June 30,  
     2020     2019  

GAAP Cash flow provided by operating activities (1)

   $ 81,649     $ 81,275  

Less:

    

Purchases of property and equipment

     (11,568     (14,138

Principal payments under finance lease obligations

     (61     (836
  

 

 

   

 

 

 

Non-GAAP Free cash flows

   $ 70,020     $ 66,301  
  

 

 

   

 

 

 

 

(1)

Includes $0.6 million and $2.2 million of acquisition related expenses paid during the six months ended June 30, 2020 and 2019, respectively.


Qualys, Inc.

RECONCILIATION OF NON-GAAP DISCLOSURES

CALCULATED CURRENT BILLINGS

(Unaudited)

(in thousands)

 

     Three Months Ended June 30,  
     2020     2019  

GAAP Revenues

   $ 88,830     $ 78,929  

Plus: Current deferred revenue at June 30

     199,732       176,609  

Less: Current deferred revenue at March 31

     (201,861     (174,452
  

 

 

   

 

 

 

Non-GAAP Calculated current billings

   $ 86,701     $ 81,086  
  

 

 

   

 

 

 

Calculated current billings growth compared to same quarter of prior year

     7     13
v3.20.2
Document and Entity Information
Aug. 10, 2020
Cover [Abstract]  
Amendment Flag false
Entity Central Index Key 0001107843
Document Type 8-K
Document Period End Date Aug. 10, 2020
Entity Registrant Name Qualys, Inc.
Entity Incorporation State Country Code DE
Entity File Number 001-35662
Entity Tax Identification Number 77-0534145
Entity Address, Address Line One 919 East Hillsdale Boulevard
Entity Address, City or Town Foster City
Entity Address, State or Province CA
Entity Address, Postal Zip Code 94404
City Area Code (650)
Local Phone Number 801-6100
Written Communications false
Soliciting Material false
Pre Commencement Tender Offer false
Pre Commencement Issuer Tender Offer false
Security 12b Title Common stock, $0.001 par value per share
Trading Symbol QLYS
Security Exchange Name NASDAQ
Entity Emerging Growth Company false