Qualys (NASDAQ:QLYS) Q4: Revenue in line with expectations, but stock falls on weak full-year outlook
Cloud security and compliance software provider Qualys (NASDAQ reported results in line with analyst expectations in the fourth quarter of fiscal 2023, with revenue increasing 10.5% year-over-year to $144.6 million. The company expects next quarter revenue to be around $145.5 million, in line with analyst estimates. It posted non-GAAP earnings of $1.40 per share, improving its profit of $1.01. per share in the same quarter last year.
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Qualys (QLYS) Q4 FY2023 Highlights:
- Revenue: $144.6 million vs. analyst estimates of $144.6 million (small error)
- EPS (non-GAAP): $1.40 vs. analyst estimates of $1.24 (12.5% beat)
- Revenue guidance for the first quarter of 2024 is $145.5 million at the midpoint, roughly in line with what analysts expected
- management income guidance for the next financier year 2024 is $605 million at the midpoint, missing analyst estimates by 2% and implying growth of 9.1% (up from 13.3% in fiscal 2023).
- Free cash flow of $32.32 million, 64.3% less than the previous quarter
- Gross Margin (GAAP): 81.2%, compared to 78.8% in the same quarter last year
- Market capitalization: 6.5 billion dollars
“In 2023, we continue to execute on our strategic vision of helping organizations consolidate security tools into a natively integrated platform to measure, communicate and eliminate cyber risk,” said Sumedh Thakar, president and CEO of Qualys.
Founded in 1999 as one of the first subscription security companies, Qualys (NASDAQ:QLYS) provides organizations with software to assess their exposure to cyberattacks.
Vulnerability Management Demand for cybersecurity is growing as more companies move their data and processes to the cloud, which, along with a significant increase in employees working remotely, has increased their exposure to attacks and malware. Additionally, the growing variety of corporate IT systems, applications and devices connected to the Internet has increased the complexity of network security, all of which has substantially increased demand for software aimed at protecting data breaches.
Sales Growth As you can see below, Qualys' revenue growth has been lackluster over the past two years, going from $109.8 million in the fourth quarter of fiscal 2021 to $144.6 million this year. quarter.
Although Qualys missed analysts' revenue estimates, its quarterly revenue growth was still 10.5% year-over-year. However, its growth slowed compared to the last quarter, as the company's revenue increased only $2.57 million in the fourth quarter compared to $4.79 million in the third quarter of 2023. While we would like to see revenue increase by a larger amount each quarter, a fluctuation is usually not concerning.
Next quarter guidance suggests Qualys expects revenue to grow 11.3% year-over-year to $145.5 million, slowing the 15.2% year-over-year increase it posted in the same quarter last year. For the next financial year, management expects revenue to be $605 million at the midpoint, a year-over-year growth of 9.1% compared to the 13.2% increase in fiscal 2023.
Cash is King If you've followed StockStory for a while, you know that we emphasize free cash flow. Why do you ask? We believe that in the end, cash is king and you can't use accounting profits to pay the bills. Qualys' free cash flow amounted to $32.32 million in the fourth quarter, down 20.9% year over year.
Qualys has generated $235.8 million in free cash flow over the trailing 12 months, a whopping 42.7% of revenue. This strong FCF margin is due to its asset-light business model, scale advantages and strong competitive positioning, giving it the option to return capital to shareholders or reinvest in its business while maintaining a healthy cash balance.
Key Takeaways from Qualys' Q4 Results We struggled to find many major positives in these results. Its full-year revenue guidance fell short of expectations and suggests a slowdown in demand. Overall, this was a mixed quarter for Qualys. The company is down 7.4% based on results and is currently trading at $163.99 per share.
