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Qualys (QLYS - Free Report) posted mixed second-quarter 2024 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. However, both top and bottom lines marked a significant year-over-year improvement.
The company reported non-GAAP earnings of $1.52 per share, which beat the Zacks Consensus Estimate of $1.31. Qualys’ second-quarter non-GAAP earnings also came well ahead of its previous guidance of $1.27-$1.35 per share.
The bottom line increased 19.7% from the year-ago quarter’s earnings of $1.27 per share. The robust year-over-year growth was primarily driven by higher revenues, improved efficiency and increased financial income.
Qualys’ second-quarter revenues increased 8.4% year over year to $148.71 million but marginally missed the Zacks Consensus Estimate of $148.76 million. The year-over-year increase in the top line was achieved by leveraging the partner ecosystem, partially offset by a decline in billings due to customers transitioning from Qualys on Microsoft Defender to TotalCloud CNAPP.
During the second quarter, sales from channel partners increased 17%, outpacing the 2% sales growth registered in direct selling. Revenue contribution mix from channel partners was 46% in the second quarter, while direct selling accounted for the remaining 54%.
Geography-wise, sales in the United States grew 5% year over year and contributed approximately 58% to the second-quarter total revenues. Accounting for the remaining 42% of second-quarter total revenues, international sales increased 14%.
Qualys’ net dollar expansion rate on a constant currency basis for the second quarter was 102%.
QLYS’ non-GAAP gross profit increased 11% year over year to $124.9 million, while the non-GAAP gross margin expanded 200 basis points (bps) to 84% in the second quarter. Non-GAAP operating income grew 11% to $65.9 million, while the non-GAAP operating margin improved 100 bps to 44%, mainly driven by better cost management.
Adjusted EBITDA for the second quarter rose 6% to $69.9 million, while adjusted EBITDA margin contracted 100 bps to 47%.
Balance Sheet
Qualys ended the April-June quarter with cash and cash equivalents and marketable securities of $393.2 million.
During the second quarter, the company generated operating cash flow and free cash flow of $49.8 million and $48.8 million, respectively. In the first half of 2024, it generated operating cash flow and free cash flow of $135.3 million and $132.3 million, respectively.
Guidance
For the third quarter, Qualys expects revenues between $149.8 million and $151.8 million, indicating year-over-year growth of 5-7%. It projects non-GAAP earnings in the range of $1.28-$1.36 per share.
For 2024, QLYS expects revenues in the range of $597.5-$601.5 million, down from the previous guidance of $601.5-$608.5 million. The company projects its non-GAAP earnings per share in the range of $5.46-$5.62, up from the previous guidance of $5.06-$5.30.
Zacks Rank & Stocks to Consider
QLYS currently carries a Zacks Rank #3 (Hold). Shares of QLYS have plunged 30.1% year to date (YTD).
The consensus mark for Twilio’s 2024 earnings has been revised upward by 2 cents to $3.12 per share over the past 30 days, indicating a 27.4% increase from 2023. It has a long-term earnings growth expectation of 33%. The stock has plunged 22.4% YTD.
The Zacks Consensus Estimate for SHOP’s fiscal 2024 earnings has been revised upward by 11 cents to 99 cents per share in the past 90 days, suggesting year-over-year growth of 33.8%. The long-term estimated earnings growth rate for the stock is 28%. The stock has lost 30.7% YTD.
The Zacks Consensus Estimate for AppFolio’s 2024 earnings has been revised downward by 2 cents to $3.98 per share in the past 60 days, indicating an increase of 132.8% on a year-over-year basis. Shares of APPF have jumped 20.1% YTD.
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Qualys (QLYS) Q2 Earnings Beat Estimates, Revenues Rise Y/Y
Qualys (QLYS - Free Report) posted mixed second-quarter 2024 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. However, both top and bottom lines marked a significant year-over-year improvement.
The company reported non-GAAP earnings of $1.52 per share, which beat the Zacks Consensus Estimate of $1.31. Qualys’ second-quarter non-GAAP earnings also came well ahead of its previous guidance of $1.27-$1.35 per share.
The bottom line increased 19.7% from the year-ago quarter’s earnings of $1.27 per share. The robust year-over-year growth was primarily driven by higher revenues, improved efficiency and increased financial income.
Qualys’ second-quarter revenues increased 8.4% year over year to $148.71 million but marginally missed the Zacks Consensus Estimate of $148.76 million. The year-over-year increase in the top line was achieved by leveraging the partner ecosystem, partially offset by a decline in billings due to customers transitioning from Qualys on Microsoft Defender to TotalCloud CNAPP.
Qualys, Inc. Price, Consensus and EPS Surprise
Qualys, Inc. price-consensus-eps-surprise-chart | Qualys, Inc. Quote
Quarter in Detail
During the second quarter, sales from channel partners increased 17%, outpacing the 2% sales growth registered in direct selling. Revenue contribution mix from channel partners was 46% in the second quarter, while direct selling accounted for the remaining 54%.
Geography-wise, sales in the United States grew 5% year over year and contributed approximately 58% to the second-quarter total revenues. Accounting for the remaining 42% of second-quarter total revenues, international sales increased 14%.
Qualys’ net dollar expansion rate on a constant currency basis for the second quarter was 102%.
QLYS’ non-GAAP gross profit increased 11% year over year to $124.9 million, while the non-GAAP gross margin expanded 200 basis points (bps) to 84% in the second quarter. Non-GAAP operating income grew 11% to $65.9 million, while the non-GAAP operating margin improved 100 bps to 44%, mainly driven by better cost management.
Adjusted EBITDA for the second quarter rose 6% to $69.9 million, while adjusted EBITDA margin contracted 100 bps to 47%.
Balance Sheet
Qualys ended the April-June quarter with cash and cash equivalents and marketable securities of $393.2 million.
During the second quarter, the company generated operating cash flow and free cash flow of $49.8 million and $48.8 million, respectively. In the first half of 2024, it generated operating cash flow and free cash flow of $135.3 million and $132.3 million, respectively.
Guidance
For the third quarter, Qualys expects revenues between $149.8 million and $151.8 million, indicating year-over-year growth of 5-7%. It projects non-GAAP earnings in the range of $1.28-$1.36 per share.
For 2024, QLYS expects revenues in the range of $597.5-$601.5 million, down from the previous guidance of $601.5-$608.5 million. The company projects its non-GAAP earnings per share in the range of $5.46-$5.62, up from the previous guidance of $5.06-$5.30.
Zacks Rank & Stocks to Consider
QLYS currently carries a Zacks Rank #3 (Hold). Shares of QLYS have plunged 30.1% year to date (YTD).
Some better-ranked stocks in the broader technology sector are Twilio (TWLO - Free Report) , Shopify (SHOP - Free Report) and AppFolio (APPF - Free Report) . While Twilio sports a Zacks Rank #1 (Strong Buy), SHOP and APPF carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus mark for Twilio’s 2024 earnings has been revised upward by 2 cents to $3.12 per share over the past 30 days, indicating a 27.4% increase from 2023. It has a long-term earnings growth expectation of 33%. The stock has plunged 22.4% YTD.
The Zacks Consensus Estimate for SHOP’s fiscal 2024 earnings has been revised upward by 11 cents to 99 cents per share in the past 90 days, suggesting year-over-year growth of 33.8%. The long-term estimated earnings growth rate for the stock is 28%. The stock has lost 30.7% YTD.
The Zacks Consensus Estimate for AppFolio’s 2024 earnings has been revised downward by 2 cents to $3.98 per share in the past 60 days, indicating an increase of 132.8% on a year-over-year basis. Shares of APPF have jumped 20.1% YTD.