Summary
Qualys opened fiscal 2024 with revenue of $145.8 million in the first quarter, up 11.6% from a year earlier. GAAP operating income rose 27.2% to $44.8 million, and GAAP net income rose 36.5% to $39.7 million. GAAP diluted EPS was $1.05, up 36.4%. Gross margin came in at 81.3%, up 2.0 percentage points, and operating margin was 30.7%, up 3.8 percentage points. Revenue grew faster than most cost lines, which is the main reason the margin lines moved the way they did.
The quarter was also strong on cash. Operating cash flow was $85.5 million, up 28.0%. Capital expenditures of $2.1 million were 49.2% lower than the prior-year quarter. Non-GAAP free cash flow, which the company defines as cash provided by operating activities less purchases of property and equipment net of disposal proceeds, was $83.5 million, compared with $62.8 million a year earlier. Management reported non-GAAP net income of $54.7 million, or $1.45 per diluted share, against $1.09 a year earlier. Adjusted EBITDA rose 18% to $69.0 million and reached 47% of revenue, up from 45%.
Billings and backlog deserve a closer look. Deferred revenue was $332.1 million at March 31, 2024, up 12.0% from a year earlier, and remaining performance obligations were $376.8 million, up 29.0%. Calculated current billings, a non-GAAP measure that adds the sequential change in current deferred revenue to reported revenue, were $144.7 million, up 8% over the same quarter of 2023, while revenue itself grew faster. The net dollar expansion rate was 104% as of March 31, 2024, compared with 109% as of March 31, 2023.
Guidance for the second quarter of 2024 points to revenue growth of 8% to 9% over the same quarter in 2023. For the full year 2024, management expects revenue growth of 8% to 10% over 2023, within a narrower revenue range than the prior outlook. Full-year GAAP and non-GAAP earnings per share guidance ranges were both raised. The non-GAAP earnings per share outlook is $5.06 to $5.30, up from $4.95 to $5.27. Both full-year figures assume roughly 37.7 million weighted average diluted shares. The GAAP outlook assumes a 22% effective income tax rate and the non-GAAP outlook a 21% rate.
Product and partnership news included TotalCloud 2.0 with TruRisk Insights, which brings cloud infrastructure, SaaS applications and externally exposed assets into one risk view. Qualys extended its Oracle partnership so that VMDR and TotalCloud are natively integrated with Oracle Cloud Infrastructure and available on the Oracle Cloud Marketplace. Orange Cyberdefense expanded its relationship with Qualys, and CyberSecurity Asset Management added passive discovery through the Qualys Cloud Agent to detect unmanaged and untrusted devices. Revenue still leans heavily on the installed base. Of the quarter's revenue increase, 96% came from customers that existed before January 1, 2024, and 4% came from new customers added during the quarter.
The risks are mostly the familiar ones. Management points to macroeconomic uncertainty, including inflationary pressure, rising interest rates, financial institution failures, reduced spending, extended sales cycles and geopolitical conflicts, any of which could push customers to trim security budgets. Competition in cloud security and compliance stays intense, customer retention and new customer generation are not assured, and currency swings can move reported results. The effective tax rate can also shift, and valuation allowances remain in certain jurisdictions where the company wants more evidence of sustained profitability before releasing them. Capital return continued: Qualys repurchased $18.0 million of stock in the quarter, added $200.0 million to its board authorization, and had $265.7 million remaining available under the program as of March 31, 2024.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2024 | Q4 FY2023 | QoQ | Q1 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $145.8M | $144.6M | +0.9% | $130.7M | +11.6% |
| Gross profit | $118.6M | $117.4M | +1.0% | $103.7M | +14.3% |
| Gross margin | 81.3% | 81.2% | +0.1 pp | 79.4% | +2.0 pp |
| Research & development | $27.5M | $27.5M | +0.2% | $27.8M | -1.0% |
| Sales & marketing | $29.4M | $31.9M | -7.9% | $25.6M | +14.7% |
| General & administrative | $16.9M | $16.6M | +2.1% | $15.1M | +11.8% |
| Total operating expenses | $73.8M | $76.0M | -2.8% | $68.6M | +7.7% |
| Operating income (loss) | $44.8M | $41.5M | +7.9% | $35.2M | +27.2% |
| Operating margin | 30.7% | 28.7% | +2.0 pp | 26.9% | +3.8 pp |
| Net income (loss) | $39.7M | $40.6M | -2.1% | $29.1M | +36.5% |
| Net margin | 27.3% | 28.1% | -0.8 pp | 22.3% | +5.0 pp |
| Diluted EPS | $1.05 | $1.08 | -$0.03 | $0.77 | +$0.28 |
Risks
MD&A highlights uncertainty from inflationary pressure, rising interest rates, financial institution failures, reduced spending and extended sales cycles. Risk Factors state these factors have been experienced in 2023 and into 2024 and could reduce IT security spending.
Customers have no obligation to renew one-year subscriptions. Net dollar expansion rate was 104% as of March 31, 2024 and 109% as of March 31, 2023, so failure to renew or upsell could slow or reduce revenue.
As a security provider, Qualys may be targeted for cyberattacks, and it states that it and its service providers have experienced and may continue to experience security incidents. Nation-state actors linked to geopolitical conflicts increase the risk of breaches that could harm reputation and customer trust.
Qualys has incorporated AI/machine learning into its solutions and expects it to drive future growth, but competitors may incorporate AI more quickly or successfully. Evolving legal and regulatory obligations around AI could require significant changes or limit its use.
Qualys faces competition from Broadcom, CrowdStrike, Palo Alto Networks, Rapid7, Tenable and private vendors such as Axonius, Checkmarx, Flexera, Invicti, Ivanti, Tanium, Tripwire, Trustwave, Veracode and Wiz. Larger competitors can bundle products and increase pricing pressure, potentially reducing average sales prices.
The sales cycle for Qualys solutions typically ranges from six to twelve months but can be more than eighteen months. Lengthy and unpredictable sales cycles, particularly for large transactions and in the current macroeconomic environment, make revenues vary and forecasting difficult.
For the three months ended March 31, 2024, approximately 45% of revenues were derived from sales through channel partners. Channel agreements are generally non-exclusive, and partners may favor competitors or be lost with limited notice, which could harm sales.
As of March 31, 2024, approximately 75% of employees were located outside the United States, with 66% in Pune, India. This exposes Qualys to foreign labor laws, geopolitical tensions including India-China tensions, and currency risk, with approximately 24% of revenues and 26% of expenses in foreign currencies for the three months ended March 31, 2024.
Qualys hosts substantially all solutions from third-party shared cloud platforms, and states that some shared cloud platforms are not currently redundant. A disruption or inability to rapidly move customers could interrupt service delivery and reduce revenues.
Privacy and data protection laws such as GDPR, CCPA, CPRA and other state laws remain uncertain and may require changes to data practices or increase compliance costs. GDPR fines can be up to four percent of the previous year's annual revenue or EUR 20 million, whichever is higher.
Growth depends on recruiting and retaining qualified sales personnel, and competition for highly skilled personnel is frequently intense. Sales and marketing expenses increased by $3.8 million, or 15%, for the three months ended March 31, 2024 compared to the same period in 2023, partly due to increased headcount.
The OECD Pillar Two directive applies for tax years beginning January 2024 and generally provides for a minimum effective tax rate of 15% on income in each jurisdiction where Qualys operates. Qualys does not anticipate an impact on current year results, but future impact is uncertain.
SaaS KPIs
All quarters →Calculated Current Billings
Adjusted EBITDA
Non-GAAP Gross Margin
Non-GAAP Operating Income
Adjusted EBITDA as a Percentage of Revenues
Total Subscription Customers
Non-GAAP Free Cash Flow
Summary, forecast, risks and KPIs are extracted from QUALYS, INC.'s SEC filings for Q1 FY2024 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.