Summary
Qualys closed the second quarter of fiscal 2024 with revenue of $148.7 million, up 8.4% from the prior-year quarter. Gross profit rose 10.6% to $122.3 million, and gross margin of 82.2% improved 1.7 percentage points from a year earlier. Operating income of $48.1 million was up 12.2%, with an operating margin of 32.3%, up 1.1 percentage points. Net income of $43.8 million was up 23.7%, and diluted EPS of $1.17 rose $0.22.
On a six-month basis, revenue of $294.5 million was up 9.9% and net income of $83.5 million was up 29.5%. Diluted EPS for the year to date was $2.22, up $0.50. Operating cash flow in the quarter was $49.8 million, down 3.3% from the prior-year quarter, while the year-to-date figure of $135.3 million was up 14.4%. Capital expenditures of $1.03 million in the quarter fell 27.6%. Non-GAAP free cash flow for the six months, defined as operating cash flow less purchases of property and equipment, was $132.3 million, compared with $112.9 million a year earlier.
The forward-looking indicators are less reassuring than the income statement. Current deferred revenue of $324.3 million was up 7.2% from a year earlier, and remaining performance obligations of $364.9 million were up 13.7%. Calculated current billings of $140.9 million, however, declined 2% versus the prior-year quarter, when billings grew 11%. The net dollar expansion rate slipped to 102% as of June 30, 2024 from 108% as of June 30, 2023. That is still expansion, but the upsell engine has slowed, and management notes it does not run the business on quarterly billings.
Non-GAAP results told a similar story. Non-GAAP net income was $56.9 million, or $1.52 per diluted share, and Adjusted EBITDA of $69.9 million was up 6%, equal to 47% of revenue, down from 48% a year earlier. Sales and marketing was the heaviest line item, rising 23% to $32.1 million on higher headcount, trade show spending and travel. Research and development fell 1%, and cost of revenues fell 1%. Stock-based compensation totalled $17.1 million in the quarter, and it sits behind most of the GAAP-to-non-GAAP gap.
Product activity centered on the Enterprise TruRisk Platform. Management rolled out a global MSSP portal, shipped CyberSecurity Asset Management 3.0 with external attack surface management enhancements, and introduced a containerized scanner appliance for Docker environments. File Integrity Monitoring was extended to network devices to support PCI DSS 4.0 compliance. Qualys VMDR was named best vulnerability management solution at the SC Awards Europe, and the company pushed deeper into federal zero-trust work aligned with FISMA guidelines, hosting more than 200 attendees at its first Public Sector Cyber Risk Conference in Washington, D.C.
Guidance points to a slower top line. For the third quarter of 2024, management guided revenues to a range representing 5% to 7% growth over the same quarter in 2023, with non-GAAP net income per diluted share of $1.28 to $1.36 and a non-GAAP effective income tax rate of 21%. For the full fiscal year 2024, the revenue outlook was trimmed from the previous range and now represents 8% growth over 2023. Non-GAAP net income per diluted share guidance for the full fiscal year was raised to $5.46 to $5.62 from $5.06 to $5.30. The GAAP guidance for the year assumes an effective income tax rate of 21%, so the improved profit outlook leans on tax and cost assumptions rather than on a stronger demand picture.
Risks sit mostly on the demand side. Management cites macroeconomic uncertainty, inflationary pressure, rising interest rates, reduced spending and extended sales cycles as pressures that could cut into customer budgets. Competition in cloud security, currency swings and the tax rate assumptions embedded in guidance are the other obvious variables. Qualys ended the quarter with $555.3 million in cash, cash equivalents and marketable securities, and $230.7 million remained available under its share repurchase authorization.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2024 | Q1 FY2024 | QoQ | Q2 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $148.7M | $145.8M | +2.0% | $137.2M | +8.4% |
| Gross profit | $122.3M | $118.6M | +3.1% | $110.5M | +10.6% |
| Gross margin | 82.2% | 81.3% | +0.9 pp | 80.6% | +1.7 pp |
| Research & development | $27.1M | $27.5M | -1.5% | $27.4M | -1.1% |
| Sales & marketing | $32.1M | $29.4M | +9.3% | $26.2M | +22.5% |
| General & administrative | $15.0M | $16.9M | -11.5% | $14.1M | +6.4% |
| Total operating expenses | $74.2M | $73.8M | +0.5% | $67.7M | +9.6% |
| Operating income (loss) | $48.1M | $44.8M | +7.4% | $42.8M | +12.2% |
| Operating margin | 32.3% | 30.7% | +1.6 pp | 31.2% | +1.1 pp |
| Net income (loss) | $43.8M | $39.7M | +10.2% | $35.4M | +23.7% |
| Net margin | 29.4% | 27.3% | +2.2 pp | 25.8% | +3.6 pp |
| Diluted EPS | $1.17 | $1.05 | +$0.12 | $0.95 | +$0.22 |
Risks
MD&A states uncertainty surrounding macroeconomic factors, including inflationary pressure, rising interest rates, financial institution failures, reduced spending and extended sales cycles, could have a material adverse effect on our long-term business. The net dollar expansion rate was 102% as of June 30, 2024 and 108% as of June 30, 2023.
Qualys has incorporated AI/machine learning into its solutions and expects to rely on it for future growth, but it may fail to realize benefits or competitors may incorporate AI more quickly. Evolving legal, regulatory and ethical obligations around AI could require significant changes or expose it to claims and reputational harm.
The sales cycle is long and unpredictable, typically six to twelve months but can exceed eighteen months, and MD&A cites extended sales cycles in the current macroeconomic environment. This can cause revenues to vary and makes forecasting difficult.
For the six months ended June 30, 2024, approximately 46% of revenues came from sales through channel partners, and agreements are generally non-exclusive with no prohibition on partners working with competitors. Loss of one or more larger channel partners could adversely affect sales.
As of June 30, 2024, approximately 75% of employees were located outside the United States, with 67% in Pune, India, and for the six months ended June 30, 2024, approximately 24% of revenues and 28% of expenses were in foreign currencies. This exposes Qualys to geopolitical instability, foreign exchange fluctuations and regulatory costs.
Growth depends on recruiting and retaining qualified sales personnel, and recent or planned hires may not become as productive as quickly as desired. Sales and marketing expenses increased 23% for the quarter and 19% for the six months ended June 30, 2024, partly due to increased headcount.
Qualys faces competition from larger vendors such as Broadcom, CrowdStrike, Palo Alto Networks, Rapid7 and Tenable, as well as private providers, and some competitors can bundle competing products or offer lower prices. This could increase pricing pressure and reduce gross profits.
As a security provider, Qualys may be targeted for cyber-attacks, and it hosts solutions from 14 shared cloud platforms, some of which are not currently redundant. A breach or disruption could harm reputation, reduce revenues and subject it to liability.
SaaS KPIs
All quarters →Calculated Current Billings
Adjusted EBITDA
Non-GAAP Gross Margin
Non-GAAP Operating Income
Adjusted EBITDA Margin
Net Dollar Expansion Rate
Total Subscription Customers
Summary, forecast, risks and KPIs are extracted from QUALYS, INC.'s SEC filings for Q2 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.