Summary
Qualys ended fiscal 2021 with fourth-quarter revenue of $109.8 million, up 15.8% from the prior-year quarter. Full-year revenue reached $411.2 million, up 13.3%. The top line benefited from renewal and expansion activity, and management said VMDR customer penetration reached 36% in the quarter. The company also launched a free 30-day Log4Shell service, made Web Application Scanning available to detect related vulnerabilities, and introduced a Ransomware Risk Assessment Service. It integrated Infrastructure as Code into CloudView, partnered with TD SYNNEX, and added cloud platform deployments in Australia and the United Kingdom.
Gross profit for the quarter was $86.1 million, up 17.0%, while full-year gross profit was $321.7 million, up 13.4%. Fourth-quarter gross margin was 78.4%, up 0.8 percentage points from the prior-year quarter. Full-year gross margin was 78.2%, flat. Operating income for the quarter rose 19.0% to $29.0 million, and operating margin was 26.5%, up 0.7 percentage points. The full-year picture was weaker. Operating income fell 9.3% to $87.7 million, and operating margin dropped 5.3 percentage points to 21.3%. Net income for the quarter fell 8.4% to $21.8 million, while full-year net income fell 22.5% to $71.0 million. Full-year GAAP diluted EPS was $1.77, down 21.3%.
Cash generation remained positive but decelerated. Fourth-quarter operating cash flow rose 2.8% to $39.9 million, and full-year operating cash flow rose 11.4% to $200.6 million. Capital expenditures were $4.3 million in the quarter, down 40.6%, and $24.4 million for the full year, down 18.7%. Non-GAAP free cash flow for 2021 was $176.1 million. Calculated current billings for the fourth quarter were $130.1 million, up 20% from the same quarter of 2020. Deferred revenue at December 31, 2021 was $290.6 million, up 19.1% from a year earlier. Remaining performance obligations were $283.7 million, up 34.6%.
Non-GAAP results added color. Fourth-quarter non-GAAP net income was $33.8 million, and non-GAAP diluted EPS was $0.84. Full-year non-GAAP net income was $129.3 million, and non-GAAP diluted EPS was $3.22. Adjusted EBITDA was $49.6 million in the quarter, up 14%, and $191.2 million for the year, up 13%. Management's guidance is for the first quarter and full year 2022. For the first quarter, Qualys expects revenue of $112.5 million to $113.1 million, or 16% to 17% growth over the same quarter in 2021. Non-GAAP EPS guidance is $0.80 to $0.82. For the full year 2022, revenue guidance is $482.0 million to $485.0 million, or 17% to 18% growth over 2021. Non-GAAP EPS guidance is $2.87 to $2.92.
Risks stay familiar for a software company. Qualys cites COVID-19 and related public health measures, customer budgeting cycles, long sales cycles, competition, currency exchange rates, and possible tax rate changes. The MD&A also notes that general and administrative costs rose on higher stock-based compensation tied to the former CEO's resignation. Capital expenditure guidance for 2022 is $25.0 million to $30.0 million. The company had approximately $271.8 million remaining under its share repurchase authorization. Management expects financing cash use to be higher in 2022 because of more share repurchases and lower stock option exercise proceeds after the former CEO's resignation.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2021 | Q3 FY2021 | QoQ | Q4 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $109.8M | $104.9M | +4.6% | $94.8M | +15.8% |
| Gross profit | $86.1M | $82.5M | +4.4% | $73.6M | +17.0% |
| Gross margin | 78.4% | 78.6% | -0.2 pp | 77.6% | +0.8 pp |
| Research & development | $22.4M | $21.3M | +5.0% | $18.6M | +20.1% |
| Sales & marketing | $22.2M | $18.6M | +19.3% | $17.9M | +23.8% |
| General & administrative | $12.4M | $10.6M | +17.7% | $12.6M | -1.5% |
| Total operating expenses | $57.0M | $50.5M | +12.9% | $49.2M | +15.9% |
| Operating income (loss) | $29.0M | $32.0M | -9.2% | $24.4M | +19.0% |
| Operating margin | 26.5% | 30.5% | -4.0 pp | 25.8% | +0.7 pp |
| Net income (loss) | $21.8M | $27.8M | -21.4% | $23.8M | -8.4% |
| Net margin | 19.9% | 26.5% | -6.6 pp | 25.1% | -5.2 pp |
| Diluted EPS | $0.54 | $0.70 | -$0.16 | $0.58 | -$0.04 |
| Customers | 10,000 | — | — | 19,000 | -47.4% |
Risks
The filing highlights a senior management transition: the former CEO resigned for health reasons in March 2021 and the current CEO was appointed in April 2021. MD&A reports FY2021 general and administrative expenses rose 64% primarily from $28.7 million of stock-based compensation tied to accelerated vesting for the former CEO, and expects financing outflows to be higher in 2022 partly from lower stock option exercises after his resignation.
The company disclosed a December 2020 incident where a service provider, Accellion, notified it of a zero-day vulnerability on an FTA server used for customer support information transfers. Attackers illegally obtained certain information, affected customers were notified, and the company incurred response costs and may continue to incur costs to enhance security measures.
Risk Factors lead with COVID-19 and economic weakness, warning that the pandemic has significantly increased economic and demand uncertainty and could cause an economic slowdown or global recession that decreases demand for the company's solutions. MD&A states the company has not incurred significant disruptions but cannot accurately predict the full impact due to vaccine, variant, customer, and partner uncertainties.
Risk Factors emphasize intense competition from larger vendors such as Broadcom, CrowdStrike, Palo Alto Networks, Rapid7, and Tenable, as well as private security providers. Larger competitors can bundle competing products and services, increasing pricing pressure and potentially causing the average sales price for the company's solutions to decline.
The sales cycle for subscriptions typically ranges from six to twelve months but can be more than eighteen months, especially for large transactions. Long testing, evaluation, contract negotiation, and budgeting processes make revenues difficult to forecast and can cause operating results to fluctuate.
For FY2021, approximately 41% of revenues were derived from sales through channel partners, and partner agreements are generally non-exclusive and do not prohibit partners from working with competitors. The loss of one or more larger channel partners could adversely affect sales and growth prospects.
As of December 31, 2021, approximately 75% of employees were located outside the United States, with 67% in Pune, India, exposing the company to foreign labor, regulatory, tax, and geopolitical risks. For FY2021, approximately 28% of expenses and 23% of revenues were generated in foreign currencies, primarily Euros, British Pounds, and Indian Rupees.
Privacy and data protection laws such as GDPR, CCPA, CPRA, and evolving cross-border transfer rules including Schrems II and new SCCs impose increasing compliance costs and potential fines of up to 4% of prior-year annual revenue or EUR 20 million. These regimes may require changes to data processing practices and inhibit adoption of the company's solutions.
The income tax provision increased 76% to $18.4 million in FY2021 from $10.5 million in FY2020, due to reduced excess tax benefits from stock-based compensation and higher income after permanent tax adjustments related to the former CEO's accelerated stock-based compensation. Changes in tax laws, audits, or stock-based compensation tax effects could adversely affect operating results.
Revenues grew from $321.6 million in 2019 to $411.2 million in 2021, and headcount increased from 1,194 employees at the beginning of 2019 to 1,823 employees as of December 31, 2021. Failure to improve systems and processes or integrate and train new employees could result in inability to manage growth and accurately forecast revenues, expenses, and earnings.
The company acquired Adya in January 2019, certain intellectual property of Spell Security in July 2020, and certain intellectual property of TotalCloud in August 2021. Integration is complex, expensive, and time-consuming, may divert management attention, and may fail to achieve anticipated benefits.
On November 3, 2021, the board authorized an additional $200.0 million for the share repurchase program, bringing aggregate authorization to $700.0 million, with approximately $271.8 million remaining as of December 31, 2021. Repurchases could affect the stock price, increase volatility, and diminish cash reserves, and the program may be suspended or terminated at any time.
SaaS KPIs
All quarters →Calculated Current Billings
Adjusted EBITDA
Non-GAAP Gross Margin
Total Subscription Customers
Non-GAAP Operating Income (% of revenues)
Summary, forecast, risks and KPIs are extracted from QUALYS, INC.'s SEC filings for Q4 FY2021 (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.