Summary
Qualys closed fiscal 2022 with fourth-quarter revenue of $130.8 million, up 19.2% from the same quarter a year earlier. Full-year revenue was $489.7 million, up 19.1%. GAAP net income for the fourth quarter was $28.3 million, up 29.8%, and full-year GAAP net income was $108.0 million, up 52.2%. Full-year GAAP diluted EPS of $2.74 rose 54.8%. Management pointed to continued innovation during the year, including new applications and upgrades to existing ones, as the driver behind the growth.
Profitability was mixed at the margin line. Fourth-quarter gross profit was $103.1 million, up 19.8%, and GAAP gross margin was 78.8%, up 0.4 percentage points. Full-year gross profit of $386.9 million rose 20.3%, and full-year GAAP gross margin was 79.0%, up 0.8 percentage points. Operating income for the quarter was $30.7 million, up 5.6%, but GAAP operating margin slipped to 23.4%, down 3.0 percentage points, as operating expenses grew faster than revenue. For the full year, operating income was $130.5 million, up 48.9%, and GAAP operating margin was 26.7%, up 5.3 percentage points.
Cash generation held up. Fourth-quarter operating cash flow was $43.8 million, up 10.0%. Full-year operating cash flow was $198.9 million, down 0.9%. Capital expenditures were $2.97 million in the quarter, down 31.5%, and $15.4 million for the year, down 37.1%. Free cash flow, a non-GAAP measure, was $183.5 million for the year compared with $176.1 million in 2021.
Backlog and billings deserve attention. Deferred revenue ended 2022 at $317.2 million, up 9.2%, while remaining performance obligations were $272.1 million, down 4.1%. Calculated current billings of $145.6 million grew 12% over the prior-year quarter, slower than the 20% increase reported in the same quarter a year earlier. The net dollar expansion rate for the year was 109%.
Guidance points to slower growth. For the first quarter of 2023, management expects revenue of $130.2 million to $131.0 million, or 15% to 16% growth, with GAAP EPS of $0.59 to $0.61. For the full 2023 fiscal year, revenue is guided to $553 million to $557 million, or 13% to 14% growth, with GAAP EPS of $2.54 to $2.62 and non-GAAP EPS of $4.10 to $4.18. The company also raised its share repurchase authorization by $100.0 million, bringing the total authorized amount to $1.0 billion, and reported $154.5 million still available under the program as of December 31, 2022. Planned 2023 capital expenditures are $18.0 million to $25.0 million.
The quarter's product news included TotalCloud with FlexScan, the formation of the Qualys Threat Research Unit, and the acquisition of Blue Hexagon to add artificial intelligence and machine learning to the platform. The company named a list of risks that could weigh on future results, including macroeconomic uncertainty, inflationary pressure, rising interest rates, currency fluctuations, competition, and the chance that customers reduce spending on IT security. The RPO decline and the billings deceleration sit alongside guidance for slower growth in 2023.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2022 | Q3 FY2022 | QoQ | Q4 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $130.8M | $125.6M | +4.2% | $109.8M | +19.2% |
| Gross profit | $103.1M | $99.6M | +3.5% | $86.1M | +19.8% |
| Gross margin | 78.8% | 79.3% | -0.5 pp | 78.4% | +0.4 pp |
| Research & development | $27.8M | $25.5M | +9.2% | $22.4M | +24.2% |
| Sales & marketing | $28.3M | $25.0M | +13.0% | $22.2M | +27.7% |
| General & administrative | $16.3M | $15.7M | +3.9% | $12.4M | +31.1% |
| Total operating expenses | $72.4M | $66.2M | +9.4% | $57.0M | +27.1% |
| Operating income (loss) | $30.7M | $33.3M | -8.0% | $29.0M | +5.6% |
| Operating margin | 23.4% | 26.6% | -3.1 pp | 26.5% | -3.0 pp |
| Net income (loss) | $28.3M | $27.7M | +2.4% | $21.8M | +29.8% |
| Net margin | 21.6% | 22.0% | -0.4 pp | 19.9% | +1.8 pp |
| Diluted EPS | $0.72 | $0.71 | +$0.01 | $0.54 | +$0.18 |
| Customers | 10,000 | — | — | 10,000 | ±0.0% |
Risks
MD&A states macroeconomic uncertainty from COVID-19, supply chain constraints, inflationary pressure, rising interest rates, labor shortages, and geopolitical conflicts have had and could continue to have a material adverse effect as customers may reduce or eliminate IT security spending.
Qualys disclosed a December 2020 Accellion FTA zero-day incident in which attackers illegally obtained certain information, and it may continue to incur costs to enhance security measures. It also cites heightened cyber risk from nation-state actors due to Russia's invasion of Ukraine.
The sales cycle typically ranges from six to twelve months and can exceed eighteen months, making timing of large deals unpredictable. Remaining performance obligations decreased 4.1% in FY2022 Q4 versus FY2021 Q4 to $272.1 million even as deferred revenue rose 9.2% to $317.2 million.
Qualys faces competition from larger vendors such as Broadcom, CrowdStrike, Palo Alto Networks, Rapid7, and Tenable that have greater resources and may bundle competing products at lower prices, increasing pricing pressure on Qualys solutions.
For the year ended December 31, 2022, approximately 42% of revenues were derived through channel partners compared with 41% in 2021. Channel agreements are generally non-exclusive, and the loss of one or more larger partners could adversely affect sales.
Qualys announced that its Chief Revenue Officer mutually agreed to end employment on March 31, 2023. It maintains no key-man insurance for senior management, and competition for highly skilled personnel in its industry is intense.
As of December 31, 2022, approximately 75% of employees were outside the United States, with 66% located in Pune, India. For 2022, approximately 29% of expenses and 24% of revenues were in foreign currencies, exposing results to currency fluctuations and geopolitical tensions including India-China.
The tax law change requiring mandatory capitalization and amortization of research and development expenses effective January 1, 2022 increased 2022 net cash taxes paid by approximately $20.0 million versus 2021. FY2022 year to date operating cash flow was down 0.9% versus FY2021 year to date despite net income up 52.2%.
Qualys hosts substantially all solutions from 11 third-party shared cloud platforms, some of which are not currently redundant. A natural disaster, cyberattack, or failure to renew a provider agreement could interrupt service delivery and reduce revenues.
Privacy rules such as GDPR and CCPA/CPRA impose compliance costs, with GDPR fines up to 4% of prior year annual revenue or EUR20 million. Cross-border data transfer uncertainty after Schrems II could increase costs or limit European sales.
SaaS KPIs
All quarters →Calculated Current Billings
Non-GAAP Gross Margin
Subscription Customers
Adjusted EBITDA Margin
Calculated Current Billings Growth (YoY)
Summary, forecast, risks and KPIs are extracted from QUALYS, INC.'s SEC filings for Q4 FY2022 (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.