Summary
Qualys closed fiscal 2023 with fourth quarter revenue of $144.6 million, up 10.5% from a year earlier. Full year revenue reached $554.5 million, up 13.2%. Profitability grew faster than the top line. GAAP gross profit for the quarter was $117.4 million, up 13.9%, and gross margin was 81.2%, up 2.4 percentage points. GAAP operating income climbed 35.2% to $41.5 million, and operating margin was 28.7%, up 5.2 percentage points. Part of that margin lift came from a $6.7 million decline in depreciation and amortization expense as older assets finished depreciating.
GAAP net income was $40.6 million in the quarter, up 43.3%. Full year net income was $151.6 million, up 40.4%, and diluted EPS was $4.03, up 47.1%. Non-GAAP net income for the quarter was $52.8 million, or $1.40 per diluted share. Cash generation was uneven. Fourth quarter operating cash flow fell 22.8% to $33.8 million even though net income rose, while full year operating cash flow climbed 23.0% to $244.6 million. Capital expenditures were $1.52 million in the quarter, down 48.7%, and $8.79 million for the year, down 42.8%. Non-GAAP free cash flow for the year was $235.8 million, defined as cash provided by operating activities less purchases of property and equipment.
Recurring revenue indicators looked healthy. Deferred revenue at December 31, 2023 was $364.9 million, up 15.0% from a year earlier, and that balance represents subscription amounts billed but not yet recognized. Remaining performance obligations were $374.4 million, up 37.6%. Calculated current billings grew 17% to $170.7 million, while reported revenue grew 10.5% in the quarter. Adjusted EBITDA was $65.8 million for the quarter, up 20%. The net dollar expansion rate was 105% in 2023, down from 109% in 2022, a sign that existing customers are expanding at a slower pace than a year ago. More than 10,000 subscription customers use the platform. Growth was broad based: 80% of the full year revenue increase came from customers that existed at or before December 31, 2022, and 20% came from new customers added in 2023.
Guidance points to slower growth in 2024. For the first quarter, management expects revenue of $144.5 million to $146.5 million, growth of 11% to 12% over the same quarter in 2023. Full year 2024 revenue guidance is $600.0 million to $610.0 million, growth of 8% to 10% over 2023. Non-GAAP net income per diluted share is guided to $1.27 to $1.35 for the first quarter and $4.95 to $5.27 for the full year. The outlook assumes an effective income tax rate of 22% on a GAAP basis and 21% on a non-GAAP basis, along with roughly 37.9 million weighted average diluted shares. Qualys did not reconcile the non-GAAP EPS guidance to GAAP EPS guidance, citing uncertainty around stock-based compensation and amortization. Management also expects 2024 capital expenditures of $15.0 million to $20.0 million.
Capital allocation remains a big part of the story. On February 7, 2024, the board authorized an additional $200.0 million for share repurchases, lifting the total program to $1.2 billion, with about $83.7 million still available at the end of 2023. Product work during the year included the Enterprise TruRisk Management platform, an organically integrated TotalCloud CNAPP offering, and a FedRAMP Ready GovCloud environment. An IDC study cited in the release pegged customer benefits at $5.1 million per year with a three-year ROI of 403%. Fixed operating lease obligations were $31.1 million, with $13.1 million due within the next 12 months, and other non-cancelable purchase obligations totaled $70.6 million. The risks are the familiar ones for a security vendor: macroeconomic uncertainty, extended sales cycles, competition, currency swings, and tax rate volatility tied to changes in U.S. rules on foreign tax credits and research and development capitalization.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2023 | Q3 FY2023 | QoQ | Q4 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $144.6M | $142.0M | +1.8% | $130.8M | +10.5% |
| Gross profit | $117.4M | $115.3M | +1.9% | $103.1M | +13.9% |
| Gross margin | 81.2% | 81.2% | +0.1 pp | 78.8% | +2.4 pp |
| Research & development | $27.5M | $27.8M | -1.1% | $27.8M | -1.2% |
| Sales & marketing | $31.9M | $27.9M | +14.6% | $28.3M | +12.9% |
| General & administrative | $16.6M | $16.0M | +3.5% | $16.3M | +1.5% |
| Total operating expenses | $76.0M | $71.7M | +6.0% | $72.4M | +4.9% |
| Operating income (loss) | $41.5M | $43.6M | -4.9% | $30.7M | +35.2% |
| Operating margin | 28.7% | 30.7% | -2.0 pp | 23.4% | +5.2 pp |
| Net income (loss) | $40.6M | $46.5M | -12.7% | $28.3M | +43.3% |
| Net margin | 28.1% | 32.8% | -4.7 pp | 21.6% | +6.4 pp |
| Diluted EPS | $1.08 | $1.24 | -$0.16 | $0.72 | +$0.36 |
| Customers | 10,000 | — | — | 10,000 | ±0.0% |
Risks
Risk factors state that economic weakness, customer financial difficulties, supply chain constraints, interest rate changes, inflationary pressures, and potential recession, as well as longer sales cycles experienced in 2023, have resulted and may result in decreased revenue and earnings.
The sales cycle for subscriptions typically ranges from six to twelve months but can be more than eighteen months, and the macroeconomic environment has prolonged it; timing of large transactions is difficult to forecast, causing revenues to vary by period.
Risk factors name Broadcom, CrowdStrike, Palo Alto Networks, Rapid7, Tenable Holdings and others as competitors with greater resources and broader suites that can bundle competing products or offer lower prices, increasing pricing pressure on Qualys solutions.
For the years ended December 31, 2023, 2022 and 2021, approximately 43%, 42% and 41% of revenues came through channel partners; agreements are generally non-exclusive, and the loss of one or more larger partners could adversely affect sales.
As a provider of IT security solutions, Qualys may be targeted for cyberattacks; it and its service providers have experienced security incidents, and geopolitical conflicts in Eastern Europe and the Middle East heighten nation-state cyber incident risk that could disrupt systems and harm reputation.
Qualys has incorporated AI/machine learning into its solutions and expects to rely on it for future growth, but competitors may incorporate AI more quickly or successfully; evolving AI laws and ethical issues could require significant changes or expose the company to claims and reputational harm.
Substantially all solutions are hosted from 14 third-party shared cloud platforms, and some platforms are not currently redundant; disruptions, provider renewal failures, or inability to rapidly move customers could interrupt service and reduce revenues.
As of December 31, 2023, approximately 75% of employees were located outside the United States, with 66% in Pune, India; this exposes Qualys to foreign labor, tax, privacy, political instability including India-China tensions, and currency risks.
The net dollar expansion rate was 105% for the year ended December 31, 2023 and 109% for 2022; if customers do not renew, renew on less favorable terms, or buy additional subscriptions, revenue growth may slow or decline and operating results would be harmed.
Evolving privacy and data protection laws such as GDPR, CCPA/CPRA, UK GDPR, and cross-border transfer frameworks can impose fines up to four percent of prior year annual revenue or 20 million euros and may require changes to data practices or limit transfers.
Tax rules including the OECD Pillar Two minimum 15% effective tax rate beginning in January 2024 and the U.S. BEAT could impact future financial results, and tax audits or changes in tax laws could materially change the tax provision.
Growth depends on recruiting and retaining qualified sales personnel and key employees, and competition for highly skilled personnel is intense; failure to expand the sales force or retain senior management could harm sales and execution.
SaaS KPIs
All quarters →Calculated Current Billings
Adjusted EBITDA
Non-GAAP Operating Income
Calculated Current Billings Growth
Adjusted EBITDA Margin
Total Subscription Customers
Summary, forecast, risks and KPIs are extracted from QUALYS, INC.'s SEC filings for Q4 FY2023 (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.