Business Overview
Qualys, Inc. (NASDAQ:QLYS) has been at the forefront of the cybersecurity industry since its inception in 1999, pioneering cloud-based solutions that help organizations identify, measure, and remediate IT security risks. With a strong track record of innovation and customer success, Qualys has solidified its position as a trusted provider of disruptive cloud-based IT, security, and compliance solutions.
Qualys was founded and incorporated in December 1999 with a vision to revolutionize the way organizations secure and protect their IT infrastructure and applications. The company initially launched its first cloud solution, Vulnerability Management (VM), in 2000, which gained widespread acceptance. Over the years, Qualys has steadily introduced additional solutions to help customers manage the increasing IT, security, and compliance requirements they face.
Today, Qualys offers an integrated suite of solutions, referred to as the Qualys Cloud Apps, that enable its customers to detect, measure, prioritize, and remediate cyber risk across a range of assets, including on-premises, endpoints, cloud, containers, and mobile environments. The company's cloud platform addresses the growing security and compliance complexities and risks amplified by the dissolving boundaries between IT infrastructures, web environments, the rapid adoption of cloud computing, containers, and serverless IT models, as well as the proliferation of geographically dispersed IT assets.
Qualys markets and sells its solutions to enterprises, government entities, and small and medium-sized businesses across a broad range of industries. The company employs both direct and indirect sales strategies, utilizing field and inside sales teams as well as a network of channel partners including managed security service providers, value-added resellers, and consulting firms. In 2024, 58% of the company's revenues were derived from customers in the United States.
Since its founding, Qualys has grown to serve over 10,000 customers worldwide, including a majority of the Forbes Global 100. The company has continuously invested in research and development to extend its cloud platform's functionality by developing new security solutions and capabilities and further enhancing its existing suite of solutions. In addition to organic growth, Qualys has explored strategic acquisitions to expand the functionality of its cloud platform, such as the acquisition of certain assets of Blue Hexagon Inc. in 2022 to leverage AI and machine learning technologies.
Financial Performance
Qualys has demonstrated consistent financial growth over the years, with revenues increasing from $489.72 million in 2022 to $554.46 million in 2023 and $607.57 million in 2024, representing a compound annual growth rate (CAGR) of 10.00%. The company's net income has also grown steadily, from $107.99 million in 2022 to $151.59 million in 2023 and $173.68 million in 2024.
The company's operating cash flow has been strong, reaching $244.09 million in 2024, while its free cash flow stood at $231.76 million, or 38.1% of revenue. Qualys' balance sheet remains healthy, with $575.30 million in cash, cash equivalents, and marketable securities as of December 31, 2024. The company's liquidity position is robust, with a current ratio and quick ratio of 1.37, and a low debt-to-equity ratio of 0.10.
In the most recent quarter (Q4 2024), Qualys reported revenue of $159.19 million, representing a 10% year-over-year growth, and net income of $43.97 million. The company attributed this growth to increased demand for its subscription services and expansion among both new and existing customers.
Looking ahead, Qualys has provided guidance for the full year 2025, projecting revenues in the range of $645 million to $657 million, representing a growth rate of 6% to 8%. For Q1 2025, the company expects revenues between $155.5 million and $158.5 million, a 7% to 9% growth rate. The company anticipates an EBITDA margin in the low 40s for 2025, implying an 18% to 20% increase in operating expenses, and a free cash flow margin in the low to mid-30s. Earnings per share (EPS) for 2025 are expected to be in the range of $5.50 to $5.90, with Q1 2025 EPS projected between $1.40 and $1.50.
Qualys plans capital expenditures in the range of $8 million to $13 million for 2025, with Q1 2025 expenditures expected to be between $2 million and $4 million. The company also anticipates a slight contraction in gross margin by approximately 1% in 2025 due to investments in its data centers.
Operational Highlights
Qualys has continued to innovate and enhance its cloud platform, introducing several new solutions and capabilities in recent years. In 2024, the company launched its Enterprise TruRisk (ETM) platform, which enables organizations to quantify and manage cyber risk in business terms, bridging the gap between IT security and business priorities.
The introduction of ETM has been a game-changer, as it allows CISOs to have a more meaningful dialogue with business leaders by articulating cyber risk in financial terms and its potential impact on the organization. This platform has been well-received by Qualys' customers, with the company reporting strong interest and a growing pipeline of prospects for its ETM solution.
Qualys has also made significant strides in strengthening its cloud security offerings, with the introduction of its Total Cloud Synapse solution. This comprehensive cloud-native application protection platform (CNAPP) provides customers with a unified view of their cloud security posture, helping them identify and remediate risks across multi-cloud environments.
Furthermore, the company has continued to enhance its cybersecurity asset management and patch management capabilities, addressing the increasing need for organizations to have a comprehensive understanding of their attack surface and the ability to effectively remediate vulnerabilities.
Product Portfolio
Qualys offers a comprehensive suite of solutions through its Qualys Enterprise TruRisk Platform, which includes:
1. Cybersecurity Asset Management (CSAM): An all-in-one solution for continuous inventory of known and unknown assets, discovery of installed applications, and assessment of asset criticality and attack surface health.
2. Vulnerability and Configuration Management: The Vulnerability Management, Detection and Response (VMDR) solution automates the entire vulnerability management lifecycle.
3. Web Application Security: Web Application Scanning (WAS) solution for continuous discovery and vulnerability detection in web apps and APIs.
4. Risk Remediation: Patch Management (PM) and Custom Assessment and Remediation (CAR) solutions for automated patch deployment and custom threat response.
5. Threat Detection and Response: Multi-Vector Endpoint Detection and Response (EDR) for comprehensive visibility across the attack chain.
6. Compliance: Policy Compliance (PC) and File Integrity Monitoring (FIM) solutions for automated security configuration assessments and change control monitoring.
7. Cloud Security: TotalCloud solution, a Cloud-Native Application Protection Platform (CNAPP) for multi-cloud environments.
Competitive Landscape and Risks
Qualys operates in a highly competitive and rapidly evolving cybersecurity market, facing competition from a diverse array of vendors, including large public companies such as CrowdStrike, Palo Alto Networks, Rapid7, and Tenable Holdings, as well as privately held security providers like Invicti, Tanium, and Wiz.
The company's success is largely dependent on its ability to continue innovating and providing solutions that address the changing security and compliance needs of its customers. Failure to anticipate market trends or develop new solutions that meet customer demands could adversely impact Qualys' competitive position and financial performance.
Additionally, the company is subject to various risks, including the potential for security breaches or incidents that could harm its reputation and business, as well as the challenges of recruiting and retaining qualified personnel in the highly competitive cybersecurity industry.
Outlook and Conclusion
Qualys' strong financial performance, innovative product roadmap, and growing customer base position the company well for continued success in the cybersecurity market. The company's focus on addressing the evolving security and compliance needs of organizations, particularly through its Enterprise TruRisk platform, is expected to drive further growth and customer adoption.
The cybersecurity market is projected to grow at a CAGR of 12.9% from 2025 to 2030, driven by an increasingly complex threat landscape and rapid digital transformation across industries. This trend bodes well for Qualys' future prospects.
However, the company must remain vigilant in navigating the competitive landscape and addressing the various risks inherent in the cybersecurity industry. Successful execution of its strategic initiatives, maintaining its technological edge, and effectively managing its operational and financial risks will be crucial for Qualys to solidify its position as a leading provider of cloud-based IT, security, and compliance solutions.