Qualys Announces First Quarter 2013 Financial Results

Qualys Announces First Quarter 2013 Financial Results

                     Revenue Growth of 17% Year-Over-Year

                GAAP EPS Loss of $0.02, Non-GAAP EPS of $0.01



REDWOOD CITY, Calif, May 6, 2013 (GLOBE NEWSWIRE) -- Qualys, Inc.
(Nasdaq:QLYS), a pioneer and leading provider of cloud security and compliance
solutions, today announced financial results for the first quarter ended March
31, 2013. For the quarter, the Company reported revenues of $24.9 million,
GAAP net loss of $0.6 million, non-GAAP net income of $0.3 million, adjusted
EBITDA of $2.8 million, GAAP loss per diluted share of $0.02, and non-GAAP
earnings per diluted share of $0.01.

Philippe Courtot, Chairman and Chief Executive Officer of Qualys, said, "We
have kicked off 2013 with a solid first quarter performance, driving revenue
growth from expanded relationships with existing customers, as well as from
the continued addition of new customers and partners. In particular, we saw
continued strong adoption of our high-growth Web Application Scanning (WAS)
and Policy Compliance solutions by both existing and new customers in the
quarter, demonstrating Qualys' ability to continue to diversify our revenues.
At the RSA Conference this year, we introduced key updates to our highly
scalable cloud platform, including the release of version 3.0 of WAS.We
remain confident in our outlook for 2013 as we continue to focus on innovation
to drive revenue growth and to generate value for our shareholders."

First Quarter 2013 Financial Highlights

Revenues:Revenues for the first quarter of 2013 increased by 17% to $24.9
million compared to $21.2 million in the same quarter last year.Revenue
growth was driven by a combination of increased sales of subscriptions for
additional solutions to existing customers, as well as sales of subscriptions
to new customers.

Bookings:Four-Quarter Bookings (a non-GAAP financial measure) were $105.1
million for the four-quarter period ended March 31, 2013, an increase of $14.8
million, or 16%, compared to $90.3 million for the four-quarter period ended
March 31, 2012. The increase in Four-Quarter Bookings was primarily due to
sales of subscriptions for additional solutions to our existing customer base,
as well as sales of subscriptions to new customers.

Gross Profit:GAAP gross profit for the first quarter of 2013 increased by 12%
to $19.1 million compared to $17.0 million in the same quarter last year.GAAP
gross margin was 77% for the first quarter of 2013 compared to 80% in the same
quarter last year.Non-GAAP gross profit for the first quarter of 2013
increased by 12% to $19.2 million compared to $17.1 million in the same
quarter last year.Non-GAAP gross margin was 77% for the first quarter of
2013, compared to 81% in the same quarter last year. The decrease in gross
margin is related to increased depreciation resulting from higher levels of
capital expenditures, which started in the second half of 2011 and continued
through the first quarter of 2013 to support the growth of our business,
including the deployment of new solutions and the expansion of our data center
infrastructure.

Operating Income (Loss):GAAP operating loss for the first quarter of 2013
increased to $0.3 million compared to an operating loss of $0.1 million in the
same quarter last year. GAAP operating margin remained constant at (1%) in
the first quarter of 2013 and in the same quarter last year.Non-GAAP
operating income for the first quarter of 2013 increased to $0.7 million
compared to $0.5 million in the same quarter last year.Non-GAAP operating
margin remained constant at 3% in the first quarter of 2013 and in the same
quarter last year.

Net Income (Loss):GAAP net loss for the first quarter of 2013 was $0.6
million, or a net loss of $0.02 per diluted share, compared to a net loss of
$0.3 million, or a $0.05 net loss per diluted share, in the same quarter last
year. Non-GAAP net income for the first quarter of 2013 was $0.3 million, or
$0.01 per diluted share, compared to a non-GAAP net income of $0.4 million, or
a $0.02 net income per diluted share, in the same quarter last year.

Adjusted EBITDA:Adjusted EBITDA (a non-GAAP financial measure) for the first
quarter of 2013 increased by 22% to $2.8 million compared to $2.3 million in
the same quarter last year.As a percentage of revenues, adjusted EBITDA
remained constant at 11% in the first quarter of 2013 compared to the same
quarter last year.

First Quarter 2013 Business Highlights

Customers:

  *New customers include: Bank of Tokyo, Fair Isaac, HSH Nordbank, Limelight
    Networks, MAN Diesel & Turbo Brazil, Nationwide Insurance, Rovi, Sony
    Computer Entertainment, Universal Music Group, Verizon, Volkswagen Brazil,
    and Wellington Management.
  *Participated in the RSA Conference USA 2013 releasing new and updated
    solutions and meeting with more than one thousand current and prospective
    customers and partners.

New Products and Functionalities:

  *Released QualysGuard Vulnerability Management Connector for Amazon Web
    Services, which allows customers to perform continuous asset discovery and
    automated vulnerability scanning of their Amazon EC2 and Amazon VPC
    instances.
  *Announced QualysGuard Web Application Scanning (WAS) 3.0, which includes
    malware detection for websites and integration with Burp Suite for attack
    simulation, along with advanced scanning configurations and reporting
    enhancements.
  *Expanded free BrowserCheck service to help businesses and individuals
    continuously monitor browsers' software, operating system settings and
    security patches on users' PCs.
  *Enhanced popular FreeScan service with new comprehensive audits for Patch
    Tuesday vulnerabilities, OWASP threats and SCAP configuration for both
    internal and external systems.

Industry Recognition and Customer Validation:

  *Recognized by SC Magazine readers for the sixth time as best vulnerability
    management tool for QualysGuard VM.
  *The Microsoft Information Security & Risk Management team recently
    published a case study on their use of WAS to efficiently evaluate the
    security of hundreds of web applications that come online every year
    around the world. To read more, please visit:
    https://www.qualys.com/customers/microsoft.

Channel Partners:

  *Joined forces with Verizon to deliver cloud-based IT security and
    compliance solutions to the Consulting Practice of Verizon's Managed
    Security Services, leveraging the full suite of QualysGuard solutions.
  *Partnered with FireMon to deliver real-time network risk visibility and
    remediation through proactive attack simulation and threat detection.

Financial Performance Outlook

Second Quarter 2013 Guidance:Management expects revenues to be in the range
of $25.9 million to $26.4 million.GAAP net income (loss) per diluted share is
expected to be in the range of a loss of $0.01 to an income of $0.01 and
non-GAAP net income per diluted share is expected to be in the range of $0.02
to $0.04 based on approximately 35.4 million weighted average diluted shares
outstanding for the quarter.

Full Year 2013 Guidance:Full year 2013 guidance remains unchanged with
management expecting revenues to be in the range of $106 million to $108
million.GAAP EPS is expected to be in the range of $0.02 to $0.06 per diluted
share and non-GAAP EPS is expected to be in the range of $0.16 to $0.20 per
diluted share based on approximately 35.7 million weighted average diluted
shares outstanding for the full year.

Investor Conference Call

Qualys will host a conference call and live webcast to discuss its first
quarter 2013 financial results today at 2:00 p.m. Pacific Time (5:00 p.m.
Eastern Time).To access the conference call, dial (877) 881-2609 in the U.S.
or +1 (970) 315-0463 for international participants with conference ID
#32922322.The live webcast of Qualys' earnings conference call can also be
accessed at investor.qualys.com.A replay of the conference call will be
available through the same webcast link following the end of the call.

About Qualys, Inc.

Qualys, Inc. (Nasdaq:QLYS), is a pioneer and leading provider of cloud
security and compliance solutions with over 6,000 customers in more than 100
countries, including a majority of each of the Forbes Global 100 and Fortune
100.The QualysGuard Cloud Platform and integrated suite of solutions help
organizations simplify security operations and lower the cost of compliance by
delivering critical security intelligence on demand and automating the full
spectrum of auditing, compliance and protection for IT systems and web
applications.Founded in 1999, Qualys has established strategic partnerships
with leading managed service providers and consulting organizations including
Accuvant, BT, Dell SecureWorks, Fujitsu, NTT, Symantec, Verizon, and Wipro.
The company is also a founding member of the Cloud Security Alliance
(CSA).For more information, please visit www.qualys.com.

Qualys, the Qualys logo and QualysGuard are proprietary trademarks of Qualys,
Inc. All other products or names may be trademarks of their respective
companies.

Legal Notice Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Forward-looking statementsgenerally relate to future
events or our future financial or operating performance.Forward-looking
statements in this press release include, but are not limited to, statements
related to:our confidence in our outlook for 2013 as we continue to focus on
innovation to drive revenue growth and generate value for our shareholders;
our guidance for revenues, GAAP net income (loss) per diluted share and
non-GAAP net income (loss) per diluted share for the second quarter and full
year of 2013; and our expectations for the number of weighted average diluted
shares outstanding for the second quarter and full year of 2013.Our
expectations and beliefs regarding these matters may not materialize, and
actual results in future periods are subject to risks and uncertainties that
could cause actual results to differ materially from those projected. These
risks include our ability to continue to develop platform capabilities and
solutions; customer acceptance and purchase of our existing solutions and new
solutions; our ability to retain existing customers and generate new
customers; the market for cloud solutions for IT security and compliance not
continuing to develop; competition from other products and services; and
general market, political, economic and business conditions.The
forward-looking statements contained in this press release are also subject to
other risks and uncertainties, including those more fully described in our
filings with the Securities and Exchange Commission, including our Annual
Report on Form 10-K for the year ended December 31, 2012, filed with the
Securities and Exchange Commission on March 5, 2013. The forward-looking
statements in this press release arebased on information available to Qualys
as of the date hereof, and Qualys disclaims any obligation to update any
forward-looking statements, except as required by law.

Non-GAAP Financial Measures

In addition to reporting financial results in accordance with generally
accepted accounting principles, or GAAP, Qualys monitors non-GAAP measures of
Four-Quarter Bookings, non-GAAP gross profit, non-GAAP gross margin, non-GAAP
operating income, non-GAAP operating margin, non-GAAP net income (loss),
non-GAAP net income (loss) per diluted share and adjusted EBITDA.

Qualys monitors Four-Quarter Bookings to understand sales trends for its
business. Qualys believes this metric provides an additional tool for
investors to use in assessing its business performance in a way that more
fully reflects current business trends than reported revenues and reduces the
variations in any particular quarter caused by customer subscription
renewals.Qualys believes Four-Quarter Bookings reflects the material sales
trends for its business because it includes sales of subscriptions to new
customers, as well as subscription renewals and upsells of additional
subscriptions to existing customers.

Qualys also monitors non-GAAP gross profit, non-GAAP gross margin, non-GAAP
operating income, non-GAAP operating margin, non-GAAP net income (loss),
non-GAAP net income (loss) per diluted share and adjusted EBITDA to evaluate
its ongoing operational performance and enhance an overall understanding of
its past financial performance. Qualys believes that these non-GAAP metrics
help illustrate underlying trends in its business that could otherwise be
masked by the effect of the income or expenses, as well as the related tax
effects, that are excluded in non-GAAP gross profit, non-GAAP gross margin,
non-GAAP operating income, non-GAAP operating margin, non-GAAP net income
(loss), non-GAAP net income (loss) per diluted share and adjusted
EBITDA.Furthermore, Qualys uses these measures to establish budgets and
operational goals for managing its business and evaluating its performance.
Qualys also believes that non-GAAP gross profit, non-GAAP gross margin,
non-GAAP operating income, non-GAAP operating margin, non-GAAP net income
(loss), non-GAAP net income (loss) per diluted share and adjusted EBITDA
provide additional tools for investors to use in comparing its recurring core
business operating results over multiple periods with other companies in its
industry.

The presentation of this non-GAAP financial information is not intended to be
considered in isolation or as a substitute for results prepared in accordance
with GAAP.A reconciliation of the non-GAAP financial measures discussed in
this press release to the most directly comparable GAAP financial measures is
included with the financial statements contained in this press
release.Management uses both GAAP and non-GAAP information in evaluating and
operating its business internally and as such has determined that it is
important to provide this information to investors.

Qualys, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share data)
                                                           
                                                           Three Months Ended
                                                           March 31,
                                                           2013      2012
Revenues                                                    $24,883   $21,191
Cost of revenues ^ (1)                                      5,795     4,160
Gross profit                                                19,088    17,031
Operating expenses:                                                  
Research and development^(1)                               5,297     5,101
Sales and marketing ^ (1)                                   10,168    9,246
General and administrative ^ (1)                            3,896     2,814
Total operating expenses                                    19,361    17,161
Loss from operations                                        (273)     (130)
Other income (expense), net:                                         
Interest expense                                            (18)      (65)
Interest income                                             77        —
Other income (expense), net                                 (319)     (12)
Total other income (expense), net                           (260)     (77)
Loss before provision for income taxes                      (533)     (207)
Provision for income taxes                                  70        78
Net loss                                                    $ (603)   $ (285)
                                                                    
Net loss per share attributable to common stockholders:              
Basic                                                       $ (0.02)  $ (0.05)
Diluted                                                     $ (0.02)  $ (0.05)
Weighted average shares used in computing net loss per               
share attributable to common stockholders:
Basic                                                       31,494    5,260
Diluted                                                     31,494    5,260
                                                                    
                                                                    
^(1) Includes stock-based compensation as follows:                   
                                                                    
Cost of revenues                                            $93       $54
Research and development                                    208       148
Sales and marketing                                         283       199
General and administrative                                  365       275
Total stock-based compensation                              $949      $676


Qualys, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(in thousands)
                                                           
                                                           Three Months Ended
                                                           March 31,
                                                           2013      2012
Net loss                                                    $ (603)   $ (285)
Change in foreign currency translation gain (loss), net of  (10)      (28)
zero tax
Available-for-sale investments:                                      
Change in net unrealized gain (loss) on investments, net of —         —
zero tax
Less: reclassification adjustment for net gain (loss)       (6)       —
included in net loss
Net change, net of zero tax                                 (6)       —
Other comprehensive loss, net                               (16)      (28)
Comprehensive loss                                          $ (619)   $ (313)


Qualys, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands)
                                                        
                                                        
                                          March 31, 2013 December 31, 2012
Assets                                                   
Current assets:                                          
Cash and cash equivalents                  $47,105        $34,885
Short-term investments                     45,541         83,547
Accounts receivable, net                   19,032         24,545
Prepaid expenses and other current assets  4,328          4,377
Total current assets                       116,006        147,354
Restricted cash                            111            114
Long-term investments                      32,557         —
Property and equipment, net                19,787         18,148
Intangible assets, net                     2,704          2,811
Goodwill                                   317            317
Other noncurrent assets                    1,241          1,574
Total assets                               $172,723       $170,318
Liabilities and Stockholders' Equity                     
Current Liabilities:                                     
Accounts payable                           $1,761         $2,031
Accrued liabilities                        8,749          7,803
Deferred revenues, current                 58,356         56,497
Capital lease obligations, current         1,122          1,183
Total current liabilities                  69,988         67,514
Deferred revenues, noncurrent              7,847          8,616
Income taxes payable, noncurrent           613            594
Other noncurrent liabilities               990            1,231
Capital lease obligations, noncurrent      542            808
Total liabilities                          79,980         78,763
Stockholders' equity:                                    
Common stock                               32             31
Additional paid-in capital                 168,457        166,651
Accumulated other comprehensive loss       (1,051)        (1,035)
Accumulated deficit                        (74,695)       (74,092)
Total stockholders' equity                 92,743         91,555
Total liabilities and stockholders' equity $172,723       $170,318


Qualys, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
                                                           
                                                           Three Months Ended
                                                           March 31,
                                                           2013      2012
Cash flows from operating activities:                                
Net loss                                                    $ (603)   $ (285)
Adjustments to reconcile net loss to net cash provided by            
operating activities:
Depreciation and amortization expense                       2,119     1,750
Bad debt expense                                            44        11
Loss on disposal of property and equipment                  2         4
Stock-based compensation                                    949       676
Non-cash interest expense                                   —         9
Amortization of premiums on investments                     49        —
Changes in operating assets and liabilities:                         
Accounts receivable                                         5,469     5,159
Prepaid expenses and other assets                           354       (388)
Accounts payable                                            (244)     807
Accrued liabilities                                         826       (734)
Deferred revenues                                           1,090     2,668
Other noncurrent liabilities                                4         (49)
Net cash provided by operating activities                   10,059    9,628
Cash flows from investing activities:                                
Purchases of investments                                    (59,916)  —
Sales of investments                                        65,309    —
Purchases of property and equipment                         (3,650)   (2,927)
Net cash provided by (used in) investing activities         1,743     (2,927)
Cash flows from financing activities:                                
Proceeds from exercise of stock options                     818       170
Principal payments under capital lease obligations          (328)     (748)
Net cash provided by (used in) financing activities         490       (578)
Effect of exchange rate changes on cash and cash            (72)      (25)
equivalents
Net increase in cash and cash equivalents                   12,220    6,098
Cash and cash equivalents at beginning of period            34,885    24,548
Cash and cash equivalents at end of period                  $47,105   $30,646
                                                                    
Non-cash investing and financing activities:                         
Vesting of early exercised common stock options             $80       $29


Qualys, Inc.
RECONCILIATION OF NON-GAAP DISCLOSURES
FOUR-QUARTER BOOKINGS
(Unaudited)
(in thousands)
                                    
                                    Four Quarters Ended
                                    March 31,
                                    2013       2012
Revenues                             $95,112    $79,713
Deferred revenues, current                     
Beginning of the Four-Quarter Period 48,354     37,773
Ending                               58,356     48,354
Net change                           10,002     10,581
Four-Quarter Bookings                $105,114   $90,294

                                      

Qualys, Inc.
RECONCILIATION OF NON-GAAP DISCLOSURES
EBITDA AND ADJUSTED EBITDA
(Unaudited)
(in thousands)
                                                       
                                                       Three Months Ended
                                                       March 31,
                                                       2013      2012
Net loss                                                $ (603)   $ (285)
Depreciation and amortization of property and equipment 2,012     1,648
Amortization of intangible assets                       107       102
Interest expense                                        18        65
Provision for income taxes                              70        78
EBITDA                                                  1,604     1,608
Stock-based compensation                                949       676
Other (income) expense, net                             242       12
Adjusted EBITDA                                         $2,795    $2,296

                                      

Qualys, Inc.
RECONCILIATION OF NON-GAAP DISCLOSURES
(Unaudited)
(in thousands, except per share data)
                                                           
                                                           Three Months Ended
                                                           March 31,
                                                           2013      2012
GAAP gross profit                                           $19,088   $17,031
Plus:                                                                
Stock-based compensation                                    93        54
Non-GAAP gross profit                                       $19,181   $17,085
                                                                    
GAAP loss from operations                                   $ (273)   $ (130)
Plus:                                                                
Stock-based compensation                                    949       676
Non-GAAP income from operations                             $676      $546
                                                                    
GAAP net loss                                               $ (603)   $ (285)
Plus:                                                                
Stock-based compensation                                    949       676
Non-GAAP net income                                         $346      $391
                                                                    
Non-GAAP net income attributable to common stockholders     $346      $90
                                                                    
Non-GAAP net income per share attributable to common                 
stockholders:
Basic                                                       $0.01     $0.02
Diluted                                                     $0.01     $0.02
Weighted average shares used in computing non-GAAP net               
income per share attributable to common stockholders
Basic                                                       31,494    5,260
Diluted                                                     35,317    25,140


Qualys, Inc.
NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS
(Unaudited)
(in thousands, except per share data)
                                                           
                                                           Three Months Ended
                                                           March 31,
                                                           2013      2012
Numerator:                                                           
Net loss                                                    $ (603)   $ (285)
Denominator:                                                         
Weighted-average shares used in computing net loss per      31,494    5,260
share attributable to common stockholders - basic
Weighted-average shares used in computing net loss per      31,494    5,260
share attributable to common stockholders - diluted
Net loss per share attributable to common stockholders               
Basic                                                       $ (0.02)  $ (0.05)
Diluted                                                     $ (0.02)  $ (0.05)

CONTACT: Investors:
         Don McCauley
         Chief Financial Officer
         Qualys, Inc.
         +1 (650) 801-6181
         dmccauley@qualys.com
        
         Media:
         John Christiansen/Stacy Roughan
         Sard Verbinnen & Co
         +1 (415) 618-8750/+1 (310) 201-2040
         jchristiansen@sardverb.com/sroughan@sardverb.com
 
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