Qualys Announces Fourth Quarter and Full Year 2020 Financial Results

FOSTER CITY, Calif., Feb. 10, 2021 /PRNewswire/ -- Qualys, Inc. (NASDAQ: QLYS), a pioneer and leading provider of disruptive cloud-based IT, security and compliance solutions, today announced financial results for the fourth quarter and full year ended December 31, 2020. For the quarter, the Company reported revenues of $94.8 million, net income under United States Generally Accepted Accounting Principles ("U.S. GAAP") of $23.8 million, non-GAAP net income of $28.6 million, Adjusted EBITDA of $43.4 million, GAAP net income per diluted share of $0.59, and non-GAAP net income per diluted share of $0.71. For the full year ended December 31, 2020, the Company reported revenues of $363.0 million, GAAP net income of $91.6 million, non-GAAP net income of $117.0 million, Adjusted EBITDA of $169.5 million, GAAP net income per diluted share of $2.24, and non-GAAP net income per diluted share of $2.87.

"We are pleased to finish 2020 with continued adoption of our Vulnerability Management, Detection and Response (VMDR®) application and Cloud Agent subscriptions with approximately 56 million agents purchased. This year we delivered an impressive suite of new applications to our Qualys Cloud Platform, including VMDR, Multi-Vector EDR, and Runtime Container Security, while producing record margins. Additionally, we are excited about our upcoming XDR offering as it presents a significant extension of our cloud platform that will help our customers further consolidate their IT, security and compliance stack," said Sumedh Thakar, interim CEO of Qualys. "In response to the recent SolarWinds and FireEye breaches, we are also offering a free 60-day integrated VMDR service to companies to quickly assess devices impacted by SolarWinds Orion vulnerabilities, SUNBURST Trojan detections, and FireEye Red Team tools. I am also pleased to announce our Board has authorized an additional $100 million open market share repurchase program, which allows us to continue to mitigate our share dilution and drive shareholder value."

Fourth Quarter 2020 Financial Highlights

Revenues: Revenues for the fourth quarter of 2020 increased by 12% to $94.8 million compared to $84.7 million for the same quarter in 2019.

Gross Profit: GAAP gross profit for the fourth quarter of 2020 increased by 9% to $73.6 million compared to $67.5 million for the same quarter in 2019. GAAP gross margin was 78% for the fourth quarter of 2020 compared to 80% for the same quarter in 2019. Non-GAAP gross profit for the fourth quarter of 2020 increased by 9% to $76.0 million compared to $69.6 million for the same quarter in 2019. Non-GAAP gross margin was 80% for the fourth quarter of 2020 compared to 82% for the same quarter in 2019.

Operating Income: GAAP operating income for the fourth quarter of 2020 increased by 25% to $24.4 million compared to $19.5 million for the same quarter in 2019. As a percentage of revenues, GAAP operating income was 26% for the fourth quarter of 2020 compared to 23% for the same quarter in 2019. Non-GAAP operating income for the fourth quarter of 2020 increased by 17% to $36.2 million compared to $30.8 million for the same quarter in 2019. As a percentage of revenues, non-GAAP operating income was 38% for the fourth quarter of 2020 compared to 36% for the same quarter in 2019.

Net Income: GAAP net income for the fourth quarter of 2020 was $23.8 million, or $0.59 per diluted share, compared to $20.7 million, or $0.50 per diluted share, for the same quarter in 2019. As a percentage of revenues, GAAP net income was 25% for the fourth quarter of 2020 compared to 24% for the same quarter in 2019. Non-GAAP net income for the fourth quarter of 2020 was $28.6 million, or $0.71 per diluted share, compared to non-GAAP net income of $25.5 million, or $0.62 per diluted share, for the same quarter in 2019. As a percentage of revenues, non-GAAP net income was 30% for both the fourth quarter of 2020 and the fourth quarter of 2019.

Adjusted EBITDA: Adjusted EBITDA (a non-GAAP financial measure) for the fourth quarter of 2020 increased by 17% to $43.4 million compared to $37.0 million for the same quarter in 2019. As a percentage of revenues, Adjusted EBITDA was 46% for the fourth quarter of 2020 compared to 44% for the same quarter in 2019.

Operating Cash Flow: Operating cash flow for the fourth quarter of 2020 increased by 15% to $38.8 million compared to $33.7 million for the same quarter in 2019. As a percentage of revenues, operating cash flow was 41% for the fourth quarter of 2020 compared to 40% for the same quarter in 2019.

Fourth Quarter 2020 Business Highlights

    --  Delivered a free 60-day integrated Vulnerability Management Detection
        and Response service to help organizations quickly assess devices
        impacted by SolarWinds Orion vulnerabilities, SUNBURST Trojan detections
        and FireEye Red Team tools.
    --  Deloitte Advisory Limited partnered with Qualys to integrate VMDR,
        Multi-Vector EDR and the upcoming Next-gen Analytics and Incidence
        Response into Deloitte Hong Kong Cyber's managed vulnerability services.
    --  Extended partnership with Armor, a leading MSSP, to include the Qualys
        CloudView App for compliance and monitoring of public clouds.
    --  Partnered with Google Cloud to add out-of-the-box container security
        support for the new Google Cloud Artifact Registry.
    --  Enhanced Qualys Container Security solution with the addition of deep
        visibility, runtime defense capabilities and automated enforcement with
        delivery of Qualys Runtime Security.
    --  Expanded Vulnerability Management integration with Microsoft to include
        Microsoft Azure Arc to allow customers to perform vulnerability scanning
        on servers outside of the Azure platform including on-premises and
        multi-cloud servers.
    --  Expanded to China by establishing a Private Cloud Platform and a
        partnership with Digital China, the largest value-added provider of
        integrated IT products, solutions and support for enterprises in China.

Full Year 2020 Financial Highlights

Revenues: Revenues for 2020 increased by 13% to $363.0 million compared to $321.6 million for 2019.

Gross Profit: GAAP gross profit for 2020 increased by 13% to $283.7 million compared to $252.1 million for 2019. GAAP gross margin was 78% for both 2020 and 2019. Non-GAAP gross profit increased by 12% to $292.7 million for 2020 compared to $260.3 million for 2019. Non-GAAP gross margin was 81% for both 2020 and 2019.

Operating Income: GAAP operating income for 2020 was $96.7 million compared to $72.3 million for 2019. As a percentage of revenues, GAAP operating income was 27% for 2020 compared to 22% for 2019. Non-GAAP operating income for 2020 was $143.0 million compared to $113.2 million for 2019. As a percentage of revenues, non-GAAP operating income was 39% for 2020 compared to 35% for 2019.

Net Income: GAAP net income for 2020 was $91.6 million, or $2.24 per diluted share, compared to $69.3 million, or $1.68 per diluted share, for 2019. As a percentage of revenues, GAAP net income was 25% for 2020 compared to 22% for 2019. Non-GAAP net income for 2020 was $117.0 million, or $2.87 per diluted share, compared to non-GAAP net income of $94.5 million, or $2.29 per diluted share, for 2019. As a percentage of revenues, non-GAAP net income was 32% for 2020 compared to 29% for 2019.

Adjusted EBITDA: Adjusted EBITDA (a non-GAAP financial measure) for 2020 increased by 23% to $169.5 million compared to $138.3 million for 2019. As a percentage of revenues, Adjusted EBITDA was 47% for 2020 compared to 43% for 2019.

Operating Cash Flow: Operating cash flow for 2020 was $180.1 million compared to $160.6 million for 2019. As a percentage of revenues, operating cash flow was 50% for both 2020 and 2019.

Full Year 2020 Business Highlights

Market Recognition

    --  Recognized as a 2020 Gartner Peer Insights Customer's Choice for
        Vulnerability Assessment.
    --  Named as Best Vulnerability Management solution by SC Awards.
    --  Acknowledged as leading the next generation of end-to-end vulnerability
        management technology with VMDR solution by industry analyst firm Ovum
        (now Omdia).

Products & Features

    --  Shipped Qualys Multi-Vector EDR, which leverages the Qualys Cloud
        Platform and Qualys Cloud Agent to link vulnerability and visibility to
        EDR and provide context beyond the endpoints to reduce false positives
        for customers and streamline threat hunting.
    --  Provided a comprehensive inventory sync with ServiceNow Service Graph
        and Configuration Management Database (CMDB) as part of the new Service
        Graph Connector Program, a new designation within the Technology Partner
        Program.
    --  Delivered Qualys VMDR, an all-in-one cloud-based app that automates the
        entire vulnerability management cycle across on-premises, endpoints,
        cloud, mobile, containers, OT and IoT environments - significantly
        accelerating the ability for organizations to respond to threats and
        prevent breaches.
    --  Introduced a free Remote Endpoint Protection solution to help
        enterprises secure remote workforces by providing instant security
        assessment, visibility and remote computer patching with zero impact on
        VPN bandwidth for both corporate and personal computers.
    --  Added malware detection to our free Remote Endpoint Protection solution
        to help businesses secure remote workers and made it available to
        federal agencies via a no-cost 60-day pilot.

Business Developments

    --  Partnered with Infosys, a global leader in next-generation digital
        services and consulting, to integrate Qualys VMDR and Multi-Vector EDR
        into its Cyber Next Platform, a managed security service offering.
    --  Expanded partnership with Ivanti, integrating Ivanti Patch Management
        into the Qualys VMDR Platform to self-heal endpoints with one click.
    --  Acquired software assets of Spell Security, bringing advanced endpoint
        behavior detection and additional telemetry to the Qualys Cloud Platform
        while strengthening Qualys' security and threat research capabilities.
    --  Delivered Vulnerability Management and Container Security to Microsoft
        Azure Security Center for virtual machines and containers.
    --  Announced Qualys Cloud Agent's general availability on Google Cloud,
        providing customers with visibility of their workloads and virtual
        machines in Google Cloud with essentially no software to install or
        maintain.
    --  Selected by Armor, a global MSSP, to embed Qualys VMDR into Armor
        Anywhere, an industry-leading cloud security platform.

Financial Performance Outlook

Based on information as of today, February 10, 2021, Qualys is issuing the following financial guidance for the first quarter and full year fiscal 2021. The Company emphasizes that the guidance is subject to various important cautionary factors referenced in the section entitled "Legal Notice Regarding Forward-Looking Statements" below, including risks and uncertainties associated with the COVID-19 pandemic.

First Quarter 2021 Guidance: Management expects revenues for the first quarter of 2021 to be in the range of $94.8 million to $95.4 million, representing 10% to 11% growth over the same quarter in 2020. GAAP net income per diluted share is expected to be in the range of $0.37 to $0.39, which assumes an effective income tax rate of 26%. Non-GAAP net income per diluted share is expected to be in the range of $0.68 to $0.70, which assumes a non-GAAP effective income tax rate of 21%. First quarter 2021 net income per diluted share estimates are based on approximately 40.6 million weighted average diluted shares outstanding for the quarter.

Full Year 2021 Guidance: Management expects revenues for the full year 2021 to be in the range of $399.0 million to $402.0 million, representing 10% to 11% growth over 2020. GAAP net income per diluted share is expected to be in the range of $1.39 to $1.44, which assumes an effective income tax rate of 26%. Non-GAAP net income per diluted share is expected to be in the range of $2.60 to $2.65, which assumes a non-GAAP effective income tax rate of 21%. Full year 2021 net income per diluted share estimates are based on approximately 40.8 million weighted average diluted shares outstanding.

Investor Conference Call

Qualys will host a conference call and live webcast to discuss its fourth quarter and full year 2020 financial results at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) on Wednesday, February 10, 2021. To access the conference call, dial (877) 881-2609 in the U.S. or (970) 315-0463 for international participants with conference ID #1674355. A live webcast of the earnings conference call, investor presentation and prepared remarks can be accessed at https://investor.qualys.com/events-presentations. A replay of the conference call will be available through the same webcast link following the end of the call.

Investor Contact

Vinayak Rao
Vice President, Corporate Development and Investor Relations
(650) 801-6210
ir@qualys.com

About Qualys

Qualys, Inc. (NASDAQ: QLYS) is a pioneer and leading provider of disruptive cloud-based IT, security and compliance solutions with over 19,000 active customers in more than 130 countries, including a majority of each of the Forbes Global 100 and Fortune 100. Qualys helps organizations streamline and consolidate their security and compliance solutions in a single platform and build security into digital transformation initiatives for greater agility, better business outcomes, and substantial cost savings.

The Qualys Cloud Platform and its integrated Cloud Apps deliver businesses critical security intelligence continuously, enabling them to automate the full spectrum of auditing, compliance, and protection for IT systems and web applications across on premises, endpoints, cloud, containers, and mobile environments. Founded in 1999 as one of the first SaaS security companies, Qualys has established strategic partnerships with leading cloud providers like Amazon Web Services, Microsoft Azure and the Google Cloud Platform, and managed service providers and consulting organizations including Accenture, BT, Cognizant Technology Solutions, Deutsche Telekom, DXC Technology, Fujitsu, HCL Technologies, IBM, Infosys, NTT, Optiv, SecureWorks, Tata Communications, Verizon and Wipro. The company is also a founding member of the Cloud Security Alliance. For more information, please visit www.qualys.com.

Qualys, Qualys VMDR® and the Qualys logo 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 statements generally 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: the benefits of our new and upcoming products, features, integrations, collaborations and joint solutions, including our upcoming XDR offering; our strategy and our business model and our ability to execute such strategy; our guidance for revenues, GAAP EPS and non-GAAP EPS for the first quarter and full year 2021; and our expectations for the number of weighted average diluted shares outstanding and the GAAP and non-GAAP effective income tax rate for the first quarter and full year 2021. 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; the ability of our platform and solutions to perform as intended; customer acceptance and purchase of our existing solutions and new solutions; real or perceived defects, errors or vulnerabilities in our products or services; our ability to retain existing customers and generate new customers; the budgeting cycles, seasonal buying patterns and length of our sales cycle; the impact of the ongoing COVID-19 pandemic and related public health measures on our business and the global economy; our ability to manage costs as we increase our customer base and the number of our platform solutions; the market for cloud solutions for IT security and compliance not increasing at the rate we expect; competition from other products and services; fluctuations in currency exchange rates; unexpected fluctuations in our effective income tax rate on a GAAP and non-GAAP basis; our ability to effectively manage our rapid growth and our ability to anticipate future market needs and opportunities; any unanticipated accounting charges; and general market, political, economic and business conditions in the United States as well as globally. 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 Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, filed with the Securities and Exchange Commission on November 4, 2020.

The forward-looking statements in this press release are based 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 GAAP, Qualys provides investors with certain non-GAAP financial measures, including non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, non-GAAP net income per diluted share, Adjusted EBITDA (defined as earnings before interest expense, interest income and other income (expense), net, income taxes, depreciation, amortization, stock-based compensation, and non-recurring expenses that do not reflect ongoing costs of operating the business) and non-GAAP free cash flows (defined as cash provided by operating activities less purchases of property and equipment (net of proceeds from disposal) and principal payments under capital lease obligations).

In computing non-GAAP financial measures, Qualys excludes the effects of stock-based compensation expense, and non-recurring expenses that do not reflect ongoing costs of operating the business. Qualys believes that these non-GAAP financial measures 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 expenses, non-GAAP operating income, non-GAAP net income, non-GAAP net income per diluted share, Adjusted EBITDA and non-GAAP free cash flows.

Furthermore, Qualys uses some of these non-GAAP financial measures to establish budgets and operational goals for managing its business and evaluating its performance. Qualys believes that non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, non-GAAP net income per diluted share, Adjusted EBITDA and non-GAAP free cash flows provide additional tools for investors to use in comparing its recurring core business operating results over multiple periods with other companies in its industry.

Although Qualys does not focus on quarterly billings, Qualys provides calculated current billings (defined as total revenues recognized in a period plus the sequential change in current deferred revenue in the corresponding period) to assist investors and analysts in assessing its operating performance.

Qualys has not reconciled non-GAAP net income per diluted share guidance to GAAP net income per diluted share guidance because Qualys does not provide guidance on the various reconciling cash and non-cash items between GAAP net income and non-GAAP net income (i.e., stock-based compensation and non-recurring expenses). The actual dollar amount of reconciling items in the first quarter and full year 2021 is likely to have a significant impact on the Company's GAAP net income per diluted share in the first quarter and full year 2021. A reconciliation of the non-GAAP net income per diluted share guidance to the GAAP net income per diluted share guidance is not available without unreasonable effort.

In order to provide a more complete picture of recurring core operating business results, the Company's non-GAAP net income and non-GAAP net income per diluted share include tax adjustments required to achieve the effective income tax rate on a non-GAAP basis, which could differ from the GAAP effective income tax rate. The Company believes its estimated non-GAAP effective income tax rate of 21% in 2021 is a reasonable estimate under its global operating structure. The Company may adjust this rate during the year to take into account events or trends that it believes materially impact the estimated annual rate. The non-GAAP effective income tax rate could be subject to change for a number of reasons, including but not limited to, significant changes resulting from tax legislation, material changes in geographic mix of revenues and expenses and other significant events.

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                        Twelve Months Ended
                                                                                         December 31,                       December 31,

                                                                                                                                         ---

                                                                                           2020                      2019                     2020                         2019

                                                                                                                                                                         ---


     Revenues                                                                          $94,801                   $84,664                 $362,963                     $321,607



     Cost of revenues(1)                                                                21,221                    17,163                   79,226                       69,517

                                                                                                                                                                         ---


     Gross profit                                                                       73,580                    67,501                  283,737                      252,090



     Operating expenses:



     Research and development (1)                                                       18,643                    17,808                   72,548                       68,239



     Sales and marketing(1)                                                             17,892                    19,344                   67,965                       70,833



     General and administrative(1)                                                      12,633                    10,804                   46,570                       40,765

                                                                                                                                                                         ---


     Total operating expenses                                                           49,168                    47,956                  187,083                      179,837

                                                                                                                                                                         ---


     Income from operations                                                             24,412                    19,545                   96,654                       72,253



     Other income (expense), net:



     Interest expense                                                                      (5)                      (8)                     (9)                       (106)



     Interest income                                                                       946                     2,052                    5,385                        8,443



     Other income (expense), net                                                         (261)                    (287)                       7                        (607)

                                                                                                                                                                         ---


     Total other income, net                                                               680                     1,757                    5,383                        7,730

                                                                                                                                                                         ---


     Income before income taxes                                                         25,092                    21,302                  102,037                       79,983



     Provision for income taxes                                                          1,276                       638                   10,465                       10,647



     Net income                                                                        $23,816                   $20,664                  $91,572                      $69,336




     Net income per share:



     Basic                                                                               $0.61                     $0.53                    $2.34                        $1.77




     Diluted                                                                             $0.59                     $0.50                    $2.24                        $1.68




     Weighted average shares used in computing net income per share:



     Basic                                                                              39,168                    39,003                   39,167                       39,075

                                                                                                                                                                         ===


     Diluted                                                                            40,440                    40,921                   40,823                       41,345

                                                                                                                                                                         ===






     
              (1)Includes stock-based compensation as follows:





     Cost of revenues                                                                     $801                      $588                   $2,767                       $2,262



     Research and development                                                            3,615                     3,276                   13,502                       11,151



     Sales and marketing                                                                 1,484                     1,395                    5,785                        4,984



     General and administrative                                                          4,204                     4,470                   17,981                       16,495



     Total stock-based compensation                                                    $10,104                    $9,729                  $40,035                      $34,892


                                                            
      
                Qualys, Inc.


                                                        
     
        CONDENSED CONSOLIDATED BALANCE SHEETS


                                                            
      
                (Unaudited)


                                                           
      
                (in thousands)




                                                                        
              
                December 31, 2020     
     
     December 31, 2019

                                                                                                                                             ---


     
                Assets



     Current assets:



     Cash and cash equivalents                                                                               $74,132                     $87,559



     Short-term marketable securities                                                                        281,892                     211,331



     Accounts receivable, net                                                                                100,179                      78,034



     Prepaid expenses and other current assets                                                                19,142                      18,692



     Total current assets                                                                                    475,345                     395,616



     Long-term marketable securities                                                                          98,458                     119,508



     Property and equipment, net                                                                              64,850                      60,579



     Operating leases - right of use asset                                                                    44,838                      40,551



     Deferred tax assets, net                                                                                 15,811                      18,830



     Intangible assets, net                                                                                   12,006                      16,795



     Goodwill                                                                                                  7,447                       7,447



     Restricted cash                                                                                           1,200                       1,200



     Other noncurrent assets                                                                                  16,864                      15,082



     Total assets                                                                                           $736,819                    $675,608

                                                                                                                                             ===


     
                Liabilities and Stockholders' Equity



     Current liabilities:



     Accounts payable                                                                                           $731                        $848



     Accrued liabilities                                                                                      29,833                      22,784



     Deferred revenues, current                                                                              213,494                     192,172



     Operating lease liabilities, current                                                                     11,672                       7,663



     Total current liabilities                                                                               255,730                     223,467



     Deferred revenues, noncurrent                                                                            30,540                      20,935



     Operating lease liabilities, noncurrent                                                                  45,700                      44,015



     Other noncurrent liabilities                                                                                367                         388



     Total liabilities                                                                                       332,337                     288,805



     Stockholders' equity:



     Common stock                                                                                                 39                          39



     Additional paid-in capital                                                                              401,359                     362,408



     Accumulated other comprehensive income (loss)                                                             (484)                      1,162



     Retained earnings                                                                                         3,568                      23,194



     Total stockholders' equity                                                                              404,482                     386,803




     Total liabilities and stockholders' equity                                                             $736,819                    $675,608

                                                                                                                                             ===


                                      
              
                Qualys, Inc.


                     
              
                CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS


                                      
              
                (Unaudited)


                                     
              
                (in thousands)


                                                                                                      Twelve Months Ended December 31,



                                                                                                 2020                                        2019

                                                                                                                                             ---


     Cash flow from operating activities:



     Net income                                                                              $91,572                                     $69,336



     Adjustments to reconcile net income to net cash provided by operating activities:



     Depreciation and amortization expense                                                    32,845                                      31,201



     Bad debt expense                                                                            486                                         247



     Loss on disposal of property and equipment                                                  106                                         202



     Stock-based compensation                                                                 40,035                                      34,892


      Amortization of premiums (accretion of discounts) on marketable
       securities                                                                                 826                                     (1,597)



     Deferred income taxes                                                                     3,512                                       7,095



     Changes in operating assets and liabilities:



     Accounts receivable                                                                    (22,631)                                    (2,456)



     Prepaid expenses and other assets                                                       (2,329)                                    (6,012)



     Accounts payable                                                                          (389)                                    (1,076)



     Accrued liabilities                                                                       5,126                                         715



     Deferred revenues                                                                        30,927                                      28,060



     Net cash provided by operating activities                                               180,086                                     160,607

                                                                                                                                             ---


     Cash flow from investing activities:



     Purchases of marketable securities                                                    (391,693)                                  (331,131)



     Sales and maturities of marketable securities                                           341,879                                     328,350



     Purchases of property and equipment                                                    (30,037)                                   (27,573)



     Proceeds from disposal of property and equipment                                            419


      Acquisition of businesses, net of cash acquired, and purchases
       of intangible assets                                                                   (1,500)                                    (4,050)



     Purchase of privately-held investment                                                                                                (625)



     Net cash used in investing activities                                                  (80,932)                                   (35,029)

                                                                                                                                             ---


     Cash flow from financing activities:



     Repurchase of common stock                                                            (126,729)                                   (86,424)



     Proceeds from exercise of stock options                                                  34,461                                      24,831


      Payments for taxes related to net share settlement of equity
       awards                                                                                (20,199)                                   (15,743)



     Principal payments under finance lease obligations                                        (114)                                    (1,709)



     Net cash used in financing activities                                                 (112,581)                                   (79,045)

                                                                                                                                             ---




     Net increase (decrease) in cash and cash equivalents                                   (13,427)                                     46,533


      Cash, cash equivalents and restricted cash at beginning of
       period                                                                                  88,759                                      42,226


      Cash, cash equivalents and restricted cash at end of period                             $75,332                                     $88,759


                                                   
              
                Qualys, Inc.


                                      
              
                RECONCILIATION OF NON-GAAP DISCLOSURES


                                                  
              
                ADJUSTED EBITDA


                                                    
              
                (Unaudited)


                                              
              
                (in thousands)






                                                                                                   Three Months Ended                       Twelve Months Ended
                                                                               December 31,                        December 31,

                                                                                                                                ---

                                                                                 2020                      2019                      2020       2019

                                                                                                                                              ---


     Net income                                                              $23,816                   $20,664                   $91,572    $69,336


      Depreciation and amortization of property and equipment                   7,225                     6,195                    26,556     25,121



     Amortization of intangible assets                                         1,645                     1,520                     6,289      6,080



     Provision for income taxes                                                1,276                       638                    10,465     10,647



     Stock-based compensation                                                 10,104                     9,729                    40,035     34,892



     Other income, net                                                         (680)                  (1,757)                  (5,383)   (7,730)



     Adjusted EBITDA                                                         $43,386                   $36,989                  $169,534   $138,346

                                                                                                                                              ===


                                   
              
                Qualys, Inc.


                      
              
                RECONCILIATION OF NON-GAAP DISCLOSURES


                                   
              
                (Unaudited)


                      
              
                (in thousands, except per share data)




                                                                              Three Months Ended                    Twelve Months Ended
                                                         December 31,                       December 31,

                                                                                                          ---

                                                            2020                    2019                       2020                  2019

                                                                                                                                   ---

      GAAP Cost of revenues                              $21,221                 $17,163                    $79,226               $69,517


      Less: Stock-based
       compensation                                        (801)                  (588)                   (2,767)              (2,262)


      Less: Amortization of
       intangible assets                                 (1,620)                (1,495)                   (6,189)              (5,980)


      Non-GAAP Cost of
       revenues                                          $18,800                 $15,080                    $70,270               $61,275





      GAAP Gross profit                                  $73,580                 $67,501                   $283,737              $252,090


      Plus: Stock-based
       compensation                                          801                     588                      2,767                 2,262


      Plus: Amortization of
       intangible assets                                   1,620                   1,495                      6,189                 5,980


      Non-GAAP Gross Profit                              $76,001                 $69,584                   $292,693              $260,332

                                                                                                                                   ---



      GAAP Research and
       development                                       $18,643                 $17,808                    $72,548               $68,239


      Less: Stock-based
       compensation                                      (3,615)                (3,276)                  (13,502)             (11,151)


      Less: Amortization of
       intangible assets                                    (25)                   (25)                     (100)                (100)


      Non-GAAP Research and
       development                                       $15,003                 $14,507                    $58,946               $56,988





      GAAP Sales and marketing                           $17,892                 $19,344                    $67,965               $70,833


      Less: Stock-based
       compensation                                      (1,484)                (1,395)                   (5,785)              (4,984)


      Non-GAAP Sales and
       marketing                                         $16,408                 $17,949                    $62,180               $65,849





      GAAP General and
       administrative                                    $12,633                 $10,804                    $46,570               $40,765


      Less: Stock-based
       compensation                                      (4,204)                (4,470)                  (17,981)             (16,495)


      Non-GAAP General and
       administrative                                     $8,429                  $6,334                    $28,589               $24,270





      GAAP Operating expenses                            $49,168                 $47,956                   $187,083              $179,837


      Less: Stock-based
       compensation                                      (9,303)                (9,141)                  (37,268)             (32,630)


      Less: Amortization of
       intangible assets                                    (25)                   (25)                     (100)                (100)


      Non-GAAP Operating
       expenses                                          $39,840                 $38,790                   $149,715              $147,107

                                                                                                                                   ---



      GAAP Income from
       operations                                        $24,412                 $19,545                    $96,654               $72,253


      Plus: Stock-based
       compensation                                       10,104                   9,729                     40,035                34,892


      Plus: Amortization of
       intangible assets                                   1,645                   1,520                      6,289                 6,080


      Non-GAAP Income from
       operations                                        $36,161                 $30,794                   $142,978              $113,225

                                                                                                                                   ---



      GAAP Net income                                    $23,816                 $20,664                    $91,572               $69,336


      Plus: Stock-based
       compensation                                       10,104                   9,729                     40,035                34,892


      Plus: Amortization of
       intangible assets                                   1,645                   1,520                      6,289                 6,080


      Less: Tax adjustment                               (6,929)                (6,366)                  (20,937)             (15,821)


      Non-GAAP Net income                                $28,636                 $25,547                   $116,959               $94,487

                                                                                                                                   ---




     Non-GAAP Net income per share:



     Basic                                                $0.73                   $0.66                      $2.99                 $2.42




     Diluted                                              $0.71                   $0.62                      $2.87                 $2.29



      Weighted average shares used in non-GAAP net
       income per share:



     Basic                                               39,168                  39,003                     39,167                39,075

                                                                                                                                   ===


     Diluted                                             40,440                  40,921                     40,823                41,345

                                                                                                                                   ===


                                                                    
           
                Qualys, Inc.


                                                       
              
             RECONCILIATION OF NON-GAAP DISCLOSURES


                                                                   
           
                FREE CASH FLOWS


                                                                     
           
                (Unaudited)


                                                                 
           
                (in thousands)




                                                                                                                            Twelve Months Ended December 31,



                                                                                                                       2020                    2019

                                                                                                                                               ---


     GAAP Cash flows provided by operating activities                                                             $180,086                $160,607



     Less:



     Purchases of property and equipment, net of proceeds from disposal                                           (29,618)               (27,573)



     Principal payments under capital lease obligations                                                              (114)                (1,709)



     Non-GAAP Free cash flows                                                                                     $150,354                $131,325

                                                                                                                                               ===


                                                                       
             
                Qualys, Inc.


                                                          
              
               RECONCILIATION OF NON-GAAP DISCLOSURES


                                                                
              
               CALCULATED CURRENT BILLINGS


                                                                        
             
                (Unaudited)


                                                                    
              
               (in thousands)




                                                                                                                                  Three Months Ended December 31,



                                                                                                                             2020                    2019

                                                                                                                                                     ---


     GAAP Revenue                                                                                                        $94,801                 $84,664



     Plus: Current deferred revenue at December 31                                                                       213,494                 192,172



     Less: Current deferred revenue at September 30                                                                    (200,283)              (180,304)



     Non-GAAP Calculated current billings                                                                               $108,012                 $96,532

                                                                                                                                                     ===


     Calculated current billings growth compared to same quarter of prior year                                               12%                    15%

View original content:http://www.prnewswire.com/news-releases/qualys-announces-fourth-quarter-and-full-year-2020-financial-results-301226228.html

SOURCE Qualys, Inc.