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Qualys Announces Fourth Quarter And Full Year 2012 Financial Results

Fourth Quarter 2012 Financial Highlights

Revenues: Revenues for the fourth quarter of 2012 increased by 19% to $24.7 million, compared to $20.7 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 $101.2 million for the four-quarter period ended December 31, 2012, an increase of $16.1 million, or 19%, compared to $85.1 million for the four-quarter period ended December 31, 2011. The increase in Four-Quarter Bookings was primarily due to sales of subscriptions for additional solutions to a larger customer base, as well as sales of subscriptions to new customers.

Gross Profit: GAAPgross profit for the fourth quarter of 2012 increased by 19% to $19.7 million, compared to $16.5 million in the same quarter last year. GAAP gross margin was 80% for the fourth quarter of 2012, compared to 80% in the same quarter last year. Non-GAAP gross profit for the fourth quarter of 2012 increased 19% to $19.8 million, compared to $16.6 million in the same quarter last year. Non-GAAP gross margin was 80% for the fourth quarter of 2012, compared to 80% in the same quarter last year.

Operating Income: GAAP operating income for the fourth quarter of 2012 increased to $1.6 million, compared to an operating loss of $43,000 in the same quarter last year. Non-GAAP operating income for the fourth quarter of 2012 increased by $1.9 million to $2.5 million, compared to $0.6 million in the same quarter last year. Non-GAAP operating margin increased to 10% in the fourth quarter of 2012 from 3% in the same quarter last year as a result of the Company's continued focus on cost management and the benefits of increasing operating scale.

Net Income: GAAP net income for the fourth quarter of 2012 was $1.2 million, or $0.03 per diluted share, up from a net loss of $0.7 million, or a $0.13 net loss per diluted share, in the same quarter last year. Non-GAAP net income for the fourth quarter of 2012 was $2.0 million, or $0.06 per diluted share, compared to a non-GAAP net loss of $16,000, or a $0.00 net loss per diluted share, in the same quarter last year.

Adjusted EBITDA: Adjusted EBITDA (a non-GAAP financial measure) for the fourth quarter of 2012 increased by 103% to $4.4 million, compared to $2.2 million in the same quarter last year. As a percentage of revenues, adjusted EBITDA increased to 18% in the fourth quarter of 2012 compared to 11% in the same quarter last year.

Full Year 2012 Financial Highlights

Revenues: Revenues for 2012 increased by 20% to $91.4 million, compared to $76.2 million in 2011. 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.

Gross Profit: Gross profit for 2012 increased by 16% to $73.0 million, compared to $63.0 million in 2011. GAAP gross margin was 80% in 2012, compared to 83% in 2011. Non-GAAP gross profit for 2012 increased by 16% to $73.3 million, compared to $63.1 million in 2011. Non-GAAP gross margin was 80% for 2012, compared to 83% in 2011.

Operating Income: GAAP operating income for 2012 increased by 3% to $3.0 million, compared to $2.9 million in 2011. GAAP operating margin was 3% in 2012, compared to 4% in 2011. Non-GAAP operating income for 2012 increased by 28% to $6.5 million, compared to $5.1 million in 2011. Non-GAAP operating margin was 7% in both 2012 and in 2011.

Net Income: GAAP net income for 2012 was $2.3 million, or $0.08 per diluted share, compared to $2.0 million, or $0.08 per diluted share, in 2011. Non-GAAP net income for 2012 was $5.7 million, or $0.20 per diluted share, compared to $4.1 million, or $0.17 per diluted share, in 2011.

Adjusted EBITDA: Adjusted EBITDA (a non-GAAP financial measure) for 2012 increased by 32% to $13.8 million, compared to $10.4 million in 2011. As a percentage of revenues, adjusted EBITDA increased to 15% in 2012 compared to 14% in 2011.

Initial Public Offering: Qualys began trading on the NASDAQ Stock Market under the symbol "QLYS" on September 28, 2012, and successfully closed its IPO on October 3, 2012. With the full exercise of the underwriters' over-allotment option, the Company sold 7,836,250 shares of common stock and certain selling shareholders sold 875,000 shares of common stock at a price to the public of $12.00 per share.

Fourth Quarter 2012 Business Highlights

Customers:

  • New customers include: Citigroup, Colgate-Palmolive, Comcast, Georgetown University, Grupo Mexico, Hilton Worldwide, Level 3, Nestle Deutschland AG, Penske Automotive, Pepperdine University, RICOH, Standard Life, Sun Life Financial, Telkom SA and U.S. Bancorp.
  • Hosted more than 600 customers and partners at the 10 th Annual Qualys Security Conference in four cities around the world, where attendees shared best practices and learned from existing customers and renowned industry experts how to protect their IT Infrastructure from cyber-attacks and manage compliance more effectively.

New Products and Functionalities:

  • Released major extensions to the QualysGuard Cloud Platform including automated workflows for Vulnerability Management and enhanced scan management capabilities to increase efficiency for customers.
  • Introduced innovative predictive analytics engine to QualysGuard Vulnerability Management to help customers analyze risk exposures to zero-day and Microsoft Patch Tuesday vulnerabilities.
  • Expanded QualysGuard Policy Compliance with support for new technologies, including Microsoft Windows 8 and Windows 2012 Server.
  • Expanded QualysGuard Web Application Scanning (WAS) with advanced scanning configurations and reporting enhancements to address the growing needs of customers. New capabilities also include Malware Detection, which is a unique and competitive advantage for WAS, as well as forthcoming integrations with attack tools to allow customers and consultants to further test and validate scanning results.
  • Upgraded the first generation of the QualysGuard Private Cloud Platforms to the new virtualized and extensible platform at Apple, Fujitsu, Microsoft, NTT and Oracle. This new virtualized platform provides customers, partners and government agencies with the performance and scalability to secure their IT infrastructures while keeping data on premise and will enable Qualys to seamlessly introduce new services to these customers and partners.

Industry Recognition:

  • Received top customer ratings in an independent information security study conducted by TheInfoPro, a service of 451 Research with top ratings in every category, outperforming all competitors. Additionally, 100% of Qualys' customers indicated they were not considering switching to a competing solution.
  • Named a finalist in five 2013 SC Magazine Awards categories, including best customer service and excellence in security and compliances solutions for enterprises and SMBs.

Channel Partners:

  • Announced an agreement with The Emirates Integrated Telecommunications Company ("du") to deliver vulnerability and compliance management services to businesses in the United Arab Emirates using the new extensible QualysGuard Private Cloud Platform to be hosted at du in Dubai.
  • Expanded the partnership with Verizon to include their managed security services and consulting practice leveraging the full suite of QualysGuard solutions.

Financial Performance Outlook

First Quarter 2013 Guidance: Management expects revenues to be in the range of $24.4 million to $24.9 million. GAAP net loss per diluted share is expected to be in the range of $0.02 to $0.04 and non-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 based on approximately 35.5 million weighted average diluted shares outstanding for the quarter.

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