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Qualys Announces Fourth Quarter And Full Year 2012 Financial Results

Stocks in this article: QLYS

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 EPS 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 EPS 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 EPS 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 EPS 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 Year Ended
  December 31, December 31,
  2012 2011 2012 2011
Revenues $ 24,657 $ 20,652 $ 91,420 $ 76,212
Cost of revenues (1) 4,981 4,123 18,404 13,247
Gross profit 19,676 16,529 73,016 62,965
Operating expenses:        
Research and development  (1) 4,870 4,953 20,195 19,633
Sales and marketing (1) 9,911 9,229 37,738 31,526
General and administrative (1) 3,268 2,390 12,079 8,900
Total operating expenses 18,049 16,572 70,012 60,059
Income (loss) from operations 1,627 (43) 3,004 2,906
Other income (expense), net:        
Interest expense (39) (40) (192) (204)
Interest income 12 4 14 14
Other income (expense), net (144) (447) (188) (346)
Total other income (expense), net (171) (483) (366) (536)
Income (loss) before provision for income taxes 1,456 (526) 2,638 2,370
Provision for income taxes 281 125 358 416
Net income (loss) $ 1,175 $ (651) $ 2,280 $ 1,954
         
Net income (loss) per share attributable to common stockholders:      
Basic $ 0.04 $ (0.13) $ 0.09 $ 0.09
Diluted $ 0.03 $ (0.13) $ 0.08 $ 0.08
Weighted average shares used in computing net income (loss) per share attributable to common stockholders:        
Basic 30,807 5,194 11,891 5,053
Diluted 35,064 5,194 28,352 24,194
         
(1) Includes stock-based compensation as follows:        
         
Cost of revenues $ 81 $ 47 $ 276 $ 143
Research and development 188 159 672 499
Sales and marketing 218 181 1,074 578
General and administrative 383 248 1,430 927
Total stock-based compensation $ 870 $ 635 $ 3,452 $ 2,147
         
         
Qualys, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(in thousands)
         
  Three Months Ended Year Ended
  December 31, December 31,
  2012 2011 2012 2011
Net income (loss) $ 1,175 $ (651) $ 2,280 $ 1,954
Foreign currency translation gain (loss), net of zero tax (42) (106) (59) (166)
Change in unrealized gain (loss) on short-term investments, net of zero tax 8 8
Other comprehensive income (loss), net (34) (106) (51) (166)
Comprehensive income (loss) $ 1,141 $ (757) $ 2,229 $ 1,788
         
     
Qualys, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands)
     
  December 31,
  2012 2011
Assets    
Current assets:    
Cash and cash equivalents $ 34,885 $ 24,548
Short-term investments 83,547
Accounts receivable, net 24,545 20,750
Prepaid expenses and other current assets 4,377 3,774
Total current assets 147,354 49,072
Restricted cash 114 112
Property and equipment, net 18,148 13,861
Intangible assets, net 2,811 3,175
Goodwill 317 317
Other noncurrent assets 1,574 2,252
Total assets $ 170,318 $ 68,789
Liabilities, Convertible Preferred Stock and Stockholders' Equity (Deficit)    
Current Liabilities:    
Accounts payable $ 2,031 $ 2,254
Accrued liabilities 7,803 8,468
Deferred revenues, current 56,497 46,717
Capital lease obligations, current 1,183 1,987
Total current liabilities 67,514 59,426
Deferred revenues, noncurrent 8,616 4,713
Income taxes payable, noncurrent 594 661
Other noncurrent liabilities 1,231 2,134
Capital lease obligations, noncurrent 808 2,406
Total liabilities 78,763 69,340
Convertible preferred stock 63,873
Stockholders' equity (deficit):    
Common stock 31 5
Additional paid-in capital 166,651 12,927
Accumulated other comprehensive loss (1,035) (984)
Accumulated deficit (74,092) (76,372)
Total stockholders' equity (deficit) 91,555 (64,424)
Total liabilities, convertible preferred stock and stockholders' equity (deficit) $ 170,318 $ 68,789
     
     
Qualys, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
     
  Year Ended December 31,
  2012 2011
Cash flows from operating activities:    
Net income $ 2,280 $ 1,954
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization expense 7,341 5,373
Bad debt expense 218 193
Loss on disposal of property and equipment 10 1
Stock-based compensation 3,452 2,147
Non-cash interest expense 24 36
Amortization of premiums on short-term investments 7
Changes in operating assets and liabilities:    
Accounts receivable (4,014) (6,651)
Prepaid expenses and other assets 91 (3,835)
Accounts payable (242) 1,248
Accrued liabilities (1,163) 2,817
Deferred revenues 13,683 11,885
Income taxes payable 181 333
Other noncurrent liabilities 84 1,689
Net cash provided by operating activities 21,952 17,190
Cash flows from investing activities:    
Purchases of short-term investments (83,547)
Purchases of property and equipment (11,188) (7,499)
Purchases of intangible assets (49)
Net cash used in investing activities (94,784) (7,499)
Cash flows from financing activities:    
Proceeds from initial public offering, net of offering costs 84,534
Proceeds from exercise of stock options 1,685 948
Proceeds from early exercise of stock options 384 390
Proceeds from issuance of Series C Preferred Stock 128
Principal payments under capital lease obligations (2,401) (1,476)
Non-contingent payment related to acquisition (1,000)
Net cash provided by (used in) financing activities 83,202 (10)
Effect of exchange rate changes on cash and cash equivalents (33) (143)
Net increase in cash and cash equivalents 10,337 9,538
Cash and cash equivalents at beginning of period 24,548 15,010
Cash and cash equivalents at end of period $ 34,885 $ 24,548
     
     
Qualys, Inc.
RECONCILIATION OF NON-GAAP DISCLOSURES
FOUR-QUARTER BOOKINGS
(Unaudited)
(in thousands)
     
  Four Quarters Ended
  December 31,
  2012 2011
Revenues $ 91,420 $ 76,212
Deferred revenues, current    
Beginning of the Four-Quarter Period 46,717 37,811
Ending 56,497 46,717
Net change 9,780 8,906
Four-Quarter Bookings $ 101,200 $ 85,118
     
         
Qualys, Inc.
RECONCILIATION OF NON-GAAP DISCLOSURES
EBITDA AND ADJUSTED EBITDA
(Unaudited)
(in thousands)
         
  Three Months Ended Year Ended
  December 31, December 31,
  2012 2011 2012 2011
Net income (loss) $ 1,175 $ (651) $ 2,280 $ 1,954
Depreciation and amortization of property and equipment 1,829 1,473 6,895 4,939
Amortization of intangible assets 115 119 446 434
Interest expense 39 40 192 204
Provision for income taxes 281 125 358 416
EBITDA 3,439 1,106 10,171 7,947
Stock-based compensation 870 635 3,452 2,147
Other (income) expense, net 132 443 174 332
Adjusted EBITDA $ 4,441 $ 2,184 $ 13,797 $ 10,426
         
         
Qualys, Inc.
RECONCILIATION OF NON-GAAP DISCLOSURES
(Unaudited)
(in thousands, except per share data)
         
  Three Months Ended Year Ended
  December 31, December 31,
  2012 2011 2012 2011
GAAP gross profit $ 19,676 $ 16,529 $ 73,016 $ 62,965
Plus:        
Stock-based compensation expense 81 47 276 143
Non-GAAP gross profit $ 19,757 $ 16,576 $ 73,292 $ 63,108
         
GAAP income (loss) from operations $ 1,627 $ (43) $ 3,004 $ 2,906
Plus:        
Stock-based compensation expense 870 635 3,452 2,147
Non-GAAP income from operations $ 2,497 $ 592 $ 6,456 $ 5,053
         
GAAP net income (loss) $ 1,175 $ (651) $ 2,280 $ 1,954
Plus:        
Stock-based compensation expense 870 635 3,452 2,147
Non-GAAP net income (loss) $ 2,045 $ (16) $ 5,732 $ 4,101
         
Non-GAAP net income (loss) attributable to common stockholders $ 2,025 $ (16) $ 2,694 $ 902
         
Non-GAAP net income (loss) per share attributable to common stockholders:      
Basic $ 0.07 $ 0.00 $ 0.23 $ 0.18
Diluted $ 0.06 $ 0.00 $ 0.20 $ 0.17
Weighted average shares used in computing non-GAAP net income (loss) per share attributable to common stockholders:        
Basic 30,807 5,194 11,891 5,053
Diluted 35,064 5,194 28,352 24,194
         
         
Qualys, Inc.
NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS
(Unaudited)
(in thousands, except per share data)
         
  Three Months Ended Year Ended
  December 31, December 31,
  2012 2011 2012 2011
Numerator:        
Net income (loss) $ 1,175 $ (651) $ 2,280 $ 1,954
Net income attributable to participating securities (16) (1,204)  (1,518)
Net income (loss) attributable to common stockholders - basic 1,159 (651) 1,076 436
Undistributed earnings reallocated to participating securities 15 1,201 1,516
Net income (loss) attributable to common stockholders - diluted $ 1,174 $ (651) $ 2,277 $ 1,952
Denominator:        
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders - basic 30,807 5,194 11,891 5,053
Effect of potentially dilutive securities:        
Convertible preferred stock 383 13,270 17,590
Common stock options 3,874 3,187 1,537
Warrants 2
Contingently issuable shares related to an acquisition 4 12
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders - diluted 35,064 5,194 28,352 24,194
Net income (loss) per share attributable to common stockholders:        
Basic $ 0.04 $ (0.13) $ 0.09 $ 0.09
Diluted $ 0.03 $ (0.13) $ 0.08 $ 0.08
         
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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