Qualys, Inc. Net Income surged on 41.7% and Revenue surged on 20.8%
02/12/2019 • About Qualys, Inc. (
$QLYS) • By InTwits
Qualys, Inc. reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Qualys, Inc. is a fast growth stock: 2018 revenue growth was 20.8%, 5 year revenue CAGR was 20.9% at 2018 ROIC 14.3%
- Qualys, Inc. spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for 2014-2018 is 11.2%. Average EBITDA Margin for the same period was 24.3%
- Qualys, Inc. has high CAPEX intensity: 5 year average CAPEX/Revenue was 11.8%. At the same time it's a lot of higher than industry average of 3.1%.
- CAPEX is quite volatile: $23m in 2018, $38m in 2017, $23m in 2016, $20m in 2015, $14m in 2014
- The company has highly profitable business model: ROIC is 14.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 20.8%. Revenue growth showed slowdown in 18Q4 - it was 17.9% YoY. During 2014-2018 Revenue growth bottomed in 2017 at 16.6%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.1 pp from 22.5% to 23.6% in 2018. EBITDA Margin stuck to a growing trend at 2.6 pp per annum in 2014-2018.
Gross Margin decreased slightly on 1.4 pp from 77.7% to 76.3% in 2018. During 2014-2018 Gross Margin topped in 2015 at 79.1% and was declining since that time. SG&A as a % of Revenue decreased on 3.9 pp from 43.0% to 39.1% in 2018. SG&A as a % of Revenue stuck to a declining trend at -2.8 pp per annum in 2014-2018. Stock Based Compensation (SBC) as a % of Revenue decreased on 4.2 pp from 15.0% to 10.8% in 2018.
Net Income margin increased on 3.0 pp from 17.5% to 20.5% in 2018. During 2014-2018 Net Income margin bottomed in 2015 at 9.7% and was growing since that time.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 8.2% in 2018. The company's CAPEX/Revenue decreased on 4.0 pp from 12.2% in 2015 to 8.2% in 2018. For the last three years the average CAPEX/Revenue was 12.1%.
Accounts receivable as a % of Revenue decreased slightly on 0.72 pp from 27.9% to 27.2% in 2018. Accounts payable as a % of Revenue increased on 6.2 pp from 2.2% to 8.4% in 2018.
Qualys, Inc. has spent
$14m on M&A in 2018 which accounts for 4.9% of revenue.
Return on investment
The company operates at good ROIC (14.3%) and ROE (16.3%). ROIC increased slightly on 2.0 pp from 12.3% to 14.3% in 2018. ROE increased on 2.9 pp from 13.4% to 16.3% in 2018. During 2014-2018 ROE bottomed in 2016 at 8.5% and was growing since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is -0.5x and Debt / EBITDA is 0.0x. Debt surged while cash dropped on 52.6%.
Qualys, Inc. has good short term financial stability: Interest coverage ratio (ICR) is 292.8x. Qualys, Inc. has no short term refinancing risk: cash is higher than short term debt (2,621.5%).
Average interest expence paid by the company was 11.0% in 2018.
Valuation and dividends
The company's trades at EV/EBITDA 40.8x and P/E 57.2x.
Management team
Qualys, Inc.'s CEO is Philippe F Courtot. Philippe F Courtot is a founder and has 18 years tenure with the company. CEO total compensation was
$9,096,098 in 2018 which included
$375,000 salary.
Insider ownership is 16.1%. Insider ownership didn't change in 2018.
The company has 1,194 employees. The number of employees jumped on 37.4%. Average revenue per employee in 2018 was
$233,575 and it dropped on 12.1%.
Financial and operational results
FY ended 12/31/2018
Qualys, Inc. ($QLYS) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 133.6 | 164.3 | 197.9 | 230.8 | 278.9 | 20.8% |
| Gross Profit | 104.6 | 130.0 | 154.8 | 179.2 | 212.7 | 18.7% |
| SG&A | 69.0 | 74.7 | 88.1 | 99.2 | 109.1 | 10.0% |
| EBITDA | 21.1 | 39.2 | 47.1 | 57.9 | 79.3 | 36.9% |
| EBIT | 9.2 | 24.8 | 30.1 | 37.2 | 50.4 | 35.2% |
| Interest expence | 0.0 | 0.0 | | 0.0 | 0.2 | 5,633.3% |
| Tax | -21.6 | 8.7 | 11.2 | -1.1 | -1.8 | |
| Net Income | 30.2 | 15.9 | 19.2 | 40.4 | 57.3 | 41.7% |
| Stock Based Compensation | 10.5 | 17.5 | 20.1 | 34.7 | 30.1 | -13.2% |
Balance Sheet
|
|---|
| Cash | 76.5 | 91.7 | 86.7 | 86.6 | 41.0 | -52.6% |
| Accounts Receivable | 33.0 | 42.3 | 47.0 | 64.4 | 75.8 | 17.7% |
| Accounts Payable | 5.7 | 2.4 | 2.1 | 1.1 | 5.6 | 388.5% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 1.6 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 13.9 | 20.1 | 23.2 | 37.8 | 22.8 | -39.8% |
| Acquisitions | | | | 12.5 | 13.6 | 9.2% |
Ratios
|
|---|
| Revenue growth | 23.7% | 23.0% | 20.5% | 16.6% | 20.8% | |
| EBITDA growth | 77.4% | 85.2% | 20.3% | 22.9% | 36.9% | |
|
|---|
| Gross Margin | 78.3% | 79.1% | 78.2% | 77.7% | 76.3% | -1.4% |
| EBITDA Margin | 15.8% | 23.8% | 23.8% | 25.1% | 28.4% | 3.3% |
| EBIT Margin | 6.9% | 15.1% | 15.2% | 16.1% | 18.1% | 1.9% |
| SG&A, % of revenue | 51.7% | 45.5% | 44.5% | 43.0% | 39.1% | -3.9% |
| SBC, % of revenue | 7.9% | 10.6% | 10.2% | 15.0% | 10.8% | -4.2% |
| Net Income Margin | 22.6% | 9.7% | 9.7% | 17.5% | 20.5% | 3.0% |
| CAPEX, % of revenue | 10.4% | 12.2% | 11.7% | 16.4% | 8.2% | -8.2% |
|
|---|
| ROIC | 7.2% | 14.9% | 13.7% | 12.3% | 14.3% | 2.0% |
| ROE | 23.7% | 9.1% | 8.5% | 13.4% | 16.3% | 2.9% |
| Net Debt/EBITDA | -3.6x | -2.3x | -1.8x | -1.5x | -0.5x | 1.0x |
| Interest expence / Average debt | | | | | 11.0% | |
People
|
|---|
| Insider ownership | 16.1% | 16.1% | 16.1% | 16.1% | 16.1% | 0.0% |
| Employees | 431 | 510 | 684 | 869 | 1,194 | 37.4% |
| Revenue/Employee, th. $ | 310 | 322 | 289 | 266 | 234 | -12.1% |
Qualys, Inc. ($QLYS) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 65 | 68 | 72 | 74 | | 22.1% | 23.2% | 20.5% | 17.9% |
| EBITDA | 15 | 18 | 25 | 21 | | 23.8% | 29.6% | 55.7% | 34.7% |
| Net Income | 9 | 10 | 23 | 14 | | -58.3% | 42.9% | 177.7% | 404.0% |
Balance Sheet
|
|---|
| Cash | 93 | 87 | 98 | 41 | | -15.0% | -33.5% | 8.2% | -52.6% |
| Short Term Debt | 0 | 2 | 2 | 2 | | | | | |
| Long Term Debt | 0 | 1 | 1 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 75.5% | 76.2% | 77.0% | 76.4% | | -1.4% | -1.9% | -1.6% | -0.7% |
| EBITDA Margin | 23.8% | 26.6% | 35.0% | 27.8% | | 0.3% | 1.3% | 7.9% | 3.5% |
| Net Income Margin | 14.1% | 15.1% | 32.8% | 19.4% | | -27.2% | 2.1% | 18.5% | 14.9% |
Peers in Systems Software
Below you can find Qualys, Inc. benchmarking vs. other companies in Systems Software industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Advantego Corp ($ADGO) | | | | | 973.8% |
| Solbright Group Inc ($SBRT) | | | 286.4% | 25.4% | 414.0% |
| Duos Technologies Group Inc ($DUOT) | | 61.0% | -9.8% | -36.4% | 210.2% |
| Dell Technologies Inc. ($DVMT) | | | | | 145.7% |
| Finjan Holdings, Inc. ($FNJN) | | -6.2% | 292.3% | 174.6% | 63.0% |
| |
|---|
| Median (48 companies) | | 18.2% | 14.6% | 14.0% | 19.0% |
|---|
| Qualys, Inc. ($QLYS) | | 23.0% | 20.5% | 16.6% | 20.8% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| StrikeForce Technologies Inc ($SFOR) | 97.0% | 96.9% | 98.3% | 95.4% | 94.0% |
| Varonis Systems, Inc. ($VRNS) | 90.2% | 90.6% | 90.5% | 90.4% | 89.8% |
| Check Point Software Technologies Ltd. ($CHKP) | 88.2% | 88.5% | 88.5% | 88.6% | 89.6% |
| Tableau Software, Inc. ($DATA) | 91.0% | 88.7% | 88.0% | 87.1% | 87.7% |
| Attunity Ltd. ($ATTU) | 90.7% | 84.9% | 83.9% | 84.1% | 87.5% |
| |
|---|
| Median (53 companies) | 76.1% | 74.5% | 73.1% | 73.9% | 73.5% |
|---|
| Qualys, Inc. ($QLYS) | 78.3% | 79.1% | 78.2% | 77.7% | 76.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Check Point Software Technologies Ltd. ($CHKP) | 54.3% | 52.4% | 49.8% | 50.7% | 48.8% |
| SolarWinds Corporation ($SWI) | | | -8.0% | 44.0% | 44.8% |
| Finjan Holdings, Inc. ($FNJN) | -192.1% | -295.2% | 2.2% | 30.2% | 42.0% |
| Oracle Corporation ($ORCL) | 46.2% | 43.8% | 40.8% | 40.2% | 40.8% |
| CA Inc. ($CA) | 33.9% | 36.7% | 37.2% | 36.1% | 35.3% |
| |
|---|
| Median (47 companies) | -2.4% | -6.6% | -9.8% | -5.4% | -4.7% |
|---|
| Qualys, Inc. ($QLYS) | 15.8% | 23.8% | 23.8% | 25.1% | 28.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| The Rubicon Project, Inc. ($RUBI) | 15.6% | 11.4% | 12.0% | 26.0% | 16.0% |
| CYREN Ltd. ($CYRN) | 2.4% | 4.4% | 3.2% | 5.8% | 9.2% |
| ServiceNow, Inc. ($NOW) | 8.0% | 8.7% | 7.6% | 7.8% | 8.6% |
| Zscaler, Inc. ($ZS) | | 12.5% | 7.8% | 6.5% | 8.0% |
| Marizyme Inc ($MRZM) | | 0.0% | 0.0% | 0.0% | 6.9% |
| |
|---|
| Median (48 companies) | 2.7% | 2.1% | 2.0% | 2.2% | 2.5% |
|---|
| Qualys, Inc. ($QLYS) | 10.4% | 12.2% | 11.7% | 16.4% | 8.2% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Finjan Holdings, Inc. ($FNJN) | -42.6% | -113.5% | 3.4% | 46.6% | 64.1% |
| Fortinet, Inc. ($FTNT) | 9.2% | 2.1% | 5.3% | 15.0% | 28.0% |
| Check Point Software Technologies Ltd. ($CHKP) | 22.2% | 23.7% | 24.7% | 26.8% | 25.5% |
| MAM Software Group, Inc. ($MAMS) | 13.3% | 19.3% | 21.1% | 24.2% | 25.2% |
| Red Hat, Inc. ($RHT) | 15.1% | 14.1% | 14.2% | 16.4% | 22.4% |
| |
|---|
| Median (56 companies) | 0.0% | 0.0% | -4.3% | -4.7% | -1.9% |
|---|
| Qualys, Inc. ($QLYS) | 7.2% | 14.9% | 13.7% | 12.3% | 14.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| NXT-ID Inc. ($NXTD) | | | | | 9.7x |
| Symantec Corporation ($SYMC) | -3.2x | -1.5x | -5.0x | 10.0x | 4.7x |
| SolarWinds Corporation ($SWI) | | | | 6.2x | 4.1x |
| Oracle Corporation ($ORCL) | 0.4x | 1.2x | 1.6x | 2.4x | 2.4x |
| ServiceNow, Inc. ($NOW) | | | | 9.0x | 0.9x |
| |
|---|
| Median (22 companies) | -2.1x | -1.4x | -1.0x | -0.3x | -0.4x |
|---|
| Qualys, Inc. ($QLYS) | -3.6x | -2.3x | -1.8x | -1.5x | -0.5x |
