Qualys, Inc. reports 32.1% Net Income growth in 2020 and 3.8 pp EBITDA Margin growth from 36.5% to 40.3%
02/10/2021 • About Qualys, Inc. (
$QLYS) • By InTwits
Qualys, Inc. reported 2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Qualys, Inc. is a fast growth stock: 2020 revenue growth was 12.9%, 5 year revenue CAGR was 17.2% at 2020 ROIC 22.0%
- EBITDA Margin is expanding: 40.3% in 2020 vs. 36.5% in 2019 vs. 23.8% in 2016
- Qualys, Inc. has high CAPEX intensity: 5 year average CAPEX/Revenue was 10.6%. At the same time it's a lot of higher than industry average of 3.2%.
- CAPEX is quite volatile: $2m in FY2020, $5m in FY2019, $10m in FY2018, $7m in FY2017, $3m in FY2016
- The company has highly profitable business model: ROIC is 22.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Qualys, Inc.'s Revenue jumped on 12.9%. Revenue growth showed small slowdown in 20Q4 - it was 12.0% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 7.1 pp from -6.2% to 0.91% in 2020. EBITDA Margin grew at 4.4 pp per annum in 2016-2020.
Gross Margin showed almost no change in 2020. SG&A as a % of Revenue decreased on 3.1 pp from 34.7% to 31.6% in 2020. SG&A as a % of Revenue declined at -3.4 pp per annum in the last 5 years.
Net Income margin increased on 3.7 pp from 21.6% to 25.2% in 2020. Net Income margin stuck to a growing trend at 3.5 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
In 2020 Qualys, Inc. had CAPEX/Revenue of 8.3%. The company's CAPEX/Revenue decreased on 8.1 pp from 16.4% in 2017 to 8.3% in 2020. Average CAPEX/Revenue for the last three years was 8.3%.
Return on investment
The company operates at high and attractive ROIC (22.0%) and ROE (23.1%). ROIC increased on 3.3 pp from 18.7% to 22.0% in 2020. ROE increased on 4.5 pp from 18.6% to 23.1% in 2020. ROIC grew at 2.3 pp per annum in 2016-2020. ROE followed a growing trend at 3.5 pp per annum in 2016-2020.
Leverage (Debt)
Debt level is -0.1x Net Debt / EBITDA and 0.4x Debt / EBITDA. Debt jumped on 10.8% while cash dropped on 15.3%.
Qualys, Inc. has no short term refinancing risk: cash is higher than short term debt (631.7%).
Valuation and dividends
Qualys, Inc.'s trades at EV/EBITDA 27.6x and P/E 44.3x.
Management team
Qualys, Inc.'s CEO is Philippe F Courtot. Philippe F Courtot has 20 years tenure with the company. Qualys, Inc.'s CFO Joo Mi Kim has spent 9 months years with the company.
Financial and operational results
FY ended 12/31/2020
Qualys, Inc. ($QLYS) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 197.9 | 230.8 | 278.9 | 321.6 | 363.0 | 12.9% |
| Gross Profit | 154.8 | 179.2 | 212.7 | 252.1 | 283.7 | 12.6% |
| SG&A | 88.1 | 99.2 | 109.1 | 111.6 | 114.5 | 2.6% |
| EBITDA | 47.1 | 57.9 | 79.3 | 117.4 | 146.2 | 24.6% |
| EBIT | 30.1 | 37.2 | 50.4 | | | |
| Interest expence | | 0.0 | 0.2 | | | |
| Tax | 11.2 | -1.1 | -1.8 | | | |
| Net Income | 19.2 | 40.4 | 57.3 | 69.3 | 91.6 | 32.1% |
| Stock Based Compensation | 20.1 | 34.7 | 30.1 | | | |
Balance Sheet
|
|---|
| Cash | 86.7 | 86.6 | 41.0 | 87.6 | 74.1 | -15.3% |
| Accounts Receivable | 47.0 | 64.4 | 75.8 | | | |
| Accounts Payable | 2.1 | 1.1 | 5.6 | | | |
| Short Term Debt | 0.0 | 0.0 | 1.6 | 7.8 | 11.7 | 50.7% |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 44.1 | 45.7 | 3.7% |
Cash flow
|
|---|
| Capex | 23.2 | 37.8 | 22.8 | 27.6 | 30.0 | 8.9% |
| Acquisitions | | 12.5 | 13.6 | | | |
Ratios
|
|---|
| Revenue growth | 20.5% | 16.6% | 20.8% | 15.3% | 12.9% | |
| EBITDA growth | 20.3% | 22.9% | 36.9% | 48.1% | 24.6% | |
|
|---|
| Gross Margin | 78.2% | 77.7% | 76.3% | 78.4% | 78.2% | -0.2% |
| EBITDA Margin | 23.8% | 25.1% | 28.4% | 36.5% | 40.3% | 3.8% |
| EBIT Margin | 15.2% | 16.1% | 18.1% | | |
| SG&A, % of revenue | 44.5% | 43.0% | 39.1% | 34.7% | 31.6% | -3.1% |
| SBC, % of revenue | 10.2% | 15.0% | 10.8% | | |
| Net Income Margin | 9.7% | 17.5% | 20.5% | 21.6% | 25.2% | 3.7% |
| CAPEX, % of revenue | 11.7% | 16.4% | 8.2% | 8.6% | 8.3% | -0.3% |
|
|---|
| ROIC | 13.7% | 12.3% | 14.3% | 18.7% | 22.0% | 3.3% |
| ROE | 8.5% | 13.4% | 16.3% | 18.6% | 23.1% | 4.5% |
| Net Debt/EBITDA | -1.8x | -1.5x | -0.5x | -0.3x | -0.1x | 0.2x |
| Interest expence / Average debt | | | 22.0% | | | |
People
|
|---|
| Insider ownership | 16.1% | 16.1% | 16.1% | | | |
| Employees | 684 | 869 | 1,194 | | | |
| Revenue/Employee, th. $ | 289 | 266 | 234 | | | |
Qualys, Inc. ($QLYS) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 86 | 89 | 93 | 95 | | 14.5% | 12.5% | 12.6% | 12.0% |
| EBITDA | 33 | 38 | 39 | 36 | | 38.1% | 45.8% | 22.5% | 1.7% |
| Net Income | 19 | 26 | 23 | 24 | | 40.9% | 62.1% | 18.6% | 15.3% |
Balance Sheet
|
|---|
| Cash | 148 | 114 | 93 | 74 | | 58.5% | 24.7% | 23.0% | -15.3% |
| Short Term Debt | 8 | 9 | 12 | 12 | | 2.6% | 22.6% | 58.9% | 50.7% |
| Long Term Debt | 41 | 45 | 48 | 46 | | 23.0% | 40.3% | 57.2% | 3.7% |
Ratios
|
|---|
| Gross Margin | 78.6% | 78.7% | 77.8% | 77.6% | | 2.1% | 1.0% | -1.5% | -2.1% |
| EBITDA Margin | 37.8% | 42.7% | 42.2% | 38.5% | | 6.5% | 9.7% | 3.4% | -3.9% |
| Net Income Margin | 21.7% | 29.6% | 24.4% | 25.1% | | 4.1% | 9.1% | 1.2% | 0.7% |
Peers in Systems Software
Below we provide Qualys, Inc. benchmarking against other companies in Systems Software industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Zscaler, Inc. ($ZS) | - | 56.5% | 51.3% | 59.2% | 42.4% |
| ServiceNow, Inc. ($NOW) | - | 38.0% | 36.0% | 32.6% | 30.6% |
| SailPoint Technologies Holdings, Inc. ($SAIL) | - | 40.5% | 33.8% | 15.9% | 26.6% |
| Rapid7, Inc. ($RPD) | - | 27.6% | 21.5% | 33.9% | 25.9% |
| Tenable Holdings, Inc. ($TENB) | - | 50.9% | 42.4% | 32.6% | 24.2% |
| |
|---|
| Median (23 companies) | 12.9% | 14.0% | 19.0% | 19.4% | 15.1% |
|---|
| Qualys, Inc. ($QLYS) | - | 16.6% | 20.8% | 15.3% | 12.9% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Check Point Software Technologies Ltd. ($CHKP) | 88.5% | 88.6% | 89.6% | 89.5% | 89.4% |
| Progress Software Corporation ($PRGS) | 83.8% | 82.6% | 83.1% | 81.8% | 86.0% |
| Varonis Systems, Inc. ($VRNS) | 90.5% | 90.4% | 89.8% | 86.2% | 84.9% |
| Vmware, Inc. ($VMW) | 85.2% | - | 85.5% | 83.9% | 83.4% |
| Tenable Holdings, Inc. ($TENB) | 88.6% | 86.4% | 83.9% | 82.8% | 82.4% |
| |
|---|
| Median (23 companies) | 73.1% | 73.9% | 73.5% | 75.4% | 76.5% |
|---|
| Qualys, Inc. ($QLYS) | 78.2% | 77.7% | 76.3% | 78.4% | 78.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Check Point Software Technologies Ltd. ($CHKP) | 49.8% | 50.7% | 48.8% | 46.0% | 45.1% |
| SolarWinds Corporation ($SWI) | -8.0% | 44.0% | 44.8% | 44.7% | 39.8% |
| Progress Software Corporation ($PRGS) | 2.4% | 28.6% | 32.9% | 23.4% | 34.4% |
| Fortinet, Inc. ($FTNT) | 7.2% | 11.1% | 15.9% | 19.8% | 23.9% |
| Vmware, Inc. ($VMW) | 25.2% | - | 28.8% | 26.3% | 22.9% |
| |
|---|
| Median (23 companies) | -9.8% | -5.4% | -4.7% | -1.4% | -1.1% |
|---|
| Qualys, Inc. ($QLYS) | 23.8% | 25.1% | 28.4% | 36.5% | 40.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Zscaler, Inc. ($ZS) | 7.8% | 6.5% | 8.0% | 9.5% | 12.0% |
| ServiceNow, Inc. ($NOW) | 7.6% | 7.8% | 8.6% | 7.7% | 9.3% |
| Zuora, Inc. ($ZUO) | 3.4% | 3.3% | 2.8% | 5.7% | 7.8% |
| Proofpoint, Inc. ($PFPT) | 9.2% | 9.0% | 4.1% | 4.0% | 6.9% |
| Allot Communications Ltd. ($ALLT) | 1.8% | 3.5% | 3.6% | 3.4% | 5.6% |
| |
|---|
| Median (23 companies) | 2.0% | 2.2% | 2.5% | 3.4% | 2.8% |
|---|
| Qualys, Inc. ($QLYS) | 11.7% | 16.4% | 8.2% | 8.6% | 8.3% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Fortinet, Inc. ($FTNT) | 5.3% | 15.0% | 28.0% | 29.0% | 46.3% |
| Check Point Software Technologies Ltd. ($CHKP) | 24.7% | 26.8% | 25.5% | 24.2% | 25.6% |
| Vmware, Inc. ($VMW) | 15.9% | - | - | 18.1% | 19.6% |
| Progress Software Corporation ($PRGS) | -4.9% | 13.5% | 18.5% | 7.6% | 16.0% |
| A10 Networks, Inc. ($ATEN) | -24.4% | -11.3% | -27.2% | -13.0% | 13.0% |
| |
|---|
| Median (23 companies) | -4.3% | -4.7% | -1.9% | -6.4% | -6.4% |
|---|
| Qualys, Inc. ($QLYS) | 13.7% | 12.3% | 14.3% | 18.7% | 22.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| SolarWinds Corporation ($SWI) | - | 6.2x | 4.1x | 4.4x | 4.1x |
| Proofpoint, Inc. ($PFPT) | - | - | - | -27.4x | 2.5x |
| Progress Software Corporation ($PRGS) | -7.5x | -0.1x | 0.1x | 1.5x | 2.1x |
| Vmware, Inc. ($VMW) | -0.7x | - | -0.8x | 0.3x | 1.5x |
| CyberArk Software Ltd. ($CYBR) | -4.1x | -5.7x | -4.5x | -3.6x | 0.9x |
| |
|---|
| Median (11 companies) | -1.0x | -0.3x | -0.4x | -0.3x | 0.9x |
|---|
| Qualys, Inc. ($QLYS) | -1.8x | -1.5x | -0.5x | -0.3x | -0.1x |
