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01/09 23:49
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary shows strong financial performance and optimistic guidance, with improved EPS and EBITDA margins. The Q&A reveals a stable macro environment, slight improvement in net dollar expansion, and promising FedRAMP initiatives. Share repurchase plans and increased marketing investments add further positivity. Despite some management uncertainties, the overall sentiment is positive, indicating a likely stock price increase of 2% to 8%.
Revenue Revenues grew 10% to $164.1 million. The channel contribution increased to 49% of total revenues compared to 46% a year ago. Revenues from channel partners grew 17%, outpacing direct, which grew 4%. By geography, 15% growth outside the U.S. was ahead of the domestic business, which grew by 7%. U.S. and international revenue mix was 57% and 43%, respectively.
Net Dollar Expansion Rate Net dollar expansion rate improved to 104%, up from 103% last quarter. This was attributed to improved gross retention rate and upsell execution.
Adjusted EBITDA Adjusted EBITDA for Q2 2025 was $73.4 million, representing a 45% margin compared to a 47% margin a year ago. The decrease in margin was due to increased operating expenses driven by investments in sales, marketing, and R&D.
Operating Expenses Operating expenses in Q2 increased by 15% to $67.7 million, driven by investments in sales and marketing and R&D.
Earnings Per Share (EPS) EPS for Q2 2025 grew 11% to $1.68. This growth reflects the company's ability to innovate and invest in long-term growth initiatives while remaining capital efficient.
Free Cash Flow Free cash flow was $32.4 million, representing a 20% margin compared to 33% in the prior year. The decline was due to fluctuations in working capital. Normalizing for this, the first half 2025 margin was 43% compared to 45% in the prior year.
Share Repurchase $49.2 million was used to repurchase 375,000 outstanding shares in Q2. Since February 2018, the company has repurchased 10 million shares, returning over $1.1 billion in cash to shareholders. As of the end of the quarter, $254.6 million remained in the share repurchase program.
Launch of Agentic AI platform: Qualys introduced a reimagined Agentic AI platform for cyber risk management, featuring autonomous AI agents to automate business processes and adapt to customer environments.
TruRisk Eliminate enhancements: New capabilities allow organizations to assess trending risks, estimate breach impacts, and automate compensating controls if patching is risky.
Identity Security Posture Management (ISPM): Introduced to analyze identity systems for misconfigurations and excessive privileges, unifying identity risk management.
Public sector expansion: Received FedRAMP High authorization, positioning Qualys as a modern alternative for federal, state, and local agencies.
Channel partner growth: Channel revenues grew 17%, now contributing 49% of total revenues, up from 46%.
Revenue growth: Q2 revenues grew 10% to $164.1 million, with international revenue growth outpacing domestic.
Profitability: Adjusted EBITDA margin was 45%, with EPS growing 11% to $1.68.
Share repurchase: Repurchased 375,000 shares for $49.2 million, with $254.6 million remaining in the program.
New pricing model: Introduced Qualys units (QLUs) for flexible module adoption, enhancing customer loyalty and reducing costs.
Marketing leadership: Appointed May Mitchell as CMO to drive pipeline creation and brand awareness.
Macroeconomic Uncertainty: Ongoing macroeconomic uncertainty is impacting revenue growth and new business opportunities, leading to budget scrutiny and a challenging environment for new business growth in 2025.
Operational Complexity: Managing siloed tools adds complexity to operations, lacks integration, and hinders the ability to assess risk and centralize remediation, as highlighted by customer challenges.
Regulatory Compliance: Government agencies face challenges in meeting compliance requirements, such as the CISO binding operational directives, and transitioning from outdated on-prem deployments to cloud-native solutions.
Competitive Pressures: The cybersecurity market is highly competitive, with organizations seeking platforms that unify risk management while allowing flexibility across their security stack, creating pressure to innovate and differentiate.
Supply Chain and Vendor Risks: Dependence on third-party tools and integrations, such as CrowdStrike, Wiz, and others, introduces potential risks related to vendor reliability and compatibility.
Cost Management: Increasing costs associated with legacy and next-gen solutions, as well as investments in sales, marketing, and R&D, could impact profitability and operational efficiency.
Adoption and Scalability Challenges: Adoption of new pricing models and innovative solutions like Agentic AI and ETM may face resistance or scalability issues, impacting customer onboarding and satisfaction.
Revenue Guidance for Full Year 2025: Revenues are expected to be in the range of $656 million to $662 million, representing a growth rate of 8% to 9%. This is an increase from the prior guidance of $648 million to $657 million.
Revenue Guidance for Q3 2025: Revenues are expected to be in the range of $164.5 million to $167.5 million, representing a growth rate of 7% to 9%.
Profitability Guidance for Full Year 2025: EBITDA margin is expected to be in the range of low to mid-40s, with operating expenses increasing by 15% to 17% and a free cash flow margin in the mid-30s. Full-year EPS is expected to be in the range of $6.2 to $6.5, up from the prior range of $6 to $6.3.
Profitability Guidance for Q3 2025: EPS is expected to be in the range of $1.5 to $1.6.
Capital Expenditures for Full Year 2025: Planned capital expenditures are expected to be in the range of $7 million to $9 million.
Capital Expenditures for Q3 2025: Planned capital expenditures are expected to be in the range of $1 million to $3 million.
Market Trends and Business Environment: The guidance assumes continued budget scrutiny and a challenging environment for new business growth in 2025. Organizations are expected to increasingly adopt cloud-native full-stack security and compliance coverage to meet the demands of today's threat landscape and reduce costs.
Investment Focus: The company plans to prioritize increased investments in sales and marketing and engineering, with a more modest increase in G&A, to drive pipeline growth, accelerate the partner program, and expand the federal vertical.
Share Repurchase Program: In Q2, we continue to invest the cash we generated from operations back into Qualys, including $1.3 million in capital expenditures and $49.2 million to repurchase 375,000 of our outstanding shares. Since commencing our share repurchase program in February 2018, we've repurchased 10 million shares and returned over $1.1 billion in cash to shareholders. As of the end of the quarter, we had $254.6 million remaining in our share repurchase program.
The earnings call summary reflects a generally positive outlook. The company has increased its revenue and EPS guidance, indicating confidence in its financial performance. There is a focus on innovation and strategic investments, particularly in AI and federal markets, which are expected to drive growth. The Q&A section highlights strong growth potential through upselling and new product adoption. Despite some uncertainties in the federal market and competition, the overall sentiment remains optimistic, with no significant negative trends identified. This suggests a likely positive stock price movement in the short term.
The earnings call summary shows strong financial performance and optimistic guidance, with improved EPS and EBITDA margins. The Q&A reveals a stable macro environment, slight improvement in net dollar expansion, and promising FedRAMP initiatives. Share repurchase plans and increased marketing investments add further positivity. Despite some management uncertainties, the overall sentiment is positive, indicating a likely stock price increase of 2% to 8%.
The financial performance shows stable growth and strong margins, but macroeconomic uncertainties and budget scrutiny pose risks. The Q&A reveals cautious optimism with no significant deal disruptions, yet spending scrutiny affects upsell opportunities. The share repurchase program supports shareholder value, but competitive pressures and regulatory challenges persist. Overall, the mixed signals result in a neutral sentiment.
The earnings call reveals mixed signals: a 10% revenue increase and strong EPS are positive, but customer spending scrutiny and competitive pressures are concerning. The Q&A section highlights management's vague responses to economic challenges, adding uncertainty. Share repurchases are positive, but increased operating expenses and stagnant net dollar expansion rate offset some optimism. Overall, the sentiment is neutral, with no clear catalyst for significant stock movement.
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