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01/09 23:50
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
Revenue $169.9 million, a 10% increase year-over-year. Growth was driven by a 17% increase in revenues from channel partners, which outpaced the 5% growth in direct revenues. International revenue grew by 15%, ahead of the 7% growth in the U.S.
Adjusted EBITDA $82.6 million, representing a 49% margin, up from a 45% margin a year ago. This improvement reflects the company's scalable and sustainable business model, as well as optimized investments in sales and marketing.
Earnings Per Share (EPS) $1.86, a 19% increase year-over-year. This growth was supported by strong operational performance and high operating leverage.
Free Cash Flow $89.5 million, representing a 53% margin, up from 37% in the prior year. Year-to-date free cash flow margin was 46%, compared to 42% in the prior year. The increase was attributed to strong operational cash generation and efficient capital allocation.
Operating Expenses $64.9 million, a 5% increase year-over-year. The rise was primarily driven by a 9% increase in sales and marketing expenses, reflecting the company's focus on driving growth.
Net Dollar Expansion Rate 104%, unchanged from the previous quarter. While gross retention improved, upsells remained challenging.
Share Repurchase $49.4 million spent to repurchase 366,000 shares in Q3. Since 2018, the company has repurchased 10.4 million shares, returning $1.2 billion to shareholders.
Agentic AI Risk Operations Center (ROC): Qualys is pioneering a new category in cybersecurity designed to centralize an organization's response to threats before they impact the business. Powered by the ETM solution, it processes high-fidelity data, normalizes and correlates intelligence, and enables real-time collaboration between AI and humans to detect and respond to threats.
TruConfirm: A new capability that confirms exploitability before customers are compromised. It uses automated validation to prioritize exploitable blind spots and enables automated remediation with TruRisk Eliminate.
TruRisk Eliminate: An AI-based automated remediation solution that addresses vulnerabilities when patches are too risky or unavailable. It has evolved into a significant adoption layer and competitive advantage for Qualys.
Federal and State Government Wins: Achieved a high 6-figure upsell with a large government agency and a 7-figure state win, showcasing strength in the federal and local government market.
Global 700 Customer Win: Secured a mid-6-figure annual bookings upsell by consolidating fragmented telemetry and disconnected tools into a cohesive risk management solution.
Middle East Airline Win: Gained a new 6-figure customer win with a major airline due to unified detection and remediation capabilities.
Q-Flex Pricing Model: Introduced a flexible pricing model to accelerate adoption of the Qualys Enterprise TruRisk platform. A Global 10 customer increased annual bookings by over 50% under this program.
Partner Ecosystem: Partner-led deal registrations increased, and nearly a dozen partners launched mROC services leveraging ETM. This momentum is expected to grow with additional strategic partners.
Shift to ETM Customer Penetration Reporting: Starting Q1 2026, Qualys will report ETM customer penetration instead of cybersecurity asset management bookings, reflecting ETM's evolution as a key growth pillar.
Focus on Pre-Breach Risk Management: Qualys is positioning itself as a leader in pre-breach cyber risk management, emphasizing innovation and operational efficiencies to address security challenges.
Market Conditions: Budget scrutiny and challenging environment for new business growth in Q4, indicating potential macroeconomic volatility.
Competitive Pressures: Competitors are beginning to validate strategies similar to Qualys, which could increase market competition.
Regulatory Hurdles: No explicit mention of regulatory hurdles, but federal and state agency wins suggest compliance and regulatory challenges may exist.
Supply Chain Disruptions: No explicit mention of supply chain disruptions.
Economic Uncertainties: Budget scrutiny and macroeconomic challenges are impacting upsells and new business growth.
Strategic Execution Risks: Challenges in upselling existing customers, with net dollar expansion rate remaining at 104%, indicating difficulty in driving growth from current customer base.
Revenue Guidance for Full Year 2025: Expected revenues to be in the range of $665.8 million to $667.8 million, representing a growth rate of 10%. This is an increase from the prior guidance of $656 million to $662 million.
Revenue Guidance for Q4 2025: Expected revenues to be in the range of $172 million to $174 million, representing a growth rate of 8% to 9%.
Profitability Guidance for Full Year 2025: EBITDA margin is expected to be in the mid- to high 40s, and net free cash flow margin in the low 40s.
EPS Guidance for Full Year 2025: Expected EPS to be in the range of $6.93 to $7, up from a prior range of $6.2 to $6.5.
EPS Guidance for Q4 2025: Expected EPS to be in the range of $1.73 to $1.8.
Capital Expenditures for Full Year 2025: Planned capital expenditures are expected to be in the range of $5.5 million to $7 million.
Capital Expenditures for Q4 2025: Planned capital expenditures are expected to be in the range of $1.2 million to $2.7 million.
Dividend Program: No mention of a dividend program or related metrics in the transcript.
Share Repurchase Program: The company repurchased 366,000 shares for $49.4 million in Q3 2025. Since February 2018, the company has repurchased 10.4 million shares, returning $1.2 billion to shareholders. As of the end of Q3 2025, $205 million remains in the 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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