Qualys, Inc. QLYS ended 2024 on a strong note with better-than-expected results for the fourth quarter. The company reported fourth-quarter 2024 non-GAAP earnings of $1.60 per share, which surpassed the Zacks Consensus Estimate of $1.35 and came above management’s guidance of $1.28-$1.38.

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The bottom line also witnessed a significant improvement from the year-ago quarter’s earnings of $1.40. The robust year-over-year growth was primarily driven by higher revenues, improved efficiency, increased financial income and lower diluted share outstanding, partially offset by increased taxes.

Qualys’ earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 15.6%.

Qualys, Inc. Price, Consensus and EPS Surprise

Qualys, Inc. price-consensus-eps-surprise-chart | Qualys, Inc. Quote

Qualys’ third-quarter revenues increased 10% year over year to $159.2 million and surpassed the Zacks Consensus Estimate of $156.1 million. The year-over-year increase in the top line was achieved by leveraging the partner ecosystem.

Despite reporting stronger-than-expected fourth-quarter results, shares of Qualys fell 5.6% in the extended trading session on Thursday as the earnings per share (EPS) guidance for full-year 2025 fell short of the Zacks Consensus Estimate. QLYS stock has plunged 20.6% over the past year, underperforming the Zacks Security industry’s decline of 15.3%.

Qualys’ Fourth Quarter in Detail

During the fourth quarter, sales from channel partners increased 18%, outpacing the 3% sales growth registered in direct selling. Revenue contribution mix from channel partners was 48% in the fourth quarter, while direct selling accounted for the remaining 52%.

Geography-wise, sales in the United States grew 7% year over year and contributed approximately 58% to the fourth-quarter total revenues. Accounting for the remaining 42% of fourth-quarter total revenues, international sales increased 15%.

Qualys’ net dollar expansion rate on a constant currency basis for the fourth quarter was 103%.

QLYS’ non-GAAP gross profit increased 11% year over year to $130.2 million, while the non-GAAP gross margin expanded 100 basis points to 84% in the fourth quarter. Non-GAAP operating income grew 16% to $70.7 million, while the non-GAAP operating margin improved 200 basis points to 44%.

Adjusted EBITDA for the fourth quarter rose 13% to $74.2 million, while adjusted EBITDA margin expanded 100 bps to 47%.

Qualys’ FY24 Performance in Brief

Qualys’ full-year 2024 revenues increased 10% year over year to $607.6 million and surpassed the Zacks Consensus Estimate of $604.5 million. The top line also came above management’s guidance range of $602.9-$605.9 million.

Qualys reported 2024 non-GAAP earnings of $6.13 per share, which surpassed the Zacks Consensus Estimate of $5.88 and came above management’s guidance of $5.81-$5.91.

Qualys’ Balance Sheet & Cash Flow

Qualys ended the quarter with cash and cash equivalents and marketable securities of $381.4 million. The company generated an operating cash flow of $47.7 million in the fourth quarter and $244.1 in full-year 2024. It generated a free cash flow of $231.8 million in 2024.

Qualys repurchased stocks worth $42.3 million in the fourth quarter and $139.9 million in full-year 2024. At the end of 2024, it has $143.4 million remaining under the ongoing share repurchase program.

Qualys Initiates Guidance

Qualys initiated guidance for the first quarter and full-year 2025. For the first quarter, the company expects revenues between $155.5 million and $158.5 million, indicating year-over-year growth of 7-9%. It projects non-GAAP earnings in the range of $1.40-$1.50. The Zacks Consensus Estimate for revenues and EPS are currently pegged at $157.9 million and $1.45 per share, respectively.

For 2025, QLYS expects revenues in the range of $645-$657 million, indicating a year-over-year growth of 6-8%. The company projects its non-GAAP earnings per share in the range of $5.50-$5.90. The consensus mark for the top and bottom lines are pegged at $652.1 million and $6.04, respectively.

Qualys’ Zacks Rank & Stocks to Consider

Currently, Qualys carries a Zacks Rank #3 (Hold).

Atlassian TEAM, Planet Labs PBC PL and Fortinet FTNT are some top-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector. TEAM, PL and FTNT carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Atlassian shares have dropped 4% for the past year. The Zacks Consensus Estimate for TEAM’s fiscal 2025 earnings is pegged at $3.45 per share, indicating a 17.8% year-over-year increase.

Planet Labs PBC shares have surged 152% in the past year. The Zacks Consensus Estimate for PL’s fiscal 2025 bottom line is pinned at a loss of 15 cents per share. In fiscal 2024, the company had reported a loss of 50 cents per share.

Fortinet shares have gained 52.2% for the past year. The Zacks Consensus Estimate for FTNT’s full-year 2025 earnings is pegged at $2.38 per share, suggesting a year-over-year increase of 6.5%.

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