• Full Year Revenue: $607.6 million, a growth of 10%.
• Adjusted EBITDA Margin: 47% for the full year.
• Net Income: $229 million, a growth of 16%.
• Earnings Per Share (EPS): $6.13 per diluted share, a growth of 16%.
• Free Cash Flow: $231.8 million, representing 30% of revenue.
• Q4 Revenue: $159.2 million, a growth of 10%.
• Channel Revenue Contribution: 48% of total revenues, up from 44% a year ago.
• Gross Retention Rate: Approximately 90%.
• Net Dollar Expansion Rate: 103%.
• Q4 Adjusted EBITDA: $74.2 million, representing a 47% margin.
• Q4 EPS: $1.60.
• Q4 Free Cash Flow: $41.9 million, representing a 26% margin.
• Share Repurchase Program: $343.4 million available after a $200 million increase.
• 2025 Revenue Guidance: $645 million to $657 million, growth of 6% to 8%.
• 2025 EPS Guidance: $5.50 to $5.90.
• 2025 EBITDA Margin Guidance: Low 40s.

• Warning! GuruFocus has detected 2 Warning Sign with VREX.

Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Qualys Inc (NASDAQ:QLYS) reported a 10% revenue growth for the full year 2024, reaching $607.6 million.
• The company achieved an adjusted EBITDA margin of 47%, demonstrating strong financial discipline.
• Qualys Inc (NASDAQ:QLYS) introduced innovative products like TruRisk Eliminate and TotalAI, enhancing their cybersecurity offerings.
• The company saw a 13% increase in customers spending $500,000 or more, indicating strong customer retention and growth.
• Qualys Inc (NASDAQ:QLYS) expanded its channel partner contributions, with revenues from channel partners growing by 18%.

Negative Points

• The net dollar expansion rate remained flat at 103%, indicating challenges in upselling to existing customers.
• New bookings performance was disappointing in Q4, impacting revenue growth expectations for 2025.
• The departure of Chief Revenue Officer Dino DiMarino may lead to potential disruptions in sales execution.
• Guidance for 2025 indicates a lower revenue growth rate of 6% to 8%, reflecting cautious market conditions.
• The company anticipates a contraction in gross margin by approximately 1% due to investments in data centers.

Q & A Highlights

Q: With Dino's departure, how will you manage sales efforts and balance your time across various responsibilities? A: Sumedh Thakar, President and CEO, stated that he has managed similar transitions before and is prepared to oversee sales efforts. The focus will be on executing the 2025 plan, emphasizing a partner-oriented go-to-market strategy. The leadership team below Dino is strong and committed, which will aid in maintaining momentum.

Q: Can you discuss the potential of TotalAI and its competitive landscape? A: Sumedh Thakar highlighted that TotalAI is unique in its ability to discover and secure AI workloads using existing Qualys infrastructure. Early feedback is positive, with customers interested in securing AI applications. The market is greenfield, and while budget allocations for AI security are still evolving, the opportunity is promising.

Q: What drove the strong revenue and billing performance in Q4, and how does it relate to guidance for Q1 and 2025? A: Joo Mi Kim, CFO, explained that better linearity in renewals contributed to Q4's strong performance. However, Q1 guidance appears lighter due to fewer days in the quarter and no assumptions of late renewal slippage. The full-year guidance assumes stable net dollar expansion rates and a continued partner-first approach, which may impact short-term growth.

Q: How does the Enterprise TruRisk Management (ETM) platform differentiate Qualys, and how is it integrated into the go-to-market strategy? A: Sumedh Thakar emphasized that ETM is unique in its comprehensive risk quantification and remediation capabilities. It allows Qualys to engage with customers without requiring immediate tool replacement, facilitating easier adoption. The platform is also designed to be leveraged through partners, offering them opportunities for additional service revenue.

Q: What are the expectations for channel investments translating into top-line growth, and what still needs to happen? A: Sumedh Thakar noted that channel investments are part of a multi-year strategy. The focus is on improving deal registrations and win rates with partners, providing training, and enabling partners to generate significant service revenue through managed services. The strategy is progressing well, with a shift towards more partner-driven business.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.