Qualys Inc. Earnings Call: Balanced Outlook Amid Challenges

Qualys Inc ((QLYS)) has held its Q1 earnings call. Read on for the main highlights of the call.

Qualys Inc. recently held its earnings call, presenting a balanced outlook that highlighted significant achievements in product innovation, channel growth, and key customer wins. However, these positives were tempered by macroeconomic challenges and a cautious revenue growth outlook.

Better-than-Expected Revenue Growth

Qualys reported a 10% increase in revenue, reaching $159.9 million, surpassing expectations for the quarter. This growth demonstrates the company’s ability to navigate current market conditions effectively.

Increased Channel Contribution

The channel’s contribution to total revenues rose to 49%, up from 45% a year ago, with channel partner revenue growing by an impressive 19%. This indicates a successful strategy in leveraging partnerships to drive revenue.

Strong Profitability and Cash Flow

Qualys maintained strong profitability with an adjusted EBITDA of $74.8 million, representing a 47% margin, consistent with last year. Free cash flow was notably high at $107.6 million, a 67% margin, up from 57% in the prior year.

New Product Innovations

The company expanded its TotalAI and TruRisk capabilities and introduced new solutions like Policy Audit and Audit Fix, aiming to streamline audit operations and enhance its product offerings.

High-Value Customer Wins

Qualys secured significant deals, including a seven-figure annual booking with a Global 100 media company and a Global 50 financial services company, showcasing its appeal to major enterprises.

Macro-Economic Uncertainty

Despite successes, the company noted increased budget scrutiny and a challenging upsell environment, with the net dollar expansion rate remaining stagnant at 103%.

Slow Growth in Direct Revenue

Direct revenue growth was modest at 2%, significantly lagging behind the 19% growth seen in channel partner revenue, highlighting a potential area for improvement.

Reduced FY Revenue Growth Guidance

Qualys adjusted its full-year 2025 revenue growth guidance to a range of 7% to 8%, slightly down from previous expectations. This cautious outlook reflects ongoing macroeconomic uncertainties.

Forward-Looking Guidance

For the year ahead, Qualys anticipates revenues between $648 million and $657 million, with a growth rate of 7% to 8%. The adjusted EBITDA margin is expected to be in the low-to-mid 40s, with operating expenses projected to grow by 15% to 17%. Earnings per share are forecasted to be between $6 and $6.3, an increase from prior guidance.

In summary, Qualys Inc.’s earnings call presented a mixed picture, with strong revenue growth and profitability balanced by cautious forward guidance due to macroeconomic challenges. The company’s strategic focus on channel partnerships and product innovation remains a key driver of its success.