Qualys Revenue Growth Reaccelerates, Billings Jump 16%
Qualys posted 11% revenue growth to $182.2 million in the quarter, breaking a five-quarter streak stuck at 10%, and raised its full-year outlook.
Qualys (QLYS) reported second-quarter revenue of $182.2 million, up 11% from a year earlier, and raised its full-year guidance on the back of accelerating bookings activity. The cybersecurity software maker's growth rate had been pinned at 10% for three straight quarters — Q3 2023, Q4 2023 and Q1 2024 — before ticking up in the period reported August 4.
The acceleration in revenue was smaller than the acceleration in the metric that leads it. Calculated current billings, a proxy for bookings that lands on the balance sheet before it shows up in revenue, grew 16% year-over-year in the quarter to $176.5 million, up from 8% growth in the same quarter last year. That gap between 16% billings growth and 11% revenue growth suggests demand strengthened faster than Qualys has yet been able to recognize it, a pattern that typically shows up in subsequent quarters' revenue.
Qualys raised its full-year 2024 revenue guidance to a range of $732.0 million to $738.0 million, implying 9% to 10% growth, up from the $721.0 million to $727.0 million range it had set just one quarter earlier. The company also lifted its earnings outlook: full-year GAAP earnings per share guidance rose to $5.76 to $5.90 a share from $5.40 to $5.61 a share, while non-GAAP guidance moved to $7.74 to $7.88 a share from $7.44 to $7.65 a share.
Profitability metrics told a more mixed story than the top-line numbers. GAAP operating margin held at 34% in the quarter, matching the fourth quarter of 2023 but down from 35% in the first quarter of 2024, and non-GAAP operating margin of 45% came in below the 46% to 47% range Qualys had posted in each of the prior three quarters. Net margins moved in the same direction: GAAP net margin was flat year-over-year at 29%, and non-GAAP net margin improved to 38% from 37% a year earlier but still trailed the 39% to 40% non-GAAP net margins reported in the third and fourth quarters of 2023 and the first quarter of 2024.
Cash generation improved sharply even as margins compressed. Operating cash flow rose 77% year-over-year to $59.6 million, or 33% of revenue, compared with $33.8 million, or 21% of revenue, in the same quarter last year. That rebound followed a first quarter in which operating cash flow had actually declined 13% year-over-year to $95.3 million, making the swing a reversal rather than a continuation of trend. Accounts receivable fell to $139.8 million at June 30 from $171.0 million at the end of December, a steeper decline than the $35.0 million drop in the comparable period a year earlier.
Qualys accelerated its share repurchases alongside the cash flow improvement, buying back $131.4 million of common stock in the first half of 2024 compared with $89.5 million in the same period of 2023. The pace follows a $200 million increase to the buyback authorization that Qualys announced alongside its fourth-quarter 2023 results.
For the third quarter, Qualys guided to revenue of $185.5 million to $187.5 million, representing 9% to 10% growth — a step down from the 11% growth just reported. The company's billings trajectory, running well ahead of revenue for a second straight period, will be the figure to watch for whether that deceleration proves temporary.