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Qualys (QLYS) to Report Q2 Earnings: What Lies in Store?

Zacks Equity Research

Qualys QLYS is slated to release second-quarter 2019 results on Jul 30.

Notably, the company surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average being 21.14%.

In the last reported quarter, the company’s top line matched but the bottom line missed the Zacks Consensus Estimate. However, both earnings and revenues recorded a year-over-year improvement.

Continued platform innovation and increasing customer adoption of the Qualys Cloud Platform and Cloud Agents drove top-line growth.

What to Expect in Q2

For the second quarter, Qualys anticipates revenues in the range of $78.2-$78.7 million, indicating 15.4% year-over-year growth at midpoint ($78.45 million). The Zacks Consensus Estimate for revenues is pegged at $78.5 million.

Further, non-GAAP earnings are projected in the range of 46-48 cents. The Zacks Consensus Estimate stands at 47 cents, which is 20.51% higher than the year-ago quarter reported number.

Total capital expenditures are expected to be in the range of $5.5 million to $6.5 million.

Let’s see how things are shaping up prior to this announcement.

Qualys, Inc. Price and EPS Surprise

Qualys, Inc. Price and EPS Surprise

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

Factors to Consider

Qualys is benefiting from a healthy demand environment in the security market due to the increasing frequency and technologically advanced nature of cyber-attacks. This is likely to have boosted adoption of the company’s solutions in the to-be-reported quarter. Moreover, continued platform adoption is a positive.

Progression of Cloud Agents, which recorded about 18 million subscriptions in the first quarter, more than doubling year over year, is a tailwind. Growing number of subscriptions in this space is likely to drive second-quarter results. Moreover, with the release of the Cloud Agent Gateway Service in April this year, customers can roll out Cloud Agents easily and cost effectively at a large scale. This is expected to increase subscriptions further.

Significant early momentum in Container Security, driven by strong capabilities of Qualys’ Cloud Platform, is expected to be a tailwind for the upcoming results. Notably, Microsoft MSFT Azure recently selected the company’s Container Security solution.

However, intense competition from the likes of FireEye FEYE, Fortinet et al is a major concern. Moreover, Palo Alto’s PANW growing presence in the container security space has likely been a concern for the demand flow of Qualys’ container security solutions in the second half of the to-be-reported quarter.

Qualys currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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