According to a recent report, the global cloud security market is estimated to grow at 14% CAGR to reach $67.6 billion by 2026 from $34.8 billion in 2021. Cloud services security provider Qualys (Nasdaq: QLYS) recently announced its quarterly results that surpassed market expectations. The company recently acquired another cloud-management platform to expand its product capabilities.

Qualys’ Financials

For the second quarter of the year, Qualys’s revenues grew 12% to $99.7 million, surpassing the market’s estimates by 0.69%. Net income of $21.1 million was worse than net income of $26.2 million a year ago. Non GAAP EPS was $0.79, ahead of the market’s estimates of $0.68.

For the third quarter, Qualys forecast revenues of $103.8-$104.4 million, with adjusted earnings of $0.78-$0.80 a share. The market was looking for revenues of $102.78 million with an EPS of $0.66 for the quarter. Qualys expects to end the year with revenues of $406-$407.5 million and EPS of $1.38-$1.43. The market was looking for revenues of $402.97 million with an EPS of $2.73 for the year.

Earlier this summer, Philippe Courtot, Qualys’s former CEO and visionary, sadly passed away. Philippe had stepped away from Qualys earlier this year on account of his health. He had originally invested in Qualys in 1999 when the company was set up and became its CEO in 2001. His vision helped Qualys become a cloud delivery platform that continued to innovate. He helped take Qualys public in 2012 and helped it become a subscription-based cloud service.

Qualys’ TotalCloud Acquisition

Keeping with its tradition of acquiring Indian startups, Qualys recently announced the acquisition of Bangalore-based TotalCloud. Founded in 2016 by Pradeep Kumar and Rajanish Dodamani, TotalCloud is a workflow-based cloud management platform with the ability to automate simple and complex cloud use cases with complete customization.

The acquisition will allow Qualys to strengthen its cloud security solution, enabling customers to build user-defined workflows for custom policies as well as executing them on-demand for simplified security and compliance. It will enable Qualys’s customers to use TotalCloud’s platform to automate cloud management activities, including security, backups, monitoring, reporting, and scheduling. Its customers will be able to use TotalCloud to automate security activities that involve multiple cloud services and incorporate ServiceNow and other tools into their cloud workflows.

Prior to the acquisition, TotalCloud was privately held. It did not disclose its funding and financials. Terms of the acquisition were not revealed. Qualys is known to acquire smaller Indian startups as part of its acqui-hire strategy. It invests in acquiring capital-efficient startups to drive market and technological expansion. It has added names like 1Mby1M portfolio company Adya, 1Mobility, Nevis Networks, and Spell Security as part of this trend.

Besides the acquisition, Qualys also announced several new products. It introduced Cybersecurity Asset Management (CSAM), which leverages vital context from the Qualys Cloud Platform to help security teams inventory their complete IT ecosystem, detect security gaps, and respond to risks, all from a unified platform. It added real-time malware protection capabilities to Qualys Multi-Vector EDR to provide customers with the ability to detect and block advanced threats including ransomware. Qualys extended its VMDR capabilities to support the patching of Linux systems within the same platform that supports patching of Windows and third-party apps.

While the recent results were impressive, the market remains concerned on both its top-line and bottom-line performance. There remains uncertainty around the bookings growth over the medium-term. According to recent channel checks, it appears that Qualys is facing stiffer pricing pressure from core Vulnerability Management (VM) competitors such as Rapid7 and Tenable, resulting in a declining competitive positioning.

Qualys’s stock is currently trading at $114.61 with a market capitalization of $4.46 billion. It touched a 52-week high of $148.84 in January and a 52-week low of $86.65 in October last year.