Early this month, cloud-based security and compliance solutions provider Qualys reported results for its second quarter that beat estimates. It also raised its outlook for the year.

Qualys’ Financials

In the recent second quarter results, Qualys reported revenue of $68.2 million, up 23%. GAAP net income was $10.3 million, or $0.24 per diluted share, compared to $7.2 million, or $0.18 per diluted share a year ago. Non-GAAP net income was $16.4 million, or $0.39 per diluted share. Analysts expected earnings of $0.34 per share on revenue of $67.1 million.

During the quarter, the percentage of enterprise customers with three or more Qualys solutions rose to 37%, up from 28% a year ago. The percentage of enterprise customers with four or more Qualys solutions rose to 19% this quarter, up from 11% a year ago. The average deal size grew 19% in the quarter. New products released since 2015 contributed about 15% of total bookings in the quarter, up from 9% in Q2 2017.

Adjusted EBITDA was $26.7 million, which translates to a 39% margin as compared to 37% a year ago.

For the third quarter, Qualys expects revenue in the range of $70.9 million to $71.5 million, representing 19% to 20% growth. It expects GAAP net income per diluted share in the range of $0.20 to $0.23 and non-GAAP net income per diluted share in the range of $0.37 to $0.39.

The company raised its guidance for the full year 2018 to be in the range of $278 million to $279.2 million, or 20% to 21% growth, up from the previous guidance range of $276.8 million to $278.5 million. GAAP net income per diluted share is now expected to be in the range of $0.84 to $0.88, up from the previous guidance range of $0.74 to $0.79. Non-GAAP net income per diluted share is expected to be in the range of $1.46 to $1.50, up from the previous guidance range of $1.43 to $1.48. Analysts expect earnings of $1.46 a share on revenue of $278.1 million.

Qualys’ Offerings

During the quarter, Qualys added several new customers to its client list including Atrium Health, Danone, Government of the District of Columbia, Hexion, ManpowerGroup, Philips Lighting, Room & Board, Southern Company, TE Connectivity, and Zscaler.

Qualys recently released the Qualys’ Container Security (CS) App. It enables customers to build continuous security into their global container deployments and DevOps processes at any scale, and integrate the results into one unified view of their global hybrid IT security and compliance posture, breaking down silos and lowering ownership cost.

Qualys also introduced a new functionality for the Security Assessment Questionnaire (SAQ) Cloud App that allows customers to achieve better visibility of data across their own network and supply chain for compliance with the European Union’s General Data Protection Regulations.

The company also announced the introduction of Asset Inventory (AI), an app for global IT asset inventory and Configuration Management Databases (CMDB) synchronization. It provides customers with a single “source of truth” for all IT assets within hybrid environments.

Qualys’ Acquisitions

In June, Qualys announced that it has entered into a non-binding letter of intent to purchase Second Front Systems. The acquisition is expected to provide increased domain expertise in building and delivering cyber security solutions tailored for the U.S. federal government, including defense, intelligence, and law enforcement. Second Front Systems was previously a Qualys channel partner for delivering solutions to federal agencies using the Qualys Gov Platform.

Qualys would expect Second Front Systems to operate under its federal division as an independent subsidiary. The transaction is expected to close either in Q3 or Q4 of this year. Terms of the deal were not disclosed.

During the quarter, Qualys purchased a minority stake in 42Crunch and simultaneously signed a distribution agreement. 42Crunch has developed an API security platform enabling organizations to quickly deliver applications built on secure APIs. This was the first Qualys venture investment.

Its stock is trading at $90.5 with a market cap of $3.51 billion. It hit a 52-week low of $45.10 a year ago. It hit a 52-week high of $98.3 in July just before the results.

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