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Qualys Counts on Acquisitions for Growth

Posted on Friday, Nov 2nd 2018

According to a recent report by Research and Markets, the global cyber security market is expected to grow from $152.71 billion in 2018 to $248.26 billion by 2023 at a CAGR of 10%. Earlier this week, cloud-based security player Qualys (Nasdaq: QLYS) reported its third quarter results that surpassed market expectations for the fourth consecutive quarter.

Qualys’ Financials

Qualys saw its third quarter revenues grow 21% over the year to $71.7 million, ahead of the market’s estimates of $71.3 million. GAAP net income for the quarter came in at $23.5 million, compared with $8.5 million reported a year ago. Adjusted EPS of $0.49 was also better than the market’s forecast of $0.38 for the quarter.

For the current quarter, Qualys forecast revenues of $73.7-$74.5 million with an EPS of $0.39-$0.41. It expects to end the year with revenues of $278.4-$279.2 million and an EPS of $1.46-$1.50. The Street was looking for Q4 revenues of $74.58 million with an EPS of $0.37 and full year revenues of $278.9 million with an EPS of $1.49.

Qualys’ Acquisition

Qualys is building its technology and market offerings through several acquisitions. It recently announced plans to acquire the Container-Native security player Layered Insight for an undisclosed sum.

Pleasanton, California-based Layered Insight delivers visibility into applications running inside containers, thus enabling organizations to set policies, automate enforcement, and detect breaches during runtime. It is able to extend these capabilities to serverless container environments including those on Amazon Fargate and Microsoft Azure Container Instances. Qualys plans to integrate these technologies into its solution to offer its customers coverage of inventory, vulnerability management, and compliance. The acquisition should bring orchestration capabilities to Qualys’s Container Security solution and enable Qualys to address the issues of visibility into and security of container images.

Qualys’ Product Expansion

Besides growth through acquisitions, Qualys is also improving its product offerings.  Recently, it showcased a Passive Network Sensor (PNS) and Cloud App that can integrate network analysis into Qualys Cloud Platform for complete IT visibility and real-time data correlation at significantly lower costs.

It released a new Out-of-Band Configuration Assessment (OCA) sensor and Cloud App that allows customers to achieve complete visibility of all known IT infrastructure by pushing vulnerability and configuration data to the Qualys Cloud Platform from systems that are otherwise difficult or impossible to assess.

Qualys has been integrating its offerings with the Cloud. Its new integration with Microsoft Azure Stack provides Azure customers a single-pane view of the security and compliance posture across Azure infrastructure and user workloads. It allows customers using Azure’s hybrid cloud model to easily detect vulnerable systems and applications across workloads deployed in Azure and Azure Stack. Additionally, Qualys also added the ability to continuously monitor and assess Azure workloads for compliance with the Center for Internet Security, a Microsoft Azure Foundations Benchmark that helps build security into DevOps initiatives.

Qualys is tapping into the SaaS opportunity successfully. It continues to expand its range of new products to ensure revenue growth to help dissipate competition from players like Rapid7. I would like to know what other features do you think Qualys should add to its service to make it superior to the competition?

Its stock is currently trading at $74.55 with a market capitalization of $2.91 billion. It touched a 52-week high of $98.30 in July this year. It was trading at a 52-week low of $53.20 in November last year. The tumbling stock price is due to the price adjustment of the macro market in October.


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