Q - QUALYS,
For the period ended Jun 30, 2025. Filed Aug 5, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 5, 2025
QLYS$190.41-4.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-06.
0001107843-25-000017
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-05.
0001107843-25-000031
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 100 previous paragraphs and 108 current paragraphs.
82 unchanged; 17 reworded; 5 added; 1 removed; 0 previous and 4 current paragraphs rearranged.
Tables are not compared: 10 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (5)
Current report
On July 4, 2025, the United States enacted tax reform legislation through the One Big Beautiful Bill Act (OBBBA). Included in this legislation are provisions that allow for the immediate expensing of domestic United States research and development expenses, immediate expensing of certain capital expenditures, and other changes to the United States taxation of profits derived from foreign operations. As the legislation was signed into law after the close of our second quarter, the impacts are not included in our operating results for the six months ended June 30, 2025. We continue to evaluate the impact of OBBBA, but currently do not expect it to have a material impact on our estimated annual effective rate in 2025.
Current report
Research and development expenses increased by $4.8 million for thesix months ended June 30, 2025 compared to the same period in 2024, primarily due to an increase in personnel costs, including stock-based compensation, of $3.9 million, driven by additional employees hired to support the growth of our business, and an increase in shared cloud platform cost of $0.9 million.
Current report
Sales and marketing expenses increased by $6.9 million for thesix months ended June 30, 2025 compared to the same period in 2024, primarily due to an increase in personnel costs, driven by increased headcount and an increase in sales commissions, of $3.4 million, and an increase in marketing expenses, primarily related to digital advertising, partner event and sponsorship, of $2.7 million, and travel expenses of $0.8 million.
Current report
General and administrative expenses increased by $2.8 million for the three months ended June 30, 2025 compared to the same period in 2024, primarily due to an increase in personnel costs, including stock-based compensation, of $2.8 million, primarily driven by increase in incentive compensation compared to the same period in 2024, and an increase in license expenses and professional service expenses of $0.5 million, partially offset by a decrease in overhead allocations of $0.5 million.
Current report
General and administrative expenses increased by $3.3 million for thesix months ended June 30, 2025 compared to the same period in 2024, primarily due to an increase in personnel costs, including stock-based compensation, of $3.4 million, primarily driven by increase in headcount and increase in incentive compensation compared to the same period in 2024, an increase in license expenses and professional service expenses of $0.7 million, and an increase in depreciation of $0.5 million due to office renovations, partially offset by a decrease in overhead allocations of $1.3 million.
Removed paragraphs (1)
Previous report
General and administrative expenses increased by $0.5 million for the three months ended March 31, 2025 compared to the same period in 2024, primarily due to an increase in personnel costs, including stock-based compensation, of $0.7 million, driven by increased headcount, partially offset by a decrease in legal fees of $0.2 million.
Reworded paragraphs (17)
Previous wording
•economic and financial conditions, including volatility in foreign exchange rates, inflation concerns, high interest rates, recessionary fears, significant volatility of global markets, reduced spending and extended sales cycles, and geopolitical conflicts;
Current wording
•economic and financial conditions, including volatility in foreign exchange rates, inflation concerns, high interest rates, recessionary fears, significant volatility of global markets, reduced spending, budget scrutiny and extended sales cycles, and geopolitical conflicts;
Previous wording
We market and sell our solutions to enterprises, government entities and small and medium-sized businesses across a broad range of industries, including education, financial services, government, healthcare, insurance, manufacturing, media, retail, technology and utilities. For the three months ended March 31, 2025 and 2024, approximately 57% and 59%, respectively, of our revenues were derived from customers in the United States based on our customers' billing addresses. We sell our solutions to enterprises and government entities primarily through our field sales force and to small and medium-sized businesses through our inside sales force. We generate a significant portion of sales through our channel partners, including managed security service providers, leading cloud providers, value-added resellers and consulting firms in the United States and internationally.
Current wording
We market and sell our solutions to enterprises, government entities and small and medium-sized businesses across a broad range of industries, including education, financial services, government, healthcare, insurance, manufacturing, media, retail, technology and utilities. For the six months ended June 30, 2025 and 2024, approximately 57% and 59%, respectively, of our revenues were derived from customers in the United States based on our customers' billing addresses. We sell our solutions to enterprises and government entities primarily through our field sales force and to small and medium-sized businesses through our inside sales force. We generate a significant portion of sales through our channel partners, including managed security service providers, leading cloud providers, value-added resellers and consulting firms in the United States and internationally.
Previous wording
Comparison of Three and Three Months Ended March 31, 2025 and 2024
Current wording
Comparison of Three and Six Months Ended June 30, 2025 and 2024
Previous wording
Revenues increased by $14.1 million for the three months ended March 31, 2025 compared to the same period in 2024, driven by increased demand for our subscription services by our end customers. Of the total increase of$14.1 million in revenues, 96% was from revenues from customers existing prior to January 1, 2025, and the remaining 4% was from new customers added in the three months ended March 31, 2025. Of the total increase of$14.1 million, 34% was from customers in the United States and the remaining 66% was from customers in foreign countries. Of the total increase of$14.1 million, 11% was from direct customers and the remaining 89% was from partners. In the three months ended March 31, 2025, 51% of total revenue was direct and the remaining 49% was from partners.
Current wording
Revenues increased by $15.4 million for the three months ended June 30, 2025 compared to the same period in 2024, driven by increased demand for our subscription services by our end customers. Of the total increase of$15.4 million in revenues, 95% was from revenues from customers existing prior to April 1, 2025, and the remaining 5% was from new customers added in the three months ended June 30, 2025. Of the total increase of$15.4 million, 38% was from customers in the United States and the remaining 62% was from customers in foreign countries. Of the total increase of$15.4 million, 23% was from direct customers and the remaining 77% was from partners. In the three months ended June 30, 2025, 51% of total revenue was direct and the remaining 49% was from partners.
Previous wording
Cost of revenues increased by $1.7 million for the three months ended March 31, 2025 compared to the same period in 2024, primarily due to an increase in personnel costs, including stock-based compensation, of $1.2 million, driven by additional employees hired to support the growth of our business, an increase in license expenses and professional service expenses of $1.0 million, and an increase in shared cloud platform cost of $0.6 million, partially offset by a decrease in depreciation and amortization expense of $1.1 million resulting from certain of our assets becoming fully depreciated or amortized.
Current wording
Cost of revenues increased by $2.5 million for the three months ended June 30, 2025 compared to the same period in 2024, primarily due to an increase in personnel costs, including stock-based compensation, of $1.8 million, driven by additional employees hired to support the growth of our business, an increase in shared cloud platform cost of $0.9 million, and an increase in license expenses and professional service expenses of $0.7 million, partially offset by a decrease in depreciation and amortization expense of $0.9 million resulting from certain of our assets becoming fully depreciated or amortized.
Previous wording
Research and development expenses increased by $1.6 million for the three months ended March 31, 2025 compared to the same period in 2024, primarily due to an increase in personnel costs, including stock-based compensation, of $1.1 million, driven by additional employees hired to support the growth of our business, and an increase in shared cloud platform cost of $0.5 million.
Current wording
Research and development expenses increased by $3.1 million for the three months ended June 30, 2025 compared to the same period in 2024, primarily due to an increase in personnel costs, including stock-based compensation, of $2.6 million, driven by additional employees hired to support the growth of our business, and an increase in shared cloud platform cost of $0.5 million.
Previous wording
Sales and marketing expenses increased by $3.3 million for the three months ended March 31, 2025 compared to the same period in 2024, primarily due to an increase in marketing expenses related to advertising of $1.3 million and trade shows of $1.0 million. The remaining increase is attributable to an increase in personnel costs, driven by increased headcount and an increase in sales commissions.
Current wording
Sales and marketing expenses increased by $3.7 million for the three months ended June 30, 2025 compared to the same period in 2024, primarily due to an increase in personnel costs, driven by increased headcount and an increase in sales commissions, of $1.9 million, and an increase in marketing expenses, primarily related to digital advertising, partner event and sponsorship, of $1.5 million, and travel expenses of $0.3 million.
Previous wording
Total other income, net increased by $1.8 million for the three months ended March 31, 2025, compared to the same periods in 2024, primarily due to favorable changes in foreign currency of $1.7 million, and an increase in interest income of $0.1 million.
Current wording
Total other income, net increased by $1.3 million for the three months ended June 30, 2025, compared to the same periods in 2024, primarily due to favorable changes in foreign currency of $1.6 million, partially offset by a decrease in interest income of $0.3 million.
Previous wording
Income tax provision increased by $1.0 million for the three months ended March 31, 2025 compared to the same period in 2024, primarily due to the tax effect of an increase in pretax income and a decrease in excess tax benefits arising from stock-based compensation compared to the prior year. The increase in tax expense was partially offset by an increase in foreign derived intangible income benefit and an increase in research and development tax credit.
Current wording
Income tax provision increased by $2.1 million for the six months ended June 30, 2025 compared to the same period in 2024, primarily due to the tax effect of a decrease in excess tax benefits arising from stock-based compensation compared to the prior year, and from an increase in pretax income.
Previous wording
Our net dollar expansion rates were 103% and 104% as of March 31, 2025 and March 31, 2024, respectively.
Current wording
Our net dollar expansion rates were 104% and 102% as of June 30, 2025 and June 30, 2024, respectively.
Previous wording
Because of these limitations, Adjusted EBITDA should be considered alongside other financial performance measures, including revenues, net income, cash flows from operating activities and our financial results presented in accordance with U.S. GAAP. The following unaudited table presents the reconciliation of net income to Adjusted EBITDA for the three months ended March 31, 2025 and 2024:
Current wording
Because of these limitations, Adjusted EBITDA should be considered alongside other financial performance measures, including revenues, net income, cash flows from operating activities and our financial results presented in accordance with U.S. GAAP. The following unaudited table presents the reconciliation of net income to Adjusted EBITDA for the three and six months ended June 30, 2025 and 2024:
Previous wording
As of March 31, 2025, our principal source of liquidity was cash, cash equivalents and marketable securities of $639.9 million, including $152.5 million of cash held outside of the United States. The following summary of cash flows for the periods indicated has been derived from our condensed consolidated financial statements included elsewhere in this report:
Current wording
As of June 30, 2025, our principal source of liquidity was cash, cash equivalents and marketable securities of $621.2 million, including $105.1 million of cash held outside of the United States. The following summary of cash flows for the periods indicated has been derived from our condensed consolidated financial statements included elsewhere in this report:
Previous wording
During the three months ended March 31, 2025, we generated$65.3 million of cash from our net income, as adjusted for non-cash items mainly related to stock-based compensation expense, depreciation and amortization expense and deferred taxes, as compared to$58.2 million during the three months ended March 31, 2024. In addition, we also generated$44.3 million of cash from changes in working capital during the three months ended March 31, 2025, of which$36.0 million was related to the net decrease in accounts receivable and deferred revenue due to the timing of collections and billings, and a$8.3 million increase in payables and accrued liabilities primarily driven by the timing of payments. During the three months ended March 31, 2024, we generated$27.3 million of cash from changes in working capital, of which$28.9 million was attributed to a decrease in accounts receivable due to the timing of collections and $8.6 million increase in payables and accrued liabilities, partially offset by a$10.1 million increase in prepaid expenses primarily driven by the timing of payments.
Current wording
During the six months ended June 30, 2025, we generated$130.1 million of cash from our net income, as adjusted for non-cash items mainly related to stock-based compensation expense, depreciation and amortization expense and deferred taxes, as compared to$118.2 million during the six months ended June 30, 2024. In addition, we also generated$13.3 million of cash from changes in working capital during the six months ended June 30, 2025, of which$13.5 million was related to the net decrease in accounts receivable and deferred revenue due to the timing of collections and billings, and a$4.4 million increase in payables and accrued liabilities primarily driven by the timing of payments, partially offset by a$4.6 million increase in prepaid expenses primarily driven by the timing of payments. During the six months ended June 30, 2024, we generated$17.1 million of cash from changes in working capital, of which$24.6 million was attributed to a decrease in accounts receivable due to the timing of collections and $8.6 million increase in payables and accrued liabilities, partially offset by a$4.5 million increase in prepaid expenses primarily driven by the timing of payments.
Previous wording
During the three months ended March 31, 2025, we used$5.0 million of cash for purchases of marketable securities net of sales and maturities, and used$2.0 million of cash in capital expenditures mainly related to purchases of computer equipment to support our growth and development and leasehold improvements for expansion of our office spaces, as compared to$10.1 million of cash generated from sales and maturities of marketable securities net of purchases, partially offset by$2.1 million of cash used in capital expenditures mainly related to purchases of computer equipment to support our growth and development during the three months ended March 31, 2024.
Current wording
During the six months ended June 30, 2025, we used$82.8 million of cash for purchases of marketable securities net of sales and maturities, and used$3.4 million of cash in capital expenditures mainly related to purchases of computer equipment to support our growth and development and leasehold improvements for expansion of our office spaces, as compared to$6.4 million of cash generated from sales and maturities of marketable securities net of purchases, partially offset by$3.1 million of cash used in capital expenditures mainly related to purchases of computer equipment to support our growth and development during the six months ended June 30, 2024.
Previous wording
During the three months ended March 31, 2025, we used$39.7 million of cash for share repurchases,$10.8 million of cash in payment of employee withholding taxes upon vesting of restricted stock units, partially offset by$3.8 million of proceeds from issuance of common stock through our ESPP, and$2.6 million of proceeds from employee exercise of stock options, as compared to$18.0 million of cash used for share repurchases, and$11.8 million of cash used in payment of employee withholding taxes upon vesting of restricted stock units and $1.5 million payment of cash held in escrow as part of the Blue Hexagon acquisition on October 4, 2022, partially offset by$3.6 million of proceeds from issuance of common stock through our ESPP and$2.8 million of proceeds from employee exercise of stock options and during the three months ended March 31, 2024.
Current wording
During the six months ended June 30, 2025, we used$89.5 million of cash for share repurchases,$15.3 million of cash in payment of employee withholding taxes upon vesting of restricted stock units, partially offset by$5.6 million of proceeds from employee exercise of stock options, and$3.8 million of proceeds from issuance of common stock through our ESPP, as compared to$53.0 million of cash used for share repurchases, and$17.7 million of cash used in payment of employee withholding taxes upon vesting of restricted stock units and $1.5 million payment of cash held in escrow as part of the Blue Hexagon acquisition on October 4, 2022, partially offset by$6.0 million of proceeds from employee exercise of stock options, and$3.6 million of proceeds from issuance of common stock through our ESPP, during the six months ended June 30, 2024.
Previous wording
Our material cash requirements include our operating lease obligations to make payments under our non-cancelable lease agreements for our facilities and shared cloud platforms. We had fixed operating lease payment obligations of $57.1 million as of March 31, 2025, with $14.0 million expected to be paid within the next 12 months. As discussed in Note 13, "Subsequent Event" to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, on May 1, 2025, we entered into a second amendment (the "Amendment") to early renew the lease of our headquarters in Foster City, California, which was scheduled to expire in April 2028. The Amendment, effective May 1, 2025, modifies our existing lease payments and extends the lease terms through April 30, 2034 with an aggregate base rent of $30.4 million, payable in monthly installments with escalating rent payments over the term of the lease.
Current wording
Our material cash requirements include our operating lease obligations to make payments under our non-cancelable lease agreements for our facilities and shared cloud platforms. We had fixed operating lease payment obligations of $70.7 million as of June 30, 2025, with $12.7 million expected to be paid within the next 12 months.
Previous wording
We expect to continue to use cash to repurchase shares in 2025 under our share repurchase program authorized by our board of directors on February 5, 2018. On February 6, 2025, we announced that our board of directors authorized an additional $200.0 million to the share repurchase program authorization, increasing the total amount of authorized repurchase to $1.4 billion. As of March 31, 2025, approximately $303.8 million remained available under our share repurchase program. Shares will be repurchased from time to time in privately negotiated transactions or on the open market in accordance with Rule 10b-18 of the Exchange Act of 1934, including pursuant to a pre-set trading plan adopted in accordance with Rule 10b5-1 under the Exchange Act.
Current wording
We expect to continue to use cash to repurchase shares in 2025 under our share repurchase program authorized by our board of directors on February 5, 2018. On February 6, 2025, we announced that our board of directors authorized an additional $200.0 million to the share repurchase program authorization, increasing the total amount of authorized repurchase to $1.4 billion. As of June 30, 2025, approximately $254.6 million remained available under our share repurchase program. Shares will be repurchased from time to time in privately negotiated transactions or on the open market in accordance with Rule 10b-18 of the Exchange Act of 1934, including pursuant to a pre-set trading plan adopted in accordance with Rule 10b5-1 under the Exchange Act.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
Revenues increased by $29.4 million for thesix months ended June 30, 2025 compared to the same period in 2024, driven by increased demand for our subscription services by our end customers. Of the total increase of$29.4 million in revenues, 90% was from revenues from customers existing prior to January 1, 2025, and the remaining 10% was from new customers added in the six months ended June 30, 2025. Of the total increase of$29.4 million, 36% was from customers in the United States and the remaining 64% was from customers in foreign countries. Of the total increase of$29.4 million, 17% was from direct customers and the remaining 83% was from partners. In the six months ended June 30, 2025, 51% of total revenue was direct and the remaining 49% was from partners.
Current report — wording carried from elsewhere
Cost of revenues increased by $4.2 million for thesix months ended June 30, 2025 compared to the same period in 2024, primarily due to an increase in personnel costs, including stock-based compensation, of $3.1 million, driven by additional employees hired to support the growth of our business, an increase in shared cloud platform cost of $1.6 million, and an increase in license expenses and professional service expenses of $1.4 million, partially offset by a decrease in depreciation and amortization expense of $1.9 million resulting from certain of our assets becoming fully depreciated or amortized.
Current report — wording carried from elsewhere
Total other income, net increased by $3.1 million for the six months ended June 30, 2025, compared to the same periods in 2024, primarily due to favorable changes in foreign currency of $3.3 million, partially offset by a decrease in interest income of $0.2 million.
Current report — wording carried from elsewhere
Income tax provision increased by $1.1 million for the three months ended June 30, 2025 compared to the same period in 2024, primarily due to the tax effect of an increase in pretax income and a decrease in excess tax benefits arising from stock-based compensation.