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Qualys ( QLYS ) stock tumbled Tuesday on jitters that missed estimates for Q1 billings and deferred revenue could indicate slowing vulnerability-management sales, a Summit Research analyst suggested. In morning trading on the stock market today , Qualys stock was down 3.5% to near 25, piercing its 50-day line. Late Monday, the cybersecurity firm reported Q1 sales and earnings that topped Wall Street expectations, but offered soft current-quarter views. Qualys reported 21 cents earnings per share minus items on $46.2 million in sales, up 40% and 23%, respectively, vs. the year-earlier quarter. Analysts had modeled 15 cents and $45.1 million. Current-quarter sales guidance for $47.6 million to $48.3 million met the consensus of 16 analysts polled by Thomson Reuters at the midpoint, but the EPS outlook for 15-17 cents entirely missed analysts’ 18 cents. Robert W. Baird analyst Steven Ashley downgraded Qualys stock to neutral from outperform, but Credit Suisse analyst Sitikantha Panigrahi kept his outperform rating and 35 price target on the shares. Q1 billings of $48.3 million decelerated to 9% year-over-year growth and missed the consensus for $51.6 million, Panigrahi noted in a research report. On the company’s earnings conference call with analysts, CEO Philippe Courtot blamed the billings weakness on an altered contract with an unidentified managed security service provider (MSSP) and said some Q1 deals had slipped into Q2. MSSP deals are lengthening, which changes the way Qualys looks at deferred revenue, Courtot said. Deferred revenue came in at $101.6 million, up 15.5% year over year. Billings and deferred revenue are important “health” indicators for software-as-a-service (SaaS) providers like Qualys, Summit Research analyst Srini Nandury wrote in a report. Nandury reiterated his buy rating and 35 price target on Qualys stock. Yet he wrote that “we are a bit concerned the slowing could indicate the core business is slowing, or the upsell/cross sell could not be working as well as it should.” Courtot, however, said he expects Qualys to outgrow the vulnerability-management market on share gains and upsell opportunities. IDC forecasts 10% year-over-year growth in that market, which is Qualys’ bread and butter. Scalper1 News
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