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Why Qualys Shares Are Crashing Today

By Anders Bylund – Updated Apr 24, 2019 at 3:35PM

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The data security expert's stock tanked after a solid earnings report paired with soft revenue guidance.

What happened

Shares of cloud security specialist Qualys (QLYS 2.03%) fell as much as 16.8% on Wednesday following the release of solid fourth-quarter results but soft revenue guidance. By 1:45 p.m. EST, the stock had recovered slightly to an 11% overnight drop.

So what

Qualys' fourth-quarter sales rose 18% year over year to $74.2 million, a rounding error ahead of Wall Street's consensus forecast. On the bottom line, adjusted earnings jumped 59% higher to $0.51 per share. Here, your average analyst would have settled for $0.40 per share.

Looking ahead, management painted earnings targets for both the first quarter and full fiscal year of 2019 right in line with current analyst views. However, revenue guidance fell short of Wall Street's expectations on both counts by a consistent margin of roughly 2%. Several analyst firms reacted to this report with immediate downgrades and/or price target cuts.

Check out the latest Qualys earnings call transcript.

Businessman manipulating a computer icon of a cloud with a padlock, all in front of a world map and an energized globe.

Image source: Getty Images.

Now what

The company's revenue growth is slowing down a bit, especially if Qualys actually delivers sales in line with the guidance targets for the new fiscal year. Expectations remain high, of course; Qualys shares are now trading at 47 times trailing earnings and 44 times the next-year earnings guidance. Some investors simply took some profits off the table today after a 34% run-up in share prices over the last three months. There's nothing terribly wrong or surprising with any of this, from the company's results to the sharp market reaction.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

Qualys Stock Quote
$117.74 (2.03%) $2.34

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