What happened
The stock of Qualys (QLYS -1.04%) trailed a booming market in August. Shares dipped 14% compared to the S&P 500's 7% increase, according to data provided by S&P Global Market Intelligence.
That decline only erased a portion of the cybersecurity specialist's latest rally, and shares remain higher by 20% so far in 2020.
Image source: Getty Images.
So what
Investors weren't thrilled with the tech company's fiscal second-quarter earnings report that on Aug. 10 showed a 13% sales increase and major improvements to its profitability. CEO Philippe Courtot at the time credited the coronavirus pandemic for creating a surge in demand from enterprises seeking to protect their systems as more employees work from remote locations.
"There has been not only an explosion of remote endpoints accessing organizations' critical data," Courtot said, but also an increase in cyberattacks targeting these systems.
Now what
Qualys' report wasn't uniformly positive. It showed shorter contract lengths, for example, as enterprises look to stay flexible with their cybersecurity commitments. The company also issued a somewhat conservative outlook that calls for sales gains to slow to around 12% in the third quarter and land at the same 12% for the full year.
Judging by their reaction to that forecast, investors were hoping for more-robust revenue gains. But Qualys' business is still as strong as it has ever been, and that strength is showing up in improving operating margin, cash flow, and earnings. Continued gains in these areas should support the stock price over the long term.
