Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Qualys (NASDAQ:QLYS), a provider of cloud security and compliance solutions, jumped on Tuesday after handily beating analyst estimates for its fourth-quarter earnings. As of 1 p.m., the stock was up over 14%.
So what: Qualys posted fourth-quarter revenue of $36.75 million, up 26% year-over-year and slightly beating analyst estimates. Non-GAAP EPS came in at $0.15, $0.06 better than what analysts were expecting.
Customers that Qualys bagged during the fourth quarter include Blue Shield of California, British American Tobacco, Halliburton, Siemens AG, and Netflix. The company's QualysGuard Cloud Platform is now used by over 6,700 customers, and recent high-profile breaches, like the one at health insurer Anthem, suggest that Qualys will see plenty of demand going forward.
Qualys expects first-quarter revenue between $37.6 million and $38.1 million, representing 25% year-over-year growth at the midpoint of that range. Non-GAAP EPS is expected to be between $0.10 and $0.12, an improvement over the $0.05 non-GAAP EPS reported in the first quarter of 2014.
Now what: Qualys posted strong growth during the quarter, and it looks like this growth will continue going forward. Investors are paying an extremely high price for this growth, however, with the stock trading at about 13 times sales after the rise in the stock price today. While the cybersecurity market is booming, and a rising tide will lift all boats for a while, investors should be careful not to dramatically overpay for any stock, especially one operating in a red-hot industry.