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Qualys (QLYS) to Report Q3 Earnings: What's in the Cards?

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Qualys (QLYS - Free Report) is slated to release third-quarter 2018 results on Oct 30.

Notably, the company surpassed the Zacks Consensus Estimate in each of the trailing four quarters with an average positive surprise of 41.3%.

In the last reported quarter, the company’s earnings and revenues surpassed the Zacks Consensus Estimate and recorded year-over-year improvement on both counts.

For the third quarter, Qualys anticipates revenues in the range of $70.9-$71.5 million, indicating 19-20% year-over-year growth. The Zacks Consensus Estimate for revenues is pegged at $71.34 million.

Further, non-GAAP earnings for the quarter are anticipated in the range of 37-39 cents. The Zacks Consensus Estimate stands at 38 cents, which is 22.6% higher than the figure reported in the year-ago quarter.

Let’s see how things are shaping up prior to this announcement.

Factors to Consider

Qualys is benefiting from continued platform innovation and increasing customer adoption of the Qualys Cloud Platform and its integrated Apps.

The company is also witnessing strong demand from the federal market driven by the improvement in go-to-market capabilities in the federal vertical.

The launch of CertView and CloudView garnered positive response from users. Moreover, the release of Qualys Community Edition, a free version of the company’s Cloud Platform that provides organizations, including small and midsize businesses, consultants and managed service providers, with a unified view of IT, security and compliance, in the quarter is expected to yield positive results.

Increasing adoption of CloudAgent and Threat Protection led to 16% year-over-year increase in average deal size in the last reported quarter. The percentage of enterprise customers with three or more Qualys solutions rose to 37% compared with 28% in the year-ago period. The percentage of enterprise customers with four or more Qualys solutions rose to 19%, up from 11% a year ago.

However, intensifying competition from the likes of FireEye, Imperva, Symantec and IBM among others is a major concern.

Also, rising research and development, and general and administrative expenses due to expansion in headcount is an overhang on margins. Notably, the company expects second half operating margins to be down from the first half, resulting in flat margins for the year.

Qualys, Inc. Price and EPS Surprise

Qualys, Inc. Price and EPS Surprise | Qualys, Inc. Quote

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Zacks Rank #4 (Sell) or #5 (Strong Sell) stocks are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Qualys currently carries a Zacks Rank #3 but has an Earnings ESP of -0.33%.

Stocks That Warrant a Look

Here are a few stocks worth considering as our model shows that these have the right combination of elements to deliver an earnings beat in their upcoming releases.

Vishay Intertechnology (VSH - Free Report) has an Earnings ESP of +0.62% and Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Advanced Energy Industries (AEIS - Free Report) has an Earnings ESP of +2.70% and a Zacks Rank #2.

AMETEK (AME - Free Report) has an Earnings ESP of +0.71% and a Zacks Rank #2.

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