Qualys, Inc. (NASDAQ:QLYS) is a cloud-based cybersecurity services provider that specializes in assessing software vulnerabilities of hardware attached to internet networks. Shares were down in the quarter as investors worried that the costs of launching new products would hamper operating margins in 2017. The company has been very successful with new product offerings, particularly its cloud agent technology, which allows customers to see changes to hardware configurations in a rapid and dynamic manner. This allows for quicker responses to potential cyber-intrusions. We are not concerned, and we applaud this kind of value-generating investment. Qualys is accelerating its revenue growth to nearly 20% and continues to trade at a very reasonable multiple of real free cash flow whereas many of its cyber peers are still losing money.
From Baron Discovery Fund's fourth quarter 2016 commentary.
