Company: QLYS
Filing Date: 2025-05-06
Form Type: 10-Q
Source: 0001107843-25-000017
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Company: QUALYS, INC.
Filing Date: 2025-05-06
Form: 10-Q
Item: Part I, Item 3
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Table of Contents

Item 3.                                Quantitative and Qualitative Disclosures about Market Risk

We have domestic and international operations and we are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate, foreign exchange and inflation risks, as well as risks relating to changes in the general economic conditions in the countries where we conduct business. To reduce certain of these risks, we monitor the financial condition of our large customers and limit credit exposure by collecting subscription fees in advance.

Foreign Currency Risk

Our results of operations and cash flows have been and will continue to be subject to fluctuations because of changes in foreign currency exchange rates, particularly changes in exchange rates between the U.S. Dollar and the EUR, GBP, INR and CAD, the currencies of countries where we currently have our most significant international operations. We enter into foreign currency forward contracts to reduce our exposure to foreign currency exchange rate fluctuations related to forecasted subscription revenue, operating expenses and foreign currency denominated assets or liabilities. As of March 31, 2025, we had designated cash flow hedge forward contracts with notional amounts of €49.1 million, £21.6 million and Rs.4,579.0 million and non-designated forward contracts with notional amounts of €18.7 million, £7.3 million, and Rs.1,650.0 million. With our hedging strategy applied, the effect of an immediate 10% adverse change in foreign exchange rates would not be material to our financial condition, operating results or cash flows.

Interest Rate Sensitivity

We had $639.9 million in cash, cash equivalents and short-term and long-term marketable securities as of March 31, 2025. Our exposure to market risk for changes in interest rates primarily relates to our cash and cash equivalents and marketable securities. Our cash equivalents and marketable securities are held in money market funds, fixed-income U.S. Treasury and government agency securities, commercial paper, corporate bonds and asset-backed securities. The primary objectives of our investment activities are the preservation of principal and support of our liquidity requirements. We do not invest for trading or speculative purposes. Our marketable securities are subject to market risk due to changes in interest rates, which may affect the interest income we earn and the fair market value of our securities. As of March 31, 2025, a hypothetical 100 basis point increase in interest rate would not result in a material decrease in the fair value of our marketable securities.

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