QUALYS, INC. (QLYS) IPO

The net proceeds to us from the sale of our common stock in this offering will 
be approximately $71.8 million, based on the initial public offering price of 
$12.00 per share and after deducting underwriting discounts and commissions and
estimated offering expenses payable by us. If the underwriters exercise their 
over-allotment option in full, our net proceeds would be approximately $84.5 
million, after deducting underwriting discounts and commissions and estimated 
offering expenses payable by us. We will not receive any proceeds from the sale
of shares of our common stock by the selling stockholders. 

The principal purposes of this offering are to obtain additional capital and 
increase our financial flexibility, improve our visibility in the marketplace, 
create a public market for our common stock and facilitate our future access to
the public equity markets. 

We currently intend to use the net proceeds that we receive from this offering 
for capital expenditures, working capital and other general corporate purposes,
which may include hiring additional personnel and investing in sales and 
marketing and research and development. In addition, we expect to spend 
approximately $20.0 million through December 31, 2013 for capital expenditures,
primarily related to infrastructure to support the anticipated growth in our 
business. We may also use a portion of the net proceeds that we receive from 
this offering to acquire or invest in complementary businesses, technologies, 
or other assets. We have not entered into any agreements or commitments with 
respect to any acquisitions or investments at this time. 

We cannot specify with certainty all of the particular uses of the net proceeds
that we receive from this offering. Accordingly, we will have broad discretion 
in using these proceeds. Furthermore, the amount and timing of our actual 
expenditures will depend on numerous factors, including the cash used in or 
generated by our operations, the status of our development, the level of our 
sales and marketing activities, and our technology investments and 
acquisitions. Our management also has discretion over many of these factors. 
Pending the use of proceeds from this offering as described above, we plan to 
invest the net proceeds that we receive in this offering in short-term and 
intermediate-term interest-bearing obligations, investment-grade investments, 
certificates of deposit, or direct or guaranteed obligations of the U.S. 
government. We cannot predict whether the invested proceeds will yield a 
favorable return.

The expanding capabilities of our security and compliance solutions have 
enabled us to address a growing array of opportunities in the cloud IT security
and compliance market. We compete with a large and broad array of established 
and emerging vulnerability management vendors, compliance vendors and data 
security vendors in a highly fragmented and competitive environment. 

We compete with large public companies, such as Hewlett-Packard Company, 
Imperva, Inc., International Business Machines Corporation, McAfee, Inc. (a 
subsidiary of Intel Corporation) and Symantec Corporation, as well as private 
security providers including Barracuda Networks, Inc., BeyondTrust Software, 
Inc., Lumension Security, Inc., nCircle Network Security, Inc., NetIQ 
Corporation, Rapid7 LLC, Tenable Network Security, Inc. and Trustwave Holdings,
Inc. We also seek to replace IT security and compliance solutions that 
organizations have developed internally. As we continue to extend our cloud 
platform’s functionality by further developing security and compliance 
solutions, such as web application scanning and firewalls, we expect to face 
additional competition in these new markets. 

We believe that the principal competitive factors affecting the market for 
cloud security and compliance solutions include product functionality, breadth 
of offerings, flexibility of delivery models, ease of deployment and use, total
cost of ownership, scalability and performance, customer support and 
extensibility of platform. We believe that our suite of solutions generally 
competes favorably with respect to these factors. However, many of our primary 
competitors have greater name recognition, longer operating histories, more 
established customer relationships, larger marketing budgets and significantly 
greater resources than we do.