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Qualys (QLYS)
NASDAQ:QLYS
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Qualys
(NASDAQ:QLYS)
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Rating:73Outperform
Price Target:
$108.00
▲(11.99% Upside)
Action:ReiteratedDate:02/11/26
Score is supported primarily by strong financial performance (high margins, low leverage, and robust free cash flow) and a constructive earnings outlook despite slower growth. The main offset is weak technicals (price below major moving averages with bearish momentum), while valuation is moderate based on a ~20x P/E and no stated dividend yield.
Positive Factors
Profitability & Margins
Qualys' very high gross and operating margins reflect a scalable SaaS platform and disciplined cost structure. Durable margin advantage provides a long-term buffer to fund R&D, go-to-market expansion and buybacks while sustaining strong returns on equity even if top-line growth slows.
Free Cash Flow Strength
Robust free cash flow conversion supports investment optionality and capital returns without adding leverage. High FCF enables sustained R&D, partner investments and buybacks, improving financial flexibility and lowering execution risk over the medium term (2–6 months and beyond).
Recurring Platform Model & Channel Reach
A subscription-based platform with meaningful channel and international traction diversifies go-to-market and reduces single-market dependence. Platform upsell (VM, ETM, patching, CNAPP) and partner-led growth create durable expansion pathways and steadier multi-year revenue visibility.
Negative Factors
Revenue Growth Moderation
A clear deceleration in guided growth reduces the runway for rapid scale and increases reliance on execution to regain momentum. Slower top-line expansion can constrain long-term ARR compounding, making returns more sensitive to both product adoption cadence and competitive dynamics.
Net Dollar Expansion & Retention Pressure
NDER near 100% and a slight retention dip signal limited upsell leverage inside the base. If platform innovations (ETM/agentic AI) do not accelerate expansion, lifetime revenue per customer may stagnate, raising the bar on new logo acquisition costs to sustain growth.
Planned Operating Expense Increases
Intentional S&M and opex increases to drive growth will compress margins and require successful conversion of POCs and partner ramps. If investments underperform, margin erosion could persist and weaken the company's high cash-return profile and financial flexibility over the medium term.
Qualys (QLYS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$3.44B
Dividend YieldN/A
Average Volume (3M)784.25K
Price to Earnings (P/E)24.2
Beta (1Y)0.86
Revenue Growth9.95%
EPS Growth12.72%
CountryUS
Employees2,443
SectorTechnology
Sector Strength88
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)1.87
Shares Outstanding35,675,926
10 Day Avg. Volume534,067
30 Day Avg. Volume784,248
Financial Highlights & Ratios
PEG Ratio1.48
Price to Book (P/B)8.56
Price to Sales (P/S)7.18
P/FCF Ratio15.78
Enterprise Value/Market Cap0.96
Enterprise Value/Revenue4.94
Enterprise Value/Gross Profit5.96
Enterprise Value/Ebitda13.36
Forecast
1Y Price Target
$136.64Price Target Upside41.68% Upside
Rating ConsensusHold
Number of Analyst Covering16
EPS Forecast (FY)7.38
Revenue Forecast (FY)$721.19M
Qualys Business Overview & Revenue Model
Company DescriptionQualys, Inc. provides cloud-based information technology (IT), security, and compliance solutions in the United States and internationally. The company offers Qualys Cloud Apps, which includes Vulnerability Management; Vulnerability Management, Detection and Response; Threat Protection; Continuous Monitoring; Patch Management; Multi-Vector Endpoint Detection and Response; Certificate Assessment; SaaS Detection and Response; Secure Enterprise Mobility; Policy Compliance; Security Configuration Assessment; PCI Compliance; File Integrity Monitoring; Security Assessment Questionnaire; Out of-Band Configuration Assessment; Web Application Scanning; Web Application Firewall; Global Asset Inventory; Cybersecurity Asset Management; Certificate Inventory; Cloud Inventory; Cloud Security Assessment; and Container Security. Its integrated suite of IT, security, and compliance solutions delivered on its Qualys Cloud Platform enables customers to identify and manage IT assets, collect and analyze IT security data, discover and prioritize vulnerabilities, recommend and implement remediation actions, and verify the implementation of such actions. The company also provides asset tagging and management, reporting and dashboards, questionnaires and collaboration, remediation and workflow, big data correlation and analytics engine, and alerts and notifications, which enable integrated workflows, management and real-time analysis, and reporting across IT, security, and compliance solutions. The company offers its solutions through its sales teams, as well as through its network of channel partners, such as security consulting organizations, managed service providers, resellers, and consulting firms. It serves enterprises, government entities, and small and medium-sized businesses in various industries, including education, financial services, government, healthcare, insurance, manufacturing, media, retail, technology, and utilities. The company was incorporated in 1999 and is headquartered in Foster City, California.
How the Company Makes MoneyQualys primarily makes money by selling subscriptions to its cloud security platform and related applications. Revenue is generated mainly from recurring subscription fees (typically contracted on multi-month or multi-year terms) that are priced based on factors such as the number of assets/hosts, IPs, endpoints, scanners, or application modules a customer uses. Customers often start with a core use case (commonly vulnerability management and asset discovery) and then expand adoption by adding additional platform applications (e.g., patch/configuration-related capabilities, web application scanning, compliance-focused tools), which drives upsell and cross-sell revenue. Qualys sells through a mix of direct sales to enterprises and channel partners such as managed security service providers (MSSPs), system integrators, and resellers that bundle, resell, or manage Qualys services for end customers. Professional services and other non-subscription items can contribute revenue, but the core economic engine is recurring platform subscriptions and expansion within existing customer accounts.
Qualys Key Performance Indicators (KPIs)
Any
Revenue by Geography
Breaks down revenue across different regions, revealing where the company is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Breaks down revenue across different regions, revealing where the company is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Data provided by:
The Fly
The FlyQualys Earnings Call Summary
Earnings Call Date:Feb 05, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 30, 2026
Earnings Call Sentiment Positive
The call highlighted strong financial performance in 2025 — double-digit revenue growth, very high margins (47%), robust free cash flow, significant product innovation (agentic AI, ETM, Agent Val), partner momentum and disciplined capital returns (share repurchases). Management provided constructive FY2026 guidance but signaled a moderation in top-line growth to 7%–8% and outlined planned investments that modestly compress margins to the mid-40s. ETM and agentic AI are promising differentiators with early customer and partner wins, but adoption is still early and has not yet driven a material uplift in net expansion. Overall, the positives (profitability, cash generation, product differentiation and partner traction) outweigh the near-term headwinds (slower growth guidance, higher operating investments and early-stage product penetration), producing a constructive but cautious outlook.Q4-2025 Updates
Positive Updates
Solid Revenue Growth
Full-year 2025 revenue grew 10% to $669.1 million; Q4 2025 revenue grew 10% to $175.3 million; FY2026 revenue guidance of $717M–$725M implies 7%–8% growth.
Strong Profitability and Cash Generation
Adjusted EBITDA margin was 47% for both FY2025 and Q4 2025 (Q4 adjusted EBITDA $82.6M). Full-year net income rose 13% to $257.8M and EPS increased 15% to $7.07. Free cash flow for the year was $304.4M (45% of revenues); Q4 free cash flow was $74.9M (43% margin vs 26% prior year).
Channel and International Momentum
Channel made up 51% of total revenues in Q4 (up from 48% a year ago) with channel revenues growing 17% vs direct growth of 4%. International revenue grew 15% while U.S. grew 6%; revenue mix was 56% U.S. / 44% International.
Product Mix Driving Bookings
Differentiated products increased share of bookings in 2025: Cybersecurity Asset Management + ETM was 10% of total bookings (13% of new bookings, up from 8%/9%); Patch Management was 8% of total bookings (16% of new bookings); TotalCloud grew to 5% of total bookings (from 4%).
Agentic AI and ETM Innovation
Launched ETM enhancements including an agentic AI risk fabric, an agent marketplace, exploit confirmation (Agent Val), integrated ISPM, and orchestration for unified remediation — positioning Qualys to quantify and remediate risk end-to-end and differentiate from score-only exposure tools.
Early Customer & Partner Wins
Notable wins include a Global 50 mid-6-figure annual bookings upsell, a Global 200 Latin America 7-figure annual bookings upsell (including CNAPP & Policy Audit), and multiple mid-6-figure federal expansions leveraging FedRAMP High authorization; partner-led deal registration increased and mROC partner ecosystem expanded.
Capital Allocation & Share Repurchase
Q4 repurchase of $44.7M (328,000 shares); total repurchases since 2018 reach 10.7M shares (~$1.2B returned). Board authorized an additional $200M, increasing available repurchase capacity to $360.5M.
Operational Discipline Despite Investments
Company maintained high margins while increasing investments: Q4 adjusted EBITDA margin 47% despite sales & marketing spend up 18% and overall operating expenses up 11%; guidance targets mid-40s EBITDA margin with planned focused investments.
Negative Updates
Moderating Growth Outlook
Guidance for FY2026 implies revenue growth of 7%–8%, down from 10% in FY2025, signaling a deceleration versus the prior year.
Net Dollar Expansion and Retention Pressures
Net dollar expansion rate (NDER) was 103% in Q4, down from 104% last quarter; management assumes no material change in NDER for 2026. Gross dollar retention remained >90% but showed a modest sequential decline.
Increased Operating Expense and Planned Investment
Q4 operating expenses rose 11% to $68.9M with sales & marketing up 18%; company expects mid-teens percentage increase in operating expenses in 2026 which contributes to guiding EBITDA margin from 47% to the mid-40s.
ETM Adoption Early-Stage; Traction Not Yet Driving Inflection
Management described ETM as early in the adoption curve; while POCs and early wins are encouraging, penetration into installed base has not yet produced a material inflection in expansion rates or revenue growth.
Market & Competitive Uncertainty
Questions raised about shifting market size estimates for VM/exposure management and potential competitive dynamics (e.g., ServiceNow/Armis) introduce uncertainty even though management downplayed immediate impact.
Seasonal/Renewal Skew and Execution Risk
Renewals and revenue are seasonally skewed toward the second half of the year, which may concentrate execution risk early in the fiscal year; success depends on partner ramp, QFlex rollout and converting POCs to larger deployments.
Company Guidance
Qualys guided full-year 2026 revenue of $717 million to $725 million (growth of about 7%–8% year‑over‑year) and Q1 2026 revenue of $172.5 million to $174.5 million (growth of about 8%–9%); full‑year adjusted EBITDA margin is expected in the mid‑40s (with an implied mid‑teens increase in operating expenses) and free cash flow margin in the low‑40s, full‑year EPS $7.17–$7.45 and Q1 EPS $1.76–$1.83; planned capital expenditures are $8 million–$12 million for 2026 (Q1 capex $1.2 million–$2.6 million). Guidance assumes no material change in net dollar expansion rate (recent NDER ~103%) with moderate new‑business contribution, and the company plans to prioritize higher sales & marketing spend as a percentage of revenue with more modest increases in engineering and G&A; current billings growth is expected to be roughly in line with the revenue growth range (≈7%–8%).Qualys Financial Statement Overview
Summary
High-quality fundamentals driven by best-in-class profitability (gross margin ~82.8%, EBIT margin ~36.9% in 2025), low leverage (debt-to-equity ~0.09), and strong free-cash-flow generation (FCF ~0.98x net income; FCF up ~12% in 2025). Key risk is decelerating revenue growth in 2025.Income Statement
Revenue has grown steadily from 2020 to 2025, but growth decelerated materially in 2025 (about 2.5% vs. mid-to-high single digits and higher in prior years). Profitability is a clear strength: gross margin improved to ~82.8% (2025) and operating profitability expanded meaningfully (EBIT margin ~36.9% and EBITDA margin ~39.1% in 2025). Net margin also strengthened to ~29.6% in 2025, indicating strong cost discipline, though the slower top-line trajectory is the main watch item.86
Very Positive
Balance Sheet
The balance sheet is conservatively levered, with low debt relative to equity (debt-to-equity ~0.09 in 2025), providing flexibility and lowering financial risk. Equity has increased versus recent years, supporting a stronger capital base. Returns on equity are very strong (mid-30%+ in 2024–2025), reflecting high profitability, though such elevated returns can be more sensitive to any future margin compression or growth slowdown.84
Very Positive
Cash Flow
Cash generation is a standout: operating cash flow and free cash flow are robust and in 2025 free cash flow was nearly equal to net income (~0.98x), signaling high earnings quality. Free cash flow grew strongly in 2025 (~12%), rebounding after a slight decline in 2024. A mild weakness is that cash flow did not fully track reported operating profit (operating cash flow at ~0.66x of EBIT in 2025), suggesting some working-capital or timing impacts, but overall cash conversion remains excellent.88
Very Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 669.13M | 607.57M | 554.46M | 489.72M | 411.17M |
| Gross Profit | 554.36M | 496.09M | 446.97M | 386.94M | 321.73M |
| EBITDA | 261.32M | 205.71M | 190.06M | 165.17M | 123.58M |
| Net Income | 198.32M | 173.68M | 151.59M | 107.99M | 70.96M |
Balance Sheet | |||||
| Total Assets | 1.10B | 973.54M | 812.62M | 700.94M | 814.56M |
| Cash, Cash Equivalents and Short-Term Investments | 445.94M | 381.42M | 425.56M | 321.33M | 405.29M |
| Total Debt | 97.23M | 47.22M | 28.74M | 42.18M | 48.52M |
| Total Liabilities | 533.93M | 496.42M | 444.44M | 411.81M | 377.85M |
| Stockholders Equity | 561.15M | 477.12M | 368.17M | 289.13M | 436.71M |
Cash Flow | |||||
| Free Cash Flow | 304.41M | 231.76M | 235.82M | 174.87M | 174.96M |
| Operating Cash Flow | 309.40M | 244.09M | 244.60M | 198.85M | 200.62M |
| Investing Cash Flow | -105.92M | -71.43M | -73.17M | 145.07M | -29.53M |
| Financing Cash Flow | -185.40M | -145.65M | -141.49M | -306.03M | -107.89M |
Qualys Technical Analysis
Negative
96.44
Price Trends
112.09
Negative
126.14
Negative
130.67
Negative
Market Momentum
-3.86
Negative
40.72
Neutral
32.60
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For QLYS, the sentiment is Negative. The current price of 96.44 is above the 20-day moving average (MA) of 95.19, below the 50-day MA of 112.09, and below the 200-day MA of 130.67, indicating a neutral trend. The MACD of -3.86 indicates Negative momentum. The RSI at 40.72 is Neutral, neither overbought nor oversold. The STOCH value of 32.60 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for QLYS.
Qualys Risk Analysis
Qualys disclosed 49 risk factors in its most recent earnings report. Qualys reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Qualys Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $3.44B | 24.22 | 37.83% | ― | 9.95% | 12.72% | |
71 Outperform | $2.17B | 8.80 | 6.07% | ― | 9.60% | ― | |
70 Outperform | $1.54B | 30.33 | 20.61% | 1.33% | 10.27% | 3.52% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
60 Neutral | $2.28B | -78.26 | -10.29% | ― | 11.05% | 45.23% | |
58 Neutral | $4.81B | ― | -29.84% | ― | 24.09% | -34.25% | |
54 Neutral | $2.79B | -38.13 | -27.04% | ― | 11.37% | -34.44% |
* Technology Sector Average
QLYS
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96.44
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-25.94%
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.