Breaking Down Qualys, Inc. (QLYS) Financial Health: Key Insights for Investors

You're looking at Qualys, Inc. (QLYS) and trying to figure out if their operational efficiency can defintely justify a higher valuation, especially with the cybersecurity market getting tougher. The quick answer is that their profitability metrics are frankly exceptional, but you need to understand the 'why' behind the numbers. The company just raised its full-year 2025 revenue guidance to a range of $665.8 million to $667.8 million, which is solid 10% growth, but the real story is the leverage: their Q3 2025 results showed an Adjusted EBITDA margin of 49% and a stunning Operating Cash Flow margin of 53%. That kind of cash generation-we're talking $90.4 million in operating cash flow for the quarter-is what lets them fund the shift to their Enterprise TruRisk Management (ETM) platform and new AI-powered agents without sacrificing the bottom line. They even boosted their Non-GAAP EPS guidance significantly, now projecting $6.93 to $7.00 per share for the full year, a clear signal that the platform strategy is starting to pay off.

Revenue Analysis

You're looking at Qualys, Inc. (QLYS) because its consistent growth in the cybersecurity space is compelling, but you need to know where that revenue actually comes from and if the growth is sustainable. The direct takeaway is that Qualys is successfully executing a strategic shift toward its platform solution, which is driving a healthy, double-digit growth rate, projected to land the full year 2025 revenue between $665.8 million and $667.8 million.

The company's revenue is almost entirely subscription-based, coming from its cloud-native platform that delivers IT, security, and compliance solutions. The primary revenue source isn't a single product but the integrated platform, now centered around the Enterprise TruRisk Management (ETM) solution. This ETM focus is a key driver, converting early proofs-of-concept (POCs) into full commercial deployments.

Growth and Channel Dynamics

Qualys, Inc. (QLYS) is projecting a robust year-over-year revenue growth rate of about 10% for the full fiscal year 2025, a solid performance for a mature security firm. For a concrete example, the third quarter of 2025 (Q3 2025) saw revenue climb to $169.9 million, which was a 10% increase over the same quarter in 2024. Here's the quick math on the TTM (trailing twelve months) ending September 30, 2025: revenue was $653.03 million, reflecting a 10.13% year-over-year jump. That's a steady climb.

The biggest story in the revenue mix is the growing influence of the channel partners. This shift is a smart move to scale without ballooning the direct sales team. In Q3 2025, partner-led sales accounted for 50% of total revenues, up from 47% a year prior. Honestly, that channel growth is what you should be watching.

• Channel partner revenue grew 17% in Q3 2025.
• Direct sales revenue grew only 5% in Q3 2025.
• International growth outpaced domestic growth, at 15% versus 7% in Q3 2025.

Strategic Shifts and New Revenue Levers

The company is defintely not sitting still; they are actively changing how they sell and what they sell. The push for ETM is the biggest change, moving customers from point solutions (like vulnerability management) to a comprehensive risk platform. This is about consolidating the cybersecurity stack for clients, which ultimately leads to larger, stickier contracts.

Also, keep an eye on the new pricing model, Q-Flex, which is a flexible platform-based pricing structure. A beta test of Q-Flex with a Global 10 customer drove a multiyear commitment and increased annual bookings by over 50%. That's a powerful lever for future revenue acceleration. What this estimate hides, still, is the potential for sales cycle lengthening as enterprise customers scrutinize large platform deals more closely, a factor management has noted. For a deeper dive into who is betting on this strategy, you should read Exploring Qualys, Inc. (QLYS) Investor Profile: Who's Buying and Why?

Profitability Metrics

You want to know if Qualys, Inc. (QLYS) is just growing revenue or if that growth is actually translating to the bottom line. The short answer is: they are a profit machine, especially when you stack their margins against the broader software industry. For the third quarter of 2025 (Q3 2025), their profitability metrics are defintely impressive, showing a company that has mastered the high-margin Software-as-a-Service (SaaS) model.

Here's the quick math on their Q3 2025 performance, based on Generally Accepted Accounting Principles (GAAP) results. Revenue hit $169.9 million, a solid 10% year-over-year increase. But the real story is what they keep from that revenue. This is where Qualys, Inc. stands out from most peers.

• Gross Profit Margin: 84% (Q3 2025)
• Operating Profit Margin: 35% (Q3 2025)
• Net Profit Margin: 30% (Q3 2025)

Their gross margin is a clear sign of operational efficiency and a low cost of revenue, which is typical for a cloud-native platform. To be fair, this is exactly what you expect from a mature SaaS business, but they are operating at the high end of that spectrum.

Comparison with Industry Averages

When you look at the industry, Qualys, Inc.'s margins are not just good; they are top-tier. The average gross margin for the Software-as-a-Service (SaaS) sector for 2025 typically sits between 75% and 85%, so Qualys, Inc.'s 84% places them firmly among the top performers. The difference gets even starker when you move down the income statement to net profit.

The table below shows how their GAAP margins compare to broader software benchmarks for 2025. It illustrates how effectively Qualys, Inc. manages its operating expenses (OpEx) to convert gross profit into operating and net income.

Trends and Operational Efficiency

The trend in profitability is highly positive, which is a key indicator for investors. In Q3 2025, the GAAP gross margin increased to 84% from 81% in Q3 2024. More importantly, the GAAP operating margin jumped from 29% in the prior-year quarter to 35% in Q3 2025. This 6-point increase in operating margin is a clear signal of improved operational efficiency.

What this estimate hides is the company's focus on cost management. While revenue grew 10% in Q3 2025, operating expenses increased by only 5%. That disparity-revenue growing twice as fast as costs-is the engine driving the margin expansion. The push for Enterprise TruRisk Management (ETM) adoption, which leverages their existing cloud-native architecture, is allowing them to scale revenue without a proportional increase in their cost base. This is the hallmark of a mature, efficiently run technology platform. For a deeper look at the risks and opportunities driving these numbers, you can check out the full post at Breaking Down Qualys, Inc. (QLYS) Financial Health: Key Insights for Investors.

Finance: draft a quarterly margin trend analysis comparing QLYS to two direct competitors by end of next week.

Debt vs. Equity Structure

You're looking at Qualys, Inc. (QLYS) and want to know how they fund their growth. The direct takeaway is this: Qualys is a rare, financially conservative player in the cybersecurity space, choosing to fund its operations and expansion almost entirely through retained earnings and equity, not debt. They're practically debt-free.

As of the second quarter of 2025, Qualys, Inc.'s total debt stood at a minimal $55.34 million USD on the balance sheet. This is a strikingly low figure for a company with a market capitalization in the billions. This minimal debt load, coupled with a robust cash and short-term investments balance of approximately $418.6 million, means the company holds significantly more cash than total debt. That's a very solid balance sheet.

The clearest indicator of this conservative approach is the Debt-to-Equity (D/E) ratio (a measure of financial leverage), which is currently around 0.11. Here's the quick math: for every dollar of shareholder equity, the company uses only about 11 cents of debt. This is defintely a low-leverage model.

To put that 0.11 D/E ratio into context, consider some of its peers in the software and security industry:

• CrowdStrike Holdings, Inc. (CRWD): 0.2158
• Okta, Inc. (OKTA): 0.1392
• Microsoft Corp. (MSFT): 0.3315
• Rapid7, Inc. (RPD): 7.631

Qualys, Inc.'s D/E ratio is substantially lower than most, illustrating a strong preference for equity funding (retained earnings) over debt financing. This capital structure is a huge advantage in a rising interest rate environment because it minimizes interest expense risk. You can learn more about the investors who appreciate this stability in Exploring Qualys, Inc. (QLYS) Investor Profile: Who's Buying and Why?

The company's strategy is clear: they prioritize internal cash flow and equity to fuel growth. We have seen no major debt issuances, credit ratings changes, or refinancing activity reported in 2025, which is consistent with a company that has effectively no reliance on the credit markets for day-to-day operations or strategic investments. This is a self-funding growth engine. The primary source of capital is the $529.40 million in total shareholder equity, built through consistent profitability, not external borrowing.

Liquidity and Solvency

You're looking at Qualys, Inc. (QLYS) to see if the company has the cash flow to weather a downturn or fund its next big move. The short answer is yes, they have a solid liquidity profile, but you need to understand where the cash is going, especially in financing activities.

For a software-as-a-service (SaaS) company like Qualys, Inc., liquidity is about more than just cash on hand; it's about the ability to cover short-term debts (current liabilities) with liquid assets (current assets). The ratios for the trailing twelve months (TTM) as of late 2025 tell a clear story.

• Current Ratio: At 1.38, Qualys, Inc. has $1.38 in current assets for every dollar of current liabilities. This is defintely a healthy margin.
• Quick Ratio: Also at 1.38, this is the same as the current ratio because a cloud-based business has virtually no inventory to subtract. It confirms their liquid assets are high quality.

A ratio above 1.0 is the baseline, and 1.38 shows the company is not straining its working capital (current assets minus current liabilities). Speaking of which, the TTM net current asset value, a proxy for working capital, stands at a positive $94.13 million. This is a good buffer.

The working capital trend is generally positive, but the Change in Working Capital reported for the nine months ended September 30, 2025, was a modest increase of $87 thousand, which signals efficient management of operating assets and liabilities, particularly with the growth in deferred revenues (a liability) that is typical for subscription models.

The cash flow statement overview for the first nine months of 2025 is where the strategic picture emerges. You can see the strength of the core business, but also the capital allocation choices being made.

Here is the quick math, in thousands of USD, for the nine months ended September 30, 2025:

Net cash from operating activities (OCF) is the engine, generating a robust $233.741 million. This is the lifeblood of the company and shows their cloud-based model is highly cash-generative.

The net cash used in investing activities (ICF) of $(97.323) million is mostly due to managing their marketable securities portfolio, a common practice for tech companies with a large cash balance, plus a small amount of capital expenditure (CapEx).

The biggest potential liquidity concern isn't a lack of cash, but the use of it in financing. The $(143.347) million used in financing activities is overwhelmingly driven by the repurchase of common stock, a move that signals management's confidence in the stock's valuation but also reduces the cash buffer.

The core business is a cash machine, and that's a massive strength. Still, keep an eye on the pace of share buybacks versus organic investment. For more on the strategic direction driving these decisions, you should review the Mission Statement, Vision, & Core Values of Qualys, Inc. (QLYS).

Next Step: Portfolio Manager: Model a scenario where OCF drops by 20% to assess the buyback program's sustainability by the end of the week.

Valuation Analysis

You're looking at Qualys, Inc. (QLYS) and trying to decide if the current price makes sense. The direct takeaway is this: Qualys is currently priced near the average analyst target, suggesting it is fairly valued, or a 'Hold,' based on its strong earnings but premium Price-to-Book (P/B) multiple.

As a seasoned financial analyst, I see a company with solid profitability but a valuation that reflects its market position in cybersecurity. The consensus from 17 Wall Street analysts in November 2025 is a clear Hold. Only 4 analysts suggest a 'Buy' or 'Strong Buy,' while 13 recommend 'Hold' or 'Sell.'

The average 12-month price target is approximately $142.14, which is just above the recent reference price of around $143.57. This small gap is why the stock is considered fairly valued-there is little expected upside in the near term. Here's the quick math on the key multiples for the 2025 fiscal year:

• Price-to-Earnings (P/E): The forward P/E ratio is estimated at 27.2x. This is a premium to the broader market, but for a profitable cloud security company, it's not extreme.
• Price-to-Book (P/B): The P/B ratio is estimated at a high 9.3x. This tells you that investors are valuing Qualys's future growth and intangible assets-like its cloud platform-far more than its current book value (assets minus liabilities).
• Enterprise Value-to-EBITDA (EV/EBITDA): The 2025 estimate sits at 14.8x. This metric, which accounts for debt and cash, is a more reasonable multiple compared to its peers, but it's still a multiple you pay for a growth-oriented business with strong margins.

What this estimate hides is the potential for growth acceleration from new offerings, which you can learn more about in the Mission Statement, Vision, & Core Values of Qualys, Inc. (QLYS).

Stock Trend and Shareholder Returns

The stock price trend over the last 12 months shows volatility, but the overall movement has been corrective. The 52-week trading range saw a low of $112.61 and a high of $170.00. For instance, in early November 2025, the stock price jumped from $121.21 to $146.13 in a single trading period, showing how quickly market sentiment can shift in this sector. Still, the stock has been trading sideways for much of 2025.

When it comes to direct shareholder returns, Qualys, Inc. is a growth-focused company, not an income stock. They do not pay a dividend. The trailing twelve-month dividend yield is 0.00%, and the dividend payout ratio is also 0.00%. This means all earnings are being reinvested back into the business for product development and market expansion, which is defintely typical for a software-as-a-service (SaaS) provider.

To summarize the core valuation metrics, here is a snapshot:

Your next step should be to look closely at their subscription renewal rates and the competitive landscape to see if their growth justifies this premium multiple.

Risk Factors

You've seen the strong profitability numbers, but as a seasoned analyst, you know the real work is mapping the risks that could derail Qualys, Inc.'s (QLYS) trajectory. The core challenge for Qualys isn't profitability-it's sustaining top-line growth in a consolidating and highly competitive cybersecurity market.

The company's full-year 2025 revenue guidance is strong, projecting a range of $665.8 million to $667.8 million, a 10% growth rate, but the risks to that growth are clear. Honestly, the biggest near-term risk is the market condition of 'budget scrutiny' that management itself called out, especially impacting new business growth in Q4 2025.

External and Competitive Pressures

The cybersecurity industry is seeing a major vendor consolidation trend, and that's a headwind for Qualys. Larger platform competitors are pushing customers to simplify their security stacks, which puts pressure on a pure-play vulnerability and risk management provider like Qualys. The slowdown in customer acquisition is already visible in the numbers.

Here's the quick math: Annual Recurring Revenue (ARR) growth was an underwhelming 10.1% over the last year, and estimated sales growth for the next 12 months is expected to slow further to about 8%. That's still growth, but it suggests the company is facing challenges in acquiring and retaining long-term customers against the backdrop of a challenging macro environment.

• Vendor Consolidation: Larger rivals offer broader, integrated platforms, tempting customers to move away from specialized solutions.
• Macro Scrutiny: Continued customer budget scrutiny makes new business difficult to close, especially for Q4 2025.
• Regulatory Risk: The company must maintain government authorizations, like its new FedRAMP High solution, and any changes to global data privacy or security standards could force costly platform updates.

Operational and Financial Risks

While Qualys is a free cash flow machine-Adjusted EBITDA for Q3 2025 was a stellar $82.6 million, representing a 49% margin-the operational risk centers on its ability to cross-sell. The net dollar expansion rate, a measure of upsell success, remained flat at 104% quarter-over-quarter. This means existing customers are not buying many more modules, which is defintely a challenge for a platform company.

The company's ability to execute on its innovation roadmap is also a constant operational risk. If the new Enterprise TruRisk Management (ETM) platform or the Agentic AI-powered Risk Operations Center (ROC) don't get strong customer acceptance, the growth story gets tougher. The good news is that they are actively managing this transition, as you can see in their Mission Statement, Vision, & Core Values of Qualys, Inc. (QLYS).

Insider activity also warrants a look; over the past 90 days, insiders sold 30,559 shares worth roughly $4.07 million. While this isn't a panic signal, it's a data point to monitor, as consistent insider selling can signal a lack of confidence in the near-term stock price.

Mitigation Strategies and Actions

Qualys isn't sitting still. They are executing clear strategies to counter these risks. The shift to a platform-centric model, anchored by ETM and Agentic AI, is their primary strategic mitigation against vendor consolidation. They are trying to become the consolidated platform themselves.

The channel strategy is also paying off. In Q3 2025, partner-led sales jumped to 50% of total revenues, up from 47% a year ago, with channel revenues growing 17%, significantly outpacing the 5% direct growth. This channel leverage is crucial for scaling in a tight budget environment. Plus, they are returning capital to shareholders, having repurchased $49.4 million in shares during Q3, with $205 million remaining in the program.

Here is a summary of the key risks and the company's counter-measures:

The next step for you is to monitor the Q4 2025 earnings call for an update on the ETM adoption rate and any change in the net dollar expansion rate. That will tell us if the strategic pivot is actually working.

Growth Opportunities

You're looking at Qualys, Inc. (QLYS) and seeing solid profitability, but the real question is whether they can accelerate growth in a tough cybersecurity market. The short answer is yes, they have a clear path. Their strategy isn't about chasing every new customer; it's about getting their existing base to adopt their new, higher-value platform solutions, plus a major push into the federal market.

For the full fiscal year 2025, management has raised their revenue guidance to a range of $665.8 million to $667.8 million, which translates to a healthy 10% year-over-year growth. This is a defintely a good sign. More importantly, they've also boosted their Non-GAAP Earnings Per Share (EPS) projection to between $6.93 and $7.00, showing they can grow revenue while maintaining their industry-leading margins. That's a powerful combination.

Key Growth Drivers: Platform and AI Innovation

The core of Qualys, Inc.'s future growth is the Enterprise TruRisk Platform (ETM) and its shift from simple vulnerability management to what they call risk surface management. This is the big product innovation. They are pioneering the Agentic AI Risk Operations Center (ROC), which uses specialized, autonomous AI agents to automate complex security and remediation tasks. This moves them up the value chain, from just identifying a problem to fixing it automatically.

The market opportunity is massive, and they are positioned well to capture it. Here's the quick math on their expanding addressable market:

• Total Addressable Market (TAM) is projected to grow from $55 billion in 2025 to $79 billion by 2028.
• New offerings like Patch Management and Cybersecurity Asset Management (CSAM) are transitioning from early-stage products to tangible growth drivers.

Strategic Market Expansion and Partnerships

The company is doubling down on two key areas: the federal sector and its channel partners. On the federal front, they secured the critical FedRAMP High Authorization for their GovCloud Platform, which is a major barrier to entry for competitors and opens up significant government contract opportunities. We've already seen momentum here, including a high six-figure upsell with a large government agency.

Also, the shift to a partner-first model is working. In the third quarter of 2025, partner-led sales accounted for 50% of total revenues, up from 47% a year ago. They are leveraging their strategic partnerships with major cloud providers like Amazon Web Services, Google Cloud Platform, and Microsoft Azure to integrate their security capabilities seamlessly.

Competitive Edge in Profitability

What sets Qualys, Inc. apart from many peers isn't just growth, but the quality of that growth-it's profitable. They run a lean, efficient operation that translates directly to superior margins and cash flow. This financial strength gives them the capital to invest in the Agentic AI innovations and market expansion without taking on debt.

Look at the margins. They are simply best-in-class.

The single-agent, cloud-native architecture of the Enterprise TruRisk Platform is a huge technical advantage. It simplifies security for customers, consolidating multiple point products and reducing their operational complexity and cost. That's a compelling sales pitch in any budget-scrutinizing macro environment.

To dig deeper into the company's financial foundation, you should check out the full analysis: Breaking Down Qualys, Inc. (QLYS) Financial Health: Key Insights for Investors.