Cybersecurity cloud platform provider Qualys (NASDAQ:QLYS) beat Wall Street’s revenue expectations in Q4 CY2025, with sales up 10.1% year on year to $175.3 million. The company expects next quarter’s revenue to be around $173.5 million, close to analysts’ estimates. Its non-GAAP profit of $1.87 per share was 4.9% above analysts’ consensus estimates.
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Qualys (QLYS) Q4 CY2025 Highlights:
- Revenue: $175.3 million vs analyst estimates of $173.2 million (10.1% year-on-year growth, 1.2% beat)
- Adjusted EPS: $1.87 vs analyst estimates of $1.78 (4.9% beat)
- Adjusted Operating Income: $80.13 million vs analyst estimates of $76.61 million (45.7% margin, 4.6% beat)
- Revenue Guidance for Q1 CY2026 is $173.5 million at the midpoint, roughly in line with what analysts were expecting
- Adjusted EPS guidance for the upcoming financial year 2026 is $7.31 at the midpoint, missing analyst estimates by 1.3%
- Operating Margin: 33.6%, up from 31% in the same quarter last year
- Annual Recurring Revenue: $697 million vs analyst estimates of $699.3 million (9.5% year-on-year growth, in line)
- Billings: $204.9 million at quarter end, up 5.6% year on year
- Market Capitalization: $4.58 billion
StockStory’s Take
Qualys closed the fourth quarter with results that met Wall Street’s revenue expectations and delivered stronger-than-anticipated non-GAAP profitability. Management attributed the company’s performance to robust adoption of its agentic AI-powered risk management offerings and expanding partner-led sales. CEO Sumedh Thakar highlighted that customers are increasingly seeking unified solutions for pre-breach risk management, emphasizing the operational efficiencies and risk reduction achieved through Qualys’ Enterprise Threat Management (ETM) platform and the Risk Operations Center (ROC) model. The continued uptick in large customer upsells and international momentum also contributed to the quarter’s growth.
Looking ahead, Qualys’ guidance reflects cautious optimism as management prioritizes accelerating ETM adoption and expanding its partner ecosystem to drive new business. CFO Joo Mi Kim noted that revenue growth assumptions are informed by stable customer retention and moderate new business contribution, with investments focused on sales, marketing, and federal sector expansion. Thakar added that early success with agentic AI capabilities and the QFlex pricing model could unlock further upside, but emphasized that broad-based adoption is still in its early stages and will be closely monitored over the coming quarters.
Key Insights from Management’s Remarks
Management credited Q4 performance to increased traction for AI-driven risk management, channel growth, and early wins with new orchestration and automation features.
- AI-powered platform adoption: The rollout of Qualys' agentic AI risk fabric and ROC drove new customer engagements, as organizations sought to consolidate fragmented security stacks and automate remediation. Management sees these features as a key differentiator versus traditional exposure management tools.
- Partner ecosystem expansion: Channel partners contributed 51% of total revenue, outpacing direct sales. Management highlighted partner-first go-to-market efforts and new mROC (managed Risk Operations Center) alliances as critical for scaling adoption and accessing new markets.
- Product mix shift: Cybersecurity Asset Management, Patch Management, and TotalCloud saw increased bookings contributions, with these differentiated products helping Qualys capture a larger share of customer budgets and address evolving risk vectors like cloud and identity.
- Operational efficiency focus: The QFlex pricing model, still in beta, offered customers increased flexibility and accelerated adoption, while helping Qualys reduce friction in upsell and cross-sell motions. Early feedback from enterprise clients was positive, particularly as security environments grow more dynamic.
- Federal sector momentum: Qualys secured notable expansions with federal agencies, leveraging its FedRAMP High Authorized platform and positioning itself for larger multi-agency rollouts. This vertical remains a long-term growth opportunity as government entities seek centralized risk quantification and remediation.
Drivers of Future Performance
Qualys’ outlook is shaped by its focus on expanding ETM usage, deepening partner relationships, and adapting to a shifting cybersecurity landscape influenced by AI and automation.
- ETM platform adoption pace: Management views broader deployment of the ETM platform and agentic AI features as the primary lever for accelerating growth and boosting customer retention. However, adoption remains in the early stages, and future performance will depend on how quickly customers transition from legacy vulnerability management to the new ROC model.
- Partner-led sales growth: The company is prioritizing investments in its partner ecosystem, aiming to certify more mROC partners and enable them to deliver higher-value, business-focused risk services. Success here is expected to drive both upsell opportunities and new customer acquisition, especially in underpenetrated regions.
- Market competition and product differentiation: Qualys faces a changing competitive environment, with large players like ServiceNow acquiring exposure management vendors. Management believes its integrated approach—combining risk quantification, validation, and automated remediation—will remain a key differentiator, but the company must continue to innovate to defend and grow its market share.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will monitor (1) the pace of ETM and agentic AI adoption among existing customers, (2) execution and revenue contribution from newly certified mROC partners, and (3) incremental progress in federal sector expansion following the FedRAMP High authorization. Additionally, we will track how effectively Qualys leverages QFlex to drive cross-sell and upsell activity, as well as its ability to maintain differentiation amid intensifying competition.
Qualys currently trades at $128.04, in line with $127.81 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).
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