Qualys delivered third quarter results that exceeded Wall Street’s expectations, driving a strong market reaction. Management attributed the outperformance to growing demand for its Enterprise TruRisk Management (ETM) platform and early adoption of its Risk Operations Center (ROC) approach. CEO Sumedh Thakar emphasized that customers are seeking to consolidate cybersecurity tools and operationalize risk management, stating, “CISOs are looking for a practical approach to consolidate tools where possible and empower their teams to use best-of-breed where it makes sense.” The company also highlighted the impact of its partner ecosystem and improved margin efficiency from increased automation and AI in product development.
Is now the time to buy QLYS? Find out in our full research report (it’s free for active Edge members).
Qualys (QLYS) Q3 CY2025 Highlights:
- Revenue: $169.9 million vs analyst estimates of $166.3 million (10.4% year-on-year growth, 2.2% beat)
- Adjusted EPS: $1.86 vs analyst estimates of $1.56 (19.2% beat)
- Adjusted Operating Income: $80.04 million vs analyst estimates of $65.64 million (47.1% margin, 21.9% beat)
- Revenue Guidance for Q4 CY2025 is $173 million at the midpoint, above analyst estimates of $169.5 million
- Management raised its full-year Adjusted EPS guidance to $6.97 at the midpoint, a 9.7% increase
- Operating Margin: 35.3%, up from 29.2% in the same quarter last year
- Annual Recurring Revenue: $679.5 million vs analyst estimates of $663.4 million (10.4% year-on-year growth, 2.4% beat)
- Billings: $183.5 million at quarter end, up 13.5% year on year
- Market Capitalization: $5.45 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Qualys’s Q3 Earnings Call
- Roger Boyd (UBS) asked for clarification on ETM pricing and upsell potential. CEO Sumedh Thakar explained that ETM now bundles asset management and AI capabilities, enabling up to 100% uplift versus legacy modules, with additional upsell available through the TruRisk Eliminate solution.
- Patrick Edwin Colville (Scotiabank) inquired about federal market momentum and competitive landscape. Thakar noted early traction in government due to FedRAMP certification and described competition as shifting toward solutions that reduce noise and prioritize actionable remediation over simply detecting more vulnerabilities.
- Michael Cikos (Needham) questioned whether any one-time benefits impacted revenue. CFO Joo Mi Kim stated there were no material one-time items and attributed growth to core execution. Cikos also asked about improving net dollar retention, with Kim pointing to enhanced customer communication about ETM’s value as a lever for future expansion.
- William Kingsley Crane (Canaccord Genuity) asked about prioritizing R&D investments across AI, ETM, and CNAPP. Thakar responded that AI is being used to boost productivity and reduce hiring needs, while R&D resource allocation is managed by leveraging efficiencies and shifting hires geographically.
- Shrenik Kothari (Baird) queried whether TruConfirm would be monetized separately or drive ETM adoption. Thakar clarified TruConfirm is included in ETM, positioning it as a differentiator rather than a standalone upsell, with the primary monetization path through subsequent upsell to TruRisk Eliminate.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will focus on (1) the pace of ETM adoption and conversion among existing customers, (2) the scaling of partner-led mROC deployments and their impact on international growth, and (3) the rollout and customer uptake of new AI-driven features like TruConfirm and TruRisk Eliminate. Additionally, we will monitor how budget scrutiny and competitive moves influence deal cycles and upsell rates.
Qualys currently trades at $150.01, up from $121.18 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).
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