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ZS vs. QLYS: Which Cybersecurity Stock is the Smarter Pick Now?
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Key Takeaways
Zscaler is expanding AI-driven cybersecurity but faces shrinking margins from rising costs.
Qualys shows steady VMDR adoption and global revenue growth of 16% year over year.
QLYS trades at a discount with 2025 EPS growth of 0.65% vs. ZS' projected 0.31% decline.
Zscaler (ZS - Free Report) and Qualys (QLYS - Free Report) are two key cybersecurity players offering critical solutions in securing enterprise environments. While both companies offer different sets of solutions, they both compete in the vulnerability management space.
Both Zscaler and Qualys are benefiting from the opportunity created by the massive rise of cyberattacks, including credential theft and abuse, remote desktop protocol attacks and social engineering-based initial access. Per a Mordor Intelligence report, the cybersecurity market is projected to witness a CAGR of 12.63% from 2025 to 2030.
With this strong projection for the cybersecurity industry’s growth, the question remains: Which stock has more upside potential? Let’s break down their fundamentals, growth prospects, market challenges and valuation to determine which offers a more compelling investment case.
The Case for Zscaler Stock
Zscaler offers a comprehensive set of enterprise network security solutions, such as web security, Internet security, antivirus, vulnerability management, firewalls, and control over user activity in mobile, cloud computing, and Internet of Things environments.
Zscaler provides unified vulnerability management that integrates more than 150 data sources that include vulnerability feeds, asset inventories, identity systems, and user behavior logs for automating remediation workflows, verification and mitigation of risks.
Although vulnerability management is not ZS’ strongest bet, the company is benefiting from the growing demand for privileged access security in digital transformation and cloud-migration strategies. Furthermore, Zscaler’s presence across several industry verticals enables it to stay protected from the negative impacts of macroeconomic and geopolitical headwinds.
Zscaler is also integrating artificial intelligence across its offering, giving it a long-term growth prospect. ZS uses AI for real-time anomaly detection, advanced threat correlation, AI-based policy recommendations, AI-based data loss prevention and AI Agents like ZDX Copilot. AI integration has enabled it to detect and mitigate cyber threats more effectively while continuously supporting its users.
However, to stay competitive, the company has heavily increased its sales and marketing expenses, particularly by increasing the sales force. Additionally, investment in R&D has also been rising, causing the margins to shrink. Zscaler's fiscal 2025 earnings are pegged at $3.18 per share, indicating a year-over-year decline of 0.31%.
Image Source: Zacks Investment Research
The Case for Qualys Stock
QLYS is the leading provider of Vulnerability Management, Detection and Response (VMDR) solutions, and has been witnessing increased VMDR customer penetration for the past several quarters. QLYS has increased the depth of its portfolio with multiple product launches and enhancements, including the industry’s first Risk Operations Center with Enterprise TruRisk Management. Qualys also launched Qualys TotalAI to de-risk generative AI and large language model applications from cyber breaches.
Qualys’ channel partner program, which involves expanding its cloud-based security solutions through a network of partners, including Managed Service Provider, Managed Security Service Provider and Value-Added Resellers, has been able to increase its revenues much faster than direct customers.
Qualys is expanding globally with an international revenue growth rate of 16% year over year in the latest quarter. This organic expansion is enabling it to gain more customers and market share without acquisition costs.
Leveraging its VMDR solution and cloud platform, Qualys aims to tap new markets and address emerging security needs. With an expected total addressable market of $72 billion by 2027, growing at a compound annual rate of approximately 13%, Qualys targets high-growth areas, such as cloud security, endpoint security and security analytics.
Qualys’ fiscal 2025 revenues are pegged at $652.2 million, indicating a year-over-year increase of 7.34%. Qualys’ fiscal 2025 earnings are pegged at $6.17 per share, indicating a year-over-year increase of 0.65%.
Image Source: Zacks Investment Research
Stock Price Performance and Valuation of ZS and QLYS
In the year-to-date period, Shares of Zscaler and Qualys have returned 68% and 1.2%, respectively.
Image Source: Zacks Investment Research
Zscaler is trading at a forward sales multiple of 15.21X, way above the Zacks Security industry’s forward sales multiple of 14.77X, over the past year. On the flipside, Qualys is trading at a discount at a P/S forward 12-month multiple of 7.69X.
Image Source: Zacks Investment Research
Conclusion: Qualys vs. Zscaler
Both Qualys and Zscaler are essential players in the cybersecurity space, but Zscaler is suffering from margin pressure. Additionally, Qualys is trading at a discount in comparison to Zscaler stock, making the stock more attractive at present.
Currently, Qualys sports a Zacks Rank #1 (Strong Buy), making the stock a stronger pick compared with Zscaler, which has a Zacks Rank #3 (Hold).
Image: Bigstock
ZS vs. QLYS: Which Cybersecurity Stock is the Smarter Pick Now?
Key Takeaways
Zscaler (ZS - Free Report) and Qualys (QLYS - Free Report) are two key cybersecurity players offering critical solutions in securing enterprise environments. While both companies offer different sets of solutions, they both compete in the vulnerability management space.
Both Zscaler and Qualys are benefiting from the opportunity created by the massive rise of cyberattacks, including credential theft and abuse, remote desktop protocol attacks and social engineering-based initial access. Per a Mordor Intelligence report, the cybersecurity market is projected to witness a CAGR of 12.63% from 2025 to 2030.
With this strong projection for the cybersecurity industry’s growth, the question remains: Which stock has more upside potential? Let’s break down their fundamentals, growth prospects, market challenges and valuation to determine which offers a more compelling investment case.
The Case for Zscaler Stock
Zscaler offers a comprehensive set of enterprise network security solutions, such as web security, Internet security, antivirus, vulnerability management, firewalls, and control over user activity in mobile, cloud computing, and Internet of Things environments.
Zscaler provides unified vulnerability management that integrates more than 150 data sources that include vulnerability feeds, asset inventories, identity systems, and user behavior logs for automating remediation workflows, verification and mitigation of risks.
Although vulnerability management is not ZS’ strongest bet, the company is benefiting from the growing demand for privileged access security in digital transformation and cloud-migration strategies. Furthermore, Zscaler’s presence across several industry verticals enables it to stay protected from the negative impacts of macroeconomic and geopolitical headwinds.
Zscaler is also integrating artificial intelligence across its offering, giving it a long-term growth prospect. ZS uses AI for real-time anomaly detection, advanced threat correlation, AI-based policy recommendations, AI-based data loss prevention and AI Agents like ZDX Copilot. AI integration has enabled it to detect and mitigate cyber threats more effectively while continuously supporting its users.
However, to stay competitive, the company has heavily increased its sales and marketing expenses, particularly by increasing the sales force. Additionally, investment in R&D has also been rising, causing the margins to shrink. Zscaler's fiscal 2025 earnings are pegged at $3.18 per share, indicating a year-over-year decline of 0.31%.
Image Source: Zacks Investment Research
The Case for Qualys Stock
QLYS is the leading provider of Vulnerability Management, Detection and Response (VMDR) solutions, and has been witnessing increased VMDR customer penetration for the past several quarters. QLYS has increased the depth of its portfolio with multiple product launches and enhancements, including the industry’s first Risk Operations Center with Enterprise TruRisk Management. Qualys also launched Qualys TotalAI to de-risk generative AI and large language model applications from cyber breaches.
Qualys’ channel partner program, which involves expanding its cloud-based security solutions through a network of partners, including Managed Service Provider, Managed Security Service Provider and Value-Added Resellers, has been able to increase its revenues much faster than direct customers.
Qualys is expanding globally with an international revenue growth rate of 16% year over year in the latest quarter. This organic expansion is enabling it to gain more customers and market share without acquisition costs.
Leveraging its VMDR solution and cloud platform, Qualys aims to tap new markets and address emerging security needs. With an expected total addressable market of $72 billion by 2027, growing at a compound annual rate of approximately 13%, Qualys targets high-growth areas, such as cloud security, endpoint security and security analytics.
Qualys’ fiscal 2025 revenues are pegged at $652.2 million, indicating a year-over-year increase of 7.34%. Qualys’ fiscal 2025 earnings are pegged at $6.17 per share, indicating a year-over-year increase of 0.65%.
Image Source: Zacks Investment Research
Stock Price Performance and Valuation of ZS and QLYS
In the year-to-date period, Shares of Zscaler and Qualys have returned 68% and 1.2%, respectively.
Image Source: Zacks Investment Research
Zscaler is trading at a forward sales multiple of 15.21X, way above the Zacks Security industry’s forward sales multiple of 14.77X, over the past year. On the flipside, Qualys is trading at a discount at a P/S forward 12-month multiple of 7.69X.
Image Source: Zacks Investment Research
Conclusion: Qualys vs. Zscaler
Both Qualys and Zscaler are essential players in the cybersecurity space, but Zscaler is suffering from margin pressure. Additionally, Qualys is trading at a discount in comparison to Zscaler stock, making the stock more attractive at present.
Currently, Qualys sports a Zacks Rank #1 (Strong Buy), making the stock a stronger pick compared with Zscaler, which has a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank stocks here.