A month has gone by since the last earnings report for Qualys (QLYS Quick QuoteQLYS - Free Report) . Shares have lost about 6.8% in that time frame, underperforming the S&P 500.

But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Qualys due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Qualys Q2 Earnings Beat on Channel Strength, FY26 Guidance Raised

Qualys reported second-quarter 2026 non-GAAP earnings of $1.98 per share, which rose 17.9% year over year and beat the Zacks Consensus Estimate by 11.24%. Revenues increased 11% to $182.2 million and surpassed the consensus mark of $179 million by 1.8%.

Results benefited from stronger partner-led execution and broader adoption of differentiated platform offerings. The net dollar expansion rate improved to 105% from 104% in the preceding quarter, signaling better upsell performance among existing customers.

QLYS Gains From Partner-Led Growth

The channel accounted for 54% of total revenues, up from 49% in the year-ago quarter. Channel-partner revenues climbed 22% year over year, while direct revenues remained largely unchanged. The performance reflected Qualys’ continued emphasis on using partners to expand customer reach and support larger platform transactions.

International growth also outpaced the domestic business. Revenues outside the United States rose 15% compared with 8% growth in the United States. The geographic revenue mix remained 55% domestic and 45% international.

Qualys Broadens Its Platform Booking Mix

Enterprise TruRisk Management and CyberSecurity Asset Management together represented 12% of last-12-month total bookings, up from 9% a year earlier. The products also contributed 14% of new bookings versus 10% in the prior-year period.

Patch Management accounted for 9% of total bookings, up from 7%, and 16% of new bookings. TotalCloud remained at 5% of total bookings. Meanwhile, vulnerability management’s contribution declined to 49% from 54%, indicating a broader mix as customers adopted newer modules.

QLYS Advances Its AI-Native Risk Strategy

Qualys introduced InstaScan, powered by Agent Insta, to identify exposure findings within minutes of a vulnerability disclosure without requiring another scan. Findings can then move to Agent Val for exploit validation and immediate risk quantification.

The company also outlined autonomous remediation capabilities that select patches, controlled deployments or compensating controls based on asset risk. Management said live benchmarking reduced the exposure window from 21 days to minutes and automatically patched 60% of vulnerabilities.

Qualys Expands Security for AI Workloads

TotalAI 2.0 extends visibility across employee AI activity, models, services, code and runtime environments. New capabilities are designed to uncover shadow AI usage and identify AI workloads operating across hybrid and multi-cloud infrastructure.

The platform also added posture-management coverage for Anthropic and OpenAI environments. It can evaluate Model Context Protocol tool exploits across more than 50 adversarial scenarios and prioritize AI-related risks through the TruRisk engine.

QLYS Sustains Strong Margin Performance

GAAP gross profit rose 12% year over year to $151.9 million, while the gross margin expanded to 83% from 82%. GAAP operating income advanced 20% to $61.9 million, with the operating margin improving to 34% from 31%.

Non-GAAP operating income increased 16% to $81.4 million, and the related margin widened to 45% from 43%. Adjusted EBITDA grew 14% to $83.8 million, representing a margin of 46% compared with 45% a year ago.

Qualys Generates Cash and Returns Capital

The company ended the second quarter with cash and marketable securities of $703.5 million. Operating cash flow surged 77% year over year to $59.6 million in the second quarter, representing 33% of revenues. Free cash flow totaled $55.9 million, with a margin of 31%. For the first six months of 2026, free cash flow reached $149.5 million, and the margin was 42%.

During the quarter, Qualys spent $76.8 million to repurchase 797,000 shares. The company had $229.8 million remaining under its share repurchase authorization at quarter-end.

QLYS Raises Its 2026 Guidance

Management increased its full-year 2026 revenue guidance to $732-$738 million from $721-$727 million. The updated range implies growth of 9-10%. Non-GAAP earnings are now projected between $7.74 and $7.88 per share, up from the prior forecast of $7.44-$7.65.

For the third quarter, Qualys expects revenues of $185.5-$187.5 million, calling for 9-10% year-over-year growth. Non-GAAP earnings are projected in the range of $1.91-$1.98 per share. Management continues to expect an adjusted EBITDA margin in the mid-40% range and a free cash flow margin in the low-40% range for 2026.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a upward trend in fresh estimates.

VGM Scores

Currently, Qualys has a average Growth Score of C, a grade with the same score on the momentum front. However, the stock was allocated a score of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Qualys has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Qualys is part of the Zacks Security industry. Over the past month, Varonis Systems (VRNS Quick QuoteVRNS - Free Report) , a stock from the same industry, has gained 7.7%. The company reported its results for the quarter ended June 2026 more than a month ago.

Varonis reported revenues of $180.02 million in the last reported quarter, representing a year-over-year change of +18.3%. EPS of $0.04 for the same period compares with $0.03 a year ago.

For the current quarter, Varonis is expected to post earnings of $0.02 per share, indicating a change of -66.7% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Varonis. Also, the stock has a VGM Score of D.