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Qualys Q3 Earnings Beat on Federal Strength, 2026 Guidance Raised
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Key Takeaways
Qualys Q3 EPS rose 14% y/y to $2.12 per share, beating estimates, while revenues climbed 10.7% to $188M.
QLYS saw channel revenues jump 24%, while strong federal bookings and international growth boosted results.
QLYS raised 2026 revenue guidance to $736.9-$738.9M and non-GAAP EPS outlook to $8.07-$8.14.
Qualys Inc. (QLYS - Free Report) reported third-quarter 2026 non-GAAP earnings of $2.12 per share, which increased 14% year over year and beat the Zacks Consensus Estimate of $1.95 by 8.72%. Revenues rose 10.7% to $188 million and surpassed the consensus mark of $186.5 million by 0.81%.
Results benefited from strong federal government demand, higher channel contributions and increasing adoption of differentiated security offerings. The net dollar expansion rate remained at 105%, unchanged from the preceding quarter.
QLYS Benefits From Channel & International Growth
The channel accounted for 55% of total revenues, up from 50% in the year-ago quarter. Channel-partner revenues climbed 24% year over year, offsetting a 2% decline in direct revenues. The performance reflected Qualys' continued emphasis on partner-led customer acquisition and platform expansion.
International revenues increased 15%, outpacing domestic growth of 7%. The United States contributed 54% to the total revenues, while international markets accounted for the remaining 46%. Management highlighted continued investments in strategic partnerships to support long-term growth.
Federal government customers contributed significantly to third-quarter bookings strength. Qualys secured a low-seven-figure annual booking deal with a large government agency, which adopted seven modules, including Enterprise TruRisk Management (ETM), TruRisk Eliminate, TotalCloud and TotalAppSec.
Another large federal agency expanded its existing subscription through a seven-figure annual bookings upsell. The number of customers generating at least $500,000 in annual revenue increased 15% year over year to 243.
Calculated current billings grew 14%, following 15% growth in the preceding quarter. Management indicated that federal deal activity could remain uneven across quarters.
QLYS Broadens Platform Booking Mix
ETM and CyberSecurity Asset Management (CSAM) together accounted for 12% of last-12-month total bookings, up from 10% a year earlier. Their contribution to bookings increased to 14% from 11%.
Patch Management represented 9% of the total bookings compared with 8% in the prior-year period. Its share of bookings rose to 18% from 16%. TotalCloud remained at 5% of the total bookings.
The net dollar expansion rate for customers with prior-year ETM or CSAM purchases improved to 108% from 107% in the second quarter, reflecting stronger expansion within this customer group.
Qualys Advances Autonomous Cyber Risk Remediation
QLYS strengthened its AI-native Risk Operations Center with InstaScan, powered by Agent Insta, which detects newly disclosed vulnerabilities without traditional scanning cycles. Management indicated that detection now occurs within 60 minutes of disclosure on average.
Agent Val, powered by TruConfirm, has performed approximately 9 million exploit validations, identifying 11% as exploitable. TruRisk Eliminate helped customers deploy more than 180 million patches over the past 12 months, with 60% executed autonomously.
The company also introduced TruRisk Eliminate 2.0 with TruConfidence, incorporating remediation intelligence, operational monitoring and AI-powered patch failure analysis. These capabilities aim to accelerate vulnerability remediation while reducing the risk of operational disruptions.
GAAP gross profit increased 10% year over year to $156.7 million, while the gross margin contracted to 83% from 84%. Non-GAAP gross profit rose 10% to $159.3 million, with the corresponding margin remaining at 85%.
Non-GAAP operating expenses increased 11% year over year to $72.2 million, driven by a 17% increase in sales and marketing spending. Non-GAAP operating income grew 9% to $87.1 million, although the operating margin narrowed to 46% from 47%.
Adjusted EBITDA rose 9% year over year to $89.9 million, representing a 48% margin compared with 49% a year earlier. GAAP net income increased 14% to $57.2 million.
The operating cash flow increased 13% year over year to $101.8 million, representing 54% of revenues. The free cash flow totaled approximately $100 million, with a margin of 53.2%, up from 52.7% in the year-ago quarter.
Qualys spent $53.6 million repurchasing approximately 330,000 shares during the quarter. The company had $176.1 million remaining under its share repurchase authorization at September-end.
QLYS Raises 2026 Guidance
Management raised its 2026 revenue guidance to $736.9-$738.9 million from $732-$738 million, implying 10% year-over-year growth. Non-GAAP earnings are projected between $8.07 and $8.14 per share, up from the previous $7.74-$7.88.
For the fourth quarter, Qualys expects revenues of $191-$193 million, indicating year-over-year growth of 9-10%. Non-GAAP earnings are projected to be $2.05-$2.12 per share. Management expects a full-year adjusted EBITDA margin of 46% and a free cash flow margin in the low-40% range.
Advanced Energy Industries shares have increased 4.7% YTD. The Zacks Consensus Estimate for Advanced Energy Industries’ 2026 earnings indicates a year-over-year increase of 88.3%. Estimates have been revised upward in the past seven days.
Shares of AMETEK have returned 16% YTD. The Zacks Consensus Estimate for AMETEK’s 2026 earnings suggests a year-over-year rise of 14.5%. Estimates have been revised upward in the past seven days.
ASE Technology shares have surged 113.4% YTD. The Zacks Consensus Estimate for ASE Technology’s 2026 earnings implies a year-over-year upsurge of 129.8%. Estimates have been revised upward in the past 30 days.
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Qualys Q3 Earnings Beat on Federal Strength, 2026 Guidance Raised
Key Takeaways
Qualys Inc. (QLYS - Free Report) reported third-quarter 2026 non-GAAP earnings of $2.12 per share, which increased 14% year over year and beat the Zacks Consensus Estimate of $1.95 by 8.72%. Revenues rose 10.7% to $188 million and surpassed the consensus mark of $186.5 million by 0.81%.
Results benefited from strong federal government demand, higher channel contributions and increasing adoption of differentiated security offerings. The net dollar expansion rate remained at 105%, unchanged from the preceding quarter.
QLYS Benefits From Channel & International Growth
The channel accounted for 55% of total revenues, up from 50% in the year-ago quarter. Channel-partner revenues climbed 24% year over year, offsetting a 2% decline in direct revenues. The performance reflected Qualys' continued emphasis on partner-led customer acquisition and platform expansion.
International revenues increased 15%, outpacing domestic growth of 7%. The United States contributed 54% to the total revenues, while international markets accounted for the remaining 46%. Management highlighted continued investments in strategic partnerships to support long-term growth.
Qualys, Inc. Price, Consensus and EPS Surprise
Qualys, Inc. price-consensus-eps-surprise-chart | Qualys, Inc. Quote
Qualys Sees Strong Federal Demand & Larger Deals
Federal government customers contributed significantly to third-quarter bookings strength. Qualys secured a low-seven-figure annual booking deal with a large government agency, which adopted seven modules, including Enterprise TruRisk Management (ETM), TruRisk Eliminate, TotalCloud and TotalAppSec.
Another large federal agency expanded its existing subscription through a seven-figure annual bookings upsell. The number of customers generating at least $500,000 in annual revenue increased 15% year over year to 243.
Calculated current billings grew 14%, following 15% growth in the preceding quarter. Management indicated that federal deal activity could remain uneven across quarters.
QLYS Broadens Platform Booking Mix
ETM and CyberSecurity Asset Management (CSAM) together accounted for 12% of last-12-month total bookings, up from 10% a year earlier. Their contribution to bookings increased to 14% from 11%.
Patch Management represented 9% of the total bookings compared with 8% in the prior-year period. Its share of bookings rose to 18% from 16%. TotalCloud remained at 5% of the total bookings.
The net dollar expansion rate for customers with prior-year ETM or CSAM purchases improved to 108% from 107% in the second quarter, reflecting stronger expansion within this customer group.
Qualys Advances Autonomous Cyber Risk Remediation
QLYS strengthened its AI-native Risk Operations Center with InstaScan, powered by Agent Insta, which detects newly disclosed vulnerabilities without traditional scanning cycles. Management indicated that detection now occurs within 60 minutes of disclosure on average.
Agent Val, powered by TruConfirm, has performed approximately 9 million exploit validations, identifying 11% as exploitable. TruRisk Eliminate helped customers deploy more than 180 million patches over the past 12 months, with 60% executed autonomously.
The company also introduced TruRisk Eliminate 2.0 with TruConfidence, incorporating remediation intelligence, operational monitoring and AI-powered patch failure analysis. These capabilities aim to accelerate vulnerability remediation while reducing the risk of operational disruptions.
QLYS Maintains Profitability Despite Higher Expenses
GAAP gross profit increased 10% year over year to $156.7 million, while the gross margin contracted to 83% from 84%. Non-GAAP gross profit rose 10% to $159.3 million, with the corresponding margin remaining at 85%.
Non-GAAP operating expenses increased 11% year over year to $72.2 million, driven by a 17% increase in sales and marketing spending. Non-GAAP operating income grew 9% to $87.1 million, although the operating margin narrowed to 46% from 47%.
Adjusted EBITDA rose 9% year over year to $89.9 million, representing a 48% margin compared with 49% a year earlier. GAAP net income increased 14% to $57.2 million.
Qualys Generates Strong Cash Flow & Repurchases Shares
The operating cash flow increased 13% year over year to $101.8 million, representing 54% of revenues. The free cash flow totaled approximately $100 million, with a margin of 53.2%, up from 52.7% in the year-ago quarter.
Qualys spent $53.6 million repurchasing approximately 330,000 shares during the quarter. The company had $176.1 million remaining under its share repurchase authorization at September-end.
QLYS Raises 2026 Guidance
Management raised its 2026 revenue guidance to $736.9-$738.9 million from $732-$738 million, implying 10% year-over-year growth. Non-GAAP earnings are projected between $8.07 and $8.14 per share, up from the previous $7.74-$7.88.
For the fourth quarter, Qualys expects revenues of $191-$193 million, indicating year-over-year growth of 9-10%. Non-GAAP earnings are projected to be $2.05-$2.12 per share. Management expects a full-year adjusted EBITDA margin of 46% and a free cash flow margin in the low-40% range.
QLYS’ Zacks Rank & Other Stocks to Consider
Qualys currently carries a Zacks Rank #2 (Buy).
Some other stocks worth considering from the broader Zacks Computer and Technology sector are Advanced Energy Industries (AEIS - Free Report) , AMETEK (AME - Free Report) and ASE Technology (ASX - Free Report) . Advanced Energy Industries, AMETEK and ASE Technology sport a Zacks Rank #1 (Strong Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Advanced Energy Industries shares have increased 4.7% YTD. The Zacks Consensus Estimate for Advanced Energy Industries’ 2026 earnings indicates a year-over-year increase of 88.3%. Estimates have been revised upward in the past seven days.
Shares of AMETEK have returned 16% YTD. The Zacks Consensus Estimate for AMETEK’s 2026 earnings suggests a year-over-year rise of 14.5%. Estimates have been revised upward in the past seven days.
ASE Technology shares have surged 113.4% YTD. The Zacks Consensus Estimate for ASE Technology’s 2026 earnings implies a year-over-year upsurge of 129.8%. Estimates have been revised upward in the past 30 days.