Industry Overview - Cybersecurity has become a top priority for organizations due to the increasing frequency and sophistication of cyberattacks, which threaten financial stability and brand reputation [1] - The global cybersecurity market is projected to grow from $193.73 billion in 2024 to $562.77 billion by 2032, reflecting a robust CAGR of 14.4% [2] Technological Advancements - Traditional security tools are becoming inadequate against modern threats, leading to a shift towards artificial intelligence (AI) for proactive threat detection and response [3] - AI enables companies to analyze large volumes of data, automating detection and response processes, which is essential given the rapid emergence of threats [3] Key Players - CrowdStrike Holdings (CRWD) is a leader in endpoint protection and is leveraging AI to enhance its Falcon platform for real-time threat detection and automated responses [6][7] - Qualys (QLYS) focuses on vulnerability management and cloud security, enhancing its AI capabilities to improve threat detection and remediation [9][10] - Radware (RDWR) provides cybersecurity solutions and is integrating AI to enhance its product offerings, including DDoS protection and traffic management [12][13] Competitive Positioning - CrowdStrike's deep integration of AI not only enhances its competitive edge but also supports sustainable revenue growth, positioning it as a strong buy [8] - Qualys' AI-powered platform is expected to drive customer adoption and long-term revenue growth, also classified as a strong buy [11] - Radware's AI-driven tools improve scalability and customer loyalty, creating opportunities for recurring revenues through subscription services [14]

Core Insights - Qualys, Inc. is recognized as one of the top cybersecurity stocks to invest in currently due to its recent achievements in security clearance [1] - The company has attained FedRAMP High Authorization, allowing it to manage sensitive and unclassified government data, positioning it among a select group of cybersecurity firms [2] - The CEO of Qualys emphasized the importance of this achievement as a reflection of the company's investment in security and its commitment to supporting U.S. Federal Government cybersecurity initiatives [3] Company Overview - Qualys, Inc. provides a cloud-based cybersecurity platform that assists organizations in discovering and managing IT assets, identifying vulnerabilities, and ensuring compliance [4] - The platform includes automated tools for vulnerability assessment, configuration management, external attack surface management, and threat intelligence to combat cyber threats [4]

Core Insights - Qualys, Inc. has achieved FedRAMP High Authorization for its Government Platform, making it one of the few cybersecurity platforms to offer a comprehensive security solution at this level [1][3][4] - The platform addresses challenges faced by federal agencies, such as limited staff and fragmented security tools, by providing a unified cyber risk management solution [2][4] - FedRAMP High is the most stringent authorization level, designed for cloud services handling sensitive government data, aligning with NIST 800-53 High Impact controls [3] Company Overview - Qualys is a leading provider of cloud-based security, compliance, and IT solutions, serving over 10,000 subscription customers globally, including many from the Forbes Global 100 and Fortune 100 [6] - The company was founded in 1999 and is recognized as one of the first SaaS security companies, with strategic partnerships that enhance its vulnerability management capabilities [7] Product Features - The Qualys Government Platform offers a range of services including vulnerability management, compliance, endpoint detection and response (EDR), asset inventory, policy enforcement, and web application security, all within a single scalable solution [2][4] - The platform is designed to provide broad visibility and control across the entire risk surface, enabling organizations to efficiently reduce risk and protect critical assets [2][4]

Core Insights - CyberArk (CYBR) and Qualys (QLYS) are significant players in the cybersecurity sector, focusing on different areas: CyberArk on privileged access management and identity security, while Qualys specializes in vulnerability management and compliance monitoring [1][2] CyberArk Overview - CyberArk is witnessing growth in its identity security offerings, particularly due to the increasing ratio of machine identities to human identities, now exceeding 80 to 1, compared to 45 to 1 a year ago [3] - The company is innovating with AI-based products such as Secure AI Agents and CORA AI, aimed at protecting AI agents from various security threats [4] - However, CyberArk's near-term growth is impacted by changing customer spending behaviors, with companies opting for phased investments in cybersecurity solutions [5] - The Zacks Consensus Estimate projects CyberArk's revenue growth rates of 32.3% for 2025 and 18.8% for 2026, with earnings growth rates of 27.4% and 25% respectively [6] Qualys Overview - Qualys has over 10,000 customers and a net dollar expansion rate of 104%, indicating strong customer retention and acquisition [10][12] - The company is enhancing its product offerings, including the launch of the first Risk Operations Center and Qualys TotalAI to mitigate risks associated with generative AI [13] - The Zacks Consensus Estimate anticipates revenue growth rates of 8% for 2025 and 6.5% for 2026, with earnings growth rates of 3.6% and 5.5% respectively [14] Market Performance and Valuation - Year-to-date, CyberArk shares have increased by 30.6%, while Qualys shares have decreased by 4.6% [16] - CyberArk is trading at a forward sales multiple of 14.7X, which is significantly higher than Qualys' 7.09X, indicating that CyberArk may be overvalued compared to Qualys [17] Investment Recommendation - Given the current market conditions, Qualys is recommended as a stronger investment option due to its robust growth and customer acquisition strategy, while CyberArk faces near-term challenges [19]

Core Insights - The cybersecurity market is projected to grow significantly, reaching $351.9 billion by 2030, with Fortinet and Qualys as key players addressing critical security needs [1][2] - Organizations are increasing their security budgets by 15% in 2025 due to escalating cyber threats [2] Fortinet (FTNT) - Fortinet reported a revenue growth of 14% year-over-year to $1.63 billion in Q2 2025, with billings increasing by 15% to $1.78 billion [4] - The company maintains a strong market position with its Security Fabric platform and leadership in network firewalls, but faces challenges in sustaining growth momentum [4][5] - Following its earnings announcement, Fortinet's stock dropped 17% in after-hours trading, indicating investor concerns about future growth despite beating earnings estimates [5] - The guidance for Q3 revenues is between $1.67 billion and $1.73 billion, suggesting a moderation in growth trajectory [5] - The consensus mark for 2025 earnings is $2.51 per share, indicating a 5.91% year-over-year growth [6] Qualys (QLYS) - Qualys demonstrated a 10% revenue growth to $164.1 million in Q2 2025, with 82% GAAP gross margins, showcasing operational efficiency [7] - The launch of the AI-powered Risk Operations Center positions Qualys as a leader in next-generation threat management, with the ability to reduce risk exposure by 85% and accelerate remediation by 70% [7] - Qualys raised its 2025 revenue guidance to $656-662 million, representing 8-9% growth, while maintaining strong profitability metrics [9] - The consensus mark for 2025 earnings is $6.35 per share, indicating a 3.59% year-over-year growth [10] Valuation and Performance Comparison - Fortinet trades at a P/E ratio of 30.18, while Qualys trades at a more attractive P/E ratio of 19.88, indicating better relative value for Qualys [11][8] - Fortinet's stock has dropped over 25% from its 52-week high and is down 14.5% year to date, while Qualys has shown more stability with a decline of 6.8% year to date [14] Conclusion - Qualys is viewed as a more compelling investment opportunity due to its innovative AI-driven platform, superior margins, and attractive valuation [18] - The focus on autonomous risk management positions Qualys for accelerated growth in the face of increasing security threats [18]

Industry Overview - The cybersecurity market is projected to witness a CAGR of 12.63% from 2025 to 2030, driven by the rise of complex attacks such as credential theft and social engineering [2] Company Profiles CrowdStrike - CrowdStrike specializes in endpoint protection and extended detection and response (XDR) through its Falcon platform, which is recognized as the industry's first multi-tenant, cloud-native security solution [4] - The Falcon platform offers 29 cloud modules categorized under Endpoint Security, Security & IT Operations, and Threat Intelligence, with subscription-based sales increasing from 72% in fiscal 2017 to 95% in fiscal 2025 [5] - Despite robust revenue growth, CrowdStrike's growth rate has decelerated from over 35% year-over-year until fiscal 2024 to 29% in fiscal 2025, with further estimates suggesting a decline to around 21% for fiscal 2026 and 2027 [6] - Rising costs are a concern, with R&D expenses increasing 12-fold and S&M expenses nearly ninefold to $1.52 billion in fiscal 2025 from $173 million in fiscal 2019 [7] - The Zacks Consensus Estimate for CrowdStrike's fiscal 2026 earnings indicates a year-over-year decline of 10.9% [8] Qualys - Qualys is a leading provider of Vulnerability Management, Detection and Response (VMDR) solutions, with a growing customer base and a net dollar retention rate of 104% [11] - The company has expanded its portfolio with new product launches, including the Risk Operations Center and enhancements to its TotalAI solution [12] - Qualys' channel partner program has driven revenue growth, with channel revenues increasing 17% year-over-year compared to 4% growth from direct customers [13] - International revenue growth is at 15% year-over-year, representing 43% of total revenues, allowing for organic expansion without acquisition costs [14] - The Zacks Consensus Estimate for Qualys' 2025 earnings is pegged at $6.35 per share, indicating a year-over-year increase of 3.6% [14] Valuation and Performance - Year-to-date, CrowdStrike shares have appreciated 25.1%, while Qualys shares have declined by 7.9% [17] - Qualys is trading at a forward sales multiple of 6.82X, below the industry average of 11.97X, while CrowdStrike is trading at a forward sales multiple of 19.98X, indicating overvaluation [20] - Qualys holds a Zacks Rank 1 (Strong Buy), making it a more attractive investment compared to CrowdStrike, which has a Zacks Rank 4 (Sell) [24]

Qualys (QLYS) FY Conference Summary Company Overview - **Company**: Qualys (QLYS) - **Date of Conference**: August 12, 2025 - **Key Speakers**: CEO Sumedh Thakkar, CFO Jimmy Kim Key Points Financial Performance - **Growth**: Reported a 10% growth with a 45% EBITDA margin, indicating strong financial health [4][5] - **Net Retention Rate**: Increased from 103% to 104%, reflecting positive customer engagement and renewal rates [5] Market Dynamics - **Macro Environment**: The macroeconomic environment remains stable, with customers taking time to consider larger purchases [4] - **Vulnerability Management Evolution**: The shift towards unified risk management platforms is gaining traction as organizations face overwhelming amounts of vulnerability findings [7][10] Product Development and Strategy - **Unified Platform**: Qualys is transitioning to a unified platform for risk management, integrating vulnerability management, asset management, and patch management [7][10] - **Agentic AI Capabilities**: Introduction of agentic AI to enhance operational efficiency and reduce manual efforts in risk management [20][22] - **Federal Market Focus**: Qualys has achieved FedRAMP High certification, positioning itself to capture growth in the federal sector, which has historically been less than 5% of revenue [35][36] Competitive Landscape - **Consolidation in Security Tools**: Customers are overwhelmed by the number of security tools, leading to a demand for consolidation while maintaining best-of-breed solutions [11][14] - **Partnership Strategy**: Transitioning from a 60/40 direct to partner sales model to a 51/49 mix, emphasizing the importance of partners in scaling the business [39] Future Outlook - **Growth Projections**: Anticipated growth rate for the second half of the year is projected at 5-7%, with a full-year growth expectation of 6-8% [45] - **Investment in R&D**: R&D expenses grew by 15% year-over-year in Q2, reflecting ongoing investment in new products and market strategies [28] Additional Insights - **Talent Acquisition**: The company has successfully leveraged its engineering team in Pune, India, to maintain a competitive edge in talent acquisition and product development [31][32] - **Managed Risk Operations Center (MROC)**: Launched to provide partners with a new offering in risk management, allowing them to generate more service revenue [42][43] Conclusion - Qualys is positioned for continued growth through strategic investments in technology, partnerships, and a focus on federal opportunities, while navigating the complexities of the cybersecurity landscape and evolving customer needs [47][48]

Core Insights - Qualys' Threat Research Unit (TRU) won two prestigious Pwnie Awards for "Epic Achievement" and "Best Remote Code Execution (RCE)" at DefCon 2025, highlighting its leadership in cybersecurity research and commitment to responsible vulnerability disclosure [1][2] Group 1: Awards and Recognition - The Pwnie Awards recognize extraordinary contributions to identifying and resolving critical vulnerabilities, with Qualys' TRU team being acknowledged for uncovering significant vulnerabilities in OpenSSH [2] - The specific vulnerabilities recognized include CVE-2024-6387, a rare signal handler race condition leading to exploitable heap corruption, and CVE-2025-26465, a machine-in-the-middle attack affecting FreeBSD [5] Group 2: Company Leadership and Strategy - Qualys emphasizes its legacy of groundbreaking vulnerability research, which differentiates it in a competitive market, and aims to provide premium research that enhances security teams' understanding of exploit impacts [2][3] - The TRU team has been nominated for 14 Pwnie Awards over the last five years, winning four, reinforcing Qualys' position as a trusted innovator in securing modern digital infrastructure [2] Group 3: Collaboration and Community Impact - The collaboration with open-source maintainers and the security community was crucial for rapid patches and strengthening security baselines, reflecting a shared commitment to a safer internet [3] - Qualys' approach to responsible disclosure benefits both customers and the broader cybersecurity ecosystem, ensuring effective resolution of vulnerabilities [2][3] Group 4: Company Overview - Qualys, Inc. is a leading provider of cloud-based security, compliance, and IT solutions, serving over 10,000 subscription customers globally, including many from the Forbes Global 100 and Fortune 100 [4] - The Qualys Enterprise TruRisk Platform automates vulnerability detection, compliance, and protection across various IT environments, showcasing the company's innovative capabilities [5]

Core Insights - Qualys, Inc. (QLYS) shares rose 8.3% after reporting better-than-expected Q2 2025 results, with non-GAAP earnings of $1.68 per share, exceeding the Zacks Consensus Estimate of $1.47 and management's guidance of $1.40-$1.50 [1][11] Financial Performance - Q2 revenues increased by 10% year over year to $164.1 million, surpassing the Zacks Consensus Estimate of $161.2 million, driven by a strong partner ecosystem [3][11] - Non-GAAP gross profit rose 10% year over year to $137.8 million, maintaining a gross margin of 84% [6] - Non-GAAP operating income grew 6% to $70.1 million, with an operating margin of 43%, reflecting increased investments in sales, marketing, and R&D [6] - Adjusted EBITDA increased by 5% to $73.4 million, with a margin decline to 45% from 47% [7] Revenue Breakdown - Sales from channel partners grew 17%, accounting for 49% of total revenues, while direct sales contributed 51% with a growth of 4% [4][11] - U.S. sales increased by 7%, contributing approximately 57% to total revenues, while international sales rose by 15%, making up 43% of revenues [4] Cash Flow and Share Repurchase - The company ended the quarter with cash and cash equivalents of approximately $621 million, down from $640 million year over year [8] - Operating cash flow for Q2 was $33.8 million, with free cash flow at $32.4 million [8] - Qualys repurchased stocks worth $49.2 million in Q2 and $89.5 million in the first half of 2025, with $254.6 million remaining under the share repurchase program [9] Guidance Updates - Qualys raised its 2025 EPS guidance to $6.20-$6.50 and revenue forecast to $656 million-$662 million, indicating an 8-9% year-over-year improvement [12][13] - For Q3, the company expects revenues between $164.5 million and $167.5 million, with non-GAAP earnings projected at $1.50-$1.60 [14]

Core Viewpoint - Qualys reported quarterly earnings of $1.68 per share, exceeding the Zacks Consensus Estimate of $1.47 per share, and showing an increase from $1.52 per share a year ago, indicating a positive earnings surprise of +14.29% [1] Financial Performance - The company achieved revenues of $164.06 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.80% and up from $148.71 million year-over-year [2] - Over the last four quarters, Qualys has consistently exceeded consensus EPS and revenue estimates [2] Stock Performance and Outlook - Qualys shares have declined approximately 3.1% since the beginning of the year, contrasting with the S&P 500's gain of 7.6% [3] - The company's future stock performance will largely depend on management's commentary during the earnings call and the trends in earnings estimate revisions [3][4] Earnings Estimates - The current consensus EPS estimate for the upcoming quarter is $1.49, with expected revenues of $163.06 million, and for the current fiscal year, the EPS estimate is $6.17 on revenues of $652.15 million [7] Industry Context - The Security industry, to which Qualys belongs, is currently ranked in the top 41% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Another company in the same industry, Zscaler, is expected to report quarterly earnings of $0.80 per share, reflecting a year-over-year decline of -9.1%, with revenues projected to be $706.19 million, up 19.1% from the previous year [9]