Qualys, Inc. (QLYS) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong financial metrics and optimistic guidance, including increased revenue and EPS expectations. Product developments, such as QFlex and AI capabilities, show innovation and potential for growth. While management avoided directly addressing some market concerns, the overall sentiment is positive, driven by strategic growth levers, federal contracts, and partner collaborations. The Q&A section supports this with positive feedback on product offerings and market strategy, suggesting a likely positive stock price movement over the next two weeks.
Key Financial Performance
Revenue (Full Year 2025) $669.1 million, a 10% increase year-over-year. This growth was attributed to strong execution, financial discipline, and a scalable business model.
Adjusted EBITDA Margin (Full Year 2025) 47%, consistent with the prior year. This was achieved despite a 14% increase in investments in sales and marketing.
Net Income (Full Year 2025) $257.8 million, a 13% increase year-over-year. This growth was driven by revenue growth and operational efficiency.
Earnings Per Share (EPS, Full Year 2025) $7.07 per diluted share, a 15% increase year-over-year. This was supported by strong profitability and share repurchases.
Free Cash Flow (Full Year 2025) $304.4 million, representing 45% of revenues. This was attributed to strong operational performance and cash generation.
Revenue (Q4 2025) $175.3 million, a 10% increase year-over-year. Growth was driven by a 17% increase in revenues from channel partners and a 15% growth in international revenue.
Adjusted EBITDA (Q4 2025) $82.6 million, representing a 47% margin, consistent with the prior year. This was achieved through disciplined cost management.
Operating Expenses (Q4 2025) $68.9 million, an 11% increase year-over-year. This was primarily due to an 18% increase in sales and marketing investments.
Earnings Per Share (EPS, Q4 2025) $1.87 per diluted share. This was supported by strong profitability and operational performance.
Free Cash Flow (Q4 2025) $74.9 million, representing a 43% margin, up from 26% in the prior year. This increase was driven by improved operational efficiency.
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Operating Highlights
Agentic AI-driven risk fabric: Introduced to enhance pre-breach risk management with automated remediation and business quantification.
ETM platform expansion: Expanded to include third-party data and launched a new orchestration layer for unified risk assessment and remediation.
Agentic AI risk management marketplace: Launched to provide autonomous experts for faster remediation and cost reduction.
Identity Security Posture Management: Integrated into ETM to address identity-related security gaps.
Risk Operations Center (ROC): Pioneered as a centralized AI-native solution for threat response and risk management.
Global 50 customer expansion: Achieved a mid-6-figure annual bookings upsell by unifying security stack and consolidating data services.
Global 200 company in Latin America: Secured a 7-figure annual bookings upsell through ETM POC and additional solutions.
Federal business growth: Achieved mid-6-figure expansions with federal agencies, with potential for multi-agency ETM rollouts.
Revenue growth: Achieved 10% revenue growth in 2025, reaching $669.1 million.
Channel partner contribution: Increased to 51% of total revenues, with 17% growth in channel revenues.
Profitability: Maintained a 47% adjusted EBITDA margin and achieved $304.4 million in free cash flow.
Partner ecosystem: Enhanced partner-led sales motion, increasing deal registrations and launching new services.
QFlex beta testing: Continued to accelerate ETM platform adoption with strong customer response.
Share repurchase program: Repurchased $44.7 million worth of shares in Q4 2025, with an additional $200 million authorized for 2026.
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Risk or Challenges
AI-driven risk fabric: The increasing sophistication and speed of AI-driven cyber threats pose challenges for organizations to keep up with the pace of attacks and implement effective pre-breach risk management solutions.
Fragmented security stack: Organizations face challenges in unifying fragmented security tools, which leads to inefficiencies and limited visibility into overall risk profiles.
AI democratizing cybercrime: The use of AI by adversaries is enabling them to operate with unprecedented speed and sophistication, intensifying the need for advanced cybersecurity measures.
Limited resources in federal agencies: Federal agencies are struggling with overwhelming volumes of security issues and limited resources to continuously assess risks, which hampers their ability to manage cybersecurity effectively.
Low to mid-single-digit growth in security spend: The anticipated slow growth in security budgets could limit the ability of organizations to invest in necessary cybersecurity measures.
Operational inefficiencies: Organizations are dealing with inefficiencies due to siloed risk signals and unintegrated tools, which hinder effective risk management and remediation.
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Guidance & Outlook
Agentic AI-driven risk fabric: Belief that the next phase of pre-breach risk management will be defined by an agentic AI-driven risk fabric with out-of-the-box business quantification and automated remediation.
Expansion of Qualys ETM platform: In 2025, expanded the platform to third-party data and launched a new orchestration layer that unifies Qualys and non-Qualys findings, delivering a business-contextual quantified view of risk.
Agentic AI risk management marketplace: Introduced a marketplace enabling security and IT teams to augment their workforce with autonomous experts, reducing time to remediation, increasing accuracy, and reducing costs.
Identity Security Posture Management: Enhanced ETM with a natively integrated solution to address identities as part of the new AI perimeter.
Risk Operations Center (ROC): Pioneering the first agentic AI-native Risk Operations Center to centralize an organization's response to threats, spanning exploit confirmation to autonomous remediation.
QFlex beta testing: Continued beta testing QFlex to help customers accelerate and maximize adoption of the Qualys ETM platform.
Revenue growth for 2026: Expected revenue to be in the range of $717 million to $725 million, representing a growth rate of 7% to 8%.
First quarter 2026 revenue: Expected revenue to be in the range of $172.5 million to $174.5 million, representing a growth rate of 8% to 9%.
EBITDA margin for 2026: Expected to be in the mid-40s, with free cash flow margin in the low 40s.
EPS for 2026: Expected to be in the range of $7.17 to $7.45.
First quarter 2026 EPS: Expected to be in the range of $1.76 to $1.83.
Capital expenditures for 2026: Planned to be in the range of $8 million to $12 million.
Capital expenditures for Q1 2026: Planned to be in the range of $1.2 million to $2.6 million.
Operating expenses in 2026: Planned to align product and marketing investments to drive pipeline, accelerate partner programs, and expand the federal vertical.
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Shareholder Return Plan
Share Repurchase Program: In Q4, we continued to invest the cash we generated from operations back into Qualys, including $724,000 on capital expenditures and $44.7 million to repurchase 328,000 of our outstanding shares. Since commencing our share repurchase program in February of 2018, we've repurchased 10.7 million shares and returned over $1.2 billion in cash to shareholders. As of the end of the quarter, we had $160.5 million remaining in our share repurchase program. We are pleased to announce that our Board has authorized another increase of $200 million to the share repurchase program, bringing the total available amount for share repurchases to $360.5 million.
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Key Q&A
Q:Can you talk a little bit more about some of your QFlex offerings and how it potentially helps remove friction and perhaps encourages broader adoption of your platform?
A:QFlex allows customers to consolidate capabilities on a single platform at their own pace during their subscription. It enables prioritization, confirmation, and remediation of vulnerabilities using agentic AI. Customers appreciate the flexibility to leverage different Qualys capabilities as threats evolve, and feedback from the beta phase has been positive.
Q:Can you help us understand where the customer is in terms of their AI journey and what the opportunity looks like for Qualys?
A:Qualys has introduced an AI agent marketplace to augment security teams. Customers leveraging VMDR can cross-sell into ETM to use agentic AI for prioritization and remediation. TotalAI helps detect vulnerabilities in AI workloads. The differentiation in agentic AI capabilities is expected to drive upgrades and cross-sells.
Q:How is Agent Val elevating ETM from an efficacy perspective and reducing total net hours at the customer level?
A:Agent Val autonomously confirms whether vulnerabilities are exploitable in a customer's environment, saving IT teams time by avoiding false positives. It enables immediate remediation once a vulnerability is confirmed, reducing exposure time and improving efficiency.
Q:How can we think about the levers for upside to growth this year?
A:Growth levers include ETM adoption, partner collaborations, and innovative product offerings. While 2025 saw 10% revenue growth, 2026 guidance is 7%-8%, with potential upside from federal contracts and new product discussions.
Q:Is the core market shrinking for VM and exposure management?
A:The market is evolving rather than shrinking. Qualys is focusing on solutions like Patch Management, Cybersecurity Asset Management, and agentic AI to address customer needs. The acquisition of Armis by ServiceNow highlights the focus on exposure management, but Qualys differentiates by enabling remediation and risk reduction.
Q:Why has Patch Management remained such a differentiator for Qualys?
A:Patch Management is integrated with VM, enabling quick detection, validation, and remediation of vulnerabilities. Qualys has deployed 140 million patches in the last year and offers patchless patching to mitigate risks without applying patches, providing flexibility and efficiency.
Q:Are there any headwinds leading to the expectation of no change in NDER in your calendar '26 guidance?
A:The guidance assumes no material change in net dollar expansion rate (NDER), informed by current pipeline and customer spending expectations. Upside potential exists with ETM adoption and federal contracts, but it's too early to confirm a trajectory.
Q:What is the strategy to get customers to adopt not just vulnerability management but also prioritization and Patch Management?
A:Qualys emphasizes the integration of Patch Management and prioritization with VMDR. Customers are adopting these capabilities to reduce exposure windows and focus on vulnerabilities that impact their business. Partners are also leveraging these solutions to offer higher-value services.
Q:How engaged are partners in core VM renewals versus selling new products?
A:Partners are launching services around the Risk Operations Center (ROC) and leveraging ETM to offer higher-value services. They are involved in both renewals and new product sales, with a focus on risk management and automation.
Q:Are budgets shifting more towards proactive security versus reactive detection and response?
A:Yes, there is a growing focus on proactive risk management. Customers are looking to operationalize workflows and reduce reliance on multiple dashboards, shifting budgets towards solutions like ETM and ROC.
Q:How does the Anthropic model release impact Qualys and the cybersecurity industry?
A:Anthropic's focus on vulnerability discovery in open-source code highlights the need for solutions like ETM to validate and remediate vulnerabilities in runtime environments. Qualys differentiates by enabling quick validation and autonomous remediation.
Q:What is the strategy for rolling out QFlex?
A:QFlex is currently in beta and being rolled out on a case-by-case basis to create win-win scenarios. It will eventually go GA with a potentially tweaked structure to balance customer flexibility and revenue growth.
Q:Review of Unclear Management Responses
A:Management avoided directly addressing the question about whether the core market for VM and exposure management is shrinking, instead focusing on how the market is evolving and their differentiation. Additionally, they did not provide a clear trajectory for ETM adoption and its impact on growth, citing early stages and limited data.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI cybercrime
AI perimeter
AI risk
AI workflow
Agent AI
America figure
Audit solution
Authorized platform
CFO statement
CIOs CISOs
CISOs security
CISOs unification
CTEM
ETM platform
Federal
action
agency
confirmation risk
exploit
exposure cyber
leverage partner
mROC partner
machine
model
motion
platform customer
platform risk
power platform
prem environment
profile
program risk
quantification remediation
remediation AI
risk assessment
risk quantification
risk tolerance
speed
stack risk
vision
win leverage
QLYS Transcript
Qualys, Inc. (QLYS) Q4 2025 Earnings Call Transcript
Positive2-6
The earnings call highlights strong financial metrics and optimistic guidance, including increased revenue and EPS expectations. Product developments, such as QFlex and AI capabilities, show innovation and potential for growth. While management avoided directly addressing some market concerns, the overall sentiment is positive, driven by strategic growth levers, federal contracts, and partner collaborations. The Q&A section supports this with positive feedback on product offerings and market strategy, suggesting a likely positive stock price movement over the next two weeks.
Qualys, Inc. (QLYS) Q3 2025 Earnings Call Transcript
Positive11-4
The earnings call summary reflects a generally positive outlook. The company has increased its revenue and EPS guidance, indicating confidence in its financial performance. There is a focus on innovation and strategic investments, particularly in AI and federal markets, which are expected to drive growth. The Q&A section highlights strong growth potential through upselling and new product adoption. Despite some uncertainties in the federal market and competition, the overall sentiment remains optimistic, with no significant negative trends identified. This suggests a likely positive stock price movement in the short term.
Qualys, Inc. (QLYS) Q2 2025 Earnings Call Transcript
Positive8-7
The earnings call summary shows strong financial performance and optimistic guidance, with improved EPS and EBITDA margins. The Q&A reveals a stable macro environment, slight improvement in net dollar expansion, and promising FedRAMP initiatives. Share repurchase plans and increased marketing investments add further positivity. Despite some management uncertainties, the overall sentiment is positive, indicating a likely stock price increase of 2% to 8%.
Qualys, Inc. (QLYS) Q1 2025 Earnings Call Transcript
Unknown5-6
The financial performance shows stable growth and strong margins, but macroeconomic uncertainties and budget scrutiny pose risks. The Q&A reveals cautious optimism with no significant deal disruptions, yet spending scrutiny affects upsell opportunities. The share repurchase program supports shareholder value, but competitive pressures and regulatory challenges persist. Overall, the mixed signals result in a neutral sentiment.
QLYS Slides
QLYS Report
Frequently Asked Questions
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