Qualys Earnings: High-Quality Results as Demand for Solutions Stays Strong

We are maintaining our $155 fair value estimate for narrow-moat Qualys after the firm kicked off fiscal 2024 with strong financial results that were mostly ahead of our above-consensus estimates. We remain impressed by Qualys’ high-quality security business, which delivers strong profitability along with top-line growth in the teens. While we view most of the cybersecurity spending consolidation as benefiting larger vendors such as Palo Alto Networks, CrowdStrike, Fortinet, and Zscaler, we believe Qualys is well positioned to serve a variety of security needs for its small and medium business customer base. Its wide array of security solutions spans vulnerability management to compliance, allowing the firm access to different nodes of a client’s security infrastructure, thereby making its offerings stickier. With the shares trading down after hours, we view Qualys as fairly valued.