Qualys NASDAQ: QLYS reported first-quarter 2026 results that management said reflected continued revenue growth and profitability, while emphasizing a product strategy centered on “pre-breach” risk management, exploit validation, and autonomous remediation. The company also raised its full-year revenue and earnings outlook modestly, citing a solid start to the year but maintaining a generally cautious view on customer expansion amid macro uncertainty.
Management frames growing urgency around exploit speed and remediation
President and CEO Sumedh Thakar said Qualys is positioning its Enterprise TruRisk Management (ETM) platform and “AI-native Risk Operations Center” (ROC) to help customers prioritize and remediate vulnerabilities faster as exploit windows shrink.
Thakar argued that increasing vulnerability discovery and exploit development—accelerated by new AI models—requires organizations to move beyond visibility and dashboards toward “closed-loop” workflows that confirm exploitability and drive remediation. He said Qualys’ approach aims to identify the small subset of vulnerabilities that are actually exploitable in production environments, describing “real risk” as whether an adversary can execute an exploit path “in an organization’s live environment.”
Thakar highlighted the general availability of Agent Val, an addition to the company’s “Agentic AI marketplace.” He said Agent Val, powered by TruConfirm within ETM, provides closed-loop exploit validation and autonomous remediation “directly to the ROC,” including running “safe exploits over the network” to confirm whether attackers can succeed.
He also described an “AI-powered patch reliability score” within TruRisk Eliminate that the company said is trained on its proprietary patch deployment dataset and is intended to predict patch-induced outages. Thakar said Qualys has deployed more than 150 million patches, including more than 40 million delivered autonomously over the last year, and said customers are increasingly looking for automation that reduces risk without creating outages.
Product and market updates: TotalCloud recognition, partnerships, and federal focus
Thakar cited third-party recognition for Qualys’ cloud offerings, saying the company’s TotalCloud solution was recognized as a leader in the “Q1 2026 Forrester Wave” report for Cloud-Native Application Protection Platform, won a 2026 SC Award for Best Cloud Security Management Solution, and was positioned as a leader in a 2026 GigaOm Radar report for cloud identity and entitlement management.
He also pointed to security research contributions from Qualys’ Threat Research Unit (TRU), including discovery of “CrackArmor,” which he said uncovered “critical AppArmor vulnerabilities” affecting “millions of Linux systems worldwide.”
On go-to-market, Thakar said partners remain a “key pillar” and described momentum among nearly two dozen “certified mROC partners.” He said one large Managed Risk Operations Center partner is working to bring an “AI-native ROC” to market powered by ETM and automated remediation solutions.
Qualys also announced strategic alliances involving frontier AI model providers. Thakar said Qualys partnered with OpenAI through its “Trusted Access for Cyber” program and with Anthropic through its “Cyber Verification Program” to advance vulnerability and threat intelligence that customers can ingest into ETM.
In addition, he announced a cyber insurance partnership with Converge Insurance that leverages ETM to help customers demonstrate security hygiene and qualify for premium reductions.
Thakar said Qualys expanded beta testing of QFlex, a procurement and consumption model aimed at accelerating and broadening adoption of the Qualys and ETM platform. He also said the company continues to pursue growth in the U.S. federal market and is hosting its third annual federal conference in Washington, D.C., while progressing toward “FedRAMP high status with large federal agencies.”
Q1 financial results: revenue growth, channel expansion, and profitability
CFO Joo Mi Kim said first-quarter revenue increased 10% year over year to $175.6 million. Kim noted an increasing contribution from channel partners, which represented 52% of total revenue compared with 49% a year earlier. Revenue from channel partners grew 17%, compared with 3% growth in direct revenue, and Kim said the company expects that trend to continue given its strategic emphasis on partners.
International revenue growth also outpaced domestic performance, with revenue outside the U.S. up 15% versus 6% growth in the U.S. The revenue mix was 55% U.S. and 45% international, Kim said.
Qualys’ net dollar expansion rate ended the quarter at 104%, slightly up from 103% in the prior quarter, with Kim saying there was “no meaningful movement” as expected.
Kim also introduced a new metric the company plans to disclose quarterly: net dollar expansion rate for customers with prior-year purchases of ETM or CyberSecurity Asset Management (CSAM) subscriptions. For Q1, that cohort posted a 107% net dollar expansion rate. Kim described ETM as “essentially an upgrade from CSAM” and said management views this cohort metric as a key indicator of ETM initiative success, while noting ETM adoption remains early.
On bookings mix, Kim said:
- ETM/CSAM represented 11% of total bookings and 14% of new bookings on a last-twelve-month (LTM) basis in Q1, up from 8% and 9% a year earlier.
- Patch Management represented 8% of total bookings and 15% of new bookings on an LTM basis, compared to 7% and 16% a year earlier.
- TotalCloud represented 5% of total LTM bookings, unchanged from a year earlier.
Adjusted EBITDA was $83.3 million, a 47% margin, flat year over year. Operating expenses increased 8% to $67.5 million, driven by sales and marketing investments, which increased 17%. EPS was $1.95 per diluted share. Free cash flow was $93.6 million, a 53% margin, down from 67% in the prior year.
Kim said Qualys repurchased 505,000 shares for $53.9 million during the quarter. Since the repurchase program began in February 2018, the company has repurchased 11.2 million shares and returned $1.3 billion to shareholders, with $306.6 million remaining under the program at quarter-end.
Guidance raised modestly; baseline assumptions unchanged
For full-year 2026, Qualys increased its revenue outlook to $721 million to $727 million, up from prior guidance of $717 million to $725 million, implying 8% to 9% growth. For Q2 2026, the company guided revenue to $177.5 million to $179.5 million, also implying 8% to 9% growth.
Kim said the guidance assumes “no material change” in the net dollar expansion rate and “moderate” contribution from new business in 2026, while noting the company believes its approach provides “some insulation” amid macro volatility.
On profitability, Qualys guided to an EBITDA margin in the “mid-40s,” free cash flow margin in the “low 40s,” and full-year EPS of $7.44 to $7.65, up from prior guidance of $7.17 to $7.45. Q2 EPS guidance was $1.73 to $1.80. The company expects 2026 capital expenditures of $8 million to $12 million, with Q2 capex expected between $1.2 million and $3.2 million.
Q&A: AI-driven inbound interest, ETM adoption pace, QFlex plans
Analysts asked whether increased activity and hype around frontier AI models is driving inbound demand. Thakar said customers expect more vulnerability disclosures and patches, and he described increased engagement from CISOs seeking ways to respond to “AI-induced attacks,” but said it was “a little too early” to quantify pipeline impact. Kim added that guidance does not assume any step-change, and in response to a question from Scotiabank’s Patrick Colville, she reiterated that the company’s baseline remains 7% to 8% current billings growth for the year.
UBS’ Roger Boyd asked about new customer adds and attach rates. Thakar pointed to Patch Management bookings contribution and said messaging around exploit validation and autonomous remediation is resonating. He said ETM and Eliminate discussions often “go hand in hand,” though ETM remains early. He also noted partner efforts to bring additional new logos and expand upsells through managed ROC services.
On QFlex, Kim said it is targeted primarily to enterprise customers seeking flexibility to pre-commit budget and swap products through the year as Qualys releases new capabilities. She said the company plans to make QFlex generally available later in 2026, and Thakar added that the model could help customers pivot among capabilities as needs change.
Questions also focused on when ETM could move overall expansion rates. Kim said the company does not expect ETM adoption to ramp enough in 2026 to materially lift companywide net revenue retention. She pointed to the time it has historically taken newer products to scale and noted that CSAM launched in 2021, while ETM has been generally available for “a little over a year.”
Kim also discussed sales and marketing investments, saying the majority of the increase is driven by headcount as Qualys shifts further from direct to indirect go-to-market motions, while acknowledging there is “room for increase in efficiency” and that productivity is not yet where the company expects it to be long term.
About Qualys NASDAQ: QLYS
Qualys, Inc NASDAQ: QLYS is a leading provider of cloud-based security and compliance solutions designed to help organizations streamline their IT security programs. Operating on a unified, modular platform, Qualys offers continuous visibility into global IT assets through a combination of lightweight cloud agents and on-premises scanner appliances. The platform supports an array of security and compliance use cases, enabling real-time detection of vulnerabilities, policy violations and misconfigurations across on-premises, cloud and hybrid environments.
The company's flagship Qualys Cloud Platform delivers a suite of integrated applications, including vulnerability management, detection and response (VMDR), policy compliance, web application scanning, file integrity monitoring, asset inventory and container security.
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