QUALYS, INC. (QLYS): what the price assumes

In the published model solve dated 2026-Q2, anchored at $187.05, QUALYS, INC. (QLYS) is priced for +24.4% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-28.

Generated: 2026-08-30 · Source: https://boothcheck.com/report/QLYS

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 10: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 9.6% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.2%); the inversion above states its own rate.

Per-Model Detail (n=18)

Economic-Unit Decomposition (Sum Of The Parts)

Only one reportable economic unit is present in the current topology source. Consolidated operating lenses remain available, but there is no multi-unit decomposition.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

At $111.37 Qualys trades at roughly 15 times company-wide operating income, which implies operating profit growing about 9% a year for five years. For a software business that just grew revenue 10% and runs operating margins in the low thirties, that is within reach, not a stretch.

Unusually for a software name, the price sits below most of the growth and relative methods rather than above them. The perpetual-growth DCF lands near $212, relative valuation near $193, price-to-sales near $154, and the reasonable-value base case near $154, all above the $111 quote. Only the asset and pure earnings-floor methods sit below it.

The balance sheet is pristine: zero debt, net cash near $471 million, return on equity above 35%, and a shrinking share count. The debate is not financial health. It is whether a profitable but moderate-growth vulnerability-management vendor can hold its ground against larger security platforms expanding into its turf.

Bull Case

Start with how far the price sits below the methods, because that is the unusual feature here. For most profitable software names the price sits above the valuation methods; for Qualys it sits below the growth and relative families. The perpetual-growth DCF lands near $212 against a $111 price, relative valuation near $193, two-stage excess return near $128, and price-to-sales near $154. The model's reasonable-value band centers at about $154 base. The price-to-fair-value ratios across those methods run from roughly 0.5 to 0.75, meaning the market is paying about half to three-quarters of what the forward and peer-multiple methods support. A subscription security business is not usually on sale against its own growth math.

The operating record backs the multiple. First-quarter 2026 revenue was $175.6 million, up 10% year over year, ahead of estimates, and management raised full-year 2026 revenue guidance to a range of $721 million to $727 million, representing 8% to 9% growth. Non-GAAP earnings were $1.95 a share against a $1.80 estimate. This is a recurring-revenue model: the company describes growth coming "from our existing customers as they renew and purchase additional subscriptions, as well as from the addition of new customers to our cloud platform" (FY2024 10-K, accession 0001107843-25-000009). Net-expansion plus new logos on a cloud platform is exactly the durable engine that supports a 9% operating-growth assumption.

The economics are genuinely high quality. Trailing operating margin sits near 34%, return on equity above 35%, and the company carries no debt against net cash near $471 million, while buying back stock and shrinking the share count. Free cash flow near $290 million funds the repurchases without leverage. For the bull, the case is straightforward: a profitable, cash-generative security vendor trading below the central estimate of its own valuation methods, with a balance sheet that gives it complete strategic flexibility and a multiple that asks only for the mid-single-digit-to-low-double-digit growth it is already delivering.

Bear Case

The competitive disruption is the heart of the bear case, and the names matter before any multiple does. The vulnerability-management category Qualys helped define is being absorbed into broader security platforms. A direct peer's filing lays out the competitive set plainly, naming "CrowdStrike; public cloud vendors and companies, such as Palo Alto Networks and Wiz, that offer solutions for cloud security" alongside point-solution providers (Tenable FY2024 10-K, accession 0001660280-25-000034). When CrowdStrike bundles exposure management into its agent, when Palo Alto and Wiz fold cloud vulnerability scanning into their platforms, a standalone scanner faces a structural question: why buy the point product when the platform you already run includes it? Qualys's own filing warns that new product introductions and evolving standards "could create downward pressure on pricing and gross margins, and could adversely affect our renewal rates" (FY2024 10-K, accession 0001107843-25-000009). Renewal rates are the entire bull case, and they are what platform consolidation threatens.

The growth profile shows the squeeze. Revenue growth of 8% to 9% guided for 2026 is respectable but decelerating relative to the broader security market and well below the high-growth platform vendors taking share. The price implies about 9% operating-profit growth sustained for five years; that is within recent history, but the open question is durability, not the starting rate, and durability is exactly what a category under platform attack cannot promise.

The analyst split captures the disagreement. After the Q1 2026 print, RBC Capital raised its target to $90 with a Sector Perform rating, while JPMorgan cut its target to $87 from $113 with an Underweight rating. Both targets sit below the current $111 price. That is two desks, one neutral and one negative, telling you the stock is worth less than it trades for despite the beat. The conservative valuation methods agree: earnings power value lands near $46, the Graham number near $45, and simple excess return near $61, all far below the price. Strip out the assumption that the platform vendors leave Qualys's renewal base alone, and the support beneath the price thins quickly.

Valuation

Inverted, the price is undemanding for a software name. At $111.37 Qualys trades at roughly 15 times company-wide operating income, which solves to operating-profit growth of about 9% a year for five years at a 9.7% cost of capital. Each one-point change in the cost of capital moves the implied growth rate about five points. Against the company's own history, a 9% pace is within what it has recently delivered, so the priced-in assumption reads as within range.

The method families split, but unusually the price sits below the optimistic ones. The forward-growth family reaches well above it: perpetual-growth DCF near $212, exit-multiple DCF near $149, discounted-future-market-cap near $99. The relative family also sits above: sector P/E value near $193, EV/EBITDA near $169, price-to-sales near $154. The asset and pure earnings-floor methods sit below: earnings power value near $46, Graham number near $45, simple excess return near $61. The blended central estimate that survives the screen is about $138, above the price, and the reasonable-growth band runs from about $126 at the low to $154 at the base.

The reconciliation: the growth-DCF and relative methods justify the price (indeed they sit above it), while the asset and earnings-floor methods say the price is expensive against book value and a zero-growth earnings stream. For a high-margin, capital-light software business, the asset and zero-growth methods are the wrong anchor, which is why the price-to-fair-value pattern tilts toward undervaluation on the relevant families. The balance sheet removes any solvency overlay: zero debt, net cash near $471 million, and free cash flow near $290 million. The real uncertainty is competitive, not financial, and the valuation question is whether the 9% growth assumption holds as security platforms consolidate the category.

Catalysts

The most recent catalyst was the first-quarter 2026 report on May 5, 2026: revenue of $175.6 million, up 10% year over year and ahead of estimates, with non-GAAP earnings of $1.95 a share against a $1.80 estimate. Management raised full-year 2026 revenue guidance to $721 million to $727 million (8% to 9% growth) and lifted non-GAAP EPS guidance to a $7.44 to $7.65 range.

Analyst sentiment is the swing factor to watch and it is currently split. RBC Capital raised its price target to $90 while keeping a Sector Perform rating; JPMorgan cut its target to $87 from $113 with an Underweight rating. Both sit below the current price, so the market is weighing the beat against a more cautious medium-term view. Subsequent quarters' read on net revenue retention and new-customer additions will decide which view prevails.

The structural catalyst is competitive: how aggressively CrowdStrike, Palo Alto Networks, and Wiz fold vulnerability and exposure management into their platforms, and whether that pressures Qualys's renewal rates and pricing. Continued buybacks, funded by net cash and free cash flow, are the offsetting positive worth tracking each quarter.

Sources: Qualys Q1 2026 results (PR Newswire, Investing.com, The Motley Fool, stocktitan.net), RBC and JPMorgan analyst actions.

Peer Cohorts (Per Segment, With Filing Citations)

Qualys (single segment) (reported)

• TENB (TENABLE HOLDINGS, INC.)
• FY2025 10-K: …0001660280 2025 FY FALSE P1Y P3Y P2Y P3Y iso4217:USD xbrli:shares iso4217:USD xbrli:shares tenb:reporting_unit tenb:segment xbrli:pure tenb:renewal_option iso4217:EUR 0001660280 2025-01-01 2025-12-31 0001660280 2025-06-30 0001660280 2026-02-20 0001660280 2025-12-31 0001660280 2024-12-31 0001660280 2024-01-01…
• FY2025 10-K: Contents forward. Our competitors include: vulnerability management and assessment vendors, including Qualys and Rapid7; diversified security software and services vendors; endpoint security vendors with nascent vulnerability assessment capabilities, including CrowdStrike; public cloud vendors and companies, such as…
• ZS (Zscaler Inc)
• FY2025 10-K: …us-gaap:FairValueInputsLevel2Member us-gaap:DesignatedAsHedgingInstrumentMember 2025-07-31 0001713683 us-gaap:ForeignExchangeForwardMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member us-gaap:DesignatedAsHedgingInstrumentMember 2025-07-31 0001713683…
• FY2025 10-K: …0001713683 2025 FY false http://fasb.org/us-gaap/2025#AccountingStandardsUpdate202006Member P1Y P3Y P4Y P3Y P1Y P1M http://fasb.org/us-gaap/2025#CostOfRevenue http://fasb.org/us-gaap/2025#CostOfRevenue http://fasb.org/us-gaap/2025#SellingAndMarketingExpense http://fasb.org/us-gaap/2025#SellingAndMarketingExpense…
• S (SentinelOne Inc)
• FY2025 10-K: …visibility across an organization's digital assets through one console, making it easier and faster for analysts to search through petabytes of data to investigate incidents and hunt threats. Singularity offers multi-tenancy and can be deployed on a diverse range of environments that our customers choose, including…
• FY2025 10-K: …2025 FY False 0001583708 P1Y P1Y http://fasb.org/us-gaap/2024#PrepaidExpenseAndOtherAssetsCurrent http://fasb.org/us-gaap/2024#PrepaidExpenseAndOtherAssetsCurrent http://fasb.org/us-gaap/2024#OtherLiabilitiesCurrent http://fasb.org/us-gaap/2024#OtherLiabilitiesCurrent…
• CRWD (CrowdStrike Holdings Inc)
• FY2025 10-K: BaseRateLoansMember us-gaap:EurodollarMember 2022-01-06 2022-01-06 0001535527 crwd:ARCreditAgreementMember crwd:AlternateBaseRateLoansMember us-gaap:EurodollarMember srt:MinimumMember 2022-01-06 2022-01-06 0001535527 crwd:ARCreditAgreementMember crwd:AlternateBaseRateLoansMember us-gaap:EurodollarMember…
• FY2025 10-K: 1535527 us-gaap:SeniorNotesMember 2025-01-31 0001535527 us-gaap:SeniorNotesMember 2024-01-31 0001535527 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:MoneyMarketFundsMember 2025-01-31 0001535527 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember…
• VRNS (VARONIS SYSTEMS, INC.)
• FY2025 10-K: …are classified within Level 2, as these assets are valued using alternative pricing sources utilizing market observable inputs. NOTE 11:- STOCKHOLDERS' EQUITY a. Common stock rights: The Company's Amended and Restated Certificate of Incorporation authorizes the Company to issue 200,000,000 shares of common stock, par…
• FY2025 10-K: …Varonis Systems Ltd. and David Bass 10.15(18)† Employment Agreement, dated as of March 12, 2021, by and between the Company and Dov Gottlieb 10.16(19) Form of Confirmation for 2020 Capped Call Transactions 10.17(20) Form of Confirmation for 2024 Capped Call Transactions 10.18(21)† Forms of Restricted Stock Unit Award…
• OKTA (Okta Inc)
• FY2025 10-K: …derive direct revenue from our unique data assets, but we may explore opportunities for monetization in the future. • Mergers and Acquisitions and Investments . From time to time, we evaluate opportunities to acquire or invest in emerging and adjacent technologies to complement our organic investments and improve our…
• FY2025 10-K: …accrued any material liabilities in the accompanying consolidated financial statements as a result of these warranties. Agreements with customers and other third parties may include indemnification or other provisions under which the Company agrees to indemnify or otherwise be liable to them for losses suffered or…
• PANW (Palo Alto Networks Inc)
• FY2025 10-K: …0001327567 false 2025 FY P2Y P1Y http://fasb.org/us-gaap/2025#OtherAssetsNoncurrent http://fasb.org/us-gaap/2025#OtherAssetsNoncurrent http://fasb.org/us-gaap/2025#AccruedLiabilitiesCurrent http://fasb.org/us-gaap/2025#AccruedLiabilitiesCurrent http://fasb.org/us-gaap/2025#OtherLiabilitiesNoncurrent…
• FY2025 10-K: …us-gaap:FairValueInputsLevel1Member 2025-07-31 0001327567 us-gaap:CommercialPaperMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member 2025-07-31 0001327567 us-gaap:CommercialPaperMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member 2025-07-31…
• FTNT (Fortinet Inc)
• FY2025 10-K: InvestmentsLineItemMember us-gaap:FairValueMeasurementsRecurringMember 2025-12-31 0001262039 us-gaap:CorporateDebtSecuritiesMember ftnt:ShortTermInvestmentsLineItemMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueInputsLevel1Member 2025-12-31…
• FY2025 10-K: …us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member 2024-12-31 0001262039 us-gaap:EstimateOfFairValueFairValueDisclosureMember ftnt:LongTermInvestmentsLineItemMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member 2024-12-31 0001262039…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.