0001107843-26-000015
SEC filingRevenue grew 10% YoY driven by existing customer expansion, with operating margin improving to 35% from 32%.
For the three months ended March 31, 2026, Qualys reported revenue of $175.6 million, a 10% increase year-over-year. Gross profit rose 11% to $145.6 million, with gross margin improving from 82% to 83%. Operating income grew 18% to $60.9 million, driving operating margin expansion from 32% to 35%, a 230 bps improvement. This margin expansion was driven by revenue growth outpacing expense increases, particularly in R&D (flat) and G&A (down 2%). Sales and marketing expenses increased 19% due to higher headcount and commissions. Net income increased 7% to $50.6 million, with net margin slightly down to 29% from 30% due to a higher tax provision. Other income decreased 37% primarily due to a $2.0 million impairment of non-marketable securities.
Qualys operates as a single segment. Revenue growth was driven by existing customers (96% of incremental revenue), with 65% from international markets and 86% from partners. The net dollar expansion rate improved to 104% from 103%, indicating successful retention and upsell. No separate segment financials are disclosed.
Management expects continued revenue growth from new and existing customers, driven by strong market position and demand for cloud-based security solutions. They anticipate increasing investments in sales and marketing, R&D, and infrastructure to support growth, which will increase absolute expenses. The company maintains a solid liquidity position with $729.3 million in cash and marketable securities and expects cash flows to fund operations. No specific guidance was provided for future periods.
Qualys ended Q1 2026 with a strong liquidity position: $279.5M in cash and equivalents plus $449.9M in marketable securities (short- and long-term), totaling $729.4M. Shareholders' equity was $569.9M. The company has no debt. Deferred revenue stood at $409.2M, and remaining performance obligations (RPO) were $466.4M, indicating healthy future revenue visibility.
Qualys has operating lease obligations totaling $65.1M as of March 31, 2026, with payments of $8.1M in the remaining nine months of 2026, $26.0M over 1-3 years, and $31.0M beyond three years. There are no material purchase commitments for inventory or capacity.
During Q1 2026, Qualys repurchased 505 thousand shares for $53.9M, with $306.6M remaining under the buyback program. A new $200M authorization was announced on February 5, 2026. The company does not pay dividends. Capital expenditures were $1.7M, representing 1.0% of revenue. No debt issuance or repayment occurred.
Qualys operates as a single reportable segment. For the quarter, U.S. revenues were $96.8M (55.1% of total) and foreign revenues were $78.9M (44.9% of total). The CODM evaluates performance using consolidated net income, which was $50.6M for the period.
Operating cash flow (CFO) of $95.3M exceeded net income of $50.6M, indicating solid cash generation. The primary adjustments include stock-based compensation ($19.3M), depreciation ($3.0M), and impairment of non-marketable securities ($2.0M). Working capital provided net inflows: accounts receivable decreased by $35.9M, partly offset by a decline in deferred revenues ($8.2M) and accrued liabilities ($2.9M). Capital expenditures of $1.7M remained low, representing only 1.8% of CFO. The company returned $53.5M to shareholders via share repurchases, which was covered by CFO. Year-over-year, CFO dropped 13% from $109.6M, driven by lower favorable working capital changes (e.g., AR decrease was $42.8M in Q1 2025 vs $35.9M now). Investing cash flow was negative $6.4M due to net purchases of marketable securities. Financing cash flow was negative $59.7M reflecting repurchases and tax withholdings. Overall, cash flow quality remains strong with low capex intensity and ample coverage of capital returns.