Qualys (QLYS) Stock Forecast & Price Target

Qualys demonstrated robust financial performance, with total revenue reaching $175.3 million, exceeding both the Street's estimate and the company's own guidance, highlighting strong contributions from channel partners, which grew 17% year-over-year. The operating margin stood at an impressive 45.7%, surpassing expectations due to better-than-anticipated revenue growth, despite increased investments in sales and marketing. Additionally, cash flow from operations surged by 59% year-over-year, amounting to $75.7 million, underscoring the company's effective strategy in enhancing both top and bottom lines.

Qualys demonstrated a decline in key financial metrics that contribute to a negative outlook, including a slight miss in Current Billings growth at 6.3%, underperforming compared to consensus expectations of 6.4%. Additionally, the company's Net Dollar Expansion Rate (NDER) fell to 103% from the previous quarter's 104%, reflecting challenges in customer retention and adoption of newer products, compounded by a modest decline in gross retention rates. Despite achieving better-than-expected 4Q25 results in terms of revenue and EPS, projections indicate that the operating margin profile is expected to deteriorate in 2026, necessitating a downward adjustment in valuation multiples.