Qualys, Inc. (QLYS): A Bull Case Theory

We came across a bullish thesis on Qualys, Inc. on The Simple Side’s Substack. In this article, we will summarize the bulls’ thesis on QLYS. Qualys, Inc.'s share was trading at $135.83 as of August 29^th. QLYS’s trailing and forward P/E were 27.05 and 22.62 respectively according to Yahoo Finance.

Qualys Inc. (QLYS) represents a rare technology company that aligns closely with Berkshire Hathaway’s disciplined investment methodology, combining understandable operations, proven earnings, a durable economic moat, financial prudence, and attractive valuation. As a cybersecurity and compliance software provider, Qualys delivers cloud-based solutions that help enterprises manage IT risk, monitor vulnerabilities, and ensure regulatory compliance.

Its subscription-driven model generates sticky, recurring revenue, creating high switching costs and long-term customer relationships. The company has consistently expanded revenue and earnings, with five-year EPS growth of 21.5% and revenue per share rising 10.7% annually, supported by robust profitability metrics, including 31% operating margins, 29% net margins, and a return on equity of 39%.

Qualys’s economic moat is reinforced by integration complexity, trust, and reputation, creating high barriers to entry for competitors. Its balance sheet is exceptionally strong, with over $381 million in cash against minimal debt, a debt-to-equity ratio of 0.11, and a low weighted average cost of capital, reflecting prudent financial management consistent with Buffett’s emphasis on low leverage. Valuation analysis suggests a fair value of $179–$202 per share, implying a 25–34% margin of safety relative to the current trading price of $134.54.

The company’s simple, subscription-based model, consistent earnings growth, durable competitive advantages, and conservative financial profile make it a compelling Buffett-style investment in the technology sector. While many tech firms fail to meet Berkshire’s criteria due to complexity or fragile moats, Qualys’s business resembles a utility in the digital economy, delivering predictable cash flows, high returns on capital, and a margin of safety that supports long-term investment. For investors seeking a resilient, profitable, and reasonably valued company in the cybersecurity space, Qualys exemplifies the principles of disciplined, value-oriented investing.

Previously we covered a bullish thesis on Qualys, Inc. (QLYS) by Na’s Substack in May 2025, which highlighted its cash-generative SaaS model, strong profitability, and strategic cloud security initiatives. The company's stock price has appreciated approximately by 7.10% since our coverage. The thesis still stands as Qualys continues to deliver recurring revenue. The Simple Side’s Substack shares a similar view but emphasizes its alignment with Buffett’s principles and durable moat.

Qualys, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 30 hedge fund portfolios held QLYS at the end of the first quarter which was 34 in the previous quarter. While we acknowledge the potential of QLYS as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None.