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

We came across a bullish thesis on Qualys, Inc. on Business Model Mastery’s Substack by The Antifragile Investor. In this article, we will summarize the bulls’ thesis on QLYS. Qualys, Inc.'s share was trading at $129.60 as of October 6th. QLYS’s trailing and forward P/E were 26.05 and 19.34 respectively according to Yahoo Finance.

Qualys, Inc. (QLYS) operates a cloud-based cybersecurity platform offering subscription services such as vulnerability management, compliance, patching, and endpoint detection. Its SaaS model is capital-light, scalable, and generates highly recurring revenue, making it a resilient business with strong free cash flow and gross margins exceeding 70%. The company is best known for its vulnerability management solutions, which scan IT systems for security gaps and become integral to a customer’s defense workflow, creating a sticky and high-switching-cost environment.

Over time, Qualys has expanded its platform to include cloud security, endpoint detection, patch management, and compliance automation, positioning itself as a one-stop solution that reduces the need for multiple vendors. The company serves over 10,000 customers across 130+ countries, including most of the Forbes Global 100, highlighting the importance of scale and trust in cybersecurity. Qualys’ pricing power is reinforced by the regulatory and compliance risks associated with replacing its platform, ensuring embedded solutions remain indispensable.

While it faces competition from CrowdStrike, Tenable, Palo Alto, and Microsoft Defender, its moat lies in the breadth and integration of its offerings rather than speed, covering vulnerability, compliance, and patching in a single platform. Key risks include faster innovation from rivals and pricing pressure from bundled IT suites, but Qualys mitigates these through automation, compliance focus, and vendor-neutral solutions critical for regulated industries.

For investors, Qualys represents a highly profitable, resilient, and trusted cybersecurity compounder—less flashy than hypergrowth peers but indispensable once embedded, offering steady growth with strong recurring cash flow and minimal downside risk. Its consistent execution and platform stickiness make it a reliable long-term investment in the cybersecurity space.

Previously we covered a bullish thesis on Qualys, Inc. (QLYS) by Na’s Substack in May 2025, which highlighted the company’s recurring revenue, high margins, free cash flow, and leadership in vulnerability management. The stock has appreciated approximately 2% since our coverage. The thesis still stands as Qualys remains a resilient, capital-light cybersecurity platform. The Antifragile Investor shares an identical focus but emphasizes its global scale and integrated one-stop platform.

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 second quarter which was 30 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.

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Disclosure: None.