Why Shares of Qualys Are Soaring Today

Cloud-based security and compliance provider Qualys (NASDAQ: QLYS) gave investors what they wanted with its third-quarter report. Revenue grew by 10% year over year to $169.9 million, while non-GAAP (generally accepted accounting principles) earnings per share of $1.86 was well above the $1.56 reported in the same period last year. Both metrics were higher than analyst expectations.

By noon ET Wednesday, the stock was up about 20.2%, according to data provided by S&P Global Market Intelligence.

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Raising the full-year outlook

Qualys announced its Risk Operations Center offering about a year ago, and it's now gaining traction, with early deployments driving the company's solid results. Other factors include wins with major federal and state agencies and adoption of Qualys' flexible pricing model.

Qualys reported an adjusted gross margin of 85% in the third quarter, up from 83% in the prior-year period. Adjusted operating margin was an impressive 47%, up from 43%. During the third quarter, Qualys' GovCloud Platform received FedRAMP High Authorization, opening the door to more government business. The company also launched a marketplace for AI-powered agents aimed at managing cyber risk.

For the full year, Qualys raised its revenue outlook to a range of $665.8 million to $667.8 million. That new guidance range represents growth of about 10% compared to 2024. The company also boosted its outlook from non-GAAP EPS to a range of $6.93 to $7.00.

Is Qualys stock a buy?

Qualys reported strong results and provided a solid outlook for the year. The company's Risk Operations Center is being deployed faster than expected, and its government wins are also contributing to the improved guidance.

Qualys stock trades for around 21 times the average analyst estimate for full-year adjusted earnings. While that's far from bargain territory, the company's improved growth trajectory makes the stock more appealing.

Timothy Green has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Qualys. The Motley Fool has a disclosure policy.