Zscaler vs. Qualys: Which Cybersecurity Stock Has the Edge?

Zscaler, Inc. ZS and Qualys, Inc. QLYS are two important players in cybersecurity, both helping enterprises protect their systems. Their products differ, but they compete in vulnerability management — a fast-growing segment as companies try to prevent breaches before they happen.

Both firms are benefiting from the surge in cyberattacks, including credential theft, remote desktop protocol attacks and social-engineering entry tactics. Per a Mordor Intelligence report, the cybersecurity market is projected to witness a CAGR of 12.28% from 2026 to 2031.

Given this strong industry outlook, investors naturally want to know which stock offers better upside. To answer that, we need to compare their fundamentals, growth outlook, risks and valuation.

The Case for Zscaler Stock

Zscaler provides a wide range of enterprise security tools, including web and internet security, antivirus, firewalls, vulnerability management and user-activity control across cloud, mobile and IoT environments. Its unified vulnerability platform pulls data from hundreds of sources, including vulnerability feeds, asset inventories, identity systems and user behavior logs, to automate risk detection and response.

Vulnerability management is not Zscaler’s main strength, but demand for privileged-access protection tied to cloud migration is helping growth. Its diversified customer base across industries also reduces exposure to macro or geopolitical slowdowns.

Despite macroeconomic pressures, Zscaler’s financial results remain impressive. In the first quarter of fiscal 2026, revenues soared 26% year over year to $788 million, with emerging products growing at a faster rate than core offerings. The company’s non-GAAP earnings surged approximately 24% to 96 cents per share. The Zacks Consensus Estimate suggests that ZS will continue to witness double-digit growth in the top and bottom lines. The consensus mark for fiscal revenues and earnings per share implies year-over-year growth of 23.2% and 16.8%, respectively.

Zscaler, Inc. Price, Consensus and EPS Surprise

Zscaler, Inc. price-consensus-eps-surprise-chart | Zscaler, Inc. Quote

Zscaler is also integrating artificial intelligence (AI) across its offerings, giving it a long-term growth prospect. ZS uses AI for real-time anomaly detection, advanced threat correlation, AI-based policy recommendations, AI-based data loss prevention and AI Agents. AI integration has enabled it to detect and mitigate cyber threats more effectively while continuously supporting its users. The company’s AI security alone reached $400 million ARR at the end of the first quarter and is expected to exceed $500 million in full fiscal 2026.

Zscaler’s gross margins face pressure as its newer products prioritize speed over profitability. In the first quarter of fiscal 2026, the gross margin slipped to 79.9% from 80.6% a year ago. Management noted that many of its new offerings, such as AI Guard, Agentic Operations and Zero Trust Branch, are optimized for faster adoption rather than margins. While margins are expected to remain around 80% in the second quarter of fiscal 2026, the risk is that as these fast-growing products take a larger share of revenues, margin expansion could be delayed. This scenario could limit near-term earnings leverage, even as overall revenues grow.

The Case for Qualys Stock

QLYS is the leading provider of Vulnerability Management, Detection and Response (“VMDR”) solutions and has been witnessing higher VMDR customer penetration for the past several quarters. QLYS has increased the depth of its portfolio with multiple product launches and enhancements, including the industry’s first Risk Operations Center with Enterprise TruRisk Management. Qualys also launched Qualys TotalAI to de-risk generative AI and large language model applications from cyber breaches.

Qualys’ channel partner program, which involves expanding its cloud-based security solutions through a network of partners, including Managed Service Providers, Managed Security Service Providers and Value-Added Resellers, has been able to increase its revenues much faster than direct customers. In the last reported results for the fourth quarter of 2025, the company’s revenues grew 10% year over year to $175.3 million, while earnings per share surged 16.9% to $1.87.

Qualys, Inc. Price, Consensus and EPS Surprise

Qualys, Inc. price-consensus-eps-surprise-chart | Qualys, Inc. Quote

Qualys is expanding globally with an international revenue growth rate of 15% year over year in the latest reported quarter. This organic expansion is enabling it to gain more customers and market share without acquisition costs.

Leveraging its VMDR solution and cloud platform, Qualys aims to tap new markets and address emerging security needs. With an expected total addressable market of $75 billion by 2029, growing at a compound annual rate of approximately 12.3%, Qualys targets high-growth areas, such as cloud security, endpoint security and security analytics.

The Zacks Consensus Estimate suggests that QLYS will continue witnessing steady growth in the top and bottom lines. Estimates for Qualys’ 2026 revenues are pegged at $721.5 million, indicating a year-over-year increase of 7.8%. Estimates for Qualys’ 2026 earnings stand at $7.32 per share, calling for a year-over-year rise of 3.5%.

ZS vs. QLYS: Price Performance and Valuation

Over the past three months, shares of Zscaler and Qualys have declined 38.5% and 24.3%, respectively.

ZS vs. QLYS: 3-Month Price Return Performance

When comparing valuations, Zscaler is trading at a forward sales multiple of 7.51, way above Qualys’ 5.14. This suggests investors are paying a larger premium for ZS stock, even though its gross margin is tightening.

Zscaler vs. Qualys: Forward 12-Month P/S Ratio

Final Thoughts: Qualys Has the Edge

Both companies are strong cybersecurity vendors with solid demand tailwinds. But right now, Qualys looks more attractive. Zscaler still has faster growth and strong AI momentum, yet its gross margin pressure and higher valuation reduce the near-term upside. Qualys, by contrast, offers steadier growth at a cheaper price, which gives it an edge over Zscaler for investment consideration.

Currently, Qualys carries a Zacks Rank #3 (Hold), making the stock worth retaining compared with Zscaler, which has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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