Qualys, Inc. (QLYS) - Q2 2026 10-Q Summary
Business Context and Reporting Period
This filing covers the quarterly period ended June 30, 2026. Qualys, Inc. is a leading provider of cloud-based IT, security, and compliance solutions delivered via its Enterprise TruRisk Platform. The company operates as a single reportable segment, serving enterprises, government entities, and small-to-medium businesses globally through direct sales and channel partners.
Key Financial Metrics
| Metric | Q2 2026 (3 Months) | Q2 2025 (3 Months) | YTD 2026 (6 Months) | YTD 2025 (6 Months) |
|---|---|---|---|---|
| Revenues | $182.2 million | $164.1 million | $357.8 million | $324.0 million |
| Gross Profit | $151.9 million | $135.2 million | $297.6 million | $266.2 million |
| Gross Margin | 83.4% | 82.4% | 83.2% | 82.2% |
| Operating Income | $61.9 million | $51.4 million | $122.8 million | $103.2 million |
| Net Income | $52.4 million | $47.3 million | $103.0 million | $94.8 million |
| Diluted EPS | $1.50 | $1.29 | $2.91 | $2.59 |
| Operating Cash Flow (YTD) | $154.9 million (2026) vs $143.4 million (2025) | |||
| Cash & Marketable Securities | $703.5 million (as of June 30, 2026) | |||
| Debt | No long-term debt reported; liabilities consist primarily of deferred revenue and operating leases. |
Material Changes vs. Prior Period
- Revenue Growth: Revenues increased 11% year-over-year for Q2 2026 and 10% for the six-month period. Growth was driven by increased demand from existing customers (97% of Q2 growth) and new customers (3% of Q2 growth).
- Expense Increases: Sales and marketing expenses rose 15% in Q2 and 17% YTD, primarily due to increased headcount, commissions, and incentive compensation. Cost of revenues increased 5% in Q2 due to personnel costs and cloud platform expenses.
- Other Income: Total other income, net, decreased 30% in Q2 and 34% YTD, driven by unfavorable foreign currency fluctuations and a $2.0 million impairment charge on non-marketable securities recognized in Q1 2026.
- Tax Provision: The effective tax rate increased to 21.9% in Q2 2026 (from 19.6% in Q2 2025) due to higher pretax income and a decrease in federal R&D credits, partially offset by benefits from the "One Big Beautiful Bill Act" (OBBBA).
Guidance, Outlook, and Risks
Outlook and Commentary: Management expects revenue growth to continue from both new and existing customers. The company maintains a strong Net Dollar Expansion Rate of 105% (LTM). Adjusted EBITDA for Q2 2026 was $83.8 million (46% of revenue).
Share Repurchases: The company repurchased 1.3 million shares for approximately $130.7 million during the first six months of 2026. As of June 30, 2026, $229.8 million remains available under the $1.6 billion authorized program.
Key Risks and Contingencies:
- Macroeconomic Conditions: Inflation, high interest rates, and geopolitical conflicts may lead to reduced IT spending and extended sales cycles.
- Competition: Intense competition from large vendors (e.g., CrowdStrike, Palo Alto Networks) and new entrants (e.g., Wiz, acquired by Google in March 2026) may pressure pricing and market share.
- Security & AI: Risks associated with cyber-attacks on the company's platform and the integration of AI/machine learning technologies, which introduce new regulatory and operational uncertainties.
- Regulatory: Evolving data privacy laws (GDPR, CCPA, UK Data Act) and export controls could increase compliance costs or limit market access.
Investor Verification Checklist
- Revenue Quality: Verify the sustainability of the 105% Net Dollar Expansion Rate and the reliance on existing customers (97% of recent growth) versus new customer acquisition.
- Expense Trajectory: Monitor the impact of increased Sales and Marketing spend (up 17% YTD) on future operating margins.
- Foreign Exchange Exposure: Assess the impact of currency fluctuations on future earnings, given that ~26% of revenue and ~29% of expenses are in foreign currencies.
- Impairment Charges: Review the $2.0 million impairment on non-marketable securities and the potential for future write-downs in the investment portfolio.
- Share Repurchase Impact: Evaluate the remaining $229.8 million repurchase authorization and its effect on diluted share count and EPS.