Summary
Qualys grew revenue 10% in the fiscal 2025 third quarter. Revenue for the three months ended September 30, 2025 was $169.9 million, up from $153.9 million in the prior year quarter. The nine-month total reached $493.8 million, up 10.1% from $448.4 million. Management tied the quarterly increase to subscription demand from accounts already on the platform. Roughly 95% of the increase came from customers that existed before July 1, 2025, and only 5% from new customers. Partners produced 74% of the increase, and customers outside the United States produced 60%.
Profitability improved faster than the top line. GAAP gross profit for the quarter was $142.1 million, up 14% from $125.0 million, and gross margin rose to 83.6% from 81.3%. GAAP operating income increased 33% to $60.0 million, or 35.3% of revenue, from $45.0 million, or 29.2% of revenue, a year earlier. GAAP net income was $50.3 million, up 9% from $46.2 million, and diluted earnings per share were $1.39 versus $1.24. The tax provision moved up sharply, and Qualys attributed that to a smaller foreign-derived intangible income benefit following the One Big Beautiful Bill Act, which was signed into law on July 4, 2025, along with fewer discrete tax benefits in the period.
Cash generation was the strongest line in the release. Operating cash flow for the quarter was $90.4 million, up 48% from $61.0 million. Year-to-date operating cash flow was $233.7 million, up 19.0% from $196.4 million. Capital expenditures fell to $0.9 million from $3.4 million in the quarter, a 73.7% decline, largely because prior spending on computer equipment and office buildouts did not repeat. Backlog measures also firmed. Current deferred revenue at September 30, 2025 was $371.5 million, up 10.0% from $337.8 million a year earlier, and remaining performance obligations were $438.0 million, up 14.3% from $383.3 million. On a non-GAAP basis, calculated current billings rose 11% to $186.4 million, Adjusted EBITDA was $82.6 million, up 19% and equal to 49% of revenue, and non-GAAP net income was $67.4 million, or $1.86 per diluted share against $1.56 a year earlier. The net dollar expansion rate was 104%, compared with 103% at September 30, 2024.
Operationally, Qualys received FedRAMP High authorization for its GovCloud platform, which opens the door wider to civilian, defense and intelligence agencies. It launched a marketplace of agentic AI agents for the Enterprise TruRisk Management platform, collected two Pwnie Awards for its Threat Research Unit, and named May Mitchell chief marketing officer. Management pointed to early Risk Operations Center deployments, wins with federal and state agencies, partner-led momentum and early adoption of flexible platform pricing as signs its consolidation pitch is working with a base of more than 10,000 subscription customers.
Guidance for the fourth quarter of 2025 calls for revenue growth of 8% to 9% over the same quarter of 2024. Fourth quarter GAAP net income per diluted share is guided to $1.26 to $1.33, and non-GAAP net income per diluted share to $1.73 to $1.80, both based on about 36.0 million weighted average diluted shares. For the full year 2025, Qualys raised its revenue outlook and now points to 10% growth over 2024, above its previous guidance range. Full-year GAAP net income per diluted share is expected at $5.23 to $5.30, up from an earlier range, and non-GAAP net income per diluted share at $6.93 to $7.00, up from $6.20 to $6.50. The full-year plan assumes a 21% effective income tax rate on a GAAP basis, and the fourth quarter assumes 22%.
The risk list is the usual one for a security software vendor, but it carries weight here. Qualys cites inflation, high interest rates, reduced customer spending, extended sales cycles, tariffs and geopolitical conflict as factors that could cut IT security budgets. Competition, customer retention, currency swings, and an effective tax rate that can shift with legislation or the geographic mix of revenue all sit in the cautionary language. The 10-Q notes that 57% of nine-month revenue came from customers in the United States, so a large slice depends on international demand, and sales flow heavily through channel partners whose productivity can lag hiring. Non-GAAP results also exclude stock-based compensation, which remains a meaningful expense and explains much of the gap between GAAP and non-GAAP earnings. Against that backdrop, the raised full-year revenue and earnings guidance is the clearest signal management expects the current demand pattern to hold through the December quarter.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2025 | Q2 FY2025 | QoQ | Q3 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $169.9M | $164.1M | +3.5% | $153.9M | +10.4% |
| Gross profit | $142.1M | $135.2M | +5.1% | $125.0M | +13.6% |
| Gross margin | 83.6% | 82.4% | +1.2 pp | 81.3% | +2.4 pp |
| Research & development | $28.9M | $30.2M | -4.4% | $28.9M | +0.1% |
| Sales & marketing | $35.3M | $35.8M | -1.5% | $32.7M | +7.9% |
| General & administrative | $17.9M | $17.7M | +1.1% | $18.5M | -3.1% |
| Total operating expenses | $82.1M | $83.8M | -2.0% | $80.1M | +2.6% |
| Operating income (loss) | $60.0M | $51.4M | +16.6% | $45.0M | +33.4% |
| Operating margin | 35.3% | 31.3% | +4.0 pp | 29.2% | +6.1 pp |
| Net income (loss) | $50.3M | $47.3M | +6.5% | $46.2M | +8.9% |
| Net margin | 29.6% | 28.8% | +0.8 pp | 30.0% | -0.4 pp |
| Diluted EPS | $1.39 | $1.29 | +$0.10 | $1.24 | +$0.15 |
Risks
MD&A states that inflationary pressure, high interest rates, significant market volatility, reduced spending, extended sales cycles, tariff and non-tariff trade barriers, and geopolitical conflicts could cause customers to reduce or eliminate IT security spending. Qualys says this pressure has continued since 2023 and may lead to longer collection cycles and customer bad debt.
Risk factors state competitors may incorporate AI/machine learning into their products more quickly or successfully than Qualys, which could impair its ability to compete. Qualys also uses AI/machine learning in its solutions, adding risks of technical error, security breaches, and new obligations under the EU Artificial Intelligence Act.
Qualys competes with CrowdStrike, Palo Alto Networks, Rapid7, Tenable, and private vendors including Wiz, which has announced a pending acquisition by Google. Larger competitors can bundle products and pressure pricing, potentially reducing average sales prices and gross margins.
Risk factors state Qualys and its service providers have experienced and may continue to experience security incidents, and its use of AI/machine learning may increase cybersecurity risks. A breach could lead to liability, reputational harm, customer loss, and potential loss of FedRAMP authorization.
The sales cycle typically ranges from six to twelve months but can exceed eighteen months, and MD&A highlights extended sales cycles in the current macroeconomic environment. Long, unpredictable large transactions can delay revenue recognition and cause period-to-period revenue variability.
For the nine months ended September 30, 2025, approximately 49% of revenues were derived through channel partners, and those agreements are generally non-exclusive. Partner failure, consolidation, or greater emphasis on competing products could reduce sales and increase credit risk.
As of September 30, 2025, approximately 78% of employees were outside the United States, with 70% located in India. For the nine months ended September 30, 2025, approximately 29% of expenses and 25% of revenues were in foreign currencies, exposing results to currency fluctuations and foreign regulatory compliance risks.
The EU Data Act became applicable on September 12, 2025, and GDPR, CCPA, CPRA, UK GDPR, and cross-border transfer rules impose compliance costs. Risk factors note uncertainty around the EU-U.S. Data Privacy Framework and standard contractual clauses, which could require additional safeguards for personal data transfers.
The OBBBA was signed into law on July 4, 2025, and MD&A states it affected financial results, including a decreased FDII deduction benefit. Future international tax provisions and Pillar Two minimum tax rules could increase Qualys's effective tax rate.
Selling to government entities is highly competitive, expensive, and time-consuming, and requires certifications including FedRAMP. Losing FedRAMP authorization could inhibit contracting with certain U.S. federal customers and create liability under public sector contracts.
Competition for highly skilled personnel is intense, especially in engineering and sales, and stock-based compensation is important for retention. Loss of senior management or key employees could delay strategic objectives and harm results.
SaaS KPIs
All quarters →Calculated Current Billings
Adjusted EBITDA
Non-GAAP Gross Margin
Subscription Customers
Calculated Current Billings Growth
Net Dollar Expansion Rate
Non-GAAP Operating Income (as % of revenues)
Adjusted EBITDA (as % of revenues)
Summary, forecast, risks and KPIs are extracted from QUALYS, INC.'s SEC filings for Q3 FY2025 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.