Qualys Lifts 2026 Outlook After 11% Revenue Growth in Q3

Qualys grew revenue 11% to $188 million in the third quarter of 2026 and raised its full-year outlook, crediting federal customer wins that drove a second straight quarter of double-digit billings growth.

Non-GAAP earnings came in at $2.12 per diluted share, CFO Joo Mi Kim said. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) reached $89.9 million, or 48% of revenue, versus 49% a year earlier. Free cash flow hit $100 million — a 53.2% margin.

The company now expects 2026 revenue of $736.9 million to $738.9 million, up from its prior range of $732 million to $738 million. It lifted its non-GAAP earnings forecast to $8.07–$8.14 per share from $7.74–$7.88.

What Drove the Billings Beat?

Calculated current billings (a forward-looking sales metric combining deferred revenue change and accounts receivable) grew 14% in the third quarter, following 16% in the second. Kim said federal business was the primary driver, with new customer acquisitions also contributing. Several federal deals closed during the quarter that could have slipped into the fourth, she noted.

For the fourth quarter, Qualys assumes roughly 8% billings growth as a base case and 11% for the full year. Kim said federal deals can be lumpy; another strong federal quarter could deliver upside, but the forecast doesn't count on it.

Steadier indicators back the picture. The overall net dollar expansion rate (existing customers' spend versus a year ago) held at 105%, unchanged from Q2. For customers with prior-year ETM or CSAM subscriptions, the rate improved to 108% from 107% sequentially. Kim said Qualys doesn't expect a material change in that rate or a fourth-quarter decline, and the company has seen no material shift in sales cycles or win rates.

Timing dented reported revenue slightly: deals closing late in the period, especially new customer wins, left less time to recognize revenue during the quarter, Kim said.

How Is the Product Strategy Shifting?

President and CEO Sumedh Thakar said customers increasingly want to automate detecting, prioritizing and fixing vulnerabilities, as attackers deploy AI and remediation speed matters more. "The biggest blocker to faster patching is lack of confidence in operational outcome," Thakar said.

Qualys launched TruRisk Eliminate 2.0 with TruConfidence, a remediation orchestration engine that assesses existing security controls, covers assets that can't run an agent, monitors systems post-patch, and analyzes patch failures with recommended fixes.

The numbers behind it: over the past 12 months, customers deployed more than 180 million patches via TruRisk Eliminate with Agent Sara, with 60% running autonomously — up from 30% a year earlier. The rollback rate was fewer than one in 8,000 deployments. High-profile vulnerability disclosures spark more customer conversations, Thakar said, but rarely immediate purchases, since organizations must rework internal processes and bring IT into the decision.

Where Is Customer and Channel Growth Showing Up?

Customers spending at least $500,000 annually rose 15% year over year to 243. Quarter wins included a new low-seven-figure annual booking with a government agency and a seven-figure annual upsell with an existing federal agency.

In the first full quarter after general availability of the QFlex purchasing model, participating customers increased average annual bookings by more than 20% versus prior-year levels — though Kim cautioned the comparison involves a small group.

Channel partners generated 55% of third-quarter revenue, up from 50% a year earlier. Channel revenue grew 24%, offsetting a 2% decline in direct revenue.

What Comes Next?

For the fourth quarter, Qualys guides to revenue of $191–$193 million, up 9–10%, with non-GAAP earnings of $2.05–$2.12 per share. Full-year targets include a 46% adjusted EBITDA margin and free cash flow margin in the low 40% range. The company repurchased 330,000 shares for $53.6 million during the quarter, with $176.1 million remaining under its buyback program.

Founded in 1999 and headquartered in Foster City, California, Qualys provides cloud-based security and compliance software spanning vulnerability management, cloud security, endpoint protection and policy compliance.

Federal wins lifted the quarter; the raised outlook says Qualys expects that momentum to stick.