QLYS

Qualys is a textbook quality compounder hiding in plain sight. The fundamentals are pristine: 82.8% gross margins, 33.2% operating margins, and a 35.3% ROE are SaaS-elite, and the five-year trajectory shows revenue growing from $411M (FY2021) to $669M (FY2025) — a ~13% CAGR — with net income nearly tripling from $71M to $198M over the same span. FY2025 operating income grew 18.6% on 10.1% revenue growth, meaning margins are still expanding even as the top line moderates. Operating cash flow of $309M (+26.8% YoY) against just $5M of capex is a near-perfect capital-light model, and management is returning that cash aggressively — $183M in buybacks (+31.1% YoY) shrank the share count 2.2%, juicing the 17% diluted EPS growth.

Valuation is the unlock. At $115.34 the stock trades at 21.2x trailing earnings and 6.1x sales — modest multiples for a business compounding EPS in the high teens with 30%+ net margins and a fortress balance sheet ($250M cash, L/E of 0.95x, no meaningful debt burden implied). The MD&A confirms the durable economics: subscriptions are 'primarily renewable annual' with revenue 'recognized ratably,' giving high visibility, and the Enterprise TruRisk Platform is broadening from vulnerability management into cloud, container, endpoint, and OT — expanding the TAM the existing salesforce can address.