Cybersecurity heavyweights are locked in a war of words. During a recent round of conference calls, and later in follow-ups on Twitter/X, CEOs from Palo Alto Networks (NASDAQ: PANW) and CrowdStrike Holdings (NASDAQ: CRWD) both took shots at competitors, including each other. CrowdStrike CEO George Kurtz even name-dropped Palo Alto in his prepared remarks, even though the two juggernauts don't directly compete in their core businesses of network security (Palo Alto) and endpoint security (CrowdStrike).

Meanwhile, smaller players are delivering solid, profitable growth in the background. One of those cybersecurity providers is Qualys (NASDAQ: QLYS), which just reported another round of consistent financial results. The stock has doubled in the last five years, even after a recent sell-off. Here's what investors should know about Qualys for 2024 and beyond.

A compelling cybersecurity stock

Qualys offers a cloud-based set of software tools that help organizations with security compliance. It scans for security vulnerabilities and suggests fixes to weaknesses it finds. As IT infrastructure has gotten more complicated with a mix of legacy internal networks and public cloud, the number of devices and apps large businesses need to track and keep secure has ballooned. The Qualys platform can play an integral role in a company's cybersecurity efforts.

Qualys isn't the fastest-growing cyber specialist in the industry, averaging a low- to mid-teens percentage revenue growth rate since 2020. It's a small player with revenue of just $555 million in 2023 (compared to billions in annual sales at the largest cybersecurity pure plays). And where many security software platform providers struggle with profitability, Qualys actually offers investors a compelling proposition with robust GAAP net income and free cash flow (FCF) generation despite its size. FCF profit margin was an impressive 42.5% last year, one of the best rates of cash generation among its peer group.

Qualys has been plowing big chunks of this FCF into share repurchases, returning $171 million and $317 million to shareholders in 2023 and 2022, respectively. The balance sheet is also rock solid with $426 million in cash and short-term investments and zero debt.

Qualys expects to grow revenue 8% to 10% in 2024, according to management's current outlook. Again, no growth records to be found here, but paired with its profitability and healthy balance sheet, there could be a lot to like about Qualys for the right investor.

Is competition going to crush Qualys?

As a high-profit business, Qualys stock is a rare value play in the high growth but usually high premium cybersecurity market. Shares of Qualys currently trade for 42 times trailing-12-month earnings per share (EPS) and 27 times trailing-12-month FCF.