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Let’s dig into the relative performance of Zscaler (NASDAQ:ZS) and its peers as we unravel the now-completed Q3 cybersecurity earnings season.
Cybersecurity continues to be one of the fastest-growing segments within software for good reason. Almost every company is slowly finding itself becoming a technology company and facing rising cybersecurity risks. Businesses are accelerating adoption of cloud-based software, moving data and applications into the cloud to save costs while improving performance. This migration has opened them to a multitude of new threats, like employees accessing data via their smartphone while on an open network, or logging into a web-based interface from a laptop in a new location.
The 9 cybersecurity stocks we track reported a satisfactory Q3. As a group, revenues beat analysts’ consensus estimates by 1% while next quarter’s revenue guidance was in line.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 8.4% since the latest earnings results.
Pioneering the "zero trust" approach that has fundamentally changed enterprise network security, Zscaler (NASDAQ:ZS) provides a cloud-based security platform that connects users, devices, and applications securely without traditional network-based security hardware.
Zscaler reported revenues of $788.1 million, up 25.5% year on year. This print exceeded analysts’ expectations by 1.9%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ billings estimates and full-year EPS guidance exceeding analysts’ expectations.
“Our outstanding Q1 results demonstrate the strong demand we are experiencing for our Zero Trust and AI Security platform. With over $3.2B in Annual Recurring Revenue, growing over 25% year-over-year, and Rule-of-78 performance, I'm very pleased to share that an increasing number of customers are relying on our platform for better security, lower operational costs and reduced IT complexity,” said Jay Chaudhry, Chairman and CEO of Zscaler.
Zscaler pulled off the fastest revenue growth but had the weakest full-year guidance update of the whole group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 16.5% since reporting and currently trades at $242.53.
Read why we think that Zscaler is one of the best cybersecurity stocks, our full report is free.
Originally developed to address the growing complexity of IT security in the cloud era, Qualys (NASDAQ:QLYS) provides a cloud-based platform that helps organizations identify, manage, and protect their IT assets from cyber threats across on-premises, cloud, and mobile environments.
Qualys reported revenues of $169.9 million, up 10.4% year on year, outperforming analysts’ expectations by 2.2%. The business had an exceptional quarter with EPS guidance for next quarter exceeding analysts’ expectations and a solid beat of analysts’ EBITDA estimates.
Qualys scored the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 20.5% since reporting. It currently trades at $146.01.
Is now the time to buy Qualys? Access our full analysis of the earnings results here, it’s free for active Edge members.
Beginning with protecting Windows file shares in 2005 and evolving into a comprehensive security platform, Varonis Systems (NASDAQ:VRNS) provides data security software that helps organizations protect sensitive information, detect threats, and comply with privacy regulations.
Varonis Systems reported revenues of $161.6 million, up 9.1% year on year, falling short of analysts’ expectations by 2.7%. It was a softer quarter as it posted full-year revenue guidance slightly missing analysts’ expectations and revenue guidance for next quarter slightly missing analysts’ expectations.
Varonis Systems delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 52.1% since the results and currently trades at $30.21.
Read our full analysis of Varonis Systems’s results here.
Built on the principle of "fighting machine with machine," SentinelOne (NYSE:S) provides an AI-powered cybersecurity platform that autonomously prevents, detects, and responds to threats across endpoints, cloud workloads, and identity systems.
SentinelOne reported revenues of $258.9 million, up 22.9% year on year. This result topped analysts’ expectations by 1.1%. It was a strong quarter as it also logged an impressive beat of analysts’ billings estimates and a solid beat of analysts’ EBITDA estimates.
SentinelOne delivered the highest full-year guidance raise among its peers. The company added 59 enterprise customers paying more than $100,000 annually to reach a total of 1,572. The stock is down 14.8% since reporting and currently trades at $14.58.
Read our full, actionable report on SentinelOne here, it’s free for active Edge members.
Known for detecting the massive SolarWinds hack in 2020 that compromised numerous government agencies, CrowdStrike (NASDAQ:CRWD) provides cloud-based cybersecurity solutions that protect endpoints, cloud workloads, identity, and data through its Falcon platform.
CrowdStrike reported revenues of $1.23 billion, up 22.2% year on year. This number surpassed analysts’ expectations by 1.6%. Overall, it was a strong quarter as it also put up an impressive beat of analysts’ billings estimates and a solid beat of analysts’ EBITDA estimates.
The stock is down 1% since reporting and currently trades at $511.80.
Read our full, actionable report on CrowdStrike here, it’s free for active Edge members.
In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.
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