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Winners And Losers Of Q1: Palo Alto Networks (NASDAQ:PANW) Vs The Rest Of The Cybersecurity Stocks


Radek Strnad /
2023/06/16 4:54 am EDT

Wrapping up Q1 earnings, we look at the numbers and key takeaways for the cybersecurity stocks, including Palo Alto Networks (NASDAQ:PANW) and its peers.

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 weaker Q1; on average, revenues beat analyst consensus estimates by 0.65%, while on average next quarter revenue guidance was 1.16% under consensus. There has been a stampede out of high valuation technology stocks as raising interest rates encourage investors to value profits over growth again, but cybersecurity stocks held their ground better than others, with the share prices up 5.27% since the previous earnings results, on average.

Palo Alto Networks (NASDAQ:PANW)

Founded in 2005 by a cybersecurity engineer Nir Zuk, Palo Alto Networks makes hardware and software cybersecurity products that protect companies from cyberattacks, breaches and malware threats.

Palo Alto Networks reported revenues of $1.72 billion, up 24.1% year on year, in line with analyst expectations. The company delivered a strong "beat and raise" quarter, with third-quarter sales meeting analysts' estimates and billings surpassing Consensus projections.

"Our team again executed well in a market that continues to become more challenging," said Nikesh Arora, chairman and CEO of Palo Alto Networks.

Palo Alto Networks Total Revenue

The stock is up 28.8% since the results and currently trades at $244.64.

Is now the time to buy Palo Alto Networks? Access our full analysis of the earnings results here, it's free.

Best Q1: CrowdStrike (NASDAQ:CRWD)

Founded by George Kurtz, the former CTO of the antivirus company McAfee, CrowdStrike (NASDAQ:CRWD) provides cybersecurity software that protects companies from breaches and helps them detect and respond to cyber attacks.

CrowdStrike reported revenues of $692.6 million, up 42% year on year, beating analyst expectations by 2.42%. Despite the stock dropping on the results, it was a decent quarter for the company, with a significant improvement in gross margin and revenue guidance for the next quarter ahead of expectations.

CrowdStrike Total Revenue

CrowdStrike achieved the strongest analyst estimates beat and highest full year guidance raise among its peers. The stock is up 0.92% since the results and currently trades at $161.49.

Is now the time to buy CrowdStrike? Access our full analysis of the earnings results here, it's free.

Weakest Q1: SentinelOne (NYSE:S)

With roots in the Israeli cyber intelligence community, SentinelOne (NYSE:S) provides software to help organizations efficiently detect, prevent, and investigate cyber attacks.

SentinelOne reported revenues of $133.4 million, up 70.5% year on year, missing analyst expectations by 2.36%. Despite the strong topline growth, it was a weak quarter for the company, with revenue guidance for the next quarter missing analysts' expectations. Full year guidance revenue was lowered and also came in below expectations. Lowering guidance is always a worrisome sign, and the company reducing full-year revenue guidance by more than 6% is also a meaningful magnitude.

SentinelOne achieved the fastest revenue growth but had the weakest performance against analyst estimates and weakest performance against analyst estimates in the group. The company added 12 enterprise customers paying more than $100,000 annually to a total of 917. The stock is down 19.6% since the results and currently trades at $16.66.

Read our full analysis of SentinelOne's results here.

Zscaler (NASDAQ:ZS)

After successfully selling all four of his previous cybersecurity companies, Jay Chaudhry's fifth venture, Zscaler (NASDAQ:ZS) offers software as a service that helps companies securely connect to applications and networks in the cloud.

Zscaler reported revenues of $418.8 million, up 46% year on year, beating analyst expectations by 1.71%. It was a decent quarter for the company, with a solid beat of analyst estimates and strong revenue guidance for the next quarter.

The stock is up 17.3% since the results and currently trades at $158.51.

Read our full, actionable report on Zscaler here, it's free.

Okta (NASDAQ:OKTA)

Founded during the aftermath of the financial crisis in 2009, Okta (NASDAQ:OKTA) is a cloud-based software as a service platform that helps companies manage identity for their employees and customers.

Okta reported revenues of $518 million, up 24.8% year on year, beating analyst expectations by 1.43%.It was a decent quarter for the company, with optimistic revenue guidance for the next quarter.

The stock is down 16.2% since the results and currently trades at $76.3.

Read our full, actionable report on Okta here, it's free.

The author has no position in any of the stocks mentioned