As we reflect back on the just completed Q2 cybersecurity sector earnings season, we dig into the relative performance of Rapid7 (NASDAQ:RPD) 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 mixed Q2; on average, revenues beat analyst consensus estimates by 2.88%, while on average next quarter revenue guidance was 0.31% under consensus. Technology stocks have been hit hard on fears of higher interest rates as investors search for near-term cash flows and cybersecurity stocks have not been spared, with share price down 20.1% since the previous earnings results, on average.
Founded in 2000 with the idea that network security comes before endpoint security, Rapid7 (NASDAQ:RPD) provides software as a service that helps companies understand where they are exposed to cyber security risks, quickly detect breaches and respond to them.
Rapid7 reported revenues of $167.4 million, up 32.4% year on year, beating analyst expectations by 2.03%. It was a mixed quarter for the company, with accelerating customer growth but an underwhelming revenue guidance for the next quarter.
“Robust customer demand for our security transformation solutions drove second quarter ending ARR of $658 million, representing growth of 35% year-over-year,” said Corey Thomas, Chairman and CEO of Rapid7.
The stock is down 31.3% since the results and currently trades at $49.25.
Is now the time to buy Rapid7? Access our full analysis of the earnings results here, it's free.
Best Q2: 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 $102.5 million, up 124% year on year, beating analyst expectations by 7.15%. It was a very strong quarter for the company, with an exceptional revenue growth and a significant improvement in net revenue retention rate.
SentinelOne delivered the strongest analyst estimates beat, fastest revenue growth, and highest full year guidance raise among its peers. The company added 164 enterprise customers paying more than $100,000 annually to a total of 755. The stock is down 3.29% since the results and currently trades at $26.40.
Is now the time to buy SentinelOne? Access our full analysis of the earnings results here, it's free.
Weakest Q2: ForgeRock (NYSE:FORG)
Founded in Norway by former Sun Microsystems engineers, ForgeRock (NYSE:FORG) offers software as a service that helps companies secure and manage the identity of their customers and employees.
ForgeRock reported revenues of $47.6 million, up 8.47% year on year, beating analyst expectations by 1.05%. It was a weak quarter for the company, with guidance for both the next quarter and the full year missing analysts' expectations.
ForgeRock had the slowest revenue growth and weakest full year guidance update in the group. The stock is down 32.1% since the results and currently trades at $15.09.
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 $318 million, up 61.3% year on year, beating analyst expectations by 4.09%. It was a solid quarter for the company, with an exceptional revenue growth and revenue guidance for the next quarter above analysts' estimates.
The stock is up 10.4% since the results and currently trades at $170.60.
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 $535.1 million, up 58.4% year on year, beating analyst expectations by 3.62%. It was a solid quarter for the company, with an exceptional revenue growth.
The company added 1,741 customers to a total of 19,686. The stock is down 13.4% since the results and currently trades at $167.26.
The author has no position in any of the stocks mentioned