As the craze of earnings season draws to a close, here's a look back at some of the most exciting (and some less so) results from Q3. Today we are looking at the cybersecurity stocks, starting with Varonis (NASDAQ:VRNS).
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 Q3; on average, revenues beat analyst consensus estimates by 2% while next quarter's revenue guidance was in line with consensus. Stocks have been under pressure as inflation (despite slowing) makes their long-dated profits less valuable, but cybersecurity stocks held their ground better than others, with the share prices up 23.6% on average since the previous earnings results.
Slowest Q3: Varonis (NASDAQ:VRNS)
Founded by a duo of former Israeli Defense Forces cyber warfare engineers, Varonis (NASDAQ:VRNS) offers software-as-service that helps customers protect data from cyber threats and gain visibility into how enterprise data is being used.
Varonis reported revenues of $122.3 million, down 0.8% year on year, falling short of analyst expectations by 2.5%. It was a weak quarter for the company, with a miss of analysts' revenue estimates and full-year revenue guidance.
Yaki Faitelson, Varonis CEO, said, "Our third quarter results reflect the continued healthy adoption of Varonis SaaS, and approximately 15% of total company ARR now comes from SaaS. The progress of our transition, coupled with our faster pace of innovation gets us closer to achieving our $1 billion ARR target and delivering meaningful stakeholder value."
Varonis delivered the weakest performance against analyst estimates, slowest revenue growth, and weakest full-year guidance update of the whole group. The stock is up 42.3% since the results and currently trades at $44.78.
Is now the time to buy Varonis? Access our full analysis of the earnings results here, it's free.
Best Q3: 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 $164.2 million, up 42.4% year on year, outperforming analyst expectations by 5%. It was a strong quarter for the company, with a significant improvement in its gross margin and a solid beat of analysts' revenue estimates.
SentinelOne scored the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise among its peers. The company added 66 enterprise customers paying more than $100,000 annually to reach a total of 1,060. The stock is up 22.9% since the results and currently trades at $24.61.
Is now the time to buy SentinelOne? Access our full analysis of the earnings results here, it's free.
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 $198.8 million, up 13.1% year on year, in line with analyst expectations. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter and decelerating customer growth.
The stock is up 18.3% since the results and currently trades at $54.33.
Founded in 1999 as one of the first subscription security companies, Qualys (NASDAQ:QLYS) provides organizations with software to assess their exposure to cyber-attacks.
Qualys reported revenues of $142 million, up 13.1% year on year, in line with analyst expectations. It was a slower quarter for the company, with underwhelming revenue guidance for the next quarter.
The stock is up 27.6% since the results and currently trades at $195.07.
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 $786 million, up 35.3% year on year, surpassing analyst expectations by 1.1%. It was a decent quarter for the company, with ARR (annual recurring revenue) and revenue narrowly topping analysts' expectations. CRWD beat on non-GAAP operating income and non-GAAP EPS by a more convincing amount. While next quarter's revenue guidance was only in-line, non-GAAP operating income was head. Full year guidance was also raised.
The stock is up 30.2% since the results and currently trades at $276.49.
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The author has no position in any of the stocks mentioned