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Reflecting On Cybersecurity Stocks’ Q3 Earnings: Zscaler (NASDAQ:ZS)


Radek Strnad /
2022/01/17 6:18 am EST
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Looking back on cybersecurity stocks' Q3 earnings, we examine this quarters’ best and worst performers, including Zscaler (NASDAQ:ZS) 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 11 cybersecurity stocks we track reported a strong Q3; on average, revenues beat analyst consensus estimates by 6.26%, while on average next quarter revenue guidance was 2.62% above consensus. Tech stocks have had a rocky start in 2022 and while some of the cybersecurity stocks have fared somewhat better, they have not been spared, with share price declining 12.8% since earnings, on average.

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 $230.5 million, up 61.6% year on year, beating analyst expectations by 8.59%. It was a strong quarter for the company, with a very optimistic guidance for the next quarter and an exceptional revenue growth.

“We delivered outstanding results for the first quarter, with year-over-year revenue growth accelerating to 62%. We recently achieved a significant milestone of surpassing $1 billion in annual recurring revenue (ARR), and are now focusing on achieving $5 billion in ARR.” said Jay Chaudhry, Chairman and CEO of Zscaler.

Zscaler Total Revenue

The stock is down 26.3% since the results and currently trades at $256.20.

We think Zscaler is a good business, but is it a buy today? Read our full report 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 $56 million, up 128% year on year, beating analyst expectations by 12.9%. It was a stunning quarter for the company, with a significant improvement in gross margin and an impressive beat of analyst estimates.

SentinelOne Total Revenue

SentinelOne pulled off the fastest revenue growth and highest full year guidance raise among its peers. The company added 71 enterprise customers paying more than $100,000 annually to a total of 416. The stock is down 15.4% since the results and currently trades at $43.24.

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

Slowest Q3: SailPoint (NYSE:SAIL)

Started by Mark McClain after his previous identity management company got acquired by Sun Microsystems, SailPoint (NYSE:SAIL) provides software for organizations to manage the digital identity of employees, customers, and partners.

SailPoint reported revenues of $110.1 million, up 17.1% year on year, beating analyst expectations by 5.98%. It was a weaker quarter for the company, with an underwhelming revenue guidance for the next quarter and a decline in gross margin.

The stock is down 11.8% since the results and currently trades at $42.48.

Read our full analysis of SailPoint's results here.

Mimecast (NASDAQ:MIME)

Founded in London by South Africans Peter Bauer and Neil Murray, Mimecast (NASDAQ:MIME) provides cloud-based filtering service for securing business email accounts.

Mimecast reported revenues of $147.2 million, up 20% year on year, beating analyst expectations by 3.08%. It was a decent quarter for the company, with a very optimistic guidance for the next quarter but decelerating customer growth.

The company lost 1,000 customers and ended up with a total of 39,600. The stock is up 7.07% since the results and currently trades at $80.36.

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

Qualys (NASDAQ:QLYS)

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 $104.9 million, up 12.7% year on year, in line with analyst expectations. It was a decent quarter for the company, with a strong sales guidance for the next quarter but a slow revenue growth.

Qualys had the weakest performance against analyst estimates, slowest revenue growth, and weakest full year guidance update among the peers. The stock is up 1.01% since the results and currently trades at $126.35.

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

The author has no position in any of the stocks mentioned