As cybersecurity stocks’ Q3 earnings season wraps, let's dig into this quarter's 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 8 cybersecurity stocks we track reported a mixed Q3; on average, revenues beat analyst consensus estimates by 2.1%, while on average next quarter revenue guidance was 0.45% under consensus. There has been a stampede out of high valuation technology stocks as rising interest rates encourage investors to value profits over growth again and cybersecurity stocks have not been spared, with share prices down 11.1% since the previous earnings results, on average.
Best Q3: 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 $355.5 million, up 54.2% year on year, beating analyst expectations by 4.33%. Despite the stock dropping on the results, it was a very strong quarter for the company, with exceptional revenue growth and very optimistic guidance for the next quarter.
"We delivered strong top line growth with improved operating profitability and increased free cash flow, once again performing at the Rule-of-80. We are seeing customers committing to our broader platform, driven by vendor consolidation and an elevated threat environment," said Jay Chaudhry, Chairman and CEO of Zscaler.
Zscaler scored the strongest analyst estimates beat and highest full year guidance raise of the whole group. The stock is down 24.1% since the results and currently trades at $104.75.
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 $481 million, up 37.1% year on year, beating analyst expectations by 3.36%. It was a solid quarter for the company, with exceptional revenue growth and a meaningful improvement in gross margin.
The stock is up 32.5% since the results and currently trades at $66.76.
Is now the time to buy Okta? Access our full analysis of the earnings results here, it's free.
Weakest Q3: Rapid7 (NASDAQ:RPD)
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 $175.7 million, up 25.6% year on year, inline with analyst expectations. It was a weak quarter for the company, with revenue guidance for both the next quarter and the full year missing analysts' expectations.
Rapid7 had the weakest performance against analyst estimates and weakest full year guidance update in the group. The company added 167 customers to a total of 10,791. The stock is down 12.5% since the results and currently trades at $34.25.
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 $580.8 million, up 52.8% year on year, beating analyst expectations by 1.01%. It was a slower quarter for the company, with revenue guidance for both the next quarter and the full year missing analysts' expectations.
The company added 1,460 customers to a total of 21,146. The stock is down 25% since the results and currently trades at $94.89.
Founded in 2002 by three cybersecurity veterans, Tenable (NASDAQ:TENB) provides software as a service that helps companies understand where they are exposed to cyber security risk and how to reduce it.
Tenable reported revenues of $174.8 million, up 26% year on year, beating analyst expectations by 2.72%. It was an ok quarter for the company, with a solid topline growth but underwhelming revenue guidance for the next quarter.
The stock is up 9.83% since the results and currently trades at $35.12.
The author has no position in any of the stocks mentioned