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Q4 Earnings Outperformers: Zscaler (NASDAQ:ZS) And The Rest Of The Cybersecurity Stocks


Adam Hejl /
2022/04/13 7:06 am EDT
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The end of an earnings season can be a great time to assess how companies are handling the current business environment and discover new stocks. Let’s have a look at how Zscaler (NASDAQ:ZS) and the rest of the cybersecurity stocks fared in Q4.

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 10 cybersecurity stocks we track reported a strong Q4; on average, revenues beat analyst consensus estimates by 5.66%, while on average next quarter revenue guidance was 3.48% above consensus. Technology stocks have been hit hard on fears of higher interest rates, but cybersecurity stocks held their ground better than others, with the share price up 16.6% 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 $255.5 million, up 62.7% year on year, beating analyst expectations by 5.66%. It was an impressive quarter for the company, with an exceptional revenue growth and a very optimistic guidance for the next quarter.

"Driven by continued demand for our Zero Trust security platform, we delivered strong results for the second quarter, with our year-over-year revenue growth rate reaching its highest level in three years, even as we surpassed $1 billion in annualized revenue,” said Jay Chaudhry, Chairman and CEO of Zscaler.

Zscaler Total Revenue

The stock is down 13.9% since the results and currently trades at $227.

We think Zscaler is a good business, but is it a buy today? Read our full report here, it's free.

Best Q4: 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 $135.5 million, up 31.2% year on year, beating analyst expectations by 19.1%. It was an exceptional quarter for the company, with a significant improvement in gross margin and an impressive beat of analyst estimates.

SailPoint Total Revenue

SailPoint delivered the strongest analyst estimates beat among its peers. The stock is up 54.7% since the results and currently trades at $64, partly on the announcement that it has entered a definitive agreement to be acquired by Thoma Bravo.

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

Weakest Q4: 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 $47.9 million, up 19.3% year on year, beating analyst expectations by 1.69%. It was a weak quarter for the company, with a decline in gross margin and underwhelming revenue guidance for the next quarter.

ForgeRock had the weakest full year guidance update in the group. The stock is up 34.5% since the results and currently trades at $22.30.

Read our full analysis of ForgeRock's results here.

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 $151.6 million, up 34% year on year, beating analyst expectations by 3.94%. It was a solid quarter for the company, with a full year guidance beating analysts' expectations.

The company added 374 customers to a total of 10,283. The stock is up 6.62% since the results and currently trades at $107.

Read our full, actionable report on Rapid7 here, it's free.

Palo Alto Networks (NYSE: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 $1.31 billion, up 29.5% year on year, beating analyst expectations by 2.74%. It was a decent quarter for the company, with a strong top line growth and revenue guidance for the next quarter above analysts' estimates.

The stock is up 28.4% since the results and currently trades at $610.90.

Read our full, actionable report on Palo Alto Networks here, it's free.

The author has no position in any of the stocks mentioned