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Q3 Earnings Highs And Lows: Palo Alto Networks (NYSE:PANW) Vs The Rest Of The Cybersecurity Stocks


Adam Hejl /
2022/01/19 6:09 am EST
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As we reflect back on the just completed Q3 cybersecurity sector earnings season, we dig into the relative performance of Palo Alto Networks (NYSE:PANW) 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. There has been a stampede out of high valuation technology stocks and while some of the cybersecurity stocks have fared somewhat better, they have not been spared, with share price declining 14.7% since earnings, on average.

Palo Alto Networks (NYSE:PANW)

Founded in 2005 by a cybersecurity engineer Nir Zuk, Palo Alto Networks (NYSE:PANW) makes hardware and software cybersecurity products that protect companies from cyberattacks, breaches and malware threats.

Palo Alto Networks reported revenues of $1.24 billion, up 31.8% year on year, beating analyst expectations by 3.58%. It was a decent quarter for the company, with a strong top line growth but a decline in gross margin and guidance roughly in line with what analysts were expecting.

"The combination of strong top-line metrics, upside to our profitability goals, and cash conversion for Q1 showcase our focus on total shareholder return," said Dipak Golechha, chief financial officer of Palo Alto Networks.

Palo Alto Networks Total Revenue

The stock is down 3.55% since the results and currently trades at $501.52.

Is now the time to buy Palo Alto Networks? 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 $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 20.1% since the results and currently trades at $40.85.

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 15.7% since the results and currently trades at $40.57.

Read our full analysis of SailPoint'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 $139.8 million, up 33.1% year on year, beating analyst expectations by 4.28%. It was a strong quarter for the company, with accelerating customer growth and guidance above analyst estimates.

The company added 594 customers to a total of 9,909. The stock is down 27.2% since the results and currently trades at $93.43.

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

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 an exceptional quarter for the company, with a very optimistic guidance for the next quarter.

The stock is down 25.9% since the results and currently trades at $257.31.

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

The author has no position in any of the stocks mentioned