As we reflect back on the just completed Q2 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 9 cybersecurity stocks we track reported a mixed Q2; on average, revenues beat analyst consensus estimates by 2.88%, while on average next quarter revenue guidance was 0.31% under consensus. Increasing interest rates hurt growth companies as investors search for near-term cash flows and cybersecurity stocks have not been spared, with share price down 14.2% since the previous earnings results, on average.
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 $1.55 billion, up 27.1% year on year, in line with analyst expectations. It was a decent quarter for the company, with a full year guidance beating analysts' expectations.
"We were pleased by our fourth quarter results, which included GAAP profitability for the first time in four years. Next-Generation Security growth, driven by our rapid pace of innovation and strong sales execution, drove our results," said Nikesh Arora, chairman and CEO of Palo Alto Networks.
Palo Alto Networks delivered the weakest performance against analyst estimates of the whole group. The stock is up 6% since the results and currently trades at $178.
Is now the time to buy Palo Alto Networks? Access our full analysis of the earnings results here, it's free.
Best Q2: 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 $102.5 million, up 124% year on year, beating analyst expectations by 7.15%. It was a very strong quarter for the company, with an exceptional revenue growth and a significant improvement in net revenue retention rate.
SentinelOne pulled off the strongest analyst estimates beat, fastest revenue growth, and highest full year guidance raise among its peers. The company added 164 enterprise customers paying more than $100,000 annually to a total of 755. The stock is up 1.02% since the results and currently trades at $27.58.
Is now the time to buy SentinelOne? Access our full analysis of the earnings results here, it's free.
Weakest Q2: 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 $47.6 million, up 8.47% year on year, beating analyst expectations by 1.05%. It was a weak quarter for the company, with guidance for both the next quarter and the full year missing analysts' expectations.
ForgeRock had the slowest revenue growth and weakest full year guidance update in the group. The stock is down 24.6% since the results and currently trades at $16.77.
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 $318 million, up 61.3% year on year, beating analyst expectations by 4.09%. It was a solid quarter for the company, with an exceptional revenue growth and a very optimistic guidance for the next quarter.
The stock is up 12.7% since the results and currently trades at $174.25.
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 $164.3 million, up 26.1% year on year, in line with analyst expectations. It was a slower quarter for the company, with an underwhelming revenue guidance for the next quarter.
The stock is down 8.74% since the results and currently trades at $40.82.
The author has no position in any of the stocks mentioned