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 SentinelOne (NYSE:S) and the rest of the cybersecurity stocks fared in Q3.
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 while some of the cybersecurity stocks have fared somewhat better than others, they have not been spared, with share prices declining 8.08% since the previous earnings results, on average.
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 $115.3 million, up 105% year on year, beating analyst expectations by 3.89%. It was a decent quarter for the company, with exceptional revenue growth but a decline in net revenue retention rate.
“We once again delivered triple digit revenue and ARR growth fueled by strong adoption of our Singularity XDR platform across endpoint, cloud, and identity. Cybersecurity is mission-critical, and our Singularity platform is purpose built for leading protection allowing us to deliver superior platform value,” said Tomer Weingarten, CEO of SentinelOne.
SentinelOne scored the fastest revenue growth of the whole group. The company added 72 enterprise customers paying more than $100,000 annually to a total of 827. The stock is up 2.33% since the results and currently trades at $14.47.
Is now the time to buy SentinelOne? Access our full analysis of the earnings results here, it's free.
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.
Zscaler scored the strongest analyst estimates beat and highest full year guidance raise among its peers. The stock is down 25.3% since the results and currently trades at $108.01.
Is now the time to buy Zscaler? 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, in line with analyst expectations. It was a weak quarter for the company, with revenue guidance for 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 9.41% since the results and currently trades at $35.41.
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 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 29.8% since the results and currently trades at $96.82.
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.
The stock is up 21.5% since the results and currently trades at $64.80.
The author has no position in any of the stocks mentioned