Wrapping up Q3 earnings, we look at the numbers and key takeaways for the cybersecurity stocks, including SentinelOne (NYSE:S) 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 Q3; on average, revenues beat analyst consensus estimates by 2% while next quarter's revenue guidance was in line with consensus. Inflation (despite slowing) has investors prioritizing near-term cash flows, but cybersecurity stocks held their ground better than others, with the share prices up 28.5% on average since the previous earnings results.
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 $164.2 million, up 42.4% year on year, topping analyst expectations by 5%. It was a strong quarter for the company, with a significant improvement in its gross margin and a solid beat of analysts' revenue estimates.
“Our third quarter performance exceeded our top and bottom line expectations, delivering industry-leading growth and margin improvement,” said Tomer Weingarten, CEO of SentinelOne.
SentinelOne achieved the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise of the whole group. The company added 66 enterprise customers paying more than $100,000 annually to reach a total of 1,060. The stock is up 25.9% since the results and currently trades at $25.2.
Is now the time to buy SentinelOne? Access our full analysis of the earnings results here, it's free.
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 $496.7 million, up 39.7% year on year, outperforming analyst expectations by 4.9%. It was a very good quarter for the company, with a decent beat of analysts' revenue estimates and strong sales guidance for the next quarter.
The stock is up 20.7% since the results and currently trades at $231.8.
Is now the time to buy Zscaler? Access our full analysis of the earnings results here, it's free.
Slowest Q3: Varonis (NASDAQ:VRNS)
Founded by a duo of former Israeli Defense Forces cyber warfare engineers, Varonis (NASDAQ:VRNS) offers software-as-service that helps customers protect data from cyber threats and gain visibility into how enterprise data is being used.
Varonis reported revenues of $122.3 million, down 0.8% year on year, falling short of analyst expectations by 2.5%. It was a weak quarter for the company, with a miss of analysts' revenue estimates and full-year revenue guidance.
Varonis had the weakest performance against analyst estimates, slowest revenue growth, and weakest full-year guidance update in the group. The stock is up 40.4% since the results and currently trades at $44.19.
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 $786 million, up 35.3% year on year, surpassing analyst expectations by 1.1%. It was a decent quarter for the company, with ARR (annual recurring revenue) and revenue narrowly topping analysts' expectations. CRWD beat on non-GAAP operating income and non-GAAP EPS by a more convincing amount. While next quarter's revenue guidance was only in-line, non-GAAP operating income was head. Full year guidance was also raised.
The stock is up 41.4% since the results and currently trades at $300.2.
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 $198.8 million, up 13.1% year on year, in line with analyst expectations. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter and decelerating customer growth.
The company added 125 customers to reach a total of 11,412. The stock is up 19.6% since the results and currently trades at $54.9.
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The author has no position in any of the stocks mentioned