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.
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 $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.
Read our full analysis of Varonis's results here.
CrowdStrike (NASDAQ:CRWD)
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.
Read our full, actionable report on CrowdStrike here, it's free.
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 $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.
Read our full, actionable report on Rapid7 here, it's free.
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The author has no position in any of the stocks mentioned