As the Q3 earnings season wraps, let’s dig into this quarter’s best and worst performers in the cybersecurity industry, including Qualys (NASDAQ:QLYS) 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 satisfactory Q3. As a group, revenues beat analysts’ consensus estimates by 1% while next quarter’s revenue guidance was in line.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 6.4% since the latest earnings results.
Best Q3: Qualys (NASDAQ:QLYS)
Originally developed to address the growing complexity of IT security in the cloud era, Qualys (NASDAQ:QLYS) provides a cloud-based platform that helps organizations identify, manage, and protect their IT assets from cyber threats across on-premises, cloud, and mobile environments.
Qualys reported revenues of $169.9 million, up 10.4% year on year. This print exceeded analysts’ expectations by 2.2%. Overall, it was an exceptional quarter for the company with EPS guidance for next quarter exceeding analysts’ expectations and a solid beat of analysts’ EBITDA estimates.
"In Q3, we continued to execute well, demonstrated by another quarter of solid revenue growth and profitability," said Sumedh Thakar, Qualys' president and CEO.
Qualys pulled off the biggest analyst estimates beat of the whole group. Unsurprisingly, the stock is up 25.5% since reporting and currently trades at $152.08.
Is now the time to buy Qualys? Access our full analysis of the earnings results here, it’s free for active Edge members.
CrowdStrike (NASDAQ:CRWD)
Known for detecting the massive SolarWinds hack in 2020 that compromised numerous government agencies, CrowdStrike (NASDAQ:CRWD) provides cloud-based cybersecurity solutions that protect endpoints, cloud workloads, identity, and data through its Falcon platform.
CrowdStrike reported revenues of $1.23 billion, up 22.2% year on year, outperforming analysts’ expectations by 1.6%. The business had a strong quarter with a solid beat of analysts’ billings estimates and an impressive beat of analysts’ EBITDA estimates.
However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $518.25.
Is now the time to buy CrowdStrike? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest Q3: Varonis Systems (NASDAQ:VRNS)
Beginning with protecting Windows file shares in 2005 and evolving into a comprehensive security platform, Varonis Systems (NASDAQ:VRNS) provides data security software that helps organizations protect sensitive information, detect threats, and comply with privacy regulations.
Varonis Systems reported revenues of $161.6 million, up 9.1% year on year, falling short of analysts’ expectations by 2.7%. It was a softer quarter as it posted full-year revenue guidance slightly missing analysts’ expectations and revenue guidance for next quarter slightly missing analysts’ expectations.
Varonis Systems delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 47.4% since the results and currently trades at $33.17.
Read our full analysis of Varonis Systems’s results here.
Rapid7 (NASDAQ:RPD)
With its name inspired by the need for quick responses to cyber threats, Rapid7 (NASDAQ:RPD) provides cybersecurity software and services that help organizations detect vulnerabilities, monitor threats, and respond to security incidents.
Rapid7 reported revenues of $218 million, up 1.5% year on year. This result beat analysts’ expectations by 0.9%. More broadly, it was a mixed quarter as it also recorded an impressive beat of analysts’ EBITDA estimates but revenue guidance for next quarter slightly missing analysts’ expectations.
Rapid7 had the slowest revenue growth among its peers. The company lost 25 customers and ended up with a total of 11,618. The stock is down 8.1% since reporting and currently trades at $16.36.
Read our full, actionable report on Rapid7 here, it’s free for active Edge members.
Palo Alto Networks (NASDAQ:PANW)
Founded in 2005 by security visionary Nir Zuk who sought to reimagine firewall technology, Palo Alto Networks (NASDAQ:PANW) provides AI-powered cybersecurity platforms that protect organizations' networks, clouds, and endpoints from sophisticated threats.
Palo Alto Networks reported revenues of $2.47 billion, up 15.7% year on year. This print surpassed analysts’ expectations by 0.5%. Taking a step back, it was a mixed quarter as it also logged a solid beat of analysts’ EBITDA estimates but a significant miss of analysts’ billings estimates.
The stock is down 4.9% since reporting and currently trades at $190.67.
Read our full, actionable report on Palo Alto Networks here, it’s free for active Edge members.
Market Update
In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.
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