Cybersecurity Stocks Q2 Results: Benchmarking CrowdStrike (NASDAQ:CRWD)
The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how cybersecurity stocks fared in Q2, starting with CrowdStrike (NASDAQ:CRWD).
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 slower Q2. As a group, revenues beat analysts’ consensus estimates by 1.8% while next quarter’s revenue guidance was in line.
Big picture, the Federal Reserve has a dual mandate of inflation and employment. The former had been running hot throughout 2021 and 2022 but cooled towards the central bank's 2% target as of late. This prompted the Fed to cut its policy rate by 50bps (half a percent) in September 2024. Given recent employment data that suggests the US economy could be wobbling, the markets will be assessing whether this rate cut and future ones (the Fed signaled more to come in 2024 and 2025) are the right moves at the right time or whether they're too little, too late for a macro that has already cooled.
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 $963.9 million, up 31.7% year on year. The quarter itself was solid, with ARR (annual recurring revenue), revenue, and operating profit all beating. Guidance was underwhelming, though, as full-year revenue was lowered and revenue guidance for next quarter missed Wall Street’s estimates.
CrowdStrike delivered the weakest full-year guidance update of the whole group. Interestingly, the stock is up 3.2% since reporting and currently trades at $272.70.
Is now the time to buy CrowdStrike? Access our full analysis of the earnings results here, it’s free.
Best Q2: 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 $130.3 million, up 12.9% year on year, outperforming analysts’ expectations by 4.4%. The business had a very strong quarter with an impressive beat of analysts’ billings estimates and optimistic revenue guidance for the next quarter.
Varonis achieved the highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 10.5% since reporting. It currently trades at $53.55.
Is now the time to buy Varonis? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: Tenable (NASDAQ:TENB)
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 $221.2 million, up 13.4% year on year, exceeding analysts’ expectations by 1.2%. Still, it was a disappointing quarter as it posted underwhelming revenue guidance for the next quarter and a miss of analysts’ ARR (annual recurring revenue) estimates.
As expected, the stock is down 13.9% since the results and currently trades at $39.63.
Read our full analysis of Tenable’s results here.
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 $198.9 million, up 33.1% year on year. This number met analysts’ expectations. Aside from that, it was a mixed quarter as it also recorded a meaningful improvement in its gross margin but a miss of analysts’ billings estimates.
SentinelOne achieved the fastest revenue growth among its peers. The company added 40 enterprise customers paying more than $100,000 annually to reach a total of 1,233. The stock is flat since reporting and currently trades at $24.86.
Read our full, actionable report on SentinelOne 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 $592.9 million, up 30.3% year on year. This result beat analysts’ expectations by 4.4%. Aside from that, it was a softer mixed as it also produced an impressive beat of analysts’ ARR (annual recurring revenue) estimates but management forecasting growth to slow.
Zscaler delivered the biggest analyst estimates beat among its peers. The stock is down 11.2% since reporting and currently trades at $171.60.
Read our full, actionable report on Zscaler here, it’s free.
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