As the Q4 earnings season wraps, let’s dig into this quarter’s best and worst performers in the cybersecurity industry, including CrowdStrike (NASDAQ: CRWD) 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 Q4. As a group, revenues beat analysts’ consensus estimates by 1.1% 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 8.3% since the latest earnings results.
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 $1.06 billion, up 25.2% year on year. This print exceeded analysts’ expectations by 2.4%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ billings estimates and a solid beat of analysts’ EBITDA estimates.
CrowdStrike scored the biggest analyst estimates beat of the whole group. Unsurprisingly, the stock is up 6.6% since reporting and currently trades at $416.
Best Q4: 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 $647.9 million, up 23.4% year on year, outperforming analysts’ expectations by 2.1%. The business had a very strong quarter with an impressive beat of analysts’ annual recurring revenue and EBITDA estimates.
The market seems happy with the results as the stock is up 7.1% since reporting. It currently trades at $210.54.
Is now the time to buy Zscaler? Access our full analysis of the earnings results here, it’s free.
Weakest Q4: 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 $158.5 million, up 2.9% year on year, falling short of analysts’ expectations by 4.2%. It was a softer quarter as it posted full-year EPS guidance missing analysts’ expectations.
Varonis delivered the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 12% since the results and currently trades at $41.28.
Read our full analysis of Varonis’s results here.
Qualys (NASDAQ: QLYS)
Founded in 1999 as one of the first subscription security companies, Qualys (NASDAQ: QLYS) provides organizations with software to assess their exposure to cyber-attacks.
Qualys reported revenues of $159.2 million, up 10.1% year on year. This result topped analysts’ expectations by 1.9%. Taking a step back, it was a mixed quarter as it also logged an impressive beat of analysts’ EBITDA estimates but full-year EPS guidance missing analysts’ expectations significantly.
The stock is down 11.6% since reporting and currently trades at $124.50.
Read our full, actionable report on Qualys here, it’s free.
Palo Alto Networks (NASDAQ: PANW)
Founded in 2005 by cybersecurity engineer Nir Zuk, Palo Alto Networks (NASDAQ: PANW) makes hardware and software cybersecurity products that protect companies from cyberattacks, breaches, and malware threats.
Palo Alto Networks reported revenues of $2.26 billion, up 14.3% year on year. This number surpassed analysts’ expectations by 0.8%. More broadly, it was a mixed quarter as it also produced a solid beat of analysts’ EBITDA estimates but a miss of analysts’ billings estimates.
The stock is down 12.8% since reporting and currently trades at $176.
Read our full, actionable report on Palo Alto Networks here, it’s free.
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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