The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Zscaler (NASDAQ:ZS) and the rest of the cybersecurity stocks fared in Q1.
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 Q1; on average, revenues beat analyst consensus estimates by 1.4%. while next quarter's revenue guidance was 0.5% below consensus. Stocks, especially growth stocks where cash flows further in the future are more important to the story, had a good end of 2023. But the beginning of 2024 has seen more volatile stock performance due to mixed inflation data, but cybersecurity stocks have shown resilience, with share prices up 5.4% on average since the previous earnings results.
Best Q1: 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 $553.2 million, up 32.1% year on year, topping analysts' expectations by 3.2%. It was a very strong quarter for the company, with an impressive beat of analysts' billings estimates and a solid beat of analysts' ARR (annual recurring revenue) estimates.
"We delivered an outstanding quarter driven by growing customer interest in our Zero Trust Exchange platform," said Jay Chaudhry, Chairman and CEO of Zscaler.
Zscaler pulled off the biggest analyst estimates beat of the whole group. The stock is up 30.1% since the results and currently trades at $202.25.
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Okta (NASDAQ:OKTA) Founded during the aftermath of the financial crisis in 2009, Okta (NASDAQ:OKTA) is a cloud-based software-as-a-service platform that helps companies manage identity for their employees and customers.
Okta reported revenues of $617 million, up 19.1% year on year, outperforming analysts' expectations by 2.1%. It was a solid quarter for the company, with optimistic revenue guidance for the next quarter and a decent beat of analysts' ARR (annual recurring revenue) estimates.
Okta achieved the highest full-year guidance raise among its peers. The stock is up 1.7% since the results and currently trades at $98.06.
Weakest Q1: 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 $205.1 million, up 12% year on year, in line with analysts' expectations. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter and decelerating customer growth.
Rapid7 had the weakest full-year guidance update in the group. The company lost 64 customers and ended up with a total of 11,462. The stock is down 6.3% since the results and currently trades at $42.94.
SentinelOne (NYNYSE:SE: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 $186.4 million, up 39.7% year on year, surpassing analysts' expectations by 2.9%. It was a weak quarter for the company, with a miss of analysts' billings estimates and underwhelming revenue guidance for the next quarter.
SentinelOne scored the fastest revenue growth among its peers. The company added 60 enterprise customers paying more than $100,000 annually to reach a total of 1,193. The stock is up 5.5% since the results and currently trades at $20.49.
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 $114 million, up 6.2% year on year, in line with analysts' expectations. It was a mixed quarter for the company, with a decline in its gross margin and full-year revenue guidance missing analysts' expectations.
Varonis had the slowest revenue growth among its peers. The stock is up 4.1% since the results and currently trades at $46.5.
This content was originally published on Stock Story
