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 satisfactory Q1. As a group, revenues beat analysts’ consensus estimates by 1.2% while next quarter’s revenue guidance was in line.
In light of this news, share prices of the companies have held steady as they are up 1.4% on average since the latest 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 $678 million, up 22.6% year on year. This print exceeded analysts’ expectations by 1.6%. Overall, it was a very strong quarter for the company with full-year EPS guidance exceeding analysts’ expectations and an impressive beat of analysts’ annual recurring revenue estimates.
“We delivered outstanding Q3 results as an increasing number of customers adopt our expanding Zero Trust Exchange platform. We enable customers to realize Zero Trust Everywhere while lowering operational cost and complexity,” said Jay Chaudhry, Chairman and CEO of Zscaler.
Zscaler pulled off the highest full-year guidance raise of the whole group. Unsurprisingly, the stock is up 24.7% since reporting and currently trades at $312.99.
We think Zscaler is a good business, but is it a buy today? Read our full report here, it’s free.
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 $159.9 million, up 9.7% year on year, outperforming analysts’ expectations by 1.8%. The business had a strong quarter with a solid beat of analysts’ EBITDA estimates and full-year EPS guidance exceeding analysts’ expectations.
The market seems happy with the results as the stock is up 11.5% since reporting. It currently trades at $141.19.
Is now the time to buy Qualys? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: 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 $229 million, up 22.9% year on year, in line with analysts’ expectations. It was a mixed quarter as it posted a solid beat of analysts’ EBITDA estimates but a miss of analysts’ billings estimates.
As expected, the stock is down 9.7% since the results and currently trades at $17.76.
Read our full analysis of SentinelOne’s results here.
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 $2.29 billion, up 15.3% year on year. This result beat analysts’ expectations by 0.5%. Zooming out, it was a satisfactory quarter as it also logged an impressive beat of analysts’ EBITDA estimates but revenue guidance for next quarter meeting analysts’ expectations.
The stock is up 4.8% since reporting and currently trades at $204.01.
Read our full, actionable report on Palo Alto Networks here, it’s free.
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 $1.10 billion, up 19.8% year on year. This number met analysts’ expectations. Aside from that, it was a satisfactory quarter as it also recorded a solid beat of analysts’ EBITDA estimates.
CrowdStrike had the weakest performance against analyst estimates among its peers. The stock is flat since reporting and currently trades at $493.47.
Read our full, actionable report on CrowdStrike here, it’s free.
Market Update
Thanks to the Fed’s series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.
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