Unpacking Q2 Earnings: Tenable (NASDAQ:TENB) In The Context Of Other Cybersecurity Stocks

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 Tenable (NASDAQ:TENB).

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.

Inflation progressed towards the Fed's 2% goal recently, leading the Fed to reduce its policy rate by 50bps (half a percent or 0.5%) in September 2024. This is the first cut in four years. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be debating whether this rate cut's timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.

While some cybersecurity stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 3.2% since the latest earnings results.

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. This print exceeded analysts’ expectations by 1.2%. Despite the top-line beat, it was still a disappointing quarter for the company with underwhelming revenue guidance for the next quarter and a miss of analysts’ ARR (annual recurring revenue) estimates.

"We delivered better-than-expected revenue, operating income and unlevered cash flow in Q2," said Amit Yoran, Chairman and CEO of Tenable.

Unsurprisingly, the stock is down 13.9% since reporting and currently trades at $39.61.

Is now the time to buy Tenable? 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 14.8% since reporting. It currently trades at $55.59.

Is now the time to buy Varonis? Access our full analysis of the earnings results 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 $963.9 million, up 31.7% year on year, in line with analysts’ expectations. It was a softer quarter as it posted underwhelming revenue guidance for the next quarter and a miss of analysts’ billings estimates.

CrowdStrike delivered the weakest full-year guidance update in the group. Interestingly, the stock is up 8% since the results and currently trades at $285.22.

Read our full analysis of CrowdStrike’s results here.

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 $208 million, up 9.2% year on year. This result topped analysts’ expectations by 1.9%. Taking a step back, it was a mixed quarter as it also produced accelerating customer growth but a miss of analysts’ billings estimates.

The company added 22 customers to reach a total of 11,484. The stock is up 15.3% since reporting and currently trades at $38.12.

Read our full, actionable report on Rapid7 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 $2.19 billion, up 12.1% year on year. This print topped analysts’ expectations by 1.2%. It was a satisfactory quarter as it also put up a decent beat of analysts’ billings estimates.

The stock is down 2.3% since reporting and currently trades at $335.16.

Read our full, actionable report on Palo Alto Networks here, it’s free.

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