Spotting Winners: Qualys (NASDAQ:QLYS) And Cybersecurity Stocks In Q2

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 Qualys (NASDAQ:QLYS) and the rest of the cybersecurity stocks fared in Q2.

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.

The Fed cut its policy rate by 50bps (half a percent) in September 2024, the first in roughly four years. This marks the end of its most pointed inflation-busting campaign since the 1980s. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be assessing 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 2% since the latest earnings results.

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 $148.7 million, up 8.4% year on year. This print was in line with analysts’ expectations, but overall, it was a softer quarter for the company with underwhelming revenue guidance for the next quarter and a miss of analysts’ billings estimates.

"We delivered a strong quarter of rapid innovation on the Qualys Enterprise TruRisk Platform, reflecting our ongoing commitment to extend our technology leadership and customer success," said Sumedh Thakar, president and CEO of Qualys.

Qualys delivered the weakest performance against analyst estimates and slowest revenue growth of the whole group. Unsurprisingly, the stock is down 9.2% since reporting and currently trades at $124.51.

Read our full report on Qualys 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 pulled off the highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 18% since reporting. It currently trades at $57.15.

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 12% since the results and currently trades at $40.49.

Read our full analysis of Tenable’s results here.

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. This number met analysts’ expectations. More broadly, it was a softer quarter as it produced underwhelming revenue guidance for the next quarter and a miss of analysts’ billings estimates.

CrowdStrike had the weakest full-year guidance update among its peers. The stock is up 9.8% since reporting and currently trades at $289.94.

Read our full, actionable report on CrowdStrike 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 number surpassed analysts’ expectations by 4.4%. More broadly, it was a softer quarter as it also logged an impressive beat of analysts’ ARR (annual recurring revenue) estimates.

Zscaler pulled off the biggest analyst estimates beat among its peers. The stock is down 10.3% since reporting and currently trades at $173.36.

Read our full, actionable report on Zscaler here, it’s free.

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