Spotting Winners: Okta (NASDAQ:OKTA) And Cybersecurity Stocks In Q3

Wrapping up Q3 earnings, we look at the numbers and key takeaways for the cybersecurity stocks, including Okta (NASDAQ:OKTA) 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 satisfactory Q3. As a group, revenues beat analysts’ consensus estimates by 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 7.7% since the latest earnings results.

Okta (NASDAQ:OKTA)

Named after the meteorological measurement for cloud cover, Okta (NASDAQ:OKTA) provides cloud-based identity management solutions that help organizations securely connect their employees, partners, and customers to the right applications and services.

Okta reported revenues of $742 million, up 11.6% year on year. This print exceeded analysts’ expectations by 1.7%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ EBITDA estimates and full-year EPS guidance beating analysts’ expectations.

Interestingly, the stock is up 6.5% since reporting and currently trades at $87.66.

Is now the time to buy Okta? Access our full analysis of the earnings results here, it’s free for active Edge members.

Best Q3: Qualys (NASDAQ:QLYS)

Originally developed to address the growing complexity of IT security in the cloud era, Qualys (NASDAQ:QLYS) provides a cloud-based platform that helps organizations identify, manage, and protect their IT assets from cyber threats across on-premises, cloud, and mobile environments.

Qualys reported revenues of $169.9 million, up 10.4% year on year, outperforming analysts’ expectations by 2.2%. The business had an exceptional quarter with EPS guidance for next quarter exceeding analysts’ expectations and a solid beat of analysts’ EBITDA estimates.

Qualys scored the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 23.6% since reporting. It currently trades at $149.80.

Is now the time to buy Qualys? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: Varonis Systems (NASDAQ:VRNS)

Beginning with protecting Windows file shares in 2005 and evolving into a comprehensive security platform, Varonis Systems (NASDAQ:VRNS) provides data security software that helps organizations protect sensitive information, detect threats, and comply with privacy regulations.

Varonis Systems reported revenues of $161.6 million, up 9.1% year on year, falling short of analysts’ expectations by 2.7%. It was a softer quarter as it posted full-year revenue guidance slightly missing analysts’ expectations and revenue guidance for next quarter slightly missing analysts’ expectations.

Varonis Systems delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 49.8% since the results and currently trades at $31.60.

Read our full analysis of Varonis Systems’s results here.

CrowdStrike (NASDAQ:CRWD)

Known for detecting the massive SolarWinds hack in 2020 that compromised numerous government agencies, CrowdStrike (NASDAQ:CRWD) provides cloud-based cybersecurity solutions that protect endpoints, cloud workloads, identity, and data through its Falcon platform.

CrowdStrike reported revenues of $1.23 billion, up 22.2% year on year. This result topped analysts’ expectations by 1.6%. It was a strong quarter as it also logged a solid beat of analysts’ billings estimates and an impressive beat of analysts’ EBITDA estimates.

The stock is flat since reporting and currently trades at $515.53.

Read our full, actionable report on CrowdStrike here, it’s free for active Edge members.

Zscaler (NASDAQ:ZS)

Pioneering the "zero trust" approach that has fundamentally changed enterprise network security, Zscaler (NASDAQ:ZS) provides a cloud-based security platform that connects users, devices, and applications securely without traditional network-based security hardware.

Zscaler reported revenues of $788.1 million, up 25.5% year on year. This print beat analysts’ expectations by 1.9%. Overall, it was a strong quarter as it also recorded an impressive beat of analysts’ billings estimates and full-year EPS guidance exceeding analysts’ expectations.

Zscaler pulled off the fastest revenue growth but had the weakest full-year guidance update among its peers. The stock is down 15.6% since reporting and currently trades at $245.25.

Read our full, actionable report on Zscaler here, it’s free for active Edge members.

Market Update

The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.

Want to invest in winners with rock-solid fundamentals? Check out our Strong Momentum Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.