As the Q3 earnings season wraps, let’s dig into this quarter’s best and worst performers in the cybersecurity industry, including Rapid7 (NASDAQ: RPD) 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 11.2% since the latest earnings results.

Rapid7 (NASDAQ: RPD)

With its name inspired by the need for quick responses to cyber threats, Rapid7 (NASDAQ: RPD) provides cybersecurity software and services that help organizations detect vulnerabilities, monitor threats, and respond to security incidents.

Rapid7 reported revenues of $218 million, up 1.5% year on year. This print exceeded analysts’ expectations by 0.9%. Despite the top-line beat, it was still a mixed quarter for the company with an impressive beat of analysts’ EBITDA estimates but revenue guidance for next quarter slightly missing analysts’ expectations.

"We ended the third quarter with $838 million in ARR as our AI-driven Command Platform continues to gain market validation," said Corey Thomas, CEO of Rapid7.

Rapid7 delivered the slowest revenue growth of the whole group. The company lost 25 customers and ended up with a total of 11,618. Unsurprisingly, the stock is down 13.5% since reporting and currently trades at $15.40.

Read our full report on Rapid7 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 achieved the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 14.1% since reporting. It currently trades at $138.31.

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 46.8% since the results and currently trades at $33.50.

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

SentinelOne (NYSE: S)

Built on the principle of "fighting machine with machine," SentinelOne (NYSE: S) provides an AI-powered cybersecurity platform that autonomously prevents, detects, and responds to threats across endpoints, cloud workloads, and identity systems.

SentinelOne reported revenues of $258.9 million, up 22.9% year on year. This number topped analysts’ expectations by 1.1%. It was a strong quarter as it also logged a solid beat of analysts’ billings estimates and an impressive beat of analysts’ EBITDA estimates.

SentinelOne delivered the highest full-year guidance raise among its peers. The company added 59 enterprise customers paying more than $100,000 annually to reach a total of 1,572. The stock is down 12.2% since reporting and currently trades at $15.02.

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

Tenable (NASDAQ: TENB)

Starting with the widely-used Nessus vulnerability scanner first released in 1998, Tenable (NASDAQ: TENB) provides exposure management solutions that help organizations identify, assess, and prioritize cybersecurity vulnerabilities across their IT infrastructure and cloud environments.

Tenable reported revenues of $252.4 million, up 11.2% year on year. This result surpassed analysts’ expectations by 2.1%. More broadly, it was a slower quarter as it produced EPS guidance for next quarter missing analysts’ expectations significantly and a significant miss of analysts’ annual recurring revenue estimates.

The stock is down 15.9% since reporting and currently trades at $24.10.

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

Market Update

Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.

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