Let’s dig into the relative performance of Palo Alto Networks (NASDAQ: PANW) and its peers as we unravel the now-completed Q2 cybersecurity earnings season.

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 strong Q2. As a group, revenues beat analysts’ consensus estimates by 1.6% while next quarter’s revenue guidance was in line.

In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.

Palo Alto Networks (NASDAQ: PANW)

Founded in 2005 by security visionary Nir Zuk who sought to reimagine firewall technology, Palo Alto Networks (NASDAQ: PANW) provides AI-powered cybersecurity platforms that protect organizations' networks, clouds, and endpoints from sophisticated threats.

Palo Alto Networks reported revenues of $2.54 billion, up 15.8% year on year. This print exceeded analysts’ expectations by 1.4%. Overall, it was a strong quarter for the company with full-year EPS guidance exceeding analysts’ expectations.

"Our strong execution in Q4 reflects a fundamental market shift in which customers understand that a fragmented defense is no defense at all against modern threats. They are partnering with us because our platforms are designed to work in concert, creating powerful operational synergies that deliver superior, near real-time outcomes and the efficiency our customers need," said Nikesh Arora, chairman and CEO of Palo Alto Networks.

Interestingly, the stock is up 8.3% since reporting and currently trades at $191.06.

Is now the time to buy Palo Alto Networks? Access our full analysis of the earnings results here, it’s free.

Best Q2: 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 $152.2 million, up 16.7% year on year, outperforming analysts’ expectations by 2.8%. The business had a very strong quarter with EPS guidance for next quarter exceeding analysts’ expectations and a solid beat of analysts’ EBITDA estimates.

Varonis Systems scored the biggest analyst estimates beat among its peers. However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $54.53.

Is now the time to buy Varonis Systems? Access our full analysis of the earnings results here, it’s free.

Weakest Q2: 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 $247.3 million, up 11.8% year on year, exceeding analysts’ expectations by 2.2%. Still, it was a slower quarter as it posted EPS guidance for next quarter missing analysts’ expectations significantly and a significant miss of analysts’ annual recurring revenue estimates.

As expected, the stock is down 3.9% since the results and currently trades at $30.99.

Read our full analysis of Tenable’s results here.

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 $719.2 million, up 21.3% year on year. This print surpassed analysts’ expectations by 1.6%. Overall, it was a strong quarter as it also recorded an impressive beat of analysts’ billings estimates and full-year guidance of robust revenue growth.

Zscaler scored the highest full-year guidance raise among its peers. The stock is down 1.7% since reporting and currently trades at $270.

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

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 $164.1 million, up 10.3% year on year. This result beat analysts’ expectations by 1.7%. It was a strong quarter as it also put up a solid beat of analysts’ EBITDA estimates and full-year EPS guidance beating analysts’ expectations.

The stock is up 4.4% since reporting and currently trades at $136.60.

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

Market Update

In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.

Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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