Industry Overview - The Zacks Security industry is experiencing robust demand for cybersecurity products due to the increasing need for secure networks and cloud-based applications, particularly in hybrid work environments [1] - The surge in demand is driven by a significant increase in data breaches, leading companies to seek comprehensive IT security solutions [1] - The industry encompasses companies providing both on-premise and cloud-based security solutions, including identity access management, infrastructure protection, and malware analysis [3] Major Trends - Rising cyber threats are escalating the need for robust security solutions, impacting not only individual companies but also national security [4] - The shift toward digital transformation and cloud migration is driving demand for cybersecurity solutions across various sectors, including education, healthcare, and entertainment [5] - Uncertain macroeconomic conditions and geopolitical issues may lead enterprises to delay significant IT investments, potentially affecting the security market in the short term [6] Company Performance - Companies like Palo Alto Networks, CrowdStrike, Fortinet, and Qualys are benefiting from the trends in the cybersecurity market [2] - The Zacks Security industry has outperformed the S&P 500 composite, with a 19.2% increase over the past year, while the broader Zacks Computer and Technology sector returned 22.2% [13] - The industry's current valuation, based on the forward 12-month price-to-sales ratio, is 12.22, higher than the S&P 500's 5.26 and the sector's 6.62 [16] Earnings Outlook - The Zacks Industry Rank for the Security industry is 81, placing it among the top 33% of nearly 250 Zacks industries, indicating solid near-term prospects [8][9] - Analysts are optimistic about the earnings growth potential for the industry, with the bottom-line estimate for 2025 revised up to $1.45 from $1.41 expected a year ago [10] Company Highlights - **CrowdStrike Holdings**: A leader in endpoint protection, benefiting from rising demand for cybersecurity solutions, with a fiscal 2026 earnings estimate revised upward to $3.54 per share [20][22] - **Qualys**: A leading provider of information security solutions, benefiting from increasing demand for cloud-based cybersecurity solutions, with a fiscal 2025 earnings estimate revised upward to $6.35 per share [26][29] - **Palo Alto Networks**: Offers network security solutions and is focusing on AI and cloud security, with a fiscal 2026 earnings estimate revised upward to $3.77 per share [32][35] - **Fortinet**: Provides network security appliances and is benefiting from strong demand from large enterprise customers, with a fiscal 2025 earnings estimate revised upward to $2.51 per share [36][39]

Core Insights - Palo Alto Networks (PANW) demonstrated strong growth in its Next-Generation Security (NGS) business, with annual recurring revenue (ARR) increasing by 32% year over year to $5.58 billion, adding approximately $490 million in new NGS ARR during the fourth quarter of fiscal 2025 [1][9]. Growth Drivers - The growth in NGS ARR was driven by three main areas: 1. The Security Access Service Edge (SASE) business saw a 35% year-over-year growth, highlighted by a $60 million contract with a global professional services firm covering 200,000 users. Additionally, the Prisma Access Browser gained over three million new licenses in the fourth quarter, doubling its sequential growth and surpassing six million total licenses [2][9]. 2. Software firewalls experienced nearly 20% year-over-year growth, with Palo Alto Networks capturing about 50% of the market share, making its products available across all major public clouds [3]. 3. The AI-based Security Operations Centre platform, XSIAM, continued to gain traction with around 400 customers, most generating over $1 million in ARR, and approximately 25% of these customers being Global 2000 companies [3]. AI Security Impact - AI security is becoming increasingly important for revenue growth, with AI-related ARR reaching $545 million, more than 2.5 times higher than the previous year. This growth was supported by new product launches, including Prisma AIRS and the acquisition of Protect AI, aimed at securing AI applications, models, and data [4]. Competitive Landscape - Competitors such as CrowdStrike and Zscaler are also expanding their platforms and innovating with AI. CrowdStrike reported $4.66 billion in ARR, reflecting a 20% year-over-year growth, while Zscaler achieved $2.9 billion in ARR, with a 23% year-over-year growth [5][6]. Valuation and Earnings Estimates - Palo Alto Networks trades at a forward price-to-sales ratio of 12.05X, slightly below the industry average of 12.23X [11]. The Zacks Consensus Estimate for fiscal 2026 and 2027 earnings indicates year-over-year growth of 12.9% and 13.6%, respectively, with upward revisions in estimates over the past 30 days [14].

Geopolitical Risk - Wagner's actions have caused discontent within the Malian army [1] Security & Defense Industry - Russian mercenaries, specifically Wagner, are not valued for adhering to international agreements like the Geneva Convention [1]

Core Insights - Check Point Software reported strong Q2 2025 earnings, with non-GAAP EPS of $2.37, exceeding estimates by 0.42% and reflecting a 9.2% increase year-over-year [2][3] - The company's revenues for Q2 2025 reached $665.2 million, surpassing the consensus mark by 0.66% and showing a 6% year-over-year growth [3][4] - Check Point raised its Q3 guidance, projecting revenues between $657 million and $687 million, and reaffirmed its 2025 guidance of $2.66-$2.76 billion [9] Financial Performance - Security subscription revenues were $297.9 million, up 9.6% year-over-year, but slightly below consensus estimates [4] - Product and licenses revenues increased by 11.7% year-over-year to $131.9 million, exceeding consensus by 6.93% [4] - Non-GAAP gross profit rose 5% year-over-year to $585 million, with a gross margin of 87.9%, down 80 basis points from the previous year [6] Operational Metrics - Non-GAAP operating income for Q2 2025 was $271.1 million, a 2.3% increase year-over-year, with an operating margin of 40.8%, down 150 basis points [7] - Deferred revenues as of June 30, 2025, totaled $1.893 billion, reflecting a 4% year-over-year increase [5] - The company generated $262.1 million in cash from operations during Q2, a decrease from $421.1 million in the previous quarter [8] Market Position and Outlook - Check Point has a Zacks Rank 3 (Hold), indicating an expectation of in-line returns in the coming months [13] - The stock has a subpar Growth Score of D and a similar score for momentum, with an overall VGM Score of F [12] - Comparatively, Varonis Systems, a peer in the security industry, reported a 16.7% year-over-year revenue increase, highlighting competitive dynamics within the sector [14]

Core Insights - Palo Alto Networks' Extended Security Intelligence and Automation Management (XSIAM) is experiencing significant growth and is expected to be a key driver of future growth for the company [1][5] - The company reported a strong customer base for XSIAM, with approximately 400 customers and an average annual recurring revenue (ARR) exceeding $1 million per customer [2][10] - New modules, such as Exposure Management, have been added to XSIAM, enhancing its capabilities and supporting the company's strategy of offering multiple security tools on a single platform [3] Customer Adoption and Performance - About 25% of XSIAM customers are Global 2000 companies, indicating robust adoption among large enterprises [2][10] - A notable deal was closed with a leading European bank for over $60 million, which included the adoption of XSIAM, reflecting demand for integrated security solutions [4][10] - More than 60% of XSIAM customers reported a mean time to respond of under 10 minutes, showcasing the platform's effectiveness [5] Financial Outlook - The company has a net retention rate of approximately 120% for platform customers, with minimal churn, providing a solid foundation for upselling [3] - The Zacks Consensus Estimate predicts revenue growth of around 13% for fiscal years 2026 and 2027 [5] - Palo Alto Networks trades at a forward price-to-sales ratio of 11.7X, slightly below the industry average of 12.11X [11] Competitive Landscape - Competitors like CrowdStrike and SentinelOne are also expanding their platforms and innovating with AI, with CrowdStrike reporting over 100% year-over-year growth in its Next-Gen SIEM ARR [6][7]

Core Insights - CrowdStrike Holdings, Inc. (CRWD) is set to announce its fiscal 2026 second-quarter earnings on August 27, with strong demand for security solutions noted on Wall Street [1] - The company has faced downward pressure on its stock due to disappointing revenue guidance for the second quarter, making the upcoming earnings report critical for its stock performance [2] Revenue Performance - For the fiscal first quarter, CrowdStrike reported a revenue of $1.10 billion, reflecting a year-over-year growth of 20%, which is lower than the 29% growth for the full fiscal year 2025 [3] - The anticipated revenue for the second quarter is projected to be between $1.14 billion and $1.15 billion, indicating a 19% year-over-year growth, which is a slowdown compared to the first quarter [4] Cash Flow and Valuation - Free cash flow decreased to $279.4 million in the fiscal first quarter from $322.5 million in the same period last year, attributed to $61 million in expenses from a platform outage [5] - CrowdStrike's forward price-to-sales (P/S) ratio is 21.9, significantly higher than the Security industry average of 13.7, suggesting caution for new investors [6] Competitive Landscape - The company faces pricing pressure from competitors like Microsoft Corporation (MSFT), which offers endpoint security as part of its Microsoft 365 E5 package, complicating CrowdStrike's market position [7] Long-term Outlook - CrowdStrike's annual recurring revenue (ARR) reached a record $4.4 billion in the fiscal first quarter, marking a 22% increase year-over-year, with management targeting $10 billion by fiscal 2031, representing a 127% increase from current levels [9][11] - The projected addressable market for CrowdStrike is $116 billion, indicating significant growth potential in the coming years [12]

Financial Data and Key Metrics Changes - The company reported net sales for Q4 increased by 0.8% to $50.7 million compared to $50.3 million for the same period last year [17] - For the fiscal year, net sales decreased by 3.8% to $181.6 million from $188.8 million [17] - Recurring monthly service revenue increased by 10% in Q4 to $22.4 million compared to $20.4 million last year [17] - Recurring revenue run rate reached $94 million, up $5 million from the prior quarter, marking the largest quarterly increase in two years [12] - Net income for Q4 decreased by 14% to $11.6 million, or $0.33 per diluted share, compared to $13.5 million, or $0.36 per diluted share, last year [23] Business Line Data and Key Metrics Changes - Equipment sales for Q4 decreased by 5.5% to $28.3 million compared to $29.9 million last year, while for the fiscal year, equipment sales decreased by 15.7% to $95.3 million [18] - Gross profit for recurring service revenue increased by 10.3% to $20.3 million with a gross margin of 91% [18] - Gross profit for equipment revenue in Q4 decreased by 31.2% to $6.4 million with a gross margin of 23% [18] Market Data and Key Metrics Changes - The company experienced a strong rebound in hardware sales in Q4, increasing 27% sequentially from Q3 [28] - The recurring revenue now represents nearly half of total sales, reflecting a strong demand for StarLink radios [27] Company Strategy and Development Direction - The company is focused on maintaining operational discipline and investing for sustainable growth despite macroeconomic uncertainties [7] - Pricing adjustments have been implemented to protect margins, with an 8.5% increase to offset rising tariff costs and a standard annual increase of 5% [15] - The company is committed to expanding its recurring revenue opportunities through new product developments, including the MVP platform for cloud-based access control systems [32] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding future growth, emphasizing the importance of adapting to tariff policies and market conditions [29] - The company aims to leverage its strong balance sheet for potential strategic acquisitions while continuing to return capital to shareholders [30] Other Important Information - The company ended the fiscal year with approximately $100 million in cash and no debt, providing significant flexibility for future investments [14] - The company returned $13.6 million in dividends and repurchased $36.8 million of its stock during the fiscal year [14] Q&A Session Summary Question: Concerns about channel inventories due to distributor destocking - Management indicated that inventory bought pre-tariff increase was expected to lead to more purchases, with strong sell-through stats observed [36][37] Question: Potential for further increases in recurring service revenue - Management expects continued growth in recurring revenue, driven by strong radio sales, although the timing of revenue recognition may vary [41][43] Question: Impact of price increases on equipment sales growth - Management believes that the pricing increases will support double-digit growth in equipment sales, especially given easier comparisons from the previous year [45] Question: Churn rates and pricing impact on recurring revenues - Management reported negligible churn in commercial accounts and noted that pricing increases have not faced pushback from customers [67][70] Question: Future dividend and buyback plans - Management indicated that there is room for future dividend increases and is always looking for opportunities to repurchase shares [72]

Core Insights - Cemtrex Inc. has signed non-binding letters of intent to acquire two profitable U.S.-based businesses in industrial robotics integration and aerospace and defense systems engineering, which are expected to contribute $15–18 million in annual revenue and $2.5–3 million in operating income once integrated [1][2][3] Group 1: Acquisition Details - The acquisitions align with Cemtrex's long-term strategy to expand into high-value markets with strong macro tailwinds, enhancing its scale, margin, and strategic capabilities [2][4] - The robotics integrator specializes in automation systems for agriculture and construction, while the aerospace and defense firm provides high-reliability communications and electronics systems, adding a new strategic vertical relevant to national security and space infrastructure [2][3] Group 2: Financial Projections - Combined with organic growth initiatives, these acquisitions are projected to help Cemtrex reach $100 million in total revenue and significantly expand operating profit [3][4] - The company aims to build a platform with durable earnings power and attractive operating margins, targeting over $150 million in revenue [4] Group 3: Company Overview - Cemtrex operates in the Security and Industrial sectors, with its Security segment providing advanced video management software and integrated surveillance solutions, while the Industrial segment offers expert services to manufacturers [5]

Core Insights - Okta (OKTA) is expected to report second-quarter fiscal 2026 results on August 26, with anticipated non-GAAP earnings between 83-84 cents per share and revenues projected at $710-$712 million, reflecting a year-over-year growth of 10% [1][9] Financial Performance - The Zacks Consensus Estimate for earnings has remained steady at 84 cents per share, indicating a year-over-year growth of 16.7%, while the revenue consensus is pegged at $711 million, showing an increase of 10.1% from the previous year [2] - Okta has consistently beaten the Zacks Consensus Estimate in the last four quarters, with an average earnings surprise of 13.53% [2] Business Growth Factors - Okta's expanding product portfolio, particularly in security and identity governance, is expected to drive client acquisition and revenue growth, with approximately 20,000 customers reported at the end of the first quarter of fiscal 2026 [3] - The number of customers with over $100,000 in Annual Contract Value increased by 70 sequentially to 4,870, indicating strong subscription revenue growth [3] - New product momentum, including offerings like Identity Governance and Identity Threat Protection with Okta AI, is anticipated to contribute positively to the upcoming quarter's performance [4] Strategic Partnerships - Okta benefits from a robust partner ecosystem, including major companies like Amazon Web Services, Microsoft, and Salesforce, with over 7,000 integrations with various applications and IT infrastructure providers [5][17] Market Position and Competition - Despite strong growth, Okta faces challenges from sluggish federal business and competition from Microsoft and other enterprise security providers like SentinelOne and Cisco [6] - Year-to-date, Okta shares have increased by 13.9%, outperforming the Zacks Computer & Technology sector and the Zacks Security industry [7] Valuation Insights - Okta's stock is currently considered overvalued, with a Value Score of D, and a forward 12-month Price/Sales ratio of 5.22X, higher than competitors like SentinelOne and Cisco [11] - For fiscal 2026, Okta expects revenues between $2.85 billion and $2.86 billion, indicating a growth of 9-10% from fiscal 2025 [16] Financial Health - Okta ended the first quarter of fiscal 2026 with $2.73 billion in cash and investments, with net cash provided by operations at $241 million and free cash flow at $238 million, raising free cash flow margin guidance to approximately 27% for fiscal 2026 [18]

Netskope Inc., a cloud security provider, filed for a US initial public offering, disclosing growing revenue and shrinking losses https://t.co/QuL2dsS2bO ...