Last week marked the end of earnings season for cybersecurity stocks for the second quarter of 2022, and 22 out of 26 companies in the Progress Cybersecurity Index beat analyst revenue and earnings estimates (see chart below). Despite all the positive earnings announcements, cybersecurity stocks continue to get pummeled in public markets, alongside broader tech and cloud businesses. As of market close on September 13, 2022, the Progress Cybersecurity Index is down (23.1%) year-to-date, outperforming the NASDAQ which is down (26.4%) and BVP Nasdaq Emerging Cloud Index which is down (41.6%) so far this year.
Several common themes emerged during earnings calls this quarter: attack surfaces are expanding, cyber attacks are on the rise, and the market opportunity remains enormous in cybersecurity. Executives also conveyed a shared sense of uncertainty in near term economic conditions and how an impending recession may impact their businesses and sales cycles. Another major theme was customers’ preference to purchase integrated platforms rather than point solutions and hinted that we may witness more cybersecurity vendor consolidation in the short run.