During the second quarter results season, the economy was a key subject in the technology sector, with corporations warning about slower spending on advertisements, gadgets, e-commerce, and software.
But despite rising interest rates and inflation that has remained close to a 40-year high, demand for cybersecurity services continues to soar.
Wall Street was pleasantly delighted by the earnings results from SentinelOne and CrowdStrike this week. Both businesses, which focus on safeguarding the numerous gadgets connected to corporate networks, also increased their annual projections.
On his company’s earnings call, CrowdStrike CEO George Kurtz stated that “cybersecurity is not a discretionary line item.”
On the conference call with investors, Nikesh Arora, CEO of Palo Alto Networks, stated that “in transformational initiatives, the vast majority of our customers continue on their investments here, despite the predicted short-term macro repercussions.” The ambition of our customers to use the cloud, develop more direct relationships with their clients, update their IT infrastructure, and increase efficiency while adjusting to a new way of working are all linked to security spending. These initiatives continue.
This year, investors have lost money on their security bet, but they have lost less than they would have if they had ventured on the larger IT industry.
Exchange-traded funds (ETFs) with a focus on cybersecurity are down 22% and 19%, respectively, in 2022 from First Trust Nasdaq and Global X (ticker symbol BUG). For the year, the Nasdaq has decreased by 25%.
Software security suppliers are demonstrating the advantage they have in these trying times.
Given the numerous hazards clients face and the risks to their company if they are the target of a significant ransomware assault, clients are unable to lower their spending.
They are now searching elsewhere.
Salesforce, a provider of cloud software, cut its fiscal-year guidance last week and said that customers were now making more thoughtful purchases.
Over the subsequent three trading days, the stock fell 11%.
Zoom’s stock also dropped after the maker of software for video calls lowered its full-year forecasts.