It was a tale of two cybersecurity companies today, as Zscaler Inc. reported beats in its latest quarter and outlook but SentinelOne Inc. missed on revenue and outlook, sending its share price plunging by over 35% in late trading.

Zscaler reported net income before certain costs such as stock compensation of 48 cents per share for the quarter that ended April 30, up from 17 cents in the same quarter of last year. Revenue jumped 46%, to $418.8 million. Analysts had expected earnings per share of 42 cents on revenue of $411.72 million.

Cash flow from operations in the quarter came in at $108.5 million, up from $77.2 million, while deferred revenue was $1.175.4 million as of April 30, up 44% year-over-year. Zscaler also has a healthy pot of cash, cash equivalents and short-term investments at hand, totaling $1.97 billion as of the end of the quarter, up from $237.1 million as of July 31 last year.

For its fiscal fourth quarter of 2023, Zscaler expects adjusted earnings of 49 cents a share on revenue of $429 million to $431 million. Analysts had expected 47 cents and $426.9 million. For its full fiscal year, the company predicts adjusted earnings of $1.63 to $1.64 a share on revenue of $1.591 billion to $1.593 billion. The figures were another beat, as analysts had expected $1.56 and $1.58 billion.

Although the results were positive, Zscaler shares declined just over 2% in late trading. The drop is the result of the figures not coming in strong enough, with Jordan Berger, an analyst at global research firm Third Bridge Group Ltd. “Despite a perceived revenue beat and a positive revision to full-year fiscal 2023 guidance, 46% year-over-year growth demonstrates a modest revenue deceleration amid persistent exposure to macroeconomic headwinds and competitive pressure,” he said.

SentinelOne fared even worse with investors. It reported an adjusted loss of 15 cents per share, lower than a loss of 21 cents per share a year prior, on a 70% leap in revenue, to $133.4 million. Despite the rapid sales growth, it was a small beat and a miss, as analysts had expected an adjusted loss of 17 cents a share on revenue of $136.62 million.

The company said its annualized recurring revenue grew 75% year-over-year, to $563.6 million as of April 30, driven by customer growth of 43%, to 10,680 customers. SentinelOne had 917 customers with an ARR of more than $100,000, up 61%, while its dollar-based net-revenue retention rate remained above 125%, generally considered a good figure.

“Even in a tough quarter, we achieved our seventh consecutive quarter of over 25 percentage points year-over-year improvement in operating margins,” Dave Bernhardt, chief financial officer of SentinelOne, said in the company’s earnings release. “We’re committed to selectively investing in key growth areas, managing our cost structure, and achieving our profitability targets.”

The tough quarter was just the beginning, with SentinelOne saying that it expects revenue of $141 million in its fiscal second quarter and $590 million to $600 million for its full fiscal year. Both missed, as analysts had expected $151.9 million and $638.5 million.

“SentinelOne reported a disappointing Q1 2024 revenue miss on the prior quarter’s guidance, an increased cost of sale and a deceleration in customer count growth, all of which point to increasing exposure to macroeconomic headwinds as well as mounting competitive pressure from peers such as CrowdStrike,” Berger said.

Image: Zscaler