Cybersecurity companies are poised to deliver another quarter of robust growth, bolstered by high-profile cyber attacks and a shift in client preferences toward larger players offering comprehensive solutions, Reuters news report said.
Palo Alto Networks, the leader in terms of market share and valuation, will kick off the earnings season for the sector on Tuesday, with analysts surveyed by Refinitiv estimating a nearly 24 percent increase in quarterly revenue. This follows growth rates of nearly 26 percent in the previous quarter and 29 percent a year ago, highlighting the enduring demand for cybersecurity services, which are considered essential despite a broader slowdown in tech spending.
The significance of cybersecurity has reached unprecedented levels due to the rapid digital transformation occurring across industries.
“More frequent instances of security threats have also heightened the demand,” noted Akshara Bassi, an analyst at Counterpoint Research.
Cyber security incidents affecting companies like Western Digital and U.S. Transportation Department, compromising the data of the chipmaker’s customers and over 237,000 U.S. government employees, have further fueled the need for robust cybersecurity measures.
Global spending on cybersecurity solutions is projected to increase by 12.1 percent to reach $219 billion in 2023, according to data from market analytics firm International Data Corporation.
Analysts highlighted that enterprise customers are consolidating their cybersecurity software vendors to simplify operations and enhance protection against attacks. By partnering with comprehensive cybersecurity providers, these clients can analyze security data more effectively, integrate various applications, optimize costs, and improve risk management.
Top cybersecurity companies like Palo Alto Networks, CrowdStrike Holdings, and Fortinet, which offer a wide range of services including cloud and identity protection, are expected to benefit from this consolidation trend, according to D.A. Davidson analyst Rudy Kessinger.
CrowdStrike and ZScaler are anticipated to report revenue growth of 39 percent and 45 percent, respectively, when they release their earnings on May 31 and June 1.
Check Point Software Technologies and Fortinet have already reported positive results earlier this month, with strong demand for firewall and cloud security products.
