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Q2 Earnings Fails to Impress Cybersecurity ETFs

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As digitization has increased the need for cybersecurity, most of the cybersecurity firms came up with stronger-than-expected earnings, outpacing the Zacks Consensus Estimate for either earnings or revenues or both.

Let’s check out the second-quarter results of some of the cyber security firms that have the largest allocation to the ETFs in this niche area of the technology sector:

Cybersecurity Earnings in Focus

Fortinet FTNT posted earnings per share of 95 cents, easily topping the Zacks Consensus Estimate by 16.1% and improving significantly from the year-ago quarter’s 82 cents. Revenues rose 30% year over year to $801.1 million and were above the consensus mark of $742 million.  The company projects revenues in the range of $800-$815 million and earnings per share of 90-95 cents for the third quarter. For the full year, it raised the revenue guidance to $3.21-$3.25 from $3.080-$3.640 billion and the earnings per share guidance to $3.75-$3.90 from $3.65-$3.80.

FireEye FEYE reported earnings per share of 9 cents, in line with the Zacks Consensus Estimate and flat with the year-ago earnings. Revenues increased 8% year over year to $248 million and marginally surpassed the consensus mark of $248.9 million. FireEye expects revenues of $118-$122 million and loss per share of 14-16 cents for the third quarter (read: Technology ETFs to Grab Amid Rising Delta Variant Cases).

Proofpoint’s PFPT earnings of 63 cents per share outpaced the Zacks Consensus Estimate of 48 cents and improved from the year-ago earnings of 51 cents. Revenues increased 19% year over year to $308.7 million and surpassed the Zacks Consensus Estimate of $295.5 million.

Check Point Software Technologies CHKP posted earnings per share of $1.61, outpacing the Zacks Consensus Estimate of $1.56. It generated revenues of $526 million, which also came above the consensus mark of $523.4 million. On a year-over-year basis, earnings grew 2% while revenues were up 4%.

CyberArk Software CYBR lagged estimates on earnings and topped revenues. Earnings of 1 cent per share missed the Zacks Consensus Estimate of 3 cents and came in less than the year-ago earnings of 42 cents. Revenues grew 10% to $117.2 million and edged past the consensus mark of $116 million. The company expects revenues of $116-$124 million and net loss of 2-19 cents for the third quarter. For 2021, CyberArk continues to expect revenues in the range of $484-$496 million and earnings per share of 1-26 cents (see: all the Technology ETFs here).

ETFs in Focus

The string of earnings beat failed to impress cybersecurity ETFs, which are down over the past 10 days. Below we have highlighted the four funds in detail:

ETFMG Prime Cyber Security ETF HACK

The fund provides global exposure to the companies providing cyber security solutions that include hardware, software and services. It tracks the Prime Cyber Defense Index, holding 62 securities in its basket. The ETF is well spread out across components with the in-focus five firms accounting for more than 2% share each. The fund has amassed $2.3 billion in AUM and charges 60 bps in fees per year. Volume is solid as it exchanges nearly 187,000 shares in hand per day.

First Trust NASDAQ Cybersecurity ETF CIBR

This ETF has accumulated $4.4 billion in its asset base and charges 60 bps in annual fees. It trades in a good average daily volume of around 566,000 shares. The fund follows the Nasdaq CTA Cybersecurity Index, which measures the performance of companies engaged in the cybersecurity segment of the technology and industrials sectors. In total, the product holds 39 stocks in its basket with the in-focus firms accounting for around 3% share each (read: Cybersecurity ETF Hits New 52-Week High).

Global X Cybersecurity ETF BUG

This ETF offers exposure to the companies that stand to benefit from the increased adoption of cybersecurity technology and follows the Indxx Cybersecurity Index. It holds 32 stocks in its basket with the in-focus five firms accounting for a combined 24.6% share. The ETF has accumulated $668.2 million in its asset base and trades in an average daily volume of 391,000 shares. It charges 50 bps in annual fees.

iShares Cybersecurity and Tech ETF IHAK

This fund provides access to companies at the forefront of cybersecurity innovation and follows the NYSE FactSet Global Cyber Security Index. Holding 42 stocks in its basket, the in-focus firms collectively account for 17.8% of the assets. IHAK has AUM of $613.1 million and charges 47 bps in fees per year. It trades in volume of 106,000 shares a day on average.
 


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Check Point Software Technologies Ltd. (CHKP) : Free Stock Analysis Report
 
Fortinet, Inc. (FTNT) : Free Stock Analysis Report
 
FireEye, Inc. (FEYE) : Free Stock Analysis Report
 
CyberArk Software Ltd. (CYBR) : Free Stock Analysis Report
 
ETFMG Prime Cyber Security ETF (HACK): ETF Research Reports
 
Proofpoint, Inc. (PFPT) : Free Stock Analysis Report
 
First Trust NASDAQ Cybersecurity ETF (CIBR): ETF Research Reports
 
iShares Cybersecurity and Tech ETF (IHAK): ETF Research Reports
 
GLBLX CYBRSEC (BUG): ETF Research Reports
 
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Zacks Investment Research