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Cyber Security ETFs Scale New Highs on Robust Q4 Earnings
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Amid market volatility, the cyber security industry is riding high on better-than-expected earnings, which pushed many stocks to multi-year highs. This is especially true as most of the cyber security firms beat the Zacks Consensus Estimate on both earnings and revenues and offered robust guidance.
Let’s dig into the earnings results of some of the cyber security firms that have the largest allocation to the ETFs in this niche area of the technology sector (see: all the Technology ETFs here):
Cyber Security Earnings in Focus
Akamai Technologies (AKAM - Free Report) reported Q4 earnings per share of 69 cents and revenues of $663 million, outpacing the Zacks Consensus Estimate of 63 cents and $647 million, respectively. On year-over-year basis, earnings were down 4.2% while revenues were up 8%. For the first quarter of 2018 and full year, the company expects earnings per share in the range of 67-70 cents and $2.90-$3.00, respectively. Revenues are expected in the range of $647-$659 million for the first quarter and $2.67-$2.71 billion for the full year.
Proofpoint earnings per share came in at 29 cents, well ahead of the Zacks Consensus Estimate of 21 cents and up 61% from the year-ago quarter. Revenues of $145.4 million increased 36.1% year over year and outpaced the consensus estimate of $140 million. For the first quarter, the company expects revenues in the range of $149-$151 million and earnings per share in the range of 15-17 cents. For the full year, Proofpoint increased the revenue guidance to $660-$665 million from $644-$648 million but lowered the earnings per share outlook to 95 cents-$1.02 from 96 cents-$1.03 (read: Can Tech ETFs Regain Investors' Love After Selloff Snub?).
Fortinet (FTNT - Free Report) posted earnings per share of 32 cents and revenues of $416.7 million, easily topping the Zacks Consensus Estimate of 29 cents and $409 million, respectively. On a year-over-year basis, earnings increased from the year-ago quarter of 30 cents while revenues were up 14.8%. The company projects revenues in the range of $387–$393 million and earnings per share of 21-22 cents for the ongoing quarter. For 2018, revenues are expected in the band of $1.695-$1.715 billion and earnings per share in the range of $1.30-$1.32.
FireEye not only beat earnings and revenue estimates but also posted its first quarterly profits. Earnings per share of a penny compared bettered the Zacks Consensus Estimate of a loss of a penny as well as the year-ago quarter’s loss of 3 cents. Revenues climbed 9.5% year over year to $202.3 million, edging past the estimated $194 million. FireEye expects revenues of $192–$197 million for the first quarter and $815-$825 million for the full year. However, the company projects to report loss per share of 3-6 cents in the ongoing quarter and breakeven to 4 cents in earnings per share for the full year.
CyberArk Software (CYBR - Free Report) outpaced the Zacks Consensus Estimate by a nickel for earnings per share and $5 million for revenues. Earnings per share were flat from the year-ago quarter while revenue jumped 25%. The company expects earnings per share of 19-22 cents on revenues of $68.25-$69.75 million for the first quarter. For the full year, revenues and earnings are expected in the range of $312-$316 million and $1.18-$1.24, respectively.
ETFs in Focus
The string of earnings beat and solid outlook have led to skyrocketing trading in the two cyber security ETFs. Both funds have hit all-time highs in the latest trading session and have gained around 7% in the year-to-date timeframe (read: How to Invest in the Hottest Technologies With ETFs).
The fund provides global exposure to the cybersecurity industry comprising companies that offer hardware, software, consulting and services to defend against cybercrime. It tracks the Prime Cyber Defense Index, holding 44 securities in its basket. It is well spread out across components with the in-focus five firms accounting for 5% share each. From an industrial look, software and programming accounts for nearly 64% of the portfolio while communication equipment and internet & mobile applications round off the top three.
In terms of country exposure, U.S. firms take the top spot at 74%, followed by Israel (10%), United Kingdom (9%), Japan (5%), the Netherlands (1%), and South Korea (1%). The fund has amassed $1.2 billion in AUM and charges 60 bps in fees per year. Volume is solid as it exchanges more than 261,000 shares in hand per day.
First Trust NASDAQ CEA Cybersecurity ETF (CIBR - Free Report)
This ETF has accumulated nearly $428.7 million in its asset base and charges 60 bps in annual fees. It trades in moderate average daily volume of around 101,000 shares. The fund follows the Nasdaq CTA Cybersecurity Index, which measures the performance of companies engaged in the cyber security segment of the technology and industrials sectors. In total, the product holds 33 stocks in its basket with the in-focus five firms accounting for more than 3% allocation each (read: ETFs to Buy as Cisco Returns to Revenue Growth in 2 Years).
Further, it is skewed toward the software industry at 53.5% while communications equipment rounds off the next spot with a 20.6% allocation. Like HACK, American firms account for 73% of CIBR while United Kingdom, Israel, the Netherlands and others hold single-digit allocation.
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Cyber Security ETFs Scale New Highs on Robust Q4 Earnings
Amid market volatility, the cyber security industry is riding high on better-than-expected earnings, which pushed many stocks to multi-year highs. This is especially true as most of the cyber security firms beat the Zacks Consensus Estimate on both earnings and revenues and offered robust guidance.
Let’s dig into the earnings results of some of the cyber security firms that have the largest allocation to the ETFs in this niche area of the technology sector (see: all the Technology ETFs here):
Cyber Security Earnings in Focus
Akamai Technologies (AKAM - Free Report) reported Q4 earnings per share of 69 cents and revenues of $663 million, outpacing the Zacks Consensus Estimate of 63 cents and $647 million, respectively. On year-over-year basis, earnings were down 4.2% while revenues were up 8%. For the first quarter of 2018 and full year, the company expects earnings per share in the range of 67-70 cents and $2.90-$3.00, respectively. Revenues are expected in the range of $647-$659 million for the first quarter and $2.67-$2.71 billion for the full year.
Proofpoint earnings per share came in at 29 cents, well ahead of the Zacks Consensus Estimate of 21 cents and up 61% from the year-ago quarter. Revenues of $145.4 million increased 36.1% year over year and outpaced the consensus estimate of $140 million. For the first quarter, the company expects revenues in the range of $149-$151 million and earnings per share in the range of 15-17 cents. For the full year, Proofpoint increased the revenue guidance to $660-$665 million from $644-$648 million but lowered the earnings per share outlook to 95 cents-$1.02 from 96 cents-$1.03 (read: Can Tech ETFs Regain Investors' Love After Selloff Snub?).
Fortinet (FTNT - Free Report) posted earnings per share of 32 cents and revenues of $416.7 million, easily topping the Zacks Consensus Estimate of 29 cents and $409 million, respectively. On a year-over-year basis, earnings increased from the year-ago quarter of 30 cents while revenues were up 14.8%. The company projects revenues in the range of $387–$393 million and earnings per share of 21-22 cents for the ongoing quarter. For 2018, revenues are expected in the band of $1.695-$1.715 billion and earnings per share in the range of $1.30-$1.32.
FireEye not only beat earnings and revenue estimates but also posted its first quarterly profits. Earnings per share of a penny compared bettered the Zacks Consensus Estimate of a loss of a penny as well as the year-ago quarter’s loss of 3 cents. Revenues climbed 9.5% year over year to $202.3 million, edging past the estimated $194 million. FireEye expects revenues of $192–$197 million for the first quarter and $815-$825 million for the full year. However, the company projects to report loss per share of 3-6 cents in the ongoing quarter and breakeven to 4 cents in earnings per share for the full year.
CyberArk Software (CYBR - Free Report) outpaced the Zacks Consensus Estimate by a nickel for earnings per share and $5 million for revenues. Earnings per share were flat from the year-ago quarter while revenue jumped 25%. The company expects earnings per share of 19-22 cents on revenues of $68.25-$69.75 million for the first quarter. For the full year, revenues and earnings are expected in the range of $312-$316 million and $1.18-$1.24, respectively.
ETFs in Focus
The string of earnings beat and solid outlook have led to skyrocketing trading in the two cyber security ETFs. Both funds have hit all-time highs in the latest trading session and have gained around 7% in the year-to-date timeframe (read: How to Invest in the Hottest Technologies With ETFs).
ETFMG Prime Cyber Security ETF (HACK - Free Report)
The fund provides global exposure to the cybersecurity industry comprising companies that offer hardware, software, consulting and services to defend against cybercrime. It tracks the Prime Cyber Defense Index, holding 44 securities in its basket. It is well spread out across components with the in-focus five firms accounting for 5% share each. From an industrial look, software and programming accounts for nearly 64% of the portfolio while communication equipment and internet & mobile applications round off the top three.
In terms of country exposure, U.S. firms take the top spot at 74%, followed by Israel (10%), United Kingdom (9%), Japan (5%), the Netherlands (1%), and South Korea (1%). The fund has amassed $1.2 billion in AUM and charges 60 bps in fees per year. Volume is solid as it exchanges more than 261,000 shares in hand per day.
First Trust NASDAQ CEA Cybersecurity ETF (CIBR - Free Report)
This ETF has accumulated nearly $428.7 million in its asset base and charges 60 bps in annual fees. It trades in moderate average daily volume of around 101,000 shares. The fund follows the Nasdaq CTA Cybersecurity Index, which measures the performance of companies engaged in the cyber security segment of the technology and industrials sectors. In total, the product holds 33 stocks in its basket with the in-focus five firms accounting for more than 3% allocation each (read: ETFs to Buy as Cisco Returns to Revenue Growth in 2 Years).
Further, it is skewed toward the software industry at 53.5% while communications equipment rounds off the next spot with a 20.6% allocation. Like HACK, American firms account for 73% of CIBR while United Kingdom, Israel, the Netherlands and others hold single-digit allocation.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>