Cybersecurity in modern realities will be in trend for a long time. This can be fairly judged by the data on the demand for shares of companies engaged in such activities. It has grown steadily in the last two years.
At first, the rise was due to the coronavirus pandemic that swept the whole world. Office employees were sent en masse to the remote, but employers were obliged to ensure their computer security, as they continued to access corporate data over the Internet. We needed private virtual networks and VPNs, equipment with security software, etc. There was even a new concept - SASE, under which an IT model with the functions of network and security services was hidden.
The rise, which began in 2020, continued in 2021. But then there was a general decline in the securities market of IT companies. The reason was the announced plans of the Fed to tighten its monetary strategy. But after the beginning of the conflict in Ukraine and the news about the increased hacker cyberattacks on government websites, the situation has changed. Demand began to grow actively again.
According to official financial statistics, subsidies to the cybersecurity sector increased by $150 million in 2021. It is difficult to say how much they will grow this year, given the current situation. Nevertheless, due to the relevance of the topic, it is now worth considering the option of investing in shares of cybersecurity companies.
CrowdStrike is the undisputed leader
CrowdStrike (CRWD) occupies one of the leading positions in the cybersecurity sector. The direction of its work is to ensure the protection of services and computer systems.
The company has its own autonomous AI-driven platform with a cloud architecture. It can collect a huge amount of data from the ecosystem in which the endpoints are combined. In a day, AI is able to process approximately 1 trillion signals about violations that threaten security. He not only blocks attacks, but also learns in parallel. Thanks to this, the platform's capabilities to provide protection against cyber attacks are constantly increasing.
About 50% of Fortune 100 companies are CrowdStrike customers. The company shows good growth dynamics. The customer base expanded by 75% in 2021. Today it includes more than 14.6 thousand companies. Accordingly, the profit also increased (by 69%), which amounted to $1.3 billion. A free cash flow of $411 million was generated (67% more than in 2020). The issuer's market share increased by 4% and amounted to 14.2%.
According to forecasts, CrowdStrike has excellent potential for development. It will reach its "ceiling" in the very distant future. In the meantime, the expansion of the targeted market guarantees the company the possibility of stable progress. Analysts are confident that the market will more than double by 2025 (from $55 billion to $116 billion). The issuer's good prospects are indicated by the fact that already now, being at the initial stage, CrowdStrike has achieved a long-term adjusted gross profit.
C3.a1 - AI on guard
Undoubtedly deserves attention C3.ai (AI), engaged in the creation of algorithms that allow the implementation of AI in large and very complex enterprises. With the help of the company's products, operational efficiency and corporate security are improved, the risks of illegal transactions aimed at money laundering are reduced.
By the end of 2020, the issuer's profit increased by 71% against the background of the overall rise of the IT industry. In 2021, the pace decreased slightly, but income growth was also recorded, only more modest — by 17%. The indicator reached the level of $183 million.
Objective facts speak in favor of the company. Its clients include such well-known brands as AstraZeneca, Baker Hughes and Shell, as well as one of the partners is the US Air Force. Balance C3.ai sufficient to compensate for all costs with a small amount of free cash flow.
And yet, at the end of 2021, the issuer's shares collapsed by almost 80%, which was caused by investors' concern about the slowdown in income growth. They were also worried about the lack of new large customers and the increase in losses. But in 2022, the situation began to improve. At the end of the first quarter, C3.a1 revenue amounted to $111 million, free cash flow — $20 million. The company has about a billion dollars in cash and investments.
Representatives of the company assure that by the end of 2022 an impressive profit will be received - 35-36% more than last year. Now there are no obstacles to growth, which means it will be stable and planned. This is facilitated by the expansion of the targeted market, which should reach $271 billion by 2024. Consequently, the prospects for the coming years have C3.ai very good.
Fortinet Inc - at the forefront of cybersecurity
Fortinet Inc. (FTNT) specializes in the field of information security systems. It offers technological solutions based on the integrated Fortinet Security Fabric platform for automatic detection and reflection of digital attacks. Protection can be used for data stored in the cloud (works for Amazon Web Services, Microsoft Azure, Google Cloud, Oracle Cloud), on IoT devices and endpoints of corporate networks. The company's products are capable of providing full-fledged network and infrastructure security.
The result of 2021 showed an increase in the issuer's securities by 75%. In February of this year, the financial statements for the last quarter and for the year as a whole were published. Quarterly revenue reached the level of $963.6 million – 29% more than in the 4th quarter of 2020. Annual profit exceeded $3.3 billion, showing an increase of 29%. A free cash flow of $1.2 billion was generated.
Financial success is explained by the increased demand for the company's products. In 2022, it plans to launch a new FortiGate 3000F firewall based on its own NP7 and CP9 processors. The product will provide support for the creation of hybrid IT architectures that are used to more effectively implement digital innovations and increase the dynamics of business growth. The new firewall will have the highest performance in its sector.
According to analysts' forecasts, the company's revenue should reach $4.3 billion this year. That is, the indicator will grow again by at least 29%. Fortinet Inc. securities are currently trading with a P/S multiplier slightly below 15, but this indicator is higher than the historical average. Judging by the company's recent successes, its shares will outperform the market, which makes them attractive for investment in the long term.
Qualys - cloud-based digital security system
Qualys (QLYS) has its own cloud platform at its disposal to provide system protection against cyber attacks. It has the most extensive information base on vulnerability signatures. Thanks to the company's products, customers can improve and automate corporate security processes while reducing costs. The partners include Amazon Web Services, Microsoft Azure and Google Cloud Platform cloud services.
Qualys helps clients to collect and analyze a huge amount of information. The company's solutions make it possible to detect and qualify threats in time, and then issue recommendations for their neutralization. The customer base today includes 19 thousand enterprises from 120 countries, among which there are many large and well-known (from the Forbes Global 50 list — almost 65%, from the Global 500 - 45%).
Qualys actively reacts to all changes in the cybersecurity technology sector, keeps its finger on the pulse, and therefore offers its customers the most modern solutions. One of the latest innovations is Context XDR. This product is designed for full-scale data tracking at all levels (network, cloud, applications, end devices), timely detection of potential threats and their neutralization.
According to the latest report presented in February of this year, the revenue growth of Qualys was 16%. In 2021, the company made a profit of $109.8 million. GAAP net income is over $21.8 million ($0.55 per diluted share). According to the forecast, sales will grow by 12.8% in 2022.
Microsoft and Google did not stay away
Realizing the prospects of business in the field of cybersecurity, two global giants decided to join it — Microsoft and Google. Both have already started reporting on their achievements.
According to Microsoft (MSFT), the profit from projects in the field of protection against cyber attacks has already reached $10 billion. More than 40 thousand enterprises have become clients of the company in this direction. It is planned to expand the customer base by 40% annually. The issuer also wants to become one of the industry leaders as soon as possible. To this end, last year RiskIQ, specializing in protection against phishing attacks and virus software, was bought out for $500 million. Microsoft also became the owner of CloudKnox Security, which occupies the first position among competitors in the field of access rights management to cloud services.
The company began to add cybersecurity tools to its Office 365 system. She launched a strategy to promote information security services along with the promotion of her own cloud platform. With a successful scenario, Microsoft has every chance to bypass already recognized leaders such as Okta, CrowdStrike and Splunk.
Google is not far behind, which this year intends to buy Mandiant, which specializes in cybersecurity. If approval is received from the regulator, the transaction will lead to an increase in the attractiveness of the company's cloud service for customers. And this will give you a chance to join the leaders of the industry.
Alphabet (GOOGL) Google is participating in the race. In 2022, the company became the owner of Siemplify, which develops security management systems, solutions for automating protection and timely repelling threats. The products of the Israeli startup are planned to be implemented in Chronicle.
Cybersecurity segment companies preparing for IPO
Netskope, Illumio and Menlo Security are of interest to potential investors. They are just preparing for an IPO, but they show good potential. Netskope managed to raise about $300 million and was valued at $7.5 billion. Illumio's figures are a little more modest: fundraising in the amount of $225 million and an estimate of $2.75 billion.
It is worth paying attention to the developer of algorithms for cybersecurity systems Darktrace (DARK). The IPO took place in the spring of 2921. Another interesting contender is SentinelOne, which successfully carried out the listing last summer. It releases cybersecurity software and in the near future, according to experts, may become a leading competitor to CrowdStrike.
The cybersecurity segment has huge prospects for investment, but it is still poorly disclosed, the securities of the companies listed in the review may seem expensive at the moment, but it should be taken into account how fast the information security direction is developing and how quickly the profitability of issuers is growing.
Euro/DollarThe euro rose against the US dollar to the level of 1.1165. There was a positive trend in trading on Wednesday.After reaching the maximum values in March, the yield of ten-year US bonds fell slightly to 2.351%.The next round of negotiations between Russia and Ukraine gave hope that military operations should stop soon. This caused a wave of positivity in the financial markets.Meanwhile, in the Eurozone in March, the composite index of business and consumer confidence fell from 113.9 points to 108.5 points, which did not justify the forecasts of experts who expected a smoother decline to 109 points.Such a sharp deterioration in the indicator is primarily due to record inflation rates and the military conflict in Ukraine.On Thursday, traders expect the publication of data from the labor market of the United States and the Eurozone, information on the unemployment rate in Germany and the Eurozone, as well as a change in the number of applications for unemployment benefits.Pound/DollarThe currency pair is consolidating above the support border of the European session, around 1.3127. The course is strongly influenced by the news background. The key resistance level at the moment is 1.3202.Meanwhile, the yield of ten-year British bonds has approached the maximum values of March and is now at 1.668%.Today, the dollar is under pressure from other world currencies. According to the final data of the Ministry of Trade, in the last reporting quarter of 2021, the economy of the United States grew by 6.9% year-on-year, and not by 7%, as previously reported. Experts expected that the indicator would be revised upwards to 7.1%. As for consumer spending, in the fourth quarter it increased not by 3.1%, but by 2.5%. Imports soared by 17.9%, exports rose by 22.4%.Today, traders expect the release of British GDP, data from the labor market of the United States, information on the cost of residential real estate.GoldThe banking metal is still reacting to the movement of the US dollar. After a week of growth, gold gained a foothold near the $1,928 per ounce mark. Important information for the market is the US unemployment index for March. Strong data will help reduce the Fed's purchases of securities.The trading environment ended with a fall in the US stock market, due to negative dynamics from the financial, consumer services, and technology sectors. The Dow Jones fell by 0.19%, the S&P 500 index fell by 0.63%.Inflation continues to gain momentum. This month, consumer prices in Germany rose by 7.6% year-on-year, while analysts expected a rise of no more than 6.7%. In February, the indicator was 5.5%.In Japan, last month there was a decrease in retail sales by 0.8% compared to February 2021, which did not meet the forecasts of analysts who reported a decrease of 0.3%.CryptocurrenciesBTC is currently in the price range of $48051 – $46810 with a strong resistance level of $48051. Most likely, traders are waiting for information from the American labor market.According to the results of Wednesday, the capitalization of the crypto market amounted to 2.15 trillion US dollars, while on Tuesday there were figures of 1.90.The Opera browser now supports bitcoin and other digital currencies. Solana and BTC are currently only available in Opera for Android. Support in the crypto browser should appear within a few months.Cryptocurrencies may be affected by the publication of data from the US labor market, the release of the index of personal consumption expenditures, as well as the level of business activity in the manufacturing sector. 
Nutanix shares, a virtual server platform, are trading 40% below the maximum levels of 2021. Despite the growth of quotations in 2020 and 2021, the securities still look attractive from the point of view of long-term purchase. The value of the company (EV) is $6 billion, in 2022 revenue is expected to be $1.9 billion (+20% YoY), which means the forward EV/S ratio is 3. From current levels, securities may well rise to $40 in the coming months.The advantage of Nutanix is that the service allows you to configure a hybrid infrastructure. Not all companies can afford to switch completely to “cloud” storage, both due to regulations and security reasons, as a result of which intermediate options are in demand in the market, and Nutanix is ready to guarantee that customers will receive quality comparable to advanced “cloud" models. If the company used to sell equipment, now it offers users only software, which had an extremely positive effect on the margin: -0.2% against last year's -12.4%. Positive changes have also occurred in terms of FCF: $17.2 million versus $28.4 million.According to the results of the fourth quarter of 2021, revenue increased by 19% YoY, to $413.1 million. ARR increased by 55% YoY, to $1.04 billion, and ACV billings - by 37% YoY, to $218 million. This trend hints at a possible acceleration of growth rates in the coming months. 
What we are currently seeing on risky assets looks rather unnatural. US technology stocks and cryptocurrencies are growing amid a whole heap of problems related to geopolitical tensions, rising inflation, the expected tightening of the Fed's monetary policy, a possible recession of the American and global economy, and so on. Yes, investors could well get tired of the constant negativity, but this is not a strong enough reason for such a powerful rebound. That is why it is hard to believe in the long-term nature of the current growth.At the moment, BTC is near the upper limit of the correction channel, which was formed as part of the global downtrend that started in November 2021. Further price behavior may shed light on the medium-term outlook of the market. With the greatest probability, we should expect a breakdown of the upper limit, the removal of sellers' stop orders, the collection of liquidity and a trip to the south with renewed vigor.Indirectly, this possibility is evidenced by the situation with other cryptocurrencies. For example, the native Solana token is currently executing a “bearish” Wolf wave pattern, according to which quotes should go to a fall and fall in price by 30-40% from current levels. Something similar is observed for the rest of the top coins. At the same time, there is simply no positive news that can support the current growth and is not expected in the near future. 
Euro/DollarThe euro rose against the US dollar to the level of 1.1132, while the US currency weakened despite strong consumer confidence data. During the day, there was a positive trend in euro/dollar trading. At the moment, the pair is consolidating in the price range of the beginning of March 1.1143 – 1.1058.The yield of ten-year US bonds shows a slight decline to the level of 2.402%.The results of the negotiations between Russia and Ukraine in Turkey had a positive impact on the single European currency. The market revived after hearing about positive developments in resolving the conflict, including the preparation of an agreement on the neutrality and nuclear-free status of Ukraine.Earlier, the dollar was supported by growing expectations about the tightening of the Fed's monetary policy. Today, the market has already included a rate increase of 2 percentage points.The current situation contributed to an increase in the yield of ten-year US Treasuries to 2.5% on the first day of the week. However, by the end of the auction, the indicator decreased slightly. On Tuesday, the yield of Treasury securities increased to 2.472%.Among the main news for today is the GDP of the United States for the fourth quarter and the index of employment in the non–agricultural sector from ADP.Pound/DollarDuring trading on Tuesday, the pound and the US dollar stuck to the 1.3090 mark. The currency pair has not been able to break through the support boundary of the European session. If the exchange rate still manages to go beyond the level of 1.3082, the prospect of reaching the area of 1.3006 will open.In the yield of ten-year British government bonds, there is a slight decrease to the level of 1.6560%.The publication of important economic statistics led to a new strengthening of the dollar, the pound followed the American currency.This month in the United States, the consumer confidence index increased to 107.2 points relative to the revised February figures of 105.7 points. The data was obtained from the Conference Board research organization. The indicator exceeded the expectations of experts who predicted a decline in the indicator to 107 points.It is worth recalling that last autumn the level of consumer confidence in the country fell sharply amid the spread of new strains of coronavirus infection. At the moment, Americans are under pressure from the disruption in global supply chains and the consequences of the military conflict in the East.On Wednesday, the currency pair will be sensitive to US economic statistics – GDP for the fourth quarter and the non-agricultural employment index from ADP.GoldThe banking metal has turned around from the minimum values and at the moment continues to adhere to positive dynamics. In the case of another wave of growth, a promising target is the resistance limit of 1925 dollars per ounce.Trading Tuesday ended with a rise in the US stock market, due to strong signals from the consumer services, goods and technology sectors. The Dow Jones increased by 0.97%, the S&P 500 index rose by 1.23%.The news background of recent days has a positive effect on gold and liquid securities.Meanwhile, this month the level of consumer confidence in the United States rose to 107.2 points relative to the revised February figures of 105.7 points.In Japan, last month there was a decrease in unemployment to 2.7% from 2.8%, while experts predicted that the indicator would remain at January levels.CryptocurrenciesAt the moment, bitcoin is consolidating in the price range of $48051 – $46820, after an unsuccessful ride to break through the resistance limit of $48051. The recent increase in volatility in financial markets has forced investors to take a wait-and-see attitude. The publication of the GDP of the United States and data from the labor market can greatly affect financial assets, including cryptocurrencies.According to the results of Tuesday, the capitalization of the crypto market amounted to 2.11 trillion US dollars, while on Monday there were figures of 2.13.According to media reports, the MicroStrategy subsidiary received a loan from Silvergate Bank in the amount of US$205 million to purchase bitcoins.Meanwhile, the US Treasury proposed to approve a document for cryptocurrencies, according to which information on foreign accounts of citizens over 50 thousand dollars should be reported to the tax service. If approved, the requirements will take effect as early as 2023.The Hong Kong Stock Exchange will open a platform for trading security tokens called Diamond. 
Shares of eBay, an online marketplace, are trading 27% below the maximum marks of 2021. In the current conditions, investors want to deal with the most reliable companies that pay dividends and conduct programs to buy their own shares from the market. eBay not only fits these criteria, but also plans to significantly increase the amount of revenue, as a result of which it has a good chance of a tangible rebound from recent lows.Management adheres to the right strategy: instead of competing with Amazon on all fronts, eBay focuses on the most important, unique areas: collectibles, auto parts, electronics and others.At the moment, the platform earns only $1.1 billion through advertising (sponsored placements and promoted lots) - this is about 11% of total revenue. By 2023, it is planned to increase this figure to $2 billion. Another growth driver is the payment system. The platform launches its digital wallet in order to reduce dependence on the current payment service - PayPal.A few more important points: the amount of quarterly dividends was increased by 20% to $0.22 per share, and a $4 billion share repurchase program was introduced (about 12% of capitalization).However, not everything is as smooth as we would like. Compared to the previous quarter, the number of active buyers decreased by 5 million to 147 million in the fourth quarter. After the pandemic peaks, activity on the platform begins to decline, and with it the revenue indicator, which increased by 5% YoY to $2.61 billion over the period. At the current stage, it is necessary to observe how eBay will increase margins and EPS. 
Shares of electric car manufacturer Tesla have gained about 40% since mid-March and are now trading not so far from the maximum marks. There is a feeling that the rising cost of oil and raw materials is a positive driver for the company: most models were completely sold out in the United States by the end of 2022. In addition, Tesla had to start fighting with wholesale buyers in China, who bought cars in large batches and sold them at a markup. Now Chinese buyers are forced to sign an agreement that they will not resell the cars for 12 months after purchase.The February lows became a bear trap for the bulls, who believed that Tesla was waiting for the fate of other technology companies, whose shares sank by 50-70% from the highs. It should be understood that Tesla does not stand still and now it is a profitable company with decent FCF values. Moreover, the manufacturer does not indifferently observe the rise in the cost of raw materials for batteries, such as nickel and lithium, but increases the cost of products in order to maintain margin values.Compared to other major industry players like Volkswagen, General Motors and Ford, which have been suffering from supply chain disruptions for a long time, and now rising raw material prices have been added to the problems, Tesla looks pretty good. Moreover, the company has launched new plants in Texas and Berlin. In other words, there are all the prerequisites for further growth of stocks to the level of record highs and above. 
The securities of Pegasystems, a leading developer of enterprise software, fell 45% below last year's peaks. We can say that at the moment the company's shares should be considered as a long-term investment and there are reasons for this. Today, the company's value is 6.5 billion US dollars. In the current year, management expects a profit of $ 1.5 billion, therefore, EV/S is equal to 4.5. It is worth noting that these are quite small figures for a growing organization. Management predicts that by 2025 the total targeted market will be equal to $110 billion, which indicates good prospects for revenue growth. At the moment, PEGA is transitioning to a subscription model, which will also have a positive impact on the company's revenue. The results of the last reporting quarter of 2021 show a profit growth of only 6%, to $316.2 million. This situation has developed due to the fact that in the process of switching to a subscription, key customers began to pay in portions. Despite a loss of $26 million in 2020, in the last three months in 2021, the firm received revenue of $18.8 million. At the end of this year, revenue is projected to grow to $65-86 million. 
Euro/DollarDuring the versatile dynamics of trading, the euro turned against the dollar to the level of 1.0992.The yield of ten-year US bonds on Monday showed a slight decline to the level of 2.440%.Meanwhile, the chairman of the Federal Reserve Bank of New York, John Williams, suggested that the Fed could raise the rate by 0.5 percentage points in the near future. He also noted that central banks, before making decisions on monetary policy, should think about how certain actions may affect other countries.The consumer confidence index is expected to be released on Tuesday. The US currency may react this week to the publication of changes in the number of initial applications for unemployment benefits, the level of employment in the non-agricultural sector and GDP.Pound/DollarThe pound/dollar currency pair continues to adhere to a downward trend. Having reached the minimum level of 1.3081, there was an attempt to make a reversal and form a new price range amid the expectation of important news. In case of growth, the first target is the resistance area of 1.3146.The yield of ten-year British bonds has turned around from the maximum values and is currently fixed at 1.6210%.Trading Monday showed the strengthening of the US dollar against the British pound, the Japanese yen and the single European currency. This is facilitated by the stable growth of treasury securities, due to increased expectations of another Fed rate hike. At the moment, the market provides for an increase in the rate by 2 percentage points.The income of 2-year-old US Treasuries increased by 13 bps, 10-year-old - by 5 bps. The increase in rates contributes to an increase in purchasing activity around the US currency.Today, the pound will be sensitive to the volume of mortgage lending. Among the important economic indicators on Tuesday are the PMI in the manufacturing sector, GDP, the BRC retail price index, the change in the value of residential real estate Nationwide.GoldAt the moment, the banking metal has dropped to the trading framework of last week, continuing to adhere to the downward trend. A further decline may lead to reaching the mid-March levels of $1,906 per ounce.Trading Monday ended with the growth of the US stock market on the background of positive dynamics from the sectors of technology, consumer goods and services. The Dow Jones approached a one-month high, rising by 0.27%, the S&P 500 index rose by 0.71%. Gold held up negatively.The dynamics of trading is still affected by the news background. The weakening of the yen was influenced by the growing divergence in the monetary policy of the Bank of Japan with other Central Banks.Meanwhile, on Monday, there was an increase in the yield of 10-year Japanese bonds to 0.25%.The downside risks of the global economy are still very high. According to S&P Global Ratings, due to record inflation rates in the UK, economic growth will slow down to 3.5% this year.CryptocurrenciesBTC continues to adhere to positive dynamics. In the case of another wave of growth, the prospect of reaching the resistance area – 49511 and 50611 will open.According to the results of Monday, the capitalization of the crypto market amounted to 2.13 trillion US dollars, while on Sunday there were figures of 2.10.According to media materials, the association “Virtual Assets of Ukraine” with the support of deputies proposed to make the country a full member of the European Blockchain Partnership. The request was made in the form of a letter, among the addressees are the head of the Administration of the President of the European Commission, Bjorn Siebert, as well as the President of the European Commission, Ursula von der Leyen. The document says that blockchain technologies can greatly help in the restoration of Ukraine after the end of hostilities.Meanwhile, Fed Governor Chris Waller believes that blockchain is overvalued, and some CBDC studies are very similar to commercials.