Cyber Macro Concerns Surfacing, Says Jefferies

June 13, 2022 1:02 PM EDT
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In a note to clients Monday, Jefferies analyst Brent Thill said they met with close to 20 security vendors at RSA, and while security remains the clear-cut priority of companies and should continue to rise as a percent of IT, macro concerns are beginning to surface.

According to Thill, most companies indicated healthy demand, but there has been an inkling of increased spending scrutiny/rationalization,

As a result, Jefferies believes this will benefit platforms that can consolidate numerous categories cost-efficiently.

While feedback was mixed across our meetings (and generally positive), there was a notable uptick in the number of vendors seeing increased buyer scrutiny (purchasing committees or extra CFO approval required). This has led to some deal cycle elongation although none of the public vendors we met noted any slowdown or close rate deterioration," wrote Thill.

"We view the solutions best equipped to weather a worsening economy as low priced high ROI tool, consolidators of spend & software delivered. This could be further simplified to "must haves" vs "nice to haves" and performance of companies in Mar 2020 serves as an indicator of who should have success."

The analyst added that those seeing early signs of macro tend to have shorter sales cycles. Jefferies' revealed that its recommended cyber basket includes CrowdStrike Holdings Inc. (NASDAQ: CRWD), Microsoft (NASDAQ: MSFT), Palo Alto Networks (NASDAQ: PANW), and Varonis Systems (NASDAQ: VRNS).

By Sam Bougedda

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