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Needham Analyst Shares Insights on 12 Security Tech Companies Before Earnings Blackout

MarketDash Editorial Team
17 hours ago
Needham's Mike Cikos offers a comprehensive look at where 12 security and tech companies stand heading into their quiet period, with insights on everything from pricing discipline to AI adoption and billing strategy shifts.

Before tech companies entered their traditional pre-earnings quiet period, Needham analyst Mike Cikos packed his calendar with management meetings. The goal? Get a read on how December went and what's coming next for a dozen companies spanning cybersecurity, cloud infrastructure, and enterprise software.

What emerged from these conversations is a snapshot of an industry at varying stages of transformation. Some companies are executing flawlessly, others are implementing strategic pivots that could pressure near-term results, and a few are still working through longer-term turnarounds.

The Ratings Rundown

Cikos maintained his existing ratings and price targets across the board:

What Management Teams Are Saying

The conversations revealed companies at different inflection points, each navigating their own strategic priorities.

Backblaze (BLZE) is deep into phase two of its go-to-market transformation, though management acknowledges the benefits won't materialize overnight. These restructuring efforts typically take quarters, not weeks, to show up in the numbers.

On the execution front, Cellebrite (CLBT) continues to impress. The digital intelligence company is hitting its marks, and management is confident enough to project growth reacceleration in 2026. Meanwhile, JFrog (FROG) posted strong third-quarter execution and appears "well-positioned to continue driving cross-sell with existing customers, while providing prudent guidance which excludes over-consumption," according to Cikos.

Pricing discipline is improving at Check Point (CHKP), which has already captured most of its previously announced 7% to 10% price increase. The company has also made a smart move linking sales compensation to annual recurring revenue, which should help maintain that discipline going forward.

Datadog (DDOG) is playing the long game, ramping several sales and marketing initiatives designed to support medium- to long-term growth targets. It's the kind of investment that pressures margins now but positions the company for sustained expansion later.

Infrastructure expansion is the story at DigitalOcean (DOCN), which expects to bring 30 megawatts of data center capacity online during the first half of 2026. That's significant capacity in a market where computing power increasingly equals competitive advantage.

Dynatrace (DT) management sounds confident about net new ARR reaccelerating in fiscal 2027, suggesting the company sees a clear path through whatever near-term headwinds it's navigating.

Fortinet (FTNT) is in an interesting spot. After strong product revenue and expansion billings so far this year, the focus has shifted to reaccelerating service revenue growth in the second half of 2026. Service revenue matters because it's typically higher-margin and more predictable than product sales.

Customer contract structure is getting attention at N-Able (NABL), which aims to convert remaining customers to annual contracts. Cikos expects roughly 65% to 70% of customers to be on annual commitments by the end of 2026, which would provide much better revenue visibility.

ServiceNow (NOW) continues seeing traction for Now Assist, its AI-powered offering. The company is dealing with some near-term current remaining performance obligation headwinds from short-term bridge contracts with U.S. federal agencies, but those should ease as the spending environment normalizes.

Tenable (TENB) is making a strategic shift toward installment billing. This could create near-term pressure since revenue gets recognized over time rather than upfront, but it offers customers greater flexibility and should ultimately result in margin expansion.

Finally, Varonis (VRNS) is approaching a key inflection point. The company expects around $60 million of its estimated $175 million in on-premises software ARR to renew in the fourth quarter of 2025. As Cikos notes, "which should provide management a dramatically improved view of customer behavior into CY26."

How the Stocks Moved

At publication time on Thursday, most of the names Cikos covers were trading higher. Backblaze (BLZE) led the gainers, up 4.88% to $4.67, followed by JFrog (FROG), which climbed 3.99% to $66.54. DigitalOcean (DOCN) added 3.24% to reach $45.28.

Other gainers included Datadog (DDOG), up 1.80% to $139.17, Cellebrite (CLBT), which rose 1.36% to $18.63, Dynatrace (DT), up 1.16% to $44.70, and Tenable (TENB), also up 1.16% to $25.08. N-Able (NABL) gained 0.86% to $7.64, while Varonis Systems (VRNS) edged up 0.85% to $32.94.

Three names declined: ServiceNow (NOW) fell 2.19% to $153.07, Check Point (CHKP) dipped 0.33% to $186.73, and Fortinet (FTNT) slipped 0.14% to $79.27.

The divergent price action suggests investors are digesting these updates differently, weighing near-term execution against longer-term strategic positioning. As always, the real test will come when earnings season begins and these companies emerge from their quiet period to report actual results.

Back to News

Needham Analyst Shares Insights on 12 Security Tech Companies Before Earnings Blackout

MarketDash Editorial Team
17 hours ago
Needham's Mike Cikos offers a comprehensive look at where 12 security and tech companies stand heading into their quiet period, with insights on everything from pricing discipline to AI adoption and billing strategy shifts.

Before tech companies entered their traditional pre-earnings quiet period, Needham analyst Mike Cikos packed his calendar with management meetings. The goal? Get a read on how December went and what's coming next for a dozen companies spanning cybersecurity, cloud infrastructure, and enterprise software.

What emerged from these conversations is a snapshot of an industry at varying stages of transformation. Some companies are executing flawlessly, others are implementing strategic pivots that could pressure near-term results, and a few are still working through longer-term turnarounds.

The Ratings Rundown

Cikos maintained his existing ratings and price targets across the board:

What Management Teams Are Saying

The conversations revealed companies at different inflection points, each navigating their own strategic priorities.

Backblaze (BLZE) is deep into phase two of its go-to-market transformation, though management acknowledges the benefits won't materialize overnight. These restructuring efforts typically take quarters, not weeks, to show up in the numbers.

On the execution front, Cellebrite (CLBT) continues to impress. The digital intelligence company is hitting its marks, and management is confident enough to project growth reacceleration in 2026. Meanwhile, JFrog (FROG) posted strong third-quarter execution and appears "well-positioned to continue driving cross-sell with existing customers, while providing prudent guidance which excludes over-consumption," according to Cikos.

Pricing discipline is improving at Check Point (CHKP), which has already captured most of its previously announced 7% to 10% price increase. The company has also made a smart move linking sales compensation to annual recurring revenue, which should help maintain that discipline going forward.

Datadog (DDOG) is playing the long game, ramping several sales and marketing initiatives designed to support medium- to long-term growth targets. It's the kind of investment that pressures margins now but positions the company for sustained expansion later.

Infrastructure expansion is the story at DigitalOcean (DOCN), which expects to bring 30 megawatts of data center capacity online during the first half of 2026. That's significant capacity in a market where computing power increasingly equals competitive advantage.

Dynatrace (DT) management sounds confident about net new ARR reaccelerating in fiscal 2027, suggesting the company sees a clear path through whatever near-term headwinds it's navigating.

Fortinet (FTNT) is in an interesting spot. After strong product revenue and expansion billings so far this year, the focus has shifted to reaccelerating service revenue growth in the second half of 2026. Service revenue matters because it's typically higher-margin and more predictable than product sales.

Customer contract structure is getting attention at N-Able (NABL), which aims to convert remaining customers to annual contracts. Cikos expects roughly 65% to 70% of customers to be on annual commitments by the end of 2026, which would provide much better revenue visibility.

ServiceNow (NOW) continues seeing traction for Now Assist, its AI-powered offering. The company is dealing with some near-term current remaining performance obligation headwinds from short-term bridge contracts with U.S. federal agencies, but those should ease as the spending environment normalizes.

Tenable (TENB) is making a strategic shift toward installment billing. This could create near-term pressure since revenue gets recognized over time rather than upfront, but it offers customers greater flexibility and should ultimately result in margin expansion.

Finally, Varonis (VRNS) is approaching a key inflection point. The company expects around $60 million of its estimated $175 million in on-premises software ARR to renew in the fourth quarter of 2025. As Cikos notes, "which should provide management a dramatically improved view of customer behavior into CY26."

How the Stocks Moved

At publication time on Thursday, most of the names Cikos covers were trading higher. Backblaze (BLZE) led the gainers, up 4.88% to $4.67, followed by JFrog (FROG), which climbed 3.99% to $66.54. DigitalOcean (DOCN) added 3.24% to reach $45.28.

Other gainers included Datadog (DDOG), up 1.80% to $139.17, Cellebrite (CLBT), which rose 1.36% to $18.63, Dynatrace (DT), up 1.16% to $44.70, and Tenable (TENB), also up 1.16% to $25.08. N-Able (NABL) gained 0.86% to $7.64, while Varonis Systems (VRNS) edged up 0.85% to $32.94.

Three names declined: ServiceNow (NOW) fell 2.19% to $153.07, Check Point (CHKP) dipped 0.33% to $186.73, and Fortinet (FTNT) slipped 0.14% to $79.27.

The divergent price action suggests investors are digesting these updates differently, weighing near-term execution against longer-term strategic positioning. As always, the real test will come when earnings season begins and these companies emerge from their quiet period to report actual results.

    Needham Analyst Shares Insights on 12 Security Tech Companies Before Earnings Blackout - MarketDash News