Spending on cybersecurity remained resilient in the third quarter, with enterprise budgets running ahead of last year’s pace and government shutdown fears turning into a surprise tailwind for deal activity, according to a Wedbush report.
Roughly 86% of corporate cyber budgets have been used so far this year, compared with about 67% at this point in 2024, Wedbush said, suggesting more companies are locking in long-term security contracts despite tighter IT spending elsewhere.
Average contract lengths ticked up to 29 months from 28 months in the prior quarter, while deal sizes rose 2% sequentially.
Wedbush said cybersecurity spending exceeded quarterly targets, reaching nearly 109% of goal, up from 106% in the previous period, showing that companies continue to prioritize long-term security investments even as other budgets level off.
The firm said sales cycles shortened by about five days to an average of 88 days, helped by a late-quarter push to close deals ahead of the US federal government shutdown. Contrary to expectations, the shutdown accelerated deal closures as agencies rushed to finalize contracts before potential disruptions.
Exceeding expectations
Among the 43 cybersecurity vendors covered by Wedbush, 10 came in below plan, 12 met expectations, and the rest exceeded targets.
CrowdStrike Holdings Inc (NASDAQ:CRWD), Zscaler Inc. (NASDAQ:ZS) and Datadog Inc (NASDAQ:DDOG) received the strongest feedback from enterprise customers, while Check Point Software Technologies Ltd. (NASDAQ:CHKP), Fortinet Inc (NASDAQ:FTNT), Qualys Inc (NASDAQ:QLYS) and SentinelOne Inc (NYSE:S) lagged.
CrowdStrike outperformed expectations by 5% to 9%, continuing to gain traction through its Falcon Flex platform and expanding federal business. Zscaler also posted a standout quarter—more than 10% above plan—boosted by federal demand and its Red Canary acquisition. Datadog came in 5% to 9% above plan as pricing adjustments and momentum across enterprise and small-business markets lifted sales.
Palo Alto Networks Inc (NYSE:PANW, ETR:5AP) met or slightly exceeded plan, with strength in its platformization strategy and growing adoption of its Cortex product. CyberArk Software Ltd (NASDAQ:CYBR) also posted results 2% to 5% above plan, benefiting from federal opportunities following last year’s BeyondTrust breach.
Not all names fared as well. Fortinet was roughly on plan but saw weaker-than-expected firewall refresh activity, while Check Point trimmed discounting but walked away from some new business opportunities.
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