Check Point Software Technology (NASDAQ:CHKP) was cut to Neutral from Buy at BTIG in a note Tuesday following its "soft Q1 print," with analysts telling investors that refresh delays drive weak visibility.
"Most notably, billings came in at $485.3MM/-3.3% vs. the Street est. of $524.5MM/+4.5%. Product revenue of $108.0MM/-6.8% y/y was also well below the Street at $116.3MM/+0.3% and our $113.6MM/-2.0% est," wrote the analysts.
They explained that the challenging economic environment is driving a delay in firewall refresh cycles and weaker-than-expected product growth.
"This in turn caused billings to decline for the first time since Q4'19 and created the largest downside variance relative to Street forecasts in over 5 years," the analysts added. "Looking forward, we expect deal scrutiny and refresh delays to persist throughout 2023, causing pressure on product revenue to remain elevated."
"We think this will in turn drive slowing growth in subscription revenue into 2024 because 75% of subscription revenue is still attached to appliances (25% is cloud)."