Check Point Software Technologies Q1 2026 Earnings Report

Check Point Software Technologies EPS Results

• Actual EPS: $2.50
• Consensus EPS: $2.42
• Beat/Miss: Beat by +$0.08
• One Year Ago EPS: $2.21

Check Point Software Technologies Revenue Results

• Actual Revenue: $668.40 million
• Expected Revenue: $672.55 million
• Beat/Miss: Missed by -$4.15 million
• YoY Revenue Growth: +4.80%

Check Point Software Technologies Announcement Details

• Quarter: Q1 2026
• Date: 4/30/2026
• Time: Before Market Opens
• Conference Call Date: Thursday, April 30, 2026
• Conference Call Time: 8:30AM ET

Check Point Software Technologies (NASDAQ:CHKP) is an Israeli-founded cybersecurity company that develops, markets and supports a broad portfolio of network, cloud and endpoint security products. Founded in 1993, the company was an early pioneer of stateful inspection firewall technology and later developed a modular “software blade” approach that allowed customers to combine protection capabilities. Check Point’s product set spans physical and virtual security appliances, software and cloud-native services designed to prevent cyberattacks, protect data and simplify security management for enterprises and service providers.

Key product families include Quantum Security Gateways (on-premises and hybrid appliances), CloudGuard (cloud security posture and workload protection), Harmony (endpoint, remote access and unified endpoint security), and SandBlast (advanced threat prevention and sandboxing). Check Point also offers centralized security management and orchestration, threat intelligence integration and consumer-oriented firewall software under brands it has carried historically. Its technology is positioned to address network security, threat prevention, data protection, secure remote access and cloud workload protection across multi-cloud environments.

Headquartered in Tel Aviv, Israel, Check Point serves customers globally with a presence across the Americas, Europe, Asia and other regions through a combination of direct sales, channel partners and managed security providers. The company has supported a broad range of industries, including enterprise, telecommunications, financial services, government and small and medium-sized businesses, by delivering both on-premises hardware and increasingly cloud-delivered security services.

Check Point was founded by Gil Shwed, Marius Nacht and Shlomo Kramer; Gil Shwed has been a prominent company leader since its founding. Over its history the company moved from pioneering firewall technologies to expanding into integrated, multi-layered security platforms and cloud-native offerings. Check Point remains focused on research-driven threat prevention and on delivering consolidated security controls to reduce operational complexity for customers managing distributed and mixed IT environments.

Check Point Software Technologies Q1 2026 Earnings Call Transcript

Key Takeaways

• Negative Sentiment: The company's comprehensive go-to-market changes disrupted sales execution and materially hurt appliance/firewall new-business bookings, prompting a reduction to full‑year revenue expectations and a near‑term headwind concentrated in Q2‑2026.
• Positive Sentiment: Subscription revenue remained strong (11% growth) with emerging technologies—email security, CTEM and SASE—showing ~40–45% ARR/calculated billings growth, which management expects to drive subscription re‑acceleration and bookings in the back half of the year.
• Positive Sentiment: Financials showed resilience: non‑GAAP EPS up 13% to $2.50, adjusted free cash flow up 11% to $457M (beating midpoint by $70M), cash/securities of $4.4B, and $325M of share repurchases, supporting balance‑sheet flexibility and shareholder returns.
• Neutral Sentiment: Check Point is investing heavily in an AI security pillar—launching the AI Defense Plane, an AI Factory Security Blueprint (NVIDIA integration) and a Gemini Enterprise partnership with Google Cloud—but management says commercialization is early and AI security revenue will be modest in 2026, becoming more material in 2027.

Presentation

[Kip Meintzer, Head of Global Investor Relations at Check Point Software]

Greetings and welcome to Check Point Software's 2026 first quarter financial results video conference. I'm Kip Meintzer, Global Head of Investor Relations, and joining me today are Chief Executive Officer Nadav Zafrir and our Chief Financial Officer, Roei Golan. Before we begin, I'd like to remind everyone this conference is being recorded and will be available for replay on our website at checkpoint.com. During the formal presentation, all participants are in a listen-only mode that will be followed by a Q&A session. During the presentation, Check Point's representatives may make forward-looking statements. Forward-looking statements generally relate to future events or future financial and/or operating performance. These statements involve risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements.

[Kip Meintzer, Head of Global Investor Relations at Check Point Software]

Any forward-looking statements made speak only as of the date hereof, Check Point Software undertakes no obligation to update publicly any forward-looking statements. In our press release, which has been posted on our website, we present GAAP and non-GAAP results, along with a reconciliation of such results, as well as the reasons for our presentation of non-GAAP information. If you have any questions after the call, please feel free to contact Investor Relations by email at kip@checkpoint.com. I'd like to turn the call over to Nadav.

[Nadav Zafrir, CEO at Check Point Software]

Thank you, Kip. Thank you all for joining us. I'm gonna begin with the key operating dynamics of the quarter, and obviously talk a little bit about how we're advancing our strategy to drive sustainable long-term growth. To begin, in our first quarter, we delivered double-digit growth in non-GAAP earnings per share and adjusted free cash flow, with revenue growth at 5%. Subscription revenue remained a key strength, driven by strong demand across our emerging technologies, which actually generated 45% growth in calculated billings led by email security, CTEM and SASE. At the same time, we do see a decrease in appliance refresh projects that resulted in lower than expected product revenues.

[Nadav Zafrir, CEO at Check Point Software]

As we discussed in our last earnings call, during the second half of 2025, we conducted a comprehensive go-to-market assessment with the objective of accelerating both new logo acquisitions and increasing wallet share in large enterprise accounts in order to enable the successful execution of a multi-pillar platform strategy. Based on this, we implemented changes to our go-to-market model to align with these goals. The transition to the new model did create short-term disruptions to the rhythm of our sales execution and primarily affects our appliances business. Now, while we're confident that the changes made are setting us up for success in the mid and long term, we do see a short-term impact on our business that will negatively affect our 2026 revenue projections.

[Nadav Zafrir, CEO at Check Point Software]

We believe these headwinds are transitory, and they reflect a deliberate reset to position our business for improved execution and scalability. We're already seeing that the current pipeline trends and ongoing customer engagements, and our plans to further invest in our firewall business, make us optimistic about the future growth trajectory. Beyond that, our strategy continues to be anchored around our four-pillar approach, which we believe is well aligned with the evolving security requirements of enterprise, particularly as AI adoption expands the threat landscape. In support of our go-to-market execution, we're strengthening our leadership team with four key appointments. First, Sherif Seddik has been named Chief Revenue Officer, and will lead our go-to-market organization. Sherif has successfully led our international sales business over the past few years.

[Nadav Zafrir, CEO at Check Point Software]

He brings more than three decades of global sales leadership experience. He'll be replacing Itai Greenberg. I want to take this opportunity to thank Itai for his continued support during my first year and for his leadership in the go-to-market changes. Beyond that, Yochai Corem, who has led our CTEM offering since the acquisition of Cyberint and has driven 96% year-over-year ARR growth, will join the leadership team. You know that as organizations operate in this increasingly agentic world, exposure management is becoming mission-critical because it enables security teams to rapidly identify emerging threats. The most important part is materially accelerate their remediation. I think we have an advantage here, and I'm happy to welcome Yochai.

[Nadav Zafrir, CEO at Check Point Software]

Alongside that, to lead our AI pillar, I'm happy to say that Adam Ely has joined as General Manager of AI Security and will also join the leadership team. Adam brings a deep experience, you know, at the intersection of cybersecurity and large-scale enterprise security operations, because in his previous roles, he was a CISO at Fidelity, Deputy CISO at Walmart. He's also a founder of Bluebox Security. I think Adam adds really a proven operator's perspective, which is so essential in this time. He will focus on building the platform, our AI security platform, to scale with the speed, the rigor, and a strong commercial pipeline. Lastly, Rafi Kretchmer is appointed the VP of Global Marketing.

[Nadav Zafrir, CEO at Check Point Software]

He'll replace Brett Dice, who we wish well in his future endeavors. Beyond that, look, you're all aware, AI is a watershed moment for the security industry. When you look at the emergence of these frontier AI models, including Mistral and GPT class, they're driving two structural shifts in cybersecurity. First one is that the barrier to sophisticated cyber attacks is literally collapsing because AI is democratizing capabilities that were once exclusive to nation-state and some very large elite, quote-unquote, criminal organizations. This is exposing a far broader set of enterprises to material risk. That's number one. Number two, cyber attacks are undergoing structural industrialization. The agentic AI enables threat actors to continually scan global infrastructure, and they're generating a continuous flow of novel attack techniques. Manual operations are giving way to automated attack pipelines.

[Nadav Zafrir, CEO at Check Point Software]

You know, this is what we call at Check Point the AI attack factories. When you look at the convergence of these two forces, it really creates a different threat environment. Larger attack population that is executing more sophisticated campaigns with greater speed and volume, the time to exploit is shrinking dramatically. We believe, I believe that this is directly validating our ethos of prevention first, which we're second to none in the industry, in my opinion. Beyond that, at Check Point, we're not waiting for this threat environment to materialize. Our response is ready and active. It's structured, of course, across our four pillar framework: the security for AI, the network through our hybrid mesh, CTEM and workspace security. During this quarter, we introduced solutions to secure enterprise AI transformation.

[Nadav Zafrir, CEO at Check Point Software]

As an example, we launched the AI Defense Plane, which is designed to secure the agentic enterprises across employee AI usage, the applications and the agents that both of these use, the people and the applications. Beyond that, we introduced the AI Factory Security Architecture Blueprint. It's integrated with the NVIDIA GPU server sitting on the server itself. This provides end-to-end protection for AI infrastructure. We're very bullish about this. Most recently, we also announced our partnership with Google Cloud. We're integrating this AI Defense Plane with Gemini Enterprise Agent platform. This can deliver real-time runtime protection at scale. We also delivered AI-driven exposure management, enabling customers to close the remediation gap through, one, improved intelligence, then the risk prioritization, and finally safe remediation, which is critical, the time to remediate in organizations today.

[Nadav Zafrir, CEO at Check Point Software]

Then finally, we launched a secure AI advisory service through to help enterprise govern, deploy and ultimately scale AI with security and doing so responsibly. To close my opening remarks, while we're experiencing near-term headwinds in our appliance business and adjusting our annual revenue guidance, we remain confident in our ability to gain market share in this expanding security market. The emerging technologies continue to perform strongly and position Check Point at a really good place to secure this rapidly growing enterprise attack surface driven by AI adoption. We believe that our differentiated strategy, our core capabilities, our strong financial profile with its industry-leading profitability.

[Nadav Zafrir, CEO at Check Point Software]

At the end of the day, a disciplined execution over time position us to really benefit from the accelerating demand for secure enterprise-grade AI, which is transforming organizations at scale. Before I take the questions, with that, I'll turn to Roei to give you some of the financials.

[Roei Golan, CFO at Check Point Software]

Thank you, Nadav. One moment. Can you see my screen? Great. Thank you, Nadav, and thank you everyone for joining the call. As Nadav mentioned, the first quarter was a solid quarter with 5% growth in revenues, driven by 11% growth in our subscription revenues. Our total revenues reached $668 million and was $2 million below the midpoint of our projection as a result of lower revenues from firewall appliances that impacted our product revenues. When we are looking around subscription revenues, they grew by 11% to $323 million and were at the midpoint of our projections. Our adjusted free cash flow was very strong and reached $457 million, $70 million above the midpoint of our projection and grew by 11%.

[Roei Golan, CFO at Check Point Software]

Our non-GAAP EPS was $2.50 and was exceeded our guidance with 13% growth year-over-year. As mentioned, we had 35% growth in revenues while our deferred revenues grew by 8% to $2.06 billion. Our calculated billings totaled to $548 million, reflecting a 1% decline year-over-year. While our current calculated billing grew by 2%. Our remaining performance obligation grew by 7% and reached $2.592 billion. As Nadav indicated earlier in the call, we had lower than expected product revenues, mainly as a result of the disruption affected by the changes we made in the go-to-market organization.

[Roei Golan, CFO at Check Point Software]

As we are looking in the second quarter, we do see this disruption still affecting our firewall appliances revenues. Based on the funnel that we see, we expect to see an improvement in the second half of the year. It is important to note that our renewal business continued to be stable and our firewall subscription ARRs continue to grow year-over-year. When we are looking on our subscription revenue, we do see a trajectory for re-acceleration, and we do expect to see acceleration in our subscription revenues in the second quarter and for the full year of 2026, driven by strong demand by emerging pillars, mainly by email security, CTEM, and SASE. As indicated, our total subscription business continues to be strong. We continue to experience strong demand for emerging products, which remains the primary driver for our revenues growth.

[Roei Golan, CFO at Check Point Software]

In Q1, our email security, SASE, and ERM in total exceeds 40% growth in ARR and over 45% in calculated billings year-over-year. It is important to note that although the revenues are still not significant for the total business, we see a significant growing funnel for our AI security offerings, and that together with the email security, CTEM, and SASE, expect to drive the subscription revenue growth in the next few quarters. When we are looking at the revenues by geography, 46% of our revenues coming from EMEA, which had 6% growth year-over-year. 42% of the revenues came from America and delivered 4% growth year-over-year, and the remaining 12% came from Asia Pacific, that had 2% growth year-over-year.

[Roei Golan, CFO at Check Point Software]

We are looking on the P&L for this quarter, our gross profit increased from $564 million-$586 million, representing a gross margin of 88%. Our operating expenses, excluding R&D grants, increased by 14%, while on constant currency basis our OpEx increased by 12%. Q1 results include approximately $27 million of benefits from R&D grants to be received under the new Israeli incentive program law, which was ratified during the period, and that's reflecting the associated impact in our financial results. Our operating expenses, net of R&D grants, were $321 million and increased by 5% year-over-year.

[Roei Golan, CFO at Check Point Software]

When we are looking on these grants, we do expect to have an approximately benefit for the total year of $100 million on our operating income, reflecting the new law that was just finalized. The increase in our OpEx is primarily as a result of our increase in our workforce, as a result of investment in our AI security and investment in sales and marketing programs. Looking on our non-GAAP operating income, it continues to be strong at $265 million or 40% operating margin. Our non-GAAP net income increased by 8% and reached $265 million, while our GAAP net income reached $192 million, similar to last year.

[Roei Golan, CFO at Check Point Software]

Our non-GAAP EPS grew by 13% and reached $2.50, while our GAAP EPS was $1.81, representing 5% increase. Moving into our cash flow and cash position. Our cash balances as of the end of the quarter, together with marketable securities and short-term deposits, reached $4.4 billion. During February, we completed the acquisition of Cyata and Cyclops Security for approximately $92 million of net cash consideration. Our adjusted free cash flow increased by 11% and reached $457 million. In addition, we continued our buyback program and purchased 1.9 million shares for a total of $325 million at an average price of $170 per share. To summarize, strong double-digit growth, non-GAAP EPS and adjusted free cash flow.

[Roei Golan, CFO at Check Point Software]

We do see continued strong demand for emerging technologies, SASE, email security, CTEM. From the other end, we do see in the near term, lower new business on firewall that affected our revenues. One, I want to go into the guidance for the second quarter and for the full year. For the second quarter, our total revenues are expected to be between $660 million-$690 million. Our subscription revenues expected to be between $328 million-$338 million. Non-GAAP EPS is between $2.40-$2.50, while our GAAP EPS expected to be around $0.70 less. While our adjusted free cash flow expected to be between $145 million-$175 million.

[Roei Golan, CFO at Check Point Software]

Regarding the cash flow, the free cash flow, important to say that there are some payments, significant payments, that moved from Q3 to Q2, again, that's mostly shifting from Q2 to Q3. We are looking on the full year guidance, as Nadav indicated, we are adjusting our revenues guidance, our total revenues guidance for the full year. The updated guidance is between $2.77 billion-$2.85 billion. That's a reflection of expected lower revenues from firewall appliances, mainly in the second quarter. Our subscription revenues, we are not changing.

[Roei Golan, CFO at Check Point Software]

We do see strong demand for our emerging products, and we hope to finish in the upper end of the range, but we are keeping the same range for the full year. Same thing for non-GAAP EPS. We are not changing our non-GAAP EPS, expected to be between $10.05-$10.85. GAAP EPS gonna be slightly higher, again, mainly because lower share count and slightly higher acquisition-related costs. Our adjusted free cash flow, we are not updating the guidance, same as we gave between $1.15 billion-$1.25 billion.

[Nadav Zafrir, CEO at Check Point Software]

Kip? You're on mute, Kip. Kip? Maybe it's better that you're on mute, but. Kip?

[Nadav Zafrir, CEO at Check Point Software]

Mm.

[Kip Meintzer, Head of Global Investor Relations at Check Point Software]

Unmute. All right. Sorry about that, guys. Having a little bit of technical difficulty. Starting off today's Q&A is going to be Brian Essex from J.P. Morgan, followed by Rob Owens of Piper Sandler.

[Brian Essex, Executive Director at J.P. Morgan]

Great. Thanks, Kip. Good morning, everyone, and thank you for taking the question. Nadav, I wanted to dig into product revenue performance. We'll take the easy question. Was macro or customer decisions to sweat assets not a factor at all? You know, if not, can you offer a little more color around the depth of the go-to-market changes? You know, where was the friction in the process most apparent? Where did the system break down, and what gives you confidence this is just a near-term issue?

[Nadav Zafrir, CEO at Check Point Software]

Thanks. Look, I don't think the macro is the issue here. When you look at the changes that we've made to our go-to-market, they're significant. You know, it's optimizing accounts to account managers. It's, you know, doubling down on our marketing, doubling down on our channels. It did create a short-term headwind in terms of execution as many of our people changed their role or changed accounts. I see this as the main driver or the main headwind that we're seeing in terms of the firewall business. You know, we don't see a macro problem. We're actually already seeing that the engagement with our customers and the funnel going back to normal.

[Nadav Zafrir, CEO at Check Point Software]

We're optimistic that this is a sort of a blip. But it does take a little time to sort of get the motion back and everybody in their seat, et cetera. For the long run, we believe this is the right thing to do, and we're gonna continue to invest. This is just on the, you know, on the workforce. Also leadership changes in America, leadership changes in other areas. There's a process here that we're going through. I think we're at the tail end of the disruption and very optimistic about the future. At the same time, when I actually look at the demand side, we're seeing different areas growing.

[Nadav Zafrir, CEO at Check Point Software]

As an example, we're very bullish on new AI data centers, where I think we have a very unique capability. For the longer term, that's how we see the market, and we're optimistic.

[Brian Essex, Executive Director at J.P. Morgan]

All right. That's helpful color. Thanks. We'll keep Kip happy and keep it to one question.

[Kip Meintzer, Head of Global Investor Relations at Check Point Software]

Thanks, Brian. Next up is Rob Owens from Piper Sandler, followed by Joseph Gallo from Jefferies.

[Rob Owens, Managing Director and Senior Research Analyst at Piper Sandler]

Great. Thank you for taking my question, and good morning here from the West Coast. Obviously, the world's been changing quickly over the last six weeks. I'd love to understand your perception relative to what's happening and how that's influencing Check Point's business. In line with that, it feels like you're losing momentum at a critical time for cyber here. How do you ensure that this doesn't lead to longer-term share losses as customers are having to make decisions in the near term to protect against these next-generation threats?

[Nadav Zafrir, CEO at Check Point Software]

Well, honestly, I actually think that we're gaining, not losing, when you look at the big picture, right? You know, take Mistral as an example, right? We think that, as I said, this is going to create a democratization, industrialization and change the nature of the business. I actually believe that we're really well-positioned to answer that. At the same time, when you look at the relevant pillars, CTEM is growing, has grown 96%. Email, which we are one of the best-in-class in the industry and ready for this AI revolution, is growing over 40%, et cetera. That's one thing. The other thing is, when you look at the fundamentals of the change in cybersecurity, I actually think that our ethos of prevention first, as an example.

[Nadav Zafrir, CEO at Check Point Software]

If you look at the latest reports by NSS and Miercom, again, once again, we're at 99.9% ability to stop attacks of known CVEs. This was always important. I think now it's becoming really critical because that's exactly the change that's happening. You're gonna have to be able to block as fast as possible or everything that is possible, and then you're gonna have to remediate extremely fast. I think from both sides of the equation, we actually have an advantage here.

[Kip Meintzer, Head of Global Investor Relations at Check Point Software]

Next up is Joseph Gallo from Jefferies, followed by Adam Tindle of Raymond James.

[Joseph Gallo, Senior Vice President at Jefferies]

Awesome. Thanks for the question. I know you talked about the impact to appliance execution, but I think the most exciting part of this story is the subscription growth and the potential for acceleration there. If we look at current billings and you take out products, that only grew 3% year-over-year in 1Q. Just you're guiding to 12% subscription growth and acceleration in the back half. Maybe just walk us through a little bit more about the confidence in that and then just any broader commentary on how we should think about billings going forward. Thanks.

[Roei Golan, CFO at Check Point Software]

I'll take it. You're right in terms of cloud and billings excluding product, but that takes into account also, like, maintenance and software and maintenance updates. Actually, it's pretty flattish right now. If you're excluding that, actually the growth of subscription is much higher, subscription billings. We do see, by the way, we see the funnel even for the second quarter and mainly for the second half of the year. We see very strong demand for our subscription packages, for our subscription offering, if it's email, SASE, CTEM we discussed, and also AI security. The numbers are still not significant in terms of bookings for AI security, but we see very significant funnel that was created just in the last few weeks. We see the enthusiasm about it.

[Roei Golan, CFO at Check Point Software]

We have a new leader there, and now that's managing this business. Definitely we feel positive about the subscription also for the next few quarters to re-accelerate.

[Joseph Gallo, Senior Vice President at Jefferies]

Thank you.

[Kip Meintzer, Head of Global Investor Relations at Check Point Software]

Next up is Adam Tindle from Raymond James, followed by Shaul Eyal of TD Cowen.

[Adam Tindle, Managing Director at Raymond James]

Okay, thanks, Kip. Good morning, Nadav. I just wanted to just take a step back. There's kind of two major things that we're having to digest here on this call. The first one, I want to understand what exactly is happening to product revenue that is causing this revision. Is there changes to terms with distributors? Is there issues with supply and shipping? What exactly is changing and happening that's causing this mechanically? The second thing that we're digesting here is the go-to-market changes that you're implementing. I wonder, you know, we've gone through this before with Check Point in the past, a number of changes to go-to-market leadership.

[Adam Tindle, Managing Director at Raymond James]

When you look at these, if you could maybe compare and contrast some of the things that have been done in the past to this time, what you've learned and what might be different with these go-to-market changes. Thanks.

[Roei Golan, CFO at Check Point Software]

I can start on the first one, and Nadav, you will take the second.

[Nadav Zafrir, CEO at Check Point Software]

Sure.

[Roei Golan, CFO at Check Point Software]

Yeah. In terms of the product, why it's mainly affected the product. We did the changes in the go-to-market organization. Part of these changes were a lot of changes for assignments for account managers that will work on large enterprise and enterprises that moves from accounts to other accounts. This had some kind of. Again, it's something that was expected, but that had more disruption that we expected on the business, mainly on the new business. On the new business, I remind you that the funnel for the refresh projects for new business on firewall takes slightly more time than the sales cycle is longer than a sales cycle for selling CTEM, email or other products or this kind of product. For firewall, it usually takes longer.

[Roei Golan, CFO at Check Point Software]

We see disruption in funnel creation mainly in Q1. That's affecting mainly some of it in Q1 but mainly in the second quarter. Therefore we see the funnel starting. We see a very nice improvement in the last few weeks after all people are on role, at role, in the relevant roles, and they are starting to work on their accounts. We're starting to see the funnel created for the second half of the year. As we mentioned, there is a near-term headwind specifically for the second quarter.

[Roei Golan, CFO at Check Point Software]

Nadav, you want to take the second one?

[Nadav Zafrir, CEO at Check Point Software]

Sure. Hey, Adam, thanks for the question. I would say a couple of things. Number one, you know, it's my job to continue and optimize and see that we have the right leaders in the right place. I think that one change that we're doing, which is, I think a differentiation, is beyond just the structural changes that, Roei, you spoke about. We're also investing more in marketing. We're doubling down on the channels. To your question about the personality changes that we're conducting, we do wanna bring strong leaders that come from the security business with the right experience, right? In our last earnings call, we announced Rachel Roberts is taking as President of Americas.

[Nadav Zafrir, CEO at Check Point Software]

She has experience, you know, vast experience in the cybersecurity market. Tom Malone joined us and is leading the global. Adam Ely comes from the industry and is going to lead the AI security. The idea is to bring seasoned leaders that know this business and then put, like, reorg the go-to-market organization, so these two things work together. The third thing is, which we've been speaking about, is the multi-pillar approach that we're coming with. All in all, I'm very bullish about where that is gonna take us. You know, I do acknowledge that in the first quarter, this has created a disruption, but I think it sets us up for success as we go forward.

[Nadav Zafrir, CEO at Check Point Software]

You'll see, you know, more people joining us at different levels from different companies, as, you know, we are, you know, just getting the right people, the right data, the right processes to create this sustainable growth. You know, we have the vision, we have the mission. I really believe that we have a meaningful headwinds with the products that we have, and we're bullish about where that's gonna take us.

[Kip Meintzer, Head of Global Investor Relations at Check Point Software]

All right. Next up is Shaul Eyal, followed by Shrenik Kothari.

[Shaul Eyal, Managing Director and Equity Research at TD Cowen]

Thank you. Good afternoon, guys. Nadav or Roei, maybe sticking with the product revenue question. As you guys know, Check Point as well as its competitors, you guys are selling a number of appliance families, low, mid, high tier markets. Is there a specific market tier in which you're seeing increased pressure or the current softness is pretty much across all market tiers?

[Roei Golan, CFO at Check Point Software]

It's across, but I would say mainly around the large. Again, mainly as a result of the disruption in the go-to-market because there were many changes to assignment of enterprise and large enterprises are mainly consuming the large boxes. That's, I would say that. Again, we see the cost of goods was more on the large one.

[Nadav Zafrir, CEO at Check Point Software]

I will say this, Shaul.

[Roei Golan, CFO at Check Point Software]

Mm-hmm.

[Nadav Zafrir, CEO at Check Point Software]

I'm trying to put together the trends that are coming. I know that this is sort of zooming out a little bit, right? When you think about priorities of large security organizations in the in today and in the next couple of years, which I think are going to be chaotic. If you believe that this democratization, industrialization of the attackers and the changes that identification is doing in everyone's networks is real, then I think that our firewalls are actually very well positioned for this future. If nothing else, because of the ability to prevent every known CVE and deploy it through our IPS in hours, not days or weeks. This is becoming more and more critical.

[Nadav Zafrir, CEO at Check Point Software]

I know that we've been preaching this for a long time, but I think this is now going to become more important. I think gives us an advantage not only with growing with the customers that we have, but going after new logos, which is actually a part of the change that we've made in the go-to-market organization. As Roei said, getting new logos in CTEM is much faster than getting new logos in firewall. I think that we have what it takes, and we have done the adjustments. We put the right people in the right places. We'll continue to do it. It's never good enough.

[Nadav Zafrir, CEO at Check Point Software]

I think it actually gives us a headwind, not only in the emerging categories, but also in the core, in the firewall, which is alive and kicking. Forget Check Point for a second. I think when you look at where the world is going right now, network security is becoming so much more important. It's one of the only places where you can really prepare an organization for the AI adoption. Doesn't happen overnight, but I truly believe this is a tailwind for Check Point.

[Shaul Eyal, Managing Director and Equity Research at TD Cowen]

Tailwind it is. Yeah. Not a headwind. Yeah.

[Nadav Zafrir, CEO at Check Point Software]

Tailwind.

[Shaul Eyal, Managing Director and Equity Research at TD Cowen]

Thank you.

[Kip Meintzer, Head of Global Investor Relations at Check Point Software]

Next up is Shrenik Kothari, followed by Keith Bachman from BMO.

[Shrenik Kothari, Analyst at Baird]

Yeah. Thanks a lot. Just maybe to switch gears from appliances. Nadav, you mentioned about AI data center, AI Factory Blueprint. Between that and the new AI Defense Plane, the Gemini agent integration, the security AI, it seems like you are trying to go after multiple layers of the enterprise AI security stack. Strategically very compelling and in terms of the opportunity. Just how should we think about monetization of this opportunity from here? Where do you see the near-term opportunity this year and the next 12 months?

[Nadav Zafrir, CEO at Check Point Software]

Yeah. It is a process. We're making very substantial investments, right? I think six months ago, we told you about the acquisition of Lakera as an example. This is where we're building a truly foundational model. We believe that if you look at the security for AI, you won't be able to use existing large language models that can, you know, do everything known to humanity, write poems and protect. Rather, if you want the latency, the accuracy and the cost, we are going to have to train our own models. That's a huge investment. We're investing in the researchers, we're investing in the GPUs.

[Nadav Zafrir, CEO at Check Point Software]

We're investing, you know, even thinking out of the box, we created a game called Gandalf, where we have over a million worldwide users, but thousands of them attack us every day so that we can put that into our small language model to continuously breed it so it can get better and better. That's a big investment. On top of that, we're building security for AI as a platform. For users, for employees, for applications, whether they're looking inside or to customers. Both of these people and applications using agents. We're doing the security to the people. We're securing runtime. We're doing it, as I said, with Gemini. We're also doing it with Copilot from Microsoft. All this is heavy investment.

[Nadav Zafrir, CEO at Check Point Software]

Now Adam is coming in to lead also the commercial side of this. We're hiring the first salespeople to drive this. We think that it's going to be, you know, still a small part of 2026, but huge potential for the future. That's one thing. Beyond that, it's also gonna feed into our other pillars, because by having those foundational models, we also have people that are simulating sort of in what we call the future labs, what these attacks of the future are gonna look like. It's not just the AI pillar. It also feeds into our intelligence, it feeds into our email security, it feeds into our endpoint security. I think over time, the value of real security, real proactive security, is going to become more and more important.

[Nadav Zafrir, CEO at Check Point Software]

At the end of the day, it's a big investment, but I think it's essential, and I think it positions us well for what's coming.

[Kip Meintzer, Head of Global Investor Relations at Check Point Software]

All right. Thank you, Shrenik. Next up in place of Keith Bachman is going to be Todd Weller. Todd. That'll be followed by Tal Liani of BofA.

[Todd Weller, Managing Director at Stephens]

Thanks, thanks for the question. Just a question on memory pricing. What are you seeing in terms of impacts? More importantly, how are you thinking about it kind of going forward over the remainder of this year? Any kind of additional pricing actions being contemplated?

[Roei Golan, CFO at Check Point Software]

Memory pricing continues to inflate, to increase. I mean, we see this trend continues. As for, I mean, as for what we are looking how it's gonna affect our revenue, our product revenues, I talked about it already when we gave the full year guidance. We took into account some disruption from the memory costs also on the firewall business. Right now, I think it's tough to say if there is anything related to that. I mean, we are looking on the funnel for the second half of the year. We see good funnel for firewall. I mean, tough to say how it will impact right now.

[Roei Golan, CFO at Check Point Software]

I don't know to tell you if it impacted the behavior of our customers in terms of buying firewalls, buying appliances. Definitely I can tell you that the memory costs have continued to surge, and I don't see it stop, I mean, in the near term.

[Kip Meintzer, Head of Global Investor Relations at Check Point Software]

All right. Thank you, Todd. Up next is Tal Liani with BofA.

[Tal Liani, Analyst at BofA]

Hey, guys. Can you hear me? Yes.

[Kip Meintzer, Head of Global Investor Relations at Check Point Software]

Yes.

[Tal Liani, Analyst at BofA]

Nadav, I keep asking you the same question, I'm gonna come back to the same question. You joined the company a few years ago with the hope that growth was gonna accelerate. You've done many things on sales, on products, and growth has decelerated instead of accelerating, in the sense that we are now at 5% environment. It's just not big enough for such a great space. There could not be a better space for you to grow and accelerate revenues, revenue growth. The question is, what is not working with the strategy? What is not working? How can you change the growth trajectory to the point that we see double-digit, sustainable double-digit growth? Really to synthesize the question, the issue is: What is the problem? Meaning, is it about sales execution?

[Tal Liani, Analyst at BofA]

Is it about portfolio? Is it about the employee composition and the fact that maybe culture needs to change? I'm trying to understand what can you do in order to change the growth trajectory?

[Nadav Zafrir, CEO at Check Point Software]

First, Tal, I totally agree that we couldn't be in a better industry right now. You know, I think that, like you said, that's why I'm here and that's what I'm here to do. Look, as we said before, yes, some of it is execution, and that's why we're making these changes that we just spoke about, which are meaningful. You know, hundreds of people getting new accounts, moving seats, putting new leaders. I think it's essential, you know, giving us a short-term headwind, but I think will drive that sustainable growth that you're looking for.

[Nadav Zafrir, CEO at Check Point Software]

At the same time, I do wanna say that, when you look at the total product portfolio that we have, although it's still not the biggest part of what we do, if you look at the emerging technologies that we have, right? Email, CTEM, SASE, and hopefully and now joining with security for AI, that's, that as Roei, as we spoke about before, is growing really fast and becoming a bigger piece of what we're doing. So, you know, all in all, I think that the vision and the strategy are there. We're making the changes that we need to do. It does take time and, you know, we need to continue course and and have the patience to get there.

[Nadav Zafrir, CEO at Check Point Software]

'Cause, you know, we need to do it with discipline and that's what we're doing, and it's gonna take time. Believe that we're in the right business with the right products. In every one of the pillars that I spoke about, we're also looking at acquisitions. I believe that when you bake all that together with the leadership that we're putting in place, we'll be in a good place in the future.

[Tal Liani, Analyst at BofA]

Okay. Thank you.

[Kip Meintzer, Head of Global Investor Relations at Check Point Software]

Thanks, Tal. Up next is Joshua Tilton from Wolfe, followed by Jonathan Ho of William Blair.

[Joshua Tilton, Analyst at Wolfe Research]

Thank you, guys. I love getting no warning. With that in mind, I'll keep it to one.

[Kip Meintzer, Head of Global Investor Relations at Check Point Software]

Apology.

[Joshua Tilton, Analyst at Wolfe Research]

It's okay. You caught me off guard a little bit. Maybe one for Roei Golan. Can you just reiterate exactly what you expect in the second half for appliances? I wasn't sure if you said stabilize or recover. Maybe just talk to the kind of the visibility you have or maybe the confidence you have around that view.

[Roei Golan, CFO at Check Point Software]

For the second half of the year, you do expect to see improvement. Right now for the second quarter, we do expect to see a decline, a sharper decline in the product revenues. For the third quarter and the fourth quarter, it's gonna be gradually. We see a much better funnel, also for the appliances, and we do expect to see improvement there. It doesn't mean that we're gonna grow in Q3 and Q4 product revenues, but definitely, we're gonna show better performance compared to what we have, what we gonna have, what we had in Q1 and what's expected for the second quarter.

[Joshua Tilton, Analyst at Wolfe Research]

Maybe just, you know, can you just talk to the confidence level around that, like, just you're seeing in the funnel?

[Roei Golan, CFO at Check Point Software]

Someone, I'm hearing myself in a way that's odd. There is an echo. I'm hearing myself in a way that's odd.

[Joshua Tilton, Analyst at Wolfe Research]

Maybe can you just talk to, like, what's driving the confidence in that view? Is it just what you see in the funnel? Like, any incremental color would be helpful.

[Roei Golan, CFO at Check Point Software]

We see progress in the funnel. We see improvement in the funnel. If we are looking, we are checking all the time, I mean, these metrics on a weekly basis. We see improvement in the funnel for the second half of the year. We see very nice deals, large deals in the funnel that are progressing. And again, we are doing these checks, we are doing the discussion with the go-to-market leaderships across the world. We feel more confident about the second half of the year. We do see even already some nice deals that we already won over the competition, over competitors, the win backs, large enterprises.

[Roei Golan, CFO at Check Point Software]

Of course, it's not gonna see these revenues in the second half of the year. We see these kind of deals being closed and will affect our revenues in the second half of the year. All of that together puts us in much better, I mean, much better view for the second half.

[Joshua Tilton, Analyst at Wolfe Research]

Helpful. Thank you.

[Kip Meintzer, Head of Global Investor Relations at Check Point Software]

All right, next up is Jonathan Ho, followed by Peter Levine.

[Jonathan Ho, Analyst at William Blair]

Hi, good morning. Thanks for taking the question. You referenced, you know, some strong growth in your AI Security solutions, but they're still relatively small contributors, you know. With that strong pipeline build, particularly in the last couple of weeks, you know, when do you expect AI Security to be more of a material contributor? Can there be maybe a stronger type of a sphere-type solution where you can land some new customers, so cross-sell within your base versus landing new customers?

[Nadav Zafrir, CEO at Check Point Software]

Thanks for the question. Look, early innings, right? I think to become a substantial part of our revenue, that will only happen in, as a standalone, that will only happen in 2027. It's a big investment. Organizations are going to, inevitably, even those that are trying to sort of, you know, slow down the adoption, inevitably, need to adopt new AI for their employees, for their applications, et cetera. We're all seeing it in our own personal lives. We're seeing it in our businesses, et cetera. It's a process. As a standalone business, I think to be substantial to Check Point, 2027. Beyond that, you're right, it's not just a standalone.

[Nadav Zafrir, CEO at Check Point Software]

For example, it's part of our workspace pillar, where, you know, workspace employee usage is sold as a bundle through our workspace. You know, when you look at the infrastructure level where we spoke about the firewall business being able to double down on the infrastructure and embed AI in the NVIDIA GPUs. Again, as Roei said, we're only seeing the first glimpse of these projects happening. As they happen, I think we're gaining advantages. To answer your question, I think it's both as a standalone and as a contributor to our other pillars, and, you know, even to our not just to our product base.

[Nadav Zafrir, CEO at Check Point Software]

One of the fastest-growing things in security for AI is AI red teaming, as an example, which is a part of our services business. It does have an impact on each one of those and as a standalone. To be a real impact on our revenue, and, you know, become a significant part, 2027.

[Kip Meintzer, Head of Global Investor Relations at Check Point Software]

All right. Thank you, Jonathan. Next up is Peter Levine, followed by Saket Kalia.

[Peter Levine, Analyst at Evercore ISI]

Great. Thanks, Kip. Maybe just to double down. You know, when you last reported mid-February, can you just help us, when do these, like, when do you really see the material impact to the go-to-market strategy? Maybe help us understand, you know, the deals that were impacted. Are these upsells, renewals or like net new deals? Meaning, like, what's the level of confidence that if it was net new deals, these are still in the pipeline. Obviously, you talked about stabilization in the second half, just help us understand, like, the impact and, like, where those deals fall.

[Roei Golan, CFO at Check Point Software]

I think when we reported back then in February, we were in the middle of the process. I mean, we started it sometime in January, but we're in the middle of the process. We did expect some kind of disruption back then. But when we looked and after when, I mean, we're looking at February or March, we did see this disruption affecting our funnel, affecting our funnel creation, mainly for the second quarter and some for the first quarter. We did see some delays of funnel creation. We see that coming. We did see these delays are affecting it. We see in the last few weeks the impact. We see that in the last weeks we do see a significant change in the funnel creation.

[Roei Golan, CFO at Check Point Software]

These delays mainly impact the second half or the first half of the year. Again, of course, there are several deals that have been pulled from one, from first half to the second half. It's important to say that renewal business looks stable. We don't see any of it. It's mainly affected new businesses and firewall. That's the main change. I mean, when we compare, I mean, we are being in the middle of the process. As Nadav said today, I think we are in the last inning. We're almost done with these changes, and we are now more confident with what we see for the second half of the year.

[Peter Levine, Analyst at Evercore ISI]

Thank you.

[Kip Meintzer, Head of Global Investor Relations at Check Point Software]

All right, up next is Saket Kalia, followed by Eric Heath.

[Saket Kalia, Analyst at Barclays]

Okay, great. Hey, guys. Thanks for taking my question here. I wanna shift gears a little bit, and Roei, maybe the question is for you. You know, the growth in emerging ARR and billings was great to see, 40%, 45%, I think those numbers were. Can you just remind us how big those businesses are in aggregate?

[Saket Kalia, Analyst at Barclays]

As a % of subscription revenue. I want to connect that back to some of the go-to-market changes. How can some of the go-to-market changes maybe support growth in those emerging products going forward?

[Roei Golan, CFO at Check Point Software]

We're not disclosing it, but these specific three products are slightly below, I would say, 30% of our ARR for subscription. Think about that area. The specific three products. Nadav, you want to talk about the go-to-market?

[Nadav Zafrir, CEO at Check Point Software]

Yeah, look, when you look at the go-to-market adjustments we've made, it does support exactly what you said. We're doubling down on investment on these pillars, but also integrating our work, our sales force together with them. That is, when we want to become a multi-pillar organization, we want our account managers to be able not just to do firewall, but also the emerging business. That's part of the change that we're doing. Beyond that, we need to go to our channels and introduce them to these new products which some of them are novel to them. You're right. On the one hand, we need to push these emerging technologies and capabilities faster, and we're doing that.

[Nadav Zafrir, CEO at Check Point Software]

At the same time, we are going to go after new logos, win backs, et cetera, with what I believe is a tailwind of what's happening from the attacker's perspective and our capabilities. At the end of the day, it's obviously the, you know, the change itself is disruptive. Now I think we're at the tail end of the disruption. As Roei Golan said, we're starting to see the upside, but it's never ending. We got to get the right people. We got to get the right data. We got to get the right processes. Then again. Ultimately, it's putting a really big focus on our go-to-market all the way from funnel creation, demand creation, channels, the people, the processes, et cetera. That's what we're doing.

[Nadav Zafrir, CEO at Check Point Software]

I think it positions us for the future.

[Saket Kalia, Analyst at Barclays]

Very helpful. Thanks.

[Kip Meintzer, Head of Global Investor Relations at Check Point Software]

All right, next up is Eric Heath, followed by Roger Boyd. Eric's on mute. There you go.

[Eric Heath, Analyst at KeyBanc Capital Markets]

There you go. A little slow on the trigger. Thanks, Kip. Thanks for your question. Nadav, I wanted to come back, I mean, to your comment about M&A. It's been part of the strategy with tuck-ins, and you have the balance sheet strength, which is a strong suit for yourself and relatively muted valuations out there, broadly speaking. Just anything you can share about more transformational M&A as part of the strategy going forward. Thanks.

[Nadav Zafrir, CEO at Check Point Software]

Yeah. Thanks, Eric. We're looking at this based on our pillar approach, right? Which, which at least in my mind, is very, very clear. What do we want to achieve in the hybrid mesh? What do we want to achieve in CTEM? What do we want to achieve in workspace? In each one of them, our M&A teams are constantly hunting for, you know, early-stage startups with foundational technologies that we can take advantage of, but also larger opportunities. I do think that one, our balance sheet, second, our discipline, and third, the volatility in the market, is going to create opportunities for us. We are gonna make those moves when, you know, when it's strategically within what we want to do in the pillar.

[Nadav Zafrir, CEO at Check Point Software]

We believe that from an execution culture, you know, we have the ability to do it. When all these ducks are lined up, that's when we're gonna make those bigger moves.

[Eric Heath, Analyst at KeyBanc Capital Markets]

Thank you.

[Kip Meintzer, Head of Global Investor Relations at Check Point Software]

All right, next up is Roger Boyd, followed by Matthew Hedberg.

[Roger Boyd, Analyst at UBS]

Awesome. Thanks, Kip. Nadav, I think you mentioned 90% growth in CTEM, 40% growth in email. Just any sense on where you are in terms of SASE growth and to what extent is that business impacted or not impacted by some of the dynamics you're seeing across product and firewall right now? Thanks.

[Nadav Zafrir, CEO at Check Point Software]

Yeah. Thank you. Look, SASE has become a fundamental part of the hybrid mesh network security. We're making really big investments there. We have, you know, our R&D part is rushing to complete our feature list. We're now able to go upstream to the larger enterprises and creating some differentiated, unique capabilities. In terms of the impact, no, I don't think it was impacted by the go-to-market change. I think the go-to-market change primarily affected our core, our firewall with people moving around. In fact, we're doubling down on our SASE, you know, sales capabilities. We joined forces with our CGNS, our cloud network security sales force with SASE.

[Nadav Zafrir, CEO at Check Point Software]

In effect, that we now have a bigger team, and more salespeople that can do both. As this matures, the most important thing for us is to make sure that our general account managers can also be selling SASE, and that's sort of the trajectory we're going into. It is becoming more and more important around our hybrid mesh network security, as organizations are, you know, moving. In fact, I think adoption of AI is actually going to make this even more critical.

[Roger Boyd, Analyst at UBS]

Very helpful. Thank you.

[Kip Meintzer, Head of Global Investor Relations at Check Point Software]

All right, our last questioner today is going to be Matthew Hedberg.

[Matthew Hedberg, Managing Director and Software Research Analyst at RBC Capital Markets]

Hey. Thanks, Kip. Hey, Nadav. You know.

[Kip Meintzer, Head of Global Investor Relations at Check Point Software]

You've definitely made us look for clean today.

[Matthew Hedberg, Managing Director and Software Research Analyst at RBC Capital Markets]

With all the advancements from some of the AI models, and with Mistral, you know, I mean, it's gotta represent an incredible challenge for not only customers, but even for some of your engineers. What is the focus internally with keeping up with this rapid change from these frontier models? Like, you know, how do we as a, as a cyber community, you know, adapt to this?

[Nadav Zafrir, CEO at Check Point Software]

Look, I think that's sort of the biggest question that we're all looking at, right? When you think about it, we're witnessing democratization and industrialization from the attacker side. That's a huge shift. Our networks, as they become agentified, they really change the nature of the network. Because if you really want to harness agents, you gotta give them the ability to get into different data sets. That create different pathways that we haven't seen before. This is not a new shift, but it's accelerating dramatically. Look, we're preparing for this era for a long time. It's not just about a single model announcement like Mistral. I think we're executing intensively over the past year. I'll give you one example of what sets us apart.

[Nadav Zafrir, CEO at Check Point Software]

You know, we have the depth of the research. We have folks in Tel Aviv, in Zurich, in San Francisco that are building this foundational model that we're constantly feeding in order to anticipate that future. Again, like I said before, this allows us not just for the latency and accuracy, but also the cost structure. We started working in different verticals like banking, health, energy with large design partners, so that not only we try to anticipate what the attackers are doing, but they also tell us what they're doing in order to optimize their own organizations, you know, irrelevance, not because of cyber, but because how they want to harness these models. Together we're trying to understand how to securely adopt them.

[Nadav Zafrir, CEO at Check Point Software]

You know, one of the things that I'm very, you know, glad to see is that someone like Adam Ely is joining us. We're seeing like, you know, we're securing Microsoft Copilot, we're securing Gemini at Google. You're right, this is a fundamental change. I think at the end of the day, on the one hand, we want to move really fast with AI adoption. On the other hand, we need to use our decades of hardening our environments, so that we can get ahead of the curve before exploits go public. In this case, I think that our IPS signature and WAF rules is, you know, best in the industry right now. I think it positions us well.

[Nadav Zafrir, CEO at Check Point Software]

I think there are going to be many more models. I think a lot of them are going to become publicly available. We're really just seeing the beginning of this. Zero-days become one-days. The time to patch is going to need to accelerate dramatically. This is where we're bringing our CTEM capability. Again, when you put these things together, I really think that we have a proposition to customers that not just going to keep them more safe, but also allow them to do this AI adoption. Having said all that, look, there's a lot of unknown. I want to be very clear about that. Some of the things that we're seeing with these new models is truly a game changer.

[Nadav Zafrir, CEO at Check Point Software]

What we're doing in order to try to stay ahead of it is not just to try to see what's happening in the wild, but also to get and to try to simulate how the attackers are going to take advantage of these tools. Because the whole attack, you know, process, everybody's talking about vulnerabilities, but there are so many other things that we need to be aware of in order to stay ahead of this. You know, in that sense, these are really exhilarating time.

[Nadav Zafrir, CEO at Check Point Software]

I think like was said before, this is a good time to be in this industry from a business perspective, but it's also one of the most important times to be in this industry, so that we can keep this digital world running. All right, guys, thank you very much for attending. I'm sure we'll see you guys throughout the quarter, and we'll be speaking to quite a few of you over the next few days. Have a great day, and we'll see you guys soon.

[Kip Meintzer, Head of Global Investor Relations at Check Point Software]

Bye-bye now. Thank you.

Participants

Analysts

• Adam Tindle, Managing Director at Raymond James
• Brian Essex, Executive Director at J.P. Morgan
• Eric Heath, Analyst at KeyBanc Capital Markets
• Jonathan Ho, Analyst at William Blair
• Joseph Gallo, Senior Vice President at Jefferies
• Joshua Tilton, Analyst at Wolfe Research
• Kip Meintzer, Head of Global Investor Relations at Check Point Software
• Matthew Hedberg, Managing Director and Software Research Analyst at RBC Capital Markets
• Nadav Zafrir, CEO at Check Point Software
• Peter Levine, Analyst at Evercore ISI
• Rob Owens, Managing Director and Senior Research Analyst at Piper Sandler
• Roei Golan, CFO at Check Point Software
• Roger Boyd, Analyst at UBS
• Saket Kalia, Analyst at Barclays
• Shaul Eyal, Managing Director and Equity Research at TD Cowen
• Shrenik Kothari, Analyst at Baird
• Tal Liani, Analyst at BofA
• Todd Weller, Managing Director at Stephens