Earnings call transcript: Check Point Software tops Q3 2025 forecasts

Check Point Software Technologies Ltd. (CHKP) reported a significant earnings beat for Q3 2025, with earnings per share (EPS) reaching $3.94, surpassing the forecast of $2.45. Revenue also exceeded expectations at $678 million, compared to a forecast of $673.28 million. The company’s stock responded positively, rising 9.53% in pre-market trading to $210. According to InvestingPro analysis, Check Point maintains impressive gross profit margins of 88.01% and demonstrates strong financial health with an overall score of "GOOD." Based on InvestingPro’s Fair Value analysis, the stock appears to be trading near its fair value.

Key Takeaways

• Check Point’s EPS exceeded forecasts by 60.82%.
• Revenue grew 7% year-over-year, reaching $678 million.
• Stock price surged 9.53% in pre-market trading.
• Emerging technology annual recurring revenue (ARR) grew over 40%.
• Full-year revenue guidance was raised by $15 million.

Company Performance

Check Point Software demonstrated robust performance in Q3 2025, driven by double-digit growth across all geographies and a 20% increase in calculated billings, which totaled $672 million. The company’s strategic focus on expanding its product portfolio and integrating acquisitions has bolstered its competitive position in the evolving cybersecurity market.

Financial Highlights

• Revenue: $678 million, up 7% year-over-year.
• Earnings per share: $3.94, including a $1.47 one-time tax benefit.
• Deferred revenues grew 8% to $1.887 billion.
• Remaining performance obligation increased 9% to $2.4 billion.

Earnings vs. Forecast

Check Point’s actual EPS of $3.94 significantly surpassed the forecasted $2.45, marking a 60.82% surprise. This performance reflects the company’s ability to capitalize on market opportunities and execute its strategic initiatives effectively.

Market Reaction

The company’s stock price experienced a notable increase of 9.53% in pre-market trading, reaching $210. This movement reflects investor confidence in Check Point’s strong financial performance and positive outlook. The stock’s rise is significant compared to its 52-week range of $169.02 to $234.36.

Outlook & Guidance

Check Point raised its full-year revenue guidance by $15 million, indicating confidence in sustained growth. For Q4, the company projects revenue between $724 million and $764 million, with a 6% midpoint growth expected. The company anticipates continued growth in subscription revenues and potential hardware refresh opportunities in 2026.

Executive Commentary

CEO Nadav Zafrir emphasized the company’s strategic direction, stating, "We are in the very first innings of the most impactful technological revolution of our lifetime." He also highlighted the company’s focus on AI adoption, noting, "Our strategy is guided by four core principles shaped by accelerating AI adoption."

Risks and Challenges

• The cybersecurity market’s rapid evolution could pose challenges in keeping pace with technological advancements.
• Potential supply chain disruptions may impact hardware availability.
• Increased competition in the AI security space could pressure margins.
• Macroeconomic uncertainties could affect enterprise spending.

Q&A

During the earnings call, analysts raised questions about the company’s pricing strategies and sales incentive changes. The discussion also explored the potential of hybrid security solutions and market opportunities, reflecting investor interest in Check Point’s strategic initiatives and market positioning.

Full transcript - Check Point Software Technologies Ltd (CHKP) Q3 2025:

Nadav Zafrir, CEO, Check Point Software Technologies: Thank you, Keith, and good to see you all. So we delivered a strong third quarter marked by double digit growth in calculated billings, driven by disciplined execution and the rising demand across all of our portfolio. And nearly a month into Q4, we remain confident in our trajectory and we’re raising our midpoint for 2025 revenue guidance and Rui will share more on this shortly. As we discussed during our second quarter earnings call, our strategy continues to be anchored in four core principles that we believe define the foundation of a modern cybersecurity stack, shaped predominantly by the accelerating adoption of AI. As we continue to shape the future of cybersecurity, our strategy is guided by these fourth principles.

First, securing the connectivity fabric as it evolves from a traditional infrastructure into an agentic autonomous reality. Second, our prevention first approach, which I believe is now more important than ever. As attackers leverage sophisticated agented capabilities, it’s literally imperative that we dramatically improve the signal to noise ratio and limit our reliance on detection to a minimum. Our open platform philosophy, the open platform philosophy is not the easiest path, but it’s the only viable one for achieving security resilience. Building an open collaborative ecosystem among vendors demands communication and cooperation, sometimes even with fierce competitors.

Yet, I can tell you from the trenches of cybersecurity, it’s clear to us that it’s essential. And our recent acquisition of Verity is a powerful example of how we’re advancing this vision. By integrating Verity into our exposure management organizations, we’ve expanded integrations across endpoint, firewall, cloud providers reaching over 100 deployments and delivering automated remediation based on what’s the best security possible. And finally, as I emphasized before, securing AI is top priority. We are in the very first innings of the most impactful technological revolution of our lifetime.

Moving from current phase of human enhancement to replacement and delegation to the next phase of crossover where sophisticated agents are taking over and crossing lanes, it’s both exhilarating, but also extremely challenging. And I think it’s a race for relevance for everyone. And we must remember and we see that at the same time, we’re seeing how rapidly attackers are leveraging AI to outpace us as defenders. And this drives our mission to build a full stack AI powered security platform. Last week, we closed the acquisition of Lakira, a Zurich based AI native security leader with deep expertise in protecting large language models and autonomous agents.

Makira enables real time defense against prompt injections, data leakage and model manipulation. And it gives us a secure, a unique security oriented model that ensures evolving defense to stay ahead of emerging AI threats. And I believe that together we’re building a comprehensive AI security platform that will enable our customers, the enterprises that we work with to scale AI adoption securely and confidently. And what does that mean? It means securing employee usage of AI tools through observability and data loss prevention.

It means protecting and agents with runtime defenses. And then finally strengthening model robustness via continuous testing and compliance readiness. You should know that Liqueira is already trusted by Fortune 500 enterprises including some of the biggest banks and largest technology companies worldwide. And we’re just getting started. As AI adoption accelerates, it exposes new threats.

And we’re committed to leading the journey to enable organizations to adopt AI securely. We’re investing organically in research and development and we’re identifying strategic acquisition opportunities that will reinforce our leadership position. Beyond that, I want to touch briefly on our latest go to market updates. During the quarter, we achieved FedRAMP authorization for the null platform for government. This position us as a trusted partner for the most demanding federal environments.

Our go to market organization is now fully staffed. Rachel Roberts joined us as President of America Sales. She brings deep enterprise sales expertise from her leadership roles at Cisco and Paolo to further build and scale our sales organization. Avi Rambam was appointed President of Technical Sales. Avi has been with us for a long time and from here on he will lead the efforts to drive technical excellence and strengthen consumer customer engagement.

And finally, Brett Theiss joins us as Chief Marketing Officer to strengthen our brand presence to fuel demand and position Check Point for its next chapter of market leadership. To close, before I hand over to Rui, so with over ten months in my role as CEO at Check Point, I think that our strategic vision is taking shape. And I’m energized by the progress we’ve made already and where we’re going in the future. And with that, I’ll turn over to Rui.

Rui Yin, CFO, Check Point Software Technologies: Great. Can you see my screen?

Nadav Zafrir, CEO, Check Point Software Technologies: Yes.

Patrick Colville, Analyst: Great.

Rui Yin, CFO, Check Point Software Technologies: So thank you, everyone, and thank you, everyone, joining the call. As Nadev mentioned, we had a strong quarter driven by strong demand across our portfolio. If we are looking on our revenues, our revenue grew by 7% to $678,000,000 exceeded by $6,000,000 our midpoint. Our non GAAP EPS reached $3.94 per diluted share and exceeded our guidance. It is important to note that this number includes a onetime tax benefit in connection with a tax settlement we signed during the quarter that resulted in an update for our tax provision and that had a benefit of $1.47 both for our GAAP and non GAAP EPS.

Excluding the one time benefit, our EPS exceeded the midpoint of our projection by approximately $02 Moving to our results. So as I indicated, our revenues grew by 7%. Our deferred revenues grew by 8% to $1,887,000,000 Our calculated billing totaled $672,000,000 reflecting a robust 20% growth year over year. That was driven by strong demand across our portfolio and across our geographies that all of them grew by double digit. I do want to remind you that our billing effect also affected by approximately three points from deals that were slipped from previous quarter.

We talked about it last in our last earning call. In addition, we had one large deal, early renewal of that resulted in 2% benefit early renewal from Q4 that came in Q3 and resulted in the benefit of two points to our billings. If we’re looking on our current calculated billings, so that grew by 14% to $642,000,000 Our remaining performance obligation grew by 9% to $2,400,000,000 I’ll move forward. As I said that we did see a strong demand across our portfolio. If I were looking on our services calculated billing, services calculated billing is actually the calculated billing excluding our product business, and that grew 21% compared to 7% last year.

And again, that’s not only from certain products that’s across our portfolio, if it’s the Quantum Firewall, Harmony email, Harmony SASE brought these great results. If we’re looking on our emerging technology, so that’s the ARR, we do see that it’s a free we I calculate the three main products that three companies that we acquired in the last few years, Harmony SASE, Harmony e mail and collaboration and external risk management. All of these products grew organically 40% more than 40% in ARR year over year. And we do see them becoming more and more significant to our total business. Moving back to our global revenues distribution.

So we did see double digit growth in America, a 10% growth that’s represented a 42% of our revenues in Q3. EMEA, which represents 45 of our revenues this quarter grew by 3%, while APAC, Asia Pacific, grew by 8% and representing today 13% of our total revenues. Moving into our P and L, into operating performance. So our gross profit increased from $563,000,000 to $6.00 $2,000,000 representing a gross margin of 89% similar to last year. Our operating expenses increased by 11%.

The increase was mainly as a result of our continued investment organically and also the impact of Cyberint and Verity acquisition that were not part of Q3 last year P and L. Our non GAAP operating income continues to be strong at $282,000,000 42% operating margin. Also something that I discussed also in our last earning call, and I want to touch base on it again in this call. The U. S.

Dollar got in the last few months, I would say, since the beginning of Q3, the U. S. Dollar got weakened significantly versus the Israeli shekels. Given the fact that we have significant expenses in shekels that have had although we are hedging significant part of that expenses, still we do see a negative effect of this weaker dollar on our P and L. In this quarter alone, that affected our P and L by approximately one point to our margin, approximately I would say $06 Looking ahead, before already talking about next quarter, so we continue to add, of course, our foreign exchange currencies and our foreign currencies.

And we do expect to see approximately one point headwind to our margin in Q4. In addition, as Nadebeh mentioned, we closed last week the acquisition of Lakira, leading AI native security for platform for agentic AI application. This acquisition that was closed last week will result in approximately after point headwind for margin in Q4. As we look further into 2026 and as I indicated in the previous earning call, based on the current FX rates, that can have an increase for our annual expenses next year in 2026 of approximately 50,000,000 to $60,000,000 That’s something that we discussed last quarter. And again, because the current rates are similar to what we discussed last quarter, I wanted to bring it back again here.

Moving into our cash flow. Our cash flow was very strong. Operating cash flow was very strong with $241,000,000 operating cash flow. That included a $66,000,000 onetime tax payment in connection with tax settlement signed during the quarter that also I talked best about it when we talked about the EPS. Excluding this onetime taxes payment, our operating cash flow grew by 23%, very strong cash flow.

People are looking on our total cash. Our total cash in the end of the quarter is $2,800,000,000 for cash and marketable securities and deposits. Another point that we had during the quarter another two point that we I want to mention here that we had during the quarter, we talked about it also last quarter that we are building a new checkpoint campus in Israel, in Tel Aviv. And during the quarter, we paid approximately $160,000,000 for the land. And that’s a we’re going to see it in the invest in the cash flow from investments.

I do have to say here that we don’t expect any significant additional investments until 2027. In addition, we continue to do our buyback and we purchased our share. We purchased approximately $325,000,000 of shares at an average price of $198 So to summarize, strong quarter revenues and EPS exceeded our projection, accelerated growth across our portfolio driven by 20% growth in calculated billings driven 20% growth in calculated billing and another strong operating cash flow and profitability profitable quarter. Moving to the business outlook for Q4 before we move to the Q and A. So if we’re looking on Q4, so we’ll start with Q4 and then touch base on the full year.

So Q4, our range is between $724,000,000 to $764,000,000 represents 6% in the midpoint. The non GAAP EPS is between $2.7 to $2.8 GAAP EPS is expected to be $0.60 less. Before looking on the annual guidance, so first, I remind you that though we in the middle column, you see the original guidance we provided in the middle of the year. Our midpoint or the uplifted midpoint of the revenues guidance will be 15,000,000 going to be $15,000,000 above the original midpoint. So it’s the range is between two point seven zero five and two point seven four five, midpoint of 2.725, 6% growth year over year.

Our non GAAP EPS is expected to be between 11.22 to $11.32 and the GAAP EPS is expected to be approximately $2.29 Again, the EPS also includes the tax benefit that I discussed. And two things two items that I want to add, Rasil, about revenues and EPS. Q4, as we it’s like in which is more typical for Q4, it’s a very heavy back end loaded quarter that also includes heavy hardware and heavy, heavy hardware projects. We see also in our final today significant refresh projects that’s supposed to come in, in Q4. And because it’s more heavy, so again, there is more we are providing the range.

There is the range is mainly for the hardware portion that again, we do expect to see more refresh project, but because the hardware is more significant in Q4, that’s something that we need to take into account in the guidance. And as for the EPS, I mentioned it when I discussed the P and L. The EPS in Q4 will be affected by two main items. One is the FX that would have approximately $07 to $08 effect based on the current rates in Q4, the weaker dollar that will affect our P and L and Laquira that will have approximately between $04 to $05 effect in Q4 EPS. That’s it.

And I’ll turn in to Keith to managing the Q and A.

Keith, Moderator: All right. Just give us a brief moment while we get the speakers situated. Our first up is going to be Brian Essex from JPMorgan, followed by Amia Colpa from Patrick Colville in position number two.

Brian Essex, Analyst, JPMorgan: Great. Thank you, Kip, and thanks for taking the question. Maybe to start with, Rui, on that last point that you just talked about in terms of guidance, noting that Q4 tends to be a heavier hardware quarter. Could you talk about your underlying assumptions for subscription and recurring revenue in your guide and how much visibility you have? Would love to just get the thoughts around the sensitivity versus hardware in 4Q.

Rui Yin, CFO, Check Point Software Technologies: So we expect to be again, I can give more insight on that. So we are expecting to have, of course, double digit growth in subscription with slightly improvement here into Q3. I remind you that in Q4, last Q4, we have already in the comparable Cyberint that the first quarter this year that Cyberint is included. But still we do expect to see acceleration of our subscription revenues from what we did have this quarter and support similar rates, growth rates for what you’ve seen in the third quarter. As for the appliances, we do expect to see growth year over year more around the midpoint and mid single digit.

Brian Essex, Analyst, JPMorgan: Alright. Super helpful. I’ll keep it the one

Brad Zelnick, Analyst: to keep keep that keep that happy. So

Keith, Moderator: Thank you. Alright. Next up is Patrick Colville. Hey, Patrick.

Patrick Colville, Analyst: Hey. Bow down, kiss the ring, king kip, king Nadav, and king Roy, congratulations.

Nadav Zafrir, CEO, Check Point Software Technologies: Thank you.

Patrick Colville, Analyst: 20% billings growth is is, you know, I’ve covered Check Point for a long time, and it’s it’s hugely impressive. So good to see that. The question we’re getting already is what is the sustainability of that growth? I mean, so you you talked about that there were a few one offs, you know, push from 2Q, pull for 4Q. But as we think about 2026, is this a new chapter for Check Point and, you know, under the leadership and, any puts and takes as we think with just the models looking out a year out?

Rui Yin, CFO, Check Point Software Technologies: Nadal, you can start.

Nadav Zafrir, CEO, Check Point Software Technologies: Sure. I can start. First of all, thank you, Patrick. It’s for your kind words. I think it is a new trajectory.

Yes, Q3 was a very strong quarter. And I think it is and some of it, as you said, has some pullovers and pull ins. But generally speaking, it’s a strong quarter. And I believe that when we give our guidance for 2026, you’ll see that we believe a trajectory of growth is in the cards for us. Having said that, you know us already, we’re going to do this prudently and we’re going to make sure that we make investments at the right places in the right time.

So I think it’s a journey, but I do think that we’re seeing the beginning of the fruits of this journey.

Brad Zelnick, Analyst: Thank you.

John DiFucci, Analyst: All

Keith, Moderator: right. Next up is Joseph Gallo followed by Taliani.

Joseph Gallo/Joshua Chilton, Analyst: Awesome. Thanks, Kip. Hey, guys. Nice job on the results. On the go to market leadership changes announced, is there a change in strategy?

And should we factor that into 4Q billings? Maybe just, you know, give us some commentary on how we should think about 4Q billings? And then where are you on a quota carrying and rep basis? And how should we

John DiFucci, Analyst: think about that growth going forward?

Nadav Zafrir, CEO, Check Point Software Technologies: Yes. Thank you for that, Joseph. So the strategy is the new strategy with the new leadership is actually going to take effect in 2026. Q4, Avery Rembaum is still going to lead The Americas and we’re keeping ahead full steam mold for all cylinders ahead. We are going to make changes as we go into 2026.

And we’ll announce some of them when we meet again and speak about guidance for 2026. I will say that we are going to be ultra focused on making sure that we go back, not go back, but continue winning upsell in large enterprise with our current existing customer base, but also with our new products roadmap, with our new capabilities, go and acquire new enterprise customers across the world with a focus in The Americas.

Shrennik/Taliani/Jonathan Ho, Analyst: Thank you.

Keith, Moderator: There we go. Alright. Next up is Taliani followed by Adam Tindle. Good morning, Tal.

Shrennik/Taliani/Jonathan Ho, Analyst: Thank you.

Keith Bachman, Analyst: How long does it take for billing growth to translate to revenue growth? And then where would it be recorded? Meaning, when I look at your revenues, product revenues, subscription, and and services, it’s all very predictable. Meaning, the only swing factor is maybe maybe products, but very predictable. So as this increase in in billings translates into revenue growth, where would you see it?

Rui Yin, CFO, Check Point Software Technologies: So so I’ll touch base on that. I’ll take it. The billing is the billing, of course, it’s it’s it’s allocated between or as you said, services, I would combine support and subscription services and and product. I think on the services side that grew this quarter, the billing grew by 21%. That’s going to be you’re going to see it in the revenues in the next four quarters.

Most of it because most of these billings came in the last month of last month of the quarter. As every quarter, it’s taking loaded quarters. So you’re going to see the effect in the next four quarters. I do have to say that we want to show sustainable growth of billing of services billing that if we’re

Shrennik/Taliani/Jonathan Ho, Analyst: going to

Rui Yin, CFO, Check Point Software Technologies: make sustainable billing go ahead with as I mean, similar growth as we’ve seen in this quarter. So that in the end, you’ll see it’s pretty I mean, you’ll see it also in our revenues. On the product side, if you’re gonna most of the billing is coming together with the revenues. So because it’s recognized immediately and you are we are billing the customer when we are delivering the product. So it’s easier.

So you see it usually immediately on the services, as I said, it takes more time.

Shrennik/Taliani/Jonathan Ho, Analyst: Got it. Thank you.

Keith, Moderator: Next up is Adam Tindle followed by Rob Owens.

Joseph Gallo/Joshua Chilton, Analyst: All right. Thanks, Kip. Nadaab, congrats, obviously, 20% calculated billings growth. I was scrolling through my model. I don’t think I’ve seen a number like that in the past decade at least.

You talked about at the Analyst Day earlier this year, SASE being a very critical growth area for the company. I wonder as you kind of reflect on the growth that you’re seeing right now, if you could talk about the contribution from SASE, the upcoming roadmap that you have for that product area? And on the

Shrennik/Taliani/Jonathan Ho, Analyst: back of this, do you

Joseph Gallo/Joshua Chilton, Analyst: think we’re at a point in time where it makes sense to step on the gas for investment for Check Point from here? And maybe any parameters on what that would do to margin if Roy wants to weigh in? Thanks.

Nadav Zafrir, CEO, Check Point Software Technologies: Yes, thank you, Adam. So I’ll start with SASE. We are seeing a meaningful ARR growth in SASE as Roy said, over 40% in Q3 of ARR growth. SASE for us is not a standalone. It’s a part of our the connectivity fabric and hybrid mesh.

And that’s one of the reasons this is such a critical factor for us. I also think that as our clients, as our customers start adopting AI, our SASE hybrid approach, the fact that we’re not only cloud but also on device gives us another parameter or another, I would say, advantage. I will say that we’ve made substantial investments, as I’ve said before, in SASE in terms of hiring new talent. And we’re talking, this is not in the dozens, this is in the hundreds, because this is a must win product for us. And we are seeing success as we go into 2026.

The good news is that we can up scale and go and start deploying in larger and larger enterprise as we go into 2026. So that’s on the SASE side. Optimism, but to be completely transparent, it’s never good enough. We need to move faster, we need to add features, we need to grow the larger enterprise, we need to integrate this into our hybrid mesh connectivity fabric and keep on moving. So that’s on SASE.

Investment, generally speaking, the answer is yes, but we need to do it prudently. So we’re investing in SASE. But we’re also investing in our newly formed Workspace. We’ve had great success with email. Now we’re bringing the other products so that we can secure our customers’ employee base wherever they are and whenever they are.

So that’s endpoint mobile browser. The biggest investment that you are going to see from us is investing in the future and that’s building the full stack AI security platform. Lakira is just one example. But we’re literally going after the best talent. Some of these are building products.

Some of these individuals are just looking to understand what the attackers are going to do as they increase Phase II, Phase III and Phase IV. So that’s going to be an investment in our future and we really need to make investments across the board. And we’ve spoken about this and I’ll let Farid chime in as well. We are doing this calculation of profitability versus growth and always looking at the two and trying to make the right calls prudently so that we can get to a sustainable growth without sacrificing too much of our margins.

Rui Yin, CFO, Check Point Software Technologies: And I think we’re going to talk more about it, Adam, about 2026 when we’re going to announce Q4 numbers probably around in February, and we can have more color about 2026 growth margins.

Keith, Moderator: All right. Next up is Rob Owens, followed by Keith Bachman.

Brad Zelnick, Analyst: Great. Thanks, Keith. Always a pleasure

Patrick Colville, Analyst: to be behind Adam. Nidav, maybe you could just expand on some of your comments around the AI security component. I realize you laid out kind of the three different components of where your strategy is, but how much do you need to fill in from an M and A perspective? I realize that it’s changing rapidly, but at this point, where is Check Point just in terms of having the coverage that you want and how much more M and A do you think will be in the next twelve to eighteen months? Thanks.

Nadav Zafrir, CEO, Check Point Software Technologies: Yeah, thanks, Rob. My favorite topic. I look at this from two different perspectives that are outside of Check Point and where Check Point’s role is. So outside of Check Point is the four phases of adoption. We, you know, there I still need to sort of, I still haven’t seen a meeting with the C level, whether it’s the board, C suite, CIO, Chief Data Officer, where this is not front and center of their strategy.

We’re all there. We’re there as people, we’re there as organizations. We understand that we either start advancing in the journey or we become obsolete. And it’s moving from enhancement, is already where we are right now, right? So we’re all better performers because of AI.

Most of the organizations already have replacement. So they already have agents that are replacing humans in different lanes, but they’re in their own lanes. And the first organizations, the more sophisticated ones are starting to play around with crossover agents that are now making crossover decisions and getting access to different databases. That opens a whole new plethora of challenges changing the idea of what it means to protect the network. Not only because there’s more to attack, but also because on the other side, we need to understand that attackers are usually one phase ahead.

So if we are in the first and second phase, they’re already experimenting with the third phase. So that’s how we look at the outside world and when we look at our customers, we want to be their partner to be able to quickly adopt AI when we are doing the security part for them. So on the level of the users, I believe we already have the best security. On the level of runtime security for the second phase and approaching the third phase, I think that Lakeira is unique. And with Lakeira, I think we have the full stack of what’s needed for today.

However, we need to think about Phase three and four, and that’s where some of it will be organically. But to your question, Rob, some of it will be inorganically. And so we’re looking at acquisition targets as we speak. I literally just had a meeting before this call with our M and A team. They’re looking at multiple companies as we speak.

Nothing is imminent right now, but there will be more.

Shrennik/Taliani/Jonathan Ho, Analyst: Thank you.

Keith, Moderator: Alright. Next next up is Keith Bachman followed by the purple man, John DiFucci.

Keith Bachman, Analyst: Well, thank you very much, team, and I appreciate going before DiFucci. I wanted to, Nadal for you, is there anything different or changing on Harmony email in terms of the competitive dynamics specifically? And I just wanted to understand a little bit how that pipe is building. In the spirit of the question is driven by how should we think about Harmony email potential growth in CY ’twenty six versus CY ’twenty five? Is there deceleration, you think even driven by just the base or scale, if you will?

And then really just if I could sneak one into, you mentioned that FX would be 50,000,000 to $60,000,000 I think next year headwind.

Joseph Gallo/Joshua Chilton, Analyst: Not trying to jump ahead to your guidance, but

Keith Bachman, Analyst: just what you’ve done so far in M and A. If you could just give us some context about what that would be to CY 26 margins, just to level set for those two. And I know you’ve talked about some other investments you might want to do as well, but just wanted to on the knowns that you have today between FX and M and A that will impact margins. Many thanks.

Nadav Zafrir, CEO, Check Point Software Technologies: Okay. I’ll start with the email. So no, we don’t see a deceleration. In fact, we’re hoping for an acceleration and we’ll speak about it in our guidance. And the reason is very simple.

I truly believe that we have the best product in the market. And although email has been around as long as the Internet has been around or as long as cyber has been around, because attackers are already at Phase two, email attacks are becoming much more sophisticated and we’re all seeing that. I mean, we all have these conversations, did you get my email? No, didn’t get your email. Why didn’t you get my email?

Well, because somebody blocked your email. Why did they block your email? Because they are becoming more and more sophisticated. And so what we’ve built around our email is an AI capability, which I think is superior to what’s out there. So this is a replacement business, right?

We’re going out there and we’re replacing incumbents all the time. And I think that in terms of TAM, we’re still relatively small. So I don’t see a deceleration. Beyond that, as you know, we’ve asked GILFREEDRIK based on that success to take all the other products that create the suite for employees. So now we’re bringing in not just the email, but email endpoint browser and mobile.

At the end of the day, we want to look at the use case. And the use case here is employees that are working from everywhere and are now being empowered by AI agents. And the fact that we can have an agent sitting at the endpoint, either at the browser level or at the SASE level, means that we can do more on the device itself, which is cheaper, more scalable and brings better security. So I’m really optimistic about bringing all that together into our workspace.

Rui Yin, CFO, Check Point Software Technologies: And I’ll continue regarding your second question about the FX. So yes, as I said about the 50,000,000 to $60,000,000 and about the M and A, like I also talked about the effect for Q4, like Kira. So we talked about $04 to $05 headwind for Q4. We do expect to have more from one end, more investment, but from the other end, we also do expect to see more revenues from Laquira. So in the end, it’s tough to say right now, again, we are working on the plan for next year.

So it’s tough to say how it’s going to be the impact on our margin next year, the Laquira acquisition. And in general margin for next year, I think that it’s we’re to we’re still planning, working on 2026. And as I said, we’ll talk more about it in February when we’re going announce Q4 numbers.

Keith Bachman, Analyst: Okay. Many thanks.

Keith, Moderator: All right. Next up is John DiFucci followed by Srennik Cathartas.

John DiFucci, Analyst: Thank you, Kip. Question is sort of a high level question for Nadab. Nadab, I’ve known you a long time, a long time. And I know that you’re you mean what you say when you talk about an open garden approach, and it makes total sense for the customer. It really does.

And I and I but I almost and I I was looking for the right word to describe it because it almost seems and I know this isn’t you, but it’s it almost seems naive to think you can do it because your competitors, you I think you said fierce in in your prepared remarks. Right? You have fierce competitors. And it and even though it’s the right thing for the customer, no one’s ever been able to do it. So I guess, can you give us a little bit more, like, if are there any anecdotes you can share with us?

Anything you talk to us about how it’s actually going in the right direction? And then finally, Roy, just a quick follow-up. It’s great to have pricing pressure pricing power, but you and just how should we think of the price increases in subscription lately and how they may be contributing? How should we think about that? It’s great to have that, but just try to understand it.

Sorry. So thank you, John.

Nadav Zafrir, CEO, Check Point Software Technologies: I’ll be as, you know, open platform, open sort of open mind. I’ll tell you this. First of all, it’s a philosophy. I agree with you. And I’ve been in the trenches for more than thirty years in cybersecurity.

I think that where we’re going, trying to come to this with a vendor lock, closed garden, monolithic approach will really not be enough to secure our customers for many reasons. Now I agree, it’s not an easy path, but we’re seeing a glimpse of first success. So I brought up Verity as an example. Verity already has the ability to integrate with over 70 other vendors. From our CTEM, we see where the danger or the threat is coming from and we can take these IC and actually fix them not only at check point, but even at other vendors.

We already have 100 implementations of that within customers, all right. So I’m not saying this is sort of all the story, but it’s a glimpse of the story. Another one is our unified management. Our unified management today with some of the cloud native firewalls, we can manage in our unified management those others firewalls, so that from the customer’s perspective, whatever they’re using, they can have the access to truly our best in class threat cloud AI with over 100 engines that is blocking billions of attacks all the time. So it’s forming.

I agree that from a business perspective, some might say, that’s naive, it’s never going to happen. I think it needs to happen. I think it’s there isn’t another way to really secure our customers. And we are seeing early success with this open platform approach. There’s a lot of investment that we need to do in order to put more meat on the bone and create a real alternative to this idea of and we see it and we see how it resonates with our customers, right?

They want to listen to this. Some of them because it’s just the nature of the beast. They have one vendor, but then they make an acquisition. Now they have three. How are they going to consolidate this and the attackers are going to come through the cracks?

So it’s a philosophy, but it’s also a roadmap. Some of it is already happening not only in our labs, but at customer sites. As I said, over 100 deployments of Verity only and more to come around that. You know, give you one more sort of way to try to defend this. You know, when you think about detection, for example, right, we look at the Mitra attack sort of a chain, right, and kill chain.

And we say, okay, at every point, we need to have multiple guarding capabilities in order to be successful at blocking attackers. Within that framework, we’re saying a lot goes into the detection and response. I can tell you that I’m constantly trying to imagine what I would do if I were on the bad side guys, and I tell you that with AgenTik AI, a lot of what’s happening on prem that gives us the ability to detect is going to become obsolete. So now if we’re in a client’s or customer’s environment with a competitor and we don’t share what we see immediately, it’s going to be game over for the customer. So now afterwards in the aftermath, I’m going say, yes, but it wasn’t my firewall, it was their firewall.

The customer doesn’t care.

John DiFucci, Analyst: Thank you. Thank you, Nidave.

Rui Yin, CFO, Check Point Software Technologies: And to your question about the price increase, so we did the price increase for the subscription firewall effective July 1. It didn’t have any effect on our revenues for Q3 because most of the business is coming in the last month, it has very immaterial effect. The bidding side, we did see some benefit from that, yet not significant from the price increase. Again, it’s when we’re managing the same discount, we benefit from this price increase. I do want to have you that we have another price increase of 5% across all our Quantum Fireworks, which will be effective oneonetwenty twenty six.

John DiFucci, Analyst: Thank you. Thanks, Ray.

Keith, Moderator: Alright. Next up is Shrennik, followed by Joshua Gilton.

Shrennik/Taliani/Jonathan Ho, Analyst: Yeah. Team, echoing my congrats.

Keith, Moderator: Nice job. Join us from Alaska or whatever other place you’re from.

Shrennik/Taliani/Jonathan Ho, Analyst: A little sensitive. Great. Great execution. Just continuing on with the big picture team following John. So, Nadal, you you have been firm in your belief that not everything goes to the cloud and and lean hard into the the hybrid mesh value proposition, especially as the cloud and for costs are rising.

We have been hearing that a lot of AI native use cases also staying on prem. So can you elaborate from your use case perspective, like where are you winning the most in these hybrid conversation, hybrid mesh? And then I had a quick follow-up on the go to market.

Nadav Zafrir, CEO, Check Point Software Technologies: I think our advantage is in large scale complex hybrid environments. You know, where you have on prem with cloud, multi cloud, you need to manage all that and I think that’s where our advantage is. Looking into the future, there are use cases that we’re seeing with the use of AI, data sovereign issues and governance that are going to take some of the use cases back to either private or quasi private establishments that are going to offer that. Again, think this is an opportunity for us on two fronts. First, it’s our sweet spot.

Second, when you think about data centers that are providing either data center as service or a private data center for AI usage, this is where performance and speed matters more than anything else. And again, that is our sweet spot. So I’m not saying this is the only use case, but I think it’s a growing use case.

Shrennik/Taliani/Jonathan Ho, Analyst: Got it. You made some big go to market hires and some ongoing transitions. Just if you can walk us through how this factors into your operating model, both near term and fiscal ’twenty six. We appreciate that.

Nadav Zafrir, CEO, Check Point Software Technologies: Operating model in terms of our investment in marketing?

Shrennik/Taliani/Jonathan Ho, Analyst: Yes, investment, just execution assumptions, yes.

Nadav Zafrir, CEO, Check Point Software Technologies: Yes, we are starting to be more aggressive in our marketing dollars across the board and we’ll see an increase in that in 2026, hopefully to be offset with operational excellence, so that we don’t hurt our margins, but are more effective in our go to market.

Shrennik/Taliani/Jonathan Ho, Analyst: Got it. Appreciate it. Thanks.

Keith, Moderator: All right. Next up is Joshua Chilton followed by Brad Zelnick.

Joseph Gallo/Joshua Chilton, Analyst: Great guys. Can you hear me?

Nadav Zafrir, CEO, Check Point Software Technologies: Yes.

Brad Zelnick, Analyst: Awesome. Congrats on a good quarter. Maybe though just stepping back, just a broader spending question from my end. I think the first half for security was a little challenging. We had Liberation Day.

There was a lot of uncertainty. So I’m just trying to understand like how would you characterize the spending environment in 3Q? How does it compare to what you saw in the first half? And maybe help us parse out how much of the success today is just pent up demand from the first half versus better execution on your end? And just kind of what are you seeing heading into Q4?

Will there be a budget flush? What are your expectations? Just level set that for us, if you could, please. Thank you so much.

Nadav Zafrir, CEO, Check Point Software Technologies: Mr. Golan, do you want to take that?

Rui Yin, CFO, Check Point Software Technologies: Yes. I’ll touch I’ll start and then you can continue. I think again, I think it’s a first half was more challenging, mainly Q2, I think. You mentioned the liberation there. So definitely, it was more uncertainty in the market.

I do have to say that you asked if there I mean, beside the three points that we mentioned that the deals that actually will slip from the first half to Q3. So as I look at and we’re analyzing from across, I mean, many metrics, internal metrics, it’s definitely much better execution. Q3 was much better execution. And when we’re looking at Q4, so Q4, again, we do see very nice deals in the pipeline. Q4 is like almost every quarter, but Q4 is more tricky.

It includes a lot of large refresh, a large outdoor deals. And again, it also depends on budget flush. You asked about budget flush. For example, last year, did see, I would say, less than average budget plus. So I thought it’s early to say, I mean, what’s gonna be this year.

Again, when you’re talking with the field, with the sales leaders, too early to say to see to to understand if we’re gonna see more budget plus this year. Our guidance, our midpoint of the guidance didn’t take into account any significant budget flush. So that’s how I see it. Nadel, I know if you want to add.

Nadav Zafrir, CEO, Check Point Software Technologies: Yes. No, I agree. I think America, I think, is good and steady. We are hoping to see an increased demand in Europe going forward. But as Ruiz said, what we’re guiding right now does not take an optimistic view on how demand is going to be growing beyond that.

Brad Zelnick, Analyst: Super helpful, guys. Thank you so much.

Keith, Moderator: Next up is Brad Zelnick followed by Jonathan Ho.

Brad Zelnick, Analyst: Hey, guys, thanks for taking the question. Congrats. It’s great to see the success in Q3. And I love seeing when Patrick Colville can admit he’s a real gentleman, that he’s able to admit when maybe he’s got it wrong happens to the best of us. The Dava, I wanted to ask, as you reflect on changes you made to sales incentives this year, specifically paying on ARR growth, how much of an impact might that have had?

And how much might that be contributing, you know, to the strong billings we’re seeing this morning? And along those lines, maybe Roy, can you talk about the trends in ARR growth, as we look through all the billings noise? Because, you know, externally, obviously, there’s always puts and takes, but ARR is obviously a very pure metric. So you managed to enter.

Rui Yin, CFO, Check Point Software Technologies: Yeah, I’ll start also by I want to talk regarding your first question. So I think we this year we paid our company was at a significant factor, they are significant factor of our company. Definitely, it’s something that we did see improvement when we are looking on the discounts, on the discounts that we are giving that again for renewals, for example. So we did see improvement on that effect after we implemented the ARR factor into the conference. So that’s something that definitely I mean, we see the change.

We see the mind and how the salespeople are when in the past, it was mainly around bookings. And now they need to think not about booking only, but also about ARR. And that’s definitely we see the positive effects of that mainly around the renewals, the discounts around renewals. So that’s one aspect that I want to touch. The other stuff, anything else?

Trying to what was the next one that you had, Brett? Or Nadav, if you want to add on that?

Nadav Zafrir, CEO, Check Point Software Technologies: Well, the only thing I would add is that I think we’re seeing the beginning. I agree with Rory that I would attribute the better performance in Q3 mostly to execution. I do believe that as we progress the change in how we measure things and our comp plan, etcetera, will take effect. But it’s work in progress.

Brad Zelnick, Analyst: That’s helpful. Guess related, is there a future where maybe you would disclose as key metric for us externally to measure the business?

Rui Yin, CFO, Check Point Software Technologies: Might be, might be, we’ll see. I mean, it’s something that we are considering every time, but might be in the future.

Shrennik/Taliani/Jonathan Ho, Analyst: Thanks for taking the question.

Keith, Moderator: All right. Next up is Jonathan Ho followed by Gabriela Borges.

Joseph Gallo/Joshua Chilton, Analyst: Hi, good morning and congratulations on the strong results. Can you maybe give us a sense of what you’re seeing from the impact of the federal government shutdown? And can you talk a little bit about the investments that you’ve made on the federal side and maybe where those opportunities lie? Yes.

Nadav Zafrir, CEO, Check Point Software Technologies: I will say that because our current business is relatively small, we’re not seeing a strong impact. Having said that, our investment in Fed ramping our products is something that we’re going to continue to do for a couple of reasons. The obvious one is it’s a big market. The second one is that this is what we’re passionate about doing, securing the most under threat environments, the most complex environments. And I think we really have an advantage there to really bring better security.

So we’re going to continue investing in that. And investing in that means in product, but also Fed ramping and focusing our selling focus on that because I think there’s a big potential there.

John DiFucci, Analyst: All

Keith, Moderator: right. Next up is Gabriela Borges followed by Fatima Boolani.

Rui Yin, CFO, Check Point Software Technologies0: Hey. Good evening. Thank you. Nadav and Roy, I wanted to follow-up on how you think about the impact of hardware refresh on your business. More specifically, I know that 2024 was a big year for Quantum Refresh.

I know that 2025 was also a good year for Quantum Refresh. Obviously, it’s not binary, but when you look at 2026 and the cohort that’s up for you in 2026, is there anything that we should keep in mind on the size or how being in year three of the Quantum Refresh impacts that cohort? Thank you.

Rui Yin, CFO, Check Point Software Technologies: So definitely the refresh cycle is a big part of our business. But I have to say that, again, when we are looking today on the opportunities, I think we’re in the middle of the refresh cycle. And I’m looking on the final for Q4. When I’m looking on the final for 2026, there’s a lot of opportunity just for refresh of our existing installed base. And I’m not talking even about the competitive replacement that we see more of them in the last few quarters.

So that’s definitely have a factor on our total business. And definitely, we see more cross selling of our other products in our portfolio. As we said, a lot of the business is coming from external risk management or from SASE. It’s coming from actually opportunities as well as part of a refresh that we did we did for a customer that’s part of this research project. They also took they they also acquired the the purchase or purchase one of our a few of our products.

So that’s definitely a big factor. And, again, as of today, based on what I see today, the the potential is definitely also there for the next twelve months.

Rui Yin, CFO, Check Point Software Technologies0: Thank you.

Keith, Moderator: Alright. Next up is Fatima Boolani followed by Peter Levy.

Rui Yin, CFO, Check Point Software Technologies0: Thank you, Kip. Nadev, I wanted to ask you a question about product strategy. You have absolutely not been shy about thinking about the portfolio in a holistic manner, both from an M and A standpoint, but also from the standpoint of, hey, these products or these capabilities aren’t necessarily our forte. We’re going to take a partnership route. So I’m referring to, you know, your partnership with Wizz on the CNAP front.

So, first and foremost, are there opportunities in the current portfolio as it stands where there is scope for rationalization, where you can take your wins where you are very strong and maybe exit certain product areas? So that’s the first question. And then the second question is, just with respect to Lakira and the vision around building a full stack AI solution kit for your customers, how much of a budgetary attribution and allocation are you actively seeing from CISOs and CIOs who I can’t imagine aren’t getting absolutely inundated with the next new mousetrap and technology. So just helping customers be ready to purchase when the technology around AI security is changing probably the most rapidly than we’ve ever seen in our lifetime. So very big picture, but wanted to get your opinion on it.

Thank you.

Nadav Zafrir, CEO, Check Point Software Technologies: No, thank you, Fatima. So on the first one, yes, do want to focus and become a podium player where we play. So a couple of examples that you brought up, the Wizz example, but we also announced that we’re going to be partnering with Illumio on micro segmentation because I think that’s an important piece of becoming secure in a hybrid mesh environment, especially agents are coming our way and starting to cross these lanes. So segmentation becomes very, very important. So we’re doing that with them.

We’re partnering with others on OT and IoT, and we’re partnering on identity. So yes, there’s a lot more where that comes from. Some of it is just being able to go through the normal APIs, but just be very mindful about that so that we can actually do it. Some of it is actually integration and some of it is going to market together like what we’ve done with Wizz. With regards to the full stack, I think this is just really the beginning, right?

This is not a huge market yet, because as I said, it’s about these phases and most organizations are in Phase one. In Phase one, we have our product for example, we call it GenAI Protect. So GenAI Protect could come into standalone, but it could also be a part of our browser, a part of our SASE solution. And I think you’ll see a lot of that. As we move to Phase two and three, we will need standalone products like what we’re bringing with Fakira, which is already deployed in some of the largest organizations of the world.

But those are the early I wouldn’t even say the earlier, these are the great innovators that are starting to do this. I think we’ll see more and more. I don’t think we’ll see this blow up in 2026. We’ll see substantial growth and I think we’ll see much more in 2027.

Keith, Moderator: Alright. Next up is Peter Levine for our last question of the day.

John DiFucci, Analyst: Great. Thank you, guys. Maybe to piggyback off that last point, Dobby and Rory. You talked about those different levels. And maybe it’s just a pricing question is, how do you view the current subscription licensing model?

Is there room to kind of evolve towards a more usage based, flexible, you know, kind of consumption model? You’ve seen many of your peers kind of move towards this usage based model as you talk about AI, SaaS, cloud security. What are your thoughts here as you think about pricing and to get customers to maybe expand and adopt more of your products over time?

Nadav Zafrir, CEO, Check Point Software Technologies: Yes, I think as and Rui, you can chime in as well. I think as you see our portfolio, its breadth is expanding, but also its nature, right. So when you think about SaaS models of consumption, I think that is becoming more relevant. The first thing that we must do is not only sell our products, but make sure that our clients and our customers are using it and are satisfied with it. We still haven’t moved to a consumption base, but I’ll be honest, is something that we’re speaking about in the corridors, specifically, for example, for areas like workspace.

Rui Yin, CFO, Check Point Software Technologies: Yeah.

Keith, Moderator: Alright. That’s it for today, folks. Thank you for joining us. And with that, we’ll see you next quarter.

Nadav Zafrir, CEO, Check Point Software Technologies: Thank you everyone for joining.

Keith, Moderator: Bye now.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.