Earnings call transcript: Check Point Software’s Q4 2024 beats expectations

Check Point Software (ETR:SOWGn) Technologies (NASDAQ:CHKP) reported its Q4 2024 earnings, surpassing Wall Street expectations with an earnings per share (EPS) of $2.70, compared to the forecasted $2.65. The company also exceeded revenue forecasts, reporting $704 million against an anticipated $698.43 million. Following the announcement, Check Point’s stock rose sharply by 8.88% in pre-market trading, reflecting investor optimism.

Key Takeaways

• Check Point’s Q4 2024 EPS and revenue surpassed forecasts.
• The company saw strong demand for its Quantum (NASDAQ:QMCO) Force Appliances and Infinity Platform.
• Leadership changes announced, with Gil Schwed transitioning to Executive Chairman.

Company Performance

Check Point Software Technologies demonstrated robust performance in Q4 2024, with revenues increasing by 8% year-over-year. The company attributed this growth to strong demand for its Quantum Force Appliances and the adoption of its Infinity Platform. Despite a competitive cybersecurity market, Check Point maintained its industry position with a consistent gross margin of 89%.

Financial Highlights

• Revenue: $704 million in Q4 2024, up 8% YoY
• Full Year Revenue: $2.565 billion, up 6% YoY
• Non-GAAP EPS: $2.70 in Q4 2024, $9.60 for the full year, up 9% YoY
• Operating Cash Flow: $249 million in Q4 2024, up 6% YoY

Earnings vs. Forecast

Check Point’s Q4 2024 earnings per share of $2.70 exceeded the forecast of $2.65, representing a modest beat. The company’s revenue of $704 million also surpassed the expected $698.43 million. This performance marks a continuation of Check Point’s trend of exceeding market expectations, with the current quarter’s results reflecting a positive surprise for investors.

Market Reaction

Following the earnings announcement, Check Point’s stock price surged by 8.88% in pre-market trading. The stock’s movement is noteworthy as it approaches its 52-week high of $226.03, indicating strong investor confidence. This rise contrasts with broader market trends, where many tech stocks have faced volatility.

Outlook & Guidance

For Q1 2025, Check Point forecasts revenue between $619 million and $649 million and a non-GAAP EPS range of $2.13 to $2.23. The company also projects full-year 2025 revenue between $2.66 billion and $2.76 billion. Check Point plans to continue focusing on AI-driven security enhancements and anticipates launching new innovations at its upcoming CPX conference.

Executive Commentary

CEO Nadav Zafreiter emphasized the company’s commitment to AI integration, stating, "We are walking into an AI dimension and an AI era." He also reiterated the importance of maintaining robust security offerings: "Security is about security, and we’re going to keep that."

Q&A

During the earnings call, analysts inquired about Check Point’s AI security strategy and plans for its SaaS and cloud offerings. The company highlighted its focus on simplifying network security and expanding its presence in the North American market.

Risks and Challenges

• Market saturation in the cybersecurity sector could limit growth.
• Macroeconomic pressures may affect customer spending on security solutions.
• Integration challenges following the Cyberint acquisition could impact margins.
• Competition from emerging cybersecurity firms with innovative solutions.
• Potential disruptions in supply chain affecting product delivery.

Full transcript - Check Point Software Technologies Ltd (CHKP) Q4 2024:

Kippie Meinser, Global Head of Investor Relations, Check Point Software: Greetings and welcome to the Check Point Software 2024 Q4 and full year financial results video conference call. I’m Kippie Meinser, Global Head of Investor Relations. And joining me today are Founder and Executive Chairman, Gil Schwed Chief Executive Officer, Nadav Zafreiter and our Chief Financial Officer, Roy Galant. Before we begin, I’d like to remind everyone that this conference is being recorded and will be available for replay on our website at checkpoint.com. During the formal presentation, all participants will be in listen only mode and that will be followed by a Q and A session.

During this presentation, Check Point’s representatives may make forward looking statements. Forward looking statements generally relate to future events or future financial or operating performance. These statements involve risks and uncertainties that could cause actual results to materially different than projected in the forward looking statements. Any forward looking statements made speak only as of the date hereof and 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 kipcheckpoint.com. And with that, I’d like to turn the call over to Roy Galan for the start of our presentation.

Roy Galant, Chief Financial Officer, Check Point Software: Thank you, Kip, and thank you everyone for joining the call. So I think we finished 2024 with the Inode, strong demand with strong demand for all our main products. Our revenues reached $704,000,000 $9,000,000 above the midpoint of our projections. Our non GAAP EPS was $2.70 at the top end of our projections. Moving to the annual results.

So our revenues reached $2,565,000,000 $15,000,000 above the midpoint of our projection in the beginning of the year, while our non GAAP EPS reached $9.60 9 percent growth year over year and $0.16 above the midpoint of our projections. So as I mentioned, we did see a strong we did finish the year with a high note with strong demand for our product. I mentioned the revenues our deferred revenues grew by 5% to $2,000,000,000 Our calculated billing grew by 11% to $959,000,000 while our current calculated billing grew by 9%. Our RPO grew by 12% to $2,516,000,000 So I think again that said was driven for strong demand for our product, mainly for the Quantum Force Appliances, the firewall appliances that we can see here the trend that we do see that since we launched this Quantum Force in the beginning of the year, we continue to see the positive trend and the strong demand for our product. This quarter we achieved 8% growth in revenues with $171,000,000 of revenues.

We also continue to see strong adoption for Infinity platform by existing customers and also by new customers joining Check Point with this platform. I think that this answering their needs under one umbrella of product and services. The earnings from Infinity Platform Agreements had another strong quarter with strong double digit growth. Moving to the revenues by geographies. So As you can see all our geographies grew.

I have to say this is the revenues, but when I’m looking on the new business booking, all the geographies grew by double digit in new business. I think that’s the most important part because in the end that’s translated into revenues. So again, very strong demand in all geographies. Moving to our P and L, our gross margin was similar to last year with 89%. Our operating expenses reached $317,000,000 12% increase compared to last year.

That was mainly driven from our continued investment in our go to market and also the addition of Cyber Inn that we acquired in the end of Q3. Our operating income was $306,000,000 44% operating margin. Moving to the financial income, this quarter it reached $25,000,000 as we keep investing in higher interest rate over time. Our non GAAP tax rate this quarter was around 8%, mainly due to updates of tax provision due to several tax assessments we have worldwide. Our non GAAP net income grew by 2% to $303,000,000 while our GAAP net income was 2 $58,000,000 or $2.30 per diluted share, 7% increase year over year.

For the annual P and L, we can see that our calculated billing also on an annual basis had a strong growth of 9% year over year. Our total revenue grew by 6%. Again, gross margin similar to our last year’s 89%. Our operating margin grew by increased by 10% to $1,181,000,000 while our operating expenses increased by 10%, while our operating income grew by 2% to almost $1,100,000,000 When I’m looking into next year and operating margin, we need to take into account half a point dilution related to our recent acquisition of Cyberint. I think we discussed it also in the when we acquired Cyberint last quarter, but again also a reminder for 2025.

Looking on the financial income for the year, again reached $96,000,000 because of the higher interest rate. We finished the year with non GAAP tax rate of 13% compared to 14% last year, again mainly due to update in our tax provision as we had tax assessment worldwide. As for the tax expenses next year, we expect it to be around the same levels in each queue and also annually. As a reminder, we’re in the middle of tax assessment worldwide and closing this method during the year could change the effective tax rate accordingly. Our non GAAP net income reached $1,439,000,000 increase of 4% year over year, while our EPS was $9.60 and as I mentioned grew by 9% year over year.

And when I’m looking for next year in terms of our number of shares, so we need to take into account a decrease of approximately 1,000,000 shares every quarter. So we are starting now from 112 and we expect to see 1,000,000 shares reduction every quarter. Moving to the cash flow. So we finished the year with $2,800,000,000 of cash and marketable securities and deposits. Our operating cash flow for the quarter was strong with $249,000,000 6 percent increase year over year.

Our annual operating cash flow for 2024 was $1,059,000,000 and also we continue to do our buyback and both more shares in the amount of $325,000,000 in Q4 and for the full year we bought shares for $1,300,000,000 To summarize, so we had a strong quarter, revenues and EPS above the midpoint of our projections, we had the demand where it was mainly driven by strong demand for our Quantum Force Appliances. You did see the double digit growth in calculated billing and also in RPO and we maintain strong profitability. With that, I’ll hand over the call to Gil.

Gil Schwed, Founder and Executive Chairman, Check Point Software: Thank you, Roelie, and glad to see here everyone. It’s a pleasure being here. For me, it’s a very exciting day because it marks my transition to my new role as the Chairman. But before I jump into it, first about the quarter. So we have a slightly different format today.

I’m going to I’m not going to present the regular slides that speaks about the deals in the quarter. And Nadav is going to spend more time not talking about the quarter, but talking about his vision for Check Point and about his view of the world. I think it’s very important that you all get to start knowing Nadav. For me, the last quarter marks a very good one. I think you heard from Roy about the financial result.

It’s great to transition with such results. Pretty much all the key financial metrics performed very, very well. I know that some of you were concerned last quarter on billings and you saw that this quarter without any particular focus billings as an indicator that’s not what we measure internally, but billing as an indicator shows very good help with 11% growth. We’ve won many of the deals that were postponed last quarter. We’ve got more deals there.

In this quarter, I mean one of the strong points is that wasn’t 1 or 2 large deals that skewed the quarter in one direction. It was a collection of wins across the globe and across the different sectors and also across the different product line. Mainly the Quantum and the Quantum Force product line showed strength something that we’ve been seeing improving over the last few quarters and it’s great to see now because that’s the core of our business. But our Infinity deals were very good. Our email security business was also very good.

We even saw some nice growth in the cloud business. So overall, all the key metrics that we had were in line with what we expect and that’s a great way again to transition my job. With that in mind, I want to thank everybody that delivered our customers that showed faith in the best security that we deliver in Checkpoint. Our employees, whether it’s the developers or the people who do ship our product and the mainly the sales people and our GCO organization with the leader of Rupal, we delivered a very good quarter. But it’s more than just 1 quarter.

And here I want to turn all respects to all of you, our shareholders and analysts that followed us for so many years and again the same thing, our customers, our employees, our leadership team that may checkpoint what it is. And if you look at this slide that summarizes my 30 actually, I’m sure it’s 2 years doing what I’m doing, but you see here a summary of almost 31 years of business and you see that on every business metric, we have very strong fundamental. If we look at 95, the year before we went public, we grew since then in revenues 250 falls. I mean profits kind of very similar. EPS grew by more than 300 or close to 400 falls from 95.

So on our share price, if I look at the basis of 95, it’s almost 800 fold high. If I look just at the IPO price in 96, it’s 80 fold high, which is also a pretty good number. So I think all these numbers are a testament to the strength of the security of Check Point and mainly to the very, very good people that surrounded me and will now work with Nadav to take Check Point into new height. Now in the last few months, I had the pleasure of working with Nadav. We did a very good training and transition process.

Over the last 45 days, Nadav took the role of the CEO and he’s doing extremely well. I couldn’t be happier than that. Many people ask me what do I go do as a Chairman. So he put here these pictures about me riding my bike. So yes, I am riding my bike and as a Chairman, I intend to do it not once a week but maybe twice a week, but I still come every day to the office.

I’m very, very excited about the future of Check Point. I’m actually enjoying my new role very, very much taking away all the day to day operational responsibilities of running a large company and the ability to speak, to listen, to think about the future. It’s a great pleasure for me and relaxing a little bit. And over the next few months, I’m going to redefine my role and mainly be a resource for everybody in Check Point and mainly to Nadav and in the way I can help with thinking and experience helping me in the future. This month and a half, I think Nadav is already doing a great job.

I couldn’t have picked a better leader for Check Point. I know that Nadav will take Check Point to new heights and I wish him and I anticipate that we’ll have great, great success with it and I hope that we’ll be here a year from now, 5 years from now, 10 years from now and see how the graph that I showed you continue to perform well. This is what I wish for everybody, for you, for our customers that will get more security for employees. And with that, I think it’s a great transition to transfer the call to Nadab, so you can hear his thoughts about the future. Nadal, the floor is yours.

Nadav Zafreiter, Chief Executive Officer, Check Point Software: Thank you so much, Gil. As you can tell, I have big shoes to fill. Naturally very excited to be here and speak to you all for the first time. So glad to see you and hope to have the opportunity to see many of you more often than in person in the future. I think it’s also an opportunity for me to thank the board for selecting me.

But especially I want to thank you Gil, first of all for building an amazing company and also for the great transition and for the friendship that we’ve had for many, many years and it’s really, really awesome to work with you. I can tell you that I’ve asked Gil with his biking not to do any double black diamond routes or singles within the next few months as I need you by my side here. So and he said he won’t and let’s see. Look, just a little bit about my background, right. So I’ve been a part of this industry for the last 30 years as well.

If I had the opportunity to see it from different perspectives, defending large networks and critical infrastructure on a national basis, I also had the opportunity to see this industry from the attackers perspective which I know which I think is very, very important. And so I have this appreciation of how difficult it is to stay ahead of the race and the fact that sometimes offense and defense are sort of asymmetric. And then in the last decade looking at this industry mostly from the innovation side. So about 10 years ago I was part of starting team 8 and have had the opportunity to watch this industry from trying to anticipate what will come in the future and build cutting edge innovation startups so that we could be ready for that future. And at Team 8, I’ve been involved in as an entrepreneur, as an investor in building over 20 companies.

Some of them are category leaders in the industry. And you know when I look at that history and that experience and the different perspectives I think I can really appreciate how hard it is to actually defend our hyper connected world and our complex networks and also how critical it is to do it. And honestly, that’s the reason I joined Check Point. I think with that experience and with the base that we have here, there’s a huge opportunity for us to continue to lead this industry over the next few years, as Gil said. Over the past couple of months, I’ve had the opportunity to meet with dozens of our customers and partners.

I’ve had the opportunities to talk to and get to know hundreds of our own Check Point people. And I have to tell you that my resolve has been galvanized because I’m super impressed, 1st and foremost, by the depth of our technology. I’ve been following Check Point from the sidelines for many, many years but when you’re in you see different things and I was exposed to this depth but also the breadth of our ecosystem. Coming from the startup world, it’s really interesting to see the scale the criticality of our software and how many large organizations in the world are actually dependent on the and relying on our technology. And then finally, I would say the passion of the people.

And I think one thing that is unique about Check Point, is some of the people that we have here has been here for almost as long as Gil and they’re super passionate. You know, some of them when I talk to them it strikes me that they’re so excited about what they’re doing after decades of doing this. And I think that’s a great foundation for us to continue to lead the industry. Speaking about passion and people, I think this is also a good opportunity to thank RuPaul Hollenbeck, our President, for driving a great 2024 as Rui and Gil have already spoken about. She’s asked to move on, but she will continue with us at my request to support us during the transition in the next few months.

And given my focus, we’ll be flattening our go to market organization so that on a personal level, but also as a focus, we can get more visibility and direct impact with our customers, with our partners, with the field because at the end of the day, I believe that our industry is going to see, you know, I don’t want to be too dramatic, but we are walking into an AI dimension and an AI era, and that’s going to have a huge impact and we want to be as close to the people at the trenches because the only way to understand what’s happening at the trenches from my experience is to be at the trenches. So these changes include adding our Americas President and our International President to my leadership forum, as well as creating a new role of the Chief Revenue Officer, who will be responsible not just to lead our sales, but also to align our product organization with our sales organization and create the synergies so that we can improve our go to market motion. Beyond that, we have also created a new leadership role to drive the success of our SaaS business. 2024 was a great year both for our email security.

We announced last quarter that we crossed $100,000,000 of ARR this last quarter. We achieved a new, I believe, really important milestone by getting the Magic Quadrant that Gartner (NYSE:IT) for our email. Sassy has been doing very well and we will have 1 leader to lead this ARR driven business. And, you know, this actually, next week, we’re getting on the road, which is very exciting for me because now I can go from dozens to 1,000. We’re going to be meeting with about 10,000 people, employees, partners, customers from around the globe, starting in Vienna next week in our Checkpoint User Experience Conference.

This is going to be my opportunity to get on stage and talk to the people and give them our vision. We’re going to be launching a lot of the innovative stuff that we’ve been working on in 2024. We’re going to be talking to our partners and customers and our own people about what is the roadmap for the new stuff that’s coming out, especially around AI, you know, not only protecting AI but also leveraging AI to create a more simplified unified version of our software. So again, thank you all for being here. I look forward to the relationship.

And I think with that, Kipp, I’m handing it over back to you. Yes, you are.

Kippie Meinser, Global Head of Investor Relations, Check Point Software: And don’t forget, we’ll be seeing a lot of these folks next week or at

Nadav Zafreiter, Chief Executive Officer, Check Point Software: the end

Kippie Meinser, Global Head of Investor Relations, Check Point Software: of the month in Vegas.

Nadav Zafreiter, Chief Executive Officer, Check Point Software: In Vegas. Yes. Looking forward to that.

Kippie Meinser, Global Head of Investor Relations, Check Point Software: So we’re going to start out with business outlook. And next slide, please. We’re going to be looking at $619,000,000 to $649,000,000 for Q1 2025. EPS of $2.13

Nadav Zafreiter, Chief Executive Officer, Check Point Software: to $2.23

Kippie Meinser, Global Head of Investor Relations, Check Point Software: and GAAP EPS $0.50 less approximately. FY 2025 for the full year, we’ll be doing $2,660,000,000 to $2,760,000,000 and non GAAP EPS of $9.60 to $10.20 with GAAP EPS approximately $2 less. And with that, we will open the call for Q and A. And here we go. Oh, look, I’m appearing.

Here we have up first.

Adam Tindle, Analyst, Raymond (NSE:RYMD) James: Yeah. Let’s see.

Kippie Meinser, Global Head of Investor Relations, Check Point Software: 1st on the call, 1st up today is Adam Tindle from Raymond James followed by Joseph Gallo at Jefferies.

Adam Tindle, Analyst, Raymond James: All right. Thanks and good morning. And congrats Gil, congrats Nadav. Great to hear very strong finish and great start to your new tenure. Nadav, you mentioned how you have different perspectives and I think that’s particularly interesting to investors as you assess the opportunities for Check Point.

I wonder if you might just dig a little bit further into innovation in Tech Stack. We compare Check Point to some of the larger competitors, some have focused on other areas, whether it’s Sassy in a bigger way or endpoint platforms that are larger. So as you use your different perspectives and think about the tech stack and innovation opportunity at Check Point, what would be sort of the top buckets that you’re looking at? And are you thinking about that organically or inorganically? Thanks.

Nadav Zafreiter, Chief Executive Officer, Check Point Software: Thanks, Adam, and good to see you. I believe that we’ve done a really good job in the last couple of years. Some of our acquisitions have been very successful. I spoke about e mail. You mentioned SASE with the acquisition of Perimeter 81.

We’ve had a great year in 2024. What we need to do right now is to merge everything into what we call a hybrid mesh network. I think that when I speak to our customers, when I speak to our partners, when I sit with them and try to understand the hardships that they’re going through, I think that 2 things come to mind. Number 1 is the level of complexity that they have to deal with. And number 2 is the fact that they have different point solutions.

And I think that they can already see that the attackers are using the cracks between those point solutions to their benefit. And so when we look at the 2025 and beyond, the idea of a hybrid mesh network to take the already incredible scale that we have with our quantum firewall, merging that with what I believe is a great saucy product and creating the idea of a mesh architect unified through the Infinity platform. Now I know that on every call with everybody from tech you’re going to hear about artificial intelligence. I’m not going to to differentiate myself on that. I think that’s the next level.

It’s literally a new dimension that we’re walking into. And on that front, we need to think about it from 2 perspectives. One perspective is what are the new things we need to defend? And we’re going to be talking a lot about that at CPX at our conference next week in Vienna and beyond. What are the new tools?

How do we use existing tools to defend new places where what we call the attack surface that is becoming that is being blown up by new ideas that attackers can go after, whether it’s new models, model inversions, using deepfake, etcetera, but also how can we leverage AI to make their lives much more simple. Right. And that’s something that we started in 2024 and I think we’re going to show a lot more of that. So to sum up, Adam, we are going to continue to build on the acquisitions that we have done and we are going to look to do more acquisitions where it fits in our strategy of the hybrid mesh architect.

Kippie Meinser, Global Head of Investor Relations, Check Point Software: All right. Next (LON:NXT) up is Joseph Gallo followed by Shaul Eyal.

Joseph Gallo, Analyst, Jefferies: Hi, all. Thanks for the question. Gil, congrats on the increased bike rides. And Nadav, congrats on the new role. Look forward to working with you.

Kippie Meinser, Global Head of Investor Relations, Check Point Software: Nadav, you may That’s on your new baby.

Joseph Gallo, Analyst, Jefferies: Thank you. Thank you. If you could send sleep, I’d appreciate it. Nadav, you made several go to market changes in your Q1. Can you just further elaborate on what changes are needed and over what time frame you expect those to take root?

And then maybe really bringing you into this, how are you thinking about the occasions of go to market changes on your guidance? Thanks.

Nadav Zafreiter, Chief Executive Officer, Check Point Software: So generally speaking, Joseph and congrats on the new baby and my empathy under lack of sleep. It takes about a couple of years from my experience. But anyways, look, so one thing that we want to do is we want to be as close to our customers as possible. I want to have a direct impact on our go to market and to that end we’re going to make the changes in the leadership. So instead of having 2 folks representing the market, sales, marketing and the leadership team we’ll have 6 that will enable us and build on the already strong foundation that we have with the focus on America.

I believe that it’s always been the truth and going forward I think that it’s the cyber industry, the latest and greatest adoption will be in America and we have great folks there and we continue to focus there. So that’s from the go to market side. And the last thing I’ll say about that is to create a real cohesion between our product team, our marketing team and our sales team.

Roy Galant, Chief Financial Officer, Check Point Software: And to your question around the guidance, of course, it was taken into account. That’s why we are providing you kind of a wider range both on the revenues and EPS. And again, I have to say that we finished strong deal that’s also affect 2025 numbers and also we’re starting good with 2025 in Q1. So I think we feel confident with the guidance we provided given the changes.

Joseph Gallo, Analyst, Jefferies: Awesome. Thank you all.

Kippie Meinser, Global Head of Investor Relations, Check Point Software: All right. Next up is Shaul Eyal followed by Jonathan Ho.

Shaul Eyal, Analyst: Thank you, Kipp. On Brasil and Nadeau, on Brasil, easy on those bike riding Congrats to Carol as well. Nadal, my question is maybe slightly more specific on the product front. I hear your commentary about the mesh, the hybrid network. In your initial 100 days with Check Point, where do you see the products maybe needing slightly more depth or improvement?

That’s on the one hand. And maybe the other side of that is, I think everybody understands the strength of Check Point without a doubt. But from your perspective, from where you currently sit and from where you sat in the past, what are some of the points of improvement you want to take Check Point through, so we can better align Check Point with the overall industry growth?

Nadav Zafreiter, Chief Executive Officer, Check Point Software: Right. I’ll say this. I think our strength is our reliability uptime and the best prevention in the industry. Going forward with this idea of hybrid mesh, We want to consolidate and create a real platform for the network. And then when I say network, it’s network everywhere, right?

So it’s your on prem data center firewall but it’s also the cloud network security and the WAF on your cloud and your remote workflow, your SASE, your SaaS, your browser. And the idea of consolidating this

Gil Schwed, Founder and Executive Chairman, Check Point Software: on

Nadav Zafreiter, Chief Executive Officer, Check Point Software: one platform, leveraging AI to simplify it is crucial to cut through that complexity that has gotten to a point where it’s really hard to deal with. The other side of that is intelligence. So with ThreatCloud AI, we already announced about 48 AI engines in 2024. We’re adding about a dozen new engines. And lastly, opening it up so that we can import data from other vendors, even if there are competitors and export intelligence or so because we understand that many of our large enterprise customers have multiple solutions and that at the end of the day, if they can’t get a holistic understanding of what’s happening in their network, they can’t do the very simple thing of trusting their infrastructure.

And I believe that this mesh architecture with a real platform and the best intelligence consolidated and driven and simplified by AI is a real opportunity.

Kippie Meinser, Global Head of Investor Relations, Check Point Software: All right. Next up oh, by the way, Cheryl, thanks for dressing up. Jonathan Ho followed by Patrick Colville.

Jonathan Ho, Analyst: Thank you. You spoke a little bit about AI. And with the opening of your new dedicated facility, can you give us a sense of where you see the most opportunities around AI? I don’t want to cover what you’ve already sort of talked about before, but I just on a forward looking basis try to understand how that becomes a differentiator for Check Point? Thank you.

Nadav Zafreiter, Chief Executive Officer, Check Point Software: Yes. Thanks, Jonathan. So if I try to zoom out for 60 seconds, we’re obviously at the end or not at the end, we’re in a process of connecting more and more things to our network to the point where a few years ago it became what we call a hyper connected mesh environment. That is accelerating and I don’t think that’s going back. I think when you couple that with a new dimension and a new era of AI, things are about to change.

And I would like to put it in 3 different buckets. Bucket number 1 are the things that actually will probably remain similar. That’s where we believe at the end of the day, you will need an infrastructure that enables competitiveness, usability, efficiency for our enterprise customers primarily. That’s not going to change. And you know what else is not going to change?

At least for the foreseeable future, at the end of every one of those nodes in the mesh, you’re going to find a human being with all of our flaws. It is what it is. In that sense, the AI can create more autonomous capabilities. We will be showing our roadmap to 0 trust using AI and autonomous capable looking into autonomous capabilities in the near future. The second bucket are things that have already changed dramatically.

When when you look at it from the attacker’s perspective, attackers that in the past we used to look at as, you know, relatively amateurish can now come and pose and we’re seeing it happening already as very sophisticated attackers because they have AI at their side. And from my experience, attackers are usually more agile than defenders for many, many reasons. We don’t have time to get into it. But we’re seeing them being more precise. We’re seeing them being at a larger scale and we’re seeing that the ROI for attackers is improving dramatically.

So stuff that could have taken them a couple of years can take a couple of weeks. Stuff that will take hundreds of engineers on the attacker side could take a few. From what we need to defend all the way from defending our prompts as we use Gen AI so that we know critical data that or sensitive data that doesn’t go out of our information out of our systems. So in that bucket, it’s literally trying to stay ahead all the time in engineering, right? So we’re going to show our how we protect AI and how we use AI to simplify.

And then the last bucket and forgive me for being a little bit philosophical here is the bucket of what we don’t know. We believe our research is constantly trying to understand what’s around the corner that can really change our industry dramatically. I don’t know if it’s going to happen next week or in 2 years, but I think there will be big things that will change our industry. To that matter, our research center will look and try to predict different futures, put different probabilities to them, come back to the present and say okay, so if this is the route that’s going to happen, what do we do about it? And the last thing I’ll say about that is that we need to be humble because when we go into the dimension, there’s also this limitation of imagination that we have.

So we need to take care of all these 3 buckets when we think about AI.

Kippie Meinser, Global Head of Investor Relations, Check Point Software: All right. Next up is Patrick Colville followed by Joel P. Fishbein, Jr.

Patrick Colville, Analyst: Alright. Cheers. I mean, Gil, you’re godfather of the firewall industry. I mean, Daf, you’re godfather of the Israeli VC ecosystem and Kipp’s the godfather IR. So, you know, looking forward to this big next chapter.

Kippie Meinser, Global Head of Investor Relations, Check Point Software: Leave it to the Brit to be so complimentary and sweet talking.

Patrick Colville, Analyst: And, Nadal, I mean, you’ve been talking nonstop, so I’m just going to give you a break. Rui, I mean, RPO rose 12% in fiscal ’twenty four. Revenue guidance for fiscal ’twenty five is 6%. That’s a big disconnect. So can you just talk through maybe the RPO strength in 4Q and just puts and takes that fiscal 2025 guidance?

And is there a realm where we could see double digit revenue growth in this coming year?

Roy Galant, Chief Financial Officer, Check Point Software: Yes. So first of all, RPO remind you that it’s not only it’s not backlog that’s going to be everything will be translated into revenues in the next 12 months. It’s the total RPO. But again, still we did have a great quarter with strong billings also short and billing at 9%. I think when I’m looking on the guidance, I think Joe asked me about the guidance and about the changes.

I think we feel confident with the guidance. We hope to finish as this in this year. We hope to finish more close to the high end of our guidance. But definitely, I don’t think again double digit this year. Again, I don’t want to talk about this year double digit, but definitely we’re starting the year with a great momentum, with great Q4.

Also when I’m looking on the pipeline for Q1, looks good. So I think we are starting great the year and hopefully when we finish 2025, we’ll be we show that the revenues will be on the eye more closer to the eye end of our guidance and not and far from the midpoint. Okay, Chris. Okay.

Kippie Meinser, Global Head of Investor Relations, Check Point Software: All right. Next up is Joel P. Fishbein Jr. Followed by Shyam Patel.

Joel P. Fishbein Jr., Analyst: Dov, I’m going to come back to you if you don’t mind. I love what you’ve outlined so far in terms of changes to go to market. I don’t think anybody will argue that Check Point’s got a fantastic product portfolio. One of the things that’s been missing though is net new customers, right? That’s and can you just talk a little bit about the strategy about going after some of these net new customers, particularly in light of some of your competitors that are really discounting very aggressively in the market to gain market share amongst this platformization strategy, etcetera, vendor consolidation, that’d be really helpful.

Thank you.

Nadav Zafreiter, Chief Executive Officer, Check Point Software: Thank you, Joel. I want to start by saying that, first of all, when you look at 2024 and the last quarter, we’ve actually grown nicely with net new logos and hopefully we can continue this throughout 2025. The next thing that I want to say is that yes, we are going to be focusing our our go to market motion, but we’re not going to change one thing, which I love about Check Point and I don’t want to change. Security is about security, and we’re going to keep that. Having said that, one thing that I’ve already announced as an example is this new formed leadership role on my leadership team that’s going to lead all of our SaaS high growth business.

And we finished last year with a nice 27% growth. And that’s something that we want to accelerate. And so I think with our Sassy business, with our email business and the consolidation that

Roy Galant, Chief Financial Officer, Check Point Software0: we’re doing at the

Gil Schwed, Founder and Executive Chairman, Check Point Software: Infinity platform level with

Nadav Zafreiter, Chief Executive Officer, Check Point Software: the idea of a hybrid mesh, hopefully, hopefully, will lead us to gain more new customers faster.

Joel P. Fishbein Jr., Analyst: Great. Thank you.

Kippie Meinser, Global Head of Investor Relations, Check Point Software: Next up is Shyam Patil followed by Joshua Tillman.

Roy Galant, Chief Financial Officer, Check Point Software1: Hey, guys. Congrats, Adop. Congrats, Gil. I guess I had a question around the firewall refresh that some of your competitors have talked about. I’m just curious, as they kind of go through sizable refreshes this year, how big of an opportunity is that for you guys?

And then, Roy, I guess when you kind of look at your outlook for the year, anything materially you’re contributing or factoring in from that or is that potentially an upside driver as we go through the year?

Roy Galant, Chief Financial Officer, Check Point Software: So I can start and W can help afterwards. So I think when I’m looking first on what we on our business outlook on the guidance for the full year, so we didn’t take into account, I mean, it’s probably it’s going to be upside if we’ll be able again, I think as you mentioned, our competitors, I think disclosed that it’s going to they have a significant install base that will be end of end of support by the end of 2025 and ’twenty six. So definitely it’s something, it’s a huge opportunity for everyone in the market. We also see by the way the very positive traction around our firewall in the last few quarters. So it’s definitely we want to see the discontinue this momentum continues.

So in terms of the guidance, so again, we didn’t take any significant factor from that, but of course, it can be a significant upside for us. We have a lot of plans around a firewall refresh and also gaining net new customers from our competitors. But that’s definitely going to be upside for our guidance. And Adab, you want to add something around it?

Nadav Zafreiter, Chief Executive Officer, Check Point Software: The only thing I would add is that we’re going to be watching it closely and hopefully it’s not just an opportunity for us for the firewall and appliances but also for customers that are looking for this idea of a hybrid mesh and the Infinity platform because for us in 2025, one of our focus areas is SASE and the viral component with 3 decades of experience where we’ve seen every permutation, every mutation coupled with our differentiated SASE which is more agile, which can allow not only to send everything to the SASE every time but actually use it or sometimes do the protection at the edge, sometimes do through the cloud, sometimes go direct, makes it more efficient. And I hope that if this refresh cycle actually gets there, it’s an opportunity to introduce not just our firewall but also our SASE products.

Roy Galant, Chief Financial Officer, Check Point Software1: Great. Thank you, guys. Thank

Kippie Meinser, Global Head of Investor Relations, Check Point Software: you. All right. Up next is Joshua Tilton followed by Robbie Owens.

Roy Galant, Chief Financial Officer, Check Point Software0: Hey,

Roy Galant, Chief Financial Officer, Check Point Software2: guys. And blanketed congrats to everyone. Maybe just to, Nadav, I’ll start with you. I think in your kind of your prepared spiel, you talked to leading the industry for the next few years. And I guess from your perspective, like what does an industry leading growth rate look like for Check Point over that timeframe?

And then maybe just, Roy, for you really quick. Can you I understand the strong growth exiting the year, but can you help us understand maybe on an organic basis, how some of those metrics look from a growth perspective coming out of Q4?

Nadav Zafreiter, Chief Executive Officer, Check Point Software: Yes. So for me, I’ll just shortly say 2 things. Again, we were the springboard that I’m coming out of is great and I’m very thankful for that to the whole team and especially to Gil which is handing over the baton at a good time to me. I think that leading the industry is first of all not just obviously not just about the growth but also about the technology. We spoke a lot about that.

In terms of growth, what I want to be able to do is a continued healthy sustainable growth, right? So you’re not going to see any mega changes because I think that one of the great things about Check Point is the efficiency and the healthy growth. Now we can maintain that health and accelerate growth in a sustainable way. I think that’s what a leader looks like and that’s what a sustained volume player company needs to do.

Roy Galant, Chief Financial Officer, Check Point Software: And in terms of your question around the organic versus non organic, so we had Cyberint of course acquisition that we closed in the end of Q3. They contributed less than 1 point to our billings and revenues. So it’s not significant. It’s less than 1 point to our billings and revenues. So the others, everything is organic.

Roy Galant, Chief Financial Officer, Check Point Software2: Super helpful guys. Thank you so much. Thanks, Joshua.

Roy Galant, Chief Financial Officer, Check Point Software: Thanks.

Kippie Meinser, Global Head of Investor Relations, Check Point Software: All right. Up next is Robbie Owens followed by Fatima. I’m soon out on maternity leave, Boolani.

Roy Galant, Chief Financial Officer, Check Point Software3: Thanks, Kipp, and good afternoon, everyone. I was hoping maybe you could parse for us just what you’re seeing across the various theaters relative to geos and as you look to reinvigorate growth, I look at that North American number, obviously you want to do better, you talked about the Americas being significant. And you did mention in some of the go to market changes, but what is really going to take to start moving the needle the other way on that front, obviously very hyper competitive here in the U. S. Thanks.

Nadav Zafreiter, Chief Executive Officer, Check Point Software: Thanks, Rob. Yes, it is probably the most competitive area, but it’s also the most important. We have under Rupaul’s tenure, we’ve built a solid boots on the ground leadership team. But that’s not enough. We need to reinvigorate that in many ways.

1st and foremost, get out there. That’s one of the reasons that the board hired me. That’s one of the reasons that Gil believes that I can take it. So get out there, sit with the customers, look them in the eye, understand what we’re what we need to improve. And also look at it from different industries perspective.

So for example, we have a we’re very strong in the financial, but we need to see what each industry needs, what are the playing blocks that we need to add for other industries. And hopefully with the idea of simplifying a lot of this and creating an ROI which is superior, we can start accelerating our growth in the United States and the rest of the Americas.

Roy Galant, Chief Financial Officer, Check Point Software3: And Roy, any comments on the various theaters and what you’re seeing, EMEA versus U. S?

Roy Galant, Chief Financial Officer, Check Point Software: So I have to say that the U. S. Had a great quarter. I mean, you don’t see it in the booking and on the revenues, but on the booking side, definitely we had a great quarter in the U. S.

And all in all Americas region. We wanted to I mean also and I’m looking on 2025, looking on the Q3, looks great to in the U. S. And Americas. We opted it will continue for the remaining of deal and of course long term.

So again, we are in definitely we see significant improvement there.

Kippie Meinser, Global Head of Investor Relations, Check Point Software: Thanks for pulling that one in, Rob. Next up is Fatima Boolani followed by Brad Zelnick. Fatima, congrats in advance.

Roy Galant, Chief Financial Officer, Check Point Software4: Thank you very much for that very kind introduction. Yes, I’m baking away over here. Very nice to meet you, Nadav. Very much look forward to working with you. It’s very clear you’re bringing a ton of new energy and really redoubling on some of the focal points and efforts of Check Point’s go to market reinvigoration.

So I wanted to spend more time on that front. You’re bringing in new executives. You’re talking about, really reinforcing the visibility with customers. So what I want to ask you is how should we think about the sales strategy from a sales capacity growth perspective as you look at 2025? And then if there’s any specifically deliberate changes you are going to be making from a segmentation, a verticalization perspective in the go to market organization?

Thank you.

Nadav Zafreiter, Chief Executive Officer, Check Point Software: Yes. Thank you, Fatima. Great to meet you. Looking forward to working with you as well. I’ll say the following two things.

Number 1 is this is not going to happen overnight. I know that the expectations are very high, but I also want to be responsible and reasonable and this is not going to happen overnight. But yes, we want to grow faster. But it will be a process because we want to grow faster in a sustained, healthy, responsible way. On the segmentation, the first thing the first two things that we’re going to do is I’m adding the marketing leader to my leadership team and creating the new role of the SaaS high growth to include email and SASE, cloud network security endpoints.

So that’s going to be consolidated because some of the consumption of these solutions and these software is also changing. And not and it’s not necessarily the same buyers as well. And so we need to change that as well. So look at it from the buyer’s perspective, look at it from the consumption perspective and look at it from our own technology perspective. But ultimately, as I said before and I’ll repeat it, bringing it all together to be this idea and strategy of a hybrid mesh one platform and a real platform.

Roy Galant, Chief Financial Officer, Check Point Software2: Thanks, Fatima.

Kippie Meinser, Global Head of Investor Relations, Check Point Software: Open to see you at CPX. Next up is Brad Zelnick followed by Hamza Atarwala.

Roy Galant, Chief Financial Officer, Check Point Software0: Thanks very much, Kipp, and nice to see everybody. Nadav, welcome. My question, Nadav, for you follows Fatima’s go to market. Your message of being as close to the customer as possible makes a ton of sense. I’m curious to understand what does that mean for the channel?

And then related to that, Rohie, the growth in sales and marketing expense in Q4 is the greatest since 2018. How much of this is direct sales headcount adds as you hit the ground running into next year? Or is it more variable marketing and incentives? How should we think about the composition and timing of sales and marketing expense hitting the P and L into next year as you bring the DOBS go to market vision to life?

Nadav Zafreiter, Chief Executive Officer, Check Point Software: I’ll start with the channels. Our partners and channels are imperative to our success. They’ve always been and we want to be the best partners to them. And if we want to do this at scale, we must do it with them. And so like I’ve said before, I’m halfway through my 1st 90 days.

I’ve met a few. In the next 4 weeks, I’m going to meet with dozens more. And so, yeah, being out there is not just being out there at the trenches where security actually happens, but also understanding from our partners, whether it’s the partners that are going after the large enterprise all the way down to our MSSB partners. What is the way that they want to use our products, consume our services? How do we work together to at the end of the day be better steward for our to the end customers and which I really understand how hard it is for them day in, day out to actually work through the complexity of their networks.

Roy Galant, Chief Financial Officer, Check Point Software: And as for your question around the sales and marketing, so I think two factors here. 1, we had Cyberint that’s contributed around 3 points to the 18% that you see and the others is around incentives. Of course, we added some other sales at comp, but also around incentive. I mentioned that our new business and also new logos had a great job. I mean, we had a significant growth in new business in the quarter.

The commission is mainly paid over new business. So we did see higher commission. I think you don’t see it still in the revenues. But again, the quarter was strong. So in terms of new business, so on the expense side, we do see some of these expenses already in the P and L.

Roy Galant, Chief Financial Officer, Check Point Software0: Thanks very much. Look forward to seeing everybody at CPX.

Kippie Meinser, Global Head of Investor Relations, Check Point Software: All right. Next up is Hamzah Fodderwala followed by Saket Galia.

Roy Galant, Chief Financial Officer, Check Point Software5: All right. Thank you for taking my question and congrats to Gil and Nadav. Nadav, a question for you. You’ve been, you mentioned at Checkpoint now for just about 90 days. And one of the things you did really well at Team 8 is you had a really strong network of CSOs.

So you mentioned some of the things Check Point does well. When you talk to customers, when you talk to CSOs, what are the 1 or 2 things that Check Point could do better? And then for Rui, I’m sorry if I missed it earlier, but in your guidance, what is the assumption around operating margin for this year? And was there any FX benefit to that? Thank you.

Nadav Zafreiter, Chief Executive Officer, Check Point Software: Thanks, Hamzah. I think I would say 2 things. Number 1 is I think our customers are expecting us to innovate and to be out there with our SaaS models, with our SaaS solution, to leverage AI, both to make their lives simpler, but also to secure their AI assets. I also think that and that’s something that we’re going to try to do faster. But the one thing that they love about us that we don’t want to change is that we do it responsibly.

So that is innovate at scale with the highest uptime and not losing the eye on the prize that at the end of the day, which is about security, right? So we need to bake all that in. And I hope that we can accelerate this process, but not lose the magic of high uptime, scalable, easy to use, etcetera. And again, I know that I’ve said that a few times, but you can’t overstate the importance of understanding the opportunity that comes with new AI capabilities to do that.

Roy Galant, Chief Financial Officer, Check Point Software: And around the guidance and the operating margin, so we expect similar margin might be 0.5% below than what we see in this year, again mainly because of the Cyberint acquisition that we discussed. I mentioned it as part of our presentation. We don’t expect to see significant FX benefit next year in 2025. Again, so that’s in terms of the margin for next year.

Roy Galant, Chief Financial Officer, Check Point Software5: That was half a point, Rui?

Roy Galant, Chief Financial Officer, Check Point Software: Half a point, approximately half a point below what we are taking.

Kippie Meinser, Global Head of Investor Relations, Check Point Software: All right. Our next up is Saket Kalia followed by our last question of the day, which will be from Roger Boyd.

Roy Galant, Chief Financial Officer, Check Point Software6: Okay, great. Hey, guys, thanks for taking my questions here. Congrats to the whole team. And Nadav, really good to meet you here virtually. Maybe for you, Nadav, I mean, to just the focus on Sassy, it feels like Sassy just as a market is really hitting more mainstream adoption.

How do you sort of think about differentiating in that market with Perimeter 81? And maybe relatedly, Roy, for you, how do you sort of size that business or maybe the total Infinity business just to sort of put a line in the sand as we think about that becoming a bigger business in the future?

Nadav Zafreiter, Chief Executive Officer, Check Point Software: So on the differentiation side, the architecture is different. And when we say when I say hybrid, that means that we have the ability to work point to point on a mesh, but also the ability to work through the SASE cloud and have the ability to also operate at the edge. So that gives us flexibility and agility. I think it gives us the opportunity to make better prevention and it also makes it more cost effective because not everything has to go through the cloud. And this allows us also to accelerate our road to 0 trust, understanding not only who is at the other end in terms of identity, but also intent.

And based on that, make a decision on the spot, what is the most secure, but also the most cost effective way to do it. And right now, at least to the best of our knowledge, the best of my knowledge, this hybrid architecture, this hybrid mesh architecture is unique. And that’s what the folks from Perimeter Ready 1 brought. Now when we merge that with the firewall capabilities and the depth and the breadth that we have, I think this is for enterprise customers, especially that have multiple use cases because look, some of the stuff that is already out there is good for niche or specific use cases. When you’re an enterprise and you have every sort of permutation and every end of long tail meets, I think that this brings a real differentiation.

Roy Galant, Chief Financial Officer, Check Point Software: And can Exactly. Okay. Did you ask me you asked a question about Infinity? Can you ask it again just to the size of Infinity, the question was already?

Roy Galant, Chief Financial Officer, Check Point Software6: Yeah. That’s right, Rory. So the size of Infinity or the size of Permader81, however you want to size it just to sort of get a sense for that kind of that SaaS part of the business.

Roy Galant, Chief Financial Officer, Check Point Software: So I think Infinity we made approximately 15% of our revenues today. In terms of booking, it’s much higher, so we expect it to see in 2025 this percentage going significantly higher. In terms of Sassy, again it’s still small, but again we did it very nice. I mean the Sassy grew very nicely in 2024, And we do expect to see another uptick in 2025 with all the improvement and all the work that was done in the last 12 months around the product.

Roy Galant, Chief Financial Officer, Check Point Software6: Very helpful. Thanks guys.

Kippie Meinser, Global Head of Investor Relations, Check Point Software: And Saket and our last question is going to come from Roger Boyd. Give it your shot Roger.

Roy Galant, Chief Financial Officer, Check Point Software7: Thanks, Kipp. I’ll come back to congrats to both Gil and Avav. On CloudGuard, I think Gil mentioned it was a strong quarter. I would love to get a little more color on what went well, any metrics there? And then specifically for Nadeau, I would love to get your vision on how competitive you think you can be in that space.

I know you mentioned 2025 will be a focus on SASE, but where does cloud security stack up in terms of focus areas? Thanks.

Nadav Zafreiter, Chief Executive Officer, Check Point Software: Yes. So for the cloud part, where we want to shine is creating one policy across all of your network state, right? So instead of having one policy for your data center, one policy for your branch, one policy for every one of your clouds. We want to bring the ability to unify that. So we’re going to be focused on cloud network security and our cloud firewall.

We also have a very strong software for WAF and we’re going to again put that into this idea of the mesh architecture.

Kippie Meinser, Global Head of Investor Relations, Check Point Software: All right. That covered for you, Roger?

Nadav Zafreiter, Chief Executive Officer, Check Point Software: That’s great. Thanks, Kara.

Kippie Meinser, Global Head of Investor Relations, Check Point Software: Thank you very much for joining us. That’s the conclusion of the call. We’ll see you throughout the quarter. Myself, Nadeb and Roy will be visiting quite frequently. So take care, and we look forward to seeing you in the quarter.

Bye bye now.

Nadav Zafreiter, Chief Executive Officer, Check Point Software: Thank you very much, everybody. Thanks, folks.

Roy Galant, Chief Financial Officer, Check Point Software0: Thank you.

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