Q3 2025 Check Point Software Technologies Ltd Earnings Call
Conciliation of such results as well as the reasons for our presentation of non-GAAP results non-GAAP information. If you have any questions. After the call. Please feel free to contact investor relations by email and get bad checkpoint Dot com now I'd like to turn the call over to Nick Dobbs Zephyr ear.
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 2020 five revenue guidance, and where we will share more on this shortly.
As we discussed during our second quarter earnings call. Our strategy continues to be anchored in four core principle that we believe define the foundation of a modern cyber security stack.
Shaped predominantly by the accelerating adoption of AI.
As we continue to shape the future of cyber security.
Our strategy is guided by these sports principles.
First securing the connectivity fabric as it evolves from a traditional infrastructure into an a gentex autonomous reality.
Second our prevention first approach, which I believe is now more important than ever as attackers leverage sophisticated egencia capabilities, it's literally imperative.
That would 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 being at building an open collaborative ecosystem among vendors demands communication and cooperation.
Speaker #1: You have joined the meeting as an attendee and will be muted throughout the meeting .
Speaker #2: , as well as the reasons for our presentation of non-GAAP results . non-GAAP information . If you have any questions after the call , please feel free to contact Investor Relations by email at Check Point Software Technologies Ltd .
Kip Meintzer: As well as the reasons for our presentation of non-GAAP results, non-GAAP information. If you have any questions after the call, please feel free to contact Investor Relations by email at kip@checkpoint.com. Now I'd like to turn the call over to Nadav Zafrir.
Sometimes even with fierce competitors, yet I can tell you from the trenches of cyber security.
Speaker #2: Now , I'd like to turn the call over to Nadav Zafrir .
It's clear to us that eats essential and our recent acquisition a very is a powerful example of how we are advancing this vision by integrating it into our exposure management organizations, we've expanded integrations across endpoint firewall cloud providers, reaching over 100 deployments and delivering.
Speaker #3: Thank you . Kip , 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 .
Nadav Zafrir: Thank you, Kip. Good to see you all. 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. Nearly a month into Q4, we remain confident in our trajectory, and we're raising our midpoint for 2025 revenue guidance. Roei 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 four 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.
Automation remediation based on whats the best security possible.
And finally as I emphasized before securing a is top priority.
We're 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 their letting crossing lanes. It's both exhilarating, but also extremely challenging and I think it's a raise for relevance for ever.
We won.
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 like Europe.
Nadav Zafrir: As attackers leverage sophisticated agentic 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 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. I can tell you from the trenches of cybersecurity, it's clear to us that it's essential. 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. Finally, as I've emphasized before, securing AI is top priority. We are in the very first innings of the most impactful technological revolution of our lifetime.
A zero based AI native security leader.
With deep expertise in protecting large language models and autonomous agents.
But keira enables real time defense against prompt injections data leakage in Mato manipulation and it gives us a secure a unique security oriented model that ensures evolving defensive stay ahead of emerging AI threats and I believe that together we are building a comprehensive AI security platform that will enable our customers.
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 observe ability and data loss prevention. He means protecting AI applications and agents with runtime defenses and then finally strengthening strengthening motto robustness back in time continuous testing and compliance readiness.
You should know that Mercury is already trusted by Fortune 500 enterprises, including some of the biggest banks the largest technology companies worldwide.
And we're just getting started.
As AI adoption accelerates it exposes new threats and we are 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.
Nadav Zafrir: Moving from the current phase of human enhancement to replacement and delegation to the next phase of crossover where sophisticated agents are taking over and crossing the lanes, it's both exhilarating but also extremely challenging. I think it's a race for relevance for everyone. 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. 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. Lakira enables real-time defense against prompt injections, data leakage, and model manipulation. It gives us a unique security-oriented model that ensures evolving defense to stay ahead of emerging AI threats.
Beyond that I wanted to touch briefly on our latest go to market updates.
During the quarter, we achieved fed ramp authorization for the Infinity 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 Robert joins US as President of America sales. She brings deep enterprise sales expertise from her leadership roles at Cisco and Palo to further build and scale our sales organization.
I'll be Rambam was appointed President of technical sales Abbvie has been with us for a long time and from Hereon. He will lead the efforts to drive technical excellence and strengthened our consumer customer engagement.
Finally, Brett dies joins us as chief marketing officer to strengthening our brand presence to fuel demand and position checkpoint for its next chapter of market leadership.
Nadav Zafrir: 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. What does that mean? It means securing employee usage of AI tools through observability and data loss prevention. It means protecting AI applications and agents with runtime defenses. Finally, strengthening model robustness via continuous testing and compliance readiness. You should know that Lakira is already trusted by Fortune 500 enterprises, including some of the biggest banks and largest technology companies worldwide. We're just getting started. As AI adoption accelerates, it exposes new threats. We're committed to leading the journey to enable organizations to adopt AI securely. We're investing organically in research and development. 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.
To close before I hand over to Rory so with over 10 months in my role as CEO of checkpoint 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 it over to <unk>.
Gary.
Yeah.
Um, and what does that mean? It means securing employee usage of AI tools through observability and data loss prevention. It means protecting AI applications and agents with runtime defenses. And then finally, strengthening model robustness via continuous testing and compliance readiness.
Greg can you see my screen.
Yep great.
So thank you Elena dam and thank everyone for joining the call and above mentioned, we had a strong quarter driven by strong demand across our portfolio.
You should know that LikeHere is already trusted by Fortune 500 enterprises, including some of the biggest banks and largest technology companies worldwide.
If were looking on our revenues our revenue grew by 7% to $678 million exceeded by $6 million Amit the point.
Our non-GAAP EPS reached $3.94 per diluted shares and exceeded our guidance. It is important to note that.
And we're just getting started. Um, as AI adoption accelerates it exposes new threats. Uh, 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.
This number includes a one time tax benefit in connection with a tax settlement, we signed during the quarter, the resulting an update for that provision and that had the benefit of $1.47 both for GAAP and non-GAAP EPS.
Nadav Zafrir: During the quarter, we achieved FedRAMP authorization for the Infinity Platform for government. This positioned us as a trusted partner for the most demanding federal environments. Our go-to-market organization is now fully staffed. Rachel Roberts joins us as President of America Sales. She brings deep enterprise sales expertise from her leadership roles at Cisco and Palo to further build and scale our sales organization. Avi Rambam was appointed President of Technical Sales. Avi's been with us for a long time. From here on, he'll lead the efforts to drive technical excellence and strengthen customer engagement. Finally, Brett Tice joins us as Chief Marketing Officer to strengthen our brand presence to fuel demand and position Check Point Software Technologies Ltd. for its next chapter of market leadership.
Beyond that, I want to touch briefly on our latest go-to-market updates. During the quarter, we achieved FedRAMP authorization for the Infinity platform for government. This positions us as a trusted partner for the most demanding Federal environments.
Excluding the one time benefit our EPS exceeded the midpoint of obligations by approximately two cents.
Yeah.
Moving to the to our results as they are as I indicated our revenues grew by 7% and our deferred revenues grew by 8% to one be on an 887 million dollar our calculated billings totaled $672 million of selecting a room of about 20% growth in mobility.
Uh, our go to market organization is now fully staffed. Um, Rachel Roberts joins us as president of America sales. She brings deep Enterprise sales expertise from her leadership roles at Cisco and Paulo uh to further build and scale, our sales organization
This was driven by strong demand across our portfolio and it caused our geography is that all of them grew by double digit I don't need to worry I do want to remind you that our billing effect also affected by approximately three points. There from these that will slip from previous quarter, we talked about at last the last in our last earning call. In addition, we had one.
AI rambam, uh, was appointed president of technical sales office. He's been with us for a long time. And from here on, you'll lead, the efforts to drive. Technical excellence and strengthen consumer customer engagement.
And finally, Brett ties joins us as Chief marketing officer to strengthen our brand presence to fuel demand and position checkpoint for its next chapter of Market leadership.
Nadav Zafrir: To close, before I hand over to Roei, with over 10 months in my role as CEO at Check Point Software Technologies Ltd., I think that our strategic vision is taking shape. I'm energized by the progress we've made already and where we're going in the future. With that, I'll turn over to Roei.
<unk> deal.
Are there any other way that there's obviously the 2% benefit and then our from Q4 that came in it came in in Q3 notes had the benefit of two points tall buildings.
If were looking on our current calculated billings, so that grew by 14% to 642 million, though at all.
To worry. Um, so with over 10 months in my role, um, as CEO at checkpoint, 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 Roi.
Our remaining performance obligation grew by 9% to $2 4 billion dollar.
Roei Golan: Great. Can you see my screen?
Nadav Zafrir: Yep.
Roei Golan: Great. Thank you, Nadav, and thank you, everyone, for joining the call. As Nadav 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 million, exceeded by $6 million our midpoint. Our non-GAAP EPS reached $3.94 per diluted shares and exceeded our guidance. It is important to note that this number includes a one-time tax benefit in connection with a tax settlement we signed during the quarter that resulted in an update for our tax provision. That had the 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 $0.02. Moving to our results, as I indicated, our revenues grew by 7%. Our deferred revenues grew by 8% to $1,887 million.
Great. Can you see my screen?
Yep, great.
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 a San Francisco articulated bidding is actually the calculated billing, excluding though how our product our product business and that grew 21% compared to 7%.
And last year and again, that's not only from silicon product that's across our portfolio. It gets the quantum firewall amani email Armani sassy.
Growth is a great result.
If we're looking on our emerging technology. So that's the a we will see that it is a free a free week free main product that they are three companies that we acquired in the last few years.
So, thank you, I want to dab and thank everyone for joining the call mentioned, we had a strong quarter driven by strong demand, the calls are portfolio. If you are looking on our revenues, our Revenue grew by 7% to 678 million exceeded by 6 million dollars. Our midpoint on on on PPS, reach $3.94, so diluted shells and exceeded our guidance, it is important to know that this number includes a a 1-time tax benefit in connection with a tax settlement. We signed during the quarter that result in an update for our tax provision and that had the benefit of $1.47 both our gaap and non-gaap eps.
A.
Armani, Sassy Armani email and collaboration and external risk management.
Excluding the 1-time benefits, our EPS exceeded the midpoint of our projection for approximately 2 cents.
All of these products grew organically, 40% more than 40% in a R E <unk> and we do see them, becoming more and more significant total business.
Roei Golan: Our calculated billings totaled $672 million, 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 digits. I do want to remind you that our billings felt also affected by approximately three points from deals that were flipped from previous quarters. We talked about it in our last earnings call. In addition, we had one large deal, an early renewal that resulted in a 2% benefit, an early renewal from Q4 that came in in Q3 and resulted in a benefit of two points to our billings. If we are looking on our current calculated billings, that grew by 14% to $642 million. Our remaining performance obligation grew by 9% to $2.4 billion. I'll move forward. As I said, we did see a strong demand across our portfolio.
Moving back to our global revenue distribution. So we did see double digit growth in America.
10% growth that's represented a 42% of our revenues in Q3.
Okay.
Moving to the to to our results. So, as a as I indicated our revenues grew by 7%, I would defer revenues grew by 8% to 1 billion and 887 million. Our calculated billing totaled 672 million reflecting back, 20% growth year over year. That was driven by strong demand across our portfolio and it caused our geography, that all of them grew by double digit.
EMEA, which represents 45% of our revenue this quarter grew by 3%, while APAC Asia Pacific grew by 8% and our presenting today, 13%.
Of our total revenues.
Moving up into our P&L into operating performance saw gross profit decreased from $563 million to $602 million, representing a gross margin of 89% similar to last deal our operating expenses increased by 11%. The increase was many of the result of our continuous investment organically.
I do need to re I do want to remind you that our billing affect also affected by approximately 3 points. The from deals that will slip from previous quarter. We talked about it. Last last in our last earning call. In addition, we had 1, large deal early renewal of that resulted the 2% benefit early in the year from Q4 that came in came in in Q3 and also in the benefit of 2 points to our Billings.
If you are looking on our current calculated billing. So that group, by 14% to 6,042 million,
Also the impact of cyber range and various acquisition that where the north part of Q3 last year BNS.
Our remaining performance obligation, grew by 9%, to 2.4 billion.
Our non-GAAP operating income continues to be strong in two other than $82 million, 42% operating margin.
Roei Golan: If we are looking on our services calculated billings, services calculated billings is actually the calculated billings excluding our product business. That grew 21% compared to 7% last year. Again, that's not only from certain products. That's across our portfolio. If it's the Quantum Firewall, Harmony Email, Harmony SASE drove this great result. If we are looking on our emerging technology, that's the ARR. We do see that the three I started with, the three main products, the three companies that we acquired in the last few years: Harmony SASE, Harmony Email and Collaboration, and External Risk Management. All of these products grew organically 40%, more than 40% in ARR year over year. We do see them becoming more and more significant to our total business. Moving back to our global revenues distribution, we did see double-digit growth in America, a 10% growth.
Also something that I discussed also in our last earning call and I want to touch base on that again in this call a the U S. Dollar got in the in the last few months I would say it seems.
Since the beginning of.
Q3.
The U S dollar gas weekend significantly this is the Israeli shekels, a given the fact that we have a significant expenses in check hills that have a headache and although we are hedging significant part of that the expenses still we do see a negative effect for this weekend rollout on our P&L.
I'll move forward as I said that uh we did see a strong demand and cost of portfolio. If I were looking on our services, calculated Billing Services, calculated Billings actually the calculated billing excluding our our product, our product business and that grew 21% compared to 7% last year. And again that's not only from certain products that across our portfolio. If it's the quantum firewall, how many email, how many sassy brought this great result.
In this quarter alone that affected our P&L by approximately one point plus margin approximate delta <unk>.
If you are looking on our emerging technology, so that's the, are we do see that the the free free we attached with the 3 main products, that 3 companies that we acquired in the last few years.
Locals looking ahead, if already talking about next quarter or so we continue to edge of course, all our kind of our foreign exchange.
Our foreign exchange currencies.
Harmony sassy almond email, and collaboration and external risk management. All of these products, grew organically 40% more than 40% in r e over the year. And we do see them becoming more and more significant on all total business.
And our foreign currencies and we do expect to see approximately one point headwind to our margin.
Roei Golan: That's represented today 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&L, into our operating performance, our gross profit increased from $563 million to $602 million, 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 continuous investment organically and also the impact of Cyberint and Verity acquisition that were not part of Q3 last year P&L. Our non-GAAP operating income continues to be strong at $282 million, 42% operating margin. Also, something that I discussed also in our last earnings call, and I want to touch base on it again in this call, the U.S.
Cubo dish.
<unk> as <unk> mentioned, we closed last week, the acquisition of <unk>, leading AI and <unk>.
Moving back to our Global Revenue revenues distribution. So we did see double digit growth in America, 10% growth. That's represented to the 42% of our revenues in Q3, uh,
<unk> got simple agent TK application and this acquisition that will close last week will result in approximately half a point headwind to our 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 any.
Which represent 45% of our revenues this quarter grow by 3%. While APAC, Asia Pacific. Grew by 8% and representing today. 13% of our total revenues
Increased fall NL expenses next year in 2026, approximately $50 million to $60 million, that's something that we discussed last quarter and again because the commentary felt similar to what we discussed last quarter I wanted to bring it back again here.
Moving into our cash flow and.
Our cash flow was very strong operating cash flow was very strong with $241 million.
Moving into our p&l into operating performance. So gross profit increased from 563 million to 602 million representing, a gross margin of 89% similar to last year, our operating expenses increased by 11% the increase of many of the result of a continuity investment organically. And also, the impact of cyber intensity acquisition. That were not part of Q3 last year, pnl.
Operating cash flow that's included a $66 million one time tax payment in connection with tax settlement signed during the quarter, but also I touched base about it when we talked about the EPS. Excluding this one time taxes a payment.
A, our non Gap operating income continues to be strong and 282, million 42%, operating margin.
Roei Golan: dollar got in the last few months, I would say since the beginning of Q3, the U.S. dollar got weakened significantly. This is the Israeli shekels. Given the fact that we have significant expenses in shekels, that have had, and although we are hedging a significant part of that expenses, still we do see a negative effect of this weaker dollar on our P&L. In this quarter alone, that affected our P&L by approximately one point to our margin, approximately, I would say, $0.06. Looking ahead, if we're already talking about next quarter, we continue to hedge, of course, our foreign exchange currencies and our foreign currencies. We do expect to see approximately one point headwind to our margin in Q4. In addition, as Nadav mentioned, we closed last week the acquisition of Lakira, a leading AI native security platform for agentic AI applications.
Great and cash flow grew by 23%.
Also, something that I discussed in our last earnings call, and I want to touch base on that again. In this call, the US dollar got in the last few months, I would say since.
Strong cash flow a if we're looking on the on our total cash our total cash in the end of the quarter is $2 8 billion cash and marketable securities and deposits.
Another point that we added during the quarter. Another two point to three I want to mention here that we had during the quarter. We I we talked about it also last quarter that we are we are building a new check one campus in Israel in Tel Aviv and during the quarter, we paid approximately $160 million for the land.
Weakened significantly. This is the Israeli shekel H. Given the fact that we have a significant expenses in shekel that have had an although we are heading significant part of that. Expenses still, we do see a negative effect of this weaker Dollar on our pnl in this quarter alone that affected our pnl by approximately 1.1, mg approximately. I would say, 6 cents.
And that's a when I see it in the investor and the cash flow coming from.
On the investment.
<unk>.
I do have to say here that we don't expect any significant additional <unk>.
Investments until 2027.
In addition, we continue to do our buyback and we purchased our share repurchase approximately $325 million of shelf.
And at an average price of 119 at Doyle.
Roei Golan: This acquisition that was closed last week will result in approximately half a point headwind for our margin in Q4. As we look further into 2026, and as I indicated in the previous earnings call, based on the current FX rates, that can have an increase for our annual expenses next year in 2026 of approximately $50 to $60 million. That's something that we discussed last quarter. 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 million operating cash flow. That included a $66 million one-time tax payment in connection with tax settlements signed during the quarter that also I touched base about it when we talked about the EPS.
Okay.
So to summarize our strong quarter avenues, and EPS exceeded exceeded our projection accelerated growth across our portfolio driven by 20% growth in calculated billings.
Um, looking looking ahead for already talking about next quarter. So we continue to edge of calls our our our foreign exchange, our foreign exchange currencies and and our foreign currencies. And we do expect to see approximately 1.8, in to our margin. In Q4, in addition, as nadav mentioned, we closed last week, the acquisition of lakira leading AI native security for platform for agent care application. This acquisition that was closed. Last week, will result in approximately half a point, Edwin for margin in Q4.
A driven 20% growth in calculated billing and another strong operating cash flow and profitability core profitability a profitable quarter.
Moving to the business outlook for Q4.
Before we move to the Q&A.
As we look further into 2026 and as I indicated in the previous earning call, based on the current ethics rate, that can have a, a, a increase for NL expenses next to in 2026 of approximately 50 to 60 million dollar. That's something that we discussed last quarter. And again because the current results are similar to what we discussed last quarter, I wanted to bring it back again here.
So if we're looking on Q4, so it will start with the Q4 and then touch based on the full year. So Q4, our range is between 724 to 764, which represents 6% at the midpoint the non-GAAP EPS between $2 77 to $2 80.
Moving into our cash flow.
Our cash flow was very strong. Operating cash flow was very strong with $20,041 million.
S. GAAP EPS is expected to be 60, plus.
Roei Golan: Excluding this one-time tax payment, our operating cash flow grew by 23%, very strong cash flow. If we're looking on our total cash, our total cash in the end of the quarter is $2.8 billion total cash in marketable securities and deposits. Another point that we had during the quarter, another two points that I want to mention here that we had during the quarter, we talked about it also last quarter that we are building a new Check Point campus in Israel, in Tel Aviv. During the quarter, we paid approximately $160 million for the land. You're going to see it 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. We purchased our share. We purchased approximately $325 million of shares at an average price of $198.
If we're looking on the annual guidance. So first a reminder, that though we in the middle column, you'll see the original guidance, we provided in the immediate of deal.
Midpoint.
The updated midpoint of the revenue guidance would be $15 million is going to be $15 million above the original midpoint.
The range is between $2 seven or 5% to 745 midpoint of $2 725, 6% growth.
<unk> on non-GAAP EPS is expected to be between $11, 22% to $11.32 and the GAAP EPS is expected to be approximately $2 29.
That's included. A 66 million 1-time tax payment in connection with tax settlement sign. During during the quarter that also, I talked about it. When we talked about the EPS, excluding this 1-time tax payment, our operating cash flow Group by 23%, very strong, uh, cash flow. If we're looking on, on our total cash, our total cash. In the end of the quarter, is 2.8 billion for a cash and marketable, securities and deposit. Another point that we added during the quote and another 2.3, I want to to mention here that we had during the quarter we we I we talked about it. Also last quarter that we we are building a new check 1 Campus in Israel in Tel Aviv and during the quarter, we paid approximately 160 million for the land.
Again, the EPS also includes the tax benefit that I discussed and two things two toy items that I want to address is about our revenue and EPS Q4, as we like in which is more typical for Q4, it's a very heavy backend loaded quarter. This also includes the hedge.
and that's going to see it in the invest in the cash flow from in, in from Investments and
Howard Weil.
And heavy every how the projects we see also in our final today significant a refreshed product that supposed to come in in Q4, and because its more heavier abbvie. So again billions more we're providing the rent. There is the range is mainly for the Aldo portion that again, we do expect to see more refresh projects, but because.
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 million dollars or of shares at an average price of 198.
Roei Golan: 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 quarter. Moving to the business outlooks for Q4. Before we move to the Q&A, if we're looking on Q4, we'll start with the Q4 and then touch base on the full year. Q4, our range is between $724 million to $764 million, which represents 6% in the midpoint. The non-GAAP EPS is between $2.70 to $2.80. GAAP EPS is expected to be $0.60 less. If we're looking on the annual guidance, first, I'll remind you that in the middle column, you see the original guidance we provided in the middle of the year. Our midpoint or the updated midpoint of the revenues guidance will be $15 million.
To summarize, a strong hotel avenue and EPS exceeded our projection, with accelerated growth across our portfolio driven by 20% growth in calculated billings.
The other 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&L. The EPS in Q4 would be affected by two main items. One is the FX and that would have approximately 7% to eight a.
Driven 20% growth in calculated billing, and and other strong operating cash flow and profitability, quote, profitability profitable quarter.
Ah, moving to the business outlooks for Q4.
Before we move to the Q&A,
The effect based on the contemplated in Q4, the weaker dollar of the two effect.
Our P&L and <unk> that will have approximately between four to five.
Perfect.
I am effect in Q4 EPS.
That's it.
Turning to keep to managing the Q&A.
So if we are looking at Q4, we'll start with Q4 and then touch base on the full year. So Q4 our range is between $724 million to $764 million, which represents 6% at the midpoint. The non-GAAP EPS is between $2.70 to $2.80. A GAAP EPS is expected to be 60 cents less.
Alright, and just give us a brief moment, while we get the speakers situated.
Our first step is going to be Brian Essex from J P. Morgan.
Roei Golan: It's going to be $15 million above the original midpoint. The range is between $2.705 billion and $2.745 billion, midpoint of $2.725 billion, 6% growth year over year. Our non-GAAP EPS is expected to be between $11.22 to $11.32. The GAAP EPS is expected to be approximately $2.29. Again, the EPS also includes the tax benefit that I discussed. Two things, two items that I want to address here 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 funnel today significant refresh projects that are supposed to come in in Q4. Because it's more heavy, there is more we are providing the range. The range is mainly for the hardware portion that, again, we do expect to see more refresh projects.
Followed by our EMEA Copa from Patrick Colville and.
Position number two.
Great. Good morning, Thank you chip and thanks for taking the question.
Maybe to start with really.
On that last point that you just talked about in terms of guidance, noting that Q4 tends to be a heavier hardware quarter.
If we're looking on the annual guidance. So first, I remind you, that's the in the middle column, you see, the original guided, we provided in the middle of the Year, our midpoint, or the updated. Midpoint of the revenues guidance will be 15. Million is going to be 15 million dollar above the original midpoint. It's so it's, the range is between 2.705 and 2.745. Midpoint of 2.725 6% growth in over the years on. Nona PPS, is expected to be between $11 and 22 cents to $11.32 and the gaap EPS is expected to be approximately.
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 some thoughts around the sensitivity versus hardware in <unk>. So.
So at least we expect to begin I can go give more insight on that so we are expecting to have a of course.
And double digit growth in subscription.
Slightly improvement into Q3, I remind you that in Q4 last Q4, we have already in the comparable <unk> that the first quarter do you feel the tablets 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 gross we're worried so what you've seen in Q.
Roei Golan: Because the hardware is more significant in Q4, that's something that we need to take into account in the guidance. As for the EPS, I mentioned it when I discussed the P&L. The EPS in Q4 will be affected by two main items. One is the FX that will have approximately $0.07 to $0.08 effect based on the current rates in Q4, the weaker dollar that will affect our P&L, and Lakira that will have approximately between $0.04 to $0.05 effect in Q4 EPS. That's it. I'll turn it to Kip to manage the Q&A.
In Q.
In the third quarter and for the appliances, we do expect to see growth in mobility more around the midpoint and mid single digits.
Alright Super helpful. I'll keep it to one keep keep have kept happy.
Thank you all right next up is.
Patrick Colville, Hey, Patrick.
Hey, Oh about down Kiss, the ring kidney care Kingdom and Kim congratulations.
Thank you.
Joining us on billings growth is as you know I've covered type of it for a long time and it's usually impressive so good to see that in.
Project is supposed to come in in Q4 and because it's more heavy heavy. So again there is more, we are providing the range. There is the the range is mainly for the outer portion. That again, we do expect to see more refresh projects but because the hardware is more significant in Q4, that's something that we need to take into account in the guidance. And it's for the EPS, I mentioned it, when I discussed the pnl, the EPS in Q4 will be affected by 2 main items. 1 is the the ethics that we have proximately 7 to 8 cents. Uh, effect based on the current rates in Q4 they weaker dollar, that will affect our pnl and Lia. That will have approximately between 4 to 5 cents effect on Q4 Epps.
That's it. And I'll turn in to keep to managing the Q&A.
[Company Representative]: 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 Amir Kolpa from Patrick Colville in position number two.
The question, we're getting already is what is the sustainability of that growth I mean, so you you talked about there were a few one offs you know push from <unk> pool for full Q, but as we think about 2026 is this a new chapter for checkpoint.
All right, just give us a brief moment while we get the speaker situated.
Our first stop is going to be Brian Essex from J.P. Morgan.
Followed by a mea culpa from Patrick Caval in position number 2.
[Analyst 1]: Great. Good morning. Thank you, Kip. Thank you for taking the question. Maybe to start with Roei, 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? We'd love to just get the thoughts around the sensitivity versus hardware in Q4.
And.
On the <unk>.
Development leadership and are.
Are there any puts and takes as we think we've got some models.
Looking out a year out.
Sure I can start first of all thank you Patrick it's a for your kind words.
I think it is a new trajectory.
Roei Golan: We expect to be, yeah, I can give more insight on that. We are expecting to have, of course, a double-digit growth in subscription with slight improvement here into Q3. I remind you that in Q4, last Q4, we have already in the comparable Cyberint that the first quarter of this year, the Cyberint is included. We do expect to see acceleration for our subscription revenues from what we did have this quarter and support similar rates, gross flow rates for what you've seen in Q3. As for the appliances, we do expect to see growth year over year, more around the mid-single digits.
Yes, Q3 was a very strong quarter.
Great. Good morning. Thank you. Kip and uh, thanks for taking the question. Um, maybe to start with really um, on that last point that you just talked about in terms of guidance, uh, noting that Q4 tends to be a heavier Hardware quarter. Um, could you talk about your your underlying assumptions for subscription and recurring Revenue in your guide and how much visibility you have? Uh, would would love to just get the thoughts around the sensitivity versus hardware and for Q.
And.
I think it is and some of it as you said has.
Some pullover and pull ins, but generally speaking it's a 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.
Going to do this prudently.
And we're going to make sure that we make the investments at the right places and 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.
[Analyst 1]: All right. Super helpful. I'll keep it at 1 and keep Kip happy.
So we we we expect to be good. I can give you more insight on that. So we expecting to have a of course, it's double digit growth in subscription uh with slightly Improvement, even to Q3. I remind you that in Q4 last Q4, we have already in the comparable cyber int that. The first quarter of this year, the tablet is included. But still we do expect to see acceleration for subscription revenues from what we did. Had this quarter and support similar rates growth for rates for what you've seen in Q in Q. Um, in queue in the third quarter, as for the appliances, we do expect to see growth in more around the midpoint and meet single digits.
[Company Representative]: Thank you. All right. Next up is Patrick Colville. Hey, Patrick.
Christopher Thank you.
All right next up is Joseph Gallo followed by <unk>.
All right. Super helpful. I'll keep it. The one and keep, keep, keep, keep happy. So, uh, thank you. All right, next up is Patrick Coleville.
Nadav Zafrir: Hey. I'll bow down, kiss the ring, King Kip, King Nadav, and King Roei. Congratulations.
Hey, Patrick.
Awesome, Thanks, Ken Hey, guys nice job on the results.
[Analyst 1]: Thank you.
Hey, bow down to Kiss, the Ring King KIPP. King. The Dove and King boy. Congratulations.
Nadav Zafrir: 20% billings growth is, you know, I've covered Check Point for a long time, and it's hugely impressive. Good to see that. The question we're getting already is, what is the sustainability of that growth? I mean, you talked about that there were a few one-offs, you know, push from Q2, pull for Q4. As we think about 2026, is this a new chapter for Check Point and, you know, under Nadav's leadership? Are there any puts and takes as we think, you know, with us, the models looking out a year out?
On the go to market leadership changes announced is there a change in strategy and should we factor that into <unk>, maybe just give us some commentary on how we should think about for two billings and then where are you on a quota carrying rep basis, and how should we think about that growth going forward.
20% billions growth is is you know covered checkpoint for a long time and it's, it's usually impressive so good to see that. Um,
Thank you for that Joseph so.
The strategy is the new strategy with the new leadership is actually going to take effect in Q1 of 2026.
Q4 every ran Boeing is still going to lead to the Americas.
And we're keeping our head or full full steam all four all cylinders ahead.
We are going to make changes as we go into 2026.
And we will announce some of them when we 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 up.
[Analyst 1]: Nadav, you're going to start.
The question we're getting already. Is what is the sustainability of that growth? I mean, so you, you, you talked about that. There were a few 1 offs, you know, pushed from 2 Q, pool for 4 q. But as we think about 2026, is this a new chapter for checkpoint. Um, and, um, you know, under, um, Nadal's leadership and, um, you know, I then he puts and takes as we think, you know, we're just the models, uh, looking at a year out.
Nadav Zafrir: Sure. I can start. First of all, thank you, Patrick, for your kind words. I think it is a new trajectory. Yes, Q3 was a very strong quarter. I think, and some of it, as you said, has some pullovers and pull-ins. Generally speaking, it's a strong quarter. 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. We're going to make sure that we make the investments at the right places in the right time. I think it's a journey. I do think that we're seeing the beginning of the fruits of this journey.
Sure. I I I can start uh uh, first of all, thank you Patrick. It's uh, uh um for for your kind words. Um, I think it is a new trajectory
Sell in large enterprise with our current existing customer base.
But also with our new product roadmap with.
With our new capabilities go into acquire new enterprise customers across the world with a focus on the Americas.
Um, yes. Q3 was a very strong quarter, um, and uh, um, I think, uh, um, it is and some of it as you said, has, uh, uh, um, some pullovers and pull in. But generally speaking, it's, uh, it's just, it's a strong quarter. And I believe that when we give our our guidance for 2026, you'll
Thank you.
They would go alright next up is tally Ani followed by Adam Tindle.
Great.
Thank you.
How long does it take for billings growth to translate to revenue growth and then where would it be recorded meaning when I look at your revenues.
See that we believe uh a a trajectory of growth is in the cards for us. Um having said that, you know, us already, uh um we're going to do this prudently um and we're going to make sure that we make the 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 the beginning of the fruits of this journey
Nadav Zafrir: Crystal clear. Thank you.
[Company Representative]: All right. Next up is Joseph Gallo, followed by Tal Liani.
Crystal Clear. Thank you.
Product revenues subscription and services, it's all very predictable, meaning the only swing factors made it maybe products, but very predictable so.
[Analyst 1]: Awesome. Thanks, Kip. Hey, guys. Nice job on the results. On the go-to-market leadership changes announced, is there a change in strategy? Should we factor that into Q4 billings? Maybe just give us some commentary on how we should think about Q4 billings. Where are you on a quota-carrying rep basis? How should we think about that growth going forward?
All right, next up is Joseph Gallo followed by tolani.
As this increase in billings translates into revenue growth where would your seat.
So it's.
So I'll touch base on that I'll take it and the billing is the billing of course, it's it's it's allocated between as you said the services combined support and subscription services and and the <unk>.
Nadav Zafrir: Thank you for that, Joseph. The strategy is the new strategy with the new leadership is actually going to take effect in Q1 of 2026. In Q4, Avi Rambam is still going to lead the Americas. We're keeping ahead at full, you know, full steam 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, you know, 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 on the Americas.
Forward.
And product I think on the services side that grew this quarter. The billings 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 or last month of the quarters every quarter. It's back end loaded quarters, so you're going to see that effect in the next four quarters.
Yeah, thank you for that, Joseph. So, um, the strategy is going -- the new strategy with the new leadership is actually going to take effect in Q1 of 2026.
I do have to say that we knew we want to show sustainable growth billing of services billing that wish that if we're going to make may make sustainable billing both <unk> and.
Similar growth as we've seen as we've seen in this quarter. So that in the end you'll see it's really I mean, you'll see it also in our revenues.
On the product side youre going to be most of the billing is coming together with the revenues. So because it is recognized immediately in your billing in the custom mill when we are delivering the product. So it's small it's easier so you'll see usually immediately on the services as I said.
Uh, Q4 Avery. Inbound is still going to lead the the Americas uh and we're keeping ahead, uh uh full, you know, Full Steam all for all cylinders ahead. Um, we are going to, uh, uh, uh, make changes as we go into 2026, um, and we'll announce some of them and we, when we meet again, uh, and speak about guidance for 2026, uh, I will say that we are going to be ultra-focused on, uh, making sure that we, uh, go back, uh, not go back but, uh, continue winning, uh, um, you know, upsell in a, in large Enterprise with our current existing customer base.
Small time.
Got it thank you.
But also, uh, uh, with our, uh, new products roadmap, uh, with our new capabilities, go and acquire new, uh, Enterprise customers, uh, uh, across the world with a focus on the Americas.
Next up is Adam Tindle, followed by Rob O N E.
[Analyst 1]: Thank you.
Thank you.
[Company Representative]: There we go. All right. Next up is Tal Liani, followed by Adam Tindle.
Alright. Thanks.
No Bob 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.
[Analyst 2]: Great. Thank you. How long does it take for billing growth to translate to revenue growth? Where would it be recorded? Meaning when I look at your revenues, product revenues, subscription, and services, it's all very predictable. The only swing factor is maybe products, but very predictable. As this increase in billings translates into revenue growth, where would you see it?
There we go. All right. Next up is tolani followed by Adam Tindle.
Thank you. Um,
You talked about at the analyst day earlier this year, a SaaS <unk> being a very critical growth area for the company I Wonder as you kind of reflect on the growth that youre seeing right. Now if you could talk about the contribution from SaaS see the upcoming roadmap that you have for that product area and on the back of this do you think we're at a point in time, where it makes sense to step on the <unk>.
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,
Gas per investment for checkpoint from here.
Product revenues subscription and and services. It's all very predictable. Meaning, the only swing factor is made maybe products but very predictable. So
And maybe any parameters on what that would do to margin if Ron wants to weigh on thanks.
Roei Golan: I'll touch base on that. I'll take it. The billing, of course, it's allocated between, as you said, services. I would combine support and subscription services and product. I think on the services side that grew this quarter, the billing grew by 21%. 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 the quarter. Every quarter, it's back-end loaded quarters. 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 will, if we're going to make sustainable billing go as, I mean, similar growth as we've seen in this quarter. In the end, you'll see it pretty, I mean, you'll see it also in our revenues.
As this increase in in Billings translates into Revenue growth, where would you see it?
So,
Yeah. Thank you Adam So I'll start with sassy, we are seeing a meaningful a our growth in SaaS is where he said over a 40% in Q3 of our growth.
It's all touch based 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 uh
Sassy 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 the as our clients as our customers start adopting AI, our SaaS see hybrid approach. The fact that we're not only cloud, but also on device gives us another.
And product, I think on the services side that grow, this quarter, the billing grow by 21%, that's going to be you're going to sit in the revenues in the next 4, quarters, most of it. Because most of these Billings came in the last month of last month of the quarter as have the quarter, its back and loaded quarters. So you're going to see the effect in the next 4 quarters. I do have to say that we knew we we we we want to to show sustainable growth of billing of services billing, that will that if we're going to may, may make sustainable billing go. Every, as I mean, similar,
A parameter or another I would say advantage.
I will say that we've made substantial investments as I've said before in in SaaS fee 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 project for us and we are seeing success as we go into 2026.
Roei Golan: On the product side, most of the billing is coming together with the revenues because it's recognized immediately and we are billing the customer when we are delivering the product, so it's easier. You see it usually immediately. On the services, as I said, it takes more time.
[Analyst 1]: Got it. Thank you.
Growth with as we've seen in as we've seen in this quarter. So that in the end, you'll see it pretty. I mean, you'll see it also in our revenues on the product side that you're going to. Most of the billing is coming together with the revenues. So because it's recognized immediately and you we are billing, the customer when we are delivering the product. So it's, it's more. It's easier. So, you see it? Usually immediately on the services. As I said, it takes more time.
The good news is that we can upscale and go in and start deploying in larger and larger enterprise.
Got it. Thank you.
[Company Representative]: Next up is Adam Tindle, followed by Robbie Owens.
As we go into 2026, so that's on the SaaS side.
[Analyst 3]: All right. Thanks, Kip. Nadav, 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. You know, on the back of this, do you think we're at a point in time where it makes sense to step on the gas for investment for Check Point from here? You know, maybe any parameters on what that would do to margin if Roei wants to weigh in. Thanks.
Next up is Adam Tindle, followed by Rob Owens.
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 to larger enterprise, we need to integrate this thing to a hybrid mesh connectivity fabric and keep on moving so that's on SaaS. It investment generally speaking.
The answer is yes, but we need to do it prudently.
We're investing in SaaS fee.
But we're also investing in our newly formed workspace you know we've had great success with email now we're bringing in the other products. So that so that we can secure our customers employee base whenever wherever they are and wherever they are so thats endpoints mobile browser.
Nadav Zafrir: Yeah. Thank you, Adam. I'll start with SASE. We are seeing a meaningful ARR growth in SASE, as Roei said, over 40% in Q3 of ARR growth. SASE for us is not a standalone. It's a part of the connectivity fabric and hybrid mesh. 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 are 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. We're talking this is not in the dozens. This is in the hundreds because this is a must-win product for us. We are seeing success as we go into 2026.
All right, thanks, good. Uh, nadav. 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. Um, you talked about at the analyst day earlier this year, sassy 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 sassy the upcoming roadmap that you have for that product area and, you know, on the back of this, do you think we're at a point in time where it makes sense to step on the gas for investment, uh, for checkpoint from here? Um, and, you know, maybe any parameters on on what that would do to margin if, if Roy wants to weigh in, thanks.
The biggest investment that.
But you are going to see from US is investing in the future and that's building the full stack AI security platform. Like here is just one example, but we're literally going after the best talent we are.
Yeah, thank you, Adam. So, um, I'll start with sassy. Um, we are seeing a, a meaningful, our growth in sassy is ruy said, uh, over 40%, uh uh, in Q3 of ARR growth.
Some of these are building products. Some of this are these individuals are just looking to understand what the attackers are going to do it as they are as they embrace phase II phase III and phase four 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 <unk> 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 call. The right calls prudently. So that we can get to a sustainable growth.
Without sacrificing too much of our margins.
Okay.
And I think we're going to talk more about the dynamic about 2026, when you're going to announce Q4.
Nadav Zafrir: The good news is that we can upscale and go and start deploying in larger and larger enterprise as we go into 2026. 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. That's on SASE. Investment, generally speaking, the answer is yes, but we need to do it prudently. We're investing in SASE. We're also investing in our newly formed workspace. You know, 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. That's endpoint, mobile, browser. The biggest investment that you are going to see from us is investing in the future.
Q4 numbers, probably around in February and now we can have modest got more more color about 2026 gross margins.
All right next up is Rob Owens, followed by Keith Bachman.
Great.
Always a pleasure to be behind Adam So.
And then maybe you could just.
Spanned on some of your comments around the AI security component I realize you laid out kind of the three different components of of where your strategy is but how much do you need to fill in from an M&A perspective, and I realize that it's.
Uh, this is not in the dozens; this is in the hundreds, um, because this is a must-win product for us, and we are seeing success as we go to 2026. The good news is that we can upscale and start deploying in larger and larger enterprises, um, as we go into 2026. So that sounds a sassy side, um, optimism. But to be completely transparent, it's never good enough. Uh, um, we need to move faster. We need to add features. We need to grow to larger enterprises, we need to integrate this into our hybrid mesh connectivity fabric, uh, um, and keep on moving. So that's on SASE investment, generally speaking.
It's changing rapidly, but you know at this point, we're as checkpoint just in terms of having the coverage that you want and how much more M&A do you think will be in the next 12 months to 18 months. Thanks, Yeah. Thanks, Rob.
My favorite topic.
The answer is yes, uh, um, but we need to do it, prudently. Um, so we're investing in sassy, um, but we're also investing in our newly formed workspace. Um, you know, we've had great success with email. Now, we're bringing the other products so that uh, so that we can secure our customers employee base Whenever Wherever they are and whatever they are. So that's endpoint mobile browser.
You know I look at this from two different perspectives that are outside of checkpoint and where checkpoints role is so outside of checkpoint. It's the four phases of adoption.
Nadav Zafrir: That's building the full-stack AI security platform. Lakira is just one example. 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 embrace phase two, phase three, and phase four. That's going to be an investment in our future. We really need to make investments across the board. We've spoken about this, and I'll let Roei 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 sustainable growth without sacrificing too much of our margins.
You know there I I still need to sort of I still haven't seen a meeting with the C level, whether it's the board C suite, our CIO Chief data Officer, where this is not front and center of their strategy, where all world there where there is people over there as organizations.
The biggest investment um that you are going to see from us um is investing in the future and that's building the full stack AI security platform. Like here are is just 1 example. Um, but we're literally going after the best talent. Uh we are the sum of these are building products. Some of this are just these uh individuals who are just looking to understand what the attackers.
We understand that we either start approaching are advancing in the journey or we'd become obsolete.
And it's moving from enhancement, where which is already where we are right now right. So we're all.
<unk> world better performers because of AI.
Most of the organizations already have replacement so they they already have agents that are replacing humans in different lanes, but they are 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.
Are going to do as they as they Embrace Phase 2 phase 3 and phase 4. Um 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 you chime in as well. Uh, we are doing this calculation of profitability versus growth, uh, and always looking at the 2 and trying to make the right the right calls prudently so that we can get to a sustainable growth, uh, and without uh, uh, sacrificing too much of our margins.
Roei Golan: I think we're going to talk more about it, Adam, about 2026 when we're going to announce Q4 numbers, probably around February. We can have more color about 2026 growth, margins.
Databases that opens a whole new plethora of challenges changing the idea of what it means to protect our network not only because there is 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 first in the first and second phase there.
And I think we're going to talk more about these Adam about 2026 when when I announced Q4 and Q4 numbers probably around in February and we can have more discount more, more color about 2026 growth margins. And
[Company Representative]: All right. Next up is Robbie Owens, followed by Keith Bachman.
Nadav Zafrir: Great. Thanks, Kip. Always a pleasure to be behind Adam. Nadav, 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. How much do you need to fill in from an M&A perspective? I realize that it's changing rapidly. At this point, where is Check Point just in terms of having the coverage that you want? How much more M&A do you think will be in the next 12 to 18 months? Thanks.
all right, next up is Rob Owens followed by Keith Bachmann
Great, thanks. Always a pleasure to be behind Adam. So, um,
Experiments with a third space. 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 you know on the level of the users I believe we already have the best security.
On the level of a run time security for the second phase and approaching the third phase I think that the cure is a unique and with luck here 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.
Nadav Zafrir: Yeah. Thanks, Rob. My favorite topic. I look at this from two different perspectives that are outside of Check Point Software Technologies Ltd. and where Check Point's role is. Outside of Check Point, it's the four phases of adoption. 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. It's moving from enhancement, which is already where we are right now, right? We're all better performers because of AI. Most of the organizations already have replacement. They already have agents that are replacing humans in different lanes, but they're in their own lanes.
Good off, maybe you could, um, just expand on some of your comments around the AI security component. And I realized you laid out kind of the 3 different components of of where your strategy is. But how much do you need to fill in from an m&a perspective? And I realized that it's changing rapidly but, you know, at this point where is checkpoint just in terms of having the coverage that you want and and how much more m&a do you think will be in the next 12 to 18 months?
Some of it will be Inorganically and so we're looking at act with it at.
Acquisition targets as we speak a.
I literally just had a meeting before this before this call with our M&A team, they're looking at multiple companies as we speak nothing is imminent right now, but there will be more.
Thank you.
Alright next next up is Keith Bachman, followed by the Purple man John to Fuji.
Thanks. Yeah, thanks Rob. Um, my favorite topic. Uh, you know, I look at this from, uh, uh, 2 different perspectives that are outside of checkpoint and where checkpoint role is. So outside of checkpoint, it's the 4 phases of adoption. Um, we, you know, there I, I still need to sort of, I still haven't seen a meeting with the sea level, whether it's the board, C Suite, uh, uh CIO Chief data officer where this is not front and center of their strategy. We're all we're all there. We're we're there as people, we're there, as organizations we understand that, we either start approaching uh, you know, advancing in the journey or we become obsolete.
Well. Thank you very much a team and I appreciate going before the Fuji I wanted to new job for you is there anything different or changing on harmony email in terms of the competitive dynamic specifically and I just wanted to understand a little bit how that.
And it's moving from enhancement where, which is already where we are right now, right? So we're all, you know, being we're all better performers because of AI
Nadav Zafrir: 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 a 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. If we are in the first and second phase, they're already experimenting with the third phase. That's how we look at the outside world. 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. On the level of the users, I believe we already have the best security.
Pipe is building in the spirit of the question is driven by you know how should we think about harmony email potential growth and see why 26 versus <unk> 25.
Is there a deceleration you think even driven by just the base or scale. If you will and they're really just if I could sneak one into you mentioned that FX would be $50 million to $60 million I think next year headwind.
Most of the organizations already have replacements. So they already have agents that are replacing humans in different lanes, but they're in their own lanes. 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, uh, um, you know, plethora of challenges, changing uh, the idea of what it means to protect the network. Not only because there's more to attack, but also because from the other side,
Not trying to jump ahead your guidance, but just what you've done so far in M&A. If you could just give us some context about what that would be to succeed C. Y 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 note.
Nadav Zafrir: On the level of runtime security for the second phase and approaching the third phase, I think that Lakira is unique. With Lakira, I think we have the full stack of what's needed for today. However, we need to think about phase three and four. That's where some of it will be organically. To your question, Rob, some of it will be inorganically. We're looking at acquisition targets as we speak. I literally just had a meeting before this call with our M&A team. They're looking at multiple companies as we speak. Nothing is imminent right now, but there will be more.
Have the best security.
Ones that you have today between FX and M&A that will impact margins. Many thanks.
So I'll start with female so no we don't see a deceleration in fact.
On the level of a runtime security for the second phase and approaching the third phase. I think that the Kira is a unique and with lakira I think we have the full stack of what's needed for today.
We're hoping for an acceleration and we will speak about it in our guidance and the reason is very simple.
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 it's been around because attackers are already at phase two.
However we need to think about phase 3 and 4 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, you know, acquisition targets as we speak.
Email attacks are becoming much more sophisticated and we're all seeing that I mean, we all have these conversation did you get my email no I didn't get you in and why didn't you get money in the world because somebody blocked hearing the why do they blocked her email because they are becoming more and more sophisticated and so we've built around our email.
I literally just had a meeting before this, uh, uh, uh, before this call with our m&a team, they're looking at multiple companies as we speak. Uh, nothing is imminent right now but there will be more
Nadav Zafrir: Thank you.
[Company Representative]: All right. Next up is Keith Bachman, followed by the purple man, John Difucci.
Thank you.
[Analyst 4]: Thank you very much, team. I appreciate going before Difucci. I wanted to, Nadav, for you, is there anything different or changing on Harmony email in terms of the competitive dynamics specifically? I just wanted to understand a little bit how that pipe is building. The spirit of the question is driven by, you know, how should we be thinking about Harmony email potential growth in CY26 versus CY25? Is there deceleration, you think, even driven by just the base or scale, if you will? Roei, just if I could sneak one in too, you mentioned that FX would be $50 to $60 million, I think, next year, headwind. Not trying to jump ahead to your guidance, just what you've done so far in M&A, if you could just give us some context about what that would be to CY26 margins, just to level set for those two.
All right. Next up is Keith Bachmann, followed by the purple man, John Duchi.
Ah 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 as steel.
Rick are 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.
Well, thank you very much, uh, team. I appreciate, uh, going before the FEUC. I wanted to, um, Nadav, for you, is there anything different, uh, or changing on Harmony Email in terms of the competitive dynamic specifically? I just want to understand a little bit how that pipeline is building. And the spirit of the question is driven by, you know, how should we be thinking about Harmony Email's potential growth in CY 2026 versus CY 2025? Is there deceleration, you think, even?
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 SaaS. The level means that we can do more on the device itself, which is cheaper more scalable and brings better security so I'm really.
[Analyst 4]: I know you've talked about some other investments you might want to do as well. Just wanted to, on the knowns that you have today between FX and M&A that will impact margins, many thanks.
Optimistic about bringing all that together into a workspace.
And I'll I'll continue on regarding your second question about the ethics. So yeah as I said about a 50 $50 million to $60 million and then about the M&A like I also talked about the effect for Q4 like Europe. So we talked about four to five cents Edwin for Q4, we do expect to have more from one end.
Nadav Zafrir: Okay. I'll start with the email. No, we don't see a deceleration. In fact, we're hoping for an acceleration, and we'll speak about it in our guidance. The reason is very simple. I truly believe that we have the best product in the market. 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. We're all seeing that. I mean, we all have these conversations. Did you get my email? No, I 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're becoming more and more sophisticated. What we've built around our email is an AI capability, which I think is superior to what's out there.
Even driven by just the base or scale if you will. And the really just if I could sneak 1 into you mentioned, that FX would be 50 to 60 million. I think next year headwind, um to not trying to jump ahead to your guidance but just what you've done so far. In m&a, if you could just give us some context about what that would be to succeed. Why 26 margins, just the, the level Set uh for for those 2. 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&a that will impact margins many. Thanks.
More investment, but from the other and we also do expect to see a more revenues from lucky loss. So in the end, it's tough to say right. Now again, we are working on the plan for next deals except to say, it's going to be the impact on our margin next deal Bellocchio acquisition and in general the margin for next deal asking that is to say, we're going to we will tailor planning.
Walking on 2026, and as I said, we'll talk more about it in February one in Ghana and ask you for numbers. Okay. Many thanks.
Alright next up is John Fucci, followed by <unk>.
Florida.
And so uh I'll I'll start with the email so no, we don't see a deceleration. In fact, uh, uh, we're hoping for an acceleration and we'll speak about it in our guidance. Um, and the reason is very simple, I I truly believe that we have the best product in the market and although email has been around as as as long as the internet has been around. Or as long as cyber has been around because attackers are already at Phase 2. Uh, 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, I 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're becoming more and more sophisticated. And so, uh, what we've built around our email, um, is uh, is an AI capability, which I think
Nadav Zafrir: This is a replacement business, right? We're going out there, and we're replacing incumbents all the time. I think that in terms of CAM, we're still relatively small. I don't see a deceleration. Beyond that, as you know, we've asked Gil Shwed, based on that success, to take all the other products that create the suite for employees. 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. The use case here is employees that are working from everywhere and are now being empowered by AI agents. 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.
Thank you chip.
My question is sort of a high level question for.
I've known you a long time.
A long time and I know that your 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, but I almost.
Looking for the right word to describe it because it almost seems that I know this isn't you.
It almost immune naive to think you can do it because your competitors I think you said fierce.
In your prepared remarks.
Most competitors.
And even though it's the right thing for the customer no ones ever been able to do it.
So I guess can you give us a little bit more or like are there any anecdotes you can share with US anything you can talk to us about how it's actually going in the right direction and then and then finally just right.
Quick follow up.
Great to have pricing pressure pricing power, but you you.
Nadav Zafrir: I'm really optimistic about bringing all that together into our workspace.
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 just trying to understand it sorry.
Superior to what's out there. So, this is a replacement business, right? We're going out there and we're replacing incumbents, uh, all the time. And I think that in terms of Cam, we're still relatively small. So, I I don't see a deceleration beyond that. Um, as you know, we've asked Gil Friedrich, uh, 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, uh, 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 end point. Um, either at the browser level or at The Sassy level means that we can do uh more on the device itself which is cheaper more scalable and brings better security. So I'm really optimistic about bringing all that.
Roei Golan: I'll continue regarding your second question about the FX. As I said about the FX, to $50 million to $60 million. About the M&A, I also talked about the effect for Q4 Lakira. We talked about $0.04 to $0.05 headwind for Q4. We do expect to have more, from one end, more investment. From the other end, we also do expect to see more revenues from Lakira. In the end, it's tough to say right now. Again, we are working on the plan for next year. It's tough to say how it's going to be the impact on our margin next year, the Lakira acquisition. In general, margin for next year, I think that we're still planning working on 2026. As I said, we'll talk more about it in February when we're going to announce Q4 numbers.
Together into our workspace.
Sorry.
Thank you John.
I'll be as of 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 30 years in cyber security I think that are where we're going on.
And I'll I'll continue regarding your second question about the ethics. So yeah, as I said about a 50 to 50 to 60 million dollar and about the m&a is like, I also talked about the effect for Q4 like era. So we talked about 4 to 5 cents Edwin for, for Q4, we do expect to have more from 1 end more investment, but from the other end, we also do expect to see a more revenues from Lia. So in the end, it's up to say right now.
Trying to come to this with a vendor lock closed garden, a monolithic approach will really not be enough to secure our customers for many reasons now I agree it's not an easy path.
Nadav Zafrir: Okay, many thanks.
But we're seeing a glimpse of first success. So I've wrote up brought up Verity as an example, verity already has the ability to integrate with over 70 other vendors.
Now again we are working on the plan for next year, so it's tough to say, it's going to be the impact on our margin. Next year, deil acquisition and in general margin for next year. I think that it's we're going to we we are still planning working on 2026 and as I said we'll talk more about it in February when we're going to announce Q4 numbers.
[Company Representative]: All right. Next up is John DiFucci, followed by Shrenik Kothari.
Okay. Many thanks.
Nadav Zafrir: Thank you, Kip. My question is sort of a high-level question for Nadav. Nadav, I've known you a long time, a long, long time. I know that you mean what you say when you talk about an open garden approach. It makes total sense for the customer. It really does. I was looking for the right word to describe it because it almost seems, and I know this isn't you, but it's almost naive to think you can do it because your competitors, I think you said fierce in your prepared remarks. You have fierce competitors. Even though it's the right thing for the customer, no one's ever been able to do it. I guess, can you give us a little bit more, like, are there any anecdotes you can share with us? Anything you can talk to us about how it's actually going in the right direction?
She followed by shrenik cathartes.
Thank you to um, my questions.
From our seats, we see worth the danger or the threat is coming from and we can take these IC and actually fix them not only a checkpoint, but even at other vendors and that's and we already have 100 implementations of that within customers alright. So I'm not saying this is sort of all the story, but it's.
Sort of a high level question for nadav. Nadav I've known you a long time. Um, 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.
A glimpse of the storage and other one is our unified management are unified management today with some of our cloud native firewalls, we can manage in our unified management in our unified management those those others are.
And I, and I, but I almost, and I was looking for the right word to describe it because they don't know. Seems and I know this isn't you or it's it almost seems naive to think you can do it because your competitors you I think you said Fierce and you're prepared tomorrow Fierce competitors. And it and even though it's the right thing for the customer know, 1's ever been able to do it.
Firewalls, so that from the customer's perspective.
Whatever they're using they can have the access to truly are best in class threat cloud AI with over 100 engines that is blocking billions of attacks all the time so.
Nadav Zafrir: Finally, just a quick follow-up. It's great to have pricing pressure, pricing power. I'm 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 trying to understand it. Sorry.
Forming I agree that from a business perspective, some might say yeah. That's naive it's never going to happen I think it needs to happen I think it's there 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.
Nadav Zafrir: Thank you, John. I'll be as an open platform, open, sort of open mind. I'll tell you this. First of all, it's a philosophy. I agree with you. I've been in the trenches for more than 30 years in cybersecurity. I think that where we're going, trying to come to this with a vendor lock, closed garden, a monolithic approach will really not be enough to secure our customers for many reasons. I agree it's not an easy path. We're seeing a glimpse of first success. I brought up Verity as an example. Verity already has the ability to integrate with over 70 other vendors. From our CTAM, we see where the danger or the threat is coming from. 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.
So I guess, can you give us a little bit more? Like, is 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 and then finally, just really just a quick follow-up. It's great to have pricing pressure to have pricing power, but you, you and just how should we think of the price increases and 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.
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.
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 they're gonna go how are they going to consolidate this and the attackers are going to come through the cracks. So its a philosophy, but it's also a roadmap and 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 are more to come around that.
One more 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 a attack a sort of a change right and kill chain and we say okay. At every at every point, we need to have multiple guarding capabilities in order to be successful at blocking attackers.
I'll I'll be as, uh, uh, you know, open platform open, uh, sort of open mind. I, I I'll tell you this. Um, first of all, it's a philosophy. I agree with you. And, uh, I, I've been in the trenches, uh, um, for the, for more than 30 years in cyber security. I think that, uh, uh, where we're going, um, trying to come to this, uh, uh, with a vendor lock closed Garden. Uh, a monolithic approach will really not be enough to secure our customers for many reasons. Now I, I agree. It's not an easy path. Uh, but we're seeing uh, glimpse of first success. Um, so I wrote up I brought up Varity as an example. Varity already has the ability to integrate, uh, um, with over 70 other vendors. Um, from our CM, we see where the danger or the threat is coming from and we can take these icy and actually fix them. Not only a checkpoint.
Nadav Zafrir: 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 other 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 are blocking billions of attacks all the time. 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 there isn't another way to really secure our customers. We are seeing early success with this open platform approach.
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 with firewall or on the bad side, guys and I would tell you that with agenda K I a lot of what's happening on Prem for you know that gives that gives us the ability to.
But even at other vendors. And that's and we already have a 100 implementation of that within customers. All right, so I'm not saying this is sort of, uh, uh, all the story, but it's a glimpse of the story. Another 1 is our unified management, a unified management today with some of the cloud native, uh, uh, firewalls. We can manage in our unified Management in our unified management. Uh, um, those uh, uh,
Detect is going to become obsolete. So now if were and our clients or customers environment with a competitor and we don't share what we see immediately it's going to be game over for the customers. So now afterwards in the aftermath I'm going to say yeah, but it wasn't my father was their firewall the customer doesn't care.
Okay.
Thank you. Thank you for that and to your question about the price increase so yeah. We did they yeah. We did the price increase for the subscription firewall effective July <unk> and it didn't have any effect on our revenues for Q3 because.
Nadav Zafrir: 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? The attackers are going to come through the cracks. 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. I'll give you one more sort of way to try to defend this.
Most of the business is coming in the last months would have been an immaterial effect on the bidding side, we did see some benefit from that yet not significant from the pricing is.
And again, it's when we're managing the same discount. So we can we can benefit from this price increase I don't want to have is that we have another pricing, 5% across all our quantum firewood, which will be effective 112026.
Those others, uh, uh, firewalls. So that from the customers perspective, you know, what, whatever they're using, they can have the access to truly our best-in-class thread Cloud. AI, uh, with over 100 engines, that is blocking billions of attacks, uh, all the time. So, it's forming. Um, I agree that from a business perspective, some might say, Ah, that's naive. It's never going to happen. I think it needs to happen. I think it's, uh, uh, there there isn't another way to really secure our customers. And we are seeing, uh, um, early success with this open platform approach. There's a lot of, uh, uh, um, investment that we need to do in order to put more meat on the bone, uh um. And create a real alternative to this idea of uh, and and we see it and and and we see how it resonates with our customers, right? They want to listen to this, some of them because you know it's just that the nature of the Beast, you know, they they have 1 vendor but then they make an acquisition.
Thank you thanks Ryan.
All right next up is shred it.
Load by Joshua Tilton.
Now, they have 3. How are they going to? 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 and, and, and some of it is already happening, not only, um, you know, in our Labs but it customers sites, as I said, over a 100 deployments of verity only and more, uh, uh, more to come, uh, uh, around that.
Yeah, Tim I'm echoing my congrats.
Joining us from Alaska or whatever other place you're from.
Nadav Zafrir: When you think about detection, for example, we look at the MITRE attack sort of chain, right, and kill chain. 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. I tell you that with agentic AI, a lot of what's happening on-prem for, you know, that gives us the ability to detect is going to become obsolete. If we're in a client's or a 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. Afterwards, in the aftermath, I'm going to say, "Yeah, but it wasn't my firewall.
you know, I I give you 1 more 1, more sort of way to try to defend this
Yeah, a little sensitive.
Okay, great execution.
Just continuing on with a big picture theme fallen John Cena dog, you'll have been bombing or believe that.
Not everything goes to the cloud and on lean hard into the hybrid mash our value proposition.
Especially as the cloud and for costs rising we have been hearing that a lot of AI native use cases also staying on Prem. So can you elaborate from your perspective like where are you winning the most in these hybrid conversation hybrid mash and then I had a quick follow up on the go to market.
You know, when you think about uh uh detection, for example, right? We look at the uh uh Mitre uh uh uh attack, uh um sort of uh uh chain, right, and kill chain. And we say, okay, every 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 think are our advantages in large scale complex hybrid environments.
You know, where where you have on prem with cloud multi cloud you need to manage all that and I think that's our that's where our advantage is looking into the future. There are use cases that we're seeing with the use of AI data.
Nadav Zafrir: It was their firewall." The customer doesn't care.
If we're uh, um, in a in a clients or customers environment with a competitor, and we don't share what we see immediately. It's going to be game over for the customers. So now afterwards in the aftermath I'm going to say. Yeah, but it wasn't my fault, it was their firewall. The customer doesn't care.
Nadav Zafrir: Thank you. Thank you, Nadav.
Roei Golan: To your question about the price increase, 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, so it has a very immaterial effect. On the billing side, we did see some benefits from that, yet not significant from the price increase. Again, it's when we're managing the same discounts so we can benefit from this price increase. I do want to add that we have another price increase of 5% across all our Quantum firewalls, which will be effective 1/1/2026.
Sovereign issues and and governance, they're going to take some of the use cases back to either private or or quasi private establishment. So they're gonna offer that again I think this is an opportunity for us on you know on two fronts first is our <unk>.
Thank you. Thank you, God. And to your question about the price increase, so yeah, we did the we did the price increase for the subscription firewall effective, July sales. It didn't have any effect on our revenues for Q3 because
Spot second when you think about our data centers that are providing a either data center as a 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.
Nadav Zafrir: Thank you. Thanks, Roei.
Most of the business is coming in the last month so it has a very immaterial effect I do. On the billing side, we did see some benefits on that. Yes. Not significant from the pricing is again it's when we managing the same discount so we can we can benefit from this price increase. I do want to have it that we have another pricing because of 5% across all our Quantum fireworks we which will be effective 1 1 2026.
[Company Representative]: All right. Next up is Shrenik Kothari, followed by Joshua Tilton.
Thank you. Thanks Ray
I think this is the only use case, but I think it's a growing use case.
[Analyst 2]: Hey, y'all team. Echoing my congrats.
All right. Next up is shanik followed by Joshua Tilton.
Got it and made some big go to market higher than and some ongoing transition justice again.
[Company Representative]: Nice of you to join us from Alaska or whatever other place you're from.
[Analyst 2]: A little sensitive. Great, great execution. Just continuing on with the big picture team, Paul and John. Nadav, you have been firm in your belief that not everything goes to the cloud and lean hard into the hybrid mesh value proposition, especially as the cloud and forecasts are rising. We have been hearing that a lot of AI-native use cases are also staying on-prem. Can you elaborate from your use case perspective? Where are you winning the most in these hybrid conversations, hybrid mesh? Add a quick follow-up on the go-to-market.
Yeah. Team uh, echoing my congrats I said you didn't join us from Alaska or whatever other place you're from.
Walk us through how this factors into your operating model, both near term and in fiscal 'twenty six no appreciate that.
Operating model in terms of our investment in marketing.
Yeah and last month.
Just execution assumptions here yeah.
Yeah, we we are starting to be more more aggressive in our in our marketing dollars across the board and we will see an increase increase in that in 2026.
Fully to be offset with our operational excellence. So that we don't hurt our margins, but are more effective in our go to market.
Nadav Zafrir: 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. 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, you know, 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. I think this is an opportunity for us on, you know, on two fronts. First, it's our sweet spot. Second, when you think about data centers that are providing either data centers as a service or a private data center for AI usage, this is where performance and speed matter more than anything else. That is our sweet spot.
A little sensitive. Uh, great great, uh, execution. Uh, just uh, continuing on with uh, the big picture team following John. Uh, so Nadal you you have been firm in your belief that uh, not everything goes to the cloud and and lean hard into the the hybrid mesh, uh, value proposition, uh, especially as uh, the cloud and for cost 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? Uh and then I had a quick follow up on on the go to market.
Yeah.
Got it appreciate it thanks.
Alright next step is Joshua Tilton, followed by Brad Zelnick.
I think uh our our our our advantage is in large scale complex, hybrid environments.
Great guys can you hear me.
Yeah.
Awesome congrats on a good quarter.
Maybe maybe they'll 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 <unk>, how does it compare to what you saw in the first half and maybe help us parse out how much of this.
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.
Um, you know where, uh, um, where you have on-prem with Cloud multicloud. You need to manage all that. And I think that's, uh, that's where our advantage is looking into the future. Um, there are use cases that we're seeing with the use of AI, uh, um, you know, data, uh, Sovereign, uh, issues, uh, and uh, uh, and governance that are going to take some of the use cases, back to either private, or, or quasi private establishments that are going to offer that again. I think this is an opportunity for us on on, you know, on 2 front first. It's our sweet spot second.
<unk> said that for us if he could please thank you so much.
Mr. Bolani, one yeah, so I'll touch I'll start and then it can that it.
Can continue I'd say I think again I think it's a first half was more challenging mainly Q2, I think you'd mentioned elaboration. There. So definitely it was more uncertainty in the market.
Nadav Zafrir: I'm not saying this is the only use case, but I think it's a growing use case.
[Analyst 2]: Got it. You made some big go-to-market hires and some ongoing transitions. Just, again, help walk us through how this factors into your operating model, both near-term and fiscal 2026. Really appreciate that.
I do have to say that you asked I mean, besides the three points that we mentioned that the Adidas that's actually what's left from the sales staff.
When you think about uh uh data centers that are providing uh uh either data center as a as a 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 um so I'm not saying this is the only use case but I think it's a growing use case.
Q3, so as I look at and we're analyzing for them across many metrics internal metrics, it's definitely much better execution Q3 was much better execution.
Nadav Zafrir: Operating model in terms of our investment in marketing?
Got it, you made some uh big go to market hires and and some online transitions. Just if you can uh walk us through how this factors into your operating model both near-term and and fiscal 26. Uh, we appreciate that.
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 although deals are.
[Analyst 2]: Yeah, investment, just execution, assumptions. Yeah.
Operating model in terms of our investment in marketing.
Nadav Zafrir: We are starting to be more aggressive in our marketing dollars across the board. 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.
Yeah. And last month uh just execution assumptions. Yeah.
And again it also depends on budget flush you're asking about budget for US for example last year, we did see.
I would say.
Less than average budget flush so tough.
It's early to say I mean, what's gonna be D. C again, when you're talking with the field with sales leaders too early to say to see total to understand if we're gonna see more budgets about D. C. A R.
Yeah, we we, we, we are starting to be more more aggressive in our, in our marketing dollars, uh, um, across the board, and we'll see an interest increase in that in 2026, uh, hopefully to be offset, uh, with operational excellence so that, uh, we don't hurt our margins, but, uh, uh, are more effective in our go to market.
[Analyst 2]: Got it. Appreciate it. Thanks.
[Company Representative]: All right. Next up is Joshua Tilton, followed by Brad Zelnick.
Got it, okay. Thanks.
[Analyst 1]: Great, guys. Can you hear me?
All right. Next up is Joshua Tilton, followed by Brad Zelnick.
[Analyst 2]: Yes.
Guidance, our midpoint of the guide that didn't take into account any significant budget flush.
Nadav Zafrir: Yep.
Great guys. Can you hear me?
[Analyst 1]: 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. I'm just trying to understand, like, how would you characterize the spending environment in Q3? How does it compare to what you saw in the first half? Maybe help us parse out how much of the success today is just pent-up demand from the first half versus, you know, better execution on your end. Just kind of what are you seeing heading into Q4? You know, will there be a budget flush? What are your expectations? Just level set that for us, if you could, please. Thank you so much.
Yes.
So that's how I see it not that I don't want I don't know if you want to add yeah. No no I agree I think America. I think is is good and steady we are hoping to see an increased demand in our Europe.
Going forward, but as as already said, we're guiding right now does not take a you know an optimistic view on how demand is going to be growing beyond that.
Super helpful guys. Thank you so much.
Next up is Brad Zelnick, followed by Jonathan Ho.
Hey, guys. Thanks for taking the question congrats.
Nadav Zafrir: Mr. Golan, you want to take the?
Awesome. Uh, congrats on a good quarter. Um, maybe maybe they'll just stepping back, uh, just a broader spending question from my end. I think the first half uh for security was a little challenging we had Liberation day. Uh there was a lot of uncertainty so I'm just trying to understand like how would you characterize the spending environment in 3 cubes? 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, you know, better execution on your end and just kind of what are you seeing heading into Q4? You know, will there be a budget flush? What are your expectations just level set that for us? If you could please thank you so much.
Roei Golan: Yeah. I'll start, and then you can continue. I think the first half was more challenging, mainly Q2. You mentioned the Liberation Day. It was more uncertainty in the market. I do have to say that you ask if the, I mean, beside the three points that we mentioned, that the deals that actually were flipped from the first half to Q3. As I look at it and we're analyzing from across many metrics, internal metrics, it's definitely much better execution. Q3 was much better execution. When we are looking at Q4, 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, large outdoor deals. It also depends on budget flush. You ask about budget flush. For example, last year, we did see less than average budget flush.
Great to see.
The success in Q3, and and I and I Love seeing what 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.
Dave I wanted to ask as you reflect on changes you made to sales incentives this year, specifically paying on AOR growth.
Much of an impact might that have had and how much might that be contributing to the strong billings. We're seeing this morning, and along those lines, maybe Roy can you talk about the trends and they are our growth as we look through all the billings noise because externally obviously, there's there's always puts and takes but <unk> was obviously, a very a very pure metric.
You bet its stewardship, yeah, I'll start us off I want to call it.
Regarding your first question. So I think we D C and we paid our compound was a significant factor. They all are a significant part of our comp plan definitely it's something that we did see improvement when we're looking on the discounts on the discounts that we're giving that again for renewals. For example, so we did see improvement on that on that effect up though.
You know, I think again I think it's a first off was more challenging mainly Q2, I think you mentioned the Liberation there so definitely it was more uncertainty in the market. I, I do have to say that you asked if the I mean beside the 3 points that we mentioned, that the deals that actually were still from the first half to the the Q3. So as I look it and we analyze the information from across, I mean many metrics, internal metrics, it's definitely much better execution. Q3 was much better execution. And when we are 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's includes a lot of loud, refresh. A large outdoor deals. And again, it's also depends on budget flush. You asked about budget flush. For example, last year, we did see
I would say.
Roei Golan: It's early to say what's going to be this year. When you're talking with the field, with the sales leaders, too early to say to see to understand if we're going to see more budget flush this year. Our guidance, our midpoint of the guidance didn't take into account any significant budget flush. That's how I see it. Nadav, I don't know if you want to add something.
Implemented they all factor into their into the complex a bit something that definitely I mean, we see the change we see the mind in all of the salespeople out when in the past it was mainly around bookings and now they need to think not about booking only but also about the all in that's definitely we see the positive effects of it mainly around Dili Neon did these cars are on green.
Nadav Zafrir: Yeah, no, I agree. I think America, I think, is good and steady. We are hoping to see an increased demand in Europe going forward. As Roei said, what we're guiding right now does not take, you know, an optimistic view on how demand is going to be growing beyond that.
So that's one aspect that I want to touch it.
The other stuff any anything else are trying to watch what the next one that you'll have the breadth or Doug if you want to add on that.
Less than average budget flush. So I tough, it's highly to say, I mean, what's going to be this year? Again, when you're talking with the field, with the sales leaders, too early to say, to see to to, to understand if we're going to see more budgets like this here, our guidance, our midpoint of the guided didn't take into account any significant budget slush. And so that's how I see it. Now, I don't want, I don't know if you want to add. Yeah, no. No, I agree. I think, uh, uh, America, um, I think is, uh, uh, is good and steady. Uh, uh, we are hoping to see, uh, an increased demand in, uh, uh, in Europe, uh, going.
Well the only thing I would add is that I think we're seeing the beginning I agree with Larry that I would attribute the better performance in Q3, mostly to Oh execution.
Going forward. Um, but as, as Rory said, we're, we're guiding right now, does not take, uh, uh, you know, an optimistic view on how demand is going to be growing beyond that.
[Analyst 1]: Super helpful, guys. Thank you so much.
Super helpful, guys. Thank you so much.
[Company Representative]: Next up is Brad Zelnick, followed by Jonathan Ho.
I do believe that as we progress.
[Analyst 1]: Hey, guys. Thanks for taking the question. Congrats. It's great to see the success in Q3. 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. Nadav, 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? How much might that be contributing, you know, to the strong billings we're seeing this morning? Along those lines, maybe, Roei, 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. You manage too internally.
Next up is Brad zelnik. Followed by Jonathan hoe.
The change in how we measure things and our comp plan et cetera will take effect.
Hey guys, thanks for taking the question. Congrats uh it's great to see.
But it's work in progress.
That's helpful. I guess related is there a future where maybe you would disclose IRR.
<unk> is a key metric for us externally to measure the business might be might be we'll see I mean, it's something that we are considering every time, but it might be in the future.
Great. Thanks for taking the question.
Alright next up is Jonathan Ho, followed by Gabriela Board Jos.
Good morning, and congratulations on the strong results can you maybe give us a sense of what youre 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.
Roei Golan: Yeah. I'll start also by, I want to, regarding your first question. I think this year, we paid, our complaint was a significant factor. The ARR was a significant factor of our complaint. 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. We did see improvement on that effect after we implemented the ARR factor into the complaint. 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. Now they need to think not about booking only, but also about ARR. That definitely, we see the positive effects of that, mainly around the discounts around renewals. That's one aspect that I want to touch. The other stuff, anything else?
Yeah.
Yeah, I would say that because our current business is relatively small.
We're not seeing a strong impact.
The success in Q3. And, and I, and I love seeing what Patrick coleville 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. Um, the do 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 buildings. 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 buildings noise because, you know, externally obviously there's, there's always puts and takes, but our is obviously a very, uh, a very pure metric, so that you manage to internally. Yeah, I I'll start also by, I want to talk to to, to getting your first question. So I think we this year, we paid our company was, I had a significant factor there, I was significant factor of our comp plan. 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
Our having said that our investment in fed ramping our product is.
Something that we're going to continue to do for a couple of reasons. The obvious one is that it's a big market. The the second one is that this is what we're passionate about doing.
Securing the most under threat environment. 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 and that means in our in our product, but also fed ramping and focusing the R. R.
Renewals for example. So we did see Improvement on that on that effect. After we implemented, the r factor into the, into the complex. So that's something that definitely, I mean, we see the change, we see the the mind and how the sales people are when, in the past, it was mainly around bookings. And now it's, they need to think not about booking only but also about our and that, definitely, we see the positive effects of that, mainly around the renewal the discounts around renewals. So that's 1 aspect that I want to touch. Uh,
Roei Golan: Prior to, what was the next one that you had, Brad? Or Nadav, if you want to add on that.
Nadav Zafrir: The only thing I would add is that I think we're seeing the beginning. I agree with Roei 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, etc., will take effect. It is work in progress.
The other stuff and anything else trying to what was the the the next 1 that you had the bread or nadav? If you want to add on that.
Selling focus on that because I think there's a big potential there.
Okay.
Yeah.
All right next up is Gabriella borders.
All our bi team Boulanger.
Hey, good evening. Thank you know the other night I wanted to follow up on how you think about the impact of hardware refresh on your business and more specifically I know that 2024 was a big year for quantum refreshing of the 'twenty 'twenty five for quantum refresh.
[Analyst 1]: That's helpful. I guess related, is there a future where maybe you would disclose ARR as a key metric for us externally to measure the business?
Oh, the only thing I would add is that, I think we're seeing the, the beginning. Um, I agree with you. It was very that I would attribute to better performance in Q3, mostly to, uh, uh, execution. Um, I do believe that as we progress, um, the the change in, how we measure things uh um and our our comp plan Etc will take effect. Um, but it's it's work in progress.
Roei Golan: It might be. We'll see. I mean, it's something that we are considering every time, but it might be in the future.
Obviously, it's not binary but when you look at 2026 and the cohort that Frank Neil in 2020 six is there anything that we should keep in mind on the size of how being in year three it's a quantum refresh impacts nikko alright. Thank you.
[Analyst 1]: Great. Thanks for taking the question.
That's helpful. I, I guess related, is there a future or maybe you would disclose are as a, as a key metric to for us externally, to measure the business might be might be we'll see. I mean, uh, it's something that we are considering every time but it might be in the future. Yeah.
[Company Representative]: All right. Next up is Jonathan Ho, followed by Gabriela Borges.
Great. Thanks for taking the question.
So definitely there is the refresh cycle is a big part of our business, but I have to say that again when we're looking today on on dapple two entities I think willing to middle of the refill cycle and when I'm looking at on the finance for Q4 were knocking on defined it for 2026 do this a lot of opportunity just for refresh.
[Analyst 3]: Hi. Good morning. 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? Can you talk a little bit about the investments that you've made on the federal side and maybe where those opportunities lie? Thank you.
All right, next up is Jonathan ho followed by Gabriela Borges.
Nadav Zafrir: Yeah. I would say that because our current business is relatively small, we're not seeing a strong impact. Having said that, our investment in FedRAMPing our products is something that we're going to continue to do for a couple of reasons. The obvious one is that it's a big market. The second one is that this is what we're passionate about doing, securing the most under-threatened environments, the most complex environments. I think we really have an advantage there to really bring better security. We're going to continue investing in that. Investing in that means in our product, but also FedRAMPing and focusing our selling focus on that because I think there's a big potential there.
Hi, good morning and congratulations on the strong results. Can you please give us a sense of what you're seeing. Um, you're 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? Thank you.
Of our existing installed base and I'm not talking about the competitive replacement that we see more of them in the last few quarters, so and that's definitely ever ever fatone off the business.
And definitely we see more cross sell and cross selling.
Our audio products in our portfolio as we said a lot of the business is coming from E. R. M external risk management of all of them SaaS seats coming from actually opportunities. It would be part of a refresh that we did we did for a customer that's part of the fleets such bullshit. He also took they are are they also acquired there.
They purchase or it does just say one of only a few of our products. So that's definitely a big factor and again as of today based on what they see today that the potential is definitely also Dale for the next 12 months.
Thank you.
Uh, we're not seeing a strong impact. Um, our, uh, um, having said that our investment in fed ramping, our products, um, is something that we're going to continue to do, um, for, for a couple of reasons. The, the obvious 1 is that it's a big Market. The the the second 1 is that, this is what we're passionate about doing, um, securing the most, uh, under threat environments, the most complex environments, and I think, uh, uh, 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, uh, in our, in our product, but also fed ramping, uh, uh, and focusing the our, our selling focus on that because I think there's a big potential there.
Alright, and next step is for chemo Blue Lonnie followed by Peter Levine.
[Company Representative]: All right. Next up is Gabriela Borges, followed by Fatima Boulani.
Thank you Kat.
I wanted to ask you a question about product strategy.
You have absolutely not being shy about thinking about the portfolio in a holistic manner. Both from an M&A standpoint, but also from the standpoint of Hey, these products or these capabilities aren't necessarily our forte, we're gonna take a partnership route so I'm, referring to you know where our partnership with wins on a female Frank.
[Analyst 5]: Hey. Good evening. Thank you. Nadav and Roei, 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.
All right. Next up is Gabriella Borges, followed by Fatima bulani,
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. Uh, 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.
First and foremost are there opportunities in it.
The current portfolio as it stands where is there any scope for rationalization, where you can take.
Roei Golan: The refresh cycle is a big part of our business. I have to say that, again, when we are looking today at the opportunities, I think we are in the middle of the refresh cycle. When I'm looking at the final for Q4, when I'm looking at the final for 2026, there's a lot of opportunity just for refresh of our existing install base. I'm not talking even about the competitive replacement that we see more of in the last few quarters. That's definitely a factor in our total business. 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 opportunities that will be part of a refresh that we did for a customer that's part of that refresh project. They also purchased a few of our products.
Obviously, it's not binary, but when you look at 2026 on the cohort that's up for you in 2026, is there anything that we should keep in mind regarding the size or how being in year 3 of The Quantum Refresh impacts that cohort? Thank you.
Take care wins, the way that they weren't very strong and maybe exit certain product areas. So that's the first question and then the second question is just with respect to the camera and a vision around building full stack.
AI solution kit for your customers.
How much of a budgetary attribution and allocation are you actively seeing from sand hills, and CIO issue I can't imagine aren't getting absolutely inundated with the next new announced wrap it in technology, So just helping customers be ready to purchase when the technology around the I six.
It's changing probably the most rapidly than we've ever seen in our lifetimes, So very big picture, but wanted to get your opinion. Thank you no. Thank you for your team and so on the on the first one yes.
Yes, we do want to focus and become a podium player where we play. So a couple of examples of you brought up the Wiz example, but we also announced that we're going to be partnering with illumina on micro segmentation.
Roei Golan: That's definitely a big factor. As of today, based on what I see today, the potential is definitely also there for the next 12 months.
So, definitely the the, the referral cycle is a big part of our business, but I have to say that again, when we are looking today on on, on the opportunities, I think we're in the middle of the refill cycle, and I'm looking on the final for Q4 and looking on the final 4 for for 2026, the this, a lot of opportunities just for refresh of our existing install base and I'm not talking even about the competitive replacing that, we see more of them in the last few quarters. So, uh, that's definitely have a factor on our total business and definitely we see more Pro sell H cross selling of our other products in our portfolio. As we said, a lot of the business is coming from ERM external risk management or for, or from sassy, it's coming from actually opportunity that it will be part of the refresh that we did. We did for a customer that's part of this research project. He also took the or they also acquired the the purchase sorry. Purchase 1 of our a few of our
Because I think that's an important piece of our becoming a secure in a hybrid mesh environment.
[Analyst 5]: Thank you.
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 12 months.
[Company Representative]: All right. Next up is Fatima Boulani, followed by Peter Levine.
Thank you.
Especially as our agents are coming our way and starting to cross. These lanes. So segmentation becomes a very very important so we're doing that with them, we're partnering with others on Ot and Iot.
[Analyst 5]: Thank you, Kip. Nadav, 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&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. I'm referring to, you know, your partnership with Wiz on the CNAP front. First and foremost, are there opportunities in the current portfolio as it stands where there is scope for rationalization, where you can, you know, take your wins where you are very strong and maybe exit certain product areas? That's the first question. The second question is just with respect to Lakira and the vision around building a full-stack AI solution kit for your customers.
All right, next up is for T-Mobile, bulani, followed by Peter Levine.
And we're partnering on identity, so, yes, theres a theres a lot more where that comes from some of it is just being able to go through the normal.
Normal API, but just be very mindful about that so that we can actually do it some of it is actual integration and some of it is going to market together like like what we've done with with with result, with with regards to the a.
Full stack I think this is just the really the beginning right. This is not a huge market yet.
Because as I said, it's about these phases in most organizations are in phase one and phase one we have our product for example, we call. It a journey I protects a generic protect could come into the standalone, but it could also be a part of our browser or a part of our fantasy solution and I think you'll see a lot of that as we move to phase II.
[Analyst 5]: 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 in technology? 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. Very big picture, but wanted to get your opinion on it. Thank you.
Thank you Kev. Uh, nadav, I wanted to ask you a question about product strategy. Um you have absolutely not been shy about thinking about the portfolio in holistic manner, both from an m&a standpoint but also from the standpoint of Hades 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 whiz on the C naught front. So um, first and foremost, are there opportunities in the current portfolio as it stands? Where there is scope for rationalization where you can, you know, uh uh take, 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 uh just with respect to Lera and the vision around building a full stack, um AI uh, solution kit for your customers, um, how much of a budgetary attribution
And three we will need standalone product like what we're going to we're bringing with Akira which is already deployed in some of the largest organizations of the world, but those are the earlier I wouldn't even say to you already. These are the innovators that are starting to do this I think we will see more and more I don't think we'll see this blow up in <unk>.
2026, we will see substantial growth and I think we will see much more in 2027.
Nadav Zafrir: No, thank you, Fatima. On the first one, yes, we do want to focus and become a podium player where we play. A couple of examples that you brought up, the Wiz 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 as agents are coming our way and starting to cross these lanes. Segmentation becomes very, very important. We're doing that with them. We're partnering with others on OT and IoT. We're partnering on identity. 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.
Mhm.
Alright next step as Peter Levine for our last question of the day right.
Alright. Thank you guys you know, they're going to piggyback off that last point.
Robert you talked about those different levels and maybe this is just a pricing question is now how do you view the current subscription licensing model, but it is there is there a room to kind of evolve towards a more usage based flexible what kind of a consumption model right. You can see many of your peers kind of move towards distributions based model as you talked about AI SaaS and cloud security.
What are your thoughts here as you think about pricing and to get customers to maybe expand adopt more of your products overtime.
Been an allocation are you actively seeing from cisos and cios who I can't imagine aren't getting absolutely inundated with the next new uh mousetrap and and technology. So just helping customers be ready to purchase when the technology uh around AI security is changing uh 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. No thank you for Tina. So uh on the on the first 1. Um yes we we do want to focus and become a Podium player where we play. So a couple of examples that you brought up the whiz example but we also uh announced that uh um we're going to be uh partnering uh uh with the loomio on micro segmentation. Uh because I think that's an important piece of uh, becoming uh uh secure in a hybrid mesh environment. Uh, especially as uh as agents are are coming our way and starting to cross these Lanes. So segmentation becomes uh very very important so uh uh
Yeah, I think as we as we and really you can chime in as well I think as you see our portfolio. Its breath is expanding but also its nature right. So when you. When you think about our SaaS models of consumption I think that is becoming more relevant the first thing.
Nadav Zafrir: Some of it is actual integration, and some of it is going to market together, like what we've done with Wiz. 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. Most organizations are in phase one. In phase one, we have our product, for example, we call it GenAI Protect. GenAI Protect could come as a standalone, but it could also be a part of our browser, a part of our SASE solution. 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 Lakira, which is already deployed in some of the largest organizations of the world. Those are the early, I wouldn't even say the early.
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. It is something that we're speaking about in the corridors specifically for example for our area.
Like workspace.
Yeah.
Alright.
That's it for today folks thank you for joining us.
And would that we'll see you next quarter.
Thank you everyone for joining.
OT and iot, uh, um, and and, and we're partnering on identity. So, yes, there's a, there's a lot more where that comes from. Um, some of it is just, uh, uh, being able to go through the, you know, normal apis, but just be very, uh, uh, mindful about that, so that we can actually do it. Some of it is actually integration and some of it is go to is going to Market together like like, uh, uh, what we've done, uh, with with with, with regards to the uh, uh, full stack. I, I think this is just the really the beginning, right? This is not a huge market yet, uh, because as I said, it's about these phases and most organizations are in Phase 1, in Phase 1. Uh, we have our product. For example, we call it Genai protect, so Genai protects could come into the Standalone, but it could also be a part of our browser. Uh, a part of our, uh, uh, sassy solution. And I think you'll see a lot of that as we move to phase 2 and 3, we will need standalone.
Bye now.
Nadav Zafrir: 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.
[Company Representative]: All right. Next up is Peter Levine for our last question of the day.
Uh products like what we're going to what we're bringing with Sakira, which is already deployed in some of the largest organizations of the world. But those are the earliest I wouldn't even say the early. This is a great innovators, um, 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. Uh, we'll see substantial growth and I think we'll see much more in 2027.
Nadav Zafrir: Great. Thank you, guys. Maybe to piggyback off that last point, Nadav or even Roei, you talked about those different levels. Maybe it's just a pricing question. How do you view the current subscription licensing model? Is there room to kind of evolve towards a more usage-based, flexible kind of consumption model? You've seen many of your peers move towards this usage-based model. As you talk about AI, SASE, 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?
Thank you. All right. Next up. Is Peter LaVine for our last question of the day.
Nadav Zafrir: Yeah. I think as we, and Roei, you can chime in as well, I think as you see our portfolio, its breadth is expanding, but also its nature, right? When you think about SASE 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, it is something that we're speaking about in the corridors, specifically, for example, for areas like workspace.
Great. Thank you guys. Yeah, maybe a pig back off that. Last Point. Um, do you talk about those different levels and maybe this is just a pricing. Question is, you know, how do you view the current subscription licensing model, right? Is there is there a room to kind of evolve towards a more usage base flexible so kind of consumption models like you see many of your peers kind of move towards this Fusion space model as you talk about AI sassy Cloud security you know what are your thoughts here, as you think about pricing and to get customers to maybe expand and adopt more of your your your photos over time.
Yeah. I think as we as we and where you can chime in as well, I think uh um as you see our our portfolio, um it's Brett is is expanding uh but also its nature, right? So when you when you think about uh uh SAS models of consumption, I think that is becoming more relevant. Um, the first thing that we must do is uh not only sell our products, but make sure that our 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. It it, it is something that, uh, we're speaking about in the corridors. Um, specifically, for example, for areas like workspace,
Yeah.
Nadav Zafrir: Yeah.
[Company Representative]: All right. That's it for today, folks. Thank you for joining us. With that, we'll see you next quarter.
All right.
Nadav Zafrir: Thank you, everyone, for joining.
That's it for today, folks. Thank you for joining us and, uh, with that. We'll see you next quarter.
Nadav Zafrir: Bye now.
Thank you everyone for joining.
Bye now.
[Analyst 5]: Goodbye.