Q1 2026 Check Point Software Technologies Ltd Earnings Call

April 30, 2026

Kip Meintzer: Are we recording?

Nadav Zafrir: Yeah, I think I have to record it.

Kip Meintzer: Okay. Greetings, welcome to Check Point Software's 2026 Q1 financial results video conference. I'm Kip Meintzer, Global Head of Investor Relations. Joining me today are Chief Executive Officer Nadav Zafrir and our Chief Financial Officer, Roei Golan. Before we begin, I'd like to remind everyone this conference is being recorded and will be available for replay on our website at checkpoint.com. During the formal presentation, all participants are in a listen-only mode that will be followed by a Q&A session. During the presentation, Check Point's representatives may make forward-looking statements. Forward-looking statements generally relate to future events or future financial and/or operating performance. These statements involve risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements.

Kip Meintzer: Okay. Greetings, welcome to Check Point Software's 2026 Q1 Financial Results Video Conference. I'm Kip Meintzer, Global Head of Investor Relations. Joining me today are Chief Executive Officer Nadav Zafrir and our Chief Financial Officer, Roei Golan. Before we begin, I'd like to remind everyone this conference is being recorded and will be available for replay on our website at checkpoint.com. During the formal presentation, all participants are in a listen-only mode that will be followed by a Q&A session. During the presentation, Check Point's representatives may make forward-looking statements. Forward-looking statements generally relate to future events or future financial and/or operating performance. These statements involve risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements.

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

Nadav Zafrir: Thank you, Kip. Thank you all for joining us. I'm gonna begin with the key operating dynamics of the quarter, obviously talk a little bit about how we're advancing our strategy to drive sustainable long-term growth. To begin, in our Q1, we delivered double-digit growth in non-GAAP earnings per share and adjusted free cash flow, with revenue growth at 5%. Subscription revenue remained a key strength, driven by strong demand across our emerging technologies, which actually generated 45% growth in calculated billings led by email security, CTEM, and SASE. At the same time, we do see a decrease in appliance refresh projects that resulted in lower than expected product revenues.

Nadav Zafrir: Thank you, Kip. Thank you all for joining us. I'm gonna begin with the key operating dynamics of the quarter, obviously talk a little bit about how we're advancing our strategy to drive sustainable long-term growth. To begin, in our Q1, we delivered double-digit growth in non-GAAP earnings per share and adjusted free cash flow, with revenue growth at 5%. Subscription revenue remained a key strength, driven by strong demand across our emerging technologies, which actually generated 45% growth in calculated billings led by Email Security, CTEM, and SASE. At the same time, we do see a decrease in appliance refresh projects that resulted in lower than expected product revenues.

Nadav Zafrir: As we discussed in our last earnings call, during H2 2025, we conducted a comprehensive go-to-market assessment with the objective of accelerating both new logo acquisition and increasing wallet share in large enterprise accounts in order to enable the successful execution of a multi-pillar platform strategy. Based on this, we implemented changes to our go-to-market model to align with these goals. The transition to the new model did create short-term disruption to the rhythm of our sales execution and primarily affects our appliances business. Now, while we're confident that the changes made are setting this up for success in the mid and long term, we do see a short-term impact on our business that will negatively affect our 2026 revenue projections.

Nadav Zafrir: As we discussed in our last earnings call, during H2 2025, we conducted a comprehensive go-to-market assessment with the objective of accelerating both new logo acquisition and increasing wallet share in large enterprise accounts in order to enable the successful execution of a Multi-Pillar Platform Strategy. Based on this, we implemented changes to our go-to-market model to align with these goals. The transition to the new model did create short-term disruption to the rhythm of our sales execution and primarily affects our appliances business. Now, while we're confident that the changes made are setting this up for success in the mid and long term, we do see a short-term impact on our business that will negatively affect our 2026 revenue projections.

Nadav Zafrir: We believe these headwinds are transitory, and they reflect a deliberate reset to position our business for improved execution and scalability. We're already seeing that the current pipeline trends and ongoing customer engagements, and our plans to further invest in our firewall business, make us optimistic about the future growth trajectory. Beyond that, our strategy continues to be anchored around our 4-pillar approach, which we believe is well-aligned with the evolving security requirements of enterprise, particularly as AI adoption expands the threat landscape. In support of our go-to-market execution, we're strengthening our leadership team with 4 key appointments. First, Sherif Seddik has been named Chief Revenue Officer, and will lead our go-to-market organization. Sherif has successfully led our international sales business over the past 3 years.

Beyond that, our strategy continues to be anchored around our 4 Pillar approach, um, which we believe as well aligned with the evolving security requirements of Enterprise, particularly as AI adoption expands, uh, the threat landscape and in support of our go to market execution, and we're getting our leadership team with 4 key appointments.

so first

Nadav Zafrir: He brings more than 3 decades of global sales leadership experience. He'll be replacing Itai Greenberg. I wanna take this opportunity to thank Itai for his continued support during my first year and for his leadership in the go-to-market changes. Beyond that, Yochai Korem, who has led our CTEM offering since the acquisition of Cyberint and has driven 96% year-over-year ARR growth, will join the leadership team. You know that as organizations operate in this increasingly agentic world, exposure management is becoming mission-critical because it enables security teams to rapidly identify emerging threats, and the most important part is materially accelerate their mediation. I think we have an advantage here, I'm happy to welcome Yochai.

Share sadik. Uh, has been named chief Revenue officer, um, and will lead our go to market. Organization Sharif has successfully letter International sales business over the past 3 years. He brings more than 3 Decades of global sales leadership experience. Um, and uh, he'll be replacing, uh, etai grimberg. Uh, I want to take this opportunity to thank the tie, uh, for his continued support during my first year, and for his leadership in the goto Market changes.

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

Uh, beyond that you hired km, uh, who has led our CM offering since the acquisition of cyberint and it's driven 96%, uh, uh, year-over-year ARR growth. Uh, will join the leadership team. Um, you know, that as organizations operate in this increasingly agentic Coral, uh, exposure management is becoming Mission critical because it enables security teams to rapidly identify emerging threat. Uh, and the most important part is materially accelerate their mediation, and I think we have an advantage here, um, and I'm happy to welcome you. Hi.

Alongside that to lead our AI pillar, I'm happy to say that Adam Eli has joined as general manager of AI security, uh, and will also join the leadership team. Adam brings a deep experience, you know, at the intersection of cyber security and large-scale Enterprise security operations. Because in his previous roles, he was, uh, a seesaw at Fidelity. Deputy CEO of Walmart, but he's also a Founder, a founder of bluebox security.

I think Adam adds really a proven operator's perspective, which is so essential in this time and you'll focus on building the platform, our AI security platform to scale with the speed, the rigger, um, and the and the strong commercial uh, pipeline.

And then, lastly, uh, Rafi, kretchmer is appointed a VB VP of global, uh, marketing. He'll replace breath dice. So we wish well in his future endeavors.

Nadav Zafrir: Beyond that, look, you're all aware, AI is a watershed moment for the security industry. When you look at the emergence of these frontier AI models, including Mythos and GPT Class, they're driving 2 structural shifts in cybersecurity. First one is that the barrier to sophisticated cyber attacks is literally collapsing because AI is democratizing capabilities that were once exclusive to nation state and some very large elite, quote-unquote, "criminal organizations." This is exposing a far broader set of enterprises to material risk. That's number 1. Number 2, cyberattacks are undergoing structural industrialization. The agentic AI enables threat actors to continually scan global infrastructure, they're generating a continuous flow of novel attack techniques. Manual operations are giving way to automated attack pipelines and, you know, this is what we call at Check Point the AI attack factories.

Beyond that. Um look you're all aware um AI is a watershed moment for uh the security industry. Um when you look at the emergence of these Frontier, AI models including Mythos and GPT class. Um they're driving 2, structural shifts in cyber security,

First 1 is that the barrier to sophisticated cyber attacks is literally collapsing uh, because AI is democratizing capabilities that were once exclusive exclusive to nation state, and some very large Elite quote, unquote, criminal organizations, and this is exposing a far broader set of Enterprises through material risk. So that's number 1. Number 2,

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

Cyber attacks are undergoing. Structural industrialization the agentic AI enabled threat actors to continue to scan Global infrastructure and they're generating a continuous flow of Novel attack techniques. And so manual operations are giving away to automated attack pipelines. And, you know, this is what we call a checkpoint, the AI attacked factories. Now when you look at the convergence of these 2 forces,

It really creates a different threat environment. Larger attack population. That is executing more sophisticated campaigns with greater speed and volume. And the time to exploit is shrinking dramatically. And we believe, I believe that this is the directly validating our ethos of prevention first, uh, which were Second To None, uh, in the industry in my opinion.

Um, beyond that a checkpoint. We're not waiting for this threat environment to materialize.

Our response is already inactive. Um, it's structured of course, our 4 Pillar framework.

These security for AI, the network, through our hybrid mesh, cm and workspace, security.

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

The applications and the Agents that both of these, use the people and the applications.

Beyond that we introduced, uh, the AI Factory security blueprint. It's uh, integrated with the Nvidia GPU service sitting on the server itself and this provides end-to-end protection for AI uh infrastructure and we're very bullish about this.

Uh most recently, uh we also announced our partnership with Google Cloud. We're integrating the this AI defense place with Gemini Enterprise agent platform and this

Can deliver real-time runtime protection at scale.

Um,

Nadav Zafrir: Finally, we launched a secure AI advisory service through to help enterprise govern, deploy, and ultimately scale AI with security and doing so responsibly. To close my opening remarks, while we're experiencing near-term headwinds in our appliance business and adjusting our annual revenue guidance, we remain confident in our ability to gain market share in this expanding security market. The emerging technologies continue to perform strongly and position Check Point at a really good place to secure this rapidly growing enterprise attack surface driven by AI adoption.

we also delivered, AI driven exposure management uh enabling customers to close the remediation Gap through 1 improved intelligence, then the risk prioritization and finally safe remediation, um, which is critical the time to remediate uh, in organizations today and then

Finally uh uh we launched a secure AI advisory Service uh through uh to help Enterprise govern deployed and uh ultimately scale AI uh with security and doing so responsibly.

Nadav Zafrir: We believe that our differentiated strategy, our core capabilities, our strong financial profile with its industry-leading profitability, and at the end of the day, a disciplined execution over time position us to really benefit from the accelerating demand for secure enterprise-grade AI, which is transforming organizations at scale. Before I take the questions, with that, I'll turn to Roy to give you some of the financials.

And so to close my opening remarks while we're experiencing near-term, headwinds in our Appliance business and adjusting our annual revenue guidance. Uh, we remain confident in our ability to gain market share in this expanding security Market. The emerging Technologies continue to perform strongly and position checkpoint uh at a really good place to secure this rapidly growing Enterprise attack surface driven by AI adoption. And we believe that our, uh differentiated strategy, our core capabilities, our strong financial profile with its industry-leading profitability and at the end of the day, a disciplined execution over time. Positioned us to really benefit from the accelerating demand, uh, for secure Enterprise. Create AI, uh, which is transforming your organization's at scale.

So before I take the questions with that, I'll turn to Roy to uh give you some of the financials.

Roei Golan: Thank you, Nadav. One moment. Can you see my screen? Great. Thank you, Nadav, and thank you everyone for joining the call. As Nadav mentioned, Q3 was a solid quarter with 5% growth in revenues, driven by 11% growth in our subscription revenues. Our total revenues reached $668 million and were $2 million below the midpoint of our projection as a result of lower revenues from firewall appliances that impacted our product revenues. Subscription revenues grew by 11% to $323 million and were at the midpoint of our projection. Our adjusted free cash flow was very strong and reached $457 million, $70 million above the midpoint of our projection and grew by 11%.

Can I have?

1 moment.

Can I see my screen?

Great.

So, uh, thank you, nadav, and thank you everyone for joining the call. So S9 have mentioned the the soft water. Where was the solid quarter with 5% growth in revenues and driven by 11% growth in our subscription revenues, our total revenues reached 668 million and with 2 million below the midpoint of our projection as a result of lower revenues from firewall, appliances. That impacted our product revenues. When we are looking around subscription revenues, they grew by 11

10% to 323 million. And when at the midpoint of our projections,

Roei Golan: Our non-GAAP EPS was $2.50 and exceeded our guidance with 13% growth year over year. As mentioned, we had 5% growth in revenues, while our deferred revenues grew by 8% to $2.06 billion. Our calculated billing totaled to $548 million, reflecting a 1% decline year over year, while our current calculated billing grew by 2%. Our remaining performance obligation grew by 7% and reached $2.592 billion. As we, as Nadav indicated earlier in the call, we had lower than expected product revenues, mainly as a result of a disruption affected by the changes we made in the go-to-market organization.

our adjusted free cash flow was very strong and reach 457 million, 70 million above the midpoint of our projection and grew by 11%.

Our non-GAAP EPS was $2.50 and was exceeded. Our guidance with 13% growth in euro bill,

So as mentioned, uh, we we had 5% growth in revenues while our deferred revenues grew by 8% to 2 billion.

our calculated billing total to 548 million reflecting a 1% decline in overall, while our current calculated billing grew by 2%,

Our our remaining performance obligation, grew by 7% and reached 2 billion 592 million.

Roei Golan: As we are looking in Q2, into Q2, we do see this disruption still affecting our firewall appliances revenues. Based on the funnel that we see, we expect to see an improvement in H2 of the year. It is important to note that our renewal business continued to be stable, and our firewall subscription ARRs continued to grow year-over-year. When we are looking on our subscription revenue, we do see a trajectory for acceleration, and we do expect to see acceleration in our subscription revenues in Q2 and for the full year of 2026, driven by strong demand by emerging pillars, mainly by email security, CTEM, and SASE. As indicated, our total subscription business continued to be strong. We continue to experience strong demand for emerging products, which remains the primary driver for our revenues growth.

So as we as nadab indicated the earlier in the call, we had lower than expected product revenues many as a result of the disruption affected by the changes we made in the go to market organization.

As we are looking into the second quarter, we do see this disruption still affecting the revenues of our appliances, but based on the final data that we see, we expect to see an improvement in the second half of the year. It is important to note that our renewal business continues to be stable, and our file subscription AI continues to grow EO value.

When we are looking at our subscription revenue, we do see a trajectory for acceleration, and we do expect to see acceleration in our subscription revenues in the second quarter and for the full year of 2026.

driven by strong Demand by emerging peel out, mainly by email security system and Sassy

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

So as indicated, our total subscription business continue to be strong. We continue to experience strong demand for emerging products, which Remains the primary driver for our revenues to go.

In q1, our email security, sassy and ERM in total exceeded 40% growth in our and over 45% in calculated Billings.

The email security system and Sassy expect to drive the subscription Revenue growth in the next few quarters.

When we are looking at the revenues by geography, 46% of our revenues are coming from EMA, which had 6% growth year over year.

I a 42% of the revenues came from America and delivers 4% growth in overview and the remaining 12% came from Asia Pacific and that had 2% growth in overview.

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

When we are looking on the pnl for this quarter, so I was profiting from 564 million to 586 million representing a ghost margin of 88%.

Our operating expenses excluding R&D grants increased by 14% while our on constant currency basis, our office increased by 12%.

Q1 results include approximately $27 million of benefits from R&D grants to be received under the new Israeli incentive program law, which was ratified during the period.

And that's reflecting the social impact in our financial results.

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

Our operating expenses, net of R&D, grants were 321 million and increased by 5% a year.

When we are looking on these grants, we do expect to have an approximately benefit for the total year of of 100 million dollar on our operating income reflecting the new load that was just was just approved was just finalized. The increase in our Opex is a primarily as a result of our increase in our Workforce, as a result of investment in our AI security and investment in sales and marketing program.

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

Looking on our non Gap, operating income, it continues to be strong at 265 million of 40%. Operating margin our non gaap, net income increased by 8% and reached 265 million while our gaap net income, reached 192 million similar to last year.

Our non-GAAP EPS grew by 13% and reached $2.50, while our GAAP EPS was $1.81, which was a 5% increase.

Moving into our cash flow and cash position. So our cash balances as of the end of the quarter together, we Mark the best Securities and short-term deposits reach, 4.4 billion,

During February, we completed the acquisition of Siata and SiteBlock Cyclops for approximately $92 million of net cash consideration. Our Justice free cash flow increased by 11%, reaching $457 million.

In addition we continued our buyback program and purchase 1.9 million shells for a total of 325 million at an average price of 170 billion.

Roei Golan: We do see continued strong demand for emerging technologies, SASE, email security, CTEM. From the other end, we did see, we do see in the near term lower new business from firewall that affected our revenues. I want to go into the guidance for Q2 and for the full year. For Q2, our total revenues are expected to be between $660 to 690 million. Our subscription revenues expected to be between $328 to 338 million. non-GAAP EPS is between $2.40 to $2.50, while our GAAP EPS expected to be around $0.70 less. While our adjusted free cash flow expected to be between $145 to 175 million.

To summarize. So strong double digit growth, non-gaap PPS, and adjusted free cash flow. We do see continuous strong demand for emerging Technologies, sassy email, security systems. And from the other, we did see in, we do see in the near-term, lower new business from firewall that affected our revenues.

When I want to go to into the guidance for the second quarter and for the full year,

So for the second quarter, our total revenues are expected to be between 6,000 and 6060 to 690 million.

Our subscription revenues expect to be between 328 to 338 million.

Roei Golan: Regarding the cash flow, the free cash flow, important to say that there are some payments, significant payments, that moved from Q3 to Q2, again, that's mostly shifting from Q2 to Q3. When we are looking on the full year guidance, as Nadav indicated, we are adjusting our revenues guidance, our total revenues guidance, for the full year. The new updated guidance is between $2,770 million to $2,850 million. That's in a reflection of expected lower revenues from firewall appliances, mainly in the Q2. Our subscription revenues, we are not changing.

And non-cap EPS is between 2.40 cents to 2.50 cents while our aghapy PS expected to be around 70 cents. Less while I adjusted free cash flow expected to be between 1, 145 to 175 million regarding the cash flow. The free cash flow important to say that there is some. There are some payments significant payments in that move from Q3 to Q2 but again.

That's a that's a a mostly shifting from Q2 to Q3 when we are looking on the full year guidance. So as not to have indicated well adjusting, our revenues guidance, our total revenues guidance for the full year,

The new, the updated guidance is between 2.7 2 billion, 770 million, to 2 billion 850 million that's in a reflection of expected lower revenues, from firewall appliances. Mainly in this, in, in the, in the second quarter.

Roei Golan: We do see strong demand for our emerging product, and we hope to finish in the upper end of the range, but we are keeping the same range for the full year. Same thing for non-GAAP EPS. We are not changing our non-GAAP EPS, expected to be between $10.05 to $10.85.

Roei Golan: GAAP EPS gonna be slightly higher, again, mainly because lower share count and slightly higher acquisition-related costs. Our adjusted free cash flow, we are not updating the guidance, same as we gave between $1.15 to 1.25 billion. I'll stop sharing. Kip? You're on mute, Kip. Kip? Maybe it's better that you're on mute, but. Kip?

Same as we gave between $1 billion and $1.15 billion, to $1.25 billion.

I'll stop sharing.

Keep.

Your music.

Keep.

maybe it's better that you're on mute, but

Kip Meintzer: Sorry.

Nadav Zafrir: Yeah.

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

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

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

Great, thanks Kip. Uh, good morning everyone and thank you for taking the question. Um, uh, nadav I wanted to dig into product Revenue performance. Um, we'll take the easy question, um, with with macro or customer decisions to sweat assets, not a factor at all. And you know, if, if not, can you offer a little offer, a little more color around the depths of the go to market changes? Um, you know, where was the friction in the process? Most apparent. Where did the system break down? And what gives you confidence. This is just a near-term issue.

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

Nadav Zafrir: We're actually already seeing that the engagement with our customers and the funnel going back to normal. We're optimistic that this is a sort of a blip. It does take a little time to sort of get the motion back and everybody in their seat, et cetera. For the long run, we believe this is the right thing to do, and we're gonna continue to invest. Now, this is just on the, you know, on the workforce. Also leadership changes in America, leadership changes in other areas. There's a process here that we're going through. I think we're at the tail end of the disruption and very optimistic about the future.

Uh, thanks so look. I don't think the macro is the issue here. Um, I when you look at our, the, the changes that we've made to our go to market their there are significant. So, you know, it's optimizing, uh, uh, accounts to, uh, account managers. Um, it's uh, uh, you know, doubling down on our, uh, marketing doubling down on our channels. Um, but it did create a short-term, uh, headwind in terms of execution, as many of our people changed their role or changed accounts. And I, I see this as the main driver or the main headwind that we're seeing in terms of the, uh, uh, firewall, uh, business. So,

You know, I don't think this is we don't we don't see a macro problem. Uh, we're actually already seeing that, uh, the the, the, the engagement with our customers and the funnel, uh, going back to normal. So, uh, we're optimistic that this is a sort of a blip, um, but it, but it does take a little time to sort of get the, the motion back and everybody in their seat, Etc. But for the long run, we believe this is the, this is the right thing to do. And we're going to continue to invest. Now, this is just on the, you know, on the, on the workforce but also leadership changes, uh, in America, uh, leadership changes in other areas. So, there's a, there's a process here, um, that we're going through. I think we're at the tail end of the disruption and

Nadav Zafrir: At the same time, when I actually look at the demand side, we're seeing different areas growing. As an example, we're very bullish on new AI data centers, where I think we have a very unique capability. For the longer term, that's how we see the market, and we're optimistic.

And very optimistic about the future, and at the same time, when I actually look at the demand side, uh, we're seeing different areas growing. So, as an example, we're very bullish on, uh, on new AI data centers, where I think we have, uh, a very unique, uh, uh, capability. So for the, uh, for the longer term, that's, uh, that's how we see the market and we're optimistic.

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

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

Rob Owens: Great. Thank you for taking my question, good morning here from the West Coast. Obviously, the world's been changing quickly over the last 6 weeks. I'd love to understand your perception relative to what's happening and how that's influencing Check Point's business. In line with that, it feels like you're losing momentum at a critical time for cyber here. How do you ensure that this doesn't lead to longer-term share losses as customers are having to make decisions in the near term to protect against these next-generation threats?

All right, it's helpful color. Thanks. We'll keep Kip happy and keep it to 1 question. Thanks Brian. Next up is Rob Owens from Piper. Sandler followed by Joseph Gallow from Jeffries.

Great. Thank you for taking my my question and good morning here from the West Coast.

Um, obviously the world's been changing quickly over the last 6 weeks, we'd love to understand your perception, uh, relative to to what's happening and how that's influencing checkpoints business. But in line with that, it feels like you're you're losing momentum at a critical time for cyber here. So how do you ensure that this doesn't lead to longer term? Share? Losses is customers are having to make decisions in the near term to protect against these next Generation threats.

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

Well, honestly, I I actually think, uh, that we're gaining not losing, uh, when you look at the, at the big picture. Um, right. Uh, um, you know, take uh, uh, Mythos as an example, right? We we think that, as I said, this is going to create a democratization industrialization and change the nature of the business. And I actually believe that we're really well positioned, uh, uh to answer that at the same time. When you look at the relevant pillars cm is growing uh has grown 96% email which uh uh we are 1 of the best in class in the industry and ready for this. AI Revolution is growing over 40% Etc. So

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

Ethos of prevention. First is an example, if you look at the latest reports by NSS and mircom. Again once again, we're at 99.9% ability to, uh, uh, to to stop attacks of known CVS. This is this, this was always important. I think now it's becoming really critical because that's exactly the change that's happening. Um, you're going to have to be able to block as fast as possible or everything that is possible. And then you're going to have to remediate extremely fast. I think from both sides of the equation, we actually have uh uh an advantage here.

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

Joseph Gallo: Awesome. Thanks for the question.

Next up is Joseph Gallo from Jeffrey's followed by Adam Tindle of Raymond James.

Joseph Gallo: I know you talked about the impact to appliance execution, I think the most exciting part of this story is the subscription growth and the potential for acceleration there. If we look at current billings and you take out product, that only grew 3% year-over-year in Q1. Just you're guiding to 12% subscription growth and acceleration in H2. Maybe just walk us through a little bit more about the confidence in that, and then just any broader commentary on how we should think about billings going forward. Thanks.

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

Roei Golan: I'll take it. You're right in terms of current billings excluding product, but that takes into account also, like, maintenance and software and maintenance updates, and actually it's pretty flattish right now. If you're excluding that, actually the growth of subscription is much higher, subscription billings. We do see, by the way, we see the funnel even for Q2 and also, and mainly for H2 of the year. We see very strong demand for our subscription packages, for our subscription offering, if it's email, SASE, CTEM we discussed, and also AI security. The numbers are still not significant in terms of bookings for AI security, but we see very significant funnel that was created just in the last few weeks. We see the enthusiasm about it.

So I'll take it. Uh, so you're right. In terms of current billing is excluding product, but that takes into account, also a maintenance and software maintenance updates. And actually we it's pretty flattish right now. So if you're excluding that so actually the growth of the subscription is much higher subscription Billings and we do see by the way, we see the final even for the second quarter and also and mainly for the second half of the year. We see very strong demand for our subscription packages for subscription offering. If it's email.

Roei Golan: We have a new leader there, and now they're managing this business. Definitely we feel positive about the subscription also for the next few quarters, to really accelerate.

As sassy see them we discuss and also aiq. Also the numbers are still not significant in terms of booking for AI security but we see very significant funnel that was created just in the last few months just in the last few weeks. We see the enthusiasm about it. We have a new leader there.

And now that managing this business, so definitely we feel positive about the subscription also for the next few quarters to accelerate.

Joseph Gallo: Thank you.

Thank you.

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

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

Adam Tindle: Okay. Thanks, Kip. Good morning, Nadav. I just wanted to take a step back. There's kind of 2 major things that we're having to digest here on this call. The first one, I wanna understand, what exactly is happening to product revenue that is causing this revision? Is there changes to terms with distributors? Is there issues with supplies and shipping? What exactly is changing and happening that's causing this mechanically? The second thing that we're digesting here is the go-to-market changes that you're implementing. I wonder, you know, we've gone through this before with Check Point in the past, a number of changes to go-to-market leadership.

Okay, thanks, Kay. Good morning, Nadav. Bye. I just wanted to take a step back. There are kind of two major things that we're having to digest here on this call. The first one, I want to understand: what exactly is happening to Product Revenue that is causing this revision? Is there changes to terms of distributors? Are there issues? What exactly is changing and happening that's causing this mechanical?

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

Lie. In the second thing that we're digesting here is to go to market changes, uh, that you're implementing. I wonder, you know, we've gone through this before with checkpoint in the past, the number of changes to go to market leadership. Um, when you look at these, if you could, maybe compare and contrast, some of the things that have been done in the past to this time, what you've learned and what might be different, uh, with these go to market changes, thanks?

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

Adam Tindle: Sure.

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

I can start on the first 1 and that we will take the second. Yeah. So on, on the and in terms of the product line may affect the product. So we did a, we did the changes in the go to market organization.

Roei Golan: For firewall, it usually takes longer, and we see disruption in funnel creation mainly in Q1 that's affecting mainly some of it in Q1 but mainly in Q2. Therefore, we see the funnels starting, we see a very nice improvement in the last few weeks after all people are on role, in the relevant roles, and they are starting to work on their accounts. We should, we see, we're starting to see the funnels created for H2. As we mentioned, there is a near-term headwind specifically for Q2. Nadav, you want to take the second one?

As part of these changes, with a lot of changes for assignments, for account managers, that will walked on large Enterprise and Enterprises that moved from accounts to other accounts. This has some kind of again, it's something that was expected, but that had more disruption that we expected on on the business, mainly on the new business, on the new business on the remind you that the funnel for refresh projects for new business on file, or it takes still a bit more time than than the sales cycle is, is, is longer than a sales cycle for selling CM email or other products or these kind of product for firewall. It's usually takes longer and we see this option in final creation, mainly in q1, that affecting mainly some of it in q1, but mainly in the second quarter and therefore we see we see the finance starting. We see a very nice Improvement in the last few weeks after all people.

Build our own, a, a pro and the relevant roles and they are starting to work on their accounts. And we should, we see, we starting the, we starting to see the final created in the second half of the, for the second half of the deal. But as, as we mentioned, there is a new-time Edwin specifically for the second quarter.

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

Uh, I think that 1 change that, uh, we're doing, which is the, um, I think a differentiation, um, is beyond, just the structural changes that, where you spoke about. We're also, uh, investing more, uh, uh, in marketing we're, we're, we're doubling down on the channels.

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

Um, to your question about the Personnel issue, uh, changes that, uh, uh, we're conducting. We do want to bring strong leaders that come from the security business, uh, with the right experience. Right? So, uh, in our last earnings call, we, we announced Ray Roberts is taking as president, uh, uh, of America's, uh, we and she has experienced, uh, uh, you know, vast experience in the cyber security Market, Tom Malone joined us, uh, um, and is leading, uh, uh, globals Adam. Eli comes from the industry and is going to lead the AI security. Um, so the idea is to bring, uh, seasoned leaders that uh, know this business and then put like, reorganize the, uh, go to market organizations. So, these 2 things work together, and the third thing is what, which we've been speaking about is the multi, uh, approach that we're coming with. So all in all, I'm very bullish about where that is going to take us. But, you know, I do acknowledge that.

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

In the first quarter. Um, this has created a disruption, but I think it sets us up for Success. Uh, as we go forward and you'll see, you know, more people joining us at different levels from different companies. Um, as you know, we, uh, are, you know, just getting the right people, the right data, the right processes to create this sustainable growth. And, uh, you know, we have the vision we have the mission. I really believe that we have a, a meaningful headwinds um, with the products that we have. Um, and uh, um, we're bullish about where that's going to take us.

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

All right. Next up is Scholl followed by sherik tatarus.

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

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

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

It's a cross, but I would say mainly around the lounge. And again, mainly as a result of the disruption in the go to market, because there were many changes to the assignment of Enterprise and larger Enterprise that are mainly consuming the large

The large boxes.

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

So, that's, uh, I would say that. But again, we see it across the board, but more on the large one.

I will say this show that

I'm trying to put together the the trends that are coming and I know that this is sort of a zooming out a little bit, right? But when you think about priorities of security of large security organizations, uh, in the uh, in today and in the next couple of years, which I think are going to be chaotic. If you believe that this democratization industrialization of the attackers and uh the changes that identification is doing in, everyone's networks is real. Then I think that our firewalls are actually very well positioned for this future. Uh, if nothing else.

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

Because of the ability to prevent every known cve and deploy it through our IPS in hours, not days or weeks, this is becoming more and more critical. Um, I know that we've been preaching this for for, for a long time, but I think this is now, uh, uh, going to become more important and I think gives us an advantage, not with only with the, uh, C, like growing with the customers that we have. But going after new logos,

which is actually a part of the change that we've made in the go to market organization, and I was really sad getting new logos in cm is much faster than

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

Uh, this is a Tailwind for checkpoint.

Roei Golan: Tailwind it is. Yeah. Not a headwind. Yeah.

Nadav Zafrir: Tailwind.

Shaul Eyal: Thank you.

Tailwind that. Is there not not a headwind. Yeah. Yeah Tailwind.

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

Next up is shanik catharus.

Followed by Keith Bachmann from BMO.

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

Nadav Zafrir: Yeah. I'll say this. It is a process. We're making very substantial investments, right? 6 months ago, we told you about the acquisition of Lakera, as an example. This is where we're building a truly foundational model. We believe that if you look at the security for AI, you won't be able to use, you know, existing large language models that can, you know, do everything known to humanity, write poems and protect. Rather, if you want the latency, the accuracy, and the cost, we are going to have to train our own model. That's a huge investment. We're investing in the researchers. We're investing in the GPUs.

Yeah, and thanks a lot. Uh, just just maybe to switch gears from from appliances. Uh, uh, not all you mentioned about, uh, yeah, the data center. Yeah, Factory blueprint and between that and, and the new AI defense plan the, the chairman I agent integration, the, the security AI, it feels like you are trying to go after, uh, multiple layers of of the Enterprise AI security stack, uh, uh, strategically very compelling and you talked about the opportunity, but just, how should we think about, uh, monetization of, of this opportunity from here? Where do you see the the near-term opportunity? Uh, this year in the next few months? Yeah.

So I'll say this, uh, it is, it is a process so that we we're making uh uh very substantial Investments, right? In the in, in a couple of I think, 6 months ago, we we told you about the acquisition of lacura as an example. Um, this is where we're building a truly foundational model. Um, I we we believe that. We're, if you look at the security for AI, you won't be able to use large, you know, existing large language models.

Nadav Zafrir: We're investing, you know, even thinking out of the box, we created a game called Gandalf, where we have over 1 million worldwide users that thousands of them attack us every day so that we can put that into our small language model to continuously breed it so it can get better and better. That's a big investment. On top of that, we're building security for AI as a platform. For users, for employees, for applications, whether they're looking inside or to customers. Both of these, both people and applications using agents. We're doing the security to the people. We're securing runtime. We're doing it, as I said, with Gemini. We're also doing it with Copilot from Microsoft. All this is heavy investment.

Those that can, you know, do everything known to humanity, write poems and protect. But rather, if you want the, the latency the accuracy and the cost we are going to have to train our own model. So that's a, that's a huge investment. Uh, we're investing in the researchers. We're investigate we're investing in the gpus we're investing. Um, you know, even uh, um, Thinking Out of the Box, we created a game called Gandalf, where we have over a million worldwide users, that thousands of them attack us every day so that we can put that into the to, to, to our small language model to continuously, uh, breed it so it can get better and better. That's a big investment. Now, on top of that we're building security for AI as a platform, so, for for, for users, for employees, um, for applications whether they're, uh, looking inside or or 2 customers and both of these both people and, uh, applications using, uh, agents.

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

And we're doing the security to the people. We're we're securing runtime. We're doing it. As I said with Gemini we're also doing it with co-pilot from Microsoft. Now uh, all this is is heavy investment now. Adam is coming in to lead. Also the commercial side of this, we're hiring the first salespeople to drive this. And uh, we think that it's going to be, uh, you know, still a small part of 2026, but huge potential, uh uh, for the future, that's 1 Thing.

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

Beyond that, uh, it's also going to feed into our other pillars, because by having those foundational models, where we also have people that are simulating—sort of in what we call the Future Labs—what these attacks of the future are going to look like. So it's not just the AI pillar; it also feeds into our intelligence, it feeds into our email security, it feeds into our endpoint security, and I think over time, um, the value of real security, real proactive security, um, is going to become more and more important. So,

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

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

All right.

Thank you, Shannon. Next up, in place of Keith Bachmann, is going to be Todd Weller.

Todd. And that'll be followed by tolani and B of A

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

Roei Golan: Memory pricing continues to inflate, to increase. I mean, we see this trend continues. As for, I mean, as for what we are looking out gonna affect our revenue, our product revenues, I talked about it already when we gave the full year guidance. We took into account some disruption from the memory cost also on the firewall business. Right now, I think it's tough to say if there is anything related to that. I mean, we are looking on the final for H2. We see good finance for firewall. I mean, tough to say how it will impact right now.

Thanks. Uh, thanks for the question. Um, just a question on memory pricing. What, what are you seeing in terms of impacts more importantly, how are you thinking about it, kind of going forward over the remainder of this year and then any kind of additional pricing actions being contemplated

So, memory pricing, continue to to inflate, to, to, to increase. I mean, we, we see this trend continues as for, I mean,

As for what we are looking out going to affect our Revenue. Our product Revenue. We, I talked about it already when we gave the full year guidance, we took into account some in the disruption from from the memory cost from the memory cost also on the firewall business. Right now, I think tough to say, if it's, if there is anything related to that, I mean we are looking on. We are looking on the final for the second half of the year. We see good Finance for firewall. So,

Roei Golan: I don't know to tell you if it impacted the behavior of our customers in terms of buying firewalls, buying appliances, but definitely I can tell you that the memory costs are continuing to surge and I don't see it stops, I mean, in the near term.

Can tell you that the the memory costs are continued to sell.

Jen. And I don't see it stocks. I mean in the Newton,

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

All right. Thank you, Todd.

Up next is tolani with BFA.

Tal Liani: Hey, guys. Can you hear me?

Hey guys.

Kip Meintzer: Yes.

Nadav Zafrir: Yes.

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

Uh, can you hear me? Yes, yes

Um, I keep asking the same question. I'm going to come back to the same question. You joined the company a few years ago with hope that growth was going to accelerate. You've done many things on sales, on products, and growth has decelerated instead of accelerating, in the sense that we are now at a 5% environment. It's just not—

big enough for such a great space.

There, there could not be a better space for you to grow and accelerate revenues, uh, Revenue growth. So, the question is, what is not working with the strategy. What is not working? How can you change the growth trajectory to the point that we see double digits, sustainable, double digit growth,

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

And and really the, the, the synthesized, the question, the issue is what is the problem? Meaning is it about sales execution. Is it about portfolio? Um, is it about the employee comp? Uh, composition? And the fact that maybe culture needs to change? I'm trying to understand. What do you what can you do in order to change the growth trajectory

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

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

So first of all, I I, I totally agree that we couldn't be in a, uh, um, in a better, uh, uh, industry right now. Um, and, uh, um, you know, I think that like you said, that's, uh, that's why I'm here and, and that's what I'm here to do. Um, look as we, as we said before. Yes, uh, some of it is execution. And that's why we're making these changes that we just spoke about which are meaningful. Um, you know, hundreds of people getting new accounts, moving seats, putting new leaders. Uh, I think it's essential, you know, giving us, uh, a short-term headwind. But I think we'll drive, uh, that, uh, uh, sustainable growth that you're looking for. At the same time, I do want to say that, uh, um, when you look at the total, uh, product portfolio that we have, uh, although it's still not, uh, the biggest part of what we do. If you look at the emerging technologies that we have, right email, CM sassy and hopefully

Nadav Zafrir: It does take time and, you know, we need to continue course and have the patience to get there because, you know, we need to do it with discipline and that's what we're doing, and it's going to take time, but believe that we're in the right business with the right products. In every one of the pillars that I spoke about, we're also looking at acquisitions. I believe that when you bake all that together with the leadership that we're putting in place, we'll be in a good place in the future.

And, and now joining with security for AI, That's that, as uh, as doreesha as we spoke about before is going, uh, uh, really really fast and becoming a bigger piece, uh, uh, of what we're doing. Um, so, you know, all in all I think that uh, uh, I the vision and the strategy are there, we're making the changes that we need to do. It does take time. And, uh, you know, we need to continue, uh, course and, uh, and have the patience uh, uh to get.

Get there. Because, you know, we need to do it with discipline, and, uh, that's what we're doing, and it's going to take time. But, uh, uh, believe that we're in the right business with the right products. Uh, in every one of the pillars, uh, um, that I spoke about, we're also looking at acquisitions. Um, and, uh, I believe that when you bake all that together with the leadership that we're putting in place, uh, we'll be in a good place in the future.

Tal Liani: Yeah. Thank you.

Okay.

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

Thank you.

Tell up next is Joshua, Tilton from Wolf followed by Jonathan hoe of William Blair.

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

Kip Meintzer: Apology.

Joshua Tilton: It's okay. You caught me off guard a little bit. Maybe one for Roei. Can you just reiterate exactly what you expect in H2 for Appliance? I wasn't sure if you said stabilize or recover. Maybe just talk to kind of the visibility you have or maybe the confidence you have around that view.

Thank you guys. I uh, I love getting no warning, um, but with that in mind I'll I'll keep it to 1 uh apology.

Roei Golan: For H2, I do expect to see improvement. Right now, for Q2, we do expect to see a decline, a sharper decline in the product revenues. For Q3 and Q4, think it's gonna be gradually. We see a much better funnel also for the appliances, and we do expect to see improvement there. It doesn't mean that we're gonna grow in Q3 and Q4 product revenues, but definitely, we're gonna show better performance compared to what we have, what we had in Q1 and what's expected for Q2. What we had in Q1 and what's expected for Q2.

Okay, can you call me off guard a little bit? Um, maybe 1 for Roy, can you just uh, reiterate exactly what you expect in the second half for appliance? I wasn't sure if you said stabilized or recovered, uh, and then maybe just talk to kind of the visibility you have or maybe the confidence you have around that view.

So, for the second half of the day, like you do expect to see improvements right now for the second quarter, we do expect to see a decline. I sharper decline in the product revenues, but for the third quarter, and the fourth quarter, it's going to be, it's going to be gradually. We still, we see a much better funnel and also for the appliances and we do expect to see Improvement there. It doesn't mean that we're going to grow in queueing you for product revenues, but definitely we going to show better performance compared to

What we have, what we're going to have, what we have in Q1, and what is expected for the second quarter? What we're going to have, what we have in Q1, and what is expected?

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

and maybe just, you know,

Roei Golan: Someone, I'm hearing. Can you hear me, Todd? There is an echo. I'm hearing myself. Can you hear me, Todd? Again, just one moment.

Can you talk to the confidence level around what you're seeing in the funnel or someone I'm using?

Again.

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

Uh, maybe just can you just talk to like what what's driving the confidence in that view? Is it just what you see in the funnel like

Roei Golan: We see improvement in the funnel. If we're looking, well, we are checking all the time, I mean, these metrics on a weekly basis. We see improvement in the funnel for the H2 of the year. We see very nice deals, large deals in the funnel that are progressing. Again, we are doing these checks, we are doing the discussion with the go-to-market leaderships across the world. We feel more confident about the H2 of the year. We do see even already some nice deals we already won over the competition, over our competitors, the win backs of large enterprises.

Roei Golan: Of course, we're not going to see it as revenues in H2 of the year, but we see some these kind of deals being closed and will affect our revenues in H2 of the year. All of that together put us in much better, I mean, much better view for H2.

Any incremental color would would be. So we see, we see progress in the fee. We see Improvement in the final if we are looking. Well, we are checking all the time, I mean, this metrics on, on a weekly basis, we see Improvement in the final for the second half of deal. We see very nice deals, large deals in the funnel at the top of dressing. And and we. And again, we are doing this checks, we are doing the discussion with the go to market leadership course, the world. We feel more confident about the second half of the year and we do see even already some nice deals that being we already won over the competition over our competitors, win backs of large Enterprises. Of course, it's not going to be, we're not going to see it as revenues in the second half of the year. But we see some it is kind of deals being closed and will affect our revenues in the second half of deal. But all of that together, put us in much better. I mean much better view for for the second half.

Joshua Tilton: Helpful. Thank you.

Helpful. Thank you.

Kip Meintzer: All right. Next up is Jonathan Ho, followed by Peter Levine.

All right. Next up is Jonathan hoe followed by Peter Lavine?

Jonathan Ho: Hi, good morning. Thanks for taking the question. You referenced, you know, some strong growth in your security for AI solutions, but they're still relatively small contributors. You know, with that strong pipeline build, particularly in the last couple of weeks, you know, when do you expect AI security to be more of a material contributor? You know, will this be more, you know, sort of standalone products, or can there be maybe a stronger tip-of-the-spear-type solution where you can land some new customers, so cross-sell within your base versus landing new customers?

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

Hi. Good morning. Uh, thanks for taking the question you referenced, you know, some strong growth in your security for AI Solutions. But they're still relatively small uh contributors you know but with that strong pipeline build particularly in the last couple of weeks you know when do you expect AI security to be more of a material contributor? And yeah. Well this would be more you sort of Standalone products or can there be maybe a stronger to the dispute type solution, where you can land some, some new customers. So, so cross sell within your base, versus Landing your customers,

Nadav Zafrir: For example, it's part of our workspace pillar, where workspace employee usage is sold as a bundle through our workspace. When you look at the infrastructure level where we spoke about the firewall business being able to double down on the infrastructure and embed AI in the NVIDIA GPUs, again, as Roei Golan said, we're only seeing the first glimpse of these projects happening. As they happen, I think we're gaining advantages. To answer your question, I think it's both as a standalone and as a contributor to our other pillars.

Yeah, thanks for the question. Look, early Innings, right? Um, and, uh, I think to become a substantial part of our revenue of that will only happen in as a standalone that will only happen in 2027. Uh, and it's a big investment organizations are, are, are going to, uh, uh, inevitably. Uh, even those that are trying to sort of, uh uh, you know, slow down the adoption, inevitably uh need to uh adopt new AI uh uh further employees for their applications, uh, Etc. We're all seeing it in our own personal lives. We're seeing it in our businesses Etc, but it's uh but it's a process and so as a standalone business, I think to be substantial to checkpoint 2027 beyond that. You're right. It's not just the Standalone. So for example it's part of our workspace Builder. Uh where

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

Where, uh, um, you know, uh, workspace, employee usage is sold as a bundle through our workspace. Um, you know, when you look at the, uh, infrastructure level, where we spoke about the firewall business, being able to, uh, uh, double down on the infrastructure and embed AI in the Nvidia gpus. Again, as we said, we're only seeing the first glimpse of these, uh, projects happening. But as they happen, uh, I think we're gaining, uh, uh, advantages. So, to answer your question, I think it's both, uh, as a standalone and as a contributor to our other pillars. Um, and, you know, even to our not just to our product. This so 1 of the fastest growing things in security for AI is AI, red. Teaming is an example, which is a part of our services business. So it does have an impact on each 1 of those and as a a standalone. Um, but to be a real uh, uh, impact on our Revenue. Um, and, you know, become

a significant part, um, 2027

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

Peter Levine: Great. Thanks, Kip. Maybe just to double down. You know, when you last reported mid-February, maybe just help us, when did you really see the material impact to the go-to-market strategy? Maybe help us understand, you know, the deals that were impacted. Are these upsells, renewals or, like, net new deals? Meaning, like, what's the level of confidence that if it was net new deals, these are still in the pipeline. Obviously, you talked about stabilization in H2, just help us understand, like, the impact and, like, where those deals fell.

All right. Thank you, Jonathan. Next up is Peter, Levine followed by second Kia?

Roei Golan: I think when we reported back then in February, we were in the middle of the process. I mean, we are middle. We started it sometime in January, but we're in the middle of the process. We did expect some kind of disruption back then. When we looked and after when, I mean, we're looking at February or March, we did see this disruption affecting our funnel, affecting our funnel creation mainly for Q2 and some for Q3. We did see some delays of funnel creation. We see that coming. We did see these delays are affecting it and we see in the last few weeks the impact.

Thanks Kay. Uh, maybe just to double down, you know, it's a really last reported mid-February, maybe just help us 1 of these. Like, when did you really see the material impact to the go to market strategy, and then maybe help us understand? You know, the deals that were impacted or these upsells, um, renewals or like net New Deals meeting like, what's the level of confidence that if it was net, New Deals, these are still in the pipeline, obviously, talk about stabilization in the second half, but just help us understand like the impact and like, where those bills go.

and,

Roei Golan: We see that in the last few weeks we do see a significant change in the funnel creation. These delays mainly impact H1 of the year. Again, there were, of course, there are several deals that have been pulled from one, from H1 to H2. It's important to say that it's renewal business, looks stable. We don't see any. It's mainly affected new businesses and firewall, in firewall. That's the main change. I mean, when we step back, I mean, we have been in the middle of the process. As Nadav said today, we are, I think we are in the last inning. We're almost done with these changes, and we are now more confident with what we see for H2 of the year.

And we see in the last few weeks, the impact. We see that in the last few weeks we do we do see a significant change in the final creation and this delay is mainly impact the second half at the first half of the year. And and again there was of course, there are several bills that have been pushed from 1 from first half to the second half. It's important to say that renewal business looks stable. We don't see any it's mainly affected, new businesses and firewall in firewall, and that's that's the main change. I mean, we are when we I mean we are being in the middle of the process, and as an up said, today we are

I think we are in the last inning. We almost done with this with these changes and well, now more confident with what we see for the second half of the deal.

Peter Levine: Thank you.

Thank you.

Kip Meintzer: All right, up next is Saket Kalia, followed by Joshua Tilton.

All right, up next is Sac Kalia, followed by Eric Keith.

Saket Kalia: Okay, great. Hey guys, thanks for taking my question here. I wanna shift gears a little bit, and Roei, maybe the question is for you. You know, the growth in emerging ARR and billings was great to see. 40%, 45% I think those numbers were. Can you just remind us how big those businesses are in aggregate, as a percent of subscription revenue? Then I wanna connect that back to some of the go-to-market changes. How can some of the go-to-market changes maybe support growth in those emerging products going forward?

Okay, great. Hey guys, thanks for taking my question here. I want to shift gears a little bit and, and Roy, maybe the question is for you, you know, the growth in emerging ARR and Billings was was great to see 40%, 45%. I think those numbers were, can you just remind us how big those businesses are in aggregate um, as a percent of of subscription revenue. And then I want to connect that back to some of the go to market changes. How can some of the the go to market changes, maybe support growth in those emerging products going forward.

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

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

So we don't we are not disclosing it but this specifically products are slightly below. I would say slightly below 30% of our our for subscription. So think about that area, this this specific free product.

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

And you want to talk about the go to? Yeah. Look when when you look at the go to market adjustments that that we've made it, it's it does support exactly what you said, right? We're doubling down uh investment on these pillars but also integrating our uh work, our sales uh uh force uh together with them. That is um when we want to become a multi-polar organization, we want our account managers to be able not just to do firewalls but also the emerging business. So, that's part of the change that we're doing beyond that. We need to go to our channels and introduce them to these new products, which some of them are novel to them. So, you're right. Uh, uh, on the 1 hand, we need to, uh, uh, push these emerging, uh, uh, uh, Technologies and capabilities faster. And we're doing that, but at the same time, uh, we are going to go after new logos, win backs, Etc. With what I believe is a Tailwind of what's Happening.

Ing from the attacker's perspective and our capabilities. Um, and at the end of the day, um, it's obviously the the you know, the change itself is disruptive uh but now I think we're at uh at the tail end of the disruption and it's really said, we're starting to see the upside.

Nadav Zafrir: That's what we're doing, and, I think it positions us for the future.

But it's never ending. We got to get the right people. We got to get the right data. We got to write get the right processes and then again, um, but ultimately, it's putting a really big focus on our go to market all the way from funnel creation, demand creation channels, the people the processes Etc. Uh and that's what we're doing and uh um I think it positions us for the future.

Saket Kalia: Very helpful. Thanks.

Kip Meintzer: All right, next up is Joshua Tilton, followed by Roger Boyd. Joshua, you're on mute. There you go.

Very helpful, thanks.

All right, next up is Eric, Keith followed by Roger Boyd.

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

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

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

Eric unmute, there you go, there you go, little slow on the trigger. Thanks Kay. Thanks for taking the question. Um, nadav. Um I wanted to come back. I mean to your comment about m&a, it's been part of the strategy with with tuck in and you have the the balance sheet strength which is a strong suit for yourself and uh relatively new to evaluations out there, broadly speaking. So just anything you can share about more transformational m&a as part of the strategy going forward. Thanks.

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

Yeah, thanks. Eric. So we're looking at this based on our pillar approach, right? Which which at least in my mind uh um is very very clear. What do we want to achieve in the hybrid mesh? Uh, what do we want to achieve in cm? What do we want to achieve in workspace? And in each 1 of them are m&a, teams are constantly hunting, um, for um, you know, early stage startups, with the, uh, with foundational technologies that we can take advantage of but also larger, uh, opportunities. Um, and I do think that, uh, 1, our balance sheet second, uh, our discipline and third, the volatility in the market, um, is going to create opportunities for us, uh, and we are going to make those moves when, uh, you know, when it's strategically, uh, within what we want to do in the pillar. We believe that from an execution culture. Uh, um, you know, uh, merge. We we have the

That's when we're going to make those, uh, those biggest—those bigger moves.

Roger Boyd: Thank you.

[Analyst]: Thank you.

Thank you.

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

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

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

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

Awesome. Thanks Kip. You know if I wanted to come back to emerging products I think you mentioned. 90% growth in cm 40% growth in email. Just any sense on where you are in terms of sassy growth and to what extent is is that business impacted or not impacted by some of the Dynamics you're seeing across product and firewall right now, thanks.

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

Yeah, thank you so. Look Sassy has become a, a, a fundamental part of the hybrid mesh, network security. Um, and we, we're making really, uh, big Investments there. Um, we have a, um, you know, our our R&D part, is rushing, um, to, uh, to complete our fish feature list. We're, we're now able to go Upstream, uh, to the larger Enterprises, um, and creating some differentiated unique capabilities. Um, in terms of the impact know, I don't think it was impacted by the go to market change. I think the go to market change primarily, uh, affected our, uh, our core. Our firewall, uh, with people moving around, uh, in fact, uh, we're doubling down on our sassy, uh, um, you know, sales capabilities. We joined forces with our cgns, our Cloud network, security sales force with sassy. So in that in effect, that we now have a

Roger Boyd: Very helpful. Thank you.

Bigger team, um, and more sales people that can do both. Um, and as this matures, the most important thing for us is to make sure that our general, uh, account managers, uh, can also be selling sassy. Uh, and that's sort of the trajectory we're going into, but it is, uh, uh, becoming more and more important around our hybrid mesh network security, uh, as organizations are uh uh you know, moving and in fact, I think uh, adoption of AI is actually going to make this even more critical.

Kip Meintzer: All right. Our last questioner today is going to be Matthew Hedberg.

Very helpful. Thank you.

All right. And our last uh, questioner today is going to be Matthew Edward

Matthew Hedberg: Hey, thanks, Kip. Hey, Nadav. You know, I think, you know, with all-

Nadav Zafrir: Good jumping in as Mr. Clean today.

Hey thanks. Kay, painting a dog. You know I think you jumping in as Mr. Clean today.

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

Exactly with all the um, advancements from some of the AI models you and and with me those, you know, I mean, it it, it's got a represent, an incredible challenge for for not only customers. But even for some of your engineers like how what is the focus internally with keeping up with this rapid change? Uh, from these Frontier models and like, you know, how how do we as a, as a cyber community, you know, adapt to this.

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

Yeah. Look, I think that's sort of the, the biggest question that we're all looking at, right? So when you think about it, uh we're witnessing democratization and industrialization. Um, from the attacker side, that that's a huge shift and our networks as they become a gentrified, they they really change the nature of the networks because if you

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

Really want to harness agents. You got to give them uh uh um, the ability, uh, um, to get into different data sets. And so that create different Pathways that we haven't seen before. This is not a new shift, but it's accelerating dramatically. And so, look, we're preparing for this error for a long time. It's not just about a single model announcement, like Mythos. Um, and I think we're executing, uh, uh, intensively over the past year. I'll give you 1 example of what sets us apart. Um, you know, we we have the depth of the research, we have, uh, uh, folks in Tel Aviv in Zurich, in San Francisco. Um, that are building this foundational model that we're constantly feeding uh in order to anticipate that uh uh uh uh future. And again like I said before this this allows us not just for the latency and accuracy but also the cost structure. We started working in different verticals, like banking Health Energy with large design Partners, so that

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

That not only, we try to anticipate what the attackers are doing, but they also tell us what's what they're doing in order to optimize their own organizations. Uh, you know, you know irrelevant uh, not because of cyber but because how they want to harness these models and together, we're trying to understand how to securely uh adopt them, you know, 1 of the things that I I'm very you know glad to see is that someone like Adam Eli is joining us. Uh, um and then we're seeing like uh, you know, we're securing micro

With co-pilot, we're securing a Gemini at Google. Um, and so

That our uh, IPS signature and wac rules, um, is, you know, best in the industry right now. Um,

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

Nadav Zafrir: What we're doing in order to try to stay ahead of it is not just to try to see what's happening in the wild, but also to get and to try to simulate how the attackers are going to take advantage of these tools. 'Cause there's the whole attack, you know, process, everybody's talking about vulnerabilities, but there's so many other things that we need to be aware of in order to stay ahead of this. You know, in that sense, these are really exhilarating time. I think like was said before, this is a good time to be in this industry from a business perspective, but it's also one of the most important times to be in this industry, so that we can keep this digital world running.

And so, I think it's positions us, uh, uh, well, I, I think they're going to be many more models. Um, I think they're a lot of them are going to, uh, uh, become publicly available. And so we're really just seeing the beginning of this, uh, zero days become 1 days. The the time to patch is going to need to accelerate dramatically. This is where we're bringing our CM uh uh, capability. And again, when you put these things together, um, I really think that we have a proposition to customers, um, that not just going to keep them more safe but also it allow them to do this. AI, uh, adoption having said all that, um, look, there's a lot of unknown. I I want to be very clear about that. Some of the things that we're seeing with these new models is is is is truly uh uh a game changer.

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

You know, in that sense these are really exhilarating time. Uh uh I think like was said before, this is this is a good time to be in this uh industry from a business perspective but it's also 1 of the most important times uh to be in this industry. Um, so that we can keep this Digital World running

Nadav Zafrir: All right, guys. Thank you very much for attending. I'm sure we'll see you guys throughout the quarter, and we'll be speaking to quite a few of you over the next few days. Have a great day, and we'll see you guys soon. Bye-bye now.

Matthew Hedberg: Bye. Thank you.

All right, guys. Thank you very much for attending. I'm sure we'll see you guys uh throughout the quarter and uh, we'll be speaking to quite a few of you over the next few days. Um, have a great day and we'll see you guys soon. Bye. Bye now. Bye, thank you.

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