Check Point Software Technologies Ltd. Q2 FY2025 earnings call

• 4 guiding principles: securing connectivity fabric, prevention first, open platform, AI-first security. - Quantum Force AI-powered firewalls grew 12% YOY. - Accelerated investment in SASE, opened R&D center in India, doubled SASE R&D team, included in Gartner Magic Quadrant for SASE and Forrester Wave for Zero Trust. - Workspace platform integrating endpoint, email, SaaS security, expanding MSP and pay-as-you-go offerings. - Enhanced prevention stack with Veriti acquisition for automated threat intelligence and real-time remediation. - Open platform philosophy to collaborate with 70+ vendors. - Embedding AI in products for unified management and customer ease.

Revenue for the second quarter was $665 million, exceeding the midpoint of projections. Product revenues were driven by strong customer demand for new appliances and higher volume of product refreshes. Americas and EMEA grew by 5%, while APAC had double-digit growth (15% year-over-year). Subscription revenues saw a slight de-acceleration due to refresh cycles and bundling, but email, SASE, and ERM were growing at over 40% year-over-year. Quantum Force AI-powered firewalls posted a 12% year-over-year growth.

• Q3 guidance: $657 million to $687 million, midpoint $672 million; non-GAAP EPS $2.40 to $2.50. - Reiterated 2025 guidance, confident of finishing high end. - FX headwind of 0.5-1 point if USD stays weak, could increase operating expenses by $50-60M in 2026.

• FX headwinds impacting margins and operating expenses. - Macro and execution factors leading to slipped deals. - Dependence on successful execution of go-to-market, product development, and acquisitions.

Q: Adam Tindle asked about Palo Alto acquiring CyberArk and Check Point's open platform approach.

A: Nadav Zafrir stated impact on Check Point is minimal, emphasized open platform for connectivity fabric and AI-first security.

Q: Tal Liani inquired about growth challenges and focus areas.

A: Nadav Zafrir said focus on go-to-market in short term, also investing in AI and culture of execution.

Q: Joseph Gallo asked about discounting and growth areas.

A: Roei Golan mentioned ARR increasing from existing customers' appliance purchases, with email, SASE, ERM growing over 40% YOY.

Q: Junaid Siddiqui asked about SASE Perimeter 81 acquisition and differentiation.

A: Nadav Zafrir discussed go-to-market expansion for SASE, differentiation via connectivity fabric platform and hybrid capability.

Q: Robbie Owens asked about slipped deals and geos.

A: Roei Golan said combination of macro and execution, deals already closed, no meaningful impact across geos.

Q: Brian Essex asked about Quantum product cycle and architecture.

A: Nadav Zafrir and Roei Golan discussed refresh cycles, hybrid connectivity fabric, and unified management with AI embedding.

Q: Shaul Eyal asked about Harmony Email growth and slipped deals.

A: Nadav Zafrir said Harmony Email continuing healthy growth, slip deals not geographically based, already closed.

Q: Keith Bachman asked about subscriptions, discounting, and growth.

A: Roei Golan said refresh headwind but tailwinds from growing email, SASE, ERM, expecting acceleration in next quarters.

Q: Andrew Nowinski asked about identity security and SASE.

A: Nadav Zafrir said open platform approach allows customer choice in identity broker, not a big impact on SASE.

Q: Shrenik asked about AI monetization, M&A, and talent.

A: Nadav Zafrir discussed hiring talent, acquisitions, and monetization through stand-alone products and platform optimization.

Q: Patrick Colville asked about margin comment and tuck-in deals.

A: Nadav Zafrir said margin comment part of vision, investments for sustainable growth, tuck-ins within strategy.

Q: Jonathan Ho asked about go-to-market changes.

A: Nadav Zafrir discussed leadership changes, hiring marketing-focused talent, and cultural shifts.

Q: Keith Weiss asked about AI internal use and Israel war impact.

A: Roei Golan and Nadav Zafrir discussed AI internal productivity, Israel war no direct impact, focus on AI-first company for customers.

Q: Saket Kalia asked about SASE wins and scale.

A: Nadav Zafrir said SASE wins mostly upsell from existing customers, opportunity in downstream via MSP pay-as-you-go.