Check Point Software Technologies Ltd. Q1 FY2026 earnings call

Nadav started by discussing key operating dynamics, noting double-digit growth in non-GAAP earnings per share and adjusted free cash flow with 5% revenue growth. Subscription revenue was strong driven by emerging technologies. They implemented go-to-market changes to accelerate new logo acquisition and increase wallet share, though it caused short-term disruption. Strengthened leadership team with four key appointments. AI is a watershed moment for security, driving two structural shifts in cybersecurity, and Check Point is responding with solutions like the AI defense plane, AI factory security blueprint, and partnerships. Also launched secure AI advisory service.

In the first quarter, revenue grew by 5%. Subscription revenue was a key strength, growing by 11% to $323 million. Emerging technologies generated 45% growth in calculated billings led by email security, CTAM, and SASE. However, a decrease in appliance reference projects resulted in lower product revenues. Geographically, 46% of revenues came from EMEA with 6% growth year over year, 42% from America with 4% growth, and 12% from Asia Pacific with 2% growth.

Second quarter total revenues expected $660 - $690 million, subscription revenues $328 - $338 million, non-GAAP EPS $2.40 - $2.50, adjusted free cash flow $145 - $175 million. Full year total revenues guidance adjusted to $2,770,000,000 - $2,850,000,000, subscription revenues unchanged, non-GAAP EPS $10.05 - $10.85, adjusted free cash flow $1,150,000,000 - $1,250,000,000.

Transition to new go-to-market model created short-term disruption to sales execution, primarily affecting appliances business. Memory pricing continued to inflate which may impact product revenues.

Q: Brian Essex from JP Morgan asked about product revenue performance and go-to-market changes.

A: Nadav said macro not the issue, go-to-market changes caused short-term headwind but optimism for future.

Q: Rob Owens from Piper Sandler asked about AI's influence.

A: Nadav said Check Point well-positioned with prevention first ethos.

Q: Joseph Gallo from Jefferies asked about subscription growth confidence.

A: Roy said strong demand for emerging products and funnel for AI security.

Q: Adam Tindall from Raymond James asked about product revenue mechanics and go-to-market history.

A: Roy and Nadav explained product revenue impact from go-to-market changes and differences from past changes.

Q: Shauli Al from TD Cowan asked about market tier pressure.

A: Nadav said mainly large enterprise affected by go-to-market disruption but firewall well-positioned for future.

Q: Sharnik Kotharis asked about AI security monetization.

A: Nadav said it's a process with substantial investments.

Q: Todd Weller from BMO asked about memory pricing impact.

A: Roy said memory costs continue to surge.

Q: Taliani from B of A asked about growth trajectory.

A: Nadav said execution changes and investments will drive sustainable growth.

Q: Joshua Tilton from Wolf asked about go-to-market impact on deals.

A: Roy said disruption affected funnel creation for second and third quarters but improvement seen.

Q: Jonathan Ho from William Blair asked about AI security contribution.

A: Nadav said early innings, standalone and part of other pillars.

Q: Peter Levine from B of A asked about go-to-market impact on deals.

A: Roy said disruption affected funnel creation but improvement in second half.

Q: Roger Boyd from B of A asked about SASE growth.

A: Nadav said SASE is fundamental with investments and sales force integration.

Q: Matthew Hedberg asked about adapting to AI frontier models.

A: Nadav said Check Point preparing with research and partnerships to stay ahead