Check Point Software Technologies (NASDAQ:CHKP) said its second-quarter results met expectations as subscription revenue growth offset weaker demand for firewall appliances, while management maintained its full-year 2026 outlook and pointed to a stronger fourth-quarter pipeline.
Total revenue rose 1% year over year to $674 million, landing $1 million below the midpoint of the company’s forecast, CFO Roei Golan said. Subscription revenue increased 12% to $333 million, reaching the midpoint of guidance. Product revenue declined 14%, which Golan attributed primarily to lower firewall-appliance demand following disruption associated with changes to the company’s go-to-market organization.
Subscription growth offsets appliance weakness
Golan said the company’s emerging technology portfolio continued to drive growth. Email security, continuous threat exposure management, or CTEM, and AI security collectively generated more than 40% annual recurring revenue growth year over year, while calculated billings from those products rose 35%.
Deferred revenue increased 7% to $2.025 billion, while remaining performance obligation rose 7% to $2.55 billion. Current RPO grew 4% to $1.6 billion. Calculated billings were $639 million, roughly unchanged from a year earlier, and current calculated billings rose 2% to $641 million.
Management said billings can be affected by customer billing preferences. Golan cited a large renewal and new-business deal that was billed annually in the prior year but quarterly this year, which he said reduced quarterly billings growth by roughly two percentage points without changing the company’s RPO growth.
Revenue from the Americas and Europe, Middle East and Africa each represented 44% of the quarterly total, with Asia-Pacific accounting for the remaining 12%.
Gross profit rose to $588 million from $585 million, producing an 87% gross margin. Golan said the slight margin decline reflected higher memory costs. Operating expenses, excluding research-and-development grants, rose 13%, or 11% on a constant-currency basis. The quarter included about $28 million in R&D grants expected from the Israeli government. Operating income was $260 million, representing a 39% operating margin.
Company introduces AI Network Firewall
Chief Executive Officer Nadav Zafrir used the call to announce what he described as the industry’s first AI Network Firewall. The offering is part of Check Point’s AI Defense Plane, a security platform intended to protect applications, users and agents from AI-based attacks.
Zafrir said the firewall is designed to give customers visibility and control over prompts, agent actions and model interactions. The company plans to embed the AI Defense Plane across network, private and public cloud, and secure access service edge, or SASE, environments.
“AI has created a new class of network traffic,” Zafrir said. “It deserves a new class of firewall.”
He said increasingly capable AI models are reducing the scarcity of tools available to cyber attackers, potentially enabling more sophisticated attacks at a higher pace. Check Point’s strategy, he said, combines its prevention-focused security model with investments in automated remediation and security capabilities that operate at machine speed.
Zafrir also said Check Point is developing its unified management platform into a more open platform. In coming months, he said, customers will be able to manage third-party firewalls, including those from competitors, through the company’s management capabilities.
Sales hiring targets 2027 growth
Check Point is launching a hiring campaign to add approximately 300 go-to-market employees by year-end, with hiring spread globally and somewhat weighted toward the Americas and Western Europe. The additions will include frontline sellers and specialists, including personnel focused on AI-related customer engagements.
However, Zafrir said the hiring initiative is not included in expectations for the remainder of 2026. He expects the new sales capacity to begin contributing during the first and second quarters of 2027.
“The guidance that we gave today does not take that into consideration,” Zafrir said, describing the initiative as preparation for a stronger 2027.
Management characterized the first half’s commercial weakness as primarily an internal execution issue rather than a broad demand problem. Golan said the company is seeing a stronger funnel of qualified opportunities for the fourth quarter as the go-to-market organization stabilizes.
Outlook remains unchanged despite a back-end-loaded second half
For the third quarter, Check Point forecast total revenue of $655 million to $685 million, subscription revenue of $332 million to $343 million, and non-GAAP earnings per share of $2.43 to $2.53. The company expects adjusted free cash flow of $235 million to $265 million.
Golan said subscription growth could slow modestly in the third quarter because certain large appliance deals are expected to move from the third quarter into the fourth quarter. Those deals also carry associated support and subscription revenue.
Management expects product revenue to remain weak in the third quarter before returning to growth in the fourth quarter. Golan said the fourth quarter is typically more product-heavy and that the company sees a stronger qualified-deal pipeline than it had previously expected. Check Point maintained the full-year guidance it issued in May.
The company ended the quarter with $4.2 billion in cash, marketable securities and deposits. It repurchased about 2.5 million shares for $325 million during the quarter, at an average price of $131 per share, and announced a $2 billion expansion of its share-repurchase program.
About Check Point Software Technologies (NASDAQ:CHKP)
Check Point Software Technologies Ltd. is an Israeli-founded cybersecurity company that develops, markets and supports a broad portfolio of network, cloud and endpoint security products. Founded in 1993, the company was an early pioneer of stateful inspection firewall technology and later developed a modular “software blade” approach that allowed customers to combine protection capabilities. Check Point’s product set spans physical and virtual security appliances, software and cloud-native services designed to prevent cyberattacks, protect data and simplify security management for enterprises and service providers.
Key product families include Quantum Security Gateways (on-premises and hybrid appliances), CloudGuard (cloud security posture and workload protection), Harmony (endpoint, remote access and unified endpoint security), and SandBlast (advanced threat prevention and sandboxing).
