Executive Summary / Key Takeaways

• Unified Prevention in an AI Era: Check Point Software ($CHKP) is strategically positioned to lead the cybersecurity market by offering a unified, AI-powered, prevention-first platform across hybrid mesh networks, cloud, and workspace environments. This approach directly addresses the escalating complexity and sophistication of AI-driven cyber threats, which have seen a 44% surge globally.
• Accelerating Growth in Key Segments: The company is demonstrating strong momentum in its Quantum Force appliances, growing 12% year-over-year in Q2 2025, and its emerging technologies like SASE and Harmony Email, which are growing above 40% year-over-year. Harmony Email alone has surpassed $120 million in Annual Recurring Revenue (ARR) with a target to reach $200 million within the next year.
• Strategic Acquisitions and Open Platform: Recent acquisitions like Veriti and Lakera bolster Check Point's AI security capabilities and threat exposure management, while its "open platform" philosophy fosters collaboration with over 70 vendors, enhancing resilience and extensibility.
• Solid Financials and Shareholder Returns: Check Point maintains a strong financial position with $2.9 billion in cash and marketable securities as of Q2 2025, robust gross margins of 88%, and consistent share buybacks, demonstrating a commitment to shareholder value.
• Positive Outlook with Execution Focus: Management reiterated its full-year 2025 guidance, expecting to finish at the high end, driven by a healthy pipeline and strong execution, despite acknowledging macroeconomic uncertainties and foreign exchange headwinds. The company is actively investing in go-to-market strategies and AI to drive sustainable growth.

The Evolving Cyber Landscape and Check Point's Foundational Response

The cybersecurity industry is undergoing a profound "generational transformation," marked by an "unprecedented pace of change" driven by the advent of artificial intelligence. This new "AI dimension" has fundamentally reshaped the threat landscape, with Check Point's 2025 Security Report revealing an alarming 44% surge in global cyber-attacks year-over-year. Attackers, now armed with sophisticated AI capabilities, are more precise, operate at a larger scale, and achieve a dramatically improved return on investment, compressing years of effort into weeks.

Against this backdrop, Check Point Software Technologies Ltd., a pioneer in IT security since 1993, has evolved its core mission to safeguard digital trust for over 100,000 organizations globally. The company's foundational strength lies in its "prevention-first" ethos, a philosophy that emphasizes stopping attacks before they inflict damage. This principle is more critical than ever in an AI-driven world where reactive security is often too late. Check Point's overarching strategy, articulated by CEO Nadav Zafrir, is built on four guiding principles: securing the connectivity fabric, a prevention-first ethos, an open platform philosophy, and AI-first security. This vision aims to deliver a holistic, consistent, and unifying security across what it terms the "modern Hybrid Mesh Network."

Technological Leadership in a Hybrid Mesh World

Check Point's technological differentiation is centered on its Infinity Platform, an AI-powered, cloud-delivered cybersecurity platform that unifies its Quantum (network), CloudGuard (cloud), and Harmony (workspace) product families. This platform is purpose-built to secure users, assets, and data across hybrid environments, from on-premises data centers to multi-cloud deployments and remote workforces.

The Hybrid Mesh Network Security is a core component, delivering high-performance firewall protection across on-premises, cloud, and SASE environments. Powered by Infinity ThreatCloud AI, this system provides real-time intelligence from millions of endpoints and over 150,000 networks, achieving an impressive 99.9% block rate against cyberattacks. This superior security efficacy, coupled with Zero Trust implementation and ease of use, led Miercom to name the Infinity Platform the top-ranked AI-powered cybersecurity platform in its 2025 assessment.

In the realm of Secure Access Service Edge (SASE), Check Point's hybrid architecture offers significant advantages over cloud-only incumbents. This approach enables a "10x better user experience" by allowing security to be consumed from the most optimal location, whether on-device or in the cloud, thereby controlling cloud costs and protecting threats at the edge. The company's SASE solution has demonstrated solid growth of approximately 40% year-over-year since the Perimeter 81 acquisition and is scaling to support up to 10,000 users, with plans to expand further by early 2026. This progress has been recognized with inclusion in the 2025 Gartner (IT) Magic Quadrant for SASE and as a leader in the Forrester (FORR) Wave for Zero Trust Platforms.

Check Point's commitment to AI-first security is evident through its continuous innovation. The company is embedding AI engines into every product to simplify and unify management, making customers' lives easier. This includes the integration of Infinity Copilot, already used by thousands of organizations globally. To further this vision, Check Point acquired Lakera in September 2025 to deliver end-to-end AI security for enterprises. Additionally, the acquisition of Veriti in June 2025, for approximately $90 million in net cash, enhanced Check Point's prevention stack by providing automated threat intelligence and real-time remediation. Veriti's platform integrates with over 70 vendors, reducing vulnerability patching time from weeks to minutes and reinforcing Check Point's "open platform" philosophy.

Competitive Positioning and Strategic Differentiation

Check Point operates in a highly competitive cybersecurity market, facing established rivals such as Palo Alto Networks (PANW), Fortinet (FTNT), CrowdStrike (CRWD), and Cisco (CSCO). Check Point's core competitive advantage lies in its long-standing reputation for robust, prevention-first security and its unified Infinity Platform. While competitors like Palo Alto Networks may emphasize faster innovation cycles in cloud and AI-enhanced security, Check Point differentiates itself with a comprehensive, integrated suite that prioritizes ease of deployment and granular policy control, particularly valuable for complex enterprise environments with stringent compliance requirements.

The company's hybrid SASE architecture stands out against many incumbents' cloud-only solutions, offering superior user experience and cost efficiency by intelligently routing traffic. This approach allows Check Point to effectively compete for market share, especially among existing Quantum firewall customers seeking a more holistic connectivity fabric. In the endpoint security space, while CrowdStrike is known for its agile, cloud-native solutions, Check Point's Harmony offerings provide broader integration across networks and clouds, delivering comprehensive protection against multi-vector attacks.

Check Point is also strategically expanding its Security Operations Center (SOC) capabilities. The acquisition of Cyberint in Q3 2024, for a net cash payment of $186 million, brought external threat management and exposure platforms into the Infinity Platform. Cyberint's technology scans organizational assets, the open web, and the dark web to identify vulnerabilities like compromised credentials, turning these insights into "actual prevention" by automating remediation actions. While Check Point acknowledges that becoming a leader in the broader SIEM market is not a simple entry point, its focus on preemptive threat exposure management through acquisitions like Cyberint and Veriti provides a unique value proposition within the SOC space.

Financial Performance and Liquidity

Check Point has demonstrated solid financial performance, reflecting its strategic execution and resilient business model. In Q2 2025, total revenues increased by 6% year-over-year to $665 million, exceeding the midpoint of projections. This growth was primarily fueled by a 12% year-over-year increase in product and license revenues, driven by strong customer demand for Quantum Force appliances. Security subscription revenues also saw a healthy 10% increase to $298 million.

However, the quarter experienced a slight de-acceleration in subscription revenues and a decline in support revenues, attributed to a higher proportion of bundled deals offered at increased discount levels during product refreshes. Management views this as a long-term positive, strengthening customer relationships and paving the way for future upsell opportunities. Calculated billing grew by 4% to $642 million, and the Remaining Performance Obligation (RPO) increased by 6% to $2.4 billion. The quarter was notably "heavily back-end loaded," with several 7-digit deals slipping into early July, which have since closed and are expected to benefit Q3 results by approximately 3 points in billing.

Profitability remains a hallmark for Check Point, with a robust gross margin of 88% in Q2 2025. Non-GAAP operating income stood at $271 million, representing a strong 41% operating margin. Operating expenses increased by 7%, reflecting continued organic workforce investments and the impact of recent acquisitions like Cyberint and Veriti.

The company maintains a strong liquidity position, with a cash balance of $2.9 billion as of June 30, 2025. Check Point actively returns capital to shareholders through its buyback program, repurchasing 1.5 million shares for approximately $325 million in Q2 2025. Strategic investments include the $160 million acquisition of land for a new campus in Tel Aviv in July 2025, with no significant additional capital expenditure anticipated until early 2027. A tax settlement for prior years, signed in Q2 2025, will result in a $66 million payment in Q3 2025, potentially yielding a material positive impact on Q3 P&L and EPS due to higher prior provisions.

Outlook and Forward-Looking Strategy

Check Point's management reiterated its full-year 2025 guidance, expressing confidence in finishing at the "high end of the guidance" for both revenue and non-GAAP EPS. For Q3 2025, the company anticipates revenues between $657 million and $687 million, with non-GAAP EPS projected between $2.40 and $2.50. This positive outlook is underpinned by a healthy pipeline, strong indicators from July, and the closure of deals that slipped from Q2.

The company's strategic roadmap emphasizes accelerating growth through focused investments. Nadav Zafrir has indicated a willingness to "give up a few points on the margin" to achieve faster, sustainable growth, a consistent part of the company's vision. This flexibility supports increased investment in go-to-market initiatives, including new leadership roles and a cultural shift towards a "sense of urgency." The company is also heavily investing in AI, with a goal to hire 500 new individuals for SASE and AI-related roles.

Foreign exchange movements, particularly the weakening U.S. dollar against the Israeli shekel, are expected to be a headwind, potentially impacting operating margins by 0.5 to 1 point in the second half of 2025 and increasing 2026 operating expenses by $50 million to $60 million if current rates persist. Despite these challenges, the continued strong demand for Quantum Force appliances, coupled with the accelerating growth of emerging technologies like email, SASE, and Enterprise Risk Management (ERM) (all growing above 40% year-over-year), are expected to drive subscription revenue acceleration in the coming quarters.

Conclusion

Check Point Software is undergoing a deliberate transformation, leveraging its deep technological expertise and strong financial foundation to address the rapidly evolving cybersecurity landscape. The company's commitment to a unified, AI-powered, prevention-first platform, exemplified by its Infinity architecture and strategic acquisitions, positions it as a formidable player in securing the hybrid mesh network. While challenges such as macroeconomic uncertainties and competitive pressures persist, Check Point's focused investments in AI, SASE, and go-to-market strategies, coupled with its robust profitability and cash generation, lay the groundwork for sustainable growth. Investors should watch for continued execution on its strategic initiatives, particularly the acceleration of subscription revenue from emerging technologies and the successful integration of its AI-focused acquisitions, as these will be critical indicators of its ability to capture market share and deliver long-term value in the AI era.