Ticker: CHKP

Quarter: Q4 2025

Date: 2026-02-12 00:00:00

Kip Meintzer: Greetings, and welcome to Check Point Software's 2025 Fourth Quarter and Full Year Financial Results Video Conference. I'm Kip Meintzer , Global Head of Investor Relations. And joining me today are Chief Executive Officer and Nadav Zafrir; and our Chief Financial Officer, Roei Golan. Before we begin, I'd like to remind everyone that the conference is being recorded and will be available for replay on our website at checkpoint.com. During this presentation, Check Point's representatives may make forward-looking statements. Forward-looking statements generally relate to future events or our future financial and/or operating performance, including statements related to the anticipated ratification of the Israeli government Research and Development Incentive Program and potential impact of these grants on our financial results. These statements involve risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. Any forward-looking statements made speak only as of the date hereof, and 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 e-mail at kip@checkpoint.com. And now I'd like to turn the call over to Nadav for. Thank you, Kip. It's great to be with everyone here today.

Nadav Zafrir: I want to begin with a recap of 2025, followed by our plans for 2026 and beyond. We printed solid 2025 fourth quarter and full year results. During the year, we delivered consistent execution while building a stronger foundation for our long-term sustainable growth. We expanded our platform with 2 new pillars, security for AI and exposure management. We're building both organically and through targeted acquisitions. We also strengthened our go-to-market engine. We expanded and flattened our C-suite structure and aligned it to our operating model. We're laser-focused on strategic customers, new logo acquisition and partner leverage. And our sales are focused and designed to develop deeper enterprise penetration, a broader portfolio adoption and increased new logo wins. We also enhanced our financial flexibility with a $2 billion 0 coupon convertible notes offering, strengthening our balance sheet and creating the capacity to invest in our highest conviction priorities. Looking ahead to 2026 and beyond, we are positioning the company to lead the AI era of cybersecurity. As you're keenly aware, AI is fundamentally changing the threat landscape, and this requires organizations to revisit their core security assumption and revalidate their security foundations. In fact, decades of corporate infrastructure is now vulnerable because the very nature of attacks is changing. And so security leaders must revalidate their existing security foundations, protect new attack surfaces that are driven by the adoption of new capabilities and tools as well as embrace AI as a force multiplier just to remain competitive. And our mission at Check Point is very clear. We secure our customers' AI transformation. That means we continuously update our existing security solutions to defend against evolving threats. We're securing the expanding AI-driven attack surface with purpose-built capabilities and leveraging AI to simplify and automate security management and operations. And we do this by applying a proactive prevention-first approach, which leverages our superior capabilities and continuously research, discover and build solutions to anticipate the evolving threats. We secure our customers' AI transformation through 4 strategic solution pillars, each one of them a platform of its own. hybrid mesh network security, securing the infrastructure, workspace security, securing the employees, exposure management that provides situational awareness and then finally, AI security across all of these pillars. We secure the hybrid mesh infrastructure across data centers, hybrid cloud, branch and SASE. And we have a very clear market differentiation for hybrid mesh. And our advantages are we have the superior proactive prevention, second to none, a hybrid architecture that optimizes user experience at the edge, an unparalleled ability to scale and then finally, an AI-powered unified management. As you know, AI is embedded everywhere. And so that the attacks can originate from everywhere, from anywhere. And so we're building an integrated and unified workspace platform that's spanning across devices, browser, e-mail SaaS applications and remote access. We believe that our recognized leadership position in e-mail security and superior phishing prevention capability is a springboard to lead the way in exposure management. Managed service providers, or MSPs also represent an important opportunity in the Workspace security pillar. We identified Rotate as a provider of a comprehensive platform purpose-built for MSPs. We acquired the team of Rotate to build momentum in the MSP market, leverage our position as a leading MSP e-mail security provider. Next, we established exposure management as a new strategic pillar, and we believe we're uniquely positioned to expand our market share in the coming few years. Security teams are challenged by the overwhelming volumes of vulnerability, disconnected intelligence, shrinking remediation windows. And in an AI-driven threat landscape, weeks-long resolution cycle for critical vulnerabilities are no longer viable. At Check Point, we deliver real-time situational awareness unified across threat intelligence, attack surface visibility, providing context and automated remediation. Today, I'm also excited to announce the acquisition of SyCOps, a cyber asset attack surface management company that brings AI-driven asset discovery to enable accurate vulnerability context and risk prioritization. Cyclops strengthens our exposure management platform and delivers robust CTAM offering that includes threat intelligence, vulnerability scanning and prioritization and at the end of the day, also actionable and safe remediation. And finally, as organizations rush to adopt AI, just to remain relevant, this breakneck pace of AI adoption prevents many new risks to organization. We get data leakage via prompts, the uploading of sensitive data, AI threats like jailbreaking or model inversion. And lastly, agents with uncontrolled autonomy, sometimes acting beyond their scope. AI security is a foundational pillar of our strategy. Our comprehensive AI security stack protects employee usage, enterprise application, agents and models. Late last year, we made the acquisition of Lakira to deliver runtime protection across AI applications and agents based on an industry-leading foundational model. You know that this is evolving faster than anything we've ever seen and requires design partnerships and open Gardner and the ability to track and acquire the innovators. And so today, I'm happy to announce the acquisition of Siyata, specializing in discovering and understanding and ultimately governing autonomous AI agents. Siyata extends our platform by protecting the emerging AI workforce, enabling organizations to safely accelerate their AI transformation. In summary, 2025, as you know, my first year as CEO of Check Point. During the year, we strengthened our leadership team. We improved our go-to-market execution and enhanced our financial flexibility, all while delivering solid results. I believe during my first year, we built a foundation that positions us to accelerate our growth over the next few years. And looking ahead, our strategy is focused and aligned. Organizations around the world are accelerating adoption, and our mission is to secure their AI transformation. Through our 4 strategic pillars, we are addressing the expanding AI-driven attack surface and bringing critical innovation to customers. The recent acquisition of Sightclub, Siyata and Browthase Talent further enhance our capabilities in exposure management, AI security and workspace. And these acquisitions strengthen our competitive position and ultimately support our long-term growth ambitions. We're executing with discipline, investing behind our highest conviction opportunities and driving greater value for customers, partners and shareholders in 2026 and beyond. And with that, I'll turn to Roei Golan on to address our financials.

Roei Golan: Thank you, Nadav. One moment. Can you see my slides?

Nadav Zafrir: Yes.

Roei Golan: Okay. So thank you, Nadav, and thank you, everyone, for joining the call. As Nadav said, we had a solid -- fourth quarter was a solid quarter with 6% growth in revenues, driven by 11% growth in our subscription revenues. Our revenues reached $745 million and were $1 million above the midpoint of our projections. Our non-GAAP EPS was $3.40 per diluted share and exceeded our guidance. The figure includes a onetime tax benefit of approximately $0.52 related to a reduction in our corporate tax rate in Israel that impacted prior periods income taxes and also updates into our tax reserves. Excluding the onetime benefit, EPS exceeded the top end of our projection by approximately $0.08. As for the full year, our revenues reached $2.725 billion and were $5 million above the midpoint of our original projections. Our non-GAAP EPS was $11.89 per diluted share and exceeded our guidance. This figure includes a tax benefit of approximately $1.90 related to a reduction in our corporate tax rate that impacted prior year income taxes and uplift in our tax results also due to the tax settlement that we announced last quarter. Excluding onetime benefit, EPS exceeded the midpoint of our projection by approximately $0.09. As mentioned, our revenues grew by 6% year-over-year, while deferred revenues grew by 9% to $2.18 billion. It is important to note that our product revenues growth was moderated in the quarter, mainly as a result of our subscription price increase that we announced in July 2025, which shifted a larger portion of bundled hardware deals towards subscription. This resulted in a headwind of $6 million to our product revenues in this quarter as we allocated relatively smaller product component without changing overall deal value. We do expect to see this impact also in Q1 of approximately $4 million to $5 million on our product revenues. We expect the benefits of this strategy to increasingly materialize in subscription revenue during Q1 and throughout 2026, while also the product price increase that we have effectively from 1/1/2026 of 5%, expect to support our product growth primarily from the second quarter of 2026. When we are looking on our calculated billings, they totaled to $1.039 billion, reflecting an 8% year-over-year growth, while our current calculated billing grew by 6%. Our remaining performance obligation, RPO grew by 8% to $2.7 billion. On an annual perspective, our revenue grew by 6% year-over-year, while our calculated billing grew by 9% to $2.9 billion. Our current calculated billing totaled to $2.784 billion, reflecting a 6% growth year-over-year. When we are looking on our recurring calculated billing, which represents the calculated billing from subscription and maintenance and update, this grew by 10% year-over-year. As we mentioned, our growth this quarter was driven by our subscription revenues. We continue to experience strong demand for our emerging product portfolio, which remains the primary driver for our revenues. In this quarter, in Q4, we had a growth across all our pillars, CEM, Workspace and hybrid mesh, while our emerging products, e-mail security, SASE and ERM exceeded 40% -- more than 40% growth in ARR. When now looking on the global revenue distribution, so we did see growth in all regions. 48% of our revenues came from EMEA, and that grew by 5% year-over-year. 40% of the revenues came from America, which had 6% growth year-over-year, while the remaining 12% came from Asia Pacific that grew 9% year-over-year. When I'm looking at the full year 2025, so actually saw 46% of our revenue came from EMEA, grew by 5%. 42% of the revenues came from America, and that grew 7%, while the remaining 12% came from Asia Pacific and that grew double digit, 11% year-year -- looking into our P&L in this quarter. So our gross profit increased from $623 million to $660 million, representing a gross margin of 89%. Our operating expenses increased by 13% to $358 million. On a constant currency basis, our OpEx increased by 11%. The increase is primarily as a result of increase in our workforce and investment in sales and marketing and channel programs. Our non-GAAP operating income continues to be strong at $302 million or 41% operating margin. Our non-GAAP net income increased by 21%, mainly as a result of a onetime tax benefit that I mentioned in the beginning of this deck in connection with reduction in tax rate and updated tax reserves. The non-GAAP EPS grew by 26%, while the onetime benefit contributed approximately $0.52. Our GAAP net income reached $305 million, an increase of 18% year-over-year, while our GAAP EPS was $2.81 and grew by 22% year-over-year. When I'm looking on the full year, so our gross profit increased to $2.4 billion, and that represents a gross margin of 88%. When I'm looking ahead into 2026, we all know the memory price increase, the recent memory price increase that we have in the market over the past few months. And it is expected to have an impact also on our gross margin in 2026. We estimate this impact to be approximately 1 point for the full year, 1 point on our gross margin for the full year, with most of the impact expected in the second half of 2026 as we have enough inventory -- sufficient inventory to support the needs for the first half of 2026. We will continue to closely monitor supply and pricing dynamics into the second half of the year and adjust our procurement strategy as needed, including potential product price increase. Our operating expenses increased by 10%, mainly as a result of our continued investment in our workforce organically and also the impact related to Cyber acquisition that we closed back in September 2024 and the acquisition that we've done during 2025 of Verity and Laqera. Our non-GAAP operating income was $1.140 billion or 41% operating margin. Looking ahead to 2026, we continue to actively hedge our foreign exchange exposure. However, not all currency are fully covered. As we disclosed in the previous earnings calls, if current exchange levels persist, we anticipate an additional headwind of approximately 1 to 1.5 points on our operating margin for next year. Our financial income increased to $114 million in 2025 as we kept reinvested our cash in higher rates compared to 2024. In December 2025, as Nadav mentioned, we completed a $2 billion convertible notes offering. As a result, we expect higher financial income in 2026 that's estimated to be between $40 million to -- the financial income in 2026 is expected to be $40 million to $40 million per quarter. In 2025, we had income tax benefit of $79 million, which included the benefit of approximately $209 million or $1.90 non-GAAP EPS in connection with updating our tax reserve due to the tax settlement and also the reduction of the tax rate for prior years. As for 2026 taxes, it is important to update that in December 2025, Israel enacted the OECD Pillar 2 framework, established a 15% global minimum effective tax rate for large multinational groups effective for taxes beginning in 2026. As a result, we currently estimate that our tax rate for 2026 will be between 16% to 17%. In parallel, a complementary Israeli government R&D incentive program was initially approved in January 2026. The outcome from this program that is expected to be effective from January 2026 can be approximately $50 million benefit into our operating income. This program is expected to be finally approved by the end of Q1 2026. Our outlook reflects this development as part of our forward-looking statements, including the anticipated certification of the R&D incentive program and the potential financial impact of related grants on our future financial results. One moment -- moving into our cash flow and our cash position. Our cash balances as of the end of the quarter was $4.3 billion. As a reminder, on December 2025, we also announced a $2 billion, and we received $1.8 billion net proceeds net of issuance costs and the purchase of the Capco. Also during October 2025, we acquired Laera for approximately $190 million of net cash consideration. Our operating cash flow was very strong this quarter with $310 million, 24% growth year-over-year and representing 42% of our revenues in Q4. We also continued our buyback program and purchased 2.2 million shares for $425 million at an average price of $193 per share. On an annual perspective, our operating cash flow grew by 17% to $1.234 billion, while important to note that this includes $66 million tax payment, onetime tax payment that related to our tax settlement that we signed in Q3, while our balance sheet hedge transaction resulted from the other end, the benefit of $51 million in 2025. Also as a reminder, during 2025, we completed the $160 million payment for the land purchase associated with the new Check Point campus that we are building here in Tel Aviv. We do not expect any significant additional payment in connection with this new campus in 2026. So to summarize, our revenues were above the midpoint of our projection and the EPS exceeded our projection. We do see continued strong demand for emerging technologies, it's e-mail, if it's SE, SASE, and we had another quarter and another year of strong operating cash flow and strong profitability. Now moving to the business outlook to our projection for Q1 and for the full year. So for Q1 and the full year, I'll start with the revenues. So first, our revenues is expected to be between $655 million to $685 million in Q1 2026. I remind you the short-term headwind that we have only specifically in Q1 in terms of product revenues. For the full year, we expect our revenues to be between $2.83 billion to $2.950 billion, between 4% to 8%, while the midpoint is 6%. This time, we're also going to give you the subscription revenue guidance which expected to accelerate to continue to accelerate. As for Q1, we do expect it to be between $318 million to $328 million, while as for the full year, we expect it to be between 10% to 14%, which means that the midpoint expect to be 12% growth. Our non-GAAP EPS, including -- it takes into effect the expected grants, the R&D incentive program that needs to be completed by the end of Q1. This take into account and the EPS is between $2.35 to $2.45, while the full year EPS, non-GAAP EPS expected to be between $10.05 and $10.85. GAAP EPS for Q1 expected to be $0.64 less, while for the full year is expected to be $2.58 less. Also, we're going to share with you guidance projections, sorry, for adjusted free cash flow for Q1 and for the full year. This is the operating cash flow minus CapEx, minus any acquisition-related costs. And we are -- in Q1, we expect to have a strong adjusted free cash flow between $420 million to $460 million, which represents 66% of our midpoint, the expected revenues in Q1. While for the full year, we expect it to be 42% of the revenues in the midpoint, which is $1.150 billion to $1.250 billion. That's it. And we keep, the floor is yours.

Kip Meintzer: All right. So for Q&A, today, first up, we're going to have Adam Tindle from Raymond James.

Adam Tindle: All right. Can you hear me?

Nadav Zafrir: Yes.

Kip Meintzer: And we'll be followed by Shaul Lal from TD Cowen.

Adam Tindle: Nadav, I wanted to ask AI security is obviously a clear focus in your script today. And it sounds like you're investing both organically and inorganically with some of the acquisitions here. I wonder, this is sort of a high-level strategic question for you. The heart of it is to kind of compare and contrast your view of AI security versus how cloud security played out. And with the context being that you made the very smart decision in cloud security to choose to partner with Wiz, essentially exiting Check Point's efforts in organically as the ROI wasn't there. Again, in hindsight, very smart given the cloud security market has been problematic for your competitors, bad pricing, bad profitability there. And I see some similarities in cloud security and AI security. So I guess what's different about AI security that got you more comfortable to invest here versus the decision to invest in cloud? And how big do you think this could be for Check Point over time?

Nadav Zafrir: Yes. No, great question. And the sort of the analogy is in place. However, in my opinion, the AI transformation is both more foundational. It's not shift and lift your activities from on-prem to the cloud, but rather it's a real shift in the way you use technology, do business, employ people, et cetera. And the second change, in my humble opinion, is that it's -- we're seeing it already, but I expect this to accelerate. So it's happening much faster. So in my opinion, you can look at the cloud analogy, but you need to have it as a reference for difference. The second thing I'll say is that -- here are 2 fundamental issues. Number one, attackers are using AI much faster than defenders. This is just the nature of this asymmetry between offense and defense and in this learning competition and how, unfortunately, for several reasons, the attackers can adapt faster. And so what we're seeing is larger scale, more precision and a real change in the nature of attacks, right? And so that's one angle that we need to look at. The other is -- and that's sort of the nature of what we're seeing right now. Every organization on the planet is racing to adopt AI to stay relevant. And as they're doing that, they're sort of creating a new attack surface. When you look at these 2 things separately, in my humble opinion, this is time to revalidate security altogether. We think we're really well positioned to lead the way to secure our customers' AI transformation based on the 4 pillars that we were talking about, based on the fact that we truly have the best prevention -- proactive prevention security, which has always been important, but it's now becoming critical. And so building we have decade data 100,000 customers, 4 pillars, a vision that I believe is very specific to secure AI transformation. This is a must for us. We're making acquisitions. We're building organically. And we really believe this is our time and our space to challenge the status quo.

Kip Meintzer: Next up is Shaul Lal, followed by Joseph Gallo of Jefferies. Apologies for some background noise.

Joseph Gallo: Question for Roei. How should we be thinking about ASP hikes from a linearity perspective? Are we seeing them coming in the first half of the year? Are we seeing them coming in the second half of the year? Can you just help us out a little bit?

Roei Golan: Yes. So we did several price increase. One of them was in July only for the subscription, the firewall subscription. And in January, we've done it for all the firewall, which including client hardware, subscription and support. In general, usually, it takes to see the ASP going up. It takes -- usually it's a quarter. I mean, if I'm looking at about, for example, appliances, we talked about the appliances. So we -- of course, it's effective from January 1. But from a revenues perspective, that's something that usually we see the main impact coming from the quarter afterwards because certain revenues that are recognizing in Q1 are coming from bookings that came from prior periods. And also, we have -- we are expecting quotes that being delivered to our customers before the effective price increase. So most of the effects usually come in -- we should expect to see from Q2 this year.

Kip Meintzer: All right. Next up is Brian Essex Rob Owens, followed by Brian Essex, pardon me.

Unknown Analyst: Am I in here first, Ki or...

Kip Meintzer: You are in first, Joseph, I'm sorry.

Joseph Gallo: I appreciate that. It was great to see the strength in subscription, but I just wanted to ask on product in 4Q. I know there was some mix shift and reallocation in large deals, but is there anything else we should be aware of? And then I believe your product guide for '26 implies approximately flat. Just any comments on remaining refresh cycle available? Or have you seen customers change their buying behaviors ahead of these incoming price increases?

Roei Golan: Yes. So I think Q4, we had a good quarter for product. Again, it was less good than what we've seen in the first 3 quarters, but still, we did see a good quarter for the demand for our product. If I'm looking ahead for 2026, 2026, I think we still have -- we see good funnel for hardware, specifically in the second half of the year. I do have to say that in the -- you are right that when you're talking -- when you're taking into consideration what I gave for subscriptions, so product is around flat to low single digit. In our guidance, we took more prudent approach, mainly because not we don't see the funnel, mainly because we are taking a more prudent approach of what's going on the macro with the memory shortages that we see everywhere price increase, not specifically only on memories, by the way, on all raw materials, and that might affect some customer behavior that's postponing some CapEx projects. So we took it into account. But definitely, again, we want to be more than that. We want to be higher than that. I think we continue to see refresh. And -- but again, we cannot ignore what's going on in the market with the memory situation.

Kip Meintzer: All right. Next up is Todd Weller -- or Brian Essex, followed by Todd Weller. Sorry about that, Brian.

Brian Essex: All right. Joe, I wasn't going to let him pass you by. Really, another question on guidance. Would love to understand maybe the puts and takes embedded in operating margins. What -- if we were to back into operating margins, what are the implicit margins in your guidance? And how do you think about spending? And then maybe one for Nadav, basically back on that, the dynamics around the hardware price increases, are you hearing any shift in spending intentions from your customers anticipating maybe firewall and server prices accelerating on the back of the memory pricing. So one for each of you.

Roei Golan: So the margin that we took into account in our guide, it's between 39% to 40%. So that's the operating margin. We're taking into account all the headwinds that we get from the memories from the FX on the other hand, the expected grants from the government. So all of that was taken into account, that puts you in the 39% to 40%. av...

Nadav Zafrir: Yes. Look, with regard to the hardware, as Re said, we don't see any change as of now. As Roei said, we do need to be prudent looking into what's happening this year. I actually think for us, this could be a competitive advantage. We have the supply for the first 2 quarters. We're going to figure out how to take advantage of the situation. I don't see this as being a huge headwind, except for what Marie said about the 1 point in the margin that we just spoke about. Obviously, very encouraged by the high growth in the subscription rate that we're seeing and projecting.

Brian Essex: And no shift towards SASE or other types of architecture.

Nadav Zafrir: Exactly. Exactly. Our SaaS products are becoming a -- our SaaS products and subscription is becoming a much bigger part of our overall cake, and we intend to continue growing that, again, across the different pillars. So in hybrid mesh, SASE, Workspace is completely SASE, so is exposure management. And this year, for the first time, a true North Star around security for AI around the AI security pillar.

Kip Meintzer: All right. Next up is Todd Weller, followed by Jan Siddiqui.

Todd Weller: Nadav, you outlined all the changes that were implemented in 2025. What would be the 2 or 3 specific ones you think will most positively impact the growth trajectory in '26? And when do you expect to see those start kind of showing up in the numbers?

Nadav Zafrir: Yes. Look, I think that we laid the foundations, right? The most importantly is the C-suite and the new leadership we had and the way we are reorganizing and refocusing our go-to-market. That's number one. And the second thing that I'm very excited about is going to the market with these 4 pillars. Each one of them is a platform in itself. Some of our customers are going to choose to use one pillar as their platform, let's say, for Workspace. Others are still using the hybrid mesh pillar and some are using everything, and it's an open garden so we can play with the others. So if you ask me, these are the 2 main things. Number one is the 4-pillar approach. Number two is the leadership in the C-suite change and the refocusing of the go-to-market. And above everything else, I am a true believer that we need to revalidate security. Attackers are moving at an extreme speed. I think we have the foundations. But as you can see, we're also making the acquisitions. We have the right design partnerships. We want to do this as an ecosystem play. So the third thing, of course, is security for AI. The race is on, and we're in it.

Kip Meintzer: Thanks, Todd. Next up is Junaid, followed by Keith Bachman from BMO.

Junaid Siddiqui: Just wanted to talk about the progress on the SASE front. You mentioned ARR grew around 40%. In the past, you've talked about making it much more enterprise-ready, moving to a unified policy. How is that tracking? And is the focus right now mostly on upselling the existing customers?

Nadav Zafrir: Yes. So great question. As you can see, the SASE now is a part of our hybrid mesh pillar. We're maturing the product. We made significant investments organically in 2025, and the product is maturing, and we're integrating it as a part of the hybrid mesh pillar and platform like you said, with our unified management. Now in terms of our sales motion, we are integrating the -- what used to be the -- what we used to call a rocket. We're now integrating this into the hybrid mesh pillar. We're also putting together the sales overlay of our CloudGuard network security with SASE to better integrate that into the overall motion. You're right that I would say that 2/3 is upsell to existing customers, but that's not the only one. We're also seeing new customers that are actually buying our SASE, and we hope to actually move them to our firewall business to create the full capability of a hybrid mesh pillar.

Kip Meintzer: All right. Next up is Keith Bachman, followed by Shrenik Kattharis of Baird.

Keith Bachman: Nadav, I want to put this to you, and it sort of reflects incoming comments already this morning. investors are looking for an acceleration of growth. You're basically guiding to 6% plus or minus total revenue growth, which is consistent with what's happened in the last 2 years. So while subscription is improving, which is nice -- it's nice to see, total growth isn't improving, right? So how do you sort of respond to -- because you're asking investors to be patient about this notion of acceleration. So how do you respond to that comment? And then consistent with that, Roei, any comments you want us to think about for total billings growth in light of the midpoint of rev growth?

Nadav Zafrir: Yes, sure. Thanks. Look, we laid the foundations. Now it's all about execution. I think we have the 4-pillar approach. We have the foundations. We have the right people in place. We have the financial flexibility to make acquisitions. Now it's all about execution. And you're right that it's not an overnight acceleration, but I think we're on the right trajectory. I think also what we have in terms of product solutions around our superior ability to proactively prevent the acquisitions that we're making and the -- what we're building in the AI security is putting us in the right trajectory. And now it's all about execution.

Roei Golan: And as for the total billings, similar to the revenues growth around high single digit, 6%, 7%, that's expectation in order to achieve the midpoint.

Kip Meintzer: All right. Next up is...

Unknown Analyst: So, you just mentioned financial flexibility, ended 4Q with $4 billion in cash and you have added $2 billion in convert. Just in terms of so far, you mentioned about favoring smaller AI native integrations and the announcements you made. Just on the large-scale M&A, right, just -- can you just talk to as some of the other peers are kind of going after platform convergence waves, aggressively chasing few things. So what kind of sort of scale IP or adjacency would actually justify more transformative sort of AI-driven bet for you guys, if at all?

Nadav Zafrir: Yes. So yes, we have the flexibility and we have the vision. And now in each one of those pillars, we need to be very disciplined and identify the targets. They could be tuck-ins, they could be larger, but the ones that actually take us to be a podium player in each one of those pillars specifically. So the target needs to have the right technology, the right people, the right culture and so that we can see that we can integrate it and move fast to create a real platform. In my humble opinion, just buying more and more products and putting sort of a supermarket approach is not what our customers are looking for when they look through consolidation. They look for a real integrated for us pillar. And each one of those pillars, we're looking at as its own platform play. So if you take exposure management, we are looking to create the #1 exposure management system. Some of the acquisitions are smaller. We're also looking at larger ones all the time, but we're going to be disciplined about it. And again, through the -- looking at each pillar separately, we're not stopping. We're moving fast.

Kip Meintzer: It looks like you just stopped playing a game when you came on. Good see you. Next up is Joshua Tilton, followed by Roger Boyd from UBS.

Joshua Tilton: Maybe, Roei, for you, any way to think about how much the acquisitions that you announced today are contributing to the guidance that you provided for 2026? And maybe outside of pricing, could you just talk to why or what gives you conviction in the belief that guiding to, I think, what you said flat to low single-digit growth for product is prudent from your perspective?

Roei Golan: Okay. So first, in terms of the acquisitions, so of course, it's part of the guidance, and that it should have an effect of approximately 0.5 point in our margin because it's mainly right now in 2026, we expect it to have many costs, many dilution to our margin. That's approximately 0.5 point to the operating margin. As for the pricing and the product, so I think, again, I'm looking -- when we are -- of course, we are working on the guidance and of course, working for our plan on 2026, we're looking on the funnel. We are looking on the potential. We're looking, of course, on the price increase that we've done in January 1. And I think that, again, we can do -- we should -- I mean, we need to continue the strong demand that we've seen in 2025. We see good final also for hardware mainly in the second half of the year, also in the first half, but mainly in the second half of the year. And I think that definitely also the price increase and the effect that we've seen that the discounts this year were actually even improved compared to last year in 2025 compared to 2024. So if we manage to continue that and maintain the discounts, we also can benefit from this price increase. I do have to say, it's important to say we didn't take into account in our guidance any additional price increase. Because of the memory shortages, there might, of course, we might consider additional price increase during the year, but that was not a factor in the guidance right now.

Joshua Tilton: And just to be clear, that 0.5 point is in the 39% to 40% margin...

Roei Golan: Part of the guidance I provided you.

Joshua Tilton: And any way to think about the top line contribution from the acquisitions?

Nadav Zafrir: Minimal.

Roei Golan: Minimal to, I would say, a few millions or even a few millions of dollars.

Kip Meintzer: All right. Next up is Roger Boyd from UBS, followed by Peter Levine from Evercore.

Roger Boyd: Awesome Nadav, I wanted to hit on rotate. They have a lot on their platform. So I guess in addition to the MSP enablement tools that you talked about and some of the exposure management technology, how much interest is there in the rest of their portfolio, which I think includes some native technology for detection across endpoint and some other attack services. And when you think about MSPs in general, can you just talk about the -- what percent of revenue they represent today and how you see that evolving? How important is that in terms of your channel strategy this year?

Nadav Zafrir: Yes. Thanks. So today, I think it's -- I don't -- it's still relatively small, but I think it's a high potential growth for us in 2026 and beyond. The MSP, we're going to consolidate everything under Workspace under Gil Friedrich. And the Rotate technology and the folks that are coming with it are going to enable us to actually streamline everything to the MSPs, and that's where the opportunity is. And you're right, it's not -- it's e-mail, it's endpoint, it's browser, it's SASE, all put together for the smaller customers, working with our partners and the MSPs. And so this acquisition is -- will allow us to accelerate to move faster into a consolidated unified ability to work with those MSPs.

Kip Meintzer: All right. Thanks, Roger. Next up is Peter Levine with Evercore, followed by Saket Kalia from Barclays.

Peter Levine: What's changed in customer demand that makes kind of exposure management more of a priority today? You touched upon it on the call in your prepared remarks, but are customers explicitly asking for like a united exposure visibility across network, cloud, identity, whatever it is? And then maybe just, Rory, help us understand like how meaningful could this category be over the next, call it, 2 or 3 years in terms of revenue contribution?

Nadav Zafrir: Yes. So first, I can't resist to answer Rory's question. It's meaningful. It's not huge right now, but we see great potential in it. When I look at this -- I come from the trenches ultimately. When I look at this as a practitioner, you've got to have this situational awareness. And so yes, we're seeing more and more demand, and we're seeing it going upstream as our capabilities become more and more mature. And what we're building is the full gamut. So on the one hand, based on an acquisition that we made a year before last around Cyberin, we have the intelligence. Now with Cyclops, we can see the posture and we can prioritize based on what we're seeing CVEs, dark web stuff. We're seeing what's coming. And from the inside, we're seeing what's vulnerable. And with the Verity acquisition, we can actually do the automatic remediation. And so what our customers find us once they deploy that is that a lot of the things that are coming at them are no longer in danger and because we can block it automatically before it even happens. In my opinion, again, looking at this as a practitioner, there's -- one of the shifts is that attackers can actually weaponize vulnerabilities much, much faster. And they can also use autonomous agents that are doing their -- once there is a breach, they operate much, much faster. And so having that proactive prevention has become more important than ever and building this triage around these 3 components, I think, is unique in the industry, and I think will carry more and more traction. For us at Check Point, it's also important because it allows us to go outside of our installed base right now to new customers and hopefully upsell and cross-sell once we go beyond that. And so yes, we see this as something which is becoming a core pillar and an important part of the 4-pillar strategy that we're going with. The last thing I'll say about it is that when we do the remediation, the automatic remediation, -- we don't do it just for checkpoint products. And that's the beauty of it. This is where an open platform, open guarding comes in. When we see vulnerability, some of our customers are not using Check Point products to secure their hybrid mesh, but we can go in and fix the other vendors' vulnerabilities when we can -- after we prioritize them. And at the end of the day, I think it gives our customers better security.

Kip Meintzer: Thanks, Peter. Next up is Saket Kalia, followed by Brad Zelnick from Deutsche Bank.

Saket Kalia: Okay. And by the way, I appreciate the additional detail on guidance. Maybe a question for both Nadav and Roei.

Nadav Zafrir: The 4 pillars are really helpful framework for thinking about the business.

Saket Kalia: Roy, for you, are there any guardrails that you can give us just on the mixes across those 4, high level, of course. And Nadav, what are you changing from either a contracting or sales comp perspective to drive higher growth across those smaller, maybe faster-growing pillars? Does that make sense?

Roei Golan: Yes. So I think if you're looking on the 4 pillars, so of course, the most significant one is Diab mesh, which includes also our firewall, which is still a significant part of our business. It's growing, of course, mainly driven by the SASE and our cloud network. That's mainly driving the growth. Both of them SASE and cloud network sitting on the subscription line item. And that's part of the acceleration that we see in the subscription line item. And the others that I think have the highest growth that we see today are Workspace and STEM. STEM, we talked a lot about it in this call. We do see very strong demand. Of course, still small numbers from total Checkpoint, but very strong demand, which started when we acquired Cyberin, then we added other acquisitions that we've done and included in the offering. And again, when we are looking on the funnel for next year, definitely will be -- it's expected to be even in 2026, a major driver for our subscription line item. And also e-mail e-mails continue to be very strong. We talked about the numbers, I think, talked about the numbers a few quarters for the few quarters. I mean we already passed the $160 million ARR and continue to grow in very strong double digit. So definitely, we're aiming to pass the $200 million this year. And I think that's the main driver that we -- that's why you see our subscription revenues continue to accelerate, and we expect it to accelerate every quarter. Of course, with the contribution for -- also from firewall, again, contribution that it's a mix of the price increase, but also gaining new logos and expanding our market share in the firewall. So that's in total picture how it translates into our revenues. Nadav, you want to...

Nadav Zafrir: Yes. The 4 pillars is strategic, as you said. In the first one, it's the infrastructure and the network. The second one is your employees. The third one is the situational awareness. And then finally, security for AI, which is as a stand-alone, but also embedded in the 3 others, and we have the services that engulf all that. To your question, to grow these pillars faster, we're doing a few things. Number one, in each pillar, we are trying to see what is a differentiated advantage, right? So like I said, for the hybrid mesh, it's the prevention first, it's the scalability. It's the unified management and it's the hybrid architecture. But there are other things that we want to improve. And so some of them we're doing organically, some we're looking for acquisitions. We're doing the same thing for each one of those pillars. The second thing is from our go-to-market focus, -- we are moving to a multi-pillar, multi-platform company so that our front liner sellers can sell each one of those pillars. And of course, in each one of them, there's also different products, and we're better aligning our account managers with the specialists that can come in and support them. And that's a major change in the way we're going to market as of literally now. The one thing I want to add is that in each one of those pillars, we're also going to challenge. We're going to challenge some of the existing status quo in the market. So we're going to we're challenging status quo around supermarket approach consolidation through a real platform approach. We're challenging a closed garden to an open garden. We're challenging complexity. So in each one of these, we're not just building our own security platform pillar, but also challenging the existing status quo. Again, some of it with existing capabilities that I think are critical and becoming more important and in others, by building new stuff and making acquisitions. And at the end of the day, I think we need to realize that especially the world we're going into, every morning, there is a new reality and a new threat. So we need to constantly evolve. We need to constantly see the road map of our customers. We need to constantly look around the corner so we can truly be their companion for a secure AI transformation.

Kip Meintzer: All right. Next up is Brad Zelnick, followed by Shyam Patil from Susquehanna.

Brad Zelnick: Nadav, I've heard you loud and clear, the foundation is in place. It now comes down to execution. And I take that to mean more go-to-market than product because Check Point has always had great product and you're acquiring high-quality tuck-ins that only strengthen your offerings in the position that you're in. But where do we stand from a go-to-market perspective? How much more ramp distribution capacity do you have heading into 2026? And maybe for Rohe to chime in, what needs to happen to exit '26 growing double digit and to get us to double-digit growth for the full year in '27?

Nadav Zafrir: Yes. Thank you for that. So you're right that it's about go-to-market execution. It starts with a louder voice around our marketing effort. It's about the focus. And as I described, we're going to be focusing on large enterprise. We're going to be focusing on new logos. We're going to be focusing on a -- on the multi-pillar, multiproduct company approach. We're going to be focusing on hiring the best people in the industry. So it's a plethora of things that we're doing to create a better execution as we go to market. And lastly, it's also about challenging the status quo. I think this is a time where the nature of security is changing. I think the criticality of the basis of what security means has become more critical than ever. And we're going to take advantage of some of the assets that we already have. We're going to take advantage of where we are situated. We are seeing all the innovators, and we're trying them out as designed -- with our design partners on the customer side. We've got new leaders in marketing. We've got new leaders in sales, and we're going to continue bringing in the best of the best in the industry to join us to do exactly what you said by the end of the year.

Roei Golan: As for the double-digit question. So I think -- again, I think we need to show -- first, we need to continue the strong momentum, the strong demand that we've seen for the -- we mentioned the CTM. We mentioned the e-mail security, the workspace and SASE. So definitely, we need to see here. We need to see specifically in e-mail and CTEM continued strong demand there. As we see already, we see it in the funnel. We saw it last year. We saw it in the last few years, but e-mail in the last years, but CTM specifically in 2025 and also in the funnel for next year. for 2026. But definitely, in order to be double digits, we need to grow even faster than firewall. I mean we are positioned much better today on the firewall than what we've been 2 years ago or 3 years ago, I think we did a significant improvement both on the product side, also on the go-to-market and on the go-to-market. I think we brought -- we have great leadership in the go-to-market. And I think we are positioned much better today to accelerate our growth on the firewall. Definitely, mid- to high single digit in the firewall, together with the continued strong momentum that we have in the other pillars that should bring us to double digit.

Kip Meintzer: All right. Next up is Shyam Patil, followed by Ben Bollin of Cleveland Research.

Shyam Patil: This is Dan on for Shyam. I guess with the price of memory increasing significantly of late, just I know you talked about potentially increasing prices, but what levers do you have to maybe try to get better deals from suppliers? And how are you looking at that as we progress through the year and try to get through sort of the shortages?

Roei Golan: So I think we are working 24/7 with suppliers around the world to get better pricing. I think we are doing -- we have a great team that's doing an amazing job in order to get the best pricing, I think. But still, we cannot avoid the situation that there is a price that the price of the memory has increased significantly. So even if we're getting better pricing, it's still significantly higher than what we used to pay a few months ago before this trend starts. But definitely, we are investing a lot on that on getting the best pricing. And again, we're doing it. We have teams around the world that's exploring opportunities in order to get the best pricing in the market. Of course, we can -- we always want to do even better, but I think definitely, we are doing a great job there.

Kip Meintzer: All right. Our last caller is going to be Patrick Colville. Ben Bolin is not on the call today. Patrick, nice to show up.

Patrick Edwin Colville: I'll make it a good one to close. It's actually a clarification question. Can you just, Roei, please just go over again what drove the product revenue to be a little bit softer than we might have hoped in 4Q? And then can you just also just reclarify why the pricing benefit doesn't really hit in 1Q and then why it builds throughout the year?

Roei Golan: So for product, most of our hardware that we are selling today, that is a significant portion of our product revenues is sold as a bundle to bundle together with the software subscriptions actually with subscription. And when we announced the subscription price increase back in July, so we announced only pricing for subscription without increasing the appliances price. From an accounting perspective, that's more accounting, we need to allocate because the stand-alone subscription price was increased without the total price. So the allocation of the revenues are smaller to the product, to the bare hardware is allocated is smaller, and that impacts mainly Q4 because in Q3, we just announced it. Some of the deals were not recognized as revenues. But in Q4, we already saw that, and that had -- again, it's mainly short-term headwind. It's not going to affect our total revenues. It's more kind of headwind on our short-term product revenues, and we're going to see the benefit from the subscription over time. So again, that's in general. And your question on the price increase, so let's separate between billings and revenues. Billings, most of it, you're going to see it in the same quarter that we did the price increase. From a revenues perspective, sometimes like in Infinity, in some other ELAs that we have -- we have deals that have been closed before we -- I mean, in prior quarters, and we are recognized -- it's part of our backlog, and we are recognizing the revenues in future periods. So in that factor, you don't see the price increase in the revenues. You're not going to see that. You might see billings for new deals, but you're not going to see the main impact in the same quarter. So as I said, the main impact we start to see from the quarter -- from Q2, which is the quarter after the price increase on the revenues, not on the billings.

Kip Meintzer: All right. Thank you, everybody, for joining us. We appreciate it, and we'll see you throughout the quarter and then obviously, next quarter. Have a great day. Bye-bye.

Roei Golan: Bye. Thank you.