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    CHKP
    Earnings call· Mar 2026(Q1 FY26)

    CHECK POINT SOFTWARE TECHNOLOGIES Q1 FY26 earnings call CHKP

    Apr 30, 2026 Source

    Executive summary

    Check Point Q1 FY26 — Go-to-Market Transition Impacts Product Revenue, Emerging Tech Drives Subscription Growth

    Check Point navigated Q1 FY26 with robust subscription revenue growth, fueled by strong demand for emerging technologies. However, a significant go-to-market model transition caused short-term disruption in its firewall appliance business, leading to lower-than-expected product revenues and a downward revision of full-year revenue guidance. The company remains confident in its long-term strategy, emphasizing AI-driven security solutions and strategic leadership changes to capitalize on the evolving threat landscape.

    Highlights

    5

    • Non-GAAP EPS grew 13% year-over-year to $2.50, exceeding guidance.

    • Adjusted free cash flow grew 11% year-over-year to $457 million, $70 million above the midpoint of projections.

    • Subscription revenue grew 11% year-over-year to $323 million, driven by strong demand in emerging technologies.

    • Emerging technologies (Email Security, CTEM, SASE) generated over 45% growth in calculated billings year-over-year.

    • The CTEM offering achieved 96% year-over-year ARR growth.

    Concerns

    4

    • Total revenues reached $668 million, $2 million below the midpoint of projections, primarily due to lower firewall appliance revenues.

    • Calculated billings declined 1% year-over-year to $548 million.

    • Full-year revenue guidance was adjusted down to $2.770 billion - $2.850 billion due to expected lower firewall appliance revenues.

    • A transition to a new go-to-market model created short-term disruption in sales execution, negatively affecting 2026 revenue projections, particularly in the appliances business.

    Guidance & targets

    11
    CategoryTargetConfidence
    Total Revenues
    $660M-$690M
    high materiality
    High
    Subscription Revenues
    $328M-$338M
    medium materiality
    High
    Non-GAAP EPS
    $2.40-$2.50
    high materiality
    High
    GAAP EPS
    around $0.70 less than Non-GAAP EPS
    medium materiality
    High
    Adjusted Free Cash Flow
    $145M-$175M
    high materiality
    High
    Total Revenues
    $2.770B-$2.850B
    high materiality
    High
    Subscription Revenues
    Same range as prior guidance, expect upper end
    medium materiality
    High
    Non-GAAP EPS
    $10.05-$10.85
    high materiality
    High
    GAAP EPS
    Slightly higher than prior guidance
    medium materiality
    High
    Adjusted Free Cash Flow
    Same as prior guidance
    high materiality
    High
    Operating Income benefit from R&D grants
    ~ $100M
    medium materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    EMEA
    EMEA contributed 46% of total revenues with 6% growth.
    Revenue contribution: 46%
    		—6%——
    America
    America contributed 42% of total revenues with 4% growth.
    Revenue contribution: 42%
    		—4%——
    Asia Pacific
    Asia Pacific contributed 12% of total revenues with 2% growth.
    Revenue contribution: 12%
    		—2%——
    Subscription
    Subscription revenue remained a key strength, growing 11% to $323 million.
    		$323M11%——

    Operational metrics

    16
    Non-GAAP EPS
    $2.5013% growth YoY
    Q1 FY26

    Exceeded guidance.

    Subscription Revenue
    $323M11% growth YoY
    Q1 FY26

    At the midpoint of projections.

    Calculated Billings
    $548M1% decline YoY
    Q1 FY26
    Current Calculated Billings
    2%growth YoY
    Q1 FY26
    Remaining Performance Obligation
    $2.592B7% growth
    Q1 FY26
    Gross Margin
    88%
    Q1 FY26

    Gross profit increased from $564 million to $586 million.

    Operating Expenses (excluding R&D grants)
    14%increase YoY
    Q1 FY26

    Increase primarily due to workforce expansion for AI security and investments in sales and marketing.

    Operating Expenses (net of R&D grants)
    $321M5% increase YoY
    Q1 FY26

    Includes approximately $27 million benefit from R&D grants.

    Non-GAAP Operating Income
    $265M
    Q1 FY26

    Continues to be strong.

    Non-GAAP Net Income
    $265M8% increase YoY
    Q1 FY26
    GAAP EPS
    $1.815% increase
    Q1 FY26
    Cash and investments balance
    $4.4B
    Q1 FY26

    Includes cash balances, marketable securities, and short-term deposits.

    Share buyback
    $325M
    Q1 FY26

    Continued buyback program.

    Emerging Technologies Calculated Billings
    >45%growth YoY
    Q1 FY26

    Primary driver of revenue growth.

    CTEM ARR
    96%growth YoY
    Q1 FY26
    Emerging Technologies as % of subscription ARR
    slightly below 30%
    Q1 FY26

    Industry KPIs

    7
    MetricValueDetails
    Revenue growth$668MUSD
    Arr net new arr96%%
    Rpo current rpo$2.592BUSD
    Bookings billings$548MUSD
    Gross retention renewal rateStable
    Operating FCF margin rule of 4040%%
    Ai product adoption monetizationEarly innings

    Orderbook & backlog

    4
    Deferred Revenues$2.06BQ1 FY26

    8% growth

    Calculated Billings$548MQ1 FY26

    1% decline YoY

    Current Calculated Billings2%Q1 FY26

    growth YoY

    Remaining Performance Obligation (RPO)$2.592BQ1 FY26

    7% growth

    Product announcements

    3
    ProductTypeDetails
    AI Defense Planlaunch
    AI Factory Security Blueprintlaunch
    Secure AI Advisory Servicelaunch

    Deals & partnerships

    2
    [indiscernible]Acquisition of a company~$92M

    Completed the acquisition of [indiscernible] for approximately $92 million of net cash consideration during February.

    Google CloudIntegration of AI Defense with Gemini Enterprise agent platform

    Announced a partnership with Google Cloud, integrating Check Point's AI Defense with Gemini Enterprise agent platform to deliver real-time runtime protection at scale.

    Risks & headwinds

    4
    Go-to-market transition disruptionShort-term (Q1 FY26, Q2 FY26), expected to improve in H2 FY26

    Lower-than-expected product revenues; $2M below midpoint for total revenues; 1% decline in calculated billings YoY; full-year revenue guidance adjusted down to $2.770B-$2.850B.

    Mitigation: Optimizing accounts, doubling down on marketing and channels, leadership changes, improving pipeline trends, and ongoing customer engagements.

    Lower new business from firewall appliancesQ1 FY26, expected to continue in Q2 FY26, with improvement in H2 FY26

    Impacted product revenues and contributed to the downward adjustment of full-year revenue guidance.

    Mitigation: Go-to-market changes to drive new logo acquisition, investment in firewall business, and focus on prevention-first ethos for AI-driven threats.

    Memory pricing increaseOngoing, near-term

    Continued surge in memory costs.

    Mitigation: Factored into full-year guidance for product revenues.

    Evolving AI threat landscapeCurrent and future

    Democratization and industrialization of cyberattacks, larger attack population, more sophisticated campaigns, shrinking time to exploit.

    Mitigation: Structured response across 4-pillar framework, introduction of AI Defense Plan, AI Factory Security Blueprint, partnership with Google Cloud, Secure AI Advisory Service, and continued investment in foundational AI models and research.

    What to watch in Q2 FY26

    4

    Firewall appliance revenue performance

    Q2 FY26 and H2 FY26
    CurrentLower than expected in Q1 FY26, sharper decline expected in Q2 FY26
    TargetImprovement in H2 FY26 (better performance than Q1/Q2, not necessarily growth)

    Why it matters

    This indicates the effectiveness of the go-to-market changes and the recovery trajectory of a core business segment.

    So for the second half of the year, you do expect to see improvement. Right now for the second quarter, we do expect to see a decline sharper decline in the product revenues. But for the third quarter and the fourth quarter, it's going to be gradually. We receive a much better funnel also for the appliances. And we do expect to see improvement there.

    Q&A highlights

    6

    Was the lower product revenue due to macro factors or go-to-market changes? Can you elaborate on the depth of the changes, where friction occurred, and your confidence that this is a short-term issue?

    Management stated that macro factors were not the issue. The significant go-to-market changes, including account optimization, increased marketing, channel focus, and leadership changes, caused short-term execution headwinds as personnel shifted roles. This disruption primarily affected the firewall business but is expected to be transitory, with pipeline and customer engagement already showing signs of normalization. The company is optimistic about future growth, particularly in new AI data centers.

    “I don't think the macro is the issue here. When you look at our -- the changes that we've made to our go-to-market, they are significant. So it's optimizing accounts to account managers. It's doubling down on our marketing, doubling down on our channels. But it did create a short-term headwind in terms of execution as many of our people changed their role or changed accounts, and I see this as the main driver or the main headwind that we're seeing in terms of the firewall business.”

    asked by Brian Essex · answered by Unknown Executive

    2 min read6 chapters

    Detailed Narrative

    01

    Go-to-Market Model Transition

    Check Point implemented significant changes to its go-to-market model in late 2025, aiming to accelerate new logo acquisition and increase wallet share in large enterprise accounts. This transition involved optimizing accounts, increasing investment in marketing and channels, and making leadership changes. While intended for long-term success, these changes created short-term disruption in sales execution, particularly impacting the firewall appliances business. Management expects these headwinds to be transitory📎, noting improving pipeline trends and customer engagements.

    02

    AI-Driven Security Strategy

    The company is actively addressing the evolving AI threat landscape, characterized by the democratization of cyberattacks and the industrialization of attack pipelines. Check Point introduced several solutions, including the AI Defense Plan to secure generative enterprises across employee AI usage and applications, and the AI Factory Security Blueprint for end-to-end protection of AI infrastructure, integrated with NVIDIA GPU services. A partnership with Google Cloud integrates AI Defense with Gemini Enterprise for real-time runtime protection, and a secure AI advisory service was launched to aid responsible AI deployment.

    03

    Leadership Appointments

    To strengthen its go-to-market execution and AI initiatives, Check Point announced several key leadership appointments. Sherif Seddik was named Chief Revenue Officer, bringing three decades of global sales leadership. An executive leading the CTEM offering, which achieved 96% year-over-year ARR growth, joined the leadership team. Adam Elin was appointed General Manager of AI Security, bringing deep experience in cybersecurity and large-scale enterprise security operations. Rafi Kretchmer was appointed VP of Global Marketing.

    04

    Emerging Technologies Performance

    Despite headwinds in product revenue, Check Point's emerging technologies, including Email Security, CTEM, and SASE, demonstrated strong performance. These areas are primary drivers of subscription revenue growth, with Email Security, SASE, and CTEM collectively exceeding 45% growth in calculated billings year-over-year. CTEM alone achieved 96% year-over-year ARR growth. These emerging products are expected to drive acceleration in subscription revenues in the coming quarters⏳.

    05

    Product Revenue Headwinds

    Lower-than-expected product revenues, primarily from firewall appliances, were directly attributed to the disruption caused by the go-to-market changes. The sales cycle for new firewall business is longer, and the disruption impacted funnel creation in Q1, with effects expected to continue into Q2. Management anticipates improvement in the second half of the year as the sales force stabilizes and new deals progress through the pipeline.

    06

    R&D Grants Benefit

    Check Point expects to receive approximately $100 million in benefit to its operating income for the full year from R&D grants. This is a result of a new Israeli incentive program law that was ratified during the period, with $27 million of this benefit recognized in Q1. This financial benefit contributes to the company's ability to maintain its non-GAAP EPS guidance despite the adjustments to its revenue outlook.

    AI-generated summary of the company’s earnings call. Not investment advice.