Check Point (NASDAQ: CHKP) says revenue hit bottom while subscriptions grow 11%

What happened

Check Point Software Technologies Ltd. (NASDAQ: CHKP) said it believes revenue bottomed in the third quarter and expects gradual improvement starting in the fourth quarter.

Revenue for the quarter ended Sept. 30 was $670 million, down 1% from a year earlier. Security subscriptions revenue rose 11% to $339 million. CEO Nadav Zafrir credited strong demand for Email, CTEM and AI Security. He also said the recovery is taking longer than anticipated.

GAAP operating income was $177 million, or 26% of revenue. Non-GAAP operating income was $251 million, or 37%. Diluted EPS was $1.82 on a GAAP basis and $2.49 non-GAAP.

Key numbers

Metric Latest Change Source
Total revenues $670 million from $677.5 million, -1% SEC 6-K
Security subscriptions revenue $339 million from $305.4 million, +11% SEC 6-K
GAAP diluted EPS $1.82 from $3.28, -45% SEC 6-K
Non-GAAP operating income $251 million from $281.9 million SEC 6-K
Cash, marketable securities and short-term deposits $4.12 billion from $2.82 billion, +46.3% Calculated from SEC 6-K
Cash flow from operations $264 million from $241 million SEC 6-K

Read more: Check Point Software Technologies (CHKP) company research

Why it matters

EPS fell 45% for GAAP, from $3.28, and 37% for non-GAAP, from $3.94. The year-earlier quarter had a one-time tax benefit. A tax settlement signed in the third quarter of 2025 added $1.47 to each measure. Without it, both rose 1%.

Operating income did slip. GAAP operating income was $199.1 million a year earlier and non-GAAP was $281.9 million. This quarter's research and development expense also included a $25 million reduction under Israel's new R&D tax incentive program.

OptimistFi has argued that Check Point works if its installed base and software margins survive the move to platforms. Subscription growth fits that view. But products and licenses revenue fell to $105.5 million from $130.4 million. Software updates, maintenance and services revenue slipped to $225.7 million from $241.7 million.

Cash, marketable securities and short-term deposits stood at $4.12 billion, up about $1.31 billion from $2.82 billion a year earlier. The filing says the rise came mainly from $1.8 billion of proceeds from a $2 billion convertible senior notes offering, after issuance costs and capped calls. The balance is below the $4.34 billion held at Dec. 31, 2025.

Check Point repurchased about 2.5 million shares for about $325 million in the quarter. Operating cash flow was $264 million, up from $241 million a year earlier.

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What's next

Check Point held a conference call at 8:30 a.m. ET on Nov. 2. It presents next at the BMO Tech Conference in New York on Nov. 12. The fourth-quarter result is the real test. Revenue above this quarter's level would support the trough call. Another decline would undercut it.

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Sources

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Originally published on OptimistFi, evidence-first equity research. More at optimistfi.com.