Check Point Software Technologies shares plunged by some 12% in premarket trading on Wall Street after releasing disappointing third-quarter results for 2026. The veteran Israeli cybersecurity company did meet the guidance it set for itself, but slightly missed analysts’ expectations, and above all, failed to convince investors that it is on the path to recovery. After the stock surged by nearly 20% over the past month, the market expected better news and instead received an admission that the improvement is delayed.
Check Point concluded the quarter with revenues of approximately $670 million, a decline of about 1% compared to the same period last year, and slightly below the $672 million that analysts had anticipated. Adjusted earnings stood at $2.49 per share, meeting forecasts. On the surface, this is not a major miss, but for a company struggling to return to growth, even a small disappointment is enough to rattle investors.
“I want to start with the bottom line. In July, we said that we expected the third quarter to mark the lowest point in our product revenues, and we see that indeed this was the case. The results in the third quarter were within the range we expected,” said Check Point CEO Nadav Zafrir in a meeting with journalists following the publication of the reports.
However, he later acknowledged that the road back to growth is longer than the company had estimated. “We believe that the third quarter marked the lowest point in our revenues, and we expect an improvement starting from the fourth quarter and beyond. At the same time, we must state this clearly, the pace of recovery is gradual, more gradual than we previously expected.”
A slow recovery weighs on Check Point’s performance
To understand Check Point’s difficulty, one must look at the transformation it is undergoing. The company is trying to expand its activity in the fields of cloud security and artificial intelligence, and to increase revenues from new products and services. Part of this effort is already succeeding. At the same time, however, sales of legacy products and licenses plummeted by some 19%. Thus, success in the new domains has not yet managed to compensate for the decline in traditional sales.
The problem stands out particularly against the backdrop of developments in the global cyber market. Demand for security solutions continues to grow, and competing companies like Fortinet and CrowdStrike are posting much higher growth rates. Check Point is still searching for the way to catch up.
One of the reasons for the difficulties is the change the company is undergoing in its sales apparatus. Check Point is trying to adapt sales personnel to the new products, enter additional fields, and recruit large customers. This process takes time, and in the meantime, it weighs on the sales pace.
“The changes we made at the beginning of the year in our sales organization have already been integrated. But we continue to increase the number of sales personnel, as we told you a few months ago. In addition, the business indicators that we closely monitor moved in the right direction over the past quarter,” Zafrir said in the meeting with journalists.
According to him, the company has already managed to close several large deals, in the scope of millions of dollars, among other things in the infrastructure and energy sectors, with customers in the United States, Europe, and Asia. These are encouraging signs from management’s perspective, but investors want to see the new deals translated into revenues and profits.
New products and major deals offer hope for growth
Profitability data also fail to provide a major reason for celebration. Adjusted net income totaled approximately $254 million, compared to roughly $431 million in the corresponding quarter. Nevertheless, the comparison is affected by a one-time tax benefit that the company received last year. Without that benefit, earnings per share rose by only about 1%. Furthermore, Check Point benefited in the past quarter from an Israeli tax benefit that reduced its research and development expenses. In other words, even the profit it managed to retain does not stem entirely from an improvement in business activity.
Despite the weak results, Check Point’s financial position remains stable. It holds approximately $4.1 billion in cash and marketable securities in its coffers, alongside debt of nearly $2.0 billion from convertible bonds. This money enables it to continue investing in the development of new products, hiring employees, and expanding operations.
Analysts estimate that Check Point will close the fourth quarter with revenues of about $787 million, a significant improvement compared to the third quarter. The forecast for 2027 also points to a return to growth, at a pace close to 6%. Zafrir estimates that sales will begin to improve as early as the coming months and will continue to rise next year.
“We believe we have passed the turning point. We expect product revenues to start improving from the fourth quarter onwards, into 2027,” he said. “We operate in a market with growing demand, and we have a lot to offer.”
