“Expect acquisitions to increase”: Check Point CEO signals expansion after strong quarter
Zafrir points to renewed growth momentum as billings surge 20% and company accelerates AI hiring worldwide.
Cybersecurity company Check Point ended the third quarter of the year with a positive surprise in new orders (billings), which rose 20% compared with the same period last year.
The rebound follows weakness in billings in the previous quarter and signals growing marketing momentum and stronger expectations for future revenue growth.
“We finished the third quarter with double-digit growth in billings. One month into the fourth quarter, we are very confident in our direction,” said CEO Nadav Zafrir. “I’ve been here for more than ten months and can see the vision and strategy being realized.”
Revenue in the quarter rose 7% to $678 million, driven mainly by 10% growth in North America, compared to single-digit increases in other regions.
Net profit reached $3.28 per share, well above analysts’ forecasts of $2.45 per share, thanks to a valuation adjustment signed during the quarter that allowed the company to recognize an accounting gain. Even excluding this one-time item, Check Point still beat Wall Street expectations by two cents.
Operating profit declined to $282 million, mainly due to recent acquisitions of several startups and the weaker dollar against the shekel, which raised local operating costs in Israel.
“Making additional acquisitions depends very much on the opportunities we see,” said Zafrir. “What limits us is not our ability to execute but the quality of the opportunities. We should expect acquisitions to increase.”
Cash flow for the quarter totaled $241 million, including $66 million paid to tax authorities in Israel and other countries as part of settlement arrangements. Most of the payment went to the Israeli Tax Authority and related to disputes for the years 2016–2020, though it was not linked to retained earnings.
“We are a very profitable company and pay a lot of taxes in Israel,” said CFO Roei Golan, “but we wanted more clarity, and there was a discussion.”
Excluding the one-time tax payment, cash flow rose 23%. During the quarter, Check Point also paid $160 million for land in Tel Aviv, in partnership with Israel Canada, where it plans to build a new headquarters.
The main highlight of the quarter was Check Point’s acquisition of Swiss-based Lakera, reportedly for around $300 million, aimed at strengthening its defenses for organizations adopting AI.
Founded in 2021 by AI experts from Google and Meta, Lakera employs about 70 people. Its distinguishing feature is the combination of proprietary AI models and a vast user community that helps refine them. Unlike many competitors that rely on external models such as OpenAI or Anthropic, Lakera has developed its own large language model, continuously updated through millions of user interactions.
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Following the acquisition, some observers expressed concern that Check Point, after announcing plans earlier this year to establish an AI research center in Israel and hire hundreds of local employees, might shift its innovation focus to Switzerland.
Zafrir dismissed those concerns: “The acquisition of Lakera stems from its unique capabilities, they built a model that helps us address the next stages of the AI revolution. But it doesn’t dramatically affect how we build our workforce. We’ve recently hired hundreds of people in Israel for AI roles. Still, competition for talent is global, and we happened to find exceptional people in Zurich.
“Lakera’s team includes 15 PhDs and mathematicians who built a remarkable model. We’ll recruit more there, but our center of gravity remains in Israel. At the same time, we’ll expand development in the U.S. and India. In today’s landscape, exceptional talent can be found everywhere.”
