“We’re not chasing large acquisitions”: Check Point falls to two-year low as CEO eyes ‘game-changing’ tech
Lowered outlook and firewall weakness overshadow long-term strategy.
In light of weak sales in the first quarter, expected to continue into the second, Check Point is slightly lowering its annual revenue forecast to $2.77-$2.85 billion, down from the original projection of $2.9 billion. Profitability guidance remains unchanged, with expected earnings of $10.05-$10.85 per share.
For the second quarter, Check Point expects revenue of $660-$690 million and earnings per share of $2.40-$2.50. According to CEO Nadav Zafrir, the weak dollar is a headwind for Check Point and the broader high-tech industry, which relies heavily on exports. However, he noted that the company is not uniquely affected and will continue hiring in Israel despite rising labor costs.
“AI is changing the world, and competition will be for talent that knows how to adapt and lead this transformation,” said Zafrir. “We believe the best talent is in Israel, and the increasing marginal cost does not make Israeli workers less attractive to us.”
The weak results and lowered forecast have pushed the stock to a two-year low, effectively returning it to levels seen on the eve of Gil Shwed’s retirement as CEO, and erasing the so-called “Nadav Zafrir premium,” the surge that followed the announcement of his appointment.
So far, the impact of Zafrir’s strategic changes has yet to materialize. The company has invested roughly $500 million in acquiring a series of startups, most of them Israeli, along with one Swiss firm, to strengthen its technological capabilities. However, these acquisitions are not expected to contribute meaningfully to revenue this year. Instead, the results reflect continued erosion in legacy products, particularly in the firewall segment.
Check Point emphasized that the changes in its sales organization did not involve significant layoffs, but rather internal restructuring, alongside an overall increase in the number of sales personnel.
Addressing the company’s acquisition strategy, Zafrir said: “We are not rushing to acquire large companies. Instead, we prefer to identify strategic solutions and acquire technologies, we believe this approach will pay off. We are constantly evaluating opportunities to acquire companies that bring game-changing technology for our customers. The recent market volatility, combined with our strong financial position, is creating interesting opportunities for Check Point.”
