The company that invented the firewall is searching for its next breakthrough
Check Point has billions in cash and decades of expertise, but investors are questioning whether it can adapt fast enough
Last Thursday, it appeared that, for the first time since taking over as CEO of Check Point a year and a half ago, Nadav Zafrir fully grasped the scale of the challenge he had inherited.
Zafrir arrived at the legendary but increasingly stagnant cybersecurity company carrying an impressive résumé: former commander of Unit 8200, co-founder of venture capital firm Team8, and one of Israel’s most respected cybersecurity figures. The appointment appeared to mark another milestone in a remarkable career.
But reality has proven far more complicated.
Check Point is facing a problem in an area where Zafrir has far less experience: sales, customer relationships, and market execution. Customers are not expanding their purchases of Check Point products at the pace the company needs, while competitors continue to gain ground. The company that pioneered enterprise cybersecurity with its firewall technology, but missed much of the cloud security revolution, has struggled to return to meaningful growth.
The financial results published Thursday delivered another disappointing quarter, and the concern was visible on Zafrir’s face during the company’s presentation.
Investors who welcomed Zafrir’s appointment as the successor to Gil Shwed, who led Check Point from its founding for nearly three decades, are beginning to lose patience. Over the past year, Check Point has become one of the weakest performers in the cybersecurity sector.
Since the beginning of 2026, Palo Alto Networks shares have gained approximately 75%, CrowdStrike has risen about 60%, and even SentinelOne has climbed 26%. Check Point, by contrast, has fallen 23%.
The broader question facing Check Point is whether the company can reinvent itself before the market decides it has become a legacy technology provider.
Check Point’s second-quarter revenue totaled $674 million, roughly in line with the middle of the company’s reduced forecast issued in April, but unchanged from both the previous quarter and the same period last year.
Adjusted earnings per share came in at $1.87, also roughly flat compared with last year, while reported earnings per share reached $2.55, slightly above expectations, largely due to changes in the company’s share count.
During the quarter, Check Point spent $325 million buying back 2.5 million shares.
Operating income totaled $185 million on a reported basis, while adjusted operating income reached $260 million. That compares with $265 million in operating income in the previous quarter, when revenue stood at $668 million.
The biggest weakness appeared in cash flow from operations, which fell to $170 million, compared with $262 million in the same quarter last year and more than $400 million in the previous quarter.
CFO Roei Golan said the decline was largely due to advance payments related to inventory buildup, particularly memory components.
The outlook for the coming quarter also offered little encouragement. Check Point expects revenue of $655 million-$685 million, implying another period of limited growth, with earnings per share forecast at $2.43-$2.53.
Cash flow is expected to recover to $235 million-$265 million.
But the concerns surrounding Check Point in the summer of 2026 go far beyond one quarter’s revenue or profitability numbers.
The real question is whether the company can regain the confidence of customers, and only afterward investors, and prove that it can compete in a cybersecurity market that has transformed dramatically.
The situation facing Check Point increasingly resembles the challenges confronting Mobileye, where founder Amnon Shashua recently announced he would step down as CEO after nearly three decades leading the company.
The similarities between the two companies are striking.
Shwed and Shashua are among the most influential figures in Israeli technology history. Both founded companies that created entirely new categories, turned Israel into a global technology hub, and became symbols of Israeli innovation.
But those same qualities may have contributed to a leadership dilemma: both remained in the CEO role for longer than many investors believed was optimal, even as global competitors entered their markets with aggressive strategies.
Founders who are exceptional technologists are not always the executives best suited to lead companies through later stages of growth, when success depends less on invention and more on sales execution, operational discipline, acquisitions and market expansion.
The danger is a form of technological confidence: the belief that companies understand their customers better than customers understand themselves.
A similar challenge now faces other admired Israeli technology companies, including Wix and Fiverr, where founders remain deeply involved in management despite growing investor concerns.
Why acquisitions alone will not save Check Point
When Zafrir replaced Shwed, who moved into the role of executive chairman, many investors expected him to accelerate growth through acquisitions.
Check Point has one major advantage: unlike many competitors, it has enormous financial resources. The company is highly profitable and holds billions of dollars in cash.
The expectation was that Zafrir could use that balance sheet to acquire promising cybersecurity companies and quickly rebuild momentum.
But after 18 months inside the company, Zafrir appears to have concluded that Check Point’s challenges are deeper than a lack of technology.
“Acquiring companies is not a difficult thing, and I understand there is an expectation that we will do big, shiny things,” he said. “We are ready to be very aggressive financially if we identify the right company according to all the parameters we have defined.”
But he added that acquisitions are not only about technology.
“The success of acquisitions, especially large ones, is also a matter of cultural fit between the teams, not just technological fit.”
The conclusion Zafrir appears to have reached after a year and a half at Check Point is that the company’s sales organization has become too comfortable.
For years, Check Point relied heavily on renewing contracts with large, established customers, including banks, insurance companies and government organizations.
But the cybersecurity market has changed.
Thousands of new technology companies have emerged over the past decade, building cloud-first infrastructures and creating demand for a new generation of security solutions.
That shift has benefited companies such as Palo Alto Networks, CrowdStrike, Wiz and Cato Networks, founded by Shlomo Kramer, who also co-founded Check Point with Shwed.
To respond, Zafrir is rebuilding Check Point’s sales organization.
“We have made a significant change to the sales structure in recent months, and we are now stabilizing the system,” he said. “At the same time, we are expanding the sales organization and recruiting hundreds of salespeople worldwide.”
The company plans to hire approximately 300 additional sales employees, following broader changes across development, product and marketing teams.
The timing of Check Point’s transformation could hardly be more important.
The cybersecurity industry is undergoing another major shift: attackers are using artificial intelligence to increase the scale and sophistication of attacks, while organizations are introducing AI systems that create entirely new security risks.
Zafrir argues that Check Point has an opportunity to become a leader in this next era.
“There is a strategy and a vision,” he said. “We are not resting on our laurels, but we need a little patience and the news will come.”
The company has invested heavily in AI capabilities, including the launch of an AI Network Firewall designed to secure user prompts and monitor the activity of AI agents.
Zafrir said the company has recruited 500 employees with AI expertise and is beginning to see the results.
“As someone who has been in the cyber business for 30 years, I see that it is not too late,” he said. “We are now between two paradigms in cyber. The first is becoming less relevant, but the second has not yet been fully defined. That gives us an opportunity to shape what comes next.”
