Check Point Software revenue fell 1% to $670 million and billings fell 5%, and the recovery moved to 2027
Third-quarter revenue fell 1% to $670 million, legacy license sales dropped about 19% and billings fell 5%, while CEO Nadav Zafrir conceded the recovery is more gradual than promised and now points to 2027. Seven analysts re-priced the stock within a day.
Vincent Jiang · 3 min read
Check Point Software+4.19% — Check Point Software, up 4.19 percent today Technologies, the Israeli network-security pioneer, fell about 12% in premarket trading on November 3 after third-quarter revenue came in at $670 million, down 1% year over year 2. The number met the company's own guidance, and non-GAAP earnings of $2.49 a share matched forecasts 16.
What the market had been sold since July was a floor: chief executive Nadav Zafrir had said the third quarter would mark the lowest point for product revenue. He confirmed that on the earnings call, then delivered the sentence that moved the stock: "the pace of recovery is gradual, more gradual than we previously expected" 12.
Two businesses share one ticker, and only one is shrinking
The subscription half is doing its job. Subscription revenue rose 11% to $339 million and now makes up 51% of the total 1. Annual recurring revenue from the newer lines (AI security, email security and continuous threat exposure management, a discipline the industry calls CTEM) grew more than 38%; email security alone passed $200 million in ARR 1.
The legacy half is not keeping up. License sales from the traditional firewall business fell about 19% 2, and calculated billings dropped 5% 1. RBC Capital Markets reads the prints the same way: customer deal delays and weaker product sales are pushing revenue recognition into 2027 3.
Management is buying where growth used to be
The company repurchased 2.5 million of its own shares for $325 million during the quarter at an average of $132, about $1.4 billion over the trailing twelve months, out of roughly $4 billion in cash 1. A 12% premarket drop from the $141.50 close on November 2 452 left the stock below the price management paid for its own paper.
Even the promised rebound leans partly on pricing rather than demand. Check Point raised firewall prices 12% to 20% effective October 4, an increase management says could add up to three points to revenue growth, against a weak-shekel headwind that could reach $50 million of 2027 expenses 1.
The -1% quarter was the end of a ten-quarter deceleration, not a surprise event
Revenue growth fell from about 6% to negative over three quarters
Data
| Revenue growth, YoY | |
|---|---|
| Q1 '24 | 5.8% |
| Q2 '24 | 6.6% |
| Q3 '24 | 6.5% |
| Q4 '24 | 6.1% |
| Q1 '25 | 6.5% |
| Q2 '25 | 6% |
| Q3 '25 | 6.7% |
| Q4 '25 | 5.9% |
| Q1 '26 | 4.8% |
| Q2 '26 | 1.3% |
| Q3 '26 | -1% |
The street re-priced the stock by the next morning
JP Morgan cut its price target to $155 from $167 5. Citigroup nudged its target up to $145 4. The most recent targets span $131 to $175 4, around a stock that closed November 2 at $141.50 45. The ratings tell the quieter story: 10 buys, 26 holds, zero sells 6.
Nobody is calling the franchise broken, and nobody is calling the recovery priced in either.
Seven targets span $131 to $175 around a $141.50 stock
Only Scotiabank sits meaningfully above the pre-drop price
- Estimate
Data
| Value | |
|---|---|
| Morgan Stanley (estimate) | $131 |
| Wells Fargo (estimate) | $135 |
| RBC Capital (estimate) | $140 |
| Citigroup (estimate) | $145 |
| UBS (estimate) | $150 |
| JP Morgan (estimate) | $155 |
| Scotiabank (estimate) | $175 |
The line that decides the trade
Fourth-quarter guidance of $720 million to $770 million sits below the analyst estimate of roughly $787 million 12. Management itself expects subscription growth to slow modestly in the fourth quarter before re-accelerating in the first half of 2027 1. Zafrir has scheduled a capital markets day in Las Vegas on February 10 to argue the longer case 1.
Between now and then the tell is not revenue, it is billings: until customers stop slipping into 2027, every quarter here is a promise about the next one.
Get Security by email, free
The breaches, flaws and security vendors AI is putting to the test. In our daily email, every weekday.
