Nadav Zafrir, Check Point's Check Point Software Technologies Ltd. 0.61%   new CEO, speaks after the earnings release: "Thirty years of experience have prepared me well for this role—we can do big things at Check Point." On AI’s impact on cybersecurity: "We know some things have changed, some things won’t, and some changes we can’t yet predict. But Check Point can lead in this space, too."

Check Point beat expectations in Q4 2024, reporting $704 million in revenue and an adjusted EPS of $2.70, exceeding analyst estimates of $698.8 million in revenue and $2.65 EPS. These were the first earnings released under new CEO Nadav Zafrir, who took over after founder Gil Shwed stepped into the chairman role. However, since Zafrir only assumed the position in December, his influence is not yet reflected in these results.

Zafrir takes the helm at a pivotal moment for Check Point. The company remains one of the largest and most stable players in cybersecurity, with a $22.4 billion market cap and $2.56 billion in revenue for 2024, marking 6% growth. However, in certain areas, Check Point has lagged. While its firewall remains among the strongest in the industry, some argue Palo Alto’s offering is superior. Yet, product and platform growth remains strong, with $463 million in Q4 revenue from products, licenses, and subscribers—a 9% year-over-year increase.

Beyond leadership changes, Check Point also announced the establishment of a new R&D center focused on AI-driven cybersecurity solutions at its Tel Aviv headquarters on Leonardo da Vinci Street, currently used as a support center for families of Israeli hostages. In the post-earnings call, Gil Shwed reflected on his tenure, while Zafrir outlined his vision for the company’s future.

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Gil Shwed: "Cybersecurity Remains a Top Global Priority"

"In my 32 years at Check Point, we grew from less than $10 million in revenue to $2.5 billion. Profits grew from $5 million to over $1 billion, and our stock price has risen 80-fold since our IPO in 1996."

Shwed emphasized that cybersecurity remains a top priority worldwide. "We are proud to have pioneered and led this industry." Regarding his transition to chairman, he added: "Personally, it's been enjoyable to step back from daily operations and work in a more strategic role."

"I hope that in the coming quarters, we will see Check Point accelerating its growth rate. And in the next 10 to 20 years, I hope Nadav and the team will continue driving the company to new heights."

Nadav Zafrir: "We Can Do Big Things at Check Point"

"I'm very excited to open this call," said Nadav Zafrir, Check Point’s new CEO. "I have 30 years of experience in cybersecurity, and in the past decade at Team8, I’ve worked on innovation—helping launch over 20 companies. That experience has prepared me well for this role, and I see an incredible opportunity here. We can do big things at Check Point."

"In the last two months, I've met dozens of customers, and what I thought about Check Point before I arrived has only been reinforced. We have the potential to lead. There are people here who have been with the company for decades and still come to work with the same passion as if it were their first day. My job is to lead the company into its next phase."

On AI’s Impact on Cybersecurity

"The world we are heading into is fundamentally different," said Zafrir. "Everyone is trying to understand how AI will reshape cybersecurity. I believe we have what it takes to lead in this space. That’s why I’m making leadership changes—to ensure both myself and the team are closer to our customers, understanding their challenges and helping them navigate the hybrid digital world. This will allow us to refine our products and improve how we engage with them."

Growth Drivers and Geopolitical Challenges

"What I hear from our customers is how complex their networks have become. We live in an increasingly connected world, and AI introduces even more uncertainty. Some things have changed, some haven’t, and some shifts we can’t yet predict.

"On the networking side, we have a strong foundation with our Infinity platform, and our firewall, SaaS solutions, and cloud security offerings (Quantum Firewall, CloudGuard) work synergistically.

"Regarding geopolitics, recent tensions highlight the critical need for robust network security. Customers can’t afford disjointed security solutions—attackers exploit gaps between them. That’s why some level of consolidation is necessary. I don’t think China will fundamentally change the industry, but AI will make everything cheaper and more scalable, meaning demand for security will only increase."

Customer Needs and AI Adoption

"Our main focus is the hybrid network—customers need a flexible connection between on-premise and cloud environments.

"AI is another key area. Customers want to know how we’re using AI to automate and streamline security processes. Many of our customers are massive financial institutions and national infrastructure providers. One of the most important things for them is unmatched reliability.

"In one of our conversations, a client said that five-nines (99.999%) uptime wasn’t enough. That level of reliability was something I hadn’t fully appreciated before. At the same time, we need to move fast with innovation while ensuring new technologies meet enterprise-grade reliability standards."

Strategic Investments in AI

"In the first phase, our AI research center will have dozens of employees, both new hires and existing staff. This year, we are making significant talent acquisitions, especially in R&D in Israel and globally.

"Cyber threats are evolving. Attackers who once had basic skills now have near-superhuman capabilities in terms of precision and scale, thanks to AI. Some of the most significant cyberattacks in recent years would have looked completely different if AI had been involved—and that’s a scary thought.

"We must continue to innovate, and our AI research team in Tel Aviv will play a key role in understanding these challenges from both the attacker’s and defender’s perspectives. We already have AI experts working on security solutions, and we are now scaling that effort significantly.

"AI represents a new battleground in cybersecurity, and we intend to lead."

Will Check Point Close the Valuation Gap with Palo Alto?

"If I didn’t believe that, I wouldn’t be here," said Zafrir. "We have the depth, the breadth, and the experience to compete. We’ve seen almost every edge case in the industry. From a competitive standpoint, we are starting from a strong position."

"I found a well-run company, and my job is to build on what’s already working—strengthening our go-to-market strategy, driving growth in areas like email security, and moving full speed ahead. There is plenty of room for optimism."