CHKP Stock Tanks As Q3 Revenue Misses Estimates — CEO Says Recovery Is ‘Taking Longer Than Anticipated’

Check Point CEO Nadav Zafrir said fiscal third-quarter results were in line with the company's expectations, citing improving leading indicators despite a slower recovery.

• Check Point’s adjusted EPS of $2.49 met expectations but fell 37% year over year, largely reflecting a one-time tax benefit in the year-ago quarter.
• CEO Nadav Zafrir believes revenue reached a low point in the third quarter, with gradual improvement expected starting in the fourth quarter.
• KeyBanc maintained its ‘Sector Weight’ rating, citing execution risks from the company's sales restructuring, per Investing.com.

Check Point Software Technologies (CHKP) shares plunged as much as 9% in Monday's premarket trading after the cybersecurity firm reported weaker-than-expected third-quarter revenue, with CEO Nadav Zafrir saying the company's recovery was taking longer than anticipated.

The company’s revenue declined 1% year over year to $670 million, below analysts' expectations of $675.44 million, while adjusted earnings per share (EPS) of $2.49 marginally beat estimates, according to FiscalAI data.

At the time of this writing, CHKP shares were trading nearly 8% lower in the premarket session.

Revenue Falls Despite Subscription Growth

Check Point’s security subscriptions revenue grew 11% year over year to $339 million, supported by demand for email security, continuous threat exposure management (CTEM) and artificial intelligence (AI) security products.

However, products and licenses revenue declined to $105.5 million from $130.4 million a year earlier, while software updates, maintenance and services revenue fell to $225.7 million from $241.7 million, offsetting subscription growth.

Remaining performance obligations (RPOs), representing contracted revenue yet to be recognized, rose 5% year over year to $2.5 billion. Firm’s adjusted EPS declined 37% year over year, although the prior-year quarter included a one-time tax benefit of approximately $1.47 per share. Excluding that benefit, adjusted EPS increased 1%.

Check Point CEO Expects Improvement From Q4

Zafrir said third-quarter results were in line with the company's expectations, citing improving leading indicators despite a slower recovery. “We believe revenues reached a trough in the third quarter, and we expect gradual improvement beginning in the fourth quarter,” he said.

“The recovery is taking longer than anticipated,” Zafrir added, while maintaining confidence in the company's strategy and focus on sustainable growth.

According to Investing.com, TD Cowen downgraded CHKP stock to ‘Market Perform’ from ‘Outperform’, while KeyBanc maintained its ‘Sector Weight’ rating, citing execution risks from the company's sales restructuring. 

The firm noted that only 39% of channel partners reported performance in line with expectations, down from 50% in the second quarter, pointing to continued near-term challenges.

What Retail Thinks About CHKP Stock

On Stocktwits, retail investors’ sentiment around CHKP stock remained ‘bullish’ amid high user message volume.

Despite cybersecurity demand increasing amid AI safety risks, CHKP stock has fallen nearly 16% so far this year. By comparison, the Global X Cybersecurity ETF (BUG) and the Amplify Cybersecurity ETF (HACK), which hold the stock, have soared around 66% and 57% respectively, over the same period.

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