Greetings, and welcome to Check Point Software's 2025 Fourth Quarter and Full Year Financial Results Video Conference. I'm Kip Meintzer, Global Head of Investor Relations. And joining me today are Chief Executive Officer, Nadav Zafrir; and our Chief Financial Officer, Roei Golan. Before we begin, I'd like to remind everyone that the conference is being recorded and will be available for replay on our website at checkpoint.com. During this presentation, Check Point's representatives may make forward-looking statements. Forward-looking statements generally relate to future events or our future financial and/or operating performance, including statements related to the anticipated ratification of the Israeli government Research and Development Incentive Program and potential impact of these grants on our financial results. These statements involve risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. Any forward-looking statements made speak only as of the date hereof, and Check Point Software undertakes no obligation to update publicly any forward-looking statements. In our press release, which has been posted on our website, we present GAAP and non-GAAP results, along with a reconciliation of such results as well as the reasons for our presentation of non-GAAP information. If you have any questions after the call, please feel free to contact Investor Relations by email at [email protected]. And now I'd like to turn the call over to Nadav for... Thank you, Kip. It's great to be with everyone here today.

I want to begin with a recap of 2025, followed by our plans for 2026 and beyond. We printed solid 2025 fourth quarter and full year results. During the year, we delivered consistent execution while building a stronger foundation for our long-term sustainable growth. We expanded our platform with two new pillars: security for AI and exposure management. We're building both organically and through targeted acquisitions. We also strengthened our go-to-market engine. We expanded and flattened our C-suite structure and aligned it to our operating model. We're laser-focused on strategic customers, new logo acquisition, and partner leverage. And our sales are focused and designed to develop deeper enterprise penetration, a broader portfolio adoption, and increased new logo wins. We also enhanced our financial flexibility with a $2 billion zero-coupon convertible notes offering, strengthening our balance sheet and creating the capacity to invest in our highest conviction priorities. Looking ahead to 2026 and beyond, we are positioning the company to lead the AI era of cybersecurity. As you're keenly aware, AI is fundamentally changing the threat landscape, and this requires organizations to revisit their core security assumptions and revalidate their security foundations. In fact, decades of corporate infrastructure are now vulnerable because the very nature of attacks is changing. And so security leaders must revalidate their existing security foundations, protect new attack surfaces that are driven by the adoption of new capabilities and tools, as well as embrace AI as a force multiplier just to remain competitive. And our mission at Check Point is very clear: we secure our customers' AI transformation. That means we continuously update our existing security solutions to defend against evolving threats. We're securing the expanding AI-driven attack surface with purpose-built capabilities and leveraging AI to simplify and automate security management and operations. And we do this by applying a proactive prevention-first approach, which leverages our superior capabilities and continuously research, discover, and build solutions to anticipate the evolving threats. We secure our customers' AI transformation through four strategic solution pillars, each one of them a platform of its own: hybrid mesh network security, securing the infrastructure; workspace security, securing the employees; exposure management provides situational awareness; and finally, AI security across all of these pillars. We secure the hybrid mesh infrastructure across data centers, hybrid cloud, branch, and SASE. And we have a very clear market differentiation for hybrid mesh. Our advantages include superior proactive prevention, second to none, a hybrid architecture that optimizes user experience at the edge, an unparalleled ability to scale, and finally, an AI-powered unified management. As you know, AI is embedded everywhere. And so attacks can originate from everywhere and anywhere. And so we're building an integrated and unified workspace platform that's spanning across devices, browser, email SaaS applications, and remote access. We believe that our recognized leadership position in email security and superior phishing prevention capability is a springboard to lead the way in exposure management. Managed service providers, or MSPs, also represent an important opportunity in the Workspace security pillar. We identified Rotate as a provider of a comprehensive platform purpose-built for MSPs. We acquired the team of Rotate to build momentum in the MSP market and leverage our position as a leading MSP email security provider. Next, we established exposure management as a new strategic pillar, and we believe we're uniquely positioned to expand our market share in the coming few years. Security teams are challenged by the overwhelming volumes of vulnerability, disconnected intelligence, and shrinking remediation windows. In an AI-driven threat landscape, weeks-long resolution cycles for critical vulnerabilities are no longer viable. At Check Point, we deliver real-time situational awareness unified across threat intelligence, attack surface visibility, providing context and automated remediation. Today, I'm also excited to announce the acquisition of Cyclops, a cyber asset attack surface management company that brings AI-driven asset discovery to enable accurate vulnerability context and risk prioritization. Cyclops strengthens our exposure management platform and delivers a robust CTAM offering that includes threat intelligence, vulnerability scanning, prioritization, and at the end of the day, actionable and safe remediation. And finally, as organizations rush to adopt AI just to remain relevant, this breakneck pace of AI adoption presents many new risks to organizations: data leakage via prompts, the uploading of sensitive data, AI threats like jailbreaking or model inversion, and agents with uncontrolled autonomy, sometimes acting beyond their scope. AI security is a foundational pillar of our strategy. Our comprehensive AI security stack protects employee usage, enterprise applications, agents, and models. Late last year, we made the acquisition of Lakira to deliver runtime protection across AI applications and agents based on an industry-leading foundational model. You know that this is evolving faster than anything we've ever seen and requires design partnerships and an open garden and the ability to track and acquire the innovators. And so today, I'm happy to announce the acquisition of Siyata, specializing in discovering, understanding, and ultimately governing autonomous AI agents. Siyata extends our platform by protecting the emerging AI workforce, enabling organizations to safely accelerate their AI transformation. In summary, 2025 was my first year as CEO of Check Point. During the year, we strengthened our leadership team, improved our go-to-market execution, and enhanced our financial flexibility, all while delivering solid results. I believe during my first year, we built a foundation that positions us to accelerate our growth over the next few years. Looking ahead, our strategy is focused and aligned. Organizations around the world are accelerating adoption, and our mission is to secure their AI transformation. Through our four strategic pillars, we are addressing the expanding AI-driven attack surface and bringing critical innovation to customers. The recent acquisitions of Sightclub, Siyata, and Browthase Talent further enhance our capabilities in exposure management, AI security, and workspace. These acquisitions strengthen our competitive position and ultimately support our long-term growth ambitions. We're executing with discipline, investing behind our highest conviction opportunities, and driving greater value for customers, partners, and shareholders in 2026 and beyond. And with that, I'll turn it over to Roei Golan to address our financials.

Thank you, Nadav. One moment. Can you see my slides?

Yes.

Okay. So thank you, Nadav, and thank you, everyone, for joining the call. As Nadav said, the fourth quarter was solid, with 6% growth in revenues, driven by 11% growth in our subscription revenues. Our revenues reached $745 million and were $1 million above the midpoint of our projections. Our non-GAAP EPS was $3.40 per diluted share and exceeded our guidance. This figure includes a one-time tax benefit of approximately $0.52 related to a reduction in our corporate tax rate in Israel that impacted prior periods' income taxes and also updates into our tax reserves. Excluding the one-time benefit, EPS exceeded the top end of our projection by approximately $0.08. As for the full year, our revenues reached $2.725 billion and were $5 million above the midpoint of our original projections. Our non-GAAP EPS was $11.89 per diluted share and exceeded our guidance. This figure includes a tax benefit of approximately $1.90 related to a reduction in our corporate tax rate that impacted prior year income taxes and uplift in our tax results also due to the tax settlement that we announced last quarter. Excluding the one-time benefit, EPS exceeded the midpoint of our projection by approximately $0.09. As mentioned, our revenues grew by 6% year-over-year, while deferred revenues grew by 9% to $2.18 billion. It is important to note that our product revenue growth was moderated in the quarter, mainly as a result of our subscription price increase that we announced in July 2025, which shifted a larger portion of bundled hardware deals towards subscription. This resulted in a headwind of $6 million to our product revenues in this quarter, as we allocated a relatively smaller product component without changing overall deal value. We expect to see this impact also in Q1 of approximately $4 million to $5 million on our product revenues. We expect the benefits of this strategy to increasingly materialize in subscription revenue during Q1 and throughout 2026, while also the product price increase that we have effectively from 1/1/2026 of 5% is expected to support our product growth primarily from the second quarter of 2026. When we are looking at our calculated billings, they totaled $1.039 billion, reflecting an 8% year-over-year growth, while our current calculated billing grew by 6%. Our remaining performance obligation (RPO) grew by 8% to $2.7 billion. On an annual perspective, our revenue grew by 6% year-over-year, while our calculated billing grew by 9% to $2.9 billion. Our current calculated billing totaled $2.784 billion, reflecting a 6% growth year-over-year. When we are looking at our recurring calculated billing, which represents the calculated billing from subscription and maintenance and updates, this grew by 10% year-over-year. As we mentioned, our growth this quarter was driven by our subscription revenues. We continue to experience strong demand for our emerging product portfolio, which remains the primary driver for our revenues. In this quarter, in Q4, we had growth across all our pillars, CEM, Workspace, and hybrid mesh, while our emerging products, email security, SASE, and ERM exceeded 40% more than 40% growth in ARR. When looking at the global revenue distribution, we saw growth in all regions. 48% of our revenues came from EMEA, which grew by 5% year-over-year. 40% of the revenues came from America, which had 6% growth year-over-year, while the remaining 12% came from Asia Pacific, which grew 9% year-over-year. Looking into our P&L in this quarter, our gross profit increased from $623 million to $660 million, representing a gross margin of 89%. Our operating expenses increased by 13% to $358 million. On a constant currency basis, our OpEx increased by 11%. The increase was primarily due to an increase in our workforce and investment in sales and marketing and channel programs. Our non-GAAP operating income continues to be strong at $302 million or 41% operating margin. Our non-GAAP net income increased by 21%, mainly as a result of a one-time tax benefit that I mentioned in the beginning of this deck, in connection with reduction in tax rate and updated tax reserves. The non-GAAP EPS grew by 26%, while the one-time benefit contributed approximately $0.52. Our GAAP net income reached $305 million, an increase of 18% year-over-year, while our GAAP EPS was $2.81 and grew by 22% year-over-year. Looking ahead into 2026, we all know the memory price increase, the recent memory price increase that we have in the market over the past few months, and it is expected to have an impact on our gross margin in 2026. We estimate this impact to be approximately one point for the full year, with most of the impact expected in the second half of 2026, as we have sufficient inventory to support the needs for the first half of 2026. We will continue to closely monitor supply and pricing dynamics into the second half of the year and adjust our procurement strategy as needed, including potential product price increases. Our operating expenses increased by 10%, mainly due to our continued investment in our workforce organically, and also the impact related to Cyber acquisition that we closed back in September 2024 and the acquisition that we've done during 2025 of Verity and Lakira. Our non-GAAP operating income was $1.140 billion or 41% operating margin. Looking ahead to 2026, we continue to actively hedge our foreign exchange exposure. However, not all currencies are fully covered. As we disclosed in the previous earnings calls, if current exchange levels persist, we anticipate an additional headwind of approximately 1 to 1.5 points on our operating margin for next year. Our financial income increased to $114 million in 2025 as we kept reinvesting our cash in higher rates compared to 2024. In December 2025, as Nadav mentioned, we completed a $2 billion convertible notes offering. As a result, we expect higher financial income in 2026, estimated to be between $40 million to $45 million per quarter. In 2025, we had an income tax benefit of $79 million, which included the benefit of approximately $209 million or $1.90 non-GAAP EPS in connection with updating our tax reserve due to the tax settlement and also the reduction of the tax rate for prior years. As for 2026 taxes, it is important to update that in December 2025, Israel enacted the OECD Pillar 2 framework, establishing a 15% global minimum effective tax rate for large multinational groups effective for taxes beginning in 2026. As a result, we currently estimate that our tax rate for 2026 will be between 16% to 17%. In parallel, a complementary Israeli government R&D incentive program was initially approved in January 2026. The outcome from this program, which is expected to be effective from January 2026, can be approximately a $50 million benefit to our operating income. This program is expected to be finally approved by the end of Q1 2026. Our outlook reflects this development as part of our forward-looking statements, including the anticipated certification of the R&D incentive program and the potential financial impact of related grants on our future financial results. Moving into our cash flow and cash position, our cash balances as of the end of the quarter were $4.3 billion. As a reminder, in December 2025, we also announced a $2 billion convertible note offering, and we received $1.8 billion in net proceeds, net of issuance costs and the purchase of Capco. Also, during October 2025, we acquired Laera for approximately $190 million of net cash consideration. Our operating cash flow was very strong this quarter at $310 million, representing 24% growth year-over-year and 42% of our revenues in Q4. We also continued our buyback program and purchased 2.2 million shares for $425 million at an average price of $193 per share. On an annual perspective, our operating cash flow grew by 17% to $1.234 billion, while it is important to note that this includes a $66 million one-time tax payment related to our tax settlement that we signed in Q3, while our balance sheet hedge transaction resulted in a benefit of $51 million in 2025. Also, as a reminder, during 2025, we completed a $160 million payment for the land purchase associated with the new Check Point campus that we are building in Tel Aviv. We do not expect any significant additional payment in connection with this new campus in 2026. To summarize, our revenues were above the midpoint of our projection and the EPS exceeded our projection. We see continued strong demand for emerging technologies, whether it's email security or SASE, and we had another quarter and another year of strong operating cash flow and strong profitability. Now moving to the business outlook to our projection for Q1 and for the full year. Our revenues are expected to be between $655 million to $685 million in Q1 2026. I remind you of the short-term headwind that we have specifically in Q1 in terms of product revenues. For the full year, we expect our revenues to be between $2.83 billion to $2.950 billion, which reflects 4% to 8% growth, while the midpoint is 6%. This time, we're also going to give you the subscription revenue guidance, which is expected to accelerate. As for Q1, we expect it to be between $318 million to $328 million, while for the full year, we expect it to be between 10% to 14%, which means that the midpoint is expected to be 12% growth. Our non-GAAP EPS, which takes into account the expected grants and the R&D incentive program that needs to be completed by the end of Q1, is between $2.35 to $2.45, while the full-year EPS, non-GAAP EPS, is expected to be between $10.05 and $10.85. GAAP EPS for Q1 is expected to be $0.64 less, while for the full year, it is expected to be $2.58 less. We're going to share with you guidance projections for adjusted free cash flow for Q1 and for the full year. In Q1, we expect to have a strong adjusted free cash flow between $420 million to $460 million, which represents 66% of our midpoint expected revenues in Q1. For the full year, we expect it to be 42% of the revenues in the midpoint, which is $1.150 billion to $1.250 billion.

All right. So for Q&A today, first up, we're going to have Adam Tindle from Raymond James.

All right. Can you hear me?

Yes.

Nadav, I wanted to ask; AI security is obviously a clear focus in your script today. And it sounds like you're investing both organically and inorganically with some of the acquisitions here. I wonder, this is sort of a high-level strategic question for you. The heart of it is to kind of compare and contrast your view of AI security versus how cloud security played out. The context being that you made the very smart decision in cloud security to partner with Wiz, essentially exiting Check Point's efforts in organically, as the ROI wasn't there. Again, in hindsight, very smart given the cloud security market has been problematic for your competitors, bad pricing, bad profitability there. And I see some similarities in cloud security and AI security. So I guess what's different about AI security that got you more comfortable to invest here versus the decision to invest in cloud? And how big do you think this could be for Check Point over time?

Yes, that's a great question. The analogy does apply, but I believe the AI transformation is more fundamental. It's not merely about moving activities from on-prem to the cloud; it's a significant change in how technology is utilized, how business is conducted, and how people are employed. Additionally, we're already witnessing this change, but I expect its pace to increase. While one can refer to the cloud analogy, it serves mainly as a point of contrast. There are two key issues to consider: firstly, attackers are leveraging AI at a much faster rate than defenders can react. This reflects the inherent imbalance between offense and defense in this competitive learning environment, where attackers can adapt more quickly for various reasons. Consequently, we are seeing attacks on a larger scale with greater precision, representing a substantial change in the nature of threats. Secondly, every organization worldwide is striving to implement AI to remain relevant, which in turn creates a new attack surface. Evaluating these two factors separately makes it clear that now is the time to completely reassess security. We believe we are well-positioned to lead in securing our customers' AI transformation through the four pillars we've discussed, bolstered by our extensive data from a decade of experience with 100,000 customers. Our proactive prevention security has always been vital, but it has now become essential. We are investing through acquisitions and organic growth, and we're confident that this is our moment to disrupt the status quo.

Next up is Shaul Lal, followed by Joseph Gallo of Jefferies. Apologies for some background noise.

Question for Roei. How should we be thinking about ASP hikes from a linearity perspective? Are we seeing them coming in the first half of the year? Are we seeing them coming in the second half of the year? Can you just help us out a little bit?

We implemented several price increases recently. One of these occurred in July specifically for the firewall subscription, and in January, we raised prices for all firewall products, including client hardware, subscriptions, and support. Typically, it takes about a quarter to see the average selling price rise. For instance, regarding appliances, we noted that although the price increase was effective from January 1, the significant revenue impact usually appears in the subsequent quarter. This is because some revenues recognized in the first quarter stem from bookings made in earlier periods. Additionally, we have quotes delivered to customers before the price increase takes effect. Therefore, we anticipate the main effects to be seen starting in the second quarter of this year.

All right. Next up is Brian Essex Rob Owens, followed by Brian Essex, pardon me.

Am I in here first, Kip, or...?

You are in first, Joseph, I'm sorry.

I appreciate that. It was great to see the strength in subscription, but I just wanted to ask on product in 4Q. I know there was some mix shift and reallocation in large deals, but is there anything else we should be aware of? And then I believe your product guidance for '26 implies approximately flat. Just any comments on remaining refresh cycle available? Or have you seen customers change their buying behaviors ahead of these incoming price increases?

Yes. I think Q4 was a solid quarter for our product. While it wasn’t as strong as the first three quarters, we still observed good demand. Looking ahead to 2026, we see a favorable pipeline for hardware, particularly in the second half of the year. However, when considering subscriptions, we expect the product to be roughly flat to low single-digit growth. Our guidance reflects a cautious approach due to concerns about the macro environment, including widespread memory shortages and price increases across all raw materials. These factors might be influencing customer behavior, leading to delays in some capital expenditure projects. We've considered this in our outlook. Nonetheless, we aim to exceed these expectations and continue to experience refresh activity.

Next up is Brian Essex, followed by Todd Weller. Sorry about that, Brian.

All right. Joe, I wasn't going to let him pass you by. Really, another question on guidance. Would love to understand maybe the puts and takes embedded in operating margins. If we were to back into operating margins, what are the implicit margins in your guidance? And how do you think about spending? And then maybe one for Nadav, basically back on that, the dynamics around the hardware price increases, are you hearing any shift in spending intentions from your customers anticipating maybe firewall and server prices accelerating on the back of the memory pricing? So one for each of you.

So the margin that we took into account in our guide is between 39% to 40%. So that's the operating margin. We're taking into account all the headwinds we get from the memories, from the FX on the other hand, and the expected grants from the government. So all of that was taken into account, which puts you in the 39% to 40%.

Look, with regard to the hardware, as Roei said, we don't see any change as of now. As Roei said, we do need to be prudent looking into what's happening this year. I actually think for us, this could be a competitive advantage. We have the supply for the first two quarters. We're going to figure out how to take advantage of the situation. I don't see this as being a huge headwind, except for what Roei said about the one point in the margin that we just discussed. Obviously, I'm very encouraged by the high growth in the subscription rate that we're seeing and projecting.

And no shift towards SASE or other types of architecture?

Our SaaS products and subscriptions are increasingly significant to our overall business, and we aim to continue expanding that across various areas. In the hybrid mesh, SASE, and Workspace, they are fully integrated with SASE, as is exposure management. This year, we have established a clear focus on security for AI within the AI security pillar for the first time.

All right. Next up is Todd Weller, followed by Jan Siddiqui.

Nadav, you outlined all the changes that were implemented in 2025. What would be the two or three specific ones you think will most positively impact the growth trajectory in '26? And when do you expect to see those start kind of showing up in the numbers?

Yes, look, I think that we laid the foundations, right? The most important thing is the C-suite and the new leadership we had and the way we are reorganizing and refocusing our go-to-market. That's number one. The second thing that I'm very excited about is going to market with these four pillars. Each one of them is a platform in itself. Some of our customers are going to choose to use one pillar as their platform, let's say for Workspace. Others are still using the hybrid mesh pillar, and some are using everything, and it's an open garden so we can play with the others. So if you ask me, these are the two main things. Number one is the four-pillar approach. Number two is the leadership in the C-suite change and the refocusing of the go-to-market. And above everything else, I am a true believer that we need to revalidate security. Attackers are moving at an extreme speed. I think we have the foundations. But as you can see, we're also making the acquisitions. We have the right design partnerships. We want to do this as an ecosystem play. So the third thing, of course, is security for AI. The race is on, and we're in it.

Thanks, Todd. Next up is Junaid, followed by Keith Bachman from BMO.

Just wanted to talk about the progress on the SASE front. You mentioned ARR grew around 40%. In the past, you've talked about making it much more enterprise-ready, moving to a unified policy. How is that tracking? And is the focus right now mostly on upselling the existing customers?

Yes, that's a great question. SASE is now part of our hybrid mesh pillar, and we are advancing the product. We made substantial investments in 2025, and it's maturing while being integrated into the hybrid mesh platform with our unified management. Regarding our sales strategy, we are incorporating what we previously referred to as a rocket into the hybrid mesh pillar. We are also combining our CloudGuard network security sales overlay with SASE for better integration into our overall approach. While I would say that two-thirds of our focus is on upselling to existing customers, we are also attracting new customers for our SASE solution, and we aim to transition them to our firewall business to fully realize the potential of the hybrid mesh pillar.

All right. Next up is Keith Bachman, followed by Shrenik Kattharis of Baird.

Nadav, I want to bring this up as it relates to the comments we've heard this morning. Investors are seeking a faster pace of growth. You're guiding towards a total revenue growth of around 6%, which aligns with the trends we've seen over the past two years. Although subscription growth is improving, total growth isn't seeing the same progress. How do you address the need for patience regarding the potential for acceleration? Additionally, Roei, do you have any insights on total billings growth in relation to the revenue growth midpoint?

Yes, sure. Thanks. Look, we laid the foundations. Now it's all about execution. I think we have the four-pillar approach. We have the foundations. We have the right people in place. We have the financial flexibility to make acquisitions. Now it's all about execution. And you're right that it's not an overnight acceleration, but I think we're on the right trajectory. I think also what we have in terms of product solutions around our superior ability to proactively prevent, the acquisitions that we're making, and what we're building in AI security are putting us on the right trajectory. Now it's all about execution.

And as for the total billings, similar to the revenues, we expect around high single-digit growth, 6%, 7%, that's the expectation in order to achieve the midpoint.

All right. Next up is...

You mentioned financial flexibility, ending the fourth quarter with $4 billion in cash and adding $2 billion in convertible notes. Regarding small AI native integrations and your announcements, could you discuss what kind of scale, intellectual property, or related areas would make a large-scale AI-driven acquisition significant for you, especially as some peers pursue aggressive platform convergence?

Yes, so yes, we have the flexibility and we have the vision. Now in each one of those pillars, we need to be very disciplined and identify the targets. They could be tuck-ins, they could be larger, but the ones that actually take us to be a podium player in each one of those pillars specifically. The target needs to have the right technology, the right people, the right culture so that we can see that we can integrate it and move fast to create a real platform. In my humble opinion, just buying more and more products and taking a supermarket approach is not what our customers are looking for when they look for consolidation. They look for a real integrated approach for us as a pillar. Each one of those pillars is looked at as its own platform play. So if you take exposure management, we are looking to create the number one exposure management system. Some of the acquisitions are smaller, but we're also looking at larger ones all the time, but we're going to be disciplined about it. Again, looking at each pillar separately, we're not stopping. We're moving fast.

It looks like you just stopped playing a game when you came on. Good to see you. Next up is Joshua Tilton, followed by Roger Boyd from UBS.

Maybe, Roei, for you, any way to think about how much the acquisitions that you announced today are contributing to the guidance that you provided for 2026? And maybe outside of pricing, could you just talk to why or what gives you conviction in the belief that guiding to, I think, what you said flat to low single-digit growth for product is prudent from your perspective?

First, regarding the acquisitions, they are included in our guidance and are expected to have an impact of about 0.5 points on our margin. Currently, we’re focused on 2026, where we anticipate various costs that may dilute our margin by approximately 0.5 points. Concerning pricing and products, we are actively working on our guidance and plans for 2026 while analyzing our sales funnel and potential. We are also reflecting on the price increase implemented on January 1. We believe we need to sustain the strong demand we witnessed in 2025. We see a positive outlook for hardware sales, particularly in the second half of the year, as well as in the first half. It’s worth mentioning that this year's discounts have improved even compared to 2025 relative to 2024. If we manage to maintain these discounts, we can benefit from the recent price increase. However, it's important to note that our guidance does not factor in any potential additional price increases due to memory shortages, which we may consider later in the year.

And just to be clear, that 0.5 point is in the 39% to 40% margin...

Part of the guidance I provided you.

And any way to think about the top line contribution from the acquisitions?

Minimal.

Minimal to, I would say, a few millions or even a few million dollars.

All right. Next up is Roger Boyd from UBS, followed by Peter Levine from Evercore.

Awesome Nadav, I wanted to hit on Rotate. They have a lot on their platform. So I guess in addition to the MSP enablement tools that you talked about and some of the exposure management technology, how much interest is there in the rest of their portfolio, which I think includes some native technology for detection across endpoint and some other attack services? And when you think about MSPs in general, can you just talk about the percentage of revenue they represent today and how you see that evolving? How important is that in terms of your channel strategy this year?

Yes, thanks. So today, I think it's still relatively small, but I think it's a high potential growth for us in 2026 and beyond. The MSP, we're going to consolidate everything under Workspace under Gil Friedrich. The Rotate technology and the folks that are coming with it will enable us to actually streamline everything to the MSPs, and that's where the opportunity is. You're right, it's not just email; it's endpoint, it's browser, it's SASE, all put together for the smaller customers, working with our partners and the MSPs. This acquisition will allow us to accelerate and move faster into a consolidated unified ability to work with those MSPs.

All right. Thanks, Roger. Next up is Peter Levine with Evercore, followed by Saket Kalia from Barclays.

What's changed in customer demand that makes kind of exposure management more of a priority today? You touched upon it on the call in your prepared remarks, but are customers explicitly asking for united exposure visibility across network, cloud, identity, whatever it is? And then maybe just, Rory, help us understand how meaningful could this category be over the next, call it, two or three years in terms of revenue contribution?

Yes, I have to answer your question because it's significant. While it's not a major aspect right now, we recognize its great potential. Speaking from my experience, it's essential to maintain situational awareness. We're increasingly seeing demand grow, particularly as our capabilities mature. We're developing comprehensive solutions. Following our acquisition of Cyberin, we now have the intelligence we need. With Trackers, we can assess the security posture and prioritize based on the vulnerabilities and threats we observe, such as CVEs and dark web activity. We're aware of internal vulnerabilities, and with Verity, we can automate remediation. Our customers find that once they implement this, many threats are neutralized automatically before they can cause harm. From a practitioner's perspective, it's notable that attackers can exploit vulnerabilities much more quickly and employ autonomous agents that can act swiftly after a breach. Therefore, proactive prevention is more crucial than ever. The integration of these three components creates a unique position in the industry and is likely to gain increasing traction. For Check Point, this is vital as it enables us to engage new customers and pursue upselling and cross-selling opportunities. We see this as a fundamental element and a key part of our four-pillar strategy moving forward.

Thanks, Peter. Next up is Saket Kalia, followed by Brad Zelnick from Deutsche Bank.

Okay. And by the way, I appreciate the additional detail on guidance. Maybe a question for both Nadav and Roei. The four pillars are really helpful framework for thinking about the business.

Yes. If you're looking at the four pillars, of course, the most significant one is hybrid mesh, which includes also our firewall, which is still a significant part of our business. It's growing, of course, mainly driven by the SASE and our cloud network. That's largely driving the growth. Both of them, SASE and cloud network, sit on the subscription line item. That's part of the acceleration we see in our subscription line item. The others that I think have the highest growth are Workspace and exposure management. Exposure management, we talked a lot about in this call. We see very strong demand, though still small numbers from total Check Point, but very strong demand, which started when we acquired Cyberin, then we added other acquisitions that we've done and included in the offering. When we look at the funnel for next year, it is expected to be even in 2026 a major driver for our subscription line item. Email continues to be very strong. I think we have already passed the $160 million in ARR and continue to grow in very strong double digits, so definitely, we're aiming to be above $200 million this year. That's the main driver that you see our subscription revenues continue to accelerate, and we expect it to accelerate every quarter. Of course, along with contribution from firewall, again, this is a mix of the price increase, but also gaining new logos and expanding our market share.

Yes, the four pillars are strategic, as you said. In the first one, it's the infrastructure and the network. The second one is your employees. The third one is the situational awareness. Finally, security for AI, which is a stand-alone but also embedded in the three others, with services surrounding all that. To your question, to grow these pillars faster, we're doing several things. Number one, in each pillar, we are trying to identify what is a differentiated advantage. For hybrid mesh, it's the prevention-first, the scalability, the unified management, and the hybrid architecture. We're doing the same thing for each of those pillars. The second thing from our go-to-market focus, we are moving to a multi-pillar, multiproduct company so that our frontline sellers can sell each one of those pillars. Of course, in each of them, there are also different products, and we're better aligning our account managers with the specialists that can come in and support them. That's a major change in how we're going to market, literally now. One final point is that in each of those pillars, we're also going to challenge some of the existing status quo in the market. For example, challenging the supermarket approach consolidation for a real platform approach. We're challenging a closed garden to an open garden. We're challenging complexity. In each of these, we are not just building our own security platform pillar but also challenging the current status quo. In doing so, we constantly evolve by listening to the roadmap of our customers and looking around the corner to be their companion in securing AI transformation.

All right. Next up is Brad Zelnick, followed by Shyam Patil from Susquehanna.

Nadav, I've heard you loud and clear; the foundation is in place. It now comes down to execution. And I take that to mean more go-to-market than product because Check Point has always had great product and you're acquiring high-quality tuck-ins that only strengthen your offerings in the position that you're in. But where do we stand from a go-to-market perspective? How much more ramp distribution capacity do you have heading into 2026? And maybe for Roei to chime in, what needs to happen to exit '26 growing double digits and to get us to double-digit growth for the full year in '27?

Yes, thank you for that. You're right that it's about go-to-market execution. It starts with a louder voice around our marketing effort. It's about focus. As I described, we're focusing on large enterprises, new logos, and a multi-pillar, multi-product company approach. We're also focused on hiring the best people in the industry. It’s a plethora of things that we're doing to create better execution as we go to market. Lastly, it's about challenging the status quo. I think this is a time where the nature of security is changing. The criticality of security has become more important than ever. We're going to take advantage of some of the assets we have. We are seeing all the innovators, and we're testing them out as designed with our design partners on the customer side. We have new leaders in marketing and sales, and we're bringing in the best of the best in the industry to do exactly what you said by the end of the year.

To address the question about achieving double digits, we need to maintain the strong momentum and demand we’ve observed for CTM, email security, workspace, and SASE. It's essential to see ongoing strong interest in these areas, similar to what we've witnessed in our funnel last year and over the past few years, particularly with email and CTM looking ahead to 2025 and beyond. To reach double-digit growth, we must outpace the growth rate of our firewall segment. Our current position in the firewall market is much stronger than it was two or three years ago, thanks to significant improvements in both product development and go-to-market strategies. We have strong leadership in our go-to-market efforts, which positions us well to accelerate our growth in the firewall segment. Our target is to achieve mid-to-high single-digit growth in the firewall, alongside sustained momentum in our other key areas, which should ultimately lead us to double-digit growth.

All right. Next up is Shyam Patil, followed by Ben Bollin of Cleveland Research.

This is Dan on for Shyam. I guess with the price of memory increasing significantly of late, just I know you talked about potentially increasing prices, but what levers do you have to maybe try to get better deals from suppliers? How are you looking at that as we progress through the year and try to get through the shortages?

I think we are working 24/7 with suppliers around the world to get better pricing. I think we have a great team that's doing an amazing job to get the best pricing. But still, we cannot avoid the situation that the price of memory has increased significantly. Even if we're getting better pricing, it's still significantly higher than what we used to pay a few months ago before this trend started. But definitely, we are investing a lot to get the best pricing. Again, we have teams around the world exploring opportunities to get the best pricing in the market. We always want to do even better, but I think we are doing a great job there.

All right. Our last caller is going to be Patrick Colville. Ben Bolin is not on the call today. Patrick, nice to show up.

I'll make it a good one to close. It's actually a clarification question. Can you just, Roei, please go over again what drove the product revenue to be a little bit softer than we might have hoped in 4Q? And can you just also clarify why the pricing benefit doesn't really hit in 1Q and then why it builds throughout the year?

Most of the hardware we are selling is part of a bundle with software subscriptions. When we announced the subscription price increase in July, we increased the subscription prices without changing the appliance prices. This is related to how revenues are allocated; the standalone subscription price went up while the overall price remained the same. As a result, less revenue is allocated to the product, specifically the hardware. This primarily affects Q4 because the deals were announced in Q3, but not all were recognized as revenue at that time. We saw the impact in Q4, but it's mainly a short-term challenge and will not affect our total revenues.

All right. Thank you, everybody, for joining us. We appreciate it, and we'll see you throughout the quarter and then obviously, next quarter. Have a great day. Bye-bye.

Bye. Thank you.