Check Point Software Technologies (NASDAQ:CHKP) shares declined 9.22% in pre-market trading on Monday after the cybersecurity company reported third-quarter 2026 revenue below analysts’ expectations, despite delivering adjusted earnings in line with forecasts.
The company posted adjusted earnings of $2.49 per share, matching the market consensus, while revenue reached $669.8 million, slightly below the $672.1 million expected by analysts.
Revenue declined 1% from $677.5 million in the corresponding quarter of 2025, reflecting continued challenges as Check Point works towards restoring growth.
However, security subscriptions revenue increased 11% year over year, supported by demand for the company’s Email, Continuous Threat Exposure Management (CTEM) and AI Security offerings.
Check Point’s third-quarter financial results reflected weaker overall revenue alongside continued growth in its subscription-based cybersecurity business.
Total revenue of $669.8 million represented a 1% decrease compared with the previous year and fell approximately $2.3 million short of analyst expectations.
Adjusted earnings per share reached $2.49, matching the consensus forecast.
On a reported adjusted basis, earnings declined from $3.94 per share in the third quarter of 2025.
However, the previous year’s figure included a one-time tax benefit of approximately $1.47 per share associated with a tax settlement.
Excluding that benefit, adjusted earnings per share increased 1% year over year, indicating relatively stable underlying earnings performance despite the revenue decline.
The distinction is important when assessing the company’s profitability, as the headline year-over-year comparison is affected by the non-recurring tax item.
Check Point reported continued expansion in its security subscriptions business, which remained a source of growth during the quarter.
Revenue from security subscriptions increased 11% year over year to $338.6 million.
The company attributed the improvement to demand for its Email, CTEM and AI Security products.
These offerings address areas of enterprise cybersecurity, including email-based threats, continuous monitoring of security exposures and risks associated with artificial intelligence.
The subscription business accounted for approximately half of Check Point’s total quarterly revenue, highlighting its importance to the company’s overall financial performance.
Growth in these products helped offset some of the weakness elsewhere in the business, although it was insufficient to prevent a decline in consolidated revenue.
Chief Executive Officer Nadav Zafrir said the company’s third-quarter performance was consistent with management’s expectations.
Zafrir highlighted the 11% increase in security subscriptions revenue and continued customer demand for Email, CTEM and AI Security solutions.
He also indicated that management believes the third quarter marked the lowest point in the company’s recent revenue performance.
Check Point expects revenue to begin improving gradually in the fourth quarter of 2026.
The outlook suggests that management anticipates a recovery following the recent period of weaker growth, although the announcement did not provide specific fourth-quarter revenue or earnings guidance.
Investors will be monitoring whether subscription momentum can translate into stronger consolidated revenue as the company moves into the final quarter of the year.
Despite the decline in revenue, Check Point reported stronger cash generation during the third quarter.
Cash flow from operating activities increased to $264.3 million, compared with $240.6 million in the corresponding period last year.
Operating cash flow represented approximately 39% of quarterly revenue, reflecting the company’s ability to convert a substantial proportion of sales into cash.
The improvement provided a positive element within the financial results, particularly as the company continues investing in its cybersecurity products and operations.
Strong operating cash generation also supports Check Point’s capacity to return capital to shareholders through its share repurchase programme.
Check Point continued its share buyback activity during the third quarter, repurchasing approximately 2.5 million shares for a total of $325 million.
The repurchases represent an ongoing use of the company’s financial resources to return capital to shareholders.
Share buybacks reduce the number of outstanding shares and can support earnings per share, depending on the company’s financial performance and the timing of purchases.
The $325 million spent on repurchases exceeded the $264.3 million generated in operating cash flow during the quarter.
However, the announcement did not provide additional details about the company’s overall cash position or future repurchase plans.
Check Point also benefited from a new research and development tax incentive programme introduced in Israel in March 2026.
The company recognised a $25 million reduction in research and development expenses under the programme during the third quarter.
The adjustment contributed to the company’s reported expense performance and represents an important factor when evaluating underlying operating costs.
The incentive is intended to support qualifying research and development activities, although the announcement did not specify its expected financial impact in future periods.
Investors may therefore consider the contribution of the tax benefit when assessing the sustainability of Check Point’s operating margins.
Check Point reported Remaining Performance Obligations (RPO) of $2.5 billion at the end of the quarter, representing a 5% increase compared with the previous year.
RPO reflects contracted revenue that has not yet been recognised, providing an indication of future revenue commitments.
The increase suggests that the company continued securing contractual business despite the decline in reported quarterly revenue.
However, the timing of revenue recognition depends on the terms and duration of the underlying contracts.
The growth in RPO, alongside the increase in security subscriptions revenue, provides additional context for management’s expectation of a gradual recovery beginning in the fourth quarter.
Check Point’s third-quarter results presented a mixed picture, with revenue falling short of expectations while adjusted earnings met forecasts.
The company reported a 1% decline in total revenue, but security subscriptions grew 11%, operating cash flow increased and remaining performance obligations reached $2.5 billion.
The $25 million research and development expense reduction also contributed to the quarter’s financial performance, while the company continued returning capital through $325 million in share repurchases.
Nevertheless, the 9.22% pre-market share price decline indicates that investors remained concerned about the revenue shortfall and the pace of the company’s recovery.
Looking ahead, attention will focus on whether Check Point can deliver the gradual revenue improvement anticipated by management in the fourth quarter, sustain subscription growth and maintain profitability as demand for its cybersecurity products develops.
Check Point Software Technology stock price
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