Zafrir says Q3 was the revenue trough with sequential improvement from Q4, but the recovery will be more gradual than previously expected.
As I said, we believe Q3 marked the bottom for revenue, and we expect sequential improvement beginning in the fourth quarter. At the same time, I want to be clear that the pace of recovery is more gradual than we previously anticipated, and you'll see in our fourth quarter outlook, it reflects that, a measured recovery.
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Zafrir argues Check Point is moving beyond firewalls toward preemptive security because the current security paradigm is showing holes.
we're no longer a firewall company, and we're no longer a network security company. We are looking at where the attackers are going, and I personally believe after 30 years in this industry that the current paradigm, we're seeing holes in the current paradigm, and I think it won't be long before many of the things that we were accustomed to will become less and less relevant. We have to move from looking at the rearview mirror, and we have to start anticipating attacks.
Zafrir expects AI data center buildouts to create incremental security demand for Check Point starting in 2027.
The investment in data centers, and specifically AI data centers, whether it's for training or for inference, is just mind-boggling. These data centers need security. In fact, that's some of the places where we believe this is going actually to be incremental starting 2027.
Zafrir says data sovereignty and local open-weight models are redefining network security and boosting on-prem demand.
I do think that network security, modern network security does not necessarily mean what it meant a couple of years ago. It also means a sovereign data center. It also means running open-weight models locally, sometimes because of sovereignty, sometimes because of the need to remain independent.
Zafrir warns of a 'vulnerability apocalypse' and says reactive security will lose, requiring proactive mitigation.
what we are seeing is a vulnerability apocalypse, if you like. The only way to stay ahead of that is to be able to thin the stacks and proactively, on the one hand, dramatically lower the probability that it will happen.
Zafrir calls security for AI almost existential for customers and Check Point, and says investment will be doubled next year.
Security for AI is one example of a capability or a product that we believe is almost existential for our customers, and hence for us.