Analysis
The introduction of U.S. tariffs in April 2025, referred to by analysts and management as "Liberation Day" tariffs, created significant market uncertainty that negatively impacted Check Point's performance in the first half of 2025. Management confirmed that 2Q2025 was particularly challenging, characterized by a deceleration in demand as customers paused spending to evaluate the implications of the new trade policies. This uncertainty led to approximately 3% of total billings, or roughly $20.2M, slipping from 2Q2025 into 3Q2025.
For FY2026, the company expects a continued headwind to profitability driven by rising component and raw material costs. Specifically, management guided to a 100bps (1 point) reduction in gross margin for the full year 2026 due to increased pricing for memory and other hardware components. Based on the midpoint of FY2026 revenue guidance of $2.89B, this margin headwind represents an estimated $28.9M impact on profitability. Most of this impact is expected to manifest in the second half of 2026 as the company exhausts its current inventory buffer.
Check Point has taken proactive steps to mitigate these tariff-related costs through pricing adjustments. Effective January 1, 2026, the company implemented a 5% price increase across its hardware product portfolio. Management indicated that they will continue to monitor supply and pricing dynamics throughout the year and may consider additional pricing actions if raw material costs continue to escalate. Furthermore, the company's strategic shift toward higher-margin software subscription services—expected to grow between 10% and 14% in 2026—serves as a structural offset to the hardware-related cost pressures.
Data
Estimated Tariff Impacts and Mitigation (FY2026)
| Metric | Estimate / Action |
|---|---|
| Gross Margin Headwind | 100bps (1.0%) |
| Estimated Financial Impact ($M) | $28.9 |
| Product Price Increase | 5.0% |
| Effective Date | Jan 1, 2026 |
Source: Transcript FY-2025, Marvin Labs
Financial Impact
- Revenue Impact (Historic): $20M
- Cost Impact (Forward-Looking): $29M
Sources
I think the first half for security was a little challenging. We had Liberation Day. There was a lot of uncertainty... I think, again, I think the first half was more challenging, mainly Q2, I think. You mentioned the deceleration there. So definitely it was more uncertainty in the market.
We all know the memory price increase... it is expected to have an impact also on our gross margin in 2026. We estimated this impact to be approximately 1 point for the full year.
The product price increase that we have effectively from 1/1/2026 of 5%, [is] expect[ed] to support our product growth primarily from the second quarter of 2026.