Gil Shwed to Step Down as Check Point CEOCompany Co-Founder Will Take Role as Executive Chairman After Appointing Successor
Firewall maker Check Point Software in an earnings call touted a strong fourth quarter - and a future that won't involve co-founder Gil Shwed as company CEO.
Shwed, widely credited as the inventor of stateful inspection, has headed the publicly traded, $19 billion Israeli pure-play cybersecurity company for three decades. He told investors during a Tuesday call that he will transition into the role of executive chairman.
"I want to be super involved in Check Point, super involved in the future of Check Point, and shift a lot of my attention from the day-to-day management of the company to shaping the future of the cybersecurity market, and Check Point in particular," he said.
The search for a replacement CEO will begin on Wednesday, Shwed said. He predicts it will take anywhere from six months to two years.
The company reported annual revenue of $2.4 billion, a 4% increase over the prior year. Among its customers are FedEx, tire maker Pirelli and pharma firm Bayer.
The four quarters leading up to the last three months of 2023 were difficult, Shwed said. "We actually ended 2022 with what we think was a very tough economy, when customers held back on projects, postponed investments." New business "was actually going down."
In contrast, during the fourth quarter, subscriptions grew by 15% and earnings per share grew by a non-GAAP 14%. "We're seeing the signs of a slight turnaround," Shwed said.
Shwed has played a large role in developing the cybersecurity market even as he faced criticism for allowing the company's first-mover advantage to dissipate, which paved the way for the rise of rival network security companies such as Palo Alto Networks and Fortinet. Most key Israeli cybersecurity figures, including Palo Alto Networks founder Nir Zuk, worked with or under Shwed at some point.
Check Point conducted no acquisitions of more than $490 million between November 2006, when it bought Pointsec Mobile Technologies for $586 million, and August 2023, when it bought Perimeter 81 for $490 million. The Silicon Valley-based platform security vendor had to slash its valuation by more than half to seal the deal.
In contrast, Palo Alto Networks spent $625 million to buy Talon this year and $800 million to buy Expanse in 2020, along with other, smaller deals. Palo Alto's more aggressive acquisition strategy has allowed the company to broaden its product portfolio beyond network security and made it a leader in cloud workload security - according to Forrester.
Check Point has also made cloud security acquisitions, but they've been smaller and less successful.
Shwed has sought to position his company as a leader in threat prevention, rather than detection. He told Information Security Media Group in 2022 that "when we see something, we are prioritizing and we know how to spot it and how to prevent it, not just how to detect and create more alerts for the SOC."
The departing CEO told investors Tuesday he didn't make a decision to change his role at the company until last week. "I saw that everything is working and everything is in its place. The products are delivering," he said.