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CHECK POINT SOFTWARE TECHNOLOGIES LTD

CHECK POINT SOFTWARE TECHNOLOGIES LTDCHKPEarnings & Financial Report

Nasdaq · Information Technology · computer security software

Check Point Software Technologies is an Israeli cybersecurity company with operations in over 60 countries. Its headquarters are located in Tel Aviv, Israel, and the company maintains a significant presence in Redwood City, California, United States. The company protects over 100,000 organizations globally and is home to the Check Point Research team. It is a partner organization of the World Economic Forum.

What changed in CHECK POINT SOFTWARE TECHNOLOGIES LTD's 20-F — 2022 vs 2023

Top changes in CHECK POINT SOFTWARE TECHNOLOGIES LTD's 2023 20-F

345 paragraphs added · 306 removed · 221 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

79 edited+50 added−23 removed168 unchanged
Any of the following could have a material effect on our overall effective tax rate: • Some programs may be discontinued, • We may be unable to meet the requirements for continuing to qualify for some programs, • These programs and tax benefits may be unavailable at their current levels, or • We may be required to refund previously recognized tax benefits if we are found to be in violation of the stipulated conditions.
Any of the following could have a material effect on our overall effective tax rate: • Some programs may be discontinued, • We may be unable to meet the requirements for continuing to qualify for some programs, • These programs and tax benefits may be unavailable at their current levels, or 20 • We may be required to refund previously recognized tax benefits if we are found to be in violation of the stipulated conditions.
Our international sales and operations subject us to many potential risks inherent in international business activities, including, but not limited to: • technology import and export license requirements; • costs of localizing our products for foreign countries, and the lack of acceptance of localized products in foreign countries; • varying economic and political instability or war, including the significant military action against Ukraine launched by Russia; • potential tariffs, sanctions, fines or other trade restrictions, including any political or economic responses and counter-responses or otherwise by various global actors to the significant military action against Ukraine launched by Russia; • imposition of or increases in tariffs or other payments on our revenues in these markets; • greater difficulty in protecting intellectual property; • difficulties in managing our overseas subsidiaries and our international operations; • economic, social, or political conditions, including conditions resulting from a decline in the macroeconomic environment, rising interest rates, exchange rate fluctuations and inflation; • political instability and civil unrest which could discourage investment and complicate our dealings with governments; • widespread health emergencies or pandemics, such as the COVID-19 pandemic; • difficulties in complying with a variety of foreign laws and legal standards and changes in regulatory requirements; • expropriation and confiscation of assets and facilities; • difficulties in collecting receivables from foreign entities or delayed revenue recognition; • recruiting and retaining talented and capable employees; • differing labor standards; • increased tax rates; • potentially adverse tax consequences, including taxation of a portion of our revenues at higher rates than the tax rate that applies to us in Israel; • fluctuations in currency exchange rates and the impact of such fluctuations on our results of operations and financial position; and • the introduction of exchange controls and other restrictions by foreign governments.
Our international sales and operations subject us to many potential risks inherent in international business activities, including, but not limited to: • technology import and export license requirements; • costs of localizing our products for foreign countries, and the lack of acceptance of localized products in foreign countries; • varying economic and political instability or war, including the war and hostilities between Israel and Hamas and Israel and Hezbollah and the significant military action against Ukraine launched by Russia; 14 • potential tariffs, sanctions, fines or other trade restrictions, including any political or economic responses and counter-responses or otherwise by various global actors to the significant military action against Ukraine launched by Russia; • imposition of or increases in tariffs or other payments on our revenues in these markets; • greater difficulty in protecting intellectual property; • difficulties in managing our overseas subsidiaries and our international operations; • economic, social, or political conditions, including conditions resulting from a decline in the macroeconomic environment, rising interest rates, exchange rate fluctuations and inflation; • political instability and civil unrest which could discourage investment and complicate our dealings with governments; • widespread health emergencies or pandemics, such as the COVID-19 pandemic; • difficulties in complying with a variety of foreign laws and legal standards and changes in regulatory requirements; • expropriation and confiscation of assets and facilities; • difficulties in collecting receivables from foreign entities or delayed revenue recognition; • recruiting and retaining talented and capable employees; • differing labor standards; • increased tax rates; • potentially adverse tax consequences, including taxation of a portion of our revenues at higher rates than the tax rate that applies to us in Israel; • fluctuations in currency exchange rates and the impact of such fluctuations on our results of operations and financial position; and • the introduction of exchange controls and other restrictions by foreign governments.
In particular, following audits of our 2016 through 2020 corporate tax returns, the Israeli Tax Authority (the “ITA”) issued in January 2023 orders for the years 2016 through 2019 challenging our positions on several issues, including matters such as our position to claim a tax credit made for foreign taxes withheld on income payments that was due to the Company outside of Israel, taxation of interest earned outside of Israel by a wholly-owned Singapore subsidiary which the ITA is seeking to tax in Israel and deductibility of expenses attributed to employee stock options.
In particular, following audits of the Company’s 2016 through 2020 corporate tax returns, the Israeli Tax Authority (the “ITA”) issued in January 2023 orders for the years 2016 through 2019 challenging our positions on several issues, including matters such as our position to claim a tax credit made for foreign taxes withheld on income payments that was due to us outside of Israel, taxation of interest earned outside of Israel by a wholly-owned Singapore subsidiary which the ITA is seeking to tax in Israel and deductibility of expenses attributed to employee stock options.
The results of our operations may be adversely affected in relation to foreign exchange fluctuations. During 2022, we entered into forward contracts to hedge against some of the risk of foreign currency exchange rates fluctuations resulting in changes in future cash flow from payments of payroll and related expenses denominated in Israeli Shekels and Euros.
The results of our operations may be adversely affected in relation to foreign exchange fluctuations. During 2023, we entered into forward contracts to hedge against some of the risk of foreign currency exchange rates fluctuations resulting in changes in future cash flow from payments of payroll and related expenses denominated in Israeli Shekels and Euros.
In connection with our Annual Report for fiscal 2022, our management assessed our internal control over financial reporting, and determined that our internal control over financial reporting was effective as of December 31, 2022, and our independent auditors have expressed an unqualified opinion over the effectiveness of our internal control over financial reporting as of December 31, 2022.
In connection with our Annual Report for fiscal 2023, our management assessed our internal control over financial reporting, and determined that our internal control over financial reporting was effective as of December 31, 2023, and our independent auditors have expressed an unqualified opinion over the effectiveness of our internal control over financial reporting as of December 31, 2023.
The tax benefits available to us require us to meet several conditions, and may be terminated or reduced in the future, which would increase our taxes For the year ended December 31, 2022, our effective tax rate was 14%.
The tax benefits available to us require us to meet several conditions, and may be terminated or reduced in the future, which would increase our taxes For the year ended December 31, 2023, our effective tax rate was 14%.
Continued growth of this market will depend, in large part, upon: • the continued expansion of Internet usage and the number of organizations adopting or expanding intranets; • the continued adoption of “cloud” infrastructure by organizations; • the ability of the infrastructures implemented by organizations to support an increasing number of users and services; • the continued development of new and improved services for implementation across the Internet and between the Internet and intranets; • the adoption of data security measures as it pertains to data encryption and data loss prevention technologies; • continued access to mobile API’s, APPs and application stores with Apple, Google and Microsoft; • government regulation of the Internet and governmental and non-governmental requirements and standards with respect to data security and privacy; and • economic, social, or political conditions, including conditions resulting from a decline in the macroeconomic environment, rising interest rates, exchange rate fluctuations, inflation, the COVID-19 pandemic, global supply chain disruptions and conditions resulting from geopolitical uncertainty and instability or war, including the Russia-Ukraine armed conflict and the tension between China and Taiwan.
Continued growth of this market will depend, in large part, upon: • the continued expansion of Internet usage and the number of organizations adopting or expanding intranets; • the continued adoption of “cloud” infrastructure by organizations; • the ability of the infrastructures implemented by organizations to support an increasing number of users and services; • the continued development of new and improved services for implementation across the Internet and between the Internet and intranets; • the adoption of data security measures as it pertains to data encryption and data loss prevention technologies; • continued access to mobile API’s, APPs and application stores with Apple, Google and Microsoft; • government regulation of the Internet and governmental and non-governmental requirements and standards with respect to data security and privacy; and 5 • economic, social, or political conditions, including conditions resulting from a decline in the macroeconomic environment, rising interest rates, exchange rate fluctuations, inflation, global pandemics such as the COVID-19 pandemic, global supply chain disruptions and conditions resulting from geopolitical uncertainty and instability or war, including the war and hostilities between Israel and Hamas and Israel and Hezbollah, the Russia-Ukraine armed conflict and the tension between China and Taiwan.
Bribery Act or other 12 Table of Contents anti-bribery laws (either due to acts or inadvertence of our employees, or due to the acts or inadvertence of others), we could suffer criminal or civil penalties or other sanctions, which could have a material adverse effect on our business, results of operations, cash flows, financial condition, reputation and ability to win future business or maintain existing contracts.
Bribery Act or other anti-bribery laws (either due to acts or inadvertence of our employees, or due to the acts or inadvertence of others), we could suffer criminal or civil penalties or other sanctions, which could have a material adverse effect on our business, results of operations, cash flows, financial condition, reputation and ability to win future business or maintain existing contracts.
Failure to retain or attract qualified personnel, at an appropriate cost, could have a material adverse effect on our business, financial condition and results of operations. 8 Table of Contents Risks Related to Our Dependence on Third-Parties We are dependent on a small number of distributors We derive our sales primarily through indirect channels.
Failure to retain or attract qualified personnel, at an appropriate cost, could have a material adverse effect on our business, financial condition and results of operations. Risks Related to Our Dependence on Third-Parties We are dependent on a small number of distributors We derive our sales primarily through indirect channels.
Our actual or alleged failure to comply with applicable laws and regulations, relating to the protection of personal data, could result in enforcement actions, significant penalties imposed by a regulator or data subject or other legal action against us or our customers or suppliers, which could result in negative publicity, increased operating costs, and financial penalties which could have a material adverse effect on our business and results of operations.
Our actual or alleged failure to comply with applicable laws and regulations, relating to the processing and protection of personal data, could result in enforcement actions, significant penalties imposed by a regulator or data subject or other legal action against us or our customers or suppliers, which could result in negative publicity, increased operating costs, and damages, financial penalties and other liabilities, all of which could have a material adverse effect on our business and results of operations.
Compliance with these laws and regulations can be costly and can delay or impede the development and offering of new products and services. 13 Table of Contents For example, the General Data Protection Regulation (“GDPR”) (which is applicable in both the EU and the UK), imposes stringent requirements for data processors and controllers.
Compliance with these laws and regulations can be costly and can delay or impede the development and offering of new products and services. For example, the General Data Protection Regulation (“GDPR”) (which is applicable in both the EU and the UK), imposes stringent requirements for data processors and controllers.
Your rights and responsibilities as a shareholder are, and will continue to be, governed by Israeli law which differs in some material respects from the rights and responsibilities of shareholders of U.S. companies 17 Table of Contents The rights and responsibilities of the holders of our ordinary shares are governed by our articles of association and by Israeli law.
Your rights and responsibilities as a shareholder are, and will continue to be, governed by Israeli law which differs in some material respects from the rights and responsibilities of shareholders of U.S. companies The rights and responsibilities of the holders of our ordinary shares are governed by our articles of association and by Israeli law.
Any failure to obtain licenses to intellectual property or any exposure to liability as a result of incorporating third-party technology into our products could materially and adversely affect our business, results of operations and financial condition. 9 Table of Contents Failures of the third-party servers, cloud service providers and other third-party hardware, software and infrastructure on which we rely could adversely affect our business We rely on servers, cloud service providers and other third-party hardware, software and infrastructure to support our operations.
Any failure to obtain licenses to intellectual property or any exposure to liability as a result of incorporating third-party technology into our products could materially and adversely affect our business, results of operations and financial condition. 10 Failures of the third-party servers, cloud service providers and other third-party hardware, software and infrastructure on which we rely could adversely affect our business We rely on servers, cloud service providers and other third-party hardware, software and infrastructure to support our operations.
Had we reported the cumulative changes in the fair value of our fixed income securities as part of our income, our reported net income for the year ended December 31, 2022, would have decreased by $95 million. Currency fluctuations may affect the results of our operations or financial condition Our functional and reporting currency is the U.S. dollar.
Had we reported the cumulative changes in the fair value of our fixed income securities as part of our income, our reported net income for the year ended December 31, 2023, would have decreased by $40 million. Currency fluctuations may affect the results of our operations or financial condition Our functional and reporting currency is the U.S. dollar.
We generate a majority of our revenues and expenses in U.S. dollars. In 2022, we incurred approximately 46% of our expenses in foreign currencies, primarily Israeli Shekels and Euros. As such, changes in exchange rates may have a material adverse effect on our business, results of operations and financial condition.
We generate a majority of our revenues and expenses in U.S. dollars. In 2023, we incurred approximately 47% of our expenses in foreign currencies, primarily Israeli Shekels and Euros. As such, changes in exchange rates may have a material adverse effect on our business, results of operations and financial condition.
In addition, acts of terrorism or war (including the significant military action against Ukraine launched by Russia and any related political or economic responses and counter-responses or otherwise by various global actors or general effect on the global economy) could cause disruptions to our or our customers’ businesses or the economy as a whole.
In addition, acts of terrorism or war (including the war and hostilities between Israel and Hamas and Israel and Hezbollah and the significant military action against Ukraine launched by Russia and any related political or economic responses and counter-responses or otherwise by various global actors or general effect on the global economy) could cause disruptions to our or our customers’ businesses or the economy as a whole.
Moreover, in case we would like to liquidate some of our investments into cash – we are dependent on market conditions and liquidity opportunities, which may be impacted by economic, social, or political conditions, including, without limitation, conditions resulting from a decline in the macroeconomic environment, rising interest rates, exchange rate fluctuations, inflation, the COVID-19 pandemic, global supply chain disruptions and conditions resulting from geopolitical uncertainty and instability or war, including the significant military action against Ukraine launched by Russia.
Moreover, in case we would like to liquidate some of our investments into cash – we are dependent on market conditions and liquidity opportunities, which may be impacted by economic, social, or political conditions, including, without limitation, conditions resulting from a decline in the macroeconomic environment, rising interest rates, exchange rate fluctuations, inflation, global pandemics such as the COVID-19 pandemic, global supply chain disruptions and conditions resulting from geopolitical uncertainty and instability or war, including the war and hostilities between Israel and Hamas and Israel and Hezbollah and the significant military action against Ukraine launched by Russia.
Any hostilities involving Israel, a significant increase in terrorism or the interruption or curtailment of trade between Israel and its present trading partners, or a significant downturn in the economic or financial condition of Israel, could materially adversely affect our operations.
Any hostilities involving Israel, a significant increase in terrorism or the interruption or curtailment of trade between Israel and its present trading partners, a potential boycott of any Israeli products, or a significant downturn in the economic or financial condition of Israel, could materially adversely affect our operations.
Interest rates are highly sensitive to many factors, including governmental monetary policies and domestic and international economic and political conditions, such as the significant military action against Ukraine launched by Russia and any related political or economic responses and counter-responses or otherwise by various global actors or general effect on the global economy.
Interest rates are highly sensitive to many factors, including governmental monetary policies and domestic and international economic and political conditions, such as the war and hostilities between Israel and Hamas and Israel and Hezbollah and the significant military action against Ukraine launched by Russia and any related political or economic responses and counter-responses or otherwise by various global actors or general effect on the global economy.
Our business, results of operations and financial condition are subject to the risks of earthquakes, fire, floods, pandemics and other natural events, as well as manmade problems such as power disruptions or terrorism or war, and have been and may continue to be adversely affected by the COVID-19 pandemic.
Our business, results of operations and financial condition are subject to the risks of earthquakes, fire, floods, pandemics such as COVID 19 pandemic and other natural events, as well as manmade problems such as power disruptions or terrorism or war, such as the war and hostilities between Israel and Hamas and Israel and Hezbollah have been and may continue to be adversely affected.
Mimecast Limited, Microsoft Corp. and Wiz Ltd., with respect to specific products that we offer. 4 Table of Contents In addition, there are hundreds of small and large companies that offer security products and services that we may compete with from time to time.
Mimecast Limited, Microsoft Corp., Wiz Ltd., and Netskope, Inc., with respect to specific products that we offer. In addition, there are hundreds of small and large companies that offer security products and services that we may compete with from time to time.
Other matters that influence customer confidence and spending, such as, political unrest, public health crises, including COVID-19, terrorist attacks, armed conflicts (such as the ongoing conflict between Russia and Ukraine), rising energy costs, and natural disasters, could also negatively affect our customers’ spending on our products and services.
Other matters that influence customer confidence and spending, such as, political unrest, public health crises, including global pandemic such as COVID-19, terrorist attacks, armed conflicts (such as the war and hostilities between Israel and Hamas and Israel and Hezbollah and the ongoing conflict between Russia and Ukraine), rising energy costs, and natural disasters, could also negatively affect our customers’ spending on our products and services.
Customers may delay or cancel cybersecurity projects or seek to lower their costs by renegotiating renewals or maintenance and support agreements. Further, customers or channel partners may be more likely to refrain from making payments and/or make late payments in worsening economic conditions.
Negative economic conditions may cause existing and prospective customers to reduce their spending. Customers may delay or cancel cybersecurity projects or seek to lower their costs by renegotiating renewals or maintenance and support agreements. Further, customers or channel partners may be more likely to refrain from making payments and/or make late payments in worsening economic conditions.
Additionally, the United States has state-level data privacy laws and their fragmented regulations increase the burden of compliance. In California, the California Consumer Privacy Act (“CCPA”) provides data privacy rights for consumers and privacy related operational requirements for companies.
Additionally, the United States has various privacy laws and its fragmented regulations increase the burden of compliance. In California, the California Consumer Privacy Act (“CCPA”) provides data privacy rights for consumers and privacy related operational requirements for companies.
Risks Related to Our Operations in Israel Potential political, economic and military instability in Israel, where our principal executive offices and our principal research and development facilities are located, may adversely affect our results of operations 16 Table of Contents We are incorporated under the laws of the State of Israel, and our principal executive offices and principal research and development facilities are located in Israel.
Risks Related to Our Operations in Israel The ongoing war and other potential political, economic and military instability in Israel, where our principal executive offices and our principal research and development facilities are located, may adversely affect our results of operations We are incorporated under the laws of the State of Israel, and our principal executive offices and principal research and development facilities are located in Israel.
In some cases, a new product or product enhancements may negatively affect sales of 5 Table of Contents our existing products.
In some cases, a new product or product enhancements may negatively affect sales of our existing products.
As of December 31, 2022, our total outstanding forward contracts that hedge against these fluctuations in foreign currency exchange rates were $266 million. 15 Table of Contents In addition, we entered into forward contracts to hedge the impact of fluctuations in exchange rates on assets and liabilities denominated in Israeli Shekels and other currencies.
As of December 31, 2023, our total outstanding forward contracts that hedge against these fluctuations in foreign currency exchange rates were $207 million. In addition, we entered into forward contracts to hedge the impact of fluctuations in exchange rates on assets and liabilities denominated in Israeli Shekels and other currencies.
Our cash, cash equivalents, short-term bank deposits and fixed-income marketable securities totaled $3,503 million as of December 31, 2022. The performance of the debt capital markets affects the market values of funds that are held in marketable securities.
Our cash, cash equivalents, short-term bank deposits and fixed-income marketable securities totaled $2,960 million as of December 31, 2023. The performance of the debt capital markets affects the market values of funds that are held in marketable securities.
The ITA orders also contest the Company’s positions on various other issues.
The ITA orders also contest our positions on various other issues.
As of December 31, 2022, the total amount of outstanding forward contracts that did not qualify for hedge accounting, was $208 million.
As of December 31, 2023, the total amount of outstanding forward contracts that did not qualify for hedge accounting, was $242 million.
We are also a target of malicious attackers who attempt to gain access to our network or data centers or those of our customers or end users; steal proprietary information related to our business, products, employees, and customers; or interrupt our systems or those of our customers or others.
We are also a target of attempts to gain access to our network or data centers or those of our customers or end users, steal proprietary information related to our business, products, services, employees, and customers, or interrupt our information technology systems or networks or those of our customers or others.
In addition, we may not be able to integrate acquired personnel, operations, and technologies successfully or effectively manage the combined business following the completion of any future acquisition.
In addition, we may not be able to integrate acquired personnel, operations, and technologies successfully or effectively manage the combined business following the completion of any future acquisition. Additionally, such integration may impact our revenue and operating results.
We may use derivative financial instruments, such as foreign exchange forward contracts, put and call options, and others, to mitigate the risk of fluctuations changes in foreign exchange rates on assets, cash flows receivables and payables denominated in certain currencies. We may not be able to purchase derivative instruments adequate to fully protect us from foreign currency exchange risks.
We may use derivative financial instruments, such as foreign exchange forward contracts, put and call options, and others, to mitigate the risk of fluctuations changes in foreign exchange rates on assets, cash flows receivables and payables denominated in certain currencies.
During 2022, 2021 and 2020, we derived approximately 60%, 58% and 57%, respectively, of our sales from our ten largest distributors. In 2022, 2021 and 2020, our two largest distributors accounted for approximately 40%, 40% and 39% of our sales, respectively. We expect that a small number of distributors will continue to generate a significant portion of our sales.
During 2023, 2022 and 2021, we derived approximately 56%, 59% and 57%, respectively, of our sales from our ten largest distributors. In each of 2023, 2022 and 2021, our three largest distributors accounted for approximately 40%, of our sales. We expect that a small number of distributors will continue to generate a significant portion of our sales.
The ITA therefore demanded the payment of additional taxes in the aggregate amount of NIS 428 million (approximately $122 million), not including an amount of NIS 418 million (approximately $119 million) related to expenses that will be deductible in future years , with respect of these four tax years (these amounts include interest through December 31, 2022).
The ITA therefore demanded the payment of additional taxes in the aggregate amount of NIS 479 million (approximately $132 million), not including an amount of NIS 421 million (approximately $116 million) related to expenses that will be deductible in future years, with respect of these four tax years (these amounts include interest and indexation through December 31, 2023).
We are subject to governmental export and import controls that could subject us to liability or impair our ability to compete in international markets Because we incorporate encryption technology into our products, certain of our products are subject to U.S. export controls and may be exported outside the U.S. only with the required export license or through an export license exception.
Any litigation of this sort in the future could result in substantial costs and a diversion of management’s attention and resources. 12 We are subject to governmental export and import controls that could subject us to liability or impair our ability to compete in international markets Because we incorporate encryption technology into our products, certain of our products are subject to U.S. export controls and may be exported outside the U.S. only with the required export license or through an export license exception.
We have certain patents in the United States and in several other 11 Table of Contents countries, as well as pending patent applications. We cannot assure you that pending patent applications will be issued, either at all or within the scope of the patent claims that we have submitted.
We have certain patents in the United States and in several other countries, as well as pending patent applications. We cannot assure you that pending patent applications will be issued, either at all or within the scope of the patent claims that we have submitted. In addition, someone else may challenge our patents and these patents may be found invalid.
Although we maintain product liability insurance for most of our products, the coverage limits of these policies may not provide sufficient protection against an asserted claim.
As a result, the limitation of liability provisions contained in these licenses may not be effective. Although we maintain product liability insurance for most of our products, the coverage limits of these policies may not provide sufficient protection against an asserted claim.
In addition, following the Russia-Ukraine armed conflict, the United States and other countries imposed economic sanctions and severe export control restrictions against Russia and Belarus, and the United States and other countries could impose wider sanctions and export restrictions and take other actions should the conflict further escalate, which affect our exports or sales into Russia and Belarus and create difficulties in business planning and forecasting due to the uncertainty of the impact of the war on aspects of our business, such as on our distributors, resellers and end-customers.
To the extent any of the foregoing causes disruptions or result in delays or cancellations of customer orders, our research and development efforts or the deployment of our products, our business and results of operations would be materially and adversely affected. 7 In addition, following the Russia-Ukraine armed conflict, the United States and other countries imposed economic sanctions and severe export control restrictions against Russia and Belarus, and the United States and other countries could impose wider sanctions and export restrictions and take other actions should the conflict further escalate, which affect our exports or sales into Russia and Belarus and create difficulties in business planning and forecasting due to the uncertainty of the impact of the war on aspects of our business, such as on our distributors, resellers and end-customers.
Competition for highly skilled personnel is intense We compete in a market marked by rapidly changing technologies and an evolving competitive landscape. In order for us to successfully compete and grow, we must attract, recruit, retain and develop personnel, at an appropriate cost, with requisite qualifications to provide expertise across the entire spectrum of our intellectual capital and business needs.
In order for us to successfully compete and grow, we must attract, recruit, retain and develop personnel, at an appropriate cost, with requisite qualifications to provide expertise across the entire spectrum of our intellectual capital and business needs.
EU Member States are anticipating to integrate the provisions of the Directive into their national laws by December 31, 2023 and generally apply these provisions for fiscal years starting on or after December 31, 2023.
EU Member States and other non EU countries enacted legislation to integrate the provisions of the Directive and Pillar Two Rules into their national laws by December 31, 2023 and the majority of those countries generally apply these provisions for fiscal years starting on or after December 31, 2023.
In addition, the ITA has issued tax assessment for the 2020 tax year in which it demanded the payment of additional taxes in the aggregate amount of NIS 74 million (approximately $21 million), not including an amount of NIS 94 million (approximately $27 million) related to expenses that will be deductible in future years, with respect to this year (these amounts include interest through December 31, 2022).
In addition, the ITA has issued tax assessment for the 2020 tax year, presenting similar arguments as those in the orders for the tax years 2016-2019, in which it demanded the payment of additional taxes in the aggregate amount of NIS 84 million (approximately $23 million), not including an amount of NIS 95 million (approximately $26 million) related to expenses that will be deductible in future years, with respect to this year (these amounts include interest and indexation through December 31, 2023).
Such actions, particularly if they become more widespread, may adversely impact our ability to sell our products. Uprisings and armed conflicts in various countries in the Middle East and North Africa are affecting the political stability of those countries. This instability may lead to deterioration of the political and trade relationships that exist between Israel and these countries.
Uprisings and armed conflicts in various countries in the Middle East and North Africa are affecting the political stability of those countries. This instability may lead to deterioration of the political and trade relationships that exist between Israel and these countries.
In addition, a foreign private issuer must disclose in its annual reports filed with the Securities and Exchange Commission each such requirement that it does not follow and describe the home country practice followed by the issuer instead of any such requirement.
In addition, a foreign private issuer must disclose in its annual reports filed with the Securities and Exchange Commission each such requirement that it does not follow and describe the home country practice followed by the issuer instead of any such requirement. Accordingly, our shareholders may not be afforded the same protection as provided under Nasdaq’s corporate governance rules. 21
Changes in foreign exchange rates around the globe, could have an adverse impact on our business and results of operations. These changes may have an impact on some of our expenses which are paid in local currencies (non US dollar), as well as an impact on our non-US customers which have their financials in non-US dollar currencies.
These changes may have an impact on some of our expenses which are paid in local currencies (non US dollar), as well as an impact on our non-US customers which have their financials in non-US dollar currencies.
In particular, the personal computer hardware environment is characterized by a wide variety of non-standard configurations that make pre-release testing for programming or compatibility errors very difficult and time-consuming. We may need to divert the attention of our engineering personnel from our research and development efforts to address instances of errors or defects.
In particular, the personal computer hardware environment is characterized by a wide variety of non-standard configurations that make pre-release testing for programming or compatibility errors very difficult and time-consuming.
We do not know whether, in the future, we will be subject to liability claims or litigation for damages related to product errors, or will experience delays as a result of these errors. Our sales agreements and product licenses typically contain provisions designed to limit our exposure to potential product liability or related claims.
As a result, the sale and support of our products entails the risk of product liability and related claims. We do not know whether, in the future, we will be subject to liability claims or litigation for damages related to product errors, or will experience delays as a result of these errors.
Additionally, our hedging activities may also generate losses as a result of volatility in foreign currency markets. If foreign exchange markets continue to be volatile, such fluctuations in foreign exchange rates could materially and adversely affect our profit margins and results of operations in future periods.
If foreign exchange markets continue to be volatile, such fluctuations in foreign exchange rates could materially and adversely affect our profit margins and results of operations in future periods. Also, the volatility in the foreign exchange markets may make it difficult to hedge our foreign currency exposures effectively.
If a third-party asserts that we are infringing its intellectual property, whether successful or not, it could subject us to costly and time-consuming litigation or expensive licenses, which could harm our business There is considerable patent and other intellectual property development activity in our industry.
Any such requirement to disclose our source code or other confidential information related to our products could materially and adversely affect our competitive position and impact our business, results of operations and financial condition. 13 If a third-party asserts that we are infringing its intellectual property, whether successful or not, it could subject us to costly and time-consuming litigation or expensive licenses, which could harm our business There is considerable patent and other intellectual property development activity in our industry.
In selling our products, we rely primarily on “shrink wrap” licenses that are not signed by the end user, and for this and other reasons, these licenses may be unenforceable under the laws of some jurisdictions. As a result, the limitation of liability provisions contained in these licenses may not be effective.
Our sales agreements and product licenses typically contain provisions designed to limit our exposure to potential product liability or related claims. In selling our products, we rely primarily on “shrink wrap” licenses that are not signed by the end user, and for this and other reasons, these licenses may be unenforceable under the laws of some jurisdictions.
Our efforts to protect our proprietary rights may not be adequate and our competitors may independently develop technology that is similar to our technology. In addition to patents, we rely on trade secret and other rights to protect our unpatented proprietary intellectual property and technology.
In addition to patents, we rely on trade secret and other rights to protect our unpatented proprietary intellectual property and technology.
Although we have been successful in the past, replacing suppliers may be difficult and it is possible it could result in an inability or delay in producing designated hardware products. We are already seeing delays which could have a material adverse impact on our business.
Any material supply chain disruption could negatively impact our business, financial condition and results of operations. Although we have been successful in the past, replacing suppliers may be difficult and it is possible it could result in an inability or delay in producing designated hardware products.
Also, the volatility in the foreign exchange markets may make it difficult to hedge our foreign currency exposures effectively. The imposition of exchange or price controls or other restrictions on the conversion of foreign currencies could also have a material adverse effect on our business, results of operations and financial condition.
The imposition of exchange or price controls or other restrictions on the conversion of foreign currencies could also have a material adverse effect on our business, results of operations and financial condition. Changes in foreign exchange rates around the globe, could have an adverse impact on our business and results of operations.
In addition, if any of our products fail to meet specifications or have reliability, quality or compatibility problems, our reputation could be damaged significantly and customers might be reluctant to buy our products, which could result in a decline in revenues, a loss of existing customers, and difficulty attracting new customers. 7 Table of Contents We are subject to risks relating to acquisitions We have made acquisitions in the past, including the acquisitions of Spectral in 2022, Avanan in 2021, and Odo Security in 2020, and we may make additional acquisitions in the future.
In addition, if any of our products fail to meet specifications or have reliability, quality or compatibility problems, our reputation could be damaged significantly and customers might be reluctant to buy our products, which could result in a decline in revenues, a loss of existing customers, and difficulty attracting new customers.
The base erosion and profit shifting (“BEPS”) project undertaken by the OECD may have adverse consequences to our tax liabilities. The first pillar of BEPS’s project is focused on the allocation of taxing rights between countries for in-scope large multinational enterprises that sell goods and services into countries with minor or no local physical presence.
The first pillar of BEPS’s project is focused on the allocation of taxing rights between countries for in-scope large multinational enterprises that sell goods and services into countries with minor or no local physical presence. We do not expect to be within the scope of this Pillar 1.
Our cash balances and investment portfolio have been, and may continue to be, adversely affected by market conditions and interest rates We maintain substantial balances of cash and liquid investments, for purposes of general corporate purposes, which may include acquisitions, share repurchases and other purposes.
In addition, this concentration of ownership may delay, prevent or deter a change in control, or deprive a shareholder of a possible premium for its ordinary shares as part of a sale of our company. 16 Our cash balances and investment portfolio have been, and may continue to be, adversely affected by market conditions and interest rates We maintain substantial balances of cash and liquid investments, for purposes of general corporate purposes, which may include acquisitions, share repurchases and other purposes.
Our future growth depends heavily on our ability to effectively develop and sell new and acquired products as well as add new features to existing products. For more details, see “Item 4 – Information on Check Point” and “Item 5 – Operating and Financial Review and Prospects”.
Our future growth depends heavily on our ability to effectively develop and sell new and acquired products as well as add new features to existing products.
The armed conflict involving Russia and Ukraine has resulted in sanctions which restrict the selling of goods, services, or technology in affected regions. The instability in these regions could further exacerbate the macroeconomic impacts on a global scale. Negative economic conditions may cause existing and prospective customers to reduce their spending.
The terrorist groups in Yemen, which are threatening to limit the movement of marine shipments to Israel through the Red Sea, and the armed conflict involving Russia and Ukraine has resulted in sanctions which restrict the selling of goods, services, or technology in affected regions. The instability in these regions could further exacerbate the macroeconomic impacts on a global scale.
We are the defendant in various other lawsuits, including employment-related litigation claims, construction claims and other legal proceedings in the normal course of our business. Litigation and governmental proceedings can be expensive, lengthy and disruptive to normal business operations, and can require extensive management attention and resources, regardless of their merit.
Litigation and governmental proceedings can be expensive, lengthy and disruptive to normal business operations, and can require extensive management attention and resources, regardless of their merit.
Uncertainties in the interpretation and application of worldwide tax reforms, complex tax laws and regulations could materially affect our tax obligations and effective tax rate On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Tax Act”), which, among other provisions, reduced the U.S. corporate tax rate from 35% to 21%, limited the tax deduction for interest expense to 30% of adjusted taxable income, implemented a “base erosion anti-abuse tax”, repealed the alternative minimum tax, or AMT, for corporations, limited the deduction for net operating 10 Table of Contents losses carried forward from taxable years beginning after December 31, 2017 to 80% of current year taxable income, eliminated net operating loss carrybacks, and beginning in 2022 eliminated the option to deduct research and development expenditures currently and required taxpayers to capitalize and amortize them over five or fifteen years.
Uncertainties in the interpretation and application of worldwide tax reforms, complex tax laws and regulations could materially affect our tax obligations and effective tax rate On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Tax Act”), which, among other provisions, beginning in 2022 eliminated the option to deduct research and development expenditures currently and required taxpayers to capitalize and amortize them over five or fifteen years.
We may not be able to continue competing successfully against our current and future competitors, and increased competition within the market may result in price reductions, reduced gross margins and operating margins, reduced net income, and loss of market share, any or all of which may materially adversely affect our business, results of operations and financial condition.
Furthermore, even if the network or application security functionality provided as standard features by operating systems software and networking hardware is more limited than that of our solutions, a significant number of customers may elect to accept more limited functionality in lieu of purchasing additional products. 6 We may not be able to continue competing successfully against our current and future competitors, and increased competition within the market may result in price reductions, reduced gross margins and operating margins, reduced net income, and loss of market share, any or all of which may materially adversely affect our business, results of operations and financial condition.
Despite our efforts to protect our proprietary rights, others may copy aspects of our products or obtain and use information that we consider proprietary. In addition, the laws of some foreign countries do not protect our proprietary rights to the same extent as the laws of the United States and Israel.
In addition, the laws of some foreign countries do not protect our proprietary rights to the same extent as the laws of the United States and Israel. Our efforts to protect our proprietary rights may not be adequate and our competitors may independently develop technology that is similar to our technology.
In 2021 and 2022, global and regional economies around the world and financial markets remained volatile as a result of a multitude of factors, including economic and political uncertainty, rising interest rates, inflation, the COVID-19 pandemic, the war in Ukraine, terrorism, governmental instability and other factors.
In the last few years, global and regional economies around the world and financial markets remained volatile as a result of a multitude of factors, including economic and political uncertainty, the war and hostilities between Israel and Hamas and Israel and Hezbollah, rising interest rates, inflation, terrorist groups in Yemen, which are threatening to limit the movement of marine shipments to Israel through the Red Sea, global pandemics such as COVID-19, the war in Ukraine, terrorism, governmental instability and other factors.
Such incidents, whether successful or unsuccessful, could result in our incurring significant costs related to, for example, rebuilding internal systems, reduced inventory value, providing modifications to our products and services, defending against litigation, responding to regulatory inquiries or actions, paying damages, or taking other remedial steps with respect to third parties.
Any actual or perceived security breach or incident impacting us, our third-party service providers, or our customers or users, whether successful or unsuccessful, could result in reputational harm, governmental inquiries, investigations or other proceedings, penalties and significant costs, including those related to, for example, rebuilding internal systems, reduced inventory value, providing modifications to our products and services, defending against litigation, responding to regulatory inquiries or actions, paying damages, or taking other remedial steps, all of which could damage our reputation and reduce demand for our products and services.
There can be no assurance that the ITA will accept the Company’s positions on the matters raised and, if it does not, the ITA may also issue an order with respect to the 2020 tax year.
There is no assurance that the ITA will accept our positions on the matters raised and, if it does not, the ITA may also issue an order with respect to the 2020 tax year. 11 We are the defendant in various other lawsuits, including employment-related litigation claims, construction claims and other legal proceedings in the normal course of our business.
It is anticipated that we would be effected from the adoption of Pillar 2’s rules, however it remains difficult to predict the magnitude of the effect of such new rules on our financial results. We are currently monitoring the new rules and awaiting further guidance and local legislation in the relevant jurisdictions.
Israel has not issued yet a proposed legislation to implement BEPS’s Pillar 2. It is anticipated that we would be impacted by the adoption of Pillar 2’s rules in the future, however it remains difficult to predict the magnitude of the effect of such new rules on our financial results.
For example, global supply chain disruptions in the first half of 2022 impacted the availability of raw products and resulted in prolonged shipping and delivery times.
For example, global supply chain disruptions in the first half of 2022 impacted the availability of raw products and resulted in prolonged shipping and delivery times. Availability of specific components continues to impact the global supply chain, mainly influencing on lead times. Demand is increasing supply requirements and the fast growing technology innovation can impact the availability and manufacturers’ capacity.
The sanctions and other macroeconomic effects of the war may also result in the devaluation of the local currency and other inflationary effects.
The sanctions and other macroeconomic effects of the war may also result in the devaluation of the local currency and other inflationary effects. Prolonged economic uncertainties or downturns, globally or in certain regions or industries, could materially adversely affect our business.
However, we will undertake management assessments of our internal control over financial reporting in connection with each annual report, and any deficiencies uncovered by these assessments or any inability of our auditors to issue an unqualified report could harm our reputation and the price of our ordinary shares. 14 Table of Contents A small number of shareholders own a substantial portion of our ordinary shares, and they may make decisions with which you or others may disagree As of February 28, 2023, our directors and executive officers owned approximately 21% of the voting power of our outstanding ordinary shares, or 24.6% of our outstanding ordinary shares if the percentage includes options currently exercisable or exercisable within 60 days of February 28, 2023 and RSUs and PSUs vesting within 60 days of February 28, 2023.
A small number of shareholders own a substantial portion of our ordinary shares, and they may make decisions with which you or others may disagree As of February 29, 2024, our directors and executive officers owned approximately 22.4% of the voting power of our outstanding ordinary shares, or 26.2% of our outstanding ordinary shares if the percentage includes options currently exercisable or exercisable within 60 days of February 29, 2024 and RSUs and PSUs vesting within 60 days of February 29, 2024.
Terrorist attacks and hostilities within Israel; the hostilities between Israel and Hezbollah and between Israel and Hamas; as well as tensions between Israel and Iran, have also heightened these risks, including extensive hostilities along Israel’s border with the Gaza Strip, which included missiles being fired from the Gaza Strip into Israel.
Terrorist attacks and hostilities within Israel; the hostilities between Israel and Hezbollah and between Israel and Hamas; as well as tensions between Israel and Iran, have also heightened these risks. In October 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets.
We believe such attempts are increasing in number and the Russia-Ukraine armed conflict was followed by increased risk of data breach and other threats from ransomware, destructive malware, distributed denial-of-service attacks, as well as fraud, spam and fake accounts, cyber-attacks or other illegal activity.
We may also be subject to increasing risks in connection with geopolitical events and conflicts, such as the Russia-Ukraine and Hamas-Israel conflicts, including risks of a security breach or incident, ransomware, destructive malware, and distributed denial-of-service attacks, as well as fraud, spam and fake accounts, cyber-attacks or other threats or illegal activity.
We believe we have good arguments against these orders and intend to file an appeal.
We believe we have good arguments against these orders and on November 29, 2023, filed an appeal to the District Court of Tel Aviv against these orders.
In addition, someone else may challenge our patents and these patents may be found invalid. Furthermore, others may develop technologies that are similar to or better than ours, or may work around any patents issued to us.
Furthermore, others may develop technologies that are similar to or better than ours, or may work around any patents issued to us. Despite our efforts to protect our proprietary rights, others may copy aspects of our products or obtain and use information that we consider proprietary.
Connecticut has also enacted a comprehensive data privacy law, the Connecticut Data Privacy Act (“CTDPA”), which was enacted on May 10, 2022, and which will be in effect from July 1, 2023. Other jurisdictions have also enacted and strengthened data protection laws, which have increased the cost of complying with them for businesses.
Broad federal privacy legislation has also been proposed. 15 Other jurisdictions have also enacted and strengthened data protection laws, which have increased the cost of complying with them for businesses.
Third parties might attempt to gain unauthorized access to our network or seek to compromise our products and services We regularly face attempts by others to gain unauthorized access through the Internet or to introduce malicious software to our information technology (IT) systems.
For example, we regularly face attempts by others to gain unauthorized access, or to introduce malicious software to our information technology systems. Additionally, malicious hackers have attempted and in the future likely will attempt to gain unauthorized access to, or sabotage, take control of or otherwise corrupt, our information technology systems, networks, processes, products and services.
From time to time we encounter intrusions or attempts at gaining unauthorized access to our products and network. To date, none have resulted in any material adverse impact to our business or operations.
Additionally, with many of our employees continuing to work remotely, we face an increased risk of attempted security breaches and incidents. To date, no intrusions or attempts at gaining unauthorized access to our information technology systems, networks, and products and services that we have identified have resulted in any material adverse impact to our business or operations.
Indirect taxes including Digital Service tax (DST) measures as adopted unilaterally in certain countries could also adversely affect our tax obligations.
We are currently monitoring the local legislations in the relevant jurisdictions and awaiting further guidance and future local legislation expected to be enacted in Israel and its effective fiscal year to take into effect. Indirect taxes including Digital Service tax (DST) measures as adopted unilaterally in certain countries could also adversely affect our tax obligations.
Our products are used to deploy and manage Internet security and protect information, which may be critical to organizations. As a result, the sale and support of our products entails the risk of product liability and related claims.
We may need to divert the attention of our engineering personnel from our research and development efforts to address instances of errors or defects. 8 Our products are used to deploy and manage Internet security and protect information, which may be critical to organizations.
This could enable our competitors to eliminate any technological advantage that our products may have over theirs. Any such requirement to disclose our source code or other confidential information related to our products could materially and adversely affect our competitive position and impact our business, results of operations and financial condition.
This could enable our competitors to eliminate any technological advantage that our products may have over theirs.
Removed
Furthermore, even if the network or application security functionality provided as standard features by operating systems software and networking hardware is more limited than that of our solutions, a significant number of customers may elect to accept more limited functionality in lieu of purchasing additional products.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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In 2021, we extended Harmony with cloud-email security with the acquisition of Avanan – a leading cloud-email security company. • Secure Internet Browsing : Provides secure, fast, and private web browsing by inspecting all SSL traffic directly on the endpoint. • Secure remote access to corporate applications : Harmony Connect provides Secure Access Service Edge (SASE) and provides secure and easy access to any corporate application. 4.
In 2021, we extended Harmony with cloud-email security with the acquisition of Avanan – a leading cloud-email security company. • Secure Internet Browsing : Provides secure, fast, and private web browsing by inspecting all SSL traffic directly on the endpoint. • Secure remote access to corporate applications: Harmony Connect provides Secure Access Service Edge (SASE) and provides secure and easy access to any corporate application.
Effect of Government Regulation on our Business Information concerning regulation is provided in “Item 5 – Operating and Financial Review and Products” under the caption “Taxes on income” and in “Item 10 – Additional Information” under the caption “Israeli taxation, foreign exchange regulation and investment programs”. Organizational Structure We are organized under the laws of the State of Israel.
Effect of Government Regulation on our Business Information concerning regulation is provided in “Item 5 – Operating and Financial Review and Products” under the caption “Taxes on income” and in “Item 10 – Additional Information” under the caption “Israeli taxation, foreign exchange regulation and investment programs”. 30 Organizational Structure We are organized under the laws of the State of Israel.
Israel Check Point Serverless Security Ltd. (6) Israel Check Point Secure Remote Access Ltd. Israel Check Point Email Security Ltd. (7) Israel Avanan, Inc. United States of America (Delaware) Check Point Developer Security Tools Ltd. Israel Check Point Software Technologies (Sweden) AB. (8) Check Point Software Technologies (Sweden) AB. – Dubai Branch (9) Sweden Sweden Zone Labs, L.L.C.
Israel Check Point Serverless Security Ltd. (6) Israel Check Point Secure Remote Access Ltd. (12) Israel Check Point Email Security Ltd. (7) Israel Avanan, Inc. United States of America (Delaware) Check Point Developer Security Tools Ltd. (12) Israel Check Point Software Technologies (Sweden) AB. (8) Sweden Check Point Software Technologies (Sweden) AB. – Dubai Branch (9) Sweden Zone Labs, L.L.C.
Israel Check Point Software Technologies South Africa PTY. Ltd South Africa Check Point Software (Kenya) Limited Kenya Check Point Software Technologies B.V Nigeria Ltd. (5) Nigeria Check Point Public Cloud Security Ltd. Israel Check Point Web Applications and API Protection Ltd. Israel Protego Labs, Inc. United States of America (Delaware) Check Point IOT Security Ltd.
(12) Israel Check Point Software Technologies South Africa PTY. Ltd South Africa Check Point Software (Kenya) Limited Kenya Check Point Software Technologies B.V Nigeria Ltd. (5) Nigeria Check Point Public Cloud Security Ltd. (12) Israel Check Point Web Applications and API Protection Ltd. Israel Protego Labs, Inc. United States of America (Delaware) Check Point IOT Security Ltd.
(former name: Protect Data AB) (5) Subsidiary of Check Point Holding (Singapore) PTE Ltd. and Check Point Yazilim Teknolojileri Pazarlama A.S. (6) Subsidiary of Protego Labs, Inc (7) Subsidiary of Avanan, Inc. (8) Subsidiary of Check Point Holding AB (9) Branch of Check Point Software Technologies (Sweden) AB.
(former name: Protect Data AB) (5) Subsidiary of Check Point Holding (Singapore) PTE Ltd. and Check Point Yazilim Teknolojileri Pazarlama A.S. (6) Subsidiary of Protego Labs, Inc (7) Subsidiary of Avanan, Inc. (8) Subsidiary of Check Point Holding AB (9) Branch of Check Point Software Technologies (Sweden) AB. (10) Subsidiary of Check Point Software Technologies Inc.
Netherlands Check Point Holding (Singapore) PTE Ltd. Singapore Check Point Holding (Singapore) PTE Ltd. – Rep office Indonesia (1) Singapore Check Point Holding (Singapore) PTE Ltd. –US, NY Branch (2) Singapore Israel Check Point Software Technologies Ltd. China (3) China Check Point Holding AB (4) Sweden Check Point Advanced Threat Prevention Ltd. Israel Check Point Mobile Security Ltd.
Netherlands Check Point Holding (Singapore) PTE Ltd. Singapore Check Point Holding (Singapore) PTE Ltd. – Rep office Indonesia (1) Singapore Check Point Holding (Singapore) PTE Ltd. –US, NY Branch (2) Singapore Israel Check Point Software Technologies Ltd. China (3) China Check Point Holding AB (4) Sweden Check Point Advanced Threat Prevention Ltd. (12) Israel Check Point Mobile Security Ltd.
Argentina Check Point Software Technologies (Australia) PTY Limited Australia Check Point Software Technologies (Austria) GmbH Austria Check Point Software Technologies Belarus LLC Belarus Check Point Software Technologies (Belgium) Belgium Check Point Software Technologies (Brazil) LTDA Brazil Check Point Software Technologies (Hong Kong) Ltd. (Guangzhou office) (1) China Check Point Software Technologies (Hong Kong) Ltd.
Argentina Check Point Software Technologies (Australia) PTY Limited Australia Check Point Software Technologies (Austria) GmbH Austria Check Point Software Technologies Belarus LLC Belarus Check Point Software Technologies (Belgium) Belgium Check Point Software Technologies (Brazil) LTDA Brazil Check Point Software Technologies (Hong Kong) Ltd. (Guangzhou office) (1) China Hong Kong SAR Check Point Software Technologies (Hong Kong) Ltd.
Environmental, Social and Governance (ESG) Practices Since Check Point’s inception, our sole focus has been on making the world a safer place to live and work. For nearly 30 years, we have worked to fulfill our vision of making the Internet secure, reliable, and available for corporations and consumers.
Environmental, Social and Governance (ESG) Practices Since Check Point’s inception, our sole focus has been on making the world a safer place to live and work. For over 30 years, we have worked to fulfill our vision of making the Internet secure, reliable, and available for corporations and consumers.
No additional payments are due under such long-term lease. Our international headquarters building contains approximately 332,000 square feet of office space. In addition, we lease approximately 30,000 square feet of additional space substantially all in Tel Aviv, Israel.
No additional payments are due under such long-term lease. Our international headquarters building contains approximately 332,000 square feet of office space. In addition, we lease approximately 80,000 square feet of additional space substantially all in Tel Aviv, Israel.
As a global brand with material social and economic influence, we recognize that our success can only be built alongside the success of our stakeholders – including, our channel partners, customers, suppliers and employees. We aim to achieve high ESG standards while continuing to develop our business and executing on our strategy. 23 Table of Contents Our Commitment.
As a global brand with material social and economic influence, we recognize that our success can only be built alongside the success of our stakeholders – including, our channel partners, customers, suppliers and employees. We aim to achieve high ESG standards while continuing to develop our business and executing on our strategy. Our Commitment.
Research and Product Development We believe that our future success will depend upon our ability to enhance our existing products, and to develop, acquire and introduce new products to address the increasingly sophisticated needs of our customers. As of December 31, 2022, we had 1,836 employees and subcontractors dedicated to research and development activities and quality assurance.
Research and Product Development We believe that our future success will depend upon our ability to enhance our existing products, and to develop, acquire and introduce new products to address the increasingly sophisticated needs of our customers. As of December 31, 2023, we had 1,956 employees and subcontractors dedicated to research and development activities and quality assurance.
Our technical assistance centers in the United States, Israel, Canada, Japan, India, China and Australia offer support worldwide, 24-hour service, seven days per week. As of December 31, 2022, we had 934 employees and subcontractors in our technical services organization.
Our technical assistance centers in the United States, Israel, Canada, Japan, India, China and Australia offer support worldwide, 24-hour service, seven days per week. As of December 31, 2023, we had 1,060 employees and subcontractors in our technical services organization.
United Kingdom (1) Representative office of Check Point Software Technologies (Hong Kong) Ltd. 27 Table of Contents Property and Equipment As of December 31, 2022, we own our headquarters located in Tel Aviv, Israel and we lease offices in various locations throughout the world.
United Kingdom (1) Representative office of Check Point Software Technologies (Hong Kong) Ltd. 32 Property and Equipment As of December 31, 2023, we own our headquarters located in Tel Aviv, Israel and we lease offices in various locations throughout the world.
Corporate Governance – How we value our method – We have adopted corporate governance guidelines to assist our Board in carrying out its responsibilities and serving the interests of our company and its shareholders. • Corporate Governance Guidelines – The Board of Directors of Check Point Software Technologies Ltd. has adopted Corporate Governance Guidelines to assist the Board in carrying out its responsibilities and serving the interests of the Company and its shareholders in a manner that is consistent with the Board’s fiduciary duties. • Committee Charters – We have adopted written charters specifying the duties and responsibilities of each of our Audit Committee, Compensation Committee and Nominating, Sustainability and Corporate Governance Committee to assist the committee members in carrying out their responsibilities.
Corporate Governance – How we value our method – We have adopted corporate governance guidelines to assist our Board in carrying out its responsibilities and serving the interests of our company and its shareholders. • Corporate Governance Guidelines – Our board of directors has adopted Corporate Governance Guidelines to assist the board of directors in carrying out its responsibilities and serving the interests of the Company and its shareholders in a manner that is consistent with the board of director’s fiduciary duties. 29 • Committee Charters – We have adopted written charters specifying the duties and responsibilities of each of our Audit Committee, Compensation Committee and Nominating, Sustainability and Corporate Governance Committee to assist the committee members in carrying out their responsibilities.
Further, Check Point generally enters into confidentiality agreements with employees, consultants, customers and potential customers, and limits access and distribution of materials and information that the company considers proprietary. 25 Table of Contents Check Point and its subsidiaries have 103 issued patents in the U.S. and in other regions and 21 pending patent applications worldwide.
Further, Check Point generally enters into confidentiality agreements with employees, consultants, customers and potential customers, and limits access and distribution of materials and information that the company considers proprietary. Check Point and its subsidiaries have 137 issued patents in the U.S. and in other regions and 20 pending patent applications worldwide.
The breakdown in the various geographies is as follows: Location Space (square feet) Israel 362,000*) Americas 130,000 Europe, Middle East and Africa 62,500 Asia Pacific 42,500 *) We acquired ownership of our international headquarters located in Tel Aviv, Israel pursuant to a pre-paid 49 year long-term lease on the land with the City of Tel Aviv – Jaffa.
The breakdown in the various geographies is as follows: Location Space (square feet) Israel 413,000 *) Americas 135,000 Europe, Middle East and Africa 61,000 Asia Pacific 43,000 *) We acquired ownership of our international headquarters located in Tel Aviv, Israel pursuant to a pre-paid 49 year long-term lease on the land with the City of Tel Aviv – Jaffa.
We demand our suppliers of products and services to comply with our high standards and values. • Supply Chain Policy – Check Point assures the high standards and values of its supply chain conduct, as it considers honesty, integrity, transparency and open communication core values of our business and operations. • Conflicts Minerals Policy – In certain conflict areas around the world, such as the Democratic Republic of the Congo and adjoining countries, the trade of certain minerals and derivative metals can be used to support corruption, money laundering and human rights abuses.
Supply Chain – How we value the process – We assure the high standards of our supply chain conduct by ensuring that the working conditions in our operations and supply chain are safe and that business operations are conducted ethically • Supply Chain Code of Conduct –We demand our suppliers of products and services to comply with our high standards and values. • Supply Chain Policy – Check Point considers honesty, integrity, transparency and open communication core values of our business and operations. • Conflicts Minerals Policy – In certain conflict areas around the world, such as the Democratic Republic of the Congo and adjoining countries, the trade of certain minerals and derivative metals can be used to support corruption, money laundering and human rights abuses.
Environment – How we value our surroundings – We take an active part in helping to ensure the sustainability of the world’s resources and environment. 24 Table of Contents • Environmental Policy – Check Point understands that climate change and the global warming have observable effects on the environment.
Environment – How we value our surroundings – We take an active part in helping to ensure the sustainability of the world’s resources and environment. • Environmental Policy – Check Point understands that climate change and the global warming have observable effects on the environment. Check Point’s impact on the environment is generally through our products, services and facilities.
These essential issues are addressed and managed constantly to ensure that they remain up to date and optimized to address the relevant concerns. • Social Investment and Volunteer Statement – Check Point invests in its worldwide volunteering and donations activities as it is committed to making the world a safer and a better place in order to achieve a more sustainable future for all.
These essential issues are addressed and managed constantly to ensure that they remain up to date and optimized to address the relevant concerns. 28 • Social Investment and Volunteer Statement – Check Point invests in its worldwide volunteering and donations activities as it is committed to making the world a safer and a better place in order to achieve a more sustainable future for all, and is committed to the social needs of the communities we live and operate in. • Human Resources – How we value ourselves – The most important asset of our company is our human capital.
(10) Subsidiary of Check Point Software Technologies Inc. 26 Table of Contents Check Point Software Technologies (Netherlands) B.V. acts as a holding company. It wholly owns all or substantially all of the share capital of the principal operating subsidiaries listed below, unless otherwise indicated in the footnotes below: NAME OF SUBSIDIARY COUNTRY OF INCORPORATION Check Point Software Technologies S.A.
It wholly owns all or substantially all of the share capital of the principal operating subsidiaries listed below, unless otherwise indicated in the footnotes below: NAME OF SUBSIDIARY COUNTRY OF INCORPORATION Check Point Software Technologies S.A.
CloudGuard secures cloud workloads in multiple environments including Amazon AWS, Microsoft Azure, Google, VMWare and others providing relevant capabilities for each cloud environment. 1. Cloud Network Security : advanced threat prevention and network security through a virtual security gateway—automated and unified across all multi-cloud and on-premises environments. 2.
CloudGuard secures cloud workloads in multiple environments including Amazon AWS, Microsoft Azure, Google, and others providing relevant capabilities for each cloud environment. • Cloud Network Security : advanced threat prevention and network security through a virtual security gateway—automated and unified across all multi-cloud and on-premises environments. • Cloud Native Application Protection Platform (CNAPP): secure the entire application lifecycle from code-to-cloud.
The contents of our website are not incorporated by reference into this Annual Report. This Annual Report is available on our website. If you would like to receive a printed copy via mail, please contact our Investor Relations department at 959 Skyway Road, Suite 300, San Carlos, CA 94070, U.S.A., Tel.: 650-628-2050, email: ir@us.checkpoint.com.
The contents of our website are not incorporated by reference into this Annual Report. This Annual Report is available on our website. If you would like to receive a printed copy via mail, please contact our Investor Relations department at 100 Oracle Parkway, Suite 800, Redwood City, CA 94065, U.S.A., Tel.: +16506282040, email: ir@checkpoint.com.
As of December 31, 2022, we had 2,829 employees and subcontractors in our sales and marketing organization, with a majority of them dedicated to pre sales and marketing support located in various jurisdictions.
In 2022, the Global Commercial Organization (GCO) was formed to further unify sales and marketing. As of December 31, 2023, we had 3,038 employees and subcontractors in our sales and marketing organization, with a majority of them dedicated to pre sales and marketing support located in various jurisdictions.
Our agent for service of process in the United States is CT Corporation System, 818 West Seventh Street, Los Angeles, CA 90017 U.S.A.; Tel: 213-627-8252. 22 Table of Contents Revenues by Category of Activity The following table presents our revenues for the last three fiscal years by category of activity: Year Ended December 31, 2022 2021 2020 (in millions) Category of Activity: Products and licenses $ 554.9 $ 513.9 $ 513.6 Security subscriptions 858.0 755.2 671.1 Software updates and maintenance 917.0 897.7 880.2 Total revenues $ 2,329.9 $ 2,166.8 $ 2,064.9 Sales and Marketing We mostly sell our products and services through a two-tier distribution model; distributors that sell to resellers and to service providers and MSSPs, who sell to end-customers.
Revenues by Category of Activity The following table presents our revenues for the last three fiscal years by category of activity: Year Ended December 31, 2023 2022 2021 (in millions) Category of Activity: Products and licenses $ 497.4 $ 554.9 $ 513.9 Security subscriptions $ 981.2 $ 858.0 $ 755.2 Software updates and maintenance $ 936.1 $ 917.0 $ 897.7 Total revenues $ 2,414.7 $ 2,329.9 $ 2,166.8 27 Sales and Marketing We mostly sell our products and services through a two-tier distribution model; distributors that sell to resellers and to service providers and MSSPs, who sell to end-customers.
(10) United States of America (California) (1) Representative office of Check Point Holding (Singapore) PTE Ltd. (2) Branch of Check Point Holding (Singapore) PTE Ltd. (3) Representative office of Check Point Software Technologies Ltd. (4) Subsidiary of Check Point Holding (Singapore) PTE Ltd.
(13) United States of America (Delaware) Check Point SSE Solutions Ltd.(12) Israel Perimeter 81 LLC (13) United States of America (Delaware) (1) Representative office of Check Point Holding (Singapore) PTE Ltd. (2) Branch of Check Point Holding (Singapore) PTE Ltd. (3) Representative office of Check Point Software Technologies Ltd. (4) Subsidiary of Check Point Holding (Singapore) PTE Ltd.
Investing in the training and development of our employees, managers and groups within the company contributes not only to them, but also to Check Point as a whole.
We believe that a diverse workforce encourages a wider variety of skills, talents, and viewpoints, leading to further creativity and innovation. • Training and Employee Development Policy –Investing in the training and development of our employees, managers and groups within the company contributes not only to them, but also to Check Point as a whole.
All Quantum gateways are updated automatically by AI-based threat prevention for complete protection against zero-day threats. 2. CloudGuard: Automatically secure your cloud Check Point cloud native security, delivered through CloudGuard, provides automated security and advanced threat prevention to protect cloud assets and workloads from cyber threats including sophisticated cyber-attacks and misconfigurations.
Check Point cloud native security, delivered through CloudGuard, provides automated security and advanced threat prevention to protect cloud assets and workloads from cyber threats including sophisticated cyber-attacks and misconfigurations.
Check Point Quantum Security Gateways deliver comprehensive security beyond any Next Generation Firewall (NGFW) and are designed to manage the most complex policy requirements. Powered with over 60 security services, these gateways are aimed at preventing the 5th generation of cyber-attacks.
Check Point Quantum Security Gateways deliver comprehensive security beyond any Next Generation Firewall (NGFW) and manage the most complex security policy requirements.
Harmony unifies five security products to deliver complete remote users security: • Harmony Endpoint protects users’ PCs from ransomware, phishing, and malware, and minimizes breach impact with autonomous detection and response capability. • Harmony Mobile protects employees’ mobile devices against malicious apps and network or operating systems attacks. 20 Table of Contents • Harmony Email & Collaboration secures users’ email clients and gives complete protection for Microsoft Office 365, Exchange, Google G Suite and others.
Harmony unifies security products to deliver complete remote workspace user security. • Harmony SaaS discovers all your SaaS services, reduces your attack surface and automatically prevents SaaS-based threats using machine learning engines. • Harmony SASE converges network security capabilities into a single solution with unified management, internet security, and comprehensive Zero Trust network access. • Harmony Endpoint protects users’ PCs from ransomware, phishing, and malware, and minimizes breach impact with autonomous detection and response capability. • Harmony Mobile protects employees’ mobile devices against malicious apps and network or operating systems attacks. 25 • Harmony Email & Collaboration secures users’ email clients and gives protection for Microsoft Office 365, Exchange, Google G, and others.
Omdia ● Harmony Mobile recognized as a Market Leader in Radar for Mobile Security Solution ● Harmony Endpoint recognized as a Market Leader in Radar for Endpoint Security Platforms KuppingerCole ● Harmony Connect recognized as a Market Leader in Compass Secure Access Service Edge (SASE) Integration Suites MITRE Evaluations ● Leadership in Endpoint Security with 100% Detection across All Tested Unique ATT&CK Techniques G2.com ● Recognized as leader in nine Grid Reports for Firewall, Cloud, Endpoint and Mobile Data security Acquisitions and other Corporate Information In September 2021, we acquired 100% of the share capital of Avanan Inc., a privately-held US-based company providing cloud email security, and the developer of a patented application-programming interface (API) solution to stop email threats before arriving to the inbox (inline), for both internal and external emails using AI based engines.
In September 2021, we acquired 100% of the share capital of Avanan, Inc., a privately-held US-based company providing cloud email security, and the developer of a patented application-programming interface (API) solution to stop email threats before arriving to the inbox (inline), for both internal and external emails using AI based engines.
We support our channel partners with a dedicated team of experienced sales professionals including account managers, channel managers and sales engineers. Our marketing efforts include building our brand, product marketing, partner incentives and promotions, event marketing, digital marketing, communications and public relations. In 2022, we continued to invest in sales and marketing resources.
We support our channel partners with a dedicated team of experienced sales professionals including account managers, channel managers and sales engineers.
Harmony: Securing the User Environment Check Point Harmony protects employees, devices, and internet connectivity from malicious attacks, while ensuring secure, remote zero-trust access at any scale to any corporate application. Check Point Harmony provides endpoint and secure connectivity in various forms for easy and comprehensive remote user access.
Check Point Harmony provides endpoint and secure connectivity in various forms for easy and comprehensive remote user access.
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ITEM 4. INFORMATION ON CHECK POINT Check Point History and Development Since its inception, our sole focus has been on making the world a safer place to live and work.
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ITEM 4. INFORMATION ON CHECK POINT Check Point History and Development Founded over 30 years ago by Gil Shwed, Check Point has continued its mission to secure the digital world for everyone, everywhere.
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Over the last three decades, we worked to fulfill our vision to provide any organization with the ability to conduct its business on the internet with advanced and comprehensive levels of security. We pioneered the first commercially available firewall, followed by a steady stream of industry-first cyber security solutions.
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From Firewall-1, the first stateful firewall to dynamic security innovations and to the emergence of the AI-powered, Cloud-driven Check Point Infinity Platform, Check Point has demonstrated its ability to defend and prevent what is coming. Check Point delivers collaborative security across an organization’s security architecture of the Network, Cloud, and the Workspace.
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As an example, our technology provides protection against both known and unknown cyber security threats across a wide range of environments: physical and virtual networks, cloud and mobile surroundings, critical infrastructures, and the ‘Internet of Things’ (IoT).
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Add to this Infinity Core Services that provides the comprehensive technical services to fulfill the cyber security needs of its global customers. The 3 Cs to Provide the Effective Threat Prevention and Security The Check Point Infinity Platform provides a comprehensive, consolidated, and collaborative security platform.
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Today, the threat landscape is more complex than ever, with organizations experiencing the 5 th generation of cyber-attacks –large-scale and multi-vector mega attacks using advanced attack technologies, while the security deployed by many businesses is generationally behind and incapable of protecting against such attacks.
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Each of the three Cs plays a significant role in providing threat prevention and security across all attack vectors. • Comprehensive Real-time Threat Prevention: Real-time AI-powered comprehensive threat prevention across all attack vectors from code to cloud, networks, users, email and IoT.
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Protecting the World from 5 th Generation of Cyber Security Attacks and a Cyber Pandemic We identified the evolving different generations of both cyber-attacks and security products. Today, we find ourselves in an increasingly complex threat landscape with organizations experiencing the 5th generation of cyber-attacks.
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AI engines deliver industry leading threat prevention to stop the most sophisticated attacks including Zero Day Malware, Phishing and DNS. • Consolidated Security Operations and Unified Management: Leverage a unified security management platform for efficient security operations to deliver threat prevention to seal security gaps and enable automatic, immediate threat intelligence sharing across all security environments. • Collaborative True collaboration across the security platform is essential to gain advantage over attackers.
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The security deployed by most businesses is generationally behind and incapable of protecting against such attacks.
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Security that Automatically Responds to Every Threat: AI-powered security engines applied to any attack vector, shared real-time threat intelligence, and anomaly detection with ThreatCloud AI, automated threat response and orchestration with XDR and Playblocks, and API-based third-party integration.
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Specifically, while we are facing the 5th generation of attacks, most businesses possess only 2nd or 3rd generation security. • Generation 1 – Late 1980s, virus attacks on stand-alone PCs affected all businesses and drove the rise of anti-virus products. • Generation 2 – Mid 1990s, attacks from the internet affected all business and drove the creation of the firewall. • Generation 3 – Early 2000s, exploiting vulnerabilities in applications affected most businesses and drove the rise in intrusion prevention systems (IPS) products. • Generation 4 – Approximately 2010, rise of targeted, unknown, evasive, polymorphic attacks affected most businesses and drove the increase in behavior analysis technologies such as sandboxing products. • Generation 5 – Approximately 2018-2022, the large-scale and multi-vector mega attacks using advanced attack technologies.
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Further, with the Infinity Platform, customers obtain these advanced core competencies: AI-powered Check Point utilizes real-time AI-powered comprehensive threat prevention across all attack vectors from code to cloud, networks, users, Email and IoT. Leveraging over 50+ AI engines to deliver industry-leading threat prevention to stop the most sophisticated attacks including Zero Day Malware, Phishing and DNS.
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These are fast-moving attacks so detection-only is not enough. These attacks targeted traditional attack vectors and expanded to mobile and cloud. Advanced threat prevention is required. Cyber-attacks are now a daily phenomenon with widespread news coverage, resulting often in lost data and privacy, and the complete halting of a business’ operations.
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Cloud-driven Infinity leverages the cloud to achieve speed, agility, and scalability. Prevention-first cloud native security across applications, workloads, and network gives customers the confidence to automate security, prevent threats, and manage posture-at cloud speed and scale.
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Organizations that presumed their security was good enough, are now discovering it was not.
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Centralized management Customers gain the ability to leverage a unified security management platform for efficient security operations to deliver threat prevention to seal security gaps and enable automatic, immediate threat intelligence sharing across all security environments. Prevention-first In years past, customers relied on threat detection capabilities.
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The world is dependent on the internet, now more than ever, and as organizations rapidly digitalize their operations, we believe their cyber security needs to be recalibrated to address the security of their corporate networks, hybrid-datacenters, cloud environments and lastly, securing their employees – wherever they are located.
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But, as sophisticated 5 th generation zero-day cyberattacks appeared, conventional detection security began to lag. Detecting a breach after the fact, is too late.
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We are bringing this vision to life with the introduction of “The 3Cs of Best Security”. By following these principles we enable organizations to deploy a cyber security architecture that works together to prevent attacks before any damage occurs. • Comprehensive : A security architecture that provides prevention first prevention across all attack vectors.
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The rise of new attack vectors also necessitated that Check Point adopt its prevention-first security solutions approach. 22 Largest partner and expert ecosystem Our integrated approach ties innovation together with 3,500 security experts of our world-acclaimed research and intelligence unit, and a broad ecosystem of business and technology partners.
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From code to cloud, networks, users, email and IoT. The complexity level of the cyber security threat landscape has significantly evolved and more than doubled itself in the last 3 years. Cyber criminals use today more attack vectors to launch their attacks and organizations require more security technologies to defend themselves.
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In this way, Check Point’s extended family protects organizations of all sizes across all industry verticals in 88 countries, realizing a safer internet experience. Check Point’s Key Platform Components Yesterday’s security is no match for today’s advanced threats. Managing complex and disparate security tools from various vendors is becoming an artifact of the past.
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A comprehensive solution across all attack vectors is imperative to allow prevention first approach against any attack. • Consolidated : The latest generation of sophisticated cyber-attacks spread quickly across all vectors and frequently bypass conventional defenses.
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To defend against rapidly evolving cyber threats in an AI-driven world, organizations need a new strategy to recalibrate their cyber defenses.
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To combat these attacks, businesses deploy multiple point solutions, many of which focus on detecting and mitigating threats rather than preventing them before they breach enterprise networks. This reactive approach to cyber-attacks is costly and ineffective, complicating security operations, and creating gaps in the security posture of an enterprise.
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Realizing this, Check Point developed the Infinity Platform that provides customers with key benefits, including: • Comprehensive enterprise-grade security across the data center, network, cloud, branch office, and remote users with unified management. • A simplified and consolidated approach to securing their entire IT infrastructure with organizations of all sizes.
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By embracing a consolidated architecture that enhances security coordination and effectiveness, organizations improve security and save money used to integrate multiple, siloed solutions.
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The Infinity Platform includes the following: • Secure Mesh Networks with Quantum Hyperscale AI-powered threat prevention for securing mesh networks including the data center, perimeter, branch and remote users.
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We believe that a consolidated architecture will reduce operational overhead and more easily allow organizations to address many of the security challenges they face today. 19 Table of Contents • Collaborative : To be able to deploy a prevention first approach, all solutions and products must work together and respond collaboratively to any threat.
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Comprehensive family of on-premise security gateways, hyperscale orchestrator, SD-WAN networking, DDoS security, automated prevention for IoT, and Cloud Security Management. • Secure the Cloud with CloudGuard Unified, prevention-first cloud native security across your applications, workloads, and network-giving the confidence to automate security, prevent threats, and manage posture-at cloud speed and scale. • Secure the Workspace with Harmony Prevents sophisticated attacks across the IT workspace including emails, web applications, devices and remote corporate access. • Collaborative Security Operations with Infinity Core Services Collaborative prevention first security operations and unified management including Extended Prevention and Response (XDR), orchestration, automation, ThreatCloud AI and generative AI copilot, supported by Check Point 24/7 managed security services, consulting and training.
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When an attack hits an Endpoint for example, all other security technologies across cloud, network, email etc., must take action and respond accordingly to prevent the attack from entering through their respective vendor. To achieve that, the consolidated and comprehensive architecture must collaborate and have every security engine easily applied to any attack vector.
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In addition, managed and professional services fortify your defense with a comprehensive suite of managed and professional cyber security services including managed detection and response, incident response, security architecture design, consulting and training.
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On top of that, real-time threat intelligence information gathered from all enforcement points, research teams and 3 rd party feeds, must be shared across the environment so preventive action can be taken immediately to prevent the attack. Check Point’s Four Strategic Pillars 1. Quantum: Enterprise network security for perimeter and datacenter Aimed to secure and effectively manage datacenter environments.
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Protecting the World from Sophisticated Cyber Security Attacks Over the last three decades, the technologies behind cyber attacks and the ensuing preventative measures have advanced rapidly, especially with the rise and availability of Generative AI. 2023 was yet another year for an increasing number of cyber attacks targeting organizations of all sizes and across all industries.
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In order to serve the different needs and demands of our customers, we offer a wide portfolio of security gateways and software platforms that support a wide range of small and medium sized business (SMB) to large enterprise data center and telco-grade environments.
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Adversaries exploited zero-day vulnerabilities by employing disruptive wipers that utilize emerging RaaS (Ransomware-as-a-Service) tactics and target edge devices, amplifying the complexity of cyber threats. The threat landscape became even more complex as cybercriminals have adopted artificial intelligence (AI) to fuel their cyber exploits. In response, Check Point has evaluated how to best prevent, detect, and respond to elevated cyber attacks.
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On each security gateway, we offer the full expanse of Check Point’s network security portfolio from industry-leading next generation firewall, IPS (Intrusion Prevention System), VPN (Virtual Private Network), WAF (Web Application Firewall), SSL (Secure Sockets Layer), and DLP (Data Loss Prevention) to a wide set of threat prevention technologies blocking known and unknown advanced 5th generation cyber-attacks.
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Instead of relying on past security strategies, organizations can thwart advanced cyberthreats with Check Point’s comprehensive cyber security platform solution. Check Point Infinity Platform Product Solutions Customer security requirements can change rapidly, such as the explosive growth of AI.
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Check Point‘s security gateways are available as a cloud service, software-only products that can run on standard hardware, or dedicated security gateway hardware appliances. Check Point’s cyber security platform (R81) introduces the industry’s first autonomous threat prevention system, which eliminates labor-intensive manual threat classification and updates.
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While different industry sectors can have unique security needs, they all share one clear desire: To obtain security solutions which are uniformly Comprehensive, Consolidated and Collaborative.
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Security and Posture Management : prevents threats and achieves high fidelity posture management. 3. Cloud Workload Protection and Web Application Protection : seamless vulnerability assessment and runtime protection of modern cloud workloads, including serverless functions and containers. 4.
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These 3 Cs are the core of Check Point offerings and they are clearly achieved through our Infinity Platform and the four strategic solution areas. • Quantum: Secure Your Network and Data Center security for perimeter and datacenter Aimed to secure and effectively manage datacenter environments.
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Powered by contextual-AI, protects web applications and APIs from the most sophisticated types of threats. • In 2022 we introduced Security from code to cloud; Developer-centric security that monitors, classifies, and protects codes, assets, and infrastructure to protect against exposed API keys, tokens, and credentials, as well as identifies and stops misconfigurations. 3.
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Powered with over 60 security services, these gateways are designed to prevent the most evasive and sophisticated 5th generation cyber-attacks. 23 Check Point Quantum Network Security provides effective and ultra-scalable protection against the most dangerous cyber-attacks targeting customers' networks, cloud, data center, IoT devices, and employees across the enterprise.
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Horizon: Prevention-First Security Operations In 2022 we introduced a new member to the Infinity architecture: Horizon, prevention-first security operations with XDR/XPR and MDR/MPR for complete coverage of threats across networks, endpoints, cloud, email and IoT, from one pane of glass.
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The speed and evolution of today's zero-day DNS and phishing attacks requires AI-powered threat prevention to predict and block malicious behavior without human intervention.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

43 edited+6 added−16 removed26 unchanged
Allowance for credit losses on AFS debt securities are recognized in our consolidated statements of income, and any remaining unrealized losses, net of taxes, are included in accumulated other comprehensive income (loss) in stockholders’ equity. We measure our money market funds and marketable securities at fair value.
Allowance for credit losses on AFS debt securities are recognized in our consolidated statements of income, and any remaining unrealized losses, net of taxes, are included in accumulated other comprehensive income (loss) in stockholders’ equity. 35 We measure our money market funds and marketable securities at fair value.
Since most of our investments are U.S. dollars denominated securities, our net financial income is heavily dependent on prevailing U.S. interest rates changes and the market expectations to such changes. The increase in net financial income in 2022 was primarily due to higher interest rates and yield on marketable securities, short-term deposits and cash equivalents.
Since most of our investments are U.S. dollars denominated securities, our net financial income is heavily dependent on prevailing U.S. interest rates changes and the market expectations to such changes. The increase in net financial income in 2023 was primarily due to higher interest rates and yield on marketable securities, short-term deposits and cash equivalents.
In 2022 and 2021 no impairment in our marketable securities was recorded. For further risk related to our portfolio see also Item 3, “Risk Factors – Risks Related to Our Business and Our Market – Our cash balances and investment portfolio have been, and may continue to be, adversely affected by market conditions and interest rates”.
In 2023 and 2022 no impairment in our marketable securities was recorded. For further risk related to our portfolio see also Item 3, “Risk Factors – Risks Related to Our Business and Our Market – Our cash balances and investment portfolio have been, and may continue to be, adversely affected by market conditions and interest rates”.
The following table presents the percentage of total consolidated revenues that we derive from sales in each of the regions shown: Year Ended December 31, 2022 2021 2020 Region: Americas, principally U.S. 43% 43% 45% Europe, Middle East and Africa 45% 45% 43% Asia-Pacific 12% 12% 12% For information on the impact of foreign currency fluctuations, please refer to “Item 11 – Quantitative and Qualitative Disclosures about Market Risk – Foreign Currency Risk”.
The following table presents the percentage of total consolidated revenues that we derive from sales in each of the regions shown: Year Ended December 31, 2023 2022 2021 Region: Americas, principally U.S. 43 % 43 % 43 % Europe, Middle East and Africa 46 % 45 % 45 % Asia-Pacific 11 % 12 % 12 % For information on the impact of foreign currency fluctuations, please refer to “Item 11 – Quantitative and Qualitative Disclosures about Market Risk – Foreign Currency Risk”.
Also, if the financial system or the credit markets continue to deteriorate or remain volatile, our investment portfolio may be impacted and the values and liquidity of our investments could be adversely affected.
Also, if the financial system or the credit markets deteriorate or remain volatile, our investment portfolio may be impacted and the values and liquidity of our investments could be adversely affected.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS For discussion related to our financial condition, changes in financial condition, and the results of operations for 2021 compared to 2020, refer to Part I, Item 5.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS For discussion related to our financial condition, changes in financial condition, and the results of operations for 2022 compared to 2021, refer to Part I, Item 5.
Our business is subject to the effects of general global economic conditions and, in particular, market conditions in the IT, Internet security and data security industries. If general economic and industry conditions deteriorate, demand for our products could be adversely affected. 28 Table of Contents We derive our sales primarily through indirect channels.
Our business is subject to the effects of general global economic conditions and, in particular, market conditions in the IT, Internet security and data security industries. If general economic and industry conditions deteriorate, demand for our products could be adversely affected. 33 We derive our sales primarily through indirect channels.
We re-issued the repurchased shares to settle exercises of options and restricted share unit awards to our employees and directors. Proceeds from such activities were $141 million and $194 million in 2022 and 2021, respectively. Our investments in marketable securities are classified as available-for-sale.
We re-issued the repurchased shares to settle exercises of options and restricted share unit awards to our employees and directors. Proceeds from such activities were $134 million and $141 million in 2023 and 2022, respectively. Our investments in marketable securities are classified as available-for-sale.
Our cost of security subscriptions is comprised of costs paid to third parties, hosting and infrastructure costs and cost of customer support related to these services. Our cost of software updates and maintenance include mainly the cost of post-sale customer support. Cost of products and licenses was $146 million in 2022 and $111 million in 2021.
Our cost of security subscriptions is comprised of costs paid to third parties, hosting and infrastructure costs and cost of customer support related to these services. Our cost of software updates and maintenance include mainly the cost of post-sale customer support. Cost of products and licenses was $99 million in 2023 and $146 million in 2022.
Net financial income was $44 million in 2022 and $42 million in 2021. As we generally hold debt securities until maturity, our current portfolio’s yield is derived primarily from interest rates and the yield on securities at time of purchase.
Net financial income was $77 million in 2023 and $44 million in 2022. As we generally hold debt securities until maturity, our current portfolio’s yield is derived primarily from interest rates and the yield on securities at time of purchase.
Taxes on Income Total taxes on income were $131 million in 2022 and $134 million in 2021. Our effective tax rate was 14% in each of the years 2022 and 2021. See Note 11 to our consolidated financial statements for further information on our statutory rates.
Taxes on Income Total taxes on income were $135 million in 2023 and $131 million in 2022. Our effective tax rate was 14% in each of the years 2023 and 2022. See Note 11 to our consolidated financial statements for further information on our statutory rates.
Our principal sources of liquidity consist of our cash and cash equivalents, short-term bank deposits and marketable securities (which aggregated $3,503 million as of December 31, 2022) and our cash flow from operations. We believe that these sources of liquidity will be sufficient to satisfy our present capital expenditure requirements. Research and Development, Patents and Licenses, etc.
Our principal sources of liquidity consist of our cash and cash equivalents, short-term bank deposits and marketable securities (which aggregated $2,960 million as of December 31, 2023) and our cash flow from operations. We believe that these sources of liquidity will be sufficient to satisfy our present capital expenditure requirements. Research and Development, Patents and Licenses, etc.
Under the repurchase programs, we may purchase our ordinary shares from time to time, depending on market conditions, share price, trading volume and other factors. We repurchased ordinary shares in the amount of $1,300 million in each of the years 2022 and 2021.
Under the repurchase programs, we may purchase our ordinary shares from time to time, depending on market conditions, share price, trading volume and other factors. We repurchased ordinary shares in the amount of $1,288 million in 2023 and $1,300 million in 2022.
We continued to deliver increasingly more of our latest security offerings as subscriptions resulting in increased sales of our security subscription packages, including advance threat protection, Infinity CloudGuard, and Harmony. As a result, security subscription revenues increased by $103 million, or 14%, from $755 million in 2021 to $858 million in 2022.
We continued to deliver increasingly more of our latest security offerings as subscriptions resulting in increased sales of our security subscription packages, including advance threat protection, Infinity CloudGuard, and Harmony. As a result, security subscription revenues increased by $123 million, or 14%, from $858 million in 2022 to $981 million in 2023.
Software updates and maintenance revenues increased by $19 million, or 2%, from $898 million in 2021 to $917 million in 2022, primarily as a result of renewals of existing and sales of new maintenance contracts. Cost of Revenues Total cost of revenues was $304 million in 2022 and $258 million in 2021.
Software updates and maintenance revenues increased by $19 million, or 2%, from $917 million in 2022 to $936 million in 2023, primarily as a result of renewals of existing and sales of new maintenance contracts. Cost of Revenues Total cost of revenues was $283 million in 2023 and $304 million in 2022.
Our capital expenditures amounted to $22 million in 2022 and $16 million in 2021, and consisted primarily of computer equipment, software and leasehold improvements. Net cash used in financing activities was $1,168 million in 2022 and $1,112 million in 2021. In 2022 and 2021, net cash used in financing activities was attributed primarily to the repurchase of ordinary shares.
Our capital expenditures amounted to $19 million in 2023 and $22 million in 2022, and consisted primarily of computer equipment, software and leasehold improvements. 39 Net cash used in financing activities was $1,165 million in 2023 and $1,168 million in 2022. In 2023 and 2022, net cash used in financing activities was attributed primarily to the repurchase of ordinary shares.
Additional details are provided in this Item 5, under the caption “Results of Operations”. Trend Information Additional details are provided in this Item 5, under the caption “Results of Operations”. 35 Table of Contents
Additional details are provided in this Item 5, under the caption “Results of Operations”. Trend Information Additional details are provided in this Item 5, under the caption “Results of Operations”. 40
In the event that we change our determination as to the amount of deferred tax assets that can be realized, we will adjust our valuation allowance with a corresponding impact to the provision for income taxes in the period in which such determination is made.
In the event that we change our determination as to the amount of deferred tax assets that can be realized, we will adjust our valuation allowance with a corresponding impact to the provision for income taxes in the period in which such determination is made. Impairment of marketable securities We classify all of our debt securities as available-for-sale (“AFS”).
Our consolidated financial statements are provided in “Item 18 – Financial Statements”. Overview We develop, market and support a wide range of products and services for IT security by offering a multilevel security architecture that defends enterprises’ cloud, network, mobile devices, Endpoints information and IOT solutions.
Overview We develop, market and support a wide range of products and services for IT security by offering a multilevel security architecture that defends enterprises’ cloud, network, mobile devices, Endpoints information and IOT solutions.
Upon adoption, we modified our impairment model for available-for-sale (“AFS”) debt securities and discontinued using the concept of “other than temporary” impairment on AFS debt securities.
Measurement of Credit Losses on Financial Instruments, using the modified retrospective transition method. Upon adoption, we modified our impairment model for available-for-sale (“AFS”) debt securities and discontinued using the concept of “other than temporary” impairment on AFS debt securities.
Additional details are provided in “Item 10 – Additional Information” under the caption “Israeli taxation, foreign exchange regulation and investment programs” and “Item 3 – Key Information” under the caption “The tax benefits available to us require us to meet several conditions, and may be terminated or reduced in the future, which would increase our taxes”. 34 Table of Contents Net Income Net income decreased by $19 million to $797 million in 2022 compared to $816 million in 2021.
Additional details are provided in “Item 10 – Additional Information” under the caption “Israeli taxation, foreign exchange regulation and investment programs” and “Item 3 – Key Information” under the caption “The tax benefits available to us require us to meet several conditions, and may be terminated or reduced in the future, which would increase our taxes”.
During 2022, 2021 and 2020, we derived approximately 60%, 58%, and 57%, respectively, of our sales from our ten largest channel partners. In 2022, 2021 and 2020, our two largest distributors accounted for approximately 40%, 40% and 39% of our sales, respectively.
During each of 2023, 2022 and 2021, we derived approximately 56%, 59%, and 57%, respectively, of our sales from our ten largest channel partners. In 2023, 2022 and 2021, our three largest distributors accounted for approximately 40%, of our sales.
No impairment charges were recognized during 2022, 2021 and 2020. . 30 Table of Contents Accounting for income tax We are subject to income taxes in Israel, the United States and numerous foreign jurisdictions. Significant judgment is required in evaluating our uncertain tax positions and determining our taxes.
Accounting for income tax We are subject to income taxes in Israel, the United States and numerous foreign jurisdictions. Significant judgment is required in evaluating our uncertain tax positions and determining our taxes.
Our cash and cash equivalents and short-term investments were $1,638 million as of December 31, 2022 and $1,694 million as of December 31, 2021. Our long-term interest bearing investments were $1,866 million as of December 31, 2022 and $2,090 million as of December 31, 2021.
Our total cash and cash equivalents, short-term investments and long-term interest bearing investments, were $2,960 million as of December 31, 2023 and $3,503 million as of December 31, 2022. Our cash and cash equivalents and short-term investments were $1,530 million as of December 31, 2023 and $1,638 million as of December 31, 2022.
As of December 31, 2022 and 2021, we have not accrued any significant liability in respect to this exposure. 31 Table of Contents Results of Operations The following table presents information concerning our results of operations in 2022 and 2021: Year Ended December 31, 2022 2021 (in millions) Revenues: Products and licenses $ 554.9 $ 513.9 Security subscriptions 858.0 755.2 Software updates and maintenance 917.0 897.7 Total revenues 2,329.9 2,166.8 Operating expenses (*): Cost of products and licenses 145.6 110.7 Cost of security subscriptions 41.4 35.9 Cost of software updates and maintenance 105.5 103.0 Amortization of technology 11.9 8.5 Total cost of revenues 304.4 258.1 Research and development 349.9 292.7 Selling and marketing 675.2 597.8 General and administrative 116.1 110.7 Total operating expenses 1,445.6 1,259.3 Operating income 884.3 907.5 Financial income, net 44.0 42.1 Income before taxes on income 928.3 949.6 Taxes on income 131.4 134.0 Net income $ 796.9 $ 815.6 (*) Including pre-tax charges for stock-based compensation, amortization of intangible assets and acquisition related expenses in the following items: Year Ended December 31, 2022 2021 (in millions) Amortization of intangible assets and acquisition related expenses Amortization of technology $ 11.9 $ 8.5 Research and development 7.1 5.6 Selling and marketing 4.2 7.3 Total amortization of intangible assets and acquisition related expenses $ 23.2 $ 21.4 Stock-based compensation Cost of products and licenses $ 0.4 $ 0.4 Cost of software updates and maintenance 5.0 4.4 Research and development 42.0 31.8 Selling and marketing 43.2 42.8 General and administrative 40.8 40.9 Total stock-based compensation $ 131.4 $ 120.3 32 Table of Contents The following table presents information concerning our results of operations as a percentage of revenues for the periods indicated: Year Ended December 31, 2022 2021 Revenues: Products and licenses 24 % 24 % Security subscriptions 37 35 Software updates and maintenance 39 41 Total revenues 100 % 100 % Operating expenses: Cost of products and licenses 6 5 Cost of security subscriptions 2 2 Cost of software updates and maintenance 5 5 Amortization of technology — *) — *) Total cost of revenues 13 12 Research and development 15 13 Selling and marketing 29 28 General and administrative 5 5 Total operating expenses 62 58 Operating income 38 42 Financial income, net 2 2 Income before taxes on income 40 44 Taxes on income 6 6 Net income 34 % 38 % *) Less than 1%.
Results of Operations The following table presents information concerning our results of operations in 2023 and 2022: Year Ended December 31, 2023 2022 (in millions) Revenues: Products and licenses $ 497.4 $ 554.9 Security subscriptions 981.2 858.0 Software updates and maintenance 936.1 917.0 Total revenues 2,414.7 2,329.9 Operating expenses (*): Cost of products and licenses 99.3 145.6 Cost of security subscriptions 57.0 41.4 Cost of software updates and maintenance 112.3 105.5 Amortization of technology 14.0 11.9 Total cost of revenues 282.6 304.4 Research and development 368.9 349.9 Selling and marketing 747.1 675.2 General and administrative 117.0 116.1 Total operating expenses 1,515.6 1,445.6 Operating income 899.1 884.3 Financial income, net 76.5 44.0 Income before taxes on income 975.6 928.3 Taxes on income 135.3 131.4 Net income $ 840.3 $ 796.9 36 (*) Including pre-tax charges for stock-based compensation, amortization of intangible assets and acquisition related expenses in the following items: Year Ended December 31, 2023 2022 (in millions) Amortization of intangible assets and acquisition related expenses Amortization of technology $ 14.0 $ 11.9 Research and development 7.0 7.1 Selling and marketing 13.7 4.2 Total amortization of intangible assets and acquisition related expenses $ 34.7 $ 23.2 Stock-based compensation Cost of products and licenses $ 0.4 $ 0.4 Cost of software updates and maintenance 7.3 5.0 Research and development 48.7 42.0 Selling and marketing 56.3 43.2 General and administrative 32.6 40.8 Total stock-based compensation $ 145.3 $ 131.4 The following table presents information concerning our results of operations as a percentage of revenues for the periods indicated: Year Ended December 31, 2023 2022 Revenues: Products and licenses 20 % 24 % Security subscriptions 41 37 Software updates and maintenance 39 39 Total revenues 100 % 100 % Operating expenses: Cost of products and licenses 4 6 Cost of security subscriptions 2 2 Cost of software updates and maintenance 5 5 Amortization of technology 1 — *) Total cost of revenues 12 13 Research and development 15 15 Selling and marketing 31 29 General and administrative 5 5 Total operating expenses 63 62 Operating income 37 38 Financial income, net 3 2 Income before taxes on income 40 40 Taxes on income 6 6 Net income 35 % 34 % *) Less than 1%. 37 Revenues We derive our revenues mainly from the sale of products and licenses, security subscriptions and software updates and maintenance.
The accounting policies that reflect our more significant estimates, judgments and assumptions and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results, include the following: • Revenue recognition (including sales reserves); • Realizability of long-lived assets (including intangible assets); • Accounting for income taxes; • Credit loss of trade receivables; • Impairment of marketable securities; • Loss Contingencies; and • Manufacturing Partner and Supplier Liabilities. 29 Table of Contents In many cases, the accounting treatment of a particular transaction is specifically dictated by U.S.
The accounting policies that reflect our more significant estimates, judgments and assumptions and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results, include the following: • Revenue recognition; • Accounting for income taxes; • Impairment of marketable securities; • Loss Contingencies; and • Manufacturing Partner and Supplier Liabilities.
Research and development expenses consist primarily of salaries and other related expenses for personnel as well as the cost of facilities and deprecation of capital equipment.
Research and Development Research and development expenses were $369 million in 2023 and $350 million in 2022, and represented 15% of revenues in each of the years 2023 and 2022. Research and development expenses consist primarily of salaries and other related expenses for personnel as well as the cost of facilities and deprecation of capital equipment.
You can see a summary of our significant accounting policies in Note 2 to our consolidated financial statements, as set forth in Item 18. Revenue recognition We derive our revenues mainly from sales of products and licenses, security subscriptions and software updates and maintenance. Our products are generally integrated with software that is essential to the functionality of the product.
Revenue recognition We derive our revenues mainly from sales of products and licenses, security subscriptions and software updates and maintenance. Our products are generally integrated with software that is essential to the functionality of the product.
Operating Income Margin In 2022, our operating margin was 38% compared to 42% in 2021. The decrease in our operating margin was primarily due to an increase in our cost of goods sold, workforce related expenses and cloud expenses.
The decrease in our operating margin was primarily due to an increase in our workforce related expenses, cloud expenses and amortization of intangibles expenses in related to our acquisitions.
Operating and Financial Review and Prospects, in our Annual Report on Form 20-F for the fiscal year ended December 31, 2021, which was filed with the U.S. Securities and Exchange Commission on April 14, 2022 . The following discussion and analysis is based on our consolidated financial statements including the related notes, and should be read in conjunction with them.
Operating and Financial Review and Prospects, in our Annual Report on Form 20-F for the fiscal year ended December 31, 2022, which was filed with the U.S. Securities and Exchange Commission on April 27, 2023 and which is hereby incorporated by reference .
Software updates and maintenance provide customers with rights to unspecified software product upgrades released during the term of the agreement and include maintenance services to end-user customers, through primarily telephone access to technical support personnel as well as hardware support services.
Software updates and maintenance provide customers with rights to unspecified software product upgrades released during the term of the agreement and include maintenance services to end-user customers, through primarily telephone access to technical support personnel as well as hardware support services. 34 We recognize revenues under the core principle that transfer of control to our customers should be depicted in an amount reflecting the consideration we expect to receive in revenue.
Impairment of marketable securities We classify all of our debt securities as available-for-sale (“AFS”). Available-for-sale debt securities are carried at fair value, with the unrealized gains and losses, net of tax, reported in accumulated other comprehensive income (loss) in shareholders’ equity.
Available-for-sale debt securities are carried at fair value, with the unrealized gains and losses, net of tax, reported in accumulated other comprehensive income (loss) in shareholders’ equity. Realized gains and losses on sale of investments are included in financial income, net and are derived using the specific identification method for determining the cost of securities sold.
Cost of security subscriptions was $41 million in 2022 and $36 million in 2021. Cost of software updates and maintenance was $106 million in 2022 and $103 million in 2021. In 2022, amortization of technology was $12 million compared to $9 million in 2021.
Cost of security subscriptions was $57 million in 2023 and $41 million in 2022. Cost of software updates and maintenance was $112 million in 2023 and $106 million in 2022. In 2023, amortization of technology was $14 million compared to $12 million in 2022. The increase in 2023 is attributed to the acquisitions made during 2023 and 2022.
Cost of revenues includes cost of product and licenses, cost of security subscriptions and cost of software updates and maintenance and amortization of technology. Our cost of products and licenses includes mainly cost of software and hardware production, packaging and shipping.
Cost of revenues includes cost of product and licenses, cost of security subscriptions and cost of software updates and maintenance and amortization of technology. Our cost of products and licenses includes mainly cost of software and hardware production, packaging and shipping. In 2023 we have seen a significant improvement in the supply chain which had been challenging last year.
In 2022, net cash used for investing activities was decreased compared to 2021, primarily due to decrease in marketable securities investments, net, offset by cash paid in conjunction with acquisitions. Our net cash paid for acquisitions amounted to $48 million in 2022 and $220 million in 2021.
In 2023, net cash provided by investing activities was increased compared to 2022, primarily due to increase in proceeds from sale of marketable securities offset by cash paid in conjunction with acquisitions, net of acquired cash, and lower investment in short term deposit. Our net cash paid for acquisitions amounted to $459 million in 2023 and $48 million in 2022.
GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting among available alternatives would not produce a materially different result. Our senior management has reviewed these critical accounting policies and related disclosures with the audit committee of our board of directors.
In many cases, the accounting treatment of a particular transaction is specifically dictated by U.S. GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting among available alternatives would not produce a materially different result.
Our selling and marketing expenses worldwide are paid in local currencies and are reported in U.S. dollars. Therefore, changes to the exchange rates between the local currencies and the U.S. dollar have affected, and may in the future affect, our expense level.
Therefore, changes to the exchange rates between the local currencies and the U.S. dollar have affected, and may in the future affect, our expense level. General and Administrative General and administrative expenses consist primarily of salaries and other related expenses for personnel, professional fees, insurance costs, legal and other expenses.
The decrease in our cash from operations was derived mostly from the decrease in our tax accruals and other liabilities. We used net cash in investing activities of $6 million in 2022 compared to net cash used in investing activities of $75 million in 2021.
We generated net cash from investing activities of $469 million in 2023 compared to net cash used in investing activities of $6 million in 2022.
Revenues We derive our revenues mainly from the sale of products and licenses, security subscriptions and software updates and maintenance. Our revenues were $2,330 million in 2022 and $2,167 million in 2021. Total revenues in 2022 increased by 8% compared to 2021. Product and license revenues were $555 million in 2022 and $514 million in 2021.
Our revenues were $2,415 million in 2023 and $2,330 million in 2022. Total revenues in 2023 increased by 4% compared to 2022. Product and license revenues were $497 million in 2023 and $555 million in 2022.
Our financial assets are held and managed through the parent company in Israel and our subsidiaries in Singapore, Canada and the U.S. We generated net cash from operations of $1,098 million in 2022 and $1,204 million in 2021. Net cash from operations for 2022 and 2021 consisted primarily of net income adjusted for non-cash activity.
Our long-term interest bearing investments were $1,430 million as of December 31, 2023 and $1,866 million as of December 31, 2022. The majority of our financial assets are held and managed through the parent company in Israel and our subsidiaries in Singapore, Canada and the U.S.
The $57 million increase in 2022 consisted of $14 million due to U.S. dollar weakened against the Israeli Shekel, is primarily a result of an increase in compensation and related expenses for personnel and in our cloud infrastructure expenses.
The net increase of $19 million in research and development expenses in 2023 primarily resulted from increases in compensation and related expenses for personnel, along with elevated expenses in our cloud infrastructure. The gross increase was partially offset by a $16 million benefit resulting from the strengthening of the U.S. dollar against the Israeli Shekel, which mitigated the gross increase.
General and Administrative General and administrative expenses consist primarily of salaries and other related expenses for personnel, professional fees, insurance costs, legal and other expenses. General and administrative expenses were $116 million in 2022 and $111 million in 2021, which represented 5% of revenues in each of the years 2022 and 2021.
General and administrative expenses were $117 million in 2023 and $116 million in 2022, which represented 5% of revenues in each of the years 2023 and 2022. Operating Income Margin In 2023, our operating margin was 37% compared to 38% in 2022.
Selling and marketing expenses were $675 million in 2022 and $598 million in 2021, which represented 29% of revenues in 2022 and 28% of revenues in 2021. The $77 million increase in 2022 consisted of $23 million due to fluctuations of various currencies against the U.S. dollar, is primarily a result of an increase in compensation expenses for personnel.
Selling and marketing expenses were $747 million in 2023 and $675 million in 2022, which represented 31% of revenues in 2023 and 29% of revenues in 2022. 38 The net increase of $72 million in selling and marketing costs in 2023 primarily stems from rises in compensation expenses for personnel and marketing activities.
Removed
COVID-19 Pandemic The COVID-19 pandemic is having widespread, rapidly evolving, and unpredictable impacts on global society, economies, financial markets, and business practices. Federal, state and foreign governments have implemented measures to contain the virus, including social distancing, travel restrictions, border closures, limitations on public gatherings, work from home, and closure of non-essential businesses.
Added
The following discussion and analysis is based on our consolidated financial statements including the related notes, and should be read in conjunction with them. Our consolidated financial statements are provided in “Item 18 – Financial Statements”.
Removed
To protect the health and well-being of our employees, partners, and third-party service providers, we have implemented work-from-home requirements, made substantial modifications to employee travel policies, and cancelled or shifted marketing and other corporate events to virtual-only formats for the foreseeable future.
Added
Our senior management has reviewed these critical accounting policies and related disclosures with the audit committee of our board of directors. You can see a summary of our significant accounting policies in Note 2 to our consolidated financial statements, as set forth in Item 18.
Removed
Our focus remains on the safety of our employees, striving to protect the health and well-being of the communities in which we operate, and providing technology to our employees, end-customers and partners to help them do their best work while remote.
Added
As of December 31, 2023 and 2022, we have not accrued any significant liability in respect to this exposure.
Removed
The ultimate duration and extent of the impact from the COVID-19 pandemic depends on future developments cannot be accurately forecasted at this time.
Added
This rise was partially offset by a $4 million benefit due to fluctuations of various currencies against the U.S. dollar, which mitigated the gross increase. Our selling and marketing expenses worldwide are paid in local currencies and are reported in U.S. dollars.
Removed
These developments include the severity and transmission rate of the disease, the actions of governments, businesses and individuals in response to the pandemic, the extent and effectiveness of containment actions, the impact on economic activity and the impact of these and other factors. See Risk Factors for further discussion of the possible impact of the COVID-19 pandemic on our business.
Added
Net Income Net income increased by $43 million to $840 million in 2023 compared to $797 million in 2022. Liquidity and Capital Resources During 2023 and 2022, we financed our operations through cash generated from operations.
Removed
We recognize revenues under the core principle that transfer of control to our customers should be depicted in an amount reflecting the consideration we expect to receive in revenue.
Added
We generated net cash from operations of $1,038 million in 2023 and $1,098 million in 2022. Net cash from operations for 2023 and 2022 consisted primarily of net income adjusted for non-cash activity. The decrease in our cash from operations was derived mostly from the lower increase in our deferred revenues compared to last year.
Removed
Realizability of long-lived assets (including intangible assets) We are required to assess the impairment of tangible and intangible long-lived assets subject to amortization, under ASC 360 “Property, Plant and Equipment”, on a periodic basis, when events or changes in circumstances indicate that the carrying value may not be recoverable.
Removed
Impairment indicators include any significant changes in the manner of our use of the assets or the strategy of our overall business, significant negative industry or economic trends and significant decline in our share price for a sustained period.
Removed
Upon determination that the carrying value of a long-lived asset may not be recoverable based upon a comparison of aggregate undiscounted projected future cash flows from the use of the asset or asset group to the carrying amount of the asset, an impairment charge is recorded for the excess of carrying amount over the fair value.
Removed
We measure fair value using discounted projected future cash flows. We base our fair value estimates on assumptions we believe to be reasonable but that are unpredictable and inherently uncertain. If these estimates or their related assumptions change in the future, we may be required to record impairment charges for our tangible and intangible long-lived assets subject to amortization.
Removed
Credit loss of trade receivables We make estimates of expected credit and collectability trends for the allowance for credit losses based upon our assessment of various factors, including historical experience, the age of the trade receivable balances, credit quality of our customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect our ability to collect from customers.
Removed
Measurement of Credit Losses on Financial Instruments, using the modified retrospective transition method. Upon adoption, we changed our impairment model to utilize a current expected credit losses (CECL) model in place of the incurred loss methodology for financial instruments measured at amortized cost, including our accounts receivables.
Removed
Realized gains and losses on sale of investments are included in financial income, net and are derived using the specific identification method for determining the cost of securities sold. Measurement of Credit Losses on Financial Instruments, using the modified retrospective transition method.
Removed
In 2022 as a result of the shortages we have seen an increase of costs of raw materials, resulting in an increase of the cost of products. We have succeeded during such period to expedite shipments and deliver products to our customers despite the supply chain shortages.
Removed
The increase in 2022 is attributed to the acquisitions made during 2022 and 2021. 33 Table of Contents Research and Development Research and development expenses were $350 million in 2022 and $293 million in 2021, and represented 15% of revenues in 2022 and 13% in 2021.
Removed
Liquidity and Capital Resources During 2022 and 2021, we financed our operations through cash generated from operations. Our total cash and cash equivalents, short-term investments and long-term interest bearing investments, were $3,503 million as of December 31, 2022 and $3,783 million as of December 31, 2021.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

64 edited+9 added−7 removed84 unchanged
Other than as specified in the share ownership table under the caption “Share ownership” below, none of our directors and executive officers holds more than 1% of our outstanding shares. Composition of Board of Directors Our board of directors currently consists of eight members, including three outside directors in accordance with the requirements of the Israeli Companies Law.
Other than as specified in the share ownership table under the caption “Share ownership” below, none of our directors and executive officers holds more than 1% of our outstanding shares. 45 Composition of Board of Directors Our board of directors currently consists of eight members, including three outside directors in accordance with the requirements of the Israeli Companies Law.
Chelouche has also served as one of our outside directors under the Israeli Companies Law since 2006. Mr. Chelouche has been Managing Partner of Aviv Venture Capital since August 2000. He serves on boards of directors of certain Aviv companies. Prior to joining Aviv Venture Capital, Mr.
Chelouche has served on our board of directors since 2006. Mr. Chelouche has also served as one of our outside directors under the Israeli Companies Law since 2006. Mr. Chelouche has been Managing Partner of Aviv Venture Capital since August 2000. He serves on boards of directors of certain Aviv companies. Prior to joining Aviv Venture Capital, Mr.
Rothrock is a member of the Massachusetts Institute of Technology Corporation, and a Trustee of the University of Texas and Texas A&M Investment Management Company. Mr. Rothrock received a B.S. in Engineering from Texas A&M University, an M.S. from the Massachusetts Institute of Technology and an M.B.A. from the Harvard Business School. Dr.
Rothrock is a member of the Massachusetts Institute of Technology Corporation, and a Trustee of the University of Texas and Texas A&M Investment Management Company. Mr. Rothrock received a B.S. in Engineering from Texas A&M University, an M.S. from the Massachusetts Institute of Technology and an M.B.A. from the Harvard Business School.
All options granted to directors and executive officers in 2022 were granted with an exercise price equal to 100% of the closing price of the ordinary shares on the Nasdaq Global Select Market on the applicable date of grant. We recorded equity-based compensation expenses in our financial statements for the year ended December 31, 2022 for Mr. Shwed, Dr.
All options granted to directors and executive officers in 2023 were granted with an exercise price equal to 100% of the closing price of the ordinary shares on the Nasdaq Global Select Market on the applicable date of grant. We recorded equity-based compensation expenses in our financial statements for the year ended December 31, 2023 for Mr. Shwed, Dr.
The administrator also has the authority to accelerate the vesting of the ordinary shares subject to outstanding awards held by our directors, officers and employees in connection with the subsequent termination of some officers’ employment following a change of control event 45 Table of Contents Dome9 Security Ltd. 2011 Share Option Plan and the 2016 Equity Incentive Subplan In connection with our acquisition of Dome9 Security Ltd. in October 2018, we assumed certain outstanding Dome9 share options under the Dome9 Security Ltd. 2011 Share Option Plan and the 2016 Equity Incentive Subplan, or the Dome9 Equity Plan, which were converted into options to purchase 47,816 of our ordinary shares.
The administrator also has the authority to accelerate the vesting of the ordinary shares subject to outstanding awards held by our directors, officers and employees in connection with the subsequent termination of some officers’ employment following a change of control event Dome9 Security Ltd. 2011 Share Option Plan and the 2016 Equity Incentive Subplan In connection with our acquisition of Dome9 Security Ltd. in October 2018, we assumed certain outstanding Dome9 share options under the Dome9 Security Ltd. 2011 Share Option Plan and the 2016 Equity Incentive Subplan, or the Dome9 Equity Plan, which were converted into options to purchase 47,816 of our ordinary shares.
The term of Ray Rothrock will expire at our 2023 annual meeting of shareholders and the terms of Yoav Chelouche and Guy Gecht will expire at our 2024 annual meeting of shareholders. There are no arrangements or understandings with major shareholders, customers, suppliers or others, pursuant to which any of the directors or members of senior management are elected.
The term of Ray Rothrock will expire at our 2026 annual meeting of shareholders and the terms of Yoav Chelouche and Guy Gecht will expire at our 2024 annual meeting of shareholders. There are no arrangements or understandings with major shareholders, customers, suppliers or others, pursuant to which any of the directors or members of senior management are elected.
Following is a summary of the salary and benefits paid in 2022 (i) to our five most highly compensated executive officers (referred to as the “Covered Executives”) and (ii) to our non-executive directors. Cash Compensation Mr. Gil Shwed, Chief Executive Officer and Director.
Following is a summary of the salary and benefits paid in 2023 (i) to our five most highly compensated executive officers (referred to as the “Covered Executives”) and (ii) to our non-executive directors. Cash Compensation Mr. Gil Shwed, Chief Executive Officer and Director.
On the date of each annual general meeting of shareholders, each non-employee director who is to continue to serve as a non-employee director after the annual meeting is granted an option to purchase an additional 15,000 ordinary shares and RSUs with a value of $50.0 thousands, of which 50% vest six months after the grant date, 25% vest nine months after the grant date, and another 25% vest a year after the grant date, provided that the director has served as a non-employee director for at least six months prior to the date of the annual meeting.
On the date of each annual general meeting of shareholders, each non-employee director who is to continue to serve as a non-employee director after the annual meeting is granted an option to purchase an additional 5,000 ordinary shares and RSUs with a value of $150.0 thousands, of which 50% vest six months after the grant date, 25% vest nine months after the grant date, and another 25% vest a year after the grant date, provided that the director has served as a non-employee director for at least six months prior to the date of the annual meeting.
These amounts include $0.3 million that were set aside or accrued to provide for severance and retirement insurance policies in 2022. These amounts do not include amounts accrued for expenses related to business travel, professional and business association dues and other business expenses reimbursed to officers.
These amounts include $0.3 million that were set aside or accrued to provide for severance and retirement insurance policies in 2023. These amounts do not include amounts accrued for expenses related to business travel, professional and business association dues and other business expenses reimbursed to officers.
Employee Stock Purchase Plans In 1996, we adopted an Employee Stock Purchase Plan, which was subsequently amended and restated in 2015, and further amended in June 2019 and July 2020. We refer to the Employee Stock Purchase Plan, as amended and restated, as the US ESPP, and the Employee Stock Purchase Plan (Non-U.S.
Employee Stock Purchase Plans In 1996, we adopted an Employee Stock Purchase Plan, which was subsequently amended and restated in 2015, and further amended in June 2019, July 2020 and January 2024. We refer to the Employee Stock Purchase Plan, as amended and restated, as the US ESPP, and the Employee Stock Purchase Plan (Non-U.S.
As of December 31, 2022, Yoav Chelouche, Guy Gecht and Ray Rothrock are our outside directors under the Israeli Companies Law. Yoav Chelouche’s and Guy Gecht’s term of office will expire in 2024, and Ray Rothrock’s term of office will expire in 2023.
As of December 31, 2023, Yoav Chelouche, Guy Gecht and Ray Rothrock are our outside directors under the Israeli Companies Law. Yoav Chelouche’s and Guy Gecht’s term of office will expire in 2024, and Ray Rothrock’s term of office will expire in 2026.
The nominating, sustainability and corporate governance committee identifies prospective board candidates, recommends nominees for election to our board of directors, develops and recommends board member selection criteria, considers committee member qualification, supervises the selection and composition of 42 Table of Contents committees of our board of directors, provides oversight in the evaluation of our board of directors and each committee, oversees our policies, programs and strategies related to environmental, social and governance (ESG) matters and develops and recommends to the board a set of corporate governance guidelines.
The nominating, sustainability and corporate governance committee identifies prospective board candidates, recommends nominees for election to our board of directors, develops and recommends board member selection criteria, considers committee member qualification, supervises the selection and composition of committees of our board of directors, provides oversight in the evaluation of our board of directors and each committee, oversees our policies, programs and strategies related to environmental, social and governance (ESG) matters and develops and recommends to the board a set of corporate governance guidelines.
Number of Ordinary Shares Reserved for Future Grants under the Equity Plans Following the amendments to the Equity Plans in July 2018, commencing December 31, 2018, on December 31st of each year, the number of Reserved and Authorized Shares (as defined below) under both Equity Plans together shall be automatically reset on such date to equal 10% of the sum of (i) the number of ordinary shares issued and outstanding on such date and (ii) the number of ordinary shares reserved and authorized under the Equity Plans for outstanding awards granted under the Equity Plans as of such date (provided, however, that in no event shall the number of Reserved and Authorized Shares be less than the number of ordinary shares reserved and authorized under the Equity Incentive Plans for outstanding awards granted under the Equity Incentive Plans as of such date).
Equity Plan and the Israel Equity Plan, and, together, as the Equity Plans. 49 Number of Ordinary Shares Reserved for Future Grants under the Equity Plans Following the amendments to the Equity Plans in July 2018, commencing December 31, 2018, on 31, December of each year, the number of Reserved and Authorized Shares (as defined below) under both Equity Plans together shall be automatically reset on such date to equal 10% of the sum of (i) the number of ordinary shares issued and outstanding on such date and (ii) the number of ordinary shares reserved and authorized under the Equity Plans for outstanding awards granted under the Equity Plans as of such date (provided, however, that in no event shall the number of Reserved and Authorized Shares be less than the number of ordinary shares reserved and authorized under the Equity Incentive Plans for outstanding awards granted under the Equity Incentive Plans as of such date).
All of these awards can vest based on time or performance milestones. Trustee .
All of these awards can vest based on time or performance milestones. 50 Trustee .
Ozer-Armon is a director of Strauss Group Ltd., Similarweb Ltd., and ICL Group Ltd. Ms. Ozer-Armon holds a BA magna cum laude in Economics and an MBA degree majoring in Finance and Marketing from Tel Aviv University and she is an AMP graduate of the Harvard Business School. Ray Rothrock has served on our board of directors since 1995. Mr.
Ozer-Armon is a director of Strauss Group Ltd., Similarweb Ltd., and ICL Group Ltd. Ms. Ozer-Armon holds a B.A. magna cum laude in Economics and an M.B.A. degree majoring in Finance and Marketing from Tel Aviv University and she is an AMP graduate of the Harvard Business School. Ray Rothrock has served on our board of directors since 1995. Mr.
We do not lease vehicles for our Covered Executives. In accordance with the company’s executive compensation policy, we also paid cash bonuses upon compliance with predetermined 2022 performance parameters set by the Compensation Committee and the Board of Directors. The 2022 cash bonus expenses for Dr. Dor, Ms. Payne, Mr. Schusheim and Ms.
We do not lease vehicles for our Covered Executives. In accordance with the company’s executive compensation policy, we also paid cash bonuses upon compliance with predetermined 2023 performance parameters set by the Compensation Committee and the Board of Directors. The 2023 cash bonus expenses for Dr. Dor, Mr. Greenberg, Mr. Schusheim and Ms.
The board of directors has determined that there are no current conflicts of interest with respect to any of our directors. The terms of Gil Shwed, Jerry Ungerman, Dr. Tal Shavit Shenhav, Tzipi Ozer-Armon and Shai Weiss will expire at our 2023 annual meeting of shareholders.
The board of directors has determined that there are no current conflicts of interest with respect to any of our directors. The terms of Gil Shwed, Jerry Ungerman, Dr. Tal Shavit Shenhav, Tzipi Ozer-Armon, Jill Smith and Shai Weiss will expire at our 2024 annual meeting of shareholders.
Each outstanding purchase right will be exercised immediately prior to our merger or consolidation with another company. Our board of directors may amend or terminate each of the ESPPs immediately after the close of any purchase date. Disclosure of a Registrant’s Action to Recover Erroneous Awarded Compensation Not applicable.
Each outstanding purchase right will be exercised immediately prior to our merger or consolidation with another company. Our board of directors may amend or terminate each of the ESPPs immediately after the close of any purchase date. Disclosure of a Registrant’s Action to Recover Erroneous Awarded Compensation None. 51
Yoav Chelouche is the chairman of the audit committee. Guy Gecht and Ray Rothrock serve as the other members of our audit committee. The audit committee has adopted a written audit committee charter as required by the Nasdaq regulations.
Yoav Chelouche is the chairman of the audit committee. Guy Gecht, Tzipi Ozer-Armon and Ray Rothrock serve as the other members of our audit committee. The audit committee has adopted a written audit committee charter as required by the Nasdaq regulations.
Compensation of Directors and Officers The total direct cash compensation that we accrued for our directors and executive officers as a group, including those who left the company during 2022, was approximately $3.8 million for the year ended December 31, 2022.
Compensation of Directors and Officers The total direct cash compensation that we accrued for our directors and executive officers as a group, including those who left the company during 2023, was approximately $3.7 million for the year ended December 31, 2023.
The compensation committee’s duties include recommending to the board of directors a compensation policy for executives and monitor its implementation, approve compensation terms of executive officers, directors and employees affiliated with controlling shareholders, make recommendations to the board of directors regarding the issuance of equity incentive awards under our equity incentive plans, and exempt certain compensation arrangements from the requirement to obtain shareholder approval under the Israeli Companies Law.
The compensation committee has adopted a written compensation committee charter. 47 The compensation committee’s duties include recommending to the board of directors a compensation policy for executives and monitor its implementation, approve compensation terms of executive officers, directors and employees affiliated with controlling shareholders, make recommendations to the board of directors regarding the issuance of equity incentive awards under our equity incentive plans, and exempt certain compensation arrangements from the requirement to obtain shareholder approval under the Israeli Companies Law.
Generally, pursuant to the amended regulations, an Israeli company traded on Nasdaq that does not have a “controlling shareholder” (as defined in the Israeli Companies Law) will be able to elect not to appoint Outside Directors to its Board of Directors and not to comply with the Audit Committee and Compensation Committee composition and chairman requirements of the Israeli Companies Law (as described above); provided , that the company complies with the applicable Nasdaq independent director requirements and the Nasdaq Audit Committee and Compensation Committee composition requirements.
Pursuant to the Israeli Companies Law Regulations , an Israeli company traded on Nasdaq that does not have a “controlling shareholder” (as defined in the Israeli Companies Law) may elect not to appoint Outside Directors to its Board of Directors and not to comply with the Audit Committee and Compensation Committee composition and chairman requirements of the Israeli Companies Law (as described above); provided , that the company complies with the applicable Nasdaq independent director requirements and the Nasdaq Audit Committee and Compensation Committee composition requirements.
Shai Weiss is the chairman of the nominating, sustainability and corporate governance committee. Ray Rothrock and Tal Shavit Shenhav serve as the other members of our nominating, sustainability and corporate governance committee. The nominating, sustainability and corporate governance committee has adopted a written nominating committee charter.
Shai Weiss is the chairman of the nominating, sustainability and corporate governance committee. Tal Shavit Shenhav and Jill Smith serve as the other members of our nominating, sustainability and corporate governance committee. The nominating, sustainability and corporate governance committee has adopted a written nominating committee charter.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES Directors and Senior Management Our directors and executive officers as of April 15, 2023, were as follows: Name Position Independent Director (1) Outside Director (2) Member of Audit Committee Member of Compensation Committee Member of Nominating, Sustainability and Corporate Governance Committee Gil Shwed Chief Executive Officer and Director Jerry Ungerman Chairman of the Board ✓ Dorit Dor Chief Technology Officer Nataly Kremer Chief Product Officer Rupal Hollenbeck President Roei Golan Tal Payne (3) Acting Chief Financial Officer Chief Financial and Operation Officer Guy Gecht (4) Lead Independent Director ✓ ✓ ✓ ✓ Yoav Chelouche (4) Director ✓ ✓ ✓ ✓ Tzipi Ozer-Armon Director ✓ Ray Rothrock (4) Director ✓ ✓ ✓ ✓ ✓ Tal Shavit Shenhav Director ✓ ✓ Shai Weiss Director ✓ ✓ (1) “Independent Director” under the Nasdaq Global Select Market regulations and the Israeli Companies Law (see explanation below).
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES Directors and Senior Management Our directors and executive officers as of March 15, 2024, were as follows: Name Position Independent Director (1) Outside Director (2) Member of Audit Committee Member of Compensation Committee Member of Nominating, Sustainability and Corporate Governance Committee Gil Shwed Chief Executive Officer and Director Jerry Ungerman Chairman of the Board ✓ Dorit Dor Chief Technology Officer Nataly Kremer Chief Product Officer and Head of Research and Development Rupal Hollenbeck President Roei Golan Chief Financial Officer Guy Gecht (3) Lead Independent Director ✓ ✓ ✓ ✓ Yoav Chelouche (3) Director ✓ ✓ ✓ ✓ Tzipi Ozer-Armon Director ✓ ✓ Ray Rothrock (3) Director ✓ ✓ ✓ ✓ Tal Shavit Shenhav Director ✓ ✓ Shai Weiss Director ✓ ✓ Jill Smith Director ✓ ✓ (1) “Independent Director” under the Nasdaq Global Select Market regulations and the Israeli Companies Law (see explanation below).
He holds an M.B.A. degree from Columbia University and a BBA degree from City University of New York, Baruch College. 38 Table of Contents Of the individuals mentioned above, only Gil Shwed owned more than one percent of our outstanding shares as of December 31, 2022.
He holds an M.B.A. degree from Columbia University and a BBA degree from City University of New York, Baruch College. 43 Of the individuals mentioned above, only Gil Shwed owned more than one percent of our outstanding shares as of December 31, 2023.
Dor, Ms. Payne, Mr. Schusheim and Ms. Hollenbeck of $22.6 million, $6.4 million, $7.1 million, $1.7 million and $1.5 million, respectively. Assumptions and key variables used in the calculation of such amounts are described in Note 2y to our audited consolidated financial statements included in Item 18 of this Annual Report.
Dor, Mr. Greenberg, Mr. Schusheim and Ms. Hollenbeck of $17.9 million, $5.4 million, $1.4 million, $1.3 million and $1.7 million, respectively. Assumptions and key variables used in the calculation of such amounts are described in Note 2y to our audited consolidated financial statements included in Item 18 of this Annual Report.
On August 30, 2022, following the approval of our Compensation Committee, Board of Directors and the company’s shareholders at the 2022 Annual General Meeting, we granted Mr.
On August 3, 2023, following the approval of our Compensation Committee, Board of Directors and the company’s shareholders at the 2023 Annual General Meeting, we granted Mr.
All shares shown as beneficially owned have identical rights in all respects. The shares beneficially owned by the directors include the shares owned by their family members to which such directors disclaim beneficial ownership. 43 Table of Contents The share numbers and percentages listed below are based on shares outstanding as of February 28, 2023.
All shares shown as beneficially owned have identical rights in all respects. The shares beneficially owned by the directors include the shares owned by their family members to which such directors disclaim beneficial ownership. The share numbers and percentages listed below are based on shares outstanding as of February 29, 2024.
Cash compensation expenses recorded in 2022 consisted of $19.2 thousands in salary expenses, and $5.9 thousands in benefit costs. Mr. Shwed requested to forego his salary and bonus for 2022, as he has done for the past several years. Following consideration of Mr. Shwed’s request, our compensation committee and board of directors have determined that Mr.
Cash compensation expenses recorded in 2023 consisted of $19.4 thousands in salary expenses, and $5.8 thousands in benefit costs. Mr. Shwed requested to forego his salary and bonus for 2023, as he has done in the past. Following consideration of Mr. Shwed’s request, our compensation committee and board of directors have determined that Mr.
Shwed will not receive a bonus for 2022, and did not receive any cash compensation for 2022 except for an amount equal to the minimum wage required under Israeli law. Dr. Dorit Dor, Chief Technology Officer. Compensation expenses recorded in 2022 included $376.4 thousands in salary expenses and $89.5 thousands in benefit costs. Ms.
Shwed will not receive a bonus for 2023, and did not receive any cash compensation for 2023 except for an amount equal to the minimum wage required under Israeli law. Dr. Dorit Dor, Chief Technology Officer. Compensation expenses recorded in 2023 included $374.9 thousands in salary expenses and $87.4 thousands in benefit costs. Mr.
Gil Shwed, our Chief Executive Officer and Director, options to purchase 0.5 million ordinary shares at an exercise price equal to 100% of the closing price of the ordinary shares on the Nasdaq Global Select Market on the date of the grant, vesting gradually over a period of four years.
Gil Shwed, our Chief Executive Officer and Director, options to purchase 0.5 million ordinary shares at an exercise price equal to 100% of the closing price of the ordinary shares on the Nasdaq Global Select Market on the date of the grant, vesting gradually over a period of four years with the vesting of options to purchase 0.2 million ordinary shares (40% of the grant) also subject to long-term company performance goals.
Employees As of December 31, 2022, we had 6,026 employees as well as 194 subcontractors (163 subcontractors in 2021, 116 subcontractors in 2020) Over the past three years, the number of our employees by function was as follows: As of December 31, 2022 2021 2020 Function : Research, development and quality assurance 1,807 1,677 1,500 Marketing, pre sale, sales and business development 2,678 2,509 2,317 Customer support 926 905 851 Information systems, administration, finance and operation 615 551 530 Total 6,026 5,642 5,198 Over the past three years, the number of our employees by geographic area was as follows: As of December 31, 2022 2021 2020 Function : Israel 2,525 2,416 2,259 Americas 1,813 1,660 1,580 Rest of the World 1,688 1,566 1,359 Total 6,026 5,642 5,198 We are subject to Israeli labor laws and regulations with respect to our Israeli employees.
Employees As of December 31, 2023, we had 6,450 employees as well as 277 subcontractors (194 subcontractors in 2022, 163 subcontractors in 2021) Over the past three years, the number of our employees by function was as follows: As of December 31, 2023 2022 2021 Function : Research, development and quality assurance 1,889 1,807 1,677 Marketing, pre sale, sales and business development 2,869 2,678 2,509 Customer support 1,027 926 905 Information systems, administration, finance and operation 665 615 551 Total 6,450 6,026 5,642 Over the past three years, the number of our employees by geographic area was as follows: As of December 31, 2023 2022 2021 Function : Israel 2,672 2,525 2,416 Americas 1,973 1,813 1,660 Rest of the World 1,805 1,688 1,566 Total 6,450 6,026 5,642 We are subject to Israeli labor laws and regulations with respect to our Israeli employees.
Tal Shavit Shenhav has served on our board of directors since 2000. Dr. Shavit Shenhav is an organizational consultant specializing in international collaboration between Israeli and American companies, consulting in the management of cultural differences in order to forge effective collaboration. Her work with leading management teams includes the definition of organizational culture as the engine of such company’s activities.
Shavit Shenhav is an organizational consultant specializing in international collaboration between Israeli and American companies, consulting in the management of cultural differences in order to forge effective collaboration. Her work with leading management teams includes the definition of organizational culture as the engine of such company’s activities.
Our board of directors has determined that each of Yoav Chelouche, Guy Gecht, Tzipi Ozer-Armon, Ray Rothrock, Tal Shavit Shenhav, Jerry Ungerman, and Shai Weiss is an independent director under the applicable Nasdaq regulations and the Israeli Companies Law. Our independent directors have regularly held meetings at which only independent directors are present.
Our board of directors has determined that each of Yoav Chelouche, Guy Gecht, Tzipi Ozer-Armon, Ray Rothrock, Tal Shavit Shenhav, Jill Smith, Jerry Ungerman, and Shai Weiss is an independent director under the applicable Nasdaq regulations and the Israeli Companies Law.
Name Number of shares beneficially owned (1) % of class of shares (2) Title of securities covered by the options, RSUs and PSUs Number of options, RSUs, and PSUs (3) Exercise price of options Date of expiration of options Gil Shwed 29,149,766 23.6 % Ordinary shares 4,240,000 $ 114.23 - $123.05 06/06/2024-08/29/2029 All directors and officers as a group (13 persons including Mr.
Name Number of shares beneficially owned (1)(5) % of class of shares (2) Title of securities covered by the options, RSUs and PSUs Number of options, RSUs, and PSUs (3) Exercise price of options Date of expiration of options Gil Shwed 29,804,551 25.6 %(4) Ordinary shares 4,920,000 $ 114.23-$131.96 06/06/2024-08/02/2030 All directors and officers as a group (13 persons including Mr.
Each executive officer is elected by the board of directors and serves at the discretion of the board. All of our executive officers and directors, other than non-employee directors, devote substantially all of their working time to our business.
Each executive officer is elected by the board of directors and serves at the discretion of the board. All of our executive officers and directors, other than non-employee directors, devote substantially all of their working time to our business. There are no family relationships among any of our directors, officers or key employees.
Yoav Chelouche and Guy Gecht serve as the other members of our compensation committee. The compensation committee has adopted a written compensation committee charter.
Yoav Chelouche and Guy Gecht serve as the other members of our compensation committee.
The option exercise prices of the outstanding options as of December 31, 2022 range between $12.99 and $142.40 per share. As of December 31, 2022, 2,408,346 RSUs and PSUs were outstanding under the Equity Plans combined. 44 Table of Contents Administration Both Equity Plans are administered by our board of directors or a committee of our board.
The option exercise prices of the outstanding options as of December 31, 2023 range between $12.99 and $136.26 per share. As of December 31, 2023, 2,767,969 RSUs and PSUs were outstanding under the Equity Plans combined. Administration Both Equity Plans are administered by our board of directors or a committee of our board.
Accordingly, as of December 31, 2022, the number of Reserved and Authorized Shares under both Equity Plans together was reset to equal 13,092,231. As of December 31, 2022, options to purchase 7,778,108 ordinary shares were outstanding under the Equity Plans and the Dome9 Equity Incentive Plan combined.
Accordingly, as of December 31, 2023, the number of Reserved and Authorized Shares under both Equity Plans together was reset to equal 12,290,744. As of December 31, 2023, options to purchase 7,233,044 ordinary shares were outstanding under the Equity Plans and the Dome9 Equity Incentive Plan combined.
Shwed is considered the inventor of the modern firewall and authored several patents, such as the company’s Stateful Inspection technology. Mr.
Shwed served as Chairman of our board of directors until September 2015. Mr. Shwed is considered the inventor of the modern firewall and authored several patents, such as the company’s Stateful Inspection technology. Mr.
There are no family relationships among any of our directors, officers or key employees. 40 Table of Contents As permitted under the Israeli Companies Law, our articles of association provide that any director may, by written notice to us, appoint another person to serve as an alternate director or may cancel the appointment of an alternate director.
As permitted under the Israeli Companies Law, our articles of association provide that any director may, by written notice to us, appoint another person to serve as an alternate director or may cancel the appointment of an alternate director.
The Israeli labor laws differ materially from U.S. labor laws and, in some cases, impose material obligations on us (such as severance pay and mandatory cost of living increases). We are also subject to the labor laws and regulations of other jurisdictions in the world where we have employees.
The Israeli labor laws differ materially from U.S. labor laws and, in some cases, impose material obligations on us (such as severance pay and mandatory cost of living increases).
As of December 31, 2022, our executive officers and directors held options to purchase an aggregate of approximately 7.3 million shares and held 0.4 million RSUs and PSUs under our equity incentive plans. The exercise prices of these options range between $84.77 and $142.40, and their expiration dates range between June 2023 and April 2029.
As of December 31, 2023, our executive officers and directors held options to purchase an aggregate of approximately 7.0 million shares and held 0.18 million RSUs and PSUs under our equity incentive plans. The exercise prices of these options range between $91.78 and $136.26, and their expiration dates range between June 2024 and October 2030.
Dollars at the exchange rate as of year-end. 39 Table of Contents We currently pay each of our non-executive directors an annual cash retainer of $40.0 thousands for the services provided to our board of directors and an annual cash retainer of $7.5 thousands for each committee membership.
Dollars at the exchange rate as of year-end and were paid in 2024 with respect to compliance with pre-determined 2023 performance metrics. 44 We currently pay each of our non-executive directors an annual cash retainer of $40.0 thousands for the services provided to our board of directors and an annual cash retainer of $7.5 thousands for each committee membership.
We refer to the plans, as amended, as the U.S. Equity Plan and the Israel Equity Plan, and, together, as the Equity Plans.
We refer to the plans, as amended, as the U.S.
During 2022, we granted our executive officers and directors options to purchase an aggregate of approximately 0.7 million shares and approximately 0.22 million RSUs and PSUs under our equity incentive plans. The exercise price of these options range between $122.12-$142.40, and their expiration dates range between April 2029 and August 2029.
During 2023, we granted our executive officers and directors options to purchase an aggregate of approximately 0.6 million shares and approximately 0.07 million RSUs and PSUs under our equity incentive plans. The exercise price of these options range between $126.16-$136.26, and their expiration dates range between December 2029 and October 2030.
Chelouche earned B.A. in Economics and Statistics from Tel Aviv University, and an M.B.A. from INSEAD University in Fontainebleau, France. Guy Gecht has served on our board of directors since 2006 and as our Lead Independent Director since August 2020. Mr. Gecht has also served as one of our outside directors under the Israeli Companies Law since 2006. Mr.
Guy Gecht has served on our board of directors since 2006 and as our Lead Independent Director since August 2020. Mr. Gecht has also served as one of our outside directors under the Israeli Companies Law since 2006. Mr.
(4) “Financial expert” as required by the Israeli Companies Law and Nasdaq requirements with respect to membership on the audit committee (see “Item 16A – Audit Committee Financial Expert”). 36 Table of Contents Gil Shwed is the founder, Chief Executive Officer and Director. Mr. Shwed served as Chairman of our board of directors until September 2015. Mr.
(2) “Outside Director” as required by the Israeli Companies Law (see explanation below). (3) “Financial expert” as required by the Israeli Companies Law and Nasdaq requirements with respect to membership on the audit committee (see “Item 16A – Audit Committee Financial Expert”). 41 Gil Shwed is the founder, Chief Executive Officer and Director. Mr.
Audit Committee . Under the Israeli Companies Law, the board of directors of any public company must establish an audit committee.
Our board of directors has established an audit committee, a compensation committee and a nominating, sustainability and corporate governance committee. Audit Committee . Under the Israeli Companies Law, the board of directors of any public company must establish an audit committee.
Hollenbeck were $459.0 thousands, $498.9 thousands, $199.5 thousands and $468.1 thousands, respectively. As noted above, Mr. Shwed did not receive a cash bonus for 2022. The cash compensation amounts paid were denominated in Israeli Shekels and converted into U.S.
Hollenbeck were $322.8 thousands, $119.7 thousands, $140.4 thousands, and $467.3 thousands, respectively. As noted above, Mr. Shwed did not receive a cash bonus for 2023. For the non-U.S. executives, the cash compensation amounts paid were denominated in Israeli Shekels and converted into U.S.
Equity Incentive Plans The following table summarizes our equity incentive plans, which have outstanding awards as of December 31, 2022: Plan Outstanding options, RSUs & PSUs Options outstanding exercise price Date of expiration of options Options exercisable 2005 United States Equity Incentive Plan 1,356,611 $84.77-$132.91 06/06/2023-08/29/2029 554,591 2005 Israel Equity Incentive Plan 8,830,117 $84.77-$142.40 06/06/2023-08/29/2029 5,111,472 Dome9 Equity Incentive Plan 545 $12.99-$ 21.97 12/21/2027-06/27/2028 545 In 2005, we adopted our 2005 United States Equity Incentive Plan and our 2005 Israel Equity Incentive Plan, which were subsequently amended in January 2014, July 2018 and August 2020.
Equity Incentive Plans The following table summarizes our equity incentive plans, which have outstanding awards as of December 31, 2023: Plan Outstanding options, RSUs & PSUs Options outstanding exercise price Date of expiration of options Options exercisable 2005 United States Equity Incentive Plan 1,219,079 $97.61-$136.26 06/06/2024-10/31/2030 370,436 2005 Israel Equity Incentive Plan 8,781,708 $91.78-$131.96 06/06/2024-08/02/2030 5,532,046 Dome9 Equity Incentive Plan 226 $12.99 12/21/2027 226 In 2005, we adopted our 2005 United States Equity Incentive Plan and our 2005 Israel Equity Incentive Plan, which were subsequently amended in January 2014, July 2018, August 2020 and August 2023.
Share Ownership The following table shows information regarding beneficial ownership by our directors and executive officers as of February 28, 2023. Beneficial ownership is determined in accordance with rules of the Securities and Exchange Commission.
We are also subject to the labor laws and regulations of other jurisdictions in the world where we have employees. 48 Share Ownership The following table shows information regarding beneficial ownership by our directors and executive officers as of February 29, 2024. Beneficial ownership is determined in accordance with rules of the Securities and Exchange Commission.
Employees), as the ROW ESPP, and together with the US ESPP, as the “ESPPs”. The ESPPs permit employees to purchase ordinary shares through payroll deductions.
Employees), as the Non-US ESPP, and together with the US ESPP, as the “ESPPs”. The ESPPs permit employees to purchase ordinary shares through payroll deductions. As of February 29, 2024, 246,703 ordinary shares were available under the US ESPP and 669,590 ordinary shares were available under the Non-US ESPP.
Golan oversees Check Point’s finance operations, including accounting, business analysis, investor relations, legal, tax and treasury. Mr. Golan has over 14 years of financial experience. Prior to joining Check Point in 2021, Mr. Golan worked at EY for 11 years, where he held the role of Managing Director in the Technology practice. Mr.
Golan has over 14 years of financial experience. Prior to joining Check Point in 2021, Mr. Golan worked at EY for 11 years, where he held the role of Managing Director in the Technology practice. Mr. Golan holds a B.A. in Economics and Accounting and a M.B.A in finance management. Mr. Golan is a certified public accountant. 42 Yoav Z.
As of December 31, 2022, options to purchase 545 ordinary shares were outstanding under the Dome9 Equity Plan on that date. The options generally have terms of between seven and ten years. The option exercise prices range from $12.99-$21.97 per share. No further options can be granted under the Dome9 Equity Plan.
As of December 31, 2023, options to purchase 226 ordinary shares were outstanding under the Dome9 Equity Plan on that date. The single outstanding grant under this plan has a term of ten years, expiring in December 2027, and an option exercise price of $12.99 per share. No further options can be granted under the Dome9 Equity Plan.
The audit committee must consist of at least three directors, must include all of the outside directors (including one outside director serving as the chair of the audit committee), and a majority of the committee members must comply with the director independence requirements prescribed by the Israeli Companies Law. 41 Table of Contents The audit committee may not include the chairman of the board, or any director employed by us, by a controlling shareholder or by any entity controlled by a controlling shareholder, or any director providing services to us, to a controlling shareholder or to any entity controlled by a controlling shareholder on a regular basis, or any director whose income is primarily dependent on a controlling shareholder, and may not include a controlling shareholder or any relatives of a controlling shareholder.
The audit committee may not include the chairman of the board, or any director employed by us, by a controlling shareholder or by any entity controlled by a controlling shareholder, or any director providing services to us, to a controlling shareholder or to any entity controlled by a controlling shareholder on a regular basis, or any director whose income is primarily dependent on a controlling shareholder, and may not include a controlling shareholder or any relatives of a controlling shareholder.
Shwed)(4) 30,654,733 24.6 % Ordinary shares 5,605,491 $ 84.77 - $142.40 06/06/2023-12/31/2029 (1) The number of ordinary shares shown includes shares that each shareholder has the right to acquire pursuant to stock options that are exercisable and RSUs and PSUs that vest within 60 days after February 28, 2023.
Shwed)(5) 30,851,436 26.2 % Ordinary shares 5,854,148 $ 91.78-$131.96 06/06/2024- 10/31/2030 (1) The number of ordinary shares shown includes shares that each shareholder has the right to acquire pursuant to stock options that are exercisable and RSUs and PSUs that vest within 60 days after February 29, 2024.
Prior to joining EFI, Mr. Gecht held various software engineering positions with technology companies. In 2019, Mr. Gecht joined the board of directors of Logitech. He holds a B.S. in Computer Science and Mathematics from Ben-Gurion University in Israel. Tzipi Ozer-Armon has served on our board of directors since January 2023. Ms.
Additionally, he was an officer in the Israeli Defense Forces, leading an engineering team in one of IDF high-tech divisions. Mr. Gecht holds a B.S. degree in computer science and mathematics from Ben Gurion University in Israel. Tzipi Ozer-Armon has served on our board of directors since January 2023. Ms.
Compensation expenses recorded in 2022 included $686.7 thousands in salary expenses and $44.8 thousands in benefit costs.
Compensation expenses recorded in 2023 included $688.0 thousands in salary expenses and $85.0 thousands in benefit costs.
Committees of the Board of Directors Our articles of association provide that the board of directors may delegate all of its powers to committees of the board as it deems appropriate, subject to the provisions of Israeli law. Our board of directors has established an audit committee, a compensation committee and a nominating, sustainability and corporate governance committee.
Our independent directors have regularly held meetings at which only independent directors are present. 46 Committees of the Board of Directors Our articles of association provide that the board of directors may delegate all of its powers to committees of the board as it deems appropriate, subject to the provisions of Israeli law.
Chelouche is a board member of Tower Semiconductor Ltd., Malam Team Ltd., and an external director of the Tel Aviv Stock Exchange (TASE). Mr. Chelouche is expected to resign from the board of directors of Tower Semiconductor Ltd. upon consummation of its acquisition by Intel Corporation, as announced in February 2022. Mr.
Chelouche is a board member of Tower Semiconductor Ltd., Malam Team Ltd., and until February 2024 served as an external director of the Tel Aviv Stock Exchange (TASE). Mr. Chelouche earned B.A. in Economics and Statistics from Tel Aviv University, and an M.B.A. from INSEAD University in Fontainebleau, France.
Hollenbeck is a board member of Blackbaud Inc. Roei Golan has been serving as VP Finance of Check Point since 2021, and as Acting Chief Financial Officer since October 2022, replacing Ms. Tal Payne, the Chief Financial and Operations Officer who is on sabbatical leave since November 2022. Mr.
Roei Golan has been serving as Chief Financial Officer of Check Point since May 2023, as Acting Chief Financial Officer from October 2022 until May 2023, and as VP Finance from 2021 until May 2023. Mr. Golan oversees Check Point's finance operations, including accounting, business analysis, investor relations, legal, tax and treasury. Mr.
Tal Payne, Chief Financial Officer & Chief Operating Officer (on sabbatical leave since November 2022). Compensation expenses recorded in 2022 included $427.3 thousands in salary expenses and $101.7 thousands in benefit costs. Mr. Sharon Schusheim, Vice President, Information Systems Compensation expenses recorded in 2022 included $273.9 thousands in salary expenses and $68.2 thousands in benefit costs. Ms. Rupal Hollenbeck, President.
Itai Greenberg, Chief Strategy Officer and Head of Cloud Security Business. Compensation expenses recorded in 2023 included $232.7 thousands in salary expenses and $63.3 thousands in benefit costs. Mr. Sharon Schusheim, Chief Services Officer, Compensation expenses recorded in 2023 included $265.9 thousands in salary expenses and $66.7 thousands in benefit costs. Ms. Rupal Hollenbeck, President.
(3) Number of options immediately exercisable or exercisable and RSUs and PSUs that vest within 60 days from February 28, 2023. (4) Other than Mr. Shwed, none of our executive officers and directors beneficially own more than 1% of our outstanding ordinary shares.
(3) Number of options immediately exercisable or exercisable and RSUs and PSU that vest within 60 days from February 29, 2024. (4) The share amount and holding percentage includes unexercised stock options.
Removed
(2) “Outside Director” as required by the Israeli Companies Law (see explanation below). (3) Ms. Payne is on sabbatical leave since November 2022.
Added
Hollenbeck is a board member of Blackbaud Inc, a leading cloud software company powering social good, and a board member of The Asian Pacific Fund, a non-profit organization.
Removed
Golan holds a B.A. in Economics and Accounting and a M.B.A in finance management. Mr. Golan is a certified public accountant. Tal Payne has been serving as Chief Financial Officer of Check Point since joining in 2008 and as Chief Financial and Operations Officer since 2015. Ms. Payne is on sabbatical leave since November 2022. Ms.
Added
Gecht served as Logitech’s interim CEO from June to December 2023, and has been a member of Logitech’s board of directors since September 2019, chairing the Technology and Innovation Committee. He is the former co-CEO of E.Merge Technology Acquisition Corp., a SPAC focused on Cyber Security, AI, and Enterprise Software, a role he held from 2020 to October 2022.
Removed
Payne oversees Check Point’s global operations and finance, including investor relations, legal, treasury, purchasing and facilities. Prior to joining Check Point, Ms. Payne served as Chief Financial Officer at Gilat Satellite Networks, Ltd., where she held the role of Vice President of Finance for over five years. Ms. Payne began her career as a certified public accountant at PricewaterhouseCoopers. Ms.
Added
Prior to co-founding E.Merge, Mr. Gecht was CEO of Electronics for Imaging (EFI), specializing in digital printing technologies, from 2000 to 2018. Joining EFI in 1995, he also held roles as president, vice president, general manager of Fiery products, and director of software engineering. Earlier, Mr. Gecht held management positions at Interro Systems and Apple Israel.
Removed
Payne holds a B.A. in Economics and Accounting and an Executive M.B.A., both from Tel Aviv University. Ms. Payne is a certified public accountant. Ms. Payne is a board member of SolarEdge Technologies, Inc. 37 Table of Contents Yoav Z. Chelouche has served on our board of directors since 2006. Mr.
Added
Jill D Smith has served on our board of directors since November 2023. Ms. Smith brings more than 25 years of international leadership experience, including 17 years as chief executive officer of private and public companies in the technology and information services markets. Most recently, Ms.
Removed
Gecht served as the Chief Executive Officer of Electronics For Imaging, Inc. (EFI), a company that provides digital imaging and print management solutions for commercial and industrial applications and has served in this position from January 2000 until October 2018. From October 1995 until January 2000, Mr. Gecht held various positions with EFI, including President of the company.
Added
Smith served as the President and Chief Executive Officer of Allied Minds, an IP commercialization company, from March 2017 through June 2019, and prior to that she served as Chairman, Chief Executive Officer and President of DigitalGlobe Inc., a global provider of satellite imagery products and services. Ms.
Removed
In 2016, the Israeli Companies Law Regulations were amended to reduce certain duplicative regulatory burden to which Israeli companies publicly-traded on Nasdaq, such as Check Point, are subject to.
Added
Smith started her career as a consultant at Bain & Company, where she rose to become Partner. She subsequently joined Sara Lee as Vice President, and went on to serve as President and Chief Executive Officer of eDial, a VoIP collaboration company, and of SRDS, a business-to-business publishing firm.
Removed
According to the amendments, 750,000 ordinary shares are authorized for issuance under the US ESPP (out of which 341,500 ordinary shares had been issued through December 31, 2022) and 1,096,795 ordinary shares are authorized for issuance under the rest of the world (ROW) ESPP (out of which 687,684 ordinary shares had been issued through December 31, 2022).
Added
She also served as Chief Operating Officer of Micron Electronics, and co-founded Treacy & Company, a consulting and boutique investment business. Ms. Smith currently serves as a director of Aspen Technology, Inc., R1 RCM Inc. and MDA Space. Dr. Tal Shavit Shenhav has served on our board of directors since 2000. Dr.
Added
The audit committee must consist of at least three directors, must include all of the outside directors (including one outside director serving as the chair of the audit committee), and a majority of the committee members must comply with the director independence requirements prescribed by the Israeli Companies Law.
Added
Without such unexercised stock options, the 24,884,551 issued ordinary shares held by Gil Shwed represented 22.0% of the outstanding ordinary shares and voting rights as of February 29, 2024. (5) Other than Mr. Shwed, none of our executive officers and directors beneficially own more than 1% of our outstanding ordinary shares.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS The following table shows information as of December 31, 2022, 2021 and 2020, for each person who, to the best of our knowledge, beneficially owned more than 5% of our outstanding ordinary shares as December 31, 2022: Name of Five Percent Shareholders No. of shares beneficially held (1) % of class of shares (2) No. of shares beneficially held (1) % of class of shares (2) No. of shares beneficially held (1) % of class of shares (2) December 31, 2022 December 31, 2021 December 31, 2020 Gil Shwed 29,149,766 23.3 % 28,369,738 21.4 % 28,704,010 20.4 % Massachusetts Financial Services Company (3) 7,335,482 6.07 % 7,470,150 5.79 % 8,084,127 5.89 % (1) The amount includes ordinary shares owned by each of the individuals, directly or indirectly, and options immediately exercisable or that are exercisable within 60 days from December 31 st , of each of the years shown in this table.
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS The following table shows information as of December 31, 2023, 2022 and 2021, for each person who, to the best of our knowledge, beneficially owned more than 5% of our outstanding ordinary shares as December 31, 2023: Name of Five Percent Shareholders No. of shares beneficially held (1)(3) % of class of shares (2) No. of shares beneficially held (1) % of class of shares (2) No. of shares beneficially held (1) % of class of shares (2) December 31, 2023 December 31, 2022 December 31, 2021 Gil Shwed 29,744,539 25.3 %(3) 29,149,766 23.3 % 28,369,738 21.4 % (1) The amount includes ordinary shares owned by each of the individuals, directly or indirectly, and options immediately exercisable or that are exercisable within 60 days from December 31 st , of each of the years shown in this table.
According to our transfer agent, as of December 31, 2022, there were 113 holders of record of our ordinary shares in the United States, representing approximately 81.51% of our outstanding shares.
According to our transfer agent, as of December 31, 2023, there were 106 holders of record of our ordinary shares in the United States, representing approximately 80.77% of our outstanding shares.
(2) If a shareholder has the right to acquire ordinary shares by exercising stock options exercisable within 60 days from December 31 st , of each of the years shown in this table, these Ordinary shares are deemed outstanding for the purpose of computing the percentage owned by the specific shareholder (that is, they are included in both the numerator and the denominator), but they are disregarded for the purpose of computing the percentage owned by any other shareholder. 46 Table of Contents (3) As of December 31, 2022, based on information contained in a Schedule 13G/A filed by Massachusetts Financial Services Company with the Securities and Exchange Commission on February 8, 2023, as of December 31, 2021, based on information contained in a Schedule 13G/A filed by Massachusetts Financial Services Company with the Securities and Exchange Commission on February 2, 2022, and as of December 31, 2020, based on information contained in a Schedule 13G/A filed by Massachusetts Financial Services Company with the Securities and Exchange Commission on February 11, 2021.
(2) If a shareholder has the right to acquire ordinary shares by exercising stock options exercisable within 60 days from December 31 st , of each of the years shown in this table, these Ordinary shares are deemed outstanding for the purpose of computing the percentage owned by the specific shareholder (that is, they are included in both the numerator and the denominator), but they are disregarded for the purpose of computing the percentage owned by any other shareholder.
Removed
The address for Massachusetts Financial Services Company is 111 Huntington Avenue, Boston, Massachusetts 02199. Our major shareholders do not have different voting rights from other shareholders with respect to our ordinary shares.
Added
(3) The share amount and holding percentage includes the unexercised stock options. Without such unexercised stock options, the 24,884,539 issued ordinary shares held by Gil Shwed represented 22.0% of the outstanding ordinary shares and voting rights as of December 31, 2023. Our major shareholders do not have different voting rights from other shareholders with respect to our ordinary shares.

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