Check Point Software Technologies Reports Second Quarter Financial Results

Achieves 24 Percent License Revenue Growth Over Second Quarter of 2003

REDWOOD CITY, Calif. - July 26, 2004 - Check Point Software Technologies Ltd. (NASDAQ: CHKP), the world leader in securing the Internet, today announced its financial results for the second quarter ended June 30, 2004. Revenues for the second quarter were $126.9 million, an increase of 20 percent compared to $106.1 million for the second quarter of 2003.

Net income and earnings per diluted share for the second quarter of 2004, including amortization of intangible assets and deferred stock compensation resulting from the acquisition of Zone Labs, were $63.3 million and $0.24 respectively.

Net income and earnings per diluted share, excluding the impact of the amortization of intangible assets and deferred stock compensation, net, were $65.9 million and $0.25, an increase of nine percent and five percent respectively, compared to $60.2 million and $0.24 in the second quarter of 2003.

Deferred revenues increased by $5.6 million in the second quarter to a record $130 million as of June 30, 2004, a 26 percent increase over deferred revenue in the quarter ended June 30, 2003.

The company generated cash flow from operating activities of $81.9 million, an increase of 21 percent compared to the quarter ended June 30, 2003. Another testament to the strong results was Days Sales Outstanding at 48 days, compared to 56 days in the quarter ended March 31, 2004. As part of the company's share repurchase program, during the quarter the company purchased 3.3 million shares at a total cost of $78.6 million. Total cash and interest bearing investments as of June 30, 2004 were $1.59 billion.

"We are pleased with our financial and operating results this quarter, especially with the strong growth in product revenues, including 24 percent license revenue growth," said Gil Shwed, chairman and CEO of Check Point Software Technologies. "Check Point's organic growth, combined with the addition of our new consumer and enterprise endpoint security solutions, allowed us to achieve exceptional results against our key financial metrics. With our new products, customers can now address their dynamic and evolving Internet security challenges with a broad range of new and enhanced solutions. Check Point aims to provide a safe Internet business environment by protecting all points in the network - including Perimeter, Internal and Web."

Recent News Highlights Include:

• Delivered Comprehensive Web Security Portfolio - Including Web Intelligence™, Connectra™ and SSL Network Extender™ that provide unmatched protection and integrity of customers' entire Web infrastructures. The introduction of the Web security portfolio has been followed by strong interest from the channel and customers.
• Introduced Prestigious Channel Program - Empowering worldwide solution provider partners to achieve greater success in selling Check Point solutions, the new Valued Partner Program provides expanded tools that enable partners to sell the most intelligent security solutions on the market.
• Enhanced Endpoint Security Solutions - Integrity™ Clientless Security 2.0 was introduced for enterprises to safely secure SSL VPN and other emerging remote access technologies. ZoneAlarm Security Suite was introduced this quarter and met by strong demand from consumer and small business users. It offers the most complete security suite including personal firewall, antivirus, advanced application and security controls, identity and privacy protections, content and communication protections and email security.

Mr. Shwed continued: "In the second quarter we completed the launch of our expanded security strategy with the shipment of our new Web security solutions. Over the past year we've expanded our security portfolio and added Perimeter, Internal, Web and endpoint security solutions, resulting in the broadest portfolio of network security solutions in our marketplace. With that expansion, our customers and partners can rely on Check Point to provide the best security and the only complete security architecture available today."

Conference Call Information
The Company will host a conference call with the investment community on July 26, 2004 at 8:30 AM ET/5:30 AM PT. To listen to the live Webcast, please visit Check Point's Web site at http://www.checkpoint.com/ir. A replay of the conference call will be available through August 9, 2004, at the Company's website or by telephone at (973) 341-3080, confirmation code 4934212.

Safe Harbor Statement
Certain statements in this press release are forward-looking statements. Because such statements deal with future events, they are subject to various risks and uncertainties and actual results could differ materially from Check Point's current expectations. Factors that could cause or contribute to such differences include, but are not limited to: Check Point's ability to integrate Zone Lab's operations effectively, the impact on revenues of economic and political uncertainties and weaknesses in various regions of the world, including the commencement or escalation of hostilities or acts of terrorism; the inclusion of network security functionality in third-party hardware or system software; any unforeseen developmental or technological difficulties with regard to Check Point's products; changes in the competitive landscape, including new competitors or the impact of competitive pricing and products; a shift in demand for products such as Check Point's; unknown factors affecting third parties with which Check Point has formed business alliances; timely availability and customer acceptance of Check Point's new and existing products, and other factors and risks discussed in Check Point's Report on Form 20-F for the year ended December 31, 2003, which is on file with the Securities and Exchange Commission. Check Point assumes no obligation to update information concerning its expectations.

About Check Point Software Technologies
Check Point Software Technologies (www.checkpoint.com) is the worldwide leader in securing the Internet. It is the confirmed market leader of both the worldwide VPN and firewall markets. Through its Next Generation product line, the company delivers a broad range of intelligent Perimeter, Internal and Web security solutions that protect business communications and resources for corporate networks and applications, remote employees, branch offices and partner extranets. The company's Zone Labs (www.zonelabs.com) division is one of the most trusted brands in Internet security, creating award-winning endpoint security solutions that protect millions of PCs from hackers, spyware and data theft. Extending the power of the Check Point solution is its Open Platform for Security (OPSEC), the industry's framework and alliance for integration and interoperability with "best-of-breed" solutions from over 350 leading companies. Check Point solutions are sold, integrated and serviced by a network of more than 2,300 Check Point partners in 92 countries.

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©2004 Check Point Software Technologies Ltd. All rights reserved. Check Point, Application Intelligence, Check Point Express, the Check Point logo, ClusterXL, ConnectControl, Connectra, FireWall-1, FireWall-1 GX, FireWall-1 SecureServer, FireWall-1 XL, FloodGate-1, INSPECT, INSPECT XL, InterSpect, IQ Engine, Open Security Extension, OPSEC, Provider-1, Safe@Office, SecureKnowledge, SecurePlatform, SecureXL, SiteManager-1, SmartCenter, SmartCenter Pro, SmartDashboard, SmartDefense, SmartLSM, SmartMap, SmartUpdate, SmartView, SmartView Monitor, SmartView Reporter, SmartView Status, SmartViewTracker, SSL Network Extender, UAM, User-to-Address Mapping, UserAuthority, VPN-1, VPN-1 Accelerator Card, VPN-1 Edge, VPN-1 Pro, VPN-1 SecureClient, VPN-1 SecuRemote, VPN-1 SecureServer, VPN-1 VSX, Web Intelligence, TrueVector, ZoneAlarm, Zone Alarm Pro, Zone Labs, the Zone Labs logo, AlertAdvisor, Cooperative Enforcement, IMsecure, Policy Lifecycle Management, Zone Labs Integrity and Smarter Security are trade-marks or registered trademarks of Check Point Software Technologies Ltd. or its affiliates. All other product names mentioned herein are trademarks or registered trademarks of their respective owners. The products described in this document are protected by U.S. Patent No. 5,606,668, 5,835,726 and 6,496,935 and may be protected by other U.S. Patents, foreign patents, or pending applications.

  Licenses

  Subscriptions

  Services

  Cost of revenues

  Research and development

  Selling and marketing

  General and administrative

  Amortization of intangible assets
  and deferred stock compensation

  Acquisition related in-process R&D

Net income

Adjustments to reconcile net income to net cash provided by operating activities:

Decrease (increase) in trade and other receivables, net

Increase in trade payables and other accrued liabilities

Other adjustments

Amortization of intangible assets and deferred stock compensation

Acquisition related in-process R&D

Cash paid in conjunction with the acquisition of Zone Labs, net

Investment in property and equipment

Net cash used in investing activities

Proceeds from issuance of shares upon exercise of options

Purchase of treasury shares

Net cash provided by (used in) financing activities