{"url_path":"/sec/chkp/10-k/2026/item-3","section_key":"item-3","section_title":"Item 3 KEY INFORMATION","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-03-31","source_url":"https://www.sec.gov/Archives/edgar/data/1015922/0001178913-26-001932-index.html","accession_number":"0001178913-26-001932","cik":"0001015922","ticker":"CHKP","issuer_name":"CHECK POINT SOFTWARE TECHNOLOGIES LTD","edgar_url":"https://www.sec.gov/Archives/edgar/data/1015922/0001178913-26-001932-index.html","primary_entity_key":"0001015922","primary_entity_name":"CHECK POINT SOFTWARE TECHNOLOGIES LTD"},"word_count":19378,"has_tables":true,"body_markdown":"ITEM 3.        KEY INFORMATION\n\n \n\nRisk Factors\n\n \n\nAn investment in our ordinary shares involves a high degree of\nrisk. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware\nof, or that we currently believe are not material, also may become important factors that affect us. If any of the following risks materialize,\nour business, financial condition, results of operations and prospects could be materially harmed. In that event, the market price of\nour ordinary shares could decline and you could lose part or all of your investment.\n\n \n\nRisk Factors Summary\n\n \n\nThe following is a summary of the principal risks that could\nmaterially and adversely affect our business, financial condition, operating results and growth prospects.\n\n \n\nRisks Related to Our Business and Our Market\n\n \n\n•\n\nIf the market for information and network security solutions does not continue to grow, our business will be adversely affected.\n\n \n\n•\n\nWe may not be able to successfully compete, which could adversely affect our business and results of operations.\n\n \n\n•\n\nIf we fail to enhance our existing products, develop or acquire new and more technologically advanced products, or fail to successfully\ncommercialize these products, our business and results of operations will suffer.\n\n \n\n•\n\nWe may need to change our pricing models to compete successfully.\n\n \n\n•\n\nOur business, results of operations and financial condition are subject to, have been and may continue to be adversely affected by\nthe risks of earthquakes, fire, floods, pandemics and other natural events, as well as manmade problems such as power disruptions or terrorism\nor war, such as the war between Israel, the U.S. and Iran and the ongoing hostilities between Israel and Hezbollah, Hamas and Yemen.\n\n \n\n•\n\nProlonged economic uncertainties or downturns, globally or in certain regions or industries, could materially adversely affect our\nbusiness.\n\n \n\n•\n\nIf our products fail to protect against attacks and our customers experience security breaches, our reputation and business could\nbe harmed.\n\n \n\n•\n\nProduct defects may increase our costs and impair the market acceptance of our products and technology.\n\n \n\n•\n\nWe are subject to risks relating to acquisitions.\n\n \n\n•\n\nWe are dependent on a limited number of product families.\n\n \n\n•\n\nCompetition for highly skilled personnel is intense.\n\n \n\n•\n\nIssues in the development and deployment of AI may results in reputational harm and legal liability and could adversely affect our\nresults of operations.\n\n \n\n3\n\nRisks Related to Our Dependence on Third-Parties\n\n \n\n•\n\nWe are dependent on a small number of distributors.\n\n \n\n•\n\nWe purchase several key components and finished products from limited sources, and we are increasingly dependent on contract manufacturers\nfor our hardware products.\n\n \n\n•\n\nWe incorporate third-party technology in our products, which may make us dependent on the providers of these technologies and expose\nus to potential intellectual property claims.\n\n \n\n•\n\nFailures of the third party technology, third-party servers, cloud service providers, such as Amazon Web Services (“AWS”),\nand other third-party hardware, software and infrastructure on which we rely could adversely affect our business.\n\n \n\nRisks Related to Tax, Legal and Regulatory Matters\n\n \n\n•\n\nWe are the defendants in various lawsuits and have been subject to tax disputes and governmental proceedings, which could adversely\naffect our business, results of operations and financial condition.\n\n \n\n•\n\nUncertainties in the interpretation and application of worldwide tax reforms, complex tax laws and regulations could materially affect\nour tax obligations and effective tax rate.\n\n \n\n•\n\nClass action litigation due to stock price volatility or other factors could cause us to incur substantial costs and divert\nour management’s attention and resources.\n\n \n\n•\n\nWe are subject to governmental export and import controls that could subject us to liability or impair our ability to compete in\ninternational markets.\n\n \n\n•\n\nChanges in government trade policies and international trade disputes that result in tariffs and other protectionist measures could\nadversely affect our business in the future.\n\n \n\nRisks Related to Our Intellectual Property\n\n \n\n•\n\nWe may not be able to successfully protect our intellectual property rights, which could cause substantial harm to our business.\n\n \n\n•\n\nWe incorporate open source technology in our products which may expose us to liability and have a material impact on our product\ndevelopment and sales.\n\n \n\n•\n\nIf a third-party asserts that we are infringing its intellectual property, whether successful or not, it could subject us to costly\nand time-consuming litigation or expensive licenses, which could harm our business.\n\n \n\n•\n\nDue to the global nature of our business, we must comply with various anti-bribery regimes and any failure to do so could adversely\naffect our business.\n\n \n\nOther General Risks and Risks Related to Capitalization and\nOwnership of Our Ordinary Shares\n\n \n\n•\n\nWe are exposed to various legal, business, political, economic, health-related and other risks associated with our international\noperations; these risks could increase our costs, reduce future growth opportunities and affect our results of operations.\n\n \n\n•\n\nOur actual or perceived failure to adequately protect personal data or customer data, or otherwise comply with data privacy and protection\nlaws and regulations or other technology related regulations, could subject us to sanctions and damages and could harm our reputation\nand business.\n\n \n\n•\n\nIssues relating to our use of artificial intelligence and machine learning technologies, combined with an uncertain legal and regulatory\nenvironment, could materially and adversely affect our business, financial condition and results of operations.\n\n \n\n•\n\nRepaying and servicing our existing and future debt, including our outstanding convertible notes may require a significant amount\nof cash, and we may not have sufficient cash flow from our business to pay our indebtedness.\n\n•\n\nOur Convertible Notes may impact our financial results, result in the dilution of existing shareholders and create downward pressure\non the price of our ordinary shares.\n\n \n\n•\n\nOur ability to pay cash upon conversion or repurchase of our outstanding Convertible Notes may be limited.\n\n•\n\nOur capped call transactions may affect the value of our ordinary shares.\n\n•\n\nWe are subject to counterparty risk with respect to the capped call transactions.\n\n \n\n•\n\nCompliance with new and changing corporate governance and public disclosure requirements adds uncertainty to our compliance policies\nand increases our costs of compliance.\n\n \n\n4\n\n•\n\nA small number of shareholders own a substantial portion of our ordinary shares, and they may make decisions with which you or others\nmay disagree.\n\n \n\n•\n\nOur cash balances and investment portfolio have been, and may continue to be, adversely affected by market conditions and interest\nrates.\n\n \n\n•\n\nCurrency fluctuations may affect the results of our operations or financial condition.\n\n \n\n•\n\nOur information technology systems, networks and products and services have been, and may continue to be, subject to various security\nthreats and cyber security incidents.\n\n \n\n•\n\nWe depend on our executive officers and other key employees, and the loss of one or more of these employees or an inability to attract\nand retain other highly skilled employees could adversely affect our business, and we may not be able to successfully navigate the recent\nleadership changes while maintaining key aspects of our culture, which could have a significant negative effect on our existing business\nand our ability to pursue future plans.\n\n \n\nRisks Related to Our Operations in Israel\n\n \n\n•\n\nThe ongoing war and hostilities and other potential political, economic and military instability in Israel, where our principal executive\noffices and our principal research and development facilities are located, may adversely affect our results of operations.\n\n \n\n•\n\nOur operations may be disrupted by the obligations of our personnel to perform military service.\n\n \n\n•\n\nWe are subject to risks in connection with the development of our new campus in Tel Aviv, Israel\n\n \n\n•\n\nThe tax benefits available to us require us to meet several conditions, and may be terminated or reduced in the future, which would\nincrease our taxes.\n\n \n\n•\n\nShareholder rights and responsibilities are, and will continue to be, governed by Israeli law which differs in some material respects\nfrom the rights and responsibilities of shareholders of U.S. companies.\n\n \n\n•\n\nProvisions of Israeli law and our articles of association may delay, prevent or make difficult an acquisition of us, prevent a change\nof control, and negatively impact our share price.\n\n \n\n•\n\nAs a foreign private issuer we are not subject to the provisions of Regulation FD or U.S. proxy rules and are exempt from filing\ncertain Exchange Act reports.\n\n \n\n•\n\nAs a foreign private issuer whose shares are listed on the Nasdaq Global Select Market (“Nasdaq”), we may follow certain\nhome country corporate governance practices instead of certain Nasdaq requirements.\n\n \n\nRisks Related to Our Business and Our Market\n\n \n\nIf the market for information and network security solutions does\nnot continue to grow, our business will be adversely affected\n\n \n\nThe market for information and network security solutions may\nnot continue to grow. Continued growth of this market will depend, in large part, upon:\n\n \n\n•\n\nthe continued expansion of internet usage and the number of organizations adopting or expanding intranets;\n\n \n\n•\n\nthe continued adoption of “cloud” infrastructure by organizations;\n\n \n\n•\n\nthe ability of the infrastructures implemented by organizations to support an increasing number of users and services;\n\n \n\n•\n\nthe continued development of new and improved services for implementation across the internet and between the internet and intranets;\n\n \n\n•\n\nthe adoption of data security measures as it pertains to data encryption and data loss prevention technologies;\n\n \n\n•\n\ncontinued access to mobile APIs, APPs and application stores with Apple, Google and Microsoft;\n\n \n\n•\n\ngovernment regulation of the internet and governmental and non-governmental requirements and standards with respect to data security\nprivacy and data protection; and\n\n \n\n•\n\neconomic, social, or political conditions, including conditions resulting from a decline in the macroeconomic environment, rising\ninterest rates, exchange rate fluctuations, inflation, global pandemics , global supply chain disruptions and conditions resulting from\ngeopolitical uncertainty and instability or war, including the war between Israel, the U.S. and Iran and its effects on the delivery of\ngoods through the Strait of Hormuz, and the ongoing hostilities between Israel and Hezbollah, Hamas and Yemen, and the Russia-Ukraine\narmed conflict and the tension between China and Taiwan.\n\n \n\n5\n\nIn the last few years, global and regional economies around the\nworld and financial markets have remained volatile largely as a result of economic and political uncertainty, the war and hostilities\nbetween Israel, the U.S. and Iran, and the ongoing hostilities between Israel and Hezbollah, Hamas and Yemen, rising interest rates, inflation,\nterrorist groups in Yemen, which limited the movement of marine shipments to Israel through the Red Sea, the war in Ukraine, terrorism,\ngovernmental instability and other factors. During this period, many organizations have limited their expenditures and a significant portion\nof such organizations have remained reluctant to increase their expenditures. If these challenging macroeconomic conditions continue or\nworsen, our customers may reduce or postpone their technology spending, which could result in significant reductions in sales of our products,\nlonger sales cycles, slower adoption of new technologies or increased price competition.\n\n \n\nFurther, if the necessary infrastructure required to operate\nour industry or complementary products and services are not developed in a timely manner and, consequently, the enterprise security, data\nsecurity, internet or intranet markets fail to grow or grow more slowly than we currently anticipate, our business, results of operations\nand financial condition may be materially adversely affected. Additional details are provided in “Item 4 – Information on\nCheck Point”.\n\n \n\nWe may not be able to successfully compete, which could adversely\naffect our business and results of operations\n\nThe market for information and network security solutions is\nintensely competitive and we expect that competition will continue to increase in the future. Our competitors include Cisco Systems, Inc.,\nFortinet Inc., Palo Alto Networks, Inc. and SonicWall Inc. and other companies in the network security space. We also compete with several\nother companies, including Zscaler, Inc., Trellix, Trend Micro Inc., NortonLifeLock Inc., Lookout, Inc., Zimperium, Inc, CrowdStrike Holdings,\nInc., SentinelOne, Inc., Sophos Group plc, Proofpoint, Inc., Broadcom, Inc., Mimecast Limited, Microsoft Corp., Netskope, Inc. and Abnormal\nSecurity Corp., with respect to specific products that we offer.\n\nIn addition, there are hundreds of small and large companies\nthat offer security products and services that we may compete with from time to time.\n\n Some of our current and potential competitors have various\nadvantages over us, including longer operating histories; access to larger customer bases; significantly greater financial, technical\nand marketing resources; a broader portfolio of products, applications and services including AI and machine learning; and larger patent\nand intellectual property portfolios. As a result, they may be able to adapt better than we can to new or emerging technologies and changes\nin customer requirements, or to devote greater resources to the promotion and sale of their products. Furthermore, some of our competitors\nwith more diversified product portfolios and larger customer bases may be better able to withstand a reduction in spending on information\nand network security solutions, as well as a general slowdown or recession in economic conditions in the markets in which they operate.\nIn addition, some of our competitors have greater financial resources than we do, and they have offered, and in the future may offer,\ntheir products at lower prices than we do, or may bundle security products with their other offerings, which may cause us to lose sales\nor to reduce our prices in response to competition. With the introduction of new products and services and new market entrants, we expect\ncompetition to intensify in the future. Industry developments and evolving technology, such as AI, may also impact our competitive landscape\nand the factors required to compete effectively in current or prospective markets. For example, companies offering generative AI services\nwith cybersecurity capabilities, including large language models represent an additional source of competition because they may currently\nor in the future serve as alternative cybersecurity systems. If we are not able to continue to compete with companies offering AI systems\nwith cybersecurity features our business, results of operations and financial condition could be adversely affected.\n\n \n\nIn addition, consolidation in the markets in which we compete\nmay affect our competitive position. This is particularly true in circumstances where customers are seeking to obtain a broader set of\nproducts and services than we are able to provide.\n\n \n\nThe markets in which we compete also include many niche competitors,\ngenerally smaller companies at a relatively early stage of operations, which are focused on specific internet and data security needs.\nThese companies’ specialized focus may enable them to adapt better than we can to new or emerging technologies and changes in customer\nrequirements in their specific areas of focus. In addition, some of these companies can invest relatively large resources on very specific\ntechnologies or customer segments. The effect of these companies’ activities in the market may result in price reductions, reduced\ngross margins and loss of market share, any of which will materially adversely affect our business, results of operations and financial\ncondition.\n\n \n\nFurther, vendors of operating system software, networking hardware\nor central processing units  (“CPUs”), may enhance their products to include functionality that is currently provided\nby our products. The widespread inclusion of similar functionality to that which is offered by our solutions, as standard features of\noperating system software and networking hardware could significantly reduce the demand for our products, particularly if the quality\nof such functionality were comparable to that of our products. Furthermore, even if the network or application security functionality\nprovided as standard features by operating systems software and networking hardware is more limited than that of our solutions, a significant\nnumber of customers may elect to accept more limited functionality in lieu of purchasing additional products.\n\n6\n\n \n\nWe may not be able to continue competing successfully against\nour current and future competitors, and increased competition within the market may result in price reductions, reduced gross margins\nand operating margins, reduced net income, and loss of market share, any or all of which may materially adversely affect our business,\nresults of operations and financial condition. For additional information, see “Item 4 – Information on Check Point”.\n\n \n\nIf we fail to enhance our existing products, develop or acquire\nnew and more technologically advanced products, or fail to successfully commercialize these products, our business and results of operations\nwill suffer\n\n \n\nThe information and network security industry is characterized\nby rapid technological advances, changes in customer requirements, frequent new product introductions and enhancements, and evolving industry\nstandards in computer hardware and software technology. In particular, the markets for data security, internet and intranet applications\nare rapidly evolving. As a result, we must continually change and improve our products in response to changes in operating systems, application\nsoftware, computer and communications hardware, networking software, programming tools, and computer language technology. We must also\ncontinually change our products in response to changes in network infrastructure requirements, including the expanding use of cloud computing.\nFurther, we must continuously improve our products to protect our customers’ data and networks from evolving security threats.\n\n \n\nOur future results of operations will depend upon our ability\nto enhance our current products and to develop and introduce new products on a timely basis; to address the increasingly sophisticated\nneeds of our customers; and to keep pace with technological developments, new competitive product offerings, and emerging industry standards.\nOur competitors’ introduction of products embodying new technologies and the emergence of new industry standards may render our\nexisting products obsolete or unmarketable. While we have historically been successful in developing, acquiring, and marketing new products\nand product enhancements that respond to technological change and evolving industry standards, we may not be able to continue to do so.\nIn addition, we may experience difficulties that could delay or prevent the successful development, introduction, and marketing of these\nproducts, as well as the integration of acquired products. Furthermore, our new products or product enhancements may not adequately meet\nthe requirements of the marketplace or achieve market acceptance. In some cases, a new product or product enhancements may negatively\naffect sales of our existing products. If we do not respond adequately to the need to develop and introduce new products or enhancements\nof existing products in a timely manner in response to changing market conditions or customer requirements, our business, results of operations\nand financial condition may be materially adversely affected.\n\n \n\n \n\nFor additional information, see “Item 4 – Information\non Check Point” and under the caption “We may not be able to successfully compete, which could adversely affect our business\nand results of operations” in this “Item 3 – Key Information – Risk Factors”.\n\n \n\nWe may need to change our pricing models to compete successfully\n\n \n\nThe intense competition we face in the sales of our products and\nservices and general economic and business conditions can put pressure on us to change our prices. If our competitors offer deep discounts\non certain products or services or develop products that the marketplace considers more valuable, we may need to lower prices or offer\nother favorable terms in order to compete successfully. Any such changes may reduce margins and could adversely affect results of operations.\nAdditionally, the increasing prevalence of cloud and SaaS delivery models offered by us and our competitors may unfavorably impact pricing\nin both our on-premises enterprise software business and our cloud business, as well as overall demand for our on-premises software product\nand service offerings, which could reduce our revenues and profitability. Our competitors may offer lower pricing on their support offerings,\nwhich could put pressure on us to further discount our product or support pricing.\n\n \n\nOur business, results of operations and financial condition are\nsubject to, have been and may continue to be adversely affected by the risks of earthquakes, fire, floods, pandemics and other natural\nevents, as well as manmade problems such as power disruptions or terrorism or war, such as the war between Israel, the U.S. and Iran,\nand the ongoing hostilities between Israel and Hezbollah, Hamas and Yemen\n\n \n\nWe operate our business primarily from Israel, and operate and\nsell our products worldwide. Our headquarters in the United States, as well as certain of our research and development operations, are\nlocated in the Silicon Valley area of Northern California, a region known for seismic activity. We also have significant operations in\nother regions that have experienced natural disasters. A significant natural disaster occurring at our facilities in Israel, in the United\nStates or elsewhere, or where our channel partners are located, could have a material adverse impact on our business, results of operations\nand financial condition. In addition, acts of terrorism or war (including the war between Israel, the U.S. and Iran, and the ongoing hostilities\nbetween Israel and Hezbollah, Hamas and Yemen, and the significant military action against Ukraine launched by Russia and any related\npolitical or economic responses and counter-responses or otherwise by various global actors or general effect on the global economy) have\ncaused disruptions and could in the future cause disruptions to our or our customers’ businesses or the economy as a whole. \nFurther, we rely on information technology systems to communicate among our workforce located worldwide. Any disruption to our internal\ncommunications, whether caused by a natural disaster, pandemics or by manmade problems, such as power disruptions or terrorism or war,\ncould delay our research and development efforts. To the extent any of the foregoing causes disruptions or result in delays or cancellations\nof customer orders, our research and development efforts or the deployment of our products, our business and results of operations would\nbe materially and adversely affected.\n\n7\n\n \n\nIn addition, following the Russia-Ukraine armed conflict, the\nUnited States and other countries imposed economic sanctions and severe export control restrictions against Russia and Belarus, and the\nUnited States and other countries could impose wider sanctions and export restrictions and take other actions should the conflict further\nescalate, which affect our exports or sales into Russia and Belarus and create difficulties in business planning and forecasting due to\nthe uncertainty of the impact of the war on aspects of our business, such as on our distributors, resellers and end-customers.  As\ndiscussed elsewhere in these risk factors, additional worldwide trade protectionism may increase as a result of the trade policies of\nthe U.S. administration and/or as a result of the global response to such policies. Our efforts to comply with any such measures may be\ncostly and time consuming. We take precautions to ensure that we and our partners comply with all relevant sanctions-related regulations,\nany alleged or actual failure by us or our partners to comply with such laws and regulations could have negative consequences for us,\nincluding reputational harm, government investigations and penalties. The sanctions and other macroeconomic effects of the war or global\ntrade protectionism may also result in the devaluation of the local currency and other inflationary effects.\n\n \n\nProlonged economic uncertainties or downturns, globally or in\ncertain regions or industries, could materially adversely affect our business\n\n \n\nOur business depends on our current and prospective customers’\nability and willingness to invest money in our products and security, which in turn is dependent upon their overall economic health and\nthe strength of the broader macroeconomic environment. The negative economic conditions in the global economy or certain regions, including\nconditions resulting from financial and credit market fluctuations (including rising interest rates), exchange rate fluctuations, or inflation,\nand the potential for regional or global recessions could cause a decrease in corporate spending on cyber security software. Other matters\nthat influence customer confidence and spending, such as, political unrest, public health crises, terrorist attacks, armed conflicts (such\nas the war between Israel, the U.S. and Iran, and the ongoing hostilities between Israel and Hezbollah, Hamas and Yemen, and the ongoing\nconflict between Russia and Ukraine), rising energy costs, and natural disasters, could also negatively affect our customers’ spending\non our products and services. The activities of certain terrorist groups in Yemen, have previously limited the movement of marine\nshipments to Israel through the Red Sea, and the armed conflict involving Russia and Ukraine has resulted in sanctions which restrict\nthe selling of goods, services, or technology in affected regions. The instability in these regions could further exacerbate the macroeconomic\nimpacts on a global scale. \n\n \n\nNegative economic conditions may cause existing and prospective\ncustomers to reduce their spending. Customers may delay or cancel cyber security projects or seek to lower their costs by renegotiating\nrenewals or maintenance and support agreements. Further, customers or channel partners may be more likely to refrain from making payments\nand/or make late payments in worsening economic conditions. If the economic conditions of the general economy or industries in which we\noperate continue to worsen from present levels, our business, results of operation and financial condition could be adversely affected.\n\n \n\nIf our products fail to protect against attacks and our customers\nexperience security breaches, our reputation and business could be harmed\n\n \n\nHackers and other malevolent actors are increasingly sophisticated,\noften affiliated with organized crime and operate large scale and complex attacks. In addition, their techniques change frequently and\ngenerally are not recognized until launched against a target. If we fail to identify and respond to new and increasingly complex methods\nof attack and to update our products to detect or prevent such threats in time to protect our customers’ high-value business data,\nour business and reputation will suffer.\n\n \n\nIn addition, an actual or perceived security breach or theft\nof the confidential data of one of our customers, regardless of whether the breach is attributable to the failure of our products, could\nadversely affect the market’s perception of our security products. Despite our best efforts, there is no guarantee that our products\nwill be free of flaws or vulnerabilities, and even if we discover these weaknesses, we may not be able to correct them promptly, if at\nall. Our customers may also misuse our products, or may not properly configure or securely deploy our products, which could result in\na breach or theft of business data.\n\n \n\nProduct defects may increase our costs and impair the market acceptance\nof our products and technology\n\n \n\nOur products are complex and must meet stringent quality requirements.\nThey may contain undetected hardware or software errors or defects, especially when new or acquired products are introduced or when new\nversions are released. In particular, the personal computer hardware environment is characterized by a wide variety of non-standard configurations\nthat make pre-release testing for programming or compatibility errors very difficult and time-consuming. We may need to divert the attention\nof our engineering personnel from our research and development efforts to address instances of errors or defects.\n\n8\n\n \n\nOur products are used to deploy and manage internet security\nand protect information, which may be critical to organizations. As a result, the sale and support of our products entails the risk of\nproduct liability and related claims. We do not know whether, in the future, we will be subject to liability claims or litigation for\ndamages related to product errors, or will experience delays as a result of these errors. Our sales agreements and product licenses typically\ncontain provisions designed to limit our exposure to potential product liability or related claims. In selling our products, we rely primarily\non “shrink wrap” licenses that are not signed by the end user, and for this and other reasons, these licenses may be unenforceable\nunder the laws of some jurisdictions. As a result, the limitation of liability provisions contained in these licenses may not be effective.\nAlthough we maintain product liability insurance for most of our products, the coverage limits of these policies may not provide sufficient\nprotection against an asserted claim. If litigation were to arise, it could, regardless of its outcome, result in substantial expense\nto us, significantly divert the efforts of our technical and management personnel, and disrupt or otherwise severely impact our relationships\nwith current and potential customers. In addition, if any of our products fail to meet specifications or have reliability, quality or\ncompatibility problems, our reputation could be damaged significantly and customers might be reluctant to buy our products, which could\nresult in a decline in revenues, a loss of existing customers, and difficulty attracting new customers.\n\n \n\nWe are subject to risks relating to acquisitions\n\n \n\nWe have made acquisitions in the past, including the acquisitions\nof Cyclops Security Ltd. and Cyata Security Ltd. in February of 2026, the talent of Rotate Ltd. in February of 2026, Lakera AI AG\nand Veriti Security Ltd. in October and June of 2025, respectively. Cyberint Technologies Ltd. in 2024, Perimeter 81 Ltd., Atmosec Ltd.\nand rmsource, Inc. in 2023, Spectral Cyber Technologies Ltd in 2022 and Avanan, Inc. in 2021, and we may make additional acquisitions\nin the future. The pursuit of acquisitions may divert the attention of management and cause us to incur various expenses in identifying,\ninvestigating, and pursuing suitable acquisitions, whether or not they are consummated.\n\n \n\n \n\nCompetition within our industry for acquisitions of businesses,\ntechnologies, assets and product lines has been, and may in the future continue to be, intense. As such, even if we are able to identify\nan acquisition that we would like to consummate, we may not be able to complete the acquisition on commercially reasonable terms or because\nthe target is acquired by another company. Furthermore, in the event that we are able to identify and consummate any future acquisitions,\nwe could:\n\n \n\n•\n\nissue equity securities which would dilute the current shareholders’ percentage of ownership;\n\n \n\n•\n\nincur substantial debt;\n\n \n\n•\n\nassume contingent liabilities; or\n\n \n\n•\n\nexpend significant cash.\n\n \n\nThese financing activities or expenditures could harm our business,\nresults of operations and financial condition or the price of our ordinary shares. Alternatively, due to difficulties in the capital and\ncredit markets, we may be unable to secure capital on acceptable terms, or at all, to complete acquisitions. In addition, we may not be\nable to integrate acquired personnel, operations, and technologies successfully or effectively manage the combined business following\nthe completion of any future acquisition. Additionally, such integration may impact our revenue and operating results. We may also not\nachieve the anticipated benefits from the acquired businesses due to a number of factors, including:\n\n \n\n•\n\nunanticipated costs, liabilities or compliance issues associated with the acquisition;\n\n \n\n•\n\nincurrence of acquisition-related costs;\n\n \n\n•\n\ndiversion of management’s attention from other business concerns;\n\n \n\n•\n\nharm to our existing business relationships with manufacturers, distributors and customers as a result of the acquisition;\n\n \n\n•\n\nthe potential loss of key employees;\n\n \n\n•\n\nuse of resources that are needed in other parts of our business;\n\n \n\n•\n\nuse of substantial portions of our available cash to consummate the acquisition; or\n\n \n\n•\n\nunrealistic goals or projections for the acquisition.\n\n \n\nMoreover, even if we do obtain benefits from acquisitions in\nthe form of increased sales and earnings, there may be a delay between the time when the expenses associated with an acquisition are incurred\nand the time when we recognize such benefits.\n\n9\n\n \n\nWe are dependent on a limited number of product families\n\n \n\nCurrently, we derive the majority of our revenues from sales\nof integrated appliances and internet security products, as well as related revenues from security subscriptions and from software updates\nand maintenance. We expect that this concentration of revenues from a small number of product families will continue for the foreseeable\nfuture. Endpoint security products and associated software updates, maintenance, and security subscriptions represent an additional revenue\nsource as well as our cloud initiatives. Our future growth depends heavily on our ability to effectively develop and sell new and acquired\nproducts as well as add new features to existing products. For more details, see “Item 4 – Information on Check Point”\nand “Item 5 – Operating and Financial Review and Prospects”.\n\n \n\nCompetition for highly skilled personnel is intense\n\n \n\nWe compete in a market marked by rapidly changing technologies\nand an evolving competitive landscape. In order for us to successfully compete and grow, we must attract, recruit, retain and develop\npersonnel, at an appropriate cost, with requisite qualifications to provide expertise across the entire spectrum of our intellectual capital\nand business needs. In recent years, the industry has experienced record growth and activity and as a result, the high-tech industry in\nIsrael has experienced significant levels of employee attrition and is currently facing a shortage of skilled human capital including\nin the areas of AI and machine learning. Similar competition for highly skilled personnel exists in the U.S. and in other markets in which\nwe operate. Failure to retain or attract qualified personnel, at an appropriate cost, could have a material adverse effect on our business,\nfinancial condition and results of operations.\n\nIssues in the development and deployment of AI may result in reputational\nharm and legal liability and could adversely affect our results of operations\n\n \n\nWe have incorporated, and are continuing to develop and deploy,\nAI into many of our products and solutions, including services that support our products and solutions. We are also incorporating AI into\nthe operations of our business. AI presents challenges and risks that could affect our products and solutions, and the operations of our\nbusiness. For example, AI algorithms may have flaws, and datasets used to train models may be insufficient or contain biased information.\nThe AI that is being incorporated into our products, solutions, and business operation tools may not be successful or beneficial, and\ninstead may cause technical, legal or ethical problems or result in increased costs. The investments that we are making across our business\nin AI reflect our ongoing efforts to innovate and provide products and services that are useful to our customers, as well as provide efficiencies\nin our business. Such investments ultimately may not be commercially viable or may not result in an adequate return of capital and we\nmay incur unanticipated liabilities. These efforts could subject us to regulatory risk, legal liability, including under legislation regulating\nAI in jurisdictions such as the E.U. and laws and regulations being considered in other jurisdictions, or brand or reputational harm.\n\nThe rapid evolution of AI, including potential government regulation\nof AI, requires us to invest significant resources to develop, test, and maintain AI in our products and services in a manner that meets\nevolving requirements and expectations. The rules and regulations adopted by policymakers over time may require us to make changes to\nour business practices. Developing, testing, and deploying AI systems may also increase the cost profile of our offerings due to the nature\nof the computing costs involved in such systems.\n\nThe intellectual property ownership and license rights surrounding\nAI technologies, as well as data protection laws related to the use and development of AI, are currently not fully addressed by courts\nor regulators. The use or adoption of AI technologies in our products may result in exposure to claims by third parties of copyright infringement\nor other intellectual property misappropriation, which may require us to pay compensation or license fees to third parties. The evolving\nlegal, regulatory, and compliance framework for AI technologies may also impact our ability to protect our own data and intellectual property\nagainst infringing use.\n\n \n\nRisks Related to Our Dependence on Third-Parties\n\n \n\nWe are dependent on a small number of distributors\n\nWe derive our sales primarily through indirect channels. During\n2025, 2024 and 2023, we derived approximately 57%, 56% and 56%, respectively, of our sales from our ten largest distributors. In each\nof 2025, 2024 and 2023, our three largest distributors accounted for approximately 39%, 39% and 40%, respectively, of our sales. We expect\nthat a small number of distributors will continue to generate a significant portion of our sales. Furthermore, there has been an industry\ntrend toward consolidation among distributors, and we expect this trend to continue in the near future which could further increase our\nreliance on a small number of distributors for a significant portion of our sales. If these distributors reduce the amount of their purchases\nfrom us for any reason, including because they choose to focus their efforts on the sales of the products of our competitors, our business,\nresults of operations and financial condition could be materially adversely affected.\n\n10\n\n \n\nOur future success is highly dependent upon our ability to establish\nand maintain successful relationships with our distributors. In addition, we rely on these entities to provide many of the training and\nsupport services for our products and equipment. Accordingly, our success depends in large part on the effective performance of these\ndistributors. Recruiting and retaining qualified distributors and training them in our technology and products requires significant time\nand resources. Further, we have no minimum purchase commitments with any of our distributors, and our contracts with these distributors\ndo not prohibit them from offering products or services that compete with ours. Our competitors may be effective in providing incentives\nto existing and potential distributors to favor their products or to prevent or reduce sales of our products. Our distributors may choose\nnot to offer our products exclusively or at all. Our failure to establish and maintain successful relationships with distributors would\nlikely materially adversely affect our business, results of operations and financial condition.\n\n \n\nWe purchase several key components and finished products from\nlimited sources, and we are increasingly dependent on contract manufacturers for our hardware products\n\n \n\nMany components, subassemblies, and modules necessary for the\nmanufacture or integration of our hardware products are obtained from a limited group of suppliers. The majority of our hardware is manufactured\nin Taiwan. Any increase in the tension between China and Taiwan, could adversely affect our manufacturing operations in Taiwan. Although\nwe do not manufacture in China, some of our component parts are sourced from China. Our reliance on sole or limited suppliers, particularly\nforeign suppliers, and our reliance on subcontractors involves several risks, including a potential inability to obtain an adequate supply\nof required components, subassemblies, or modules and limited control over pricing, quality, and timely delivery of components, subassemblies\nor modules. Such risks could become exacerbated to the extent such suppliers and subcontractors are materially disrupted by quarantines,\nfactory slowdowns or shutdowns and border closings, as well as travel restrictions. For example, global supply chain disruptions associated\nwith geopolitical events, such as the war between the U.S., Israel and Iran and its effects on the delivery of goods through the Strait\nof Hormuz, and silicon industry impacted the availability of raw products and resulted in prolonged shipping and delivery times. Availability\nof specific components continues to impact the global supply chain, mainly impacting lead times. Demand is increasing supply requirements\nand the fast growing technology innovation can impact the availability and manufacturers’ capacity. For example, there is currently\na worldwide shortage of semiconductor, memory and other electronic components driven by the proliferation of AI infrastructure and the\nhigh energy demands of such production. Our products are dependent upon some of these components and a continued shortage or increased\nprices drive by global semiconductor shortages may negatively impact our business by increasing lead times and prices from our suppliers,\nwhich could adversely affect our results of operations. Any material supply chain disruption could negatively impact our business, financial\ncondition and results of operations. Although we have been successful in the past, replacing suppliers may be difficult and it is possible\nit could result in an inability or delay in producing designated hardware products. Managing our supplier and contractor relationships\nis particularly difficult during time periods in which we introduce new products and during time periods in which demand for our products\nis increasing, especially if demand increases more quickly than we expect. We also have extended support contracts with these suppliers\nand have been dependent on their ability to perform over a period of years.\n\n \n\nWe incorporate third-party technology in our products, which may\nmake us dependent on the providers of these technologies and expose us to potential intellectual property claims\n\n \n\nOur products contain certain technology that we license from\nother companies. Third-party developers or owners of technologies may not be willing to enter into, or renew, license agreements with\nus regarding technologies that we may wish to incorporate in our products, either on acceptable terms or at all. If we cannot obtain licenses\nto these technologies, we may be at a disadvantage compared with our competitors who are able to license these technologies. In addition,\nwhen we do obtain licenses to third-party technologies that we did not develop, we may have little or no ability to determine in advance\nwhether the technology infringes the intellectual property rights of others. In the event such third-party developers and owners are otherwise\nunable to provide such technology or services to us, our ability to provide our products and services could be disrupted. This includes\nmandated government shutdowns. Our suppliers and licensors may not be required or may not be able to indemnify us in the event that a\nclaim of infringement is asserted against us, or they may be required to indemnify us only up to a maximum amount, above which we would\nbe responsible for any further costs or damages. Any failure to obtain licenses to intellectual property or any exposure to liability\nas a result of incorporating third-party technology into our products could materially and adversely affect our business, results of operations\nand financial condition.\n\n \n\nFailures of the third-party technology, third-party servers, cloud\nservice providers, such as AWS, and other third-party hardware, software and infrastructure on which we rely could adversely affect our\nbusiness\n\n \n\nWe rely on third-party technology, third-party servers, cloud\nservice providers, such as AWS, and other third-party hardware, software and infrastructure to support our operations. The owners and\noperators of the data centers and cloud services with which we are engaged, and the other third parties on which we rely, do not guarantee\nuninterrupted or error-free technology, products or services. Problems faced by our third-party providers, including technological or\nbusiness-related disruptions, could adversely impact our business and results of operations, including by adversely impacting our products\nand services.\n\n \n\n Our\nservers, data centers and other facilities are also vulnerable to damage or interruption from fires, natural disasters, terrorist attacks,\npower loss, telecommunications failures, pandemics or similar catastrophic events. Disruptions to these servers or facilities could interrupt\nour ability to provide our products and services and materially adversely affect our business and results of operations.\n\n11\n\nRisks Related to Tax, Legal and Regulatory Matters\n\n \n\nWe are the defendants in various lawsuits and have been subject\nto tax disputes and governmental proceedings, which could adversely affect our business, results of operations and financial condition\n\n \n\nAs a global company we are subject to taxation in Israel, the\nUnited States and various other countries. We attempt to utilize an efficient operating model and accordingly to pay taxes based on the\nlaws in the countries in which we operate. Nonetheless, various tax authorities in different parts of the world may disagree with our\noperating sale model. This may lead to disputes and to tax assessments, which can have a negative effect on our tax liabilities.\n\n \n\nIn addition, we are subject to the continuous examination by\ntax authorities around the world. It is possible that tax authorities may disagree with certain positions we have taken and any adverse\noutcome of such a review, investigation or audit could have a negative effect on our financial position and results of operations. We\nregularly assess the likelihood of adverse outcomes resulting from these examinations, and audits to determine the adequacy of our provision\nfor income and other taxes, but the determination of our worldwide provision for income taxes and other tax liabilities requires significant\njudgment by management, and there are transactions where the ultimate tax determination is uncertain. Although we believe that our estimates\nare reasonable, the ultimate tax outcome may differ from the amounts recorded in our consolidated financial statements and may materially\naffect our financial results in the period or periods for which such determination is made. There can be no assurance that the outcomes\nfrom continuous examinations will not have an adverse effect on our business, financial condition and results of operations.\n\n \n\nIn January 2023, the Israeli Tax Authority (the “ITA”)\nissued orders for the years 2016 through 2019 challenging our positions on several issues and,  demanded the payment of additional\ntaxes in the aggregate amount of NIS 536 million (approximately $158 million), not including an amount of NIS 476 million (approximately\n$140 million) related to expenses that will be deductible in future years, with respect of these four tax years (these amounts include\ninterest and indexation up to the tax settlement’s payment date, i.e. 31 July 2025). On November 29, 2023, the Company filed an\nappeal to the District Court of Tel Aviv against these orders.\n\n \n\nIn addition, the ITA has issued a tax assessment for the 2020\ntax year in which it demanded the payment of additional taxes in the aggregate amount of NIS 94 million (approximately $28 million), not\nincluding an amount of NIS 106 million (approximately $31 million) related to expenses that will be deductible in future years, with respect\nto the 2020 tax year (these amounts include interest and indexation up to the tax settlement’s payment date, i.e. 31 July 2025).\nOn December 31, 2023 we submitted a tax appeal against the 2020 tax assessment to the ITA.\n\n \n\nOn July 15, 2025, the Company and the ITA entered into a settlement\nagreement under which the Company agreed to pay total additional taxes of NIS 223.2 million (approximately $66 million) in respect of\nthe 2016–2020 tax years, which was ratified by the District Court of Tel Aviv on July 16, 2025.  The Company settled the tax\ndemand payment to the ITA on July 31, 2025. The settlement fully and finally resolves all tax matters between the Company and the ITA\nrelating to the 2016-2020 tax years.\n\n \n\nWe are the defendant in various other lawsuits, including employment-related\nlitigation claims, construction claims and other legal proceedings in the normal course of our business. Litigation and governmental proceedings\ncan be expensive, lengthy and disruptive to normal business operations, and can require extensive management attention and resources,\nregardless of their merit. While we currently intend to defend the aforementioned matters vigorously, we cannot predict the results of\ncomplex legal proceedings, and an unfavorable resolution of a lawsuit or proceeding could materially adversely affect our business, results\nof operations and financial condition. See also “Item 8 – Financial Information” under the caption “Legal Proceedings”.\n\n \n\nUncertainties in the interpretation and application of worldwide\ntax reforms, complex tax laws and regulations could materially affect our tax obligations and effective tax rate\n\nOn July 4, 2025, the One, Big, Beautiful Bill Act  was enacted,\nwhich, among other changes to U.S. federal income tax law, permanently suspends the requirement to capitalize and amortize domestic research\nand development expenditures and permits such deductions on a current basis, and reinstates 100% bonus depreciation for certain qualified\nproperty. The Bill also allows to some extent an accelerated amortization of domestic research and development expenditures that had previously\nbeen amortized during the years 2022-2024.\n\n \n\nIn addition, California recently enacted a temporary suspension\non the use of California net operating loss carryforwards under certain conditions in the taxable years beginning in 2024, 2025 and 2026,\nand other state tax limitations may apply.\n\nThe base erosion and profit shifting (“BEPS”) project\nundertaken by the Organisation for Economic Co-operation and Development (“OECD”) may have adverse consequences to our tax\nliabilities. The first pillar of BEPS’s project is focused on the allocation of taxing rights between countries for in-scope large\nmultinational enterprises that sell goods and services into countries with minor or no local physical presence. We do not expect to be\nwithin the scope of Pillar One.\n\n12\n\n \n\nIn December 2022, the Council of the European Union (“EU”)\nunanimously adopted the Directive on BEPS’s Pillar Two ensuring a global minimum tax rate of 15% for certain\ncompanies with an annual global turnover of at least €750 million, in the Union (the Directive). The OECD has also\nissued the Safe Harbours and Penalty Relief : Global Ani-Base Erosion Rules (“Pillar Two Rules”) and related\nguidance. EU Member States and other non-EU countries enacted legislation to integrate the provisions of the\nDirective and Pillar Two rules into their national laws by December 31, 2023 and the majority of those countries generally\napply these provisions for fiscal years starting on or after December 31, 2023. \n\n \n\nOn December 2025, the Israeli Knesset approved the Minimum Corporate\nTax Law (Multinational Group), 2025 (the “Law”) which adopts BEPS’s Pillar Two Rules. The Law introduces\na qualified domestic minimum top-up tax, pursuant to which multinational enterprise groups with  annual global turnover of\nat least  €750 million are subject to a minimum corporate tax rate of 15% on the Israeli Constituent Entity\nas defined under the OECD’s Pillar Two Rules.  The Law enters into force with effective date of January 1, 2026.  \n\n \n\nIn parallel, as part of the Israeli Economic Program Law for\nthe 2026 budget year, legislation to incentivize research and development activities (the “R&D Incentive Legislation”)\nwas enacted on March 30, 2026 and entered into force as of January 1, 2026.\n\nThe R&D Incentive Legislation introduces a tax credit, at\nvarying rates based on specified thresholds, for qualifying research and development expenditures incurred in Israel by eligible Israeli\ncompanies that are part of multinational enterprise groups, subject to meeting defined eligibility criteria. The tax credit may be utilized\nto offset Israeli corporate income tax or the Israeli domestic minimum top-up tax.\n\nIn addition, the R&D Incentive Legislation, subject to conditions\nas  prescribed therein, provides that  all or a portion of the unutilized R&D tax credit will be provided to eligible companies\nin the form of a cash grant upon the lapse of a period stipulated by the R&D Incentive Legislation, rather than being utilized solely\nas a tax credit. This mechanism is intended, among other things, to support the qualification of the incentive under the OECD Pillar Two\nframework.\n\nThe implementation of the Israeli Pillar Two Law is expected\nto increase our reported tax expenses beginning in 2026. Based on the current Proposed R&D Incentive Legislation and its associated\ntax credit, and assuming enactment effective January 1, 2026, income tax expense is expected to increase, while the net cash impact is\nnot expected to be material. However, the ultimate impact will depend on the final form of the proposed R&D Incentive Legislation,\nif and when enacted and the amount of tax credits approved thereunder.\n\n \n\nWe are currently monitoring the local minimum corporate tax legislations\nin the relevant jurisdictions and awaiting further  guidance on the Israeli Proposed R&D Incentive Legislation and its effective\ndate.\n\n \n\nIndirect taxes, including digital service tax (“DST”)\nmeasures as unilaterally adopted by certain jurisdiction, could also adversely affect our tax obligations. These measures generally aim\nat securing taxation rights of the jurisdiction for the revenues/profits generated by the transnational e-commerce activities with customers\nwho are resident in this specific jurisdiction. Current or future attempts to impose sales, income, or other taxes on e-commerce would\nlikely increase the cost of doing business online and decrease the attractiveness of advertising and selling products over the internet\nand could lead to significant increases in internal costs necessary to capture data and collect and remit taxes.\n\n \n\nFinally, we are subject to audit by taxing authorities in several\njurisdictions, and tax laws may be interpreted differently by the competent tax authorities and courts, which could lead to an increase\nof our tax burden and increased costs to us to comply with new laws and interpretations thereof and tax auditors. New taxes or reporting\nobligations could also result in additional costs necessary to collect the data required to assess these taxes and to remit them to the\nrelevant tax authorities or to comply with these reporting obligations.\n\n \n\nClass action litigation due to stock price volatility or\nother factors could cause us to incur substantial costs and divert our management’s attention and resources\n\n \n\nIn the past, following periods of volatility in the market price\nof a public company’s securities, securities class action litigation has often been instituted against that company. Companies such\nas ours in the technology industry are particularly vulnerable to this kind of litigation as a result of the volatility of their stock\nprices. We have been named as a defendant in this type of litigation in the past. Any litigation of this sort in the future could result\nin substantial costs and a diversion of management’s attention and resources.\n\n13\n\n \n\nWe are subject to governmental export and import controls that\ncould subject us to liability or impair our ability to compete in international markets\n\n \n\nBecause we incorporate encryption technology into our products,\ncertain of our products are subject to U.S. export controls and may be exported outside the U.S. only with the required export license\nor through an export license exception. If we were to fail to comply with U.S. export licensing requirements, U.S. customs regulations,\nU.S. economic sanctions, or other laws, we could be subject to substantial civil and criminal penalties, including fines, incarceration\nfor responsible employees and managers, and the possible loss of export or import privileges. Obtaining the necessary export license for\na particular sale may be time-consuming and may result in the delay or loss of sales opportunities. Furthermore, U.S. export control laws\nand economic sanctions prohibit the shipment of certain products to U.S. embargoed or sanctioned countries, governments, and persons.\nEven though we take precautions to ensure that we comply with all relevant regulations, any failure by us or any partners to comply with\nsuch regulations could have negative consequences for us, including reputational harm, government investigations, and penalties.\n\n \n\nIn addition, various countries regulate the import of certain\nencryption technology, including through import permit and license requirements, and have enacted laws that could limit our ability to\ndistribute our products or could limit our end-customers’ ability to implement our products in those countries. Changes in our products\nor changes in export and import regulations for whatever reason may create delays in the introduction of our products into international\nmarkets, prevent our end-customers with international operations from deploying our products globally or, in some cases, prevent or delay\nthe export or import of our products to certain countries, governments, or persons altogether. Any change in export or import regulations,\neconomic sanctions or related legislation, shift in the enforcement or scope of existing regulations, or change in the countries, governments,\npersons, or technologies targeted by such regulations or protectionist measures, could result in decreased use of our products by, or\nin our decreased ability to export or sell our products to, existing or potential end-customers with international operations. Any decreased\nuse of our products or limitation on our ability to export to or sell our products in international markets would likely adversely affect\nour business, financial condition, and results of operations.\n\nChanges in government trade policies and international trade disputes\nthat result in tariffs and other protectionist measures could adversely affect our business in the future\n\nThe U.S. government and the current administration have made\npublic statements and taken certain actions indicating significant changes in U.S. trade policy, including imposing new or increased tariffs\non certain goods imported into the United States from Canada, Mexico and China. In response, a number of other countries have announced\nan intention to impose additional duties on imports from the United States. To date, our business has not been affected by such actions.\nHowever, changes in government trade policies and international trade disputes that result in tariffs and other protectionist measures\ncould adversely affect our business in the future.  \n\n \n\nRisks Related to Our Intellectual Property\n\n \n\nWe may not be able to successfully protect our intellectual property\nrights, which could cause substantial harm to our business\n\n \n\nWe seek to protect our proprietary technology by relying on a\ncombination of statutory as well as common law copyright and trademark laws, trade secrets, confidentiality procedures and contractual\nprovisions as indicated below in the section entitled “Proprietary Rights” in “Item 4 – Information on Check Point”.\nWe have certain patents in the United States and in several other countries, as well as pending patent applications. We cannot assure\nyou that pending patent applications will be issued, either at all or within the scope of the patent claims that we have submitted. In\naddition, someone else may challenge our patents and these patents may be found invalid. Furthermore, others may develop technologies\nthat are similar to or better than ours, or may work around any patents issued to us. Despite our efforts to protect our proprietary rights,\nothers may copy aspects of our products or obtain and use information that we consider proprietary. In addition, the laws of some foreign\ncountries do not protect our proprietary rights to the same extent as the laws of the United States and Israel. Our efforts to protect\nour proprietary rights may not be adequate and our competitors may independently develop technology that is similar to our technology.\n\n \n\nIn addition to patents, we rely on trade secret and other rights\nto protect our unpatented proprietary intellectual property and technology. Despite our efforts to protect our proprietary technologies\nand our intellectual property rights, unauthorized parties, including our employees, consultants, service providers or customers, may\nattempt to copy aspects of our products or obtain and use our trade secrets or other confidential information. We generally enter into\nconfidentiality agreements with our employees, consultants, and other service providers, and generally limit access to and distribution\nof our proprietary information and proprietary technology through certain procedural safeguards. These agreements and arrangements may\nnot effectively prevent unauthorized use or disclosure of our intellectual property or technology and may not provide an adequate remedy\nin the event of unauthorized use or disclosure of our intellectual property or technology. We cannot be certain that the steps taken by\nus will prevent misappropriation of our intellectual property or technology or infringement of our intellectual property rights.\n\n14\n\n \n\nIf we are unable to secure, protect and enforce our intellectual\nproperty rights, such failure could harm our brand and adversely impact our business, financial condition and results of operations.\n\n \n\nWe incorporate open source technology in our products which may\nexpose us to liability and have a material impact on our product development and sales\n\n \n\nSome of our products utilize open source technologies. These\ntechnologies are licensed to us under varying license structures, including the General Public License. If we have improperly used, or\nin the future improperly use, software that is subject to such licenses with our products in such a way that our software becomes subject\nto the General Public License, we may be required to disclose our own source code to the public. This could enable our competitors to\neliminate any technological advantage that our products may have over theirs. Any such requirement to disclose our source code or other\nconfidential information related to our products could materially and adversely affect our competitive position and impact our business,\nresults of operations and financial condition.\n\n \n\nIf a third-party asserts that we are infringing its intellectual\nproperty, whether successful or not, it could subject us to costly and time-consuming litigation or expensive licenses, which could harm\nour business\n\n \n\nThere is considerable patent and other intellectual property\ndevelopment activity in our industry. Our success depends, in part, upon our ability not to infringe upon the intellectual property rights\nof others. Our competitors, as well as a number of other entities and individuals, own or claim to own intellectual property relating\nto our industry. From time to time, third parties have brought, and continue to bring, claims that we are infringing upon their intellectual\nproperty rights, and we may be found to be infringing upon such rights. In addition, third-parties have in the past sent us correspondence\nclaiming that we infringe upon their intellectual property, and in the future we may receive claims that our products infringe or violate\ntheir intellectual property rights. Furthermore, we may be unaware of the intellectual property rights of others that may cover some or\nall of our technology or products. Any claims or litigation could cause us to incur significant expenses and, if successfully asserted\nagainst us, could require that we pay substantial damages or royalty payments, prevent us from selling our products, or require that we\ncomply with other unfavorable terms. In addition, we may decide to pay substantial settlement costs and/or licensing fees in connection\nwith any claim or litigation, whether or not successfully asserted against us. Even if we were to prevail, any disputes or litigation\nregarding intellectual property matters could be costly and time-consuming and divert the attention of our management and key personnel\nfrom our business operations. As such, third-party claims with respect to intellectual property may increase our cost of goods sold and\noperating expenses, reduce the sales of our products, and may have a material and adverse effect on our business.\n\n \n\nDue to the global nature of our business, we must comply with\nvarious anti-bribery regimes and any failure to do so could adversely affect our business\n\n \n\nThe global nature of our business creates various domestic and\nlocal regulatory challenges. The U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), the U.K. Bribery Act\n2010 (the “U.K. Bribery Act”), Chapter 9 (sub-chapter 5) of the Israeli Penal Law, 1977, the Israeli Prohibition on Money\nLaundering Law – 2000 (the “Israeli Anti-Bribery Laws”) and similar anti-bribery laws in other jurisdictions generally\nprohibit companies and their intermediaries from making improper payments to foreign government officials and other persons for the purpose\nof obtaining or retaining business. In addition, companies are required to maintain records that accurately and fairly represent their\ntransactions and have an adequate system of internal accounting controls. Further, changes in laws could result in increased regulatory\nrequirements and compliance costs which could adversely affect our business, financial condition and results of operations.\n\n \n\nAs a result, we are exposed to a risk of violating anti-bribery\nlaws in the countries where we operate. Although we have internal policies and procedures, including a code of ethics and proper business\nconduct, reasonably designed to promote compliance with anti-bribery laws, we cannot assure that our employees or other agents will not\nengage in prohibited conduct and render us responsible under the FCPA, the U.K. Bribery Act, the Israeli Anti-Bribery Laws or any similar\nanti-bribery laws in other jurisdictions. If we are found to be in violation of the FCPA, the U.K. Bribery Act, the Israeli Anti-Bribery\nLaws or other anti-bribery laws (either due to acts or inadvertence of our employees, or due to the acts or inadvertence of others), we\ncould suffer criminal or civil penalties or other sanctions, which could have a material adverse effect on our business, results of operations,\ncash flows, financial condition, reputation and ability to win future business or maintain existing contracts.\n\nOther General Risks and Risks Related to the Ownership of Our Ordinary\nShares\n\n \n\nWe are exposed to various legal, business, political, economic,\nhealth-related and other risks associated with our international operations; these risks could increase our costs, reduce future growth\nopportunities and affect our results of operations\n\n \n\nWe operate our business primarily from Israel, we sell our products\nworldwide, and we generate a significant portion of our revenue outside the United States. We intend to continue to expand our international\noperations, which will require significant management attention and financial resources. In order to continue to expand worldwide, we\nwill need to establish additional operations, hire additional personnel and recruit additional channel partners internationally. To the\nextent that we are unable to do so effectively, our growth is likely to be limited and our business, results of operations and financial\ncondition may be materially adversely affected.\n\n15\n\n \n\n \n\nOur international sales and operations subject us to many potential\nrisks inherent in international business activities, including, but not limited to:\n\n \n\n•\n\ntechnology import and export license requirements;\n\n \n\n•\n\ncosts of localizing our products for foreign countries, and the lack of acceptance of localized products in foreign countries;\n\n \n\n•\n\nvarying economic and political instability or war, including the war  between Israel, the U.S. and Iran and the ongoing hostilities\nbetween Israel and Hezbollah, Hamas and Yemen and the significant military action against Ukraine launched by Russia;\n\n \n\n•\n\npotential tariffs, sanctions, fines or other trade restrictions, including any political or economic responses and counter-responses\nor otherwise by various global actors to the significant military action against Ukraine launched by Russia, as well as the possibility\nof further international trade disputes that result in tariffs and other protectionist measures;\n\n \n\n•\n\nimposition of or increases in tariffs or other payments on our revenues in these markets;\n\n \n\n•\n\ngreater difficulty in protecting intellectual property;\n\n \n\n•\n\ndifficulties in managing our overseas subsidiaries and our international operations;\n\n \n\n•\n\neconomic, social, or political conditions, including conditions resulting from a decline in the macroeconomic environment, rising\ninterest rates, exchange rate fluctuations and inflation;\n\n \n\n•\n\npolitical instability and civil unrest which could discourage investment and complicate our dealings with governments;\n\n \n\n•\n\nwidespread health emergencies or pandemic;\n\n \n\n•\n\ndifficulties in complying with a variety of foreign laws and legal standards and changes in regulatory requirements;\n\n \n\n•\n\nexpropriation and confiscation of assets and facilities;\n\n \n\n•\n\ndifficulties in collecting receivables from foreign entities or delayed revenue recognition;\n\n \n\n•\n\nrecruiting and retaining talented and capable employees;\n\n \n\n•\n\ndiffering labor standards;\n\n \n\n•\n\nincreased tax rates;\n\n \n\n•\n\npotentially adverse tax consequences, including taxation of a portion of our revenues at higher rates than the tax rate that applies\nto us in Israel;\n\n \n\n•\n\nfluctuations in currency exchange rates and the impact of such fluctuations on our results of operations and financial position;\nand\n\n \n\n•\n\nthe introduction of exchange controls and other restrictions by foreign governments.\n\n \n\nThese difficulties could cause our revenues to decline, increase\nour costs or both. This is also specifically tied to currency exchange rates which have an impact on our financial statements based on\ncurrency rate fluctuations.\n\nOur actual or perceived failure to adequately protect personal data or customer data,\nor to otherwise comply with data privacy and protection laws and regulations or other technology related regulations, could subject us\nto sanctions and damages and could harm our reputation and business\n\nA variety of state, national, foreign, and international laws\nand regulations apply to the collection, use, retention, protection, disclosure, transfer, and other processing of personal data and customer\ndata, and other areas in new and evolving technologies. These laws and regulations, as demonstrated by the examples below, continue to\nevolve. New or modified laws and regulations relating to these matters are proposed and implemented frequently and existing laws and regulations\nsubject to new or different interpretations. Compliance with these laws and regulations can be costly and can delay or impede the development\nand offering of new products and services.\n\n16\n\n \n\nFor example, the General Data Protection Regulation (“GDPR”)\n(which is applicable in both the EU and the UK), imposes stringent requirements for data processors and controllers. Such requirements\ninclude amongst other things, obligations to: i) provide data subjects with fulsome disclosures about the processing of personal information;\nii) adhere to reasonable data retention limits; iii) comply with individual requests in relation to their personal data, including access\nand deletion requests; iv) ensure suitable security / protection of personal data and comply with mandatory notification requirements\nin the case of a data breach; v) adhere to elevated standards regarding valid consent in some specific cases of data processing; and vi)\ncomply with stringent data transfer obligations, including in relation to international transfers of personal data. The GDPR also includes\npotentially severe penalties for failure to comply, inter alia, a fine up to 20 million EUR / 17.5 million GBP (as applicable) or up to\n4% of the annual worldwide turnover, whichever is greater, which can be imposed. Compliance with these stringent requirements on privacy\nuser notifications and data handling (both as they apply to us but also our customers) could increase our financial risk exposure, require\nus to adapt our business in order to comply with the GDPR requirements and incur additional costs.\n\n \n\nAdditionally, the United States has various privacy laws with\nprivacy laws now having been implemented in 19 US states. In some respects the laws across US states are harmonised but there remain points\nof difference and fragmented regulations increase the burden of compliance.  In California, the California Consumer Privacy Act (“CCPA”)\nand California Privacy Rights Act (“CPRA”) provide data privacy rights for consumers and privacy-related operational requirements\nfor companies.  The CCPA and CPRA, and other US state laws are making it easier for certain individuals to opt-out of having their\npersonal data processed and disclosed to third parties through various opt-out mechanisms, which could result in an increase to our operational\ncosts to ensure compliance with such legal and regulatory requirements.\n\n \n\nOther jurisdictions have also enacted and strengthened data protection\nlaws, which have increased the cost of complying with them for businesses. For example, Israel has enacted laws and regulations relating\nto privacy, data protection, and security, including Israeli Privacy Protection Law 5741-1981 and its associated regulations that have\nbrought the Israeli regime closer to the GDPR, in particular with regard to enforcement with the law providing for administrative fines\nof up to 5% of global turnover. In Latin America, Brazil’s Lei Geral de Proteção de Dados (LGPD), one of the most impactful\ndata protection laws in Latin America, is largely aligned to the GDPR. In China, Personal Information Protection Law of the People’s\nRepublic of China (“PIPL”) applies and has parallels with the GDPR given that is has extra-territorial effect, applying to\ndata processing activities in China and outside of China in certain circumstances. In Australia, the Privacy and Other Legislation Amendment\nAct 2024 (POLA) modernised Australia’s data privacy legislation and introducing GDPR‑style features, new enforcement powers,\nand expanded individual rights.\n\n \n\nIn addition, the increasing use of artificial intelligence and\nAI-enabled tools in business operations, including by third-party service providers, may increase the risk that personal data is processed,\ndisclosed or retained in ways that are inconsistent with applicable data protection laws or contractual obligations. Regulatory frameworks\ngoverning the use of AI and automated data processing are also evolving in multiple jurisdictions (for example in the EU through the EU\nAI Act), which may further increase our compliance costs and exposure to regulatory scrutiny, penalties and other liabilities, all of\nwhich could have a material adverse effect on our business and results of operations.\n\n \n\nStringent privacy, data protection and security requirements\nin the GDPR, CCPA, and other laws and regulations (e.g., in those regulating AI) could decrease demand for our products and services,\nincrease our costs, and impair our ability to maintain and grow our customer base and increase our revenue, We may face challenges in\naddressing these requirements and making necessary changes to our policies and practices, and may incur significant costs and expenses\nin an effort to do so. Moreover, because the interpretation and application of many laws, regulations, industry standards, contractual\nobligations and other actual and asserted obligations to which we are or may become subject relating to privacy, data protection, \nsecurity, AI, and other new and evolving areas are uncertain, it is possible that these laws, regulations, industry standards, contractual\nobligations or other actual or asserted obligations to which we are or may become subject may be interpreted and applied in a manner that\nis inconsistent with our existing or future data processing practices or features of our products and services. Our actual or alleged\nfailure to comply with applicable laws and regulations, or any other actual or asserted obligations relating to the collection, use, retention,\nprotection, disclosure, transfer, and other processing of personal data and customer data, could result in investigations, enforcement\nactions and other proceedings, significant penalties imposed or sought by a regulator or data subject, claims, demands, and litigation\nor other legal action or proceedings against us or our customers or suppliers, which could result in negative publicity, increased operating\ncosts, restrictions upon our practices and damages, financial penalties and other liabilities, all of which could have a material adverse\neffect on our business and results of operations.\n\n \n\nIssues relating to our use of artificial intelligence and machine\nlearning technologies, combined with an uncertain legal and regulatory environment, could materially and adversely affect our business,\nfinancial condition and results of operations.\n\n \n\nWe have incorporated and may continue to incorporate artificial\nintelligence and machine learning solutions and features into our products or services, and\notherwise within our business, and these solutions and features may become more important to our operations, including our product development,\nproduct demand, customer support and internal processes, or to our future growth over time. There can be no assurance that we will realize\nthe desired or anticipated benefits from artificial intelligence and machine learning technologies, or at all, and we may fail to properly\nimplement or market our artificial intelligence and machine learning solutions and features. Additionally, our artificial intelligence\nand machine learning solutions and features may expose us to additional claims, demands, and proceedings by private parties and regulatory\nauthorities and subject us to legal liability as well as brand and reputational harm. For example, if artificial intelligence models used\nin our products or services are incorrectly designed, the data used to train them is incomplete or inadequate, or we do not have sufficient\nrights to use data on which such models rely, the performance of our artificial intelligence and machine learning solutions and features,\nas well as our reputation, could suffer or we could incur liability through the violation of contractual or regulatory obligations. The\nlegal, regulatory, and policy environments around artificial intelligence and machine learning are evolving rapidly. For example, the\nEU Artificial Intelligence Act (the “AI Act”), which achieved approval by the European Council on February 2, 2024, and the\nEuropean Parliament on March 13, 2024, imposes obligations on providers and users of artificial intelligence technologies. The AI Act\nmay impact the development and adoption of our artificial intelligence and machine learning solutions in Europe. Additionally, several\nU.S. states have proposed, and in certain cases have enacted, legislation imposing obligations in connection with the development or use\nof, or otherwise regulating, artificial intelligence and machine learning technologies. Other countries also are contemplating laws regulating\nartificial intelligence and machine learning technologies. We may become subject to new legal and other obligations in connection with\nour use of artificial intelligence and machine learning, which could require us to make significant changes to our policies and practices,\nnecessitating expenditure of significant time, expense, and other resources.\n\n17\n\nRepaying and servicing our existing and future debt, including our outstanding Convertible\nNotes may require a significant amount of cash, and we may not have sufficient cash flow from our business to pay our indebtedness.\n\n \n\nOur ability to make scheduled payments of the principal of the\nConvertible Notes depends on our future performance, which is subject to economic, financial, competitive, and other factors beyond our\ncontrol. Our business may not generate cash flow from operations in the future sufficient to service our debt and make necessary capital\nexpenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets,\nrestructuring debt, or obtaining additional debt financing or equity capital on terms that may be onerous or highly dilutive. Our ability\nto refinance any future indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to\nengage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.\n\nIn addition, our indebtedness, combined with our other financial obligations and contractual commitments,\ncould have other important consequences. For example, it could:\n\n \n\n•\n\nmake us more vulnerable to adverse changes in general economic, industry, and competitive conditions and adverse changes in government\nregulation;\n\n \n\n•\n\nlimit our flexibility in planning for, or reacting to, changes in our business and our industry;\n\n \n\n•\n\nplace us at a disadvantage compared to our competitors who have less debt;\n\n \n\n•\n\nlimit our ability to borrow additional amounts to fund acquisitions, for working capital, and for other general corporate purposes;\nand\n\n \n\n•\n\nmake an acquisition of our company less attractive or more difficult.\n\nAny of these factors could harm our business, results of operations,\nand financial condition. In addition, if we incur additional indebtedness, the risks related to our business and our ability to service\nor repay our indebtedness would increase.\n\nOur Convertible Notes may impact our financial results, result in the dilution of existing\nshareholders and create downward pressure on the price of our ordinary shares.\n\n \n\nIn December 2025, we issued and sold $2.0 billion aggregate principal\namount of 0.00% Convertible Senior Notes due 2030 (the “Convertible Notes”), in a private offering to qualified institutional\nbuyers pursuant to Rule 144A under the Securities Act of 1933, as amended, all of which were outstanding as of December 31, 2025.\n\n \n\nOur Convertible Notes may affect our earnings per share figures,\nas accounting procedures may require that we include in our calculation of earnings per share the number of ordinary shares into which\nthe Convertible Notes are convertible. The Convertible Notes may be converted under the conditions specified in  the indenture governing\nthe Convertible Notes (the “Indenture”). Upon conversion, we will satisfy our conversion obligation by paying cash up to the\naggregate principal amount of the Convertible Notes being converted and by paying and/or delivering, as the case may be, ordinary shares\nor cash or a combination of cash and ordinary shares, at our election, in respect of the remainder, if any, of our conversion obligation\nin excess thereof. If our ordinary shares are issued to holders of the Convertible Notes upon conversion, it will cause dilution to our\nshareholders’ equity, and the market price of our ordinary shares may decrease due to the additional selling pressure in the market.\n\n \n\nWe may determine in the future to repurchase all or portions\nof the outstanding Convertible Notes from time to time in accordance with applicable Securities and Exchange Commission (“SEC”)\nand other legal requirements and in consideration of market and other conditions. Any repurchases or exchanges of our outstanding Convertible\nNotes are likely to affect the market price of our ordinary shares. We expect that holders of any Convertible Notes that are repurchased\nor exchanged may enter into or unwind various derivatives with respect to our ordinary shares and/or purchase or sell our ordinary shares\nin the market to hedge their exposure in connection with these transactions. In addition, in connection with any repurchases of the Convertible\nNotes, the counterparties to the Capped Call (as defined below) or their respective affiliates may modify their hedge positions with respect\nto the Capped Call by entering into or unwinding various derivatives with respect to our ordinary shares and/or purchasing or selling\nour ordinary shares or other securities of ours in secondary market transactions. This activity could impact the market price of our ordinary\nshares at that time.\n\n \n\n18\n\nOur ability to pay cash upon conversion or repurchase of the Convertible Notes may\nbe limited.\n\n \n\nIf the last reported sale price of our ordinary shares on the\ntrading day immediately preceding the business day immediately preceding December 15, 2028 is less than 110% of the conversion price,\nholders of the Convertible Notes have the right to require us to repurchase for cash all or any portion of their Convertible Notes on\nDecember 15, 2028 at a repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued\nand unpaid “special interest” (as defined in the Indenture) to, but excluding, the repurchase date. Additionally, holders\nof the Convertible Notes have the right, subject to and under the terms of the Indenture to require us to repurchase all or a portion\nof their Convertible Notes upon the occurrence of a “fundamental change” before the maturity date, at a repurchase price equal\nto 100% of the principal amount of such Convertible Notes to be repurchased, plus accrued and unpaid special interest, if any.\n\n \n\nOur ability to repurchase the Convertible Notes upon any required\nrepurchase event or to pay cash upon maturity or conversion of Convertible Notes may be limited by law, regulatory authority, or agreements\ngoverning our future indebtedness or cash liquidity constraints. In addition, we may not have enough available cash or be able to obtain\nfinancing at the time we are required to make repurchases of the Convertible Notes surrendered or Convertible Notes being converted. Our\nfailure to repurchase the Convertible Notes at a time when the repurchase is required by the Indenture or to pay cash upon maturity or\nconversion of such Convertible Notes as required by the Indenture would constitute a default under the Indenture. A default under the\nIndenture or the fundamental change itself within the meaning of the Indenture could also lead to a default under agreements governing\nour future indebtedness. If the payments of the related indebtedness were to be accelerated after any applicable notice or grace periods,\nwe may not have sufficient funds to repay the indebtedness and repurchase the Convertible Notes or to pay cash upon conversion of the\nConvertible Notes.\n\nOur capped call transactions may affect the value of our ordinary shares.\n\n \n\nIn connection with the pricing of the Convertible Notes, we entered\ninto privately-negotiated capped call transactions (“Capped Calls”) with certain financial institutions (the “option\ncounterparties”). The Capped Calls are expected generally to reduce the potential dilution to our ordinary shares upon any conversion\nof the Convertible Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted Convertible\nNotes, as the case may be, with such reduction and/or offset subject to a cap.\n\n \n\nThe option counterparties and/or their respective affiliates\nmay modify their hedge positions by entering into or unwinding various derivatives with respect to our ordinary shares and/or purchasing\nor selling our ordinary shares or other securities of ours in secondary market transactions prior to the maturity of the Convertible Notes\n(and are likely to do so following any conversion of the Convertible Notes, any repurchase of the Convertible Notes by us on any fundamental\nchange repurchase date, any redemption date or any other date on which the Convertible Notes are retired by us, in each case, if we exercise\nthe relevant election under the Capped Calls and in connection with any negotiated unwind or modification of the Capped Calls). This activity\ncould cause or avoid an increase or a decrease in the market price of our ordinary shares.\n\n \n\nThe potential effect, if any, of these transactions and activities\non the trading price of our ordinary shares will depend in part on market conditions. Any of these activities could adversely affect the\nmarket price of our ordinary shares.\n\nWe are subject to counterparty risk with respect to the capped call transactions.\n\n \n\nWe are subject to the risk that any of the option counterparties\nmay default under the Capped Calls. Our exposure to the credit risk of the option counterparties under the Capped Calls will not be secured\nby any collateral. Past global economic conditions, including recent increases in prevailing interest rates, have resulted in the actual\nor perceived failure or financial difficulties of many financial institutions. If an option counterparty becomes subject to insolvency\nproceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at that time under our transactions\nwith them. Our exposure will depend on many factors. Generally, the increase in our exposure will be correlated to the increase in the\nmarket price and in the volatility of our ordinary shares. In addition, upon a default by any counterparty to any capped call transactions,\nwe may suffer more dilution than we currently anticipate with respect to our ordinary shares. We can provide no assurances as to the financial\nstability or viability of the option counterparties.\n\n \n\nCompliance with new and changing corporate governance and public\ndisclosure requirements adds uncertainty to our compliance policies and increases our costs of compliance\n\n \n\nChanging laws, regulations and standards relating to accounting,\ncorporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection\nAct of 2010 (“Dodd-Frank”), new SEC regulations, amendments to the Israeli Companies Law and Nasdaq rules are creating increased\ncompliance costs and uncertainty for companies like ours. These new or changed laws, regulations and standards may lack specificity and\nare subject to varying interpretations. The implementation of these laws and their application in practice may evolve over time as new\nguidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and\nhigher costs of compliance as a result of ongoing revisions to such governance standards.\n\n19\n\n \n\nIn addition, continuing compliance with Section 404 of the\nSarbanes-Oxley Act of 2002 and the related regulations regarding our required assessment of our internal control over financial reporting\nrequires the commitment of significant financial and managerial resources and the report of an independent registered public accounting\nfirm on the Company’s internal control over financial reporting.\n\n \n\nIn connection with our Annual Report for fiscal 2025, our management\nassessed our internal control over financial reporting, and determined that our internal control over financial reporting was effective\nas of December 31, 2025, and our independent auditors have expressed an unqualified opinion over the effectiveness of our internal\ncontrol over financial reporting as of December 31, 2025. However, we will undertake management assessments of our internal control\nover financial reporting in connection with each annual report, and any deficiencies uncovered by these assessments or any inability of\nour auditors to issue an unqualified report could harm our reputation and the price of our ordinary shares.\n\n \n\nA small number of shareholders own a substantial portion of our\nordinary shares, and they may make decisions with which you or others may disagree\n\n \n\nAs of February 28, 2026, our directors and executive officers\nowned approximately 23.96% of the voting power of our outstanding ordinary shares, or 25.43% of our outstanding ordinary shares if\nthe percentage includes options currently exercisable or exercisable within 60 days of February 28, 2026 and RSUs and PSUs vesting within\n60 days of February 28, 2026. The interests of these shareholders may differ from your interests and present a conflict. If these shareholders\nact together, they could exercise significant influence over our operations and business strategy. For example, although these shareholders\nhold considerably less than a majority of our outstanding ordinary shares, they may have sufficient voting power to influence matters\nrequiring approval by our shareholders, including the election and removal of directors and the approval or rejection of mergers or other\nbusiness combination transactions. In addition, this concentration of ownership may delay, prevent or deter a change in control, or deprive\na shareholder of a possible premium for its ordinary shares as part of a sale of our company.\n\n \n\nOur cash balances and investment portfolio have been, and may\ncontinue to be, adversely affected by market conditions and interest rates\n\n \n\nWe maintain substantial balances of cash and liquid investments,\nfor purposes of general corporate purposes, which may include acquisitions, share repurchases and other purposes. Our cash, cash equivalents,\nshort-term bank deposits and fixed-income marketable securities valued total of $4,342 million as of December 31, 2025. The performance\nof the debt capital markets affects the market values of funds that are held in marketable securities. These assets are subject to price\nfluctuations, changes in interest rates and credit spreads, market liquidity and various other factors, including, without limitation,\nrating agency upgrades / downgrades that may impair some or all of their value, or unexpected changes in the financial markets’\nhealthiness worldwide.\n\n \n\nWe expect that market conditions will continue to fluctuate and\nthe fair value of our investments may be affected accordingly. Moreover, in case we would like to liquidate some of our investments into\ncash – we are dependent on market conditions and liquidity opportunities, which may be impacted by economic, social, or political\nconditions, including, without limitation, conditions resulting from a decline in the macroeconomic environment, rising interest rates,\nexchange rate fluctuations, inflation, global pandemics, global supply chain disruptions and conditions resulting from geopolitical uncertainty\nand instability or wars.\n\n \n\nFinancial income is an important component of our net income.\nThe outlook for our financial income is dependent on many factors, some of which are beyond our control, and they include the future direction\nof interest rates, foreign exchange rates, amount of any share repurchases, acquisitions that we may execute and the amount of cash flows\nfrom operations that are available for investment. We rely on third-party money managers to manage the majority of our investment portfolio\nin a risk-controlled framework and subject to our investment policy. Our investment portfolio is invested primarily in fixed-income securities\nand short-term bank deposits, and is affected primarily by changes in interest rates and credit spreads. Interest rates are highly sensitive\nto many factors, including governmental monetary policies and domestic and international economic and political conditions, such as the\nwars and significant military actions around the globe and any related political or economic responses and counter-responses or otherwise\nby various global actors or general effect on the global economy. Any significant decline in our financial income or the value of our\ninvestments due to changes in interest rates, interest rate expectations, credit spreads, deterioration in the credit rating of the securities\nin which we have invested, or general market conditions, could have an adverse effect on our results of operations and financial condition.\n\n \n\nWe generally buy and hold our fixed income securities, while\nlimiting credit risk by setting a maximum concentration limit per issuer as well as setting minimum credit rating requirement. Our fixed\nincome investment portfolio consists primarily of government bonds, securities issued by government agencies and corporate debentures.\nAlthough we believe that we generally adhere to conservative investment guidelines, a turmoil in the financial markets may result in impairments\nof the carrying value of our investment assets. We classify our investments in fixed maturity securities as available-for-sale. Changes\nin the fair value of investments classified as available-for-sale are not recognized as income during the period, but rather are recognized\nas a separate component of equity until realized. Realized losses in our investments portfolio may adversely affect our financial position\nand results. Had we reported the cumulative changes in the fair value of our fixed income securities as part of our income, our reported\nnet income for the year ended December 31, 2025, would have increased by $10 million.\n\n20\n\n \n\nCurrency fluctuations may affect the results of our operations\nor financial condition\n\n \n\nOur functional and reporting currency is the U.S. dollar. We\ngenerate a majority of our revenues and expenses in U.S. dollars. In 2025, we incurred approximately 42% of our expenses in foreign currencies,\nprimarily Israeli Shekels and Euros. As such, changes in exchange rates may have a material adverse effect on our business, results of\noperations and financial condition. The exchange rates between the U.S. dollar and certain foreign currencies have fluctuated substantially\nin recent years and may continue to fluctuate substantially in the future. We expect that a majority of our revenues will continue to\nbe generated in U.S. dollars for the foreseeable future and that a significant portion of our expenses, including payroll related costs,\nas well as capital and operating expenditures, will continue to be denominated in the currencies referred to above. The results of our\noperations may be adversely affected in relation to foreign exchange fluctuations. During 2025, we entered into forward contracts to hedge\nagainst some of the risk of foreign currency exchange rates fluctuations resulting in changes in future cash flow from payments of payroll\nand related expenses denominated in Israeli Shekels and Euros. As of December 31, 2025, our total outstanding forward contracts that\nhedge against these fluctuations in foreign currency exchange rates was $329 million.\n\n \n\nIn addition, we entered into forward contracts to hedge the impact\nof fluctuations in exchange rates on assets and liabilities denominated in Israeli Shekels and other currencies. As of December 31,\n2025, the total amount of outstanding forward contracts that did not qualify for hedge accounting, was $196 million. We may use derivative\nfinancial instruments, such as foreign exchange forward contracts, put and call options, and others, to mitigate the risk of fluctuations\nchanges in foreign exchange rates on assets, cash flows receivables and payables denominated in certain currencies. We may not be able\nto purchase derivative instruments adequate to fully protect us from foreign currency exchange risks.\n\n \n\nAdditionally, our hedging activities may also generate losses\nas a result of volatility in foreign currency markets. If foreign exchange markets continue to be volatile, such fluctuations in foreign\nexchange rates could materially and adversely affect our profit margins and results of operations in future periods. Also, the volatility\nin the foreign exchange markets may make it difficult to hedge our foreign currency exposures effectively.\n\n \n\nThe imposition of exchange or price controls or other restrictions\non the conversion of foreign currencies could also have a material adverse effect on our business, results of operations and financial\ncondition.\n\n \n\nChanges in foreign exchange rates around the globe, could have\nan adverse impact on our business and results of operations. These changes may have an impact on some of our expenses which are paid in\nlocal currencies (non-US dollar), as well as an impact on our non-US customers which have their financials in non-US dollar currencies.\n\n \n\nOur information technology systems, networks and products and\nservices have been, and may continue to be, subject to various security threats and cyber security incidents\n\n \n\nOur information technology systems, networks, products, and services\nhave in the past and may in the future be subject to various security threats or cyber security incidents, including from computer malware,\nmalicious code injection, ransomware, viruses, social engineering (including phishing attacks), denial of service or other attacks, human\nerror, technical errors, employee theft or misuse and general hacking. For example, we regularly face attempts by others to gain unauthorized\naccess, or to introduce malicious software to our information technology systems, and certain of these attempts have been successful.\nAdditionally, malicious hackers have attempted and in the future likely will attempt to gain unauthorized access to, or sabotage, take\ncontrol of or otherwise corrupt, our information technology systems, networks, processes, products and services. We are also a target\nof attempts to gain access to our network or data centers or those of our customers or end users, steal proprietary information related\nto our business, products, services, employees, and customers, or interrupt our information technology systems or networks or those of\nour customers or others. We may also be subject to increasing risks in connection with geopolitical events and conflicts, such as the\nwar that began on February 28, 2026 between Israel, the United Stated and Iran resulting in Iran launching thousands of ballistic missiles\nand drones against civilian targets in Israel and against U.S. military bases and other civilian targets in several countries in the Persian\nGulf, and Hezbollah, a terrorist organization based in Lebanon, launching hundreds of missiles and drones Israeli military sites and civilian\ntargets in Northern Israel, the Russia-Ukraine and the war and hostilities between Israel and Hezbollah, Hamas and Yemen, including risks\nof a security breach or incident, ransomware, destructive malware, and distributed denial-of-service attacks, as well as fraud, spam and\nfake accounts, cyber attacks or other threats or illegal activity. Additionally, with many of our employees continuing to work remotely,\nwe face an increased risk of attempted security breaches and incidents.\n\n21\n\nWe also have incorporated machine learning and other artificial\nintelligence technologies into aspects of our products, services, and business, and may continue to incorporate additional artificial\ntechnologies into our products and services and otherwise in our business and operations in the future. The use of artificial intelligence\ntechnologies may create additional cyber security risks or increase cyber security risks and may result in security breaches or other\ntypes of cyber security incidents. Further, artificial intelligence technologies may be used in connection with certain cyber security\nattacks, resulting in heightened risks of security breaches and incidents.\n\n \n\nThere also have been and may continue to be significant supply\nchain attacks (such as the attacks resulting from vulnerabilities in SolarWinds Orion and other widely-used software and technology infrastructure)\nand we cannot guarantee that our or our third-party providers’ systems have not been breached or compromised or that they do not\ncontain exploitable defects, vulnerabilities, or bugs that could result in a security breach or incident of or impacting, or other disruption\nto, our information technology systems, networks, products or services, or those of third parties that support us and our platform. We\nhave been impacted by security incidents of widely trusted third-party software and technology infrastructure, such as the SolarWinds\nOrion incident in December 2020. We have taken steps to protect our information technology systems, networks and products and services,\nbut our security measures or those of our customers or third-party service providers could be insufficient and breached or otherwise compromised\nor disrupted, including as a result of third-party action, employee, customer or user errors, technological limitations, defects or vulnerabilities,\nmalfeasance, fraud or malice on the part of employees or third parties, including state-sponsored organizations with significant financial\nand technological resources, or from failures in technological resources, failures to comply with policies or otherwise. We have been,\nand may in the future be, impacted by these threats and our internal controls and operations regarding security may not be effective in\neliminating the risk of compromise of our information technology systems or networks or our products or services.\n\n \n\nWhile we seek to prevent, detect and investigate unauthorized\nattempts, attacks and other threats against our information technology systems, network and products and services, no set of security\nsafeguards is infallible, and we remain at risk, including to additional known or unknown threats. We have experienced cyber security\nincidents of various kinds in the past and we may experience cyber security incidents in the future, and we cannot guarantee that any\nsuch incidents will not have a material adverse impact in the future. Any actual or perceived security breach or incident impacting us,\nour third-party service providers, or our customers or users, whether successful or unsuccessful, could result in reputational harm, governmental\ninquiries, investigations or other proceedings, penalties and significant costs, including those related to, for example, rebuilding internal\nsystems, reduced inventory value, providing modifications to our products and services, defending against litigation, responding to regulatory\ninquiries or actions, paying damages, or taking other remedial steps, all of which could damage our reputation and reduce demand for our\nproducts and services. Further, we may be required or otherwise find it appropriate to expend significant resources, adapt our business\nactivities and practices, or modify our operations or information technology in an effort to protect against security incidents and to\nmitigate, detect and remediate vulnerabilities, whether in connection with an actual or perceived security breach or incident or otherwise.\n\n \n\nWe cannot be certain that our insurance coverage will be adequate\nfor data security liabilities incurred and, that it will cover any indemnification claims against us relating to any incident, that insurance\nwill continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any\nfuture claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence\nof changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements,\ncould have a material adverse effect on our business, including our financial condition, operating results, and reputation.\n\nWe depend on our executive officers and other key employees, and\nthe loss of one or more of these employees or an inability to attract and retain other highly skilled employees could adversely affect\nour business, and we may not be able to successfully navigate the recent leadership changes while maintaining key aspects of our culture,\nwhich could have a significant negative effect on our existing business and our ability to pursue future plans\n\n \n\nOur success depends largely upon the continued services of our\nexecutive officers and other key employees. There have been changes in the past, and there may be changes in the future, to our executive\nmanagement team resulting from the hiring or departure of executives, which could disrupt our business. In December 2024, Nadav Zafrir\nbecame our new Chief Executive Officer and our founder and former Chief Executive Officer, Gil Shwed, transitioned into the role\nof Executive Chairman. In addition, in 2025 we announced the appointments of several senior management members.  The loss of one\nor more of our executive officers or other key employees could adversely affect our business. Changes in our executive management team\nmay also cause disruptions in, and adverse impacts to, our business.  We also may not be able to successfully navigate the recent\nleadership changes while maintaining key aspects of our culture, which could have a significant negative effect on our existing business\nand our ability to pursue future plans.\n\n22\n\n \n\n \n\nRisks Related to Our Operations in Israel\n\n \n\nThe ongoing war and other potential political, economic and military\ninstability in Israel, where our principal executive offices and our principal research and development facilities are located, may adversely\naffect our results of operations\n\n \n\nWe are incorporated under the laws of the State of Israel, and\nour principal executive offices and principal research and development facilities are located in Israel. Accordingly, political, economic\nand military conditions in and surrounding Israel may directly affect our business. Since the State of Israel was established in 1948,\na number of armed conflicts have occurred between Israel and its Arab neighbors. Terrorist attacks and hostilities within Israel; and\nthe war between Israel, the U.S. and Iran, and the ongoing hostilities between Israel and Hezbollah, Hamas and Yemen, have also heightened\nthese risks.\n\n \n\nIn October 2023, Hamas terrorists infiltrated Israel’s\nsouthern border from the Gaza Strip and conducted a series of attacks on civilian and military targets. Hamas also launched\nextensive rocket attacks on Israeli population and industrial centers located along Israel’s border with the Gaza Strip\nand in other areas within the State of Israel. These attacks resulted in extensive deaths, injuries and kidnapping of civilians and soldiers.\nFollowing the attack, Israel’s security cabinet declared war against Hamas and a military campaign against these terrorist organizations\ncommenced in parallel to their continued rocket and terror attacks. Following the attack by Hamas on Israel’s southern border, Hezbollah\nin Lebanon has also launched missile, rocket, and shooting attacks against Israeli military sites, troops, and Israeli towns in northern\nIsrael. In response to these attacks, Israel’s security cabinet declared war against the Hezbollah in southern Lebanon. The Houthi\nmovement, which controls parts of Yemen, launched missile, rocket, and shooting attacks against Israel and attacks on marine vessels traversing\nthe Red Sea, which marine vessels were thought to either be in route towards Israel or to be partly owned by Israeli businessmen. \nIt is possible that other terrorist organizations, including Palestinian military organizations in the West Bank, as well as other hostile\ncountries will join the hostilities.\n\n \n\nOn February 28, 2026, Israel and the United States launched a\njoint attack against Iran, targeting key officials and military commanders. Iran launched thousands of ballistic missiles and drones against\ncivilian targets in Israel and against U.S. military bases and other civilian targets in several countries in the Persian Gulf , and Hezbollah\nlaunched hundreds of missiles and drones from Lebanon against Israeli military sites and civilian targets in Northern Israel.\n\n \n\nThe intensity and duration of the current war between Israel,\nthe U.S. and Iran, and the ongoing hostilities between Israel and Hezbollah, Hamas and Yemen are difficult to predict, as are such hostilities’\neconomic implications on our business and operations and on Israel's economy in general. Our principal place of business is located in\nTel Aviv, Israel, and there can be no assurance that attacks launched will not reach our facilities, which could result in a significant\ndisruption of our business. Further, these events may be intertwined with wider macroeconomic indications of a deterioration of Israel’s\neconomic standing, that may involve an additional downgrade in Israel's credit rating by rating agencies, which may have an adverse effect\non the Company and our ability to effectively conduct our operations.\n\n \n\nAny war or hostilities involving Israel, a significant increase\nin terrorism or the interruption or curtailment of trade between Israel and its present trading partners, a potential boycott of any Israeli\nproducts, or a significant downturn in the economic or financial condition of Israel, could materially adversely affect our operations.\nOngoing and revived hostilities or other Israeli political or economic factors could materially adversely affect our business, results\nof operations and financial condition. In addition, there have been increased efforts by activists to cause companies and consumers to\nboycott Israeli goods based on Israeli government policies. Such actions, particularly if they become more widespread, may adversely impact\nour ability to sell our products.\n\n \n\nOur commercial insurance does not cover losses that may occur\nas a result of events associated with war and terrorism. Although the Israeli government currently covers the reinstatement value of direct\ndamages that are caused by terrorist attacks or acts of war, we cannot be certain that such government coverage will be maintained or\nthat it will sufficiently cover our potential damages.\n\n \n\nUprisings and armed conflicts in various countries in the Middle\nEast and North Africa are affecting the political stability of those countries. This instability may lead to deterioration of the political\nand trade relationships that exist between Israel and these countries. In addition, this instability may affect the global economy and\nmarketplace, including as a result of changes in oil and gas prices.\n\n \n\nBeginning in 2023, governmental attempts to pursue a reform in\nIsrael’s judicial system have prompted significant political tension in Israel. This controversy has prompted protests in Israel\nand triggered a considerable political debate. The proposed legislation has not become effective and its scope has not been fully determined.\nAt this stage we cannot assess the potential business impact of these developments and their likely effect on our business, results of\noperation, and financial condition , but we continue to monitor the evolving government tensions.\n\n23\n\n \n\nOur operations may be disrupted by the obligations of our personnel\nto perform military service\n\n \n\nMany of our employees in Israel are obligated to perform annual\nmilitary reserve duty in the Israel Defense Forces, in the event of a military conflict, could be called to active duty. Our operations\ncould be disrupted by the absence of a significant number of our employees related to military service or the absence for extended periods\nof military service of one or more of our key employees. Military service requirements for our employees could materially adversely affect\nour business, results of operations and financial condition.\n\n \n\nWe are subject to risks in connection with the development of\nour new campus in Tel Aviv, Israel\n\n \n\nIn June 2025, our joint bid with Israel Canada (T.R.) Ltd. for\nthe long-term prepaid lease of a land lot in Tel Aviv, Israel was approved as the winning bid. Our portion of the aggregate purchase price\npayable pursuant to the joint bid was NIS 500 million plus Israeli VAT (total net payment including unrecoverable taxes of approximately\n$160 million).\n\n \n\nWe intend to develop the commercial portion of the land lot,\na piece of land within walking distance from the Company’s current headquarters in Tel Aviv and connected by a park, to address\nour expansion plans for the coming years. We expect the construction of the new campus to be completed by 2032.\n\n \n\nThe successful and timely completion of the new campus project\nis subject to numerous risks, many of which are beyond our control. These risks include construction delays, cost overruns and permitting\nand regulatory challenges. Any of these factors could increase the total cost of the project above our current expectations and delay\nthe timing of its completion.\n\n \n\nIn addition, the design and construction of a large-scale campus\nis inherently complex and may require us to make assumptions regarding future workforce size, space utilization, hybrid work environment,\nand operational needs. If these assumptions prove to be inaccurate, we may incur inefficiencies in the use of the campus, including underutilized\nor excess space. For example, changes in our business, including shifts toward remote or hybrid work arrangements, workforce reductions,\nor slower-than-expected growth, could result in a significant portion of the campus being unused or not fully utilized upon completion.\n\n \n\nThe location of our new campus in Tel Aviv, Israel, is also subject\nto risks associated with the ongoing hostilities in the Middle East, and there can be no assurance that attacks launched will not reach\nour new campus or delay the construction and buildout of our campus.\n\n \n\n The tax benefits available to us require us to meet several\nconditions, and may be terminated or reduced in the future, which would increase our taxes\n\n \n\nFor the year ended December 31, 2025, our effective tax\nrate was (12%). Our income tax benefit was primarily related to the settlement with the ITA and the adjustment of Israeli tax expenses\ndue to the application of the lower statutory tax rate. We have benefited or currently benefit from a variety of government programs and\ntax benefits that generally carry conditions that we must meet in order to be eligible to obtain any benefit.\n\n \n\nOur income tax  and the effective\ntax rate reflected in our financial statements increased beginning 2026  as a result of the recently enacted new corporate\nminimum tax law of 15% in Israel and other changes in the tax laws of the countries in which we operate or changes in the mix of countries\nwhere we generate profit.\n\n \n\nIf we fail to meet the conditions upon which certain favorable\ntax treatment is based, we would not be able to claim future tax benefits and could be required to refund tax benefits already received.\n\n \n\nAny of the following could have a material effect on our overall\neffective tax rate:\n\n \n\n•\n\nSome programs may be discontinued,\n\n \n\n•\n\nWe may be unable to meet the requirements for continuing to qualify for some programs,\n\n \n\n•\n\nThese programs and tax benefits may be unavailable at their current levels, or\n\n \n\n•\n\nWe may be required to refund previously recognized tax benefits if we are found to be in violation of the stipulated conditions.\n\n \n\nAdditional details are provided in “Item 5 – Operating\nand Financial Review and Prospects” under the caption “Taxes on income”, in “Item 10 – Additional Information”\nunder the caption “Israeli taxation, foreign exchange regulation and investment programs” and in Note 12 to our Consolidated\nFinancial Statements.\n\n24\n\n \n\nShareholder rights and responsibilities are, and will continue\nto be, governed by Israeli law which differs in some material respects from the rights and responsibilities of shareholders of U.S. companies\n\n \n\nThe rights and responsibilities of the holders of our ordinary\nshares are governed by our articles of association and by Israeli law. These rights and responsibilities differ in some material respects\nfrom the rights and responsibilities of shareholders in U.S.- based corporations. In particular, a shareholder of an Israeli company has\na duty to act in good faith and in a customary manner in exercising its rights and performing its obligations towards the company and\nother shareholders, and to refrain from abusing its power in the company, including, among other things, in voting at a general meeting\nof shareholders on matters such as amendments to a company’s articles of association, increases in a company’s authorized\nshare capital, mergers and acquisitions and related party transactions requiring shareholder approval. In addition, a shareholder who\nis aware that it possesses the power to determine the outcome of a shareholder vote or to appoint or prevent the appointment of a director\nor executive officer in the company has a duty of fairness toward the company. There is limited case law available to assist in understanding\nthe nature of this duty or the implications of these provisions. These provisions may be interpreted to impose additional obligations\nand liabilities on holders of our ordinary shares that are not typically imposed on shareholders of U.S. corporations.\n\n \n\nProvisions of Israeli law and our articles of association may\ndelay, prevent or make difficult an acquisition of us, prevent a change of control, and negatively impact our share price\n\n \n\nIsraeli corporate law regulates acquisitions of shares through\ntender offers and mergers, requires special approvals for transactions involving directors, officers or significant shareholders, and\nregulates other matters that may be relevant to these types of transactions. Furthermore, Israeli tax considerations may make potential\nacquisition transactions unappealing to us or to some of our shareholders. For example, Israeli tax law may subject a shareholder who\nexchanges his or her ordinary shares for shares in a foreign corporation, to taxation before disposition of the investment in the foreign\ncorporation. These provisions of Israeli law may delay, prevent or make difficult an acquisition of our company, which could prevent a\nchange of control and, therefore, depress the price of our shares.\n\n \n\nIn addition, our articles of association contain certain provisions\nthat may make it more difficult to acquire us, such as the provision which provides that our board of directors may issue preferred shares.\nThese provisions may have the effect of delaying or deterring a change in control of us, thereby limiting the opportunity for shareholders\nto receive a premium for their shares and possibly affecting the price that some investors are willing to pay for our securities.\n\n \n\nAs a foreign private issuer we are not subject to the provisions\nof Regulation FD or U.S. proxy rules and are exempt from filing certain Exchange Act reports\n\n \n\nAs a foreign private issuer, we are exempt from a number of requirements\nunder U.S. securities laws that apply to public companies that are not foreign private issuers. In particular, we are exempt from the\nrules and regulations under the Exchange Act related to the furnishing and content of proxy statements. In addition, we are not required\nunder the Exchange Act to file annual and current reports and financial statements with the SEC as frequently or as promptly as U.S. domestic\ncompanies whose securities are registered under the Exchange Act and we are generally exempt from filing quarterly reports with the SEC\nunder the Exchange Act. We are also exempt from the provisions of Regulation FD, which prohibits issuers from making selective disclosure\nof material nonpublic information to, among others, broker-dealers and holders of a company’s securities when it is reasonably foreseeable\nthat the holder will trade in the company’s securities on the basis of the information. For so long as we qualify as a foreign private\nissuer, we are not required to comply with the proxy rules applicable to U.S. domestic companies, although pursuant to the Companies Law,\nwe disclose the annual compensation of our five most highly compensated office holders (as defined under the Israeli Companies Law) on\nan individual basis, including in this Annual Report.\n\n \n\nAs a foreign private issuer whose shares are listed on the Nasdaq\nGlobal Select Market, we may follow certain home country corporate governance practices instead of certain Nasdaq requirements\n\n \n\nAs a foreign private issuer whose shares are listed on Nasdaq,\nwe are permitted to follow certain home country corporate governance practices instead of certain requirements of the Nasdaq Stock Market\nRules. For example, we follow our home country law, instead of the Nasdaq Stock Market Rules, which require that we obtain shareholder\napproval for the establishment or amendment of certain equity-based compensation plans and arrangements. Under Israeli law and practice,\nin general, the approval of the board of directors is required for the establishment or amendment of equity-based compensation plans and\narrangements, unless the arrangement is for the benefit of a director or a controlling shareholder, in which case compensation committee\nor audit committee and shareholder approval are also required. A foreign private issuer that elects to follow a home country practice\ninstead of Nasdaq requirements must submit to Nasdaq in advance a written statement from an independent counsel in such issuer’s\nhome country certifying that the issuer’s practices are not prohibited by the home country’s laws. In addition, a foreign\nprivate issuer must disclose in its annual reports filed with the SEC each such requirement that it does not follow and describe the home\ncountry practice followed by the issuer instead of any such requirement. Accordingly, our shareholders may not be afforded the same protection\nas provided under Nasdaq’s corporate governance rules.\n\n25"}