{"url_path":"/sec/chkp/10-k/2026/item-5","section_key":"item-5","section_title":"Item 5 OPERATING AND","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":3721,"has_tables":true,"body_markdown":"ITEM 5.       OPERATING AND\nFINANCIAL REVIEW AND PROSPECTS\n\n \n\nFor discussion related to our financial condition, changes in\nfinancial condition, and the results of operations for 2024 compared to 2023, refer to Part I, Item 5. Operating and Financial Review\nand Prospects, in our Annual Report on Form 20-F for the fiscal year ended December 31, 2024, which was filed with the U.S. Securities\nand Exchange Commission on March 17, 2025 and which is hereby incorporated by reference.\n\n \n\nThe following discussion and analysis is based on our consolidated\nfinancial statements including the related notes, and should be read in conjunction with them. Our consolidated financial statements are\nprovided in “Item 18 – Financial Statements”.\n\n \n\nOverview\n\n \n\nWe develop, market and support a wide range of products and services\nfor IT security by offering a multilevel security architecture that defends enterprises’ cloud, network, mobile devices, Endpoints\ninformation and IOT solutions. Our solutions operate under a unified security architecture, Infinity, that enables end-to-end security\nwith a single line of unified security gateways and allow a single agent for all endpoint security that can be managed from a single unified\nmanagement console. This unified management allows for ease of deployment and centralized control and is supported by, and reinforced\nwith, real-time threat intelligence and autonomous security updates. Our products and services are sold to enterprises, service providers,\nsmall and medium sized businesses and consumers. Our open platform framework allows customers to extend the capabilities of our products\nand services with third-party hardware and security software applications. Our products are sold, integrated and serviced by a network\nof channel partners worldwide.\n\n \n\nOur business is subject to the effects of general global economic\nconditions and, in particular, market conditions in the IT, internet security and data security industries. If general economic and industry\nconditions deteriorate, demand for our products could be adversely affected.\n\n \n\nInformation concerning the effect of governmental regulation\non our business is provided in “Item 5 – Operating and Financial Review and Prospects” under the caption “Taxes\non income” and in “Item 10 – Additional Information” under the caption “Israeli taxation, foreign exchange\nregulation and investment programs”.\n\n36\n\n \n\n \n\nWe derive our sales primarily through indirect channels. During\neach of 2025, 2024 and 2023, we derived approximately 57%, 56%, and 56%, respectively, of our sales from our ten largest channel partners.\nIn 2025, 2024 and 2023, our three largest distributors accounted for approximately 39%, 39% and 40% respectively, of our sales. The following\ntable presents the percentage of total consolidated revenues that we derive from sales in each of the regions shown:\n\n \n\n \n\nYear Ended December 31,\n\n \n\n \n\n \n\n2025\n\n \n \n\n2024\n\n \n \n\n2023\n\n \n\nRegion:\n\n \n \n \n \n \n \n \n \n \n\nAmericas, principally U.S.\n\n \n \n\n42\n\n%\n\n \n \n\n42\n\n%\n\n \n \n\n43\n\n%\n\nEurope, Middle East and Africa\n\n \n \n\n46\n\n%\n\n \n \n\n47\n\n%\n\n \n \n\n46\n\n%\n\nAsia-Pacific\n\n \n \n\n12\n\n%\n\n \n \n\n11\n\n%\n\n \n \n\n11\n\n%\n\n \n\nFor information on the impact of foreign currency fluctuations,\nplease refer to “Item 11 – Quantitative and Qualitative Disclosures about Market Risk – Foreign Currency Risk”.\n\n \n\nCritical Accounting Policies and Estimates\n\n \n\nOur consolidated financial statements are prepared in accordance\nwith U.S. GAAP. These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates,\njudgments and assumptions that we make are reasonable based upon information available to us at the time that these estimates, judgments\nand assumptions were made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of\nthe date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. To the extent\nthere are material differences between these estimates, judgments or assumptions and actual results, our consolidated financial statements\nwill be affected. The accounting policies that reflect our more significant estimates, judgments and assumptions and which we believe\nare the most critical to aid in fully understanding and evaluating our reported financial results, include the following:\n\n \n\n•\n\nRevenue recognition;\n\n \n\n•\n\nAccounting for income taxes; and\n\n \n\n•\n\nBusiness combination.\n\nIn many cases, the accounting treatment of a particular transaction\nis specifically dictated by U.S. GAAP and does not require management’s judgment in its application. There are also areas in which\nmanagement’s judgment in selecting among available alternatives would not produce a materially different result. Our senior management\nhas reviewed these critical accounting policies and related disclosures with the audit committee of our board of directors. You can see\na summary of our significant accounting policies in Note 2 to our consolidated financial statements, as set forth in Item 18.\n\n \n\nRevenue recognition\n\n \n\nWe derive our revenues mainly from sales of products and licenses,\nsecurity subscriptions and software updates and maintenance. Our products are generally integrated with software that is essential to\nthe functionality of the product. We sell our products primarily through channel partners including distributors, resellers, Original\nEquipment Manufacturers (“OEMs”), system integrators and Managed Security Service Providers (“MSSPs”), all of\nwhom are considered end users.\n\n \n\nSecurity subscriptions provide customers with access to its\nsuite of security solutions and is sold as a service.\n\n \n\nSoftware updates and maintenance provide customers with rights\nto unspecified software product upgrades released during the term of the agreement and include maintenance services to end-user customers,\nthrough primarily telephone access to technical support personnel as well as hardware support services.\n\n \n\nWe recognize revenues under the core principle that transfer\nof control to our customers should be depicted in an amount reflecting the consideration we expect to receive in revenue. Therefore, we\nidentify a contract with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the\ntransaction price to each performance obligation in the contract and recognize revenues when (or as) we satisfy a performance obligation.\n\n37\n\n \n\nWe recognize revenues from sales of products and licenses, under\nTopic 606, upon shipment when control of the promised goods is transferred to the customer, or upon electronic transfer of the Certificate\nKey to the customer.\n\n \n\nWe recognize revenues from security subscriptions and software\nupdates and maintenance ratably over the term of the agreement due to the continuous transfer of control to the customer over the period\nand upon the transfer of services to the customers.\n\n \n\nOur arrangements typically contain multiple deliverables, such\nas products and licenses, security subscriptions and software updates and maintenance, which are generally capable of being distinct and\naccounted for as separate performance obligations. We evaluated the criteria to be distinct under Topic 606, and concluded that the products\nand the licenses were distinct and distinct in the context of the contract from the security subscription and the software updates and\nmaintenance, as the customer can benefit from the products and licenses without the services and the services are separately identifiable\nwithin the arrangement. We allocate the transaction price to each performance obligation based on relative standalone selling price basis,\nby using the prices charged for a performance obligation when sold separately.\n\n \n\nDeferred revenues represent mainly the unrecognized revenue billed\nfor security subscriptions and for software updates and maintenance. Such revenues are recognized ratably over the term of the related\nagreement.\n\n \n\nWe recognize revenues net of estimated amounts that may be refunded\nfor sales returns, rebates, stock rotations and other rights provided to customers on product and service related sales subject to varying\nlimitations. We estimate and record these reductions based on our historical sales returns experience, analysis of credit memo data, rebate\nplans, stock rotation and other known factors. In each accounting period, we use judgments and estimates to determine potential future\nsales credits, returns and stock rotation, related to current period revenue. These estimates affect our “revenue” line item\non our consolidated statements of income and affect our “deferred revenues” and “accrued expenses and other liabilities”\non our consolidated balance sheets.\n\nAccounting for income tax    \n\n \n\nWe are subject to income taxes in Israel, the United States and\nnumerous foreign jurisdictions. Significant judgment is required in evaluating our uncertain tax positions and determining our taxes.\nAlthough we believe our reserves are reasonable, no assurance can be given that the final tax outcome of these matters will not be different\nfrom that which is reflected in our historical income tax provisions and accruals. We adjust these reserves in light of changing facts\nand circumstances, such as the closing of a tax audit or the refinement of an estimate, or upon lapse of statute of limitations. To the\nextent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision\nfor income taxes in the period in which such determination is made.\n\n \n\nBusiness combination\n\n \n\nWe apply the provisions of ASC 805, Business Combinations and\nallocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed or incurred, and intangible assets\nacquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable\nassets and liabilities is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed or incurred,\nmanagement makes significant estimates and assumptions, especially with respect to intangible assets.\n\n \n\nSignificant estimates in valuing certain intangible assets include,\nbut are not limited to, future expected cash flows from acquired technology, and customer relationships from a market participant perspective,\nuseful lives and discount rates.\n\n \n\nWe also apply the provisions of ASU 2021-08, Business Combinations\n(Topic 805)(“ASU 2021-08”) which requires that we recognize and measure contract assets and contract liabilities acquired\nin a business combination in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”) and that\nat the acquisition date, we account for related revenue contracts in accordance with ASC 606 as if we had originated the contracts.\n\n \n\nManagement’s estimates of fair value are based upon assumptions\nbelieved to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.\n\n38\n\nResults of Operations\n\n \n\nThe following table presents information concerning our results\nof operations in 2025 and 2024:\n\n \n\n \n\n \n\nYear Ended December 31,\n\n \n\n \n\n \n\n2025\n\n \n \n\n2024\n\n \n\n \n\n \n\n(in millions)\n\n \n\nRevenues:\n\n \n \n \n \n \n \n\nProducts and licenses\n\n \n\n$\n\n548.2\n\n \n \n\n$\n\n507.9\n\n \n\nSecurity subscriptions\n\n \n \n\n1,219.0\n\n \n \n \n\n1,104.2\n\n \n\nSoftware updates and maintenance\n\n \n \n\n958.2\n\n \n \n \n\n952.9\n\n \n\n \n\n \n \n \n \n \n \n \n \n\nTotal revenues\n\n \n \n\n2,725.4\n\n \n \n \n\n2,565.0\n\n \n\n \n\n \n \n \n \n \n \n \n \n\nOperating expenses (*):\n\n \n \n \n \n \n \n \n \n\nCost of products and licenses\n\n \n \n\n105.8\n\n \n \n \n\n97.8\n\n \n\nCost of security subscriptions\n\n \n \n\n90.9\n\n \n \n \n\n72.6\n\n \n\nCost of software updates and maintenance\n\n \n \n\n132.6\n\n \n \n \n\n123.9\n\n \n\nAmortization of technology\n\n \n \n\n32.5\n\n \n \n \n\n25.0\n\n \n\n \n\n \n \n \n \n \n \n \n \n\nTotal cost of revenues\n\n \n \n\n361.8\n\n \n \n \n\n319.3\n\n \n\n \n\n \n \n \n \n \n \n \n \n\nResearch and development\n\n \n \n\n456.7\n\n \n \n \n\n394.9\n\n \n\nSelling and marketing\n\n \n \n\n947.0\n\n \n \n \n\n862.9\n\n \n\nGeneral and administrative\n\n \n \n\n128.8\n\n \n \n \n\n111.9\n\n \n\n \n\n \n \n \n \n \n \n \n \n\nTotal operating expenses\n\n \n \n\n1,894.3\n\n \n \n \n\n1,689.0\n\n \n\n \n\n \n \n \n \n \n \n \n \n\nOperating income\n\n \n \n\n831.1\n\n \n \n \n\n876.0\n\n \n\nFinancial income, net\n\n \n \n\n114.0\n\n \n \n \n\n96.1\n\n \n\n \n\n \n \n \n \n \n \n \n \n\nIncome before taxes on income (tax benefit)\n\n \n \n\n945.1\n\n \n \n \n\n972.1\n\n \n\nTaxes on income (tax benefit)\n\n \n \n\n(111.8\n\n)\n\n \n \n\n126.4\n\n \n\n \n\n \n \n \n \n \n \n \n \n\nNet income\n\n \n\n$\n\n1,056.9\n\n \n \n\n$\n\n845.7\n\n \n\n \n\n39\n\n(*)\n\nIncluding pre-tax charges for stock-based compensation, amortization of intangible assets and acquisition related expenses in the\nfollowing items:\n\n \n\n \n\n \n\nYear Ended December 31,\n\n \n\n \n\n \n\n2025\n\n \n \n\n2024\n\n \n\n \n\n \n\n(in millions)\n\n \n\nAmortization of intangible assets and acquisition related expenses\n\n \n \n \n \n \n \n\nAmortization of technology\n\n \n\n$\n\n32.5\n\n \n \n\n$\n\n25.0\n\n \n\nResearch and development\n\n \n \n\n4.6\n\n \n \n \n\n6.5\n\n \n\nSelling and marketing\n\n \n \n\n40.1\n\n \n \n \n\n40.3\n\n \n\n \n\n \n \n \n \n \n \n \n \n\nTotal amortization of intangible assets and acquisition related\nexpenses\n\n \n\n$\n\n77.2\n\n \n \n\n$\n\n71.8\n\n \n\n \n\n \n \n \n \n \n \n \n \n\nStock-based compensation\n\n \n \n \n \n \n \n \n \n\nCost of products and licenses\n\n \n\n$\n\n0.6\n\n \n \n\n$\n\n0.4\n\n \n\nCost of software updates and maintenance\n\n \n \n\n13.5\n\n \n \n \n\n8.2\n\n \n\nResearch and development\n\n \n \n\n76.3\n\n \n \n \n\n53.1\n\n \n\nSelling and marketing\n\n \n \n\n79.8\n\n \n \n \n\n58.2\n\n \n\nGeneral and administrative\n\n \n \n\n35.4\n\n \n \n \n\n29.8\n\n \n\n \n\n \n \n \n \n \n \n \n \n\nTotal stock-based compensation\n\n \n\n$\n\n205.6\n\n \n \n\n$\n\n149.7\n\n \n\n \n\nThe following table presents information concerning our results of operations as a\npercentage of revenues for the periods indicated:\n\n \n\n \n\n \n\nYear Ended December 31,\n\n \n\n \n\n \n\n2025\n\n \n \n\n2024\n\n \n\nRevenues:\n\n \n \n \n \n \n \n\nProducts and licenses\n\n \n \n\n20\n\n%\n\n \n \n\n20\n\n%\n\nSecurity subscriptions\n\n \n \n\n45\n\n \n \n \n\n43\n\n \n\nSoftware updates and maintenance\n\n \n \n\n35\n\n \n \n \n\n37\n\n \n\n \n\n \n \n \n \n \n \n \n \n\nTotal revenues\n\n \n \n\n100\n\n%\n\n \n \n\n100\n\n%\n\n \n\n \n \n \n \n \n \n \n \n\nOperating expenses:\n\n \n \n \n \n \n \n \n \n\nCost of products and licenses\n\n \n \n\n4\n\n \n \n \n\n4\n\n \n\nCost of security subscriptions\n\n \n \n\n3\n\n \n \n \n\n3\n\n \n\nCost of software updates and maintenance\n\n \n \n\n5\n\n \n \n \n\n5\n\n \n\nAmortization of technology\n\n \n \n\n1\n\n \n \n \n\n1\n\n \n\nTotal cost of revenues\n\n \n \n\n13\n\n \n \n \n\n13\n\n \n\nResearch and development\n\n \n \n\n17\n\n \n \n \n\n15\n\n \n\nSelling and marketing\n\n \n \n\n35\n\n \n \n \n\n34\n\n \n\nGeneral and administrative\n\n \n \n\n5\n\n \n \n \n\n4\n\n \n\n \n\n \n \n \n \n \n \n \n \n\nTotal operating expenses\n\n \n \n\n70\n\n \n \n \n\n66\n\n \n\n \n\n \n \n \n \n \n \n \n \n\nOperating income\n\n \n \n\n30\n\n \n \n \n\n34\n\n \n\nFinancial income, net\n\n \n \n\n5\n\n \n \n \n\n4\n\n \n\n \n\n \n \n \n \n \n \n \n \n\nIncome before taxes on income (tax benefit)\n\n \n \n\n35\n\n \n \n \n\n38\n\n \n\nTaxes on income (tax benefit)\n\n \n \n\n(4\n\n)\n\n \n \n\n5\n\n \n\n \n\n \n \n \n \n \n \n \n \n\nNet income\n\n \n \n\n39\n\n%\n\n \n \n\n33\n\n%\n\n \n\n40\n\nRevenues\n\n \n\nWe derive our revenues mainly from the sale of products and licenses,\nsecurity subscriptions and software updates and maintenance. Our revenues were $2,725 million in 2025 and $2,565 million in\n2024.\n\n \n\nTotal revenues in 2025 increased by 6% compared to 2024. Product\nand license revenues were $548 million in 2025 and $508 million in 2024. We continued to deliver increasingly more of our latest\nsecurity offerings as subscriptions resulting in increased sales of our security subscription packages, including considerable demand\nfor our emerging products portfolio and across all 3 pillars: Hybrid Mesh, Workspace and CTEM . As a result, security subscription revenues\nincreased by $115 million, or 10%, from $1,104 million in 2024 to $1,219 million in 2025. Software updates and maintenance\nrevenues increased by $5 million, or 1%, from $953 million in 2024 to $958 million in 2025, primarily as a result of renewals\nof existing and sales of new maintenance contracts and professional services.\n\n \n\nCost of Revenues\n\n \n\nTotal cost of revenues was $362 million in 2025 and $319 million\nin 2024. Cost of revenues includes cost of product and licenses, cost of security subscriptions and cost of software updates and maintenance\nand amortization of technology. Our cost of products and licenses includes mainly cost of software and hardware production, packaging\nand shipping. Our cost of security subscriptions is comprised of costs paid to third parties, hosting and infrastructure costs and cost\nof customer support related to these services. Our cost of software updates and maintenance include mainly the cost of post-sale customer\nsupport.\n\n \n\nCost of products and licenses was $106 million in 2025 and\n$98 million in 2024.\n\n \n\nCost of security subscriptions was $91 million in 2025 and\n$73 million in 2024.\n\n \n\nCost of software updates and maintenance was $133 million\nin 2025 and $124 million in 2024.\n\n \n\nIn 2025, amortization of technology was $33 million compared\nto $25 million in 2024. The increase in 2025 is attributed to the acquisitions made during 2025 and 2024.\n\n \n\n \n\nResearch and Development\n\n \n\nResearch and development expenses were $457 million in 2025\nand $395 million in 2024, and represented 17% of revenues in 2025 and 15% of revenues in 2024. Research and development expenses\nconsist primarily of salaries and other related expenses for personnel as well as the cost of our cloud infrastructure expenses.\n\n \n\nThe $62 million increase in 2025 is primarily a result of an\nincrease in compensation and related expenses for personnel , cloud infrastructure expenses and a $7 million expense related to currency\nexchange and hedging.\n\n \n\nThe majority of our personnel engaged in research and development\nare located in Israel, where compensation-related expenses are paid in Israeli Shekels, while our research and development expenses are\nreported in U.S. dollars. Therefore, changes to the exchange rate between the Israeli Shekel and the U.S. dollar have affected and may\nin the future affect our research and development expenses. We have forward contracts to hedge against a certain portion of the exposure\nmentioned above.\n\n \n\nSelling and Marketing\n\n \n\nSelling and marketing expenses consist primarily of salaries,\ncommissions, advertising, trade shows, seminars, public relations, co-op activities with partners, travel and other related expenses.\nSelling and marketing expenses were $947 million in 2025 and $863 million in 2024, which represented 35% of revenues in 2025\nand 34% of revenues in 2024.\n\n \n\nThe net increase of $84  million in selling and marketing\ncosts in 2025 primarily stems from significant investments in partners and marketing programs.\n\n \n\nOur selling and marketing expenses worldwide are paid in local\ncurrencies and are reported in U.S. dollars. Therefore, changes to the exchange rates between the local currencies and the U.S. dollar\nhave affected, and may in the future affect, our expense level.\n\n \n\nGeneral and Administrative\n\n \n\nGeneral and administrative expenses consist primarily of salaries\nand other related expenses for personnel, professional fees, insurance costs, legal and other expenses. General and administrative expenses\nwere $129 million in 2025 and $112 million in 2024 , which represented 5% of revenues in 2025 and 4% of revenues in 2024.\n\n \n\nOperating Income Margin\n\n \n\nIn 2025, our operating margin was 30% compared to 34% in 2024.\nThe decrease in our operating margin was primarily due to an increase in our workforce related expenses, cloud expenses, stock-based compensation\nexpenses and amortization of intangibles expenses in related to our acquisitions.\n\n \n\nWe may experience future fluctuations or declines in operating\nmargins from historical levels due to several factors, as described above in “Item 3 – Key Information” under the caption\n“Risk Factors – Risks Related to Our Business and Our Market”.\n\n \n\nFinancial Income, Net\n\n \n\nNet financial income consists primarily of interest earned on\ncash equivalents, short-term deposits and marketable securities. Net financial income was $114 million in 2025 and $96 million\nin 2024. As we generally hold debt securities until maturity, our current portfolio’s yield is derived primarily from interest rates\nand the yield on securities at time of purchase. Since most of our investments are U.S. dollars denominated securities, our net financial\nincome is heavily dependent on prevailing U.S. interest rates changes and the market expectations to such changes. The higher financial\nincome is mainly due to higher reinvestment yield in our investment portfolios in 2025, as well as additional interest income on operational\ncash. Additionally, in December, 2025, we completed a $2,000 million Convertible Senior Note issuance, while the net cash received during\nthe last month of the year contributed additional interest income. For further risk related to our portfolio see also Item 3, “Risk\nFactors – Risks Related to Our Business and Our Market – Our cash balances and investment portfolio have been, and may continue\nto be, adversely affected by market conditions and interest rates”.\n\n41\n\n \n\nTaxes on Income (tax benefit)\n\n \n\nTotal taxes on income (tax benefit) were $(112) million\nin 2025 and $126 million in 2024. Our effective tax rate was (12)% in 2025 and 13% in 2024. See Note 12 to our consolidated financial\nstatements for further information on our statutory rates.\n\n \n\nAdditional details are provided in “Item 10 – Additional\nInformation” under the caption “Israeli taxation, foreign exchange regulation and investment programs” and “Item\n3 – Key Information” under the caption “The tax benefits available to us require us to meet several conditions, and\nmay be terminated or reduced in the future, which would increase our taxes”.\n\n \n\nNet Income\n\n \n\nNet income increased by $211 million to $1,057 million in 2025\ncompared to $846 million in 2024.\n\n \n\n \n\nLiquidity and Capital Resources\n\n \n\nDuring 2025 and 2024, we financed our operations through cash\ngenerated from operations. Our total cash and cash equivalents, short-term investments and long-term interest bearing investments, were\n$4,342 million as of December 31, 2025 and $2,784 million as of December 31, 2024. Our cash and cash equivalents and\nshort-term investments were $3,015 million as of December 31, 2025 and $1,372 million as of December 31, 2024. Our\nlong-term interest bearing investments were $1,327 million as of December 31, 2025 and $1,412 million as of December 31,2024.\nThe majority of our financial assets are held and managed through the parent company in Israel and our subsidiaries in Canada and the\nU.S.\n\n \n\nIn December 2025, we issued and sold $2.0 billion aggregate principal\namount of 0.00% Convertible Senior Notes due 2030 in a private offering to qualified institutional buyers pursuant to Rule 144A under\nthe Securities Act (all of which were outstanding as of December 31, 2025).\n\n \n\nWe generated net cash from operations of $1,199 million\nin 2025 and $1,052 million in 2024. Net cash from operations for 2025 and 2024 consisted primarily of net income adjusted for non-cash\nactivity. The increase in our cash from operations includes benefit from balance sheet hedging transaction of $51 million, offset by one-time\ntax settlement payment of $66 million.\n\n \n\nNet cash used in investing activities was $680 million in 2025\ncompared to $24 million in 2024. In 2025, net cash used in investing activities increased compared to 2024, primarily due to higher\ninvestment in short term deposit and lease prepayment paid during 2025. Our net cash paid for acquisitions amounted to $273 million\nin 2025 and $186 million in 2024. Our capital expenditures amounted to $27 million in 2025 and $24 million in 2024, and consisted\nprimarily of computer equipment, software and leasehold improvements.\n\n \n\nNet cash provided by financing activities was $752 million\nin 2025 and net cash used in financing activities was $1,060 million in 2024 . In 2025, net cash provided by financing activities\nwas attributed primarily to the issuance of convertible senior notes in the amount of $1,780 net of issuance costs and net of purchased\ncapped call. Net cash used in financing activities in 2025 and 2024 was also attributed to the repurchase of ordinary shares. Under the\nrepurchase programs, we may purchase our ordinary shares from time to time, depending on market conditions, share price, trading volume\nand other factors. We repurchased ordinary shares in the amount of $1,400 million in 2025 and $1,300 million in 2024. We re-issued\nthe repurchased shares to settle exercises of options and restricted share unit awards to our employees and directors. Proceeds from such\nactivities were $393 million and $259 million in 2025 and 2024, respectively.\n\n \n\nOur investments in marketable securities are classified as AFS.\nAFS securities are carried at fair value, with the unrealized gains and losses, net of tax, recorded in other comprehensive income (loss).\nAmortization of premium, discount and interest is recorded in our consolidated statements of income.\n\n \n\nOur liquidity could be negatively affected by a decrease in demand\nfor our products and services, or increase in employment costs. Also, if the financial system or the credit markets deteriorate or remain\nvolatile, our investment portfolio may be impacted and the values and liquidity of our investments could be adversely affected.\n\n \n\nOur principal sources of liquidity consist of our cash and cash\nequivalents, short-term bank deposits and marketable securities (which aggregated $4,342 million as of December 31, 2025) and\nour cash flow from operations. We believe that these sources of liquidity will be sufficient to meet our normal operating requirements\nduring the next 12 months and the foreseeable future and to fund capital expenditures.\n\n42\n\n \n\nResearch and Development, Patents and Licenses, etc.\n\n \n\nAdditional details are provided in this Item 5, under the caption\n“Results of Operations”.\n\n \n\nTrend Information\n\n \n\nAdditional details are provided in this Item 5, under the caption\n“Results of Operations”."}