Shares of Check Point Software Technologies Ltd. closed 8.2% lower today after it posted mixed second quarter earnings.

The cybersecurity provider generated $260 million in adjusted operating income during the three months ended June 30. That translated into adjusted earnings of $2.55 per share, 10 cents more than what analysts polled by Zacks had forecasted. The company topped the consensus estimate despite a slight gross margin decrease that it attributed to higher memory chip costs.

By contrast, Check Point’s top line missed expectations. The company closed the second quarter with sales of $674 million. That’s $1 million lower than the midpoint of its guidance and a fraction of a percent lower than the consensus estimate.

Check Point’s sales growth was dragged down by its product revenue segment. The segment includes the company’s physical firewalls and certain other offerings that it doesn’t sell on a subscription basis. Product revenue declined 14% year-over-year in the second quarter.

According to Check Point, one of the reasons behind the drop is that several customers pushed back large firewall appliance purchases to the fourth quarter. The company expects its product segment to return to growth in the last three months of the year.

In conjunction with its earnings report, Check Point debuted a new version of the software that powers its firewalls. The release introduces a tool called the AI Network Firewall that is optimized to protect artificial intelligence workloads. According to Check Point, the tool can create an inventory of the AI tools used by a company’s employees and block risks such as malicious prompts.

The slowdown in the company’s firewall appliance business was partly offset by increased demand for its subscription-based software products. The company’s subscription revenue segment climbed 12% year-over-year in the second quarter to $333 million. Check Point says that the segment’s growth accelerated by 2% in the past year.

The company’s subscription momentum was driven by its email security, CTEM and AI security product lines, which delivered a more than 40% annualized revenue increase. Check Point’s AI security products block risks such as prompt injection attacks. Its CTEM, or continuous threat exposure management, software helps companies find and fix vulnerabilities in their infrastructure. 

“Our go-to-market execution is improving, and we are significantly expanding sales capacity to capture a growing market opportunity,” said Check Point Chief Executive Officer Nadav Zafrir.

The company estimates that it will close the current quarter with revenue of $655 million to $685 million. Subscription deals are expected to account for about half that sum. For the full year, Check Point is forecasting adjusting earnings of $10.45 per share at the midpoint on revenue of $2.77 billion to $2.85 billion.

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