CST: 26/09/2016 00:15:50   

Check Point Software Technologies Reports 2015 Fourth Quarter and Full Year Financial Results

241 Days ago

SAN CARLOS, CA--(Marketwired - Jan 28, 2016) - Check Point® Software Technologies Ltd. (NASDAQ: CHKP), the largest pure-play security vendor globally, today announced its financial results for the fourth quarter and full-year ended December 31, 2015.

Fourth Quarter 2015:

  • Total Revenue: $458 million, representing a 9 percent increase year over year
  • Non-GAAP Operating Income: $262 million, representing 57 percent of revenues
  • Non-GAAP EPS: $1.20, representing a 12 percent increase year over year
  • Deferred Revenues: $906 million, representing a 16 percent increase year over year

Full Year 2015:

  • Total Revenue: $1,630 million, representing a 9 percent increase year over year
  • Non-GAAP Operating Income: $927 million, representing 57 percent of revenues
  • Non-GAAP EPS: $4.17, representing a 12 percent increase year over year

"We completed 2015 with revenues in the upper half of our range and earnings that exceeded our projections. Subscription revenues grew 22 percent during the quarter, driven primarily by customer demand for advanced threat prevention technologies including SandBlast zero-day malware protection," said Gil Shwed, founder and chief executive officer of Check Point Software Technologies. "We're pleased to see that our investment in advanced threat prevention and mobile security are producing results."

Financial Highlights for the Fourth Quarter of 2015:

  • Total Revenue: $458 million compared to $421 million in the fourth quarter of 2014.
  • GAAP Operating Income: $239 million compared to $229 million in the fourth quarter of 2014.
  • Non-GAAP Operating Income: $262 million compared to $247 million in the fourth quarter of 2014.
  • GAAP Net Income and Earnings per Diluted Share: GAAP net income was $195 million compared to $186 million in the fourth quarter of 2014. GAAP earnings per diluted share were $1.08 compared to $0.98 in the fourth quarter of 2014.
  • Non-GAAP Net Income: Non-GAAP net income was $216 million compared to $203 million in the fourth quarter of 2014.
  • Non-GAAP Earnings per Diluted Share: $1.20 compared to $1.07 in the fourth quarter of 2014. 
  • Deferred Revenues: As of December 31, 2015, deferred revenues were $906 million compared to $784 million as of December 31, 2014. 
  • Cash Flow: Cash flow from operations of $212 million compared to $210 million in the fourth quarter of 2014.
  • Share Repurchase Program: During the fourth quarter of 2015, the company repurchased 3 million shares at a total cost of $249 million.
  • Cash Balances, Marketable Securities and Short Term Deposits: $3,615 million as of December 31, 2015, compared to $3,683 million as of December 31, 2014.

Financial Highlights for the Year Ended December 31, 2015

  • Total Revenues: $1,630 million compared to $1,496 million in 2014.
  • GAAP Operating Income: $840 million compared to $801 million in 2014. 
  • Non-GAAP Operating Income: $927 million compared to $866 million in 2014.
  • GAAP Net Income and Earnings per Diluted Share: GAAP net income was $686 million compared to $660 million in 2014. GAAP earnings per diluted share were $3.74 compared to $3.43 in 2014.
  • Non-GAAP Net Income and Earnings per Diluted Share: Non-GAAP net income was $766 million compared to $715 million in 2014. Non-GAAP earnings per diluted share were $4.17 compared to $3.72 in 2014.
  • Cash Flow: Cash flow from operations of $917 million compared to $753 million in 2014. Net of the tax settlement payment made to the Israeli Tax Authorities in 2014 and the payments made in 2015 related to acquisitions, cash flow from operations in 2015 was $951 million compared to $865 million in 2014.
  • Share Repurchase Program: In 2015, the company repurchased approximately 12 million shares at a total cost of $986 million, which represented an average repurchase per quarter of $246 million. 

For information regarding the non-GAAP financial measures discussed in this release, as well as a reconciliation of such non-GAAP financial measures to the most directly comparable GAAP financial measures, please see "Use of Non-GAAP Financial Information" and "Reconciliation of GAAP to Non-GAAP Financial Information."

"Our unique focus remains on attack prevention, not merely detecting attacks after the damage is done. In 2016, we will continue to provide threat prevention solutions and technologies that will enable more customers to stay one step ahead of the threats on their network, mobile and cloud environments," concluded Shwed.

Business Highlights

Product, technology & acquisition announcements during 2015:

February - Hyperwise Acquisition: Unique CPU-Level threat prevention technology.
March - Threat Extraction Technology: Providing zero malware protection in zero seconds.
April - Lacoon Mobile Security Acquisition: Advanced threat prevention for mobile devices.
May - 1200R SCADA Appliance: Securing industrial control systems and critical infrastructure.
July - Check Point vSEC: Private cloud security solution for VMware NSX environments.
July - ZoneAlarm 2016: Consumer endpoint security software.
August - Check Point Protect: Mobile Threat Prevention Solution for smartphones.
September - SandBlast: New Threat Prevention Solution.

This week we've also made the following product introduction:
January 2016 - 15000 & 23000 Data Center Appliances: Next generation threat prevention securing of SSL/TLS encrypted traffic.

Check Point Security research & security vulnerability discoveries during 2015:

Volatile Cedar: Campaign allowing attackers to monitor a victim's actions and steal data.

2015 Check Point Security Report : Report revealed that 96% of organizations are using high-risk applications and that there was an increase in security incidents across all categories. The report is available at http://www.checkpoint.com/securityreport.

Magento eCommerce Platform : Critical RCE (remote code execution) vulnerability in eBay's Magento web ecommerce platform, affecting nearly 200,000 online shops.

WhatsApp Web Vulnerabilities: Vulnerabilities that exploit the WhatsApp Web logic put up to 200 million users at risk.

Certifi-gate Vulnerability in Android: Allows applications to gain illegitimate privileged access rights and exists in hundreds of millions of devices.

BrainTest related Mobile Malware: Malware, packaged within an Android game app called BrainTest, affected between 200,000 and one million users.

EZCast Vulnerability: HDMI dongle-based TV streamer that converts non-connected TVs into smart TVs allowing hacker's ability to gain unauthorized access to an EZCast subscriber's home network.

Rocket Kitten: Strategic malware attacks supported by persistent spear phishing campaigns.

During 2015 we received the following Industry Accolades:

Gartner
Number One Worldwide Firewall Equipment Market Share 2014
Leader Enterprise Network Firewall Market Quadrant 2015
Leader Unified Threat Management Magic Quadrant 2015
Leader Mobile Data Protection Magic Quadrant 2015
Number One Worldwide Firewall Equipment Market Share 2015 1 st . 2 nd , 3 rd Quarter

IDC
Top Position Worldwide Combined Firewall & UTM Appliance Market 2014
Top Position Worldwide Combined Firewall and UTM Appliance Market 2015 1 st . 2 nd , 3 rd Quarter

NSS Breach Detection Systems Results:  Check Point's Next Generation Threat Prevention Solution received a "recommended" rating in the NSS Labs Breach Detection Systems (BDS) group test. Check Point received a 100 percent catch rate of HTTP, 100 percent catch rate for email and 100 percent catch rate for drive by malware.

CRN Channel Chief Award :  Check Point President, Amnon Bar-Lev, was named one of CRN's 2015 Channel Chiefs.

Common Criteria Certification: Check Point was awarded Common Criteria (CC) certification for R77.30, following a rigorous third-party evaluation and testing process.

Best Product of 2015: Check Point SandBlast was named 'Coolest Security Product of 2015' by CRN Magazine.

First Quarter Investor Conference Participation Schedule:

  • Goldman Sachs Technology & Internet Conference 2016
    February 11, 2016 -San Francisco, CA
  • JMP Technology Conference
    February 29, 2016 -San Francisco, CA
  • Raymond James 37 th Annual Institutional Investor Conference
    March 7, 2016 - Orlando, FL

Members of Check Point's management team are expected to present at these conferences and discuss the latest company strategies and initiatives. Check Point's conference presentations are expected to be available via webcast on the company's web site. To view these presentations and access the most updated information please visit the company's web site at www.checkpoint.com/ir. The schedule is subject to change.

Conference Call and Webcast Information
Check Point will host a conference call with the investment community on January 28, 2016 at 8:30 AM ET/5:30 AM PT. To listen to the live webcast, please visit the website at: www.checkpoint.com/ir. A replay of the conference call will be available through February 4, 2016 on the company's website or by telephone at +1.201.612.7415, replay ID number 13628376.

About Check Point Software Technologies Ltd.
Check Point Software Technologies Ltd. (www.checkpoint.com) is the largest pure-play security vendor globally, providing industry-leading solutions and protecting customers from cyberattacks with an unmatched catch rate of malware and other types of threats. Check Point offers a complete security architecture defending enterprises -- from networks to mobile devices -- in addition to the most comprehensive and intuitive security management. Check Point protects over 100,000 organizations of all sizes. At Check Point, we secure the future.

©2016 Check Point Software Technologies Ltd. All rights reserved

Legal Notice Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements generally relate to future events or our future financial or operating performance. Forward-looking statements in this press release include, but are not limited to, statements related to our expectations regarding our continued focus on providing threat prevention solutions and technologies for customers in 2016 and our participation in investor conferences during the first quarter of 2016. Our expectations and beliefs regarding these matters may not materialize, and actual results or events in the future are subject to risks and uncertainties that could cause actual results or events to differ materially from those projected. These risks include our ability to continue to develop platform capabilities and solutions; customer acceptance and purchase of our existing solutions and new solutions; the market for IT security continuing to develop; competition from other products and services; and general market, political, economic and business conditions. The forward-looking statements contained in this press release are also subject to other risks and uncertainties, including those more fully described in our filings with the Securities and Exchange Commission, including our Annual Report on Form 20-F filed with the Securities and Exchange Commission on April 24, 2015. The forward-looking statements in this press release are based on information available to Check Point as of the date hereof, and Check Point disclaims any obligation to update any forward-looking statements, except as required by law.

Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Check Point uses non-GAAP measures of net income, operating income, operating margin and earnings per diluted share, which are adjustments from results based on GAAP to exclude stock-based compensation charges, amortization of intangible assets and acquisition related expenses and the related tax affects. Check Point's management believes the non-GAAP financial information provided in this release is useful to investors' understanding and assessment of Check Point's ongoing core operations and prospects for the future. Historically, Check Point has also publicly presented these supplemental non-GAAP financial measures in order to assist the investment community to see the Company "through the eyes of management," and thereby enhance understanding of its operating performance. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of the non-GAAP financial measures discussed in this press release to the most directly comparable GAAP financial measures is included with the financial statements contained in this press release. Management uses both GAAP and non-GAAP information in evaluating and operating business internally and as such has determined that it is important to provide this information to investors.

 
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
CONSOLIDATED STATEMENT OF INCOME
 
(In thousands, except per share amounts)
 
    Three Months Ended   Year Ended
    December 31,   December 31,
    2015   2014   2015   2014
    (unaudited)   (unaudited)   (unaudited)   (audited)
Revenues:                        
  Products and licenses   $ 173,993   $ 162,002   $ 555,792   $ 520,312
  Software Blades subscriptions     88,026     72,357     318,624     265,021
Total revenues from products and software blades     262,019     234,359     874,416     785,333
  Software updates and maintenance     196,053     186,283     755,422     710,483
Total revenues     458,072     420,642     1,629,838     1,495,816
                         
Operating expenses:                        
  Cost of products and licenses     31,825     29,379     101,158     95,868
  Cost of software blades subscriptions     1,961     1,755     7,623     5,626
Total cost of products and software blades     33,786     31,134     108,781     101,494
  Cost of Software updates and maintenance     20,388     20,729     78,468     74,807
  Amortization of technology     546     60     1,808     240
Total cost of revenues     54,720     51,923     189,057     176,541
                         
  Research and development     40,030     34,278     149,279     133,300
  Selling and marketing     101,198     83,187     359,804     306,363
  General and administrative     23,134     22,000     91,981     78,558
Total operating expenses     219,082     191,388     790,121     694,762
                         
Operating income     238,990     229,254     839,717     801,054
Financial income, net     9,168     7,002     34,073     28,762
Income before taxes on income     248,158     236,256     873,790     829,816
Taxes on income     53,554     50,473     187,924     170,245
Net income   $ 194,604   $ 185,783   $ 685,866   $ 659,571
Basic earnings per share   $ 1.11   $ 1.01   $ 3.83   $ 3.50
Number of shares used in computing basic earnings per share     175,907     184,781     179,218     188,487
Diluted earnings per share   $ 1.08   $ 0.98   $ 3.74   $ 3.43
Number of shares used in computing diluted earnings per share     179,975     189,160     183,619     192,300
 
 
 
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
RECONCILIATION OF GAAP TO NON GAAP FINANCIAL INFORMATION
 
 (In thousands, except per share amounts)
    Three Months Ended     Year Ended  
    December 31,     December 31,  
    2015     2014     2015     2014  
    (unaudited)     (unaudited)     (unaudited)     (unaudited)  
                                 
GAAP operating income   $ 238,990     $ 229,254     $ 839,717     $ 801,054  
Stock-based compensation (1)     19,768       17,132       76,302       63,169  
Amortization of intangible assets and acquisition related expenses (2)     3,309       518       11,221       2,106  
Non-GAAP operating income   $ 262,067     $ 246,904     $ 927,240     $ 866,329  
                                 
GAAP net income   $ 194,604     $ 185,783     $ 685,866     $ 659,571  
Stock-based compensation (1)     19,768       17,132       76,302       63,169  
Amortization of intangible assets and acquisition related expenses (2)     3,309       518       11,221       2,106  
Taxes on the above items (3)     (1,682 )     (874 )     (7,186 )     (9,493 )
Non-GAAP net income   $ 215,999     $ 202,559     $ 766,203     $ 715,353  
                                 
Diluted GAAP Earnings per share   $ 1.08     $ 0.98     $ 3.74     $ 3.43  
Stock-based compensation (1)     0.11       0.09       0.41       0.33  
Amortization of intangible assets and acquisition related expenses (2)     0.02       -       0.06       0.01  
Taxes on the above items (3)     (0.01 )     -       (0.04 )     (0.05 )
Diluted Non-GAAP Earnings per share   $ 1.20     $ 1.07     $ 4.17     $ 3.72  
                                 
Number of shares used in computing diluted Non-GAAP earnings per share     179,975       189,160       183,619       192,300  
                                 
(1) Stock-based compensation:                                
  Cost of products and licenses   $ 18     $ 14     $ 65     $ 66  
  Cost of software updates and maintenance     410       306       1,520       1,024  
  Research and development     3,008       2,289       11,544       9,284  
  Selling and marketing     4,238       3,611       16,351       13,339  
  General and administrative     12,094       10,912       46,822       39,456  
      19,768       17,132       76,302       63,169  
                                 
(2) Amortization of intangible assets and acquisition related expenses:                                
  Amortization of technology-cost of revenues     546       60       1,808       240  
  Research and development     1,897       -       6,146       -  
  Selling and marketing     866       458       3,267       1,866  
      3,309       518       11,221       2,106  
(3) Taxes on the above items     (1,682 )     (874 )     (7,186 )     (9,493 )
Total, net   $ 21,395     $ 16,776     $ 80,337     $ 55,782  
 
 
 
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED BALANCE SHEET DATA
 
 (In thousands)
 
 ASSETS
             
    December 31,     December 31,  
    2015     2014  
    (unaudited)     (audited)  
Current assets:                
Cash and cash equivalents   $ 192,312     $ 261,970  
Marketable securities and short-term deposits     1,091,915       1,050,492  
Trade receivables, net     410,763       366,700  
Prepaid expenses and other current assets     85,762       68,673  
Total current assets     1,780,752       1,747,835  
                 
Long-term assets:                
Marketable securities     2,331,187       2,370,471  
Property and equipment, net     48,692       41,549  
Severance pay fund     5,262       5,491  
Deferred tax asset, net     20,793       14,368  
Goodwill and other intangible assets, net     838,020       741,960  
Other assets     45,174       27,144  
Total long-term assets     3,289,128       3,200,983  
                 
Total assets   $ 5,069,880     $ 4,948,818  
                 
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:                
Deferred revenues   $ 717,528     $ 651,281  
Trade payables and other accrued liabilities     339,325       281,554  
Total current liabilities     1,056,853       932,835  
                 
Long-term liabilities:                
Long-term deferred revenues     188,255       132,732  
Income tax accrual     283,215       235,705  
Deferred tax liability, net     240       504  
Accrued severance pay     9,451       9,483  
      481,161       378,424  
                 
Total liabilities     1,538,014       1,311,259  
                 
Shareholders' equity:                
Share capital     774       774  
Additional paid-in capital     987,331       859,124  
Treasury shares at cost     (4,043,271 )     (3,126,685 )
Accumulated other comprehensive loss     (4,250 )     (1,070 )
Retained earnings     6,591,282       5,905,416  
Total shareholders' equity     3,531,866       3,637,559  
Total liabilities and shareholders' equity   $ 5,069,880     $ 4,948,818  
Total cash and cash equivalents, marketable securities and short-term deposits   $ 3,615,414     $ 3,682,933  
 
 
 
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
SELECTED CONSOLIDATED CASH FLOW DATA
 
 (In thousands)
    Three Months Ended     Year Ended  
    December 31,     December 31,  
    2015     2014     2015     2014  
    (unaudited)     (unaudited)     (unaudited)     (unaudited)  
Cash flow from operating activities:                                
Net income   $ 194,604     $ 185,783     $ 685,866     $ 659,571  
Adjustments to reconcile net income to net cash provided by operating activities:                                
Depreciation of property and equipment     2,817       2,495       10,358       9,178  
Amortization of intangible assets     990       518       3,612       2,106  
Stock-based compensation     19,768       17,132       76,302       63,169  
Realized loss (gain) on marketable securities     (113 )     18       (16 )     (289 )
Decrease (increase) in trade and other receivables, net     (188,964 )     (147,846 )     (64,788 )     4,337  
Increase in deferred revenues, trade payables and other accrued liabilities    
208,911
      167,336       241,009       38,749  
Excess tax benefit from stock-based compensation     (13,303 )     (8,843 )     (19,376 )     (11,669 )
Deferred income taxes, net     (12,731 )     (6,224 )     (15,847 )     (12,292 )
Net cash provided by operating activities     211,979       210,369       917,120       752,860  
                                 
Cash flow from investing activities:                                
                                 
Cash paid in conjunction with acquisitions, net of acquired cash     -       -      
(96,544
)    
 -
 
Investment in property and equipment     (7,142 )     (4,621 )     (17,348 )     (12,736 )
Net cash used in investing activities     (7,142 )     (4,621 )     (113,892 )     (12,736 )
                                 
Cash flow from financing activities:                                
Proceeds from issuance of shares upon exercise of options     48,763       8,781       102,852       70,266  
Purchase of treasury shares     (249,290 )     (194,905 )     (985,735 )     (768,176 )
Excess tax benefit from stock-based compensation     13,303       8,843       19,376       11,669  
Net cash used in financing activities     (187,224 )     (177,281 )     (863,507 )     (686,241 )
                                 
Unrealized loss on marketable securities, net     (14,501 )     (1,486 )     (7,240 )     (874 )
                                 
Increase (decrease) in cash and cash equivalents, marketable securities and short term deposits    
 3,112
     
26,981
     
(67,519
)     53,009  
                                 
Cash and cash equivalents, marketable securities and short term deposits at the beginning of the period    
 3,612,302
     
3,655,952
     
3,682,933
      3,629,924  
                                 
Cash and cash equivalents, marketable securities and short term deposits at the end of the period   $
3,615,414
    $ 3,682,933     $
3,615,414
    $ 3,682,933