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CST: 23/09/2019 05:10:54   

Check Point Software Technologies Reports 2019 Second Quarter Financial Results

61 Days ago

SAN CARLOS, Calif., July 24, 2019 (GLOBE NEWSWIRE) -- Check Point® Software Technologies Ltd. (NASDAQ: CHKP), today announced its financial results for the second quarter ended June 30, 2019.

Second Quarter 2019:

  • Total Revenue: $488 million, a 4 percent increase year over year
  • Deferred Revenues: $1,286 million, an 11 percent increase year over year
  • GAAP Operating Income : $ 213 million, representing 44 percent of revenues
  • Non-GAAP Operating Income : $ 242 million, representing 50 percent of revenues
  • GAAP EPS : $ 1.21, Non-GAAP EPS: $1. 38

“Second quarter results were driven by 13 percent growth in our security subscriptions revenues, which included our advanced threat prevention and our CloudGuard family of products,” said Gil Shwed, Founder and CEO of Check Point Software Technologies. “We continued to expand our product offerings during the second quarter with the introduction of new technologies which included Malware DNA, a new artificial intelligence-based engine that accelerates zero-day threat prevention, and CloudGuard Log.ic, providing threat protection and context-rich security intelligence.”

Financial Highlights for the Second Quarter of 2019:

  • Total Revenue: $488 million compared to $468 million in the second quarter of 2018, a 4 percent increase year over year.
  • GAAP Operating Income: $213 million compared to $224 million in the second quarter of 2018, representing 44 percent and 48 percent of revenues in the second quarter of 2019 and 2018, respectively.
  • Non-GAAP Operating Income: $242 million compared to $247 million in the second quarter of 2018, representing 50 percent and 53 percent of revenues in the second quarter of 2019 and 2018, respectively.
  • GAAP Taxes on Income: $48 million compared to $43 million in the second quarter of 2018.
  • GAAP Net Income and Earnings per Diluted Share: GAAP net income was $186 million compared to $198 million in the second quarter of 2018. GAAP earnings per diluted share were $1.21 compared to $1.24 in the second quarter of 2018.
  • Non-GAAP Net Income and Earnings per Diluted Share: Non-GAAP net income was $211 million compared to $218 million in the second quarter of 2018. Non-GAAP earnings per diluted share were $1.38 compared to $1.37 in second quarter of 2018, a 1 percent increase year over year.
  • Deferred Revenues: As of June 30, 2019, deferred revenues were $1,286 million compared to $1,158 million as of June 30, 2018, an 11 percent increase year over year.
  • Cash Balances, Marketable Securities and Short Term Deposits: $4,110 million as of June 30, 2019, compared to $4,042 million as of June 30, 2018.
  • Cash Flow: Cash flow from operations of $233 million compared to $213 million in the second quarter of 2018, a 9 percent increase year over year.
  • Share Repurchase Program: During the second quarter of 2019, the company repurchased approximately 2.8 million shares at a total cost of approximately $325 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.”

Key Business Highlights

During the quarter, we announced initiatives, products and research, attached is a summary of the key ones:

Check Point Launches Channel Initiatives to Increase Value and Accelerate Benefits to Partners
New incentives give VARs extra rewards for customer purchases of CloudGuard IaaS through AWS & Azure marketplaces; the new engage app enables even closer partner relationships to boost sales activities.

Product & Technology Announcements

Check Point Introduces 16000 and 26000 Series Security Gateways
Delivering Terabit-Per-Second Threat Prevention: 16000/26000 series integrated with R80.30, SandBlast Technology, and the Maestro Hyperscale Orchestrator deliver 1 Tera-bps Gen V Threat Prevention.

Check Point Software Exposes Unseen Cloud Threats with New Security Analytics Solution
CloudGuard Log.ic provides threat protection and context-rich security intelligence in the public cloud, enabling operations teams to see every IaaS and PaaS asset, understand cloud activities, and easily launch forensics.

Check Point Software Introduces Malware DNA
New Artificial Intelligence-based Malware Detection Engine to Accelerate Zero-Day Threat Prevention: New engine scans unknown malware for code patterns that match existing known malware, further accelerating the identification and blocking of previously undiscovered malware, and reducing response times.

Applications & Infrastructure Vulnerabilities

Check Point Research https://research.checkpoint.com uncovered numerous findings that included vulnerabilities in widely deployed applications and services such as ISPsystem and Microsoft Management Console. In addition, the research team exposed various campaigns targeting IPTV Platforms, government targets and more.

EA Games Vulnerability
Check Point Research identified a chain of vulnerabilities in one of the world’s largest gaming companies, Electronic Arts. The potential damage could have involved an attacker gaining access to a user’s credit card information and the ability to fraudulently purchase in game currency on behalf of the user.

The NSO WhatsApp Vulnerability – This is How It Happened
Check Point Research provided the first technical analysis of the critical vulnerability found in the popular WhatsApp messaging application that allowed spyware to be injected into victims’ phones.

Vulnerabilities in ISPsystem
Check Point Research found a critical security vulnerability in ISPsystem software, which allowed an attacker to hijack a session of another logged-in user and take control over that user’s web sites, virtual machines, billing data, etc.

Microsoft Management Console (MMC) Vulnerabilities
Check Point Research discovered several vulnerabilities in Microsoft’s Management Console (MMC) that would allow an attacker to deliver a malicious payload.

Vulnerability in Xiaomi Pre-Installed Security App
Check Point Research discovered a vulnerability in one of the preinstalled apps in one of the world’s biggest mobile vendors, Xiaomi. The attack was exposed when pre-installing the ‘Guard Provide’ security app.

We Decide What You See: Remote Code Execution on a Major IPTV Platform
Check Point Research discovered critical vulnerabilities in a Ukrainian TV streaming platform that, if exploited, could leave service providers exposed to a serious breach including the entire customer database of personal info and financial details.

Malware and Campaigns Research

Agent Smith: A New Species of Mobile Malware
Check Point Research discovered a new variant of mobile malware that infected around 25 million devices, while the users remained unaware. Disguised as Google related apps, the malware exploits various known Android vulnerabilities and replaces installed apps on the device with malicious versions without user interaction.

PlaNETWORK: Face to Face with Cyber Crime
Check Point Research carried out an investigative research that allowed for a rare opportunity of coming face to face with real-life threat actors. These threat actors were an Indonesian group called “plaNETWORK”. Check Point Research has responsibly reported its findings regarding plaNETWORK to regional law enforcement agencies who are now looking into the matter.

FINTEAM: Trojanized TeamViewer against Government Targets
Check Point Research spotted a targeted attack against officials within government finance authorities and representatives in several embassies in Europe. The attack, which starts with a malicious attachment disguised as a top-secret U.S. document that weaponized TeamViewer to gain control of the infected computer.

PreAMo: A Clicker Campaign found on Google Play
Check Point Research uncovered a series of applications conducting fraudulent activities against Ad Agencies. The malware found from those leads, dubbed ‘PreAMo’, imitates the user by clicking on banners. The malware was downloaded over 90 million times across six applications.

The Muddy Waters of APT Attacks
The Iranian APT, Muddy Water, has been active for several years. Check Point Research took a deeper look and analyzed a new campaign of it targeting Belarus that started via targeted emails sent to organizations there.

Conference Call and Webcast Information
Check Point will host a conference call with the investment community on July 24, 2019, at 8:30 AM ET/5:30 AM PT. To listen to the live webcast or replay, please visit the website: www.checkpoint.com/ir.

Third Quarter Investor Conference Participation Schedule:

  • KeyBanc Capital Markets 21st Annual Global Technology Leadership Forum
    August 12, 2019 – Vail, CO
  • Citi 2019 Global Technology Conference
    September 4, 2019 – New York, NY
  • Deutsche Bank 2019 Technology Conference
    September 10-11, 2019 – Las Vegas, NV (Meetings Only)

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.

About Check Point Software Technologies Ltd.
Check Point Software Technologies Ltd. (www.checkpoint.com) is a leading provider of cyber security solutions to governments and corporate enterprises globally. Its solutions protect customers from cyber-attacks with an industry leading catch rate of malware, ransomware and other types of attacks. Check Point offers a multilevel security architecture that defends enterprises’ cloud, network and mobile device held information, plus the most comprehensive and intuitive one point of control security management system. Check Point protects over 100,000 organizations of all sizes.

©2019 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 products and solutions, including Malware DNA, CloudGuard Log.ic and Zero Trust, expectations related to our new channel initiatives, and our participation in investor conferences during the third quarter of 2019. 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 23, 2019. 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 operating income, net income and earnings per diluted share, which are adjustments from results based on GAAP to exclude, as applicable, stock-based compensation expenses, 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
 
(Unaudited, in thousands, except per share amounts)
 
    Three Months Ended   Six Months Ended
    June 30,   June 30,
    2019   2018   2019   2018  
Revenues:                  
Products and licenses   $121,825   $125,666   $234,622   $243,805  
Security subscriptions   148,663   132,076   292,638   259,327  
Total revenues from products and security subscriptions   270,488   257,742   527,260   503,132  
Software updates and maintenance   217,628   210,028   432,684   416,964  
Total revenues   488,116   467,770   959,944   920,096  
                   
Operating expenses:                  
Cost of products and licenses   21,368   21,595   40,991   40,973  
Cost of security subscriptions   6,478   4,085   11,760   7,726  
Total cost of products and security subscriptions   27,846   25,680   52,751   48,699  
Cost of Software updates and maintenance   23,148   22,381   45,836   43,058  
Amortization of technology   1,388   546   2,776   1,092  
Total cost of revenues   52,382   48,607   101,363   92,849  
                   
Research and development   58,875   50,289   116,509   103,652  
Selling and marketing   138,300   124,493   273,340   244,251  
General and administrative   26,026   20,421   50,138   41,959  
Total operating expenses   275,583   243,810   541,350   482,711  
                   
Operating income   212,533   223,960   418,594   437,385  
Financial income, net   20,890   16,415   39,798   31,275  
Income before taxes on income   233,423   240,375   458,392   468,660  
Taxes on income   47,889   42,689   92,926   83,834  
Net income   $185,534   $197,686   $365,466   $384,826  
                   
Basic earnings per share   $1.22   $1.26   $2.38   $2.44  
Number of shares used in computing basic earnings per share   152,019   156,982   153,472   157,571  
                   
Diluted earnings per share   $1.21   $1.24   $2.36   $2.40  
Number of shares used in computing diluted earnings per share   153,687   159,669   155,156   160,674  


CHECK POINT SOFTWARE TECHNOLOGIES LTD.
SELECTED FINANCIAL METRICS
 
(Unaudited, in thousands, except per share amounts)
 
    Three Months Ended   Six Months Ended
    June 30,   June 30,
    2019   2018   2019   2018
                 
Revenues   $488,116   $467,770   $959,944   $920,096
Non-GAAP operating income   241,800   247,123   476,714   486,121
Non-GAAP net income   211,474   218,183   416,929   428,074
Diluted Non-GAAP Earnings per share   $1.38   $1.37   $2.69   $2.67
Number of shares used in computing diluted Non-GAAP earnings per share   153,687   159,669   155,156   160,674


CHECK POINT SOFTWARE TECHNOLOGIES LTD.
RECONCILIATION OF GAAP TO NON GAAP FINANCIAL INFORMATION
 
(Unaudited, in thousands, except per share amounts)
 
    Three Months Ended   Six Months Ended
    June 30,   June 30,
    2019   2018   2019   2018
                 
GAAP operating income   $212,533   $223,960   $418,594   $437,385
                 
Stock-based compensation (1)   25,974   20,827   50,806   43,141
Amortization of intangible assets and acquisition related expenses (2)   3,293   2,336   7,314   5,595
Non-GAAP operating income   $241,800   $247,123   $476,714   $486,121
                 
GAAP net income   $185,534   $197,686   $365,466   $384,826
                 
Stock-based compensation (1)   25,974   20,827   50,806   43,141
Amortization of intangible assets and acquisition related expenses (2)   3,293   2,336   7,314   5,595
                 
Taxes on the above items (3)   (3,327)   (2,666)   (6,657)   (5,488)
Non-GAAP net income   $211,474   $218,183   $416,929   $428,074
                 
Diluted GAAP Earnings per share   $1.21   $1.24   $2.36   $2.40
                 
Stock-based compensation (1)   0.17   0.13   0.33   0.27
Amortization of intangible assets and acquisition related expenses (2)   0.02   0.02   0.04   0.04
                 
Taxes on the above items (3)   (0.02)   (0.02)   (0.04)   (0.04)
Diluted Non-GAAP Earnings per share   $1.38   $1.37   $2.69   $2.67
                 
Number of shares used in computing diluted Non-GAAP earnings per share   153,687   159,669   155,156   160,674
                 
(1) Stock-based compensation:                
Cost of products and licenses   $35   $39   $68   $76
Cost of software updates and maintenance   1,000   851   1,939   1,537
Research and development   4,704   4,212   9,007   8,248
Selling and marketing   6,219   4,448   12,305   9,738
General and administrative   14,016   11,277   27,487   23,542
    25,974   20,827   50,806   43,141
                 
(2) Amortization of intangible assets and acquisition related expenses:                
Amortization of technology-cost of revenues   1,388   546   2,776   1,092
Research and development   1,511   974   3,525   2,871
Selling and marketing   394   816   1,013   1,632
    3,293   2,336   7,314   5,595
                 
(3) Taxes on the above items   (3,327)   (2,666)   (6,657)   (5,488)
                 
Total, net   $25,940   $20,497   $51,463   $43,248


CHECK POINT SOFTWARE TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED BALANCE SHEET DATA
 
(Unaudited, in thousands)
 
ASSETS
 
    June 30,   December 31,
    2019   2018
Current assets:        
Cash and cash equivalents   $249,101   $303,687
Marketable securities and short-term deposits   1,366,217   1,448,092
Trade receivables, net   320,622   495,390
Prepaid expenses and other current assets   80,942   74,738
Total current assets   2,016,882   2,321,907
         
Long-term assets:        
Marketable securities   2,494,259   2,287,345
Property and equipment, net   85,996   78,514
Deferred tax asset, net   65,654   84,688
Goodwill and other intangible assets, net   993,731   991,539
Other assets   91,277   64,220
Total long-term assets   3,730,917   3,506,306
         
Total assets   $5,747,799   $5,828,213


LIABILITIES AND
SHAREHOLDERS’ EQUITY
 
Current liabilities:        
Deferred revenues   $939,514   $980,175
Trade payables and other accrued liabilities   358,544   351,695
Total current liabilities   1,298,058   1,331,870
         
Long-term liabilities:        
Long-term deferred revenues   346,889   357,779
Income tax accrual   406,944   356,750
Other long-term liabilities   33,847   9,425
    787,680   723,954
         
Total liabilities   2,085,738   2,055,824
         
Shareholders’ equity:        
Share capital   774   774
Additional paid-in capital   1,692,077   1,597,800
Treasury shares at cost   (7,455,122)   (6,844,702)
Accumulated other comprehensive gain (loss)   15,852   (24,497)
Retained earnings   9,408,480   9,043,014
Total shareholders’ equity   3,662,061   3,772,389
         
Total liabilities and shareholders’ equity   $5,747,799   $5,828,213
Total cash and cash equivalents, marketable securities and short-term deposits   $4,109,577   $4,039,124


CHECK POINT SOFTWARE TECHNOLOGIES LTD.
SELECTED CONSOLIDATED CASH FLOW DATA
 
(Unaudited, in thousands)
 
    Three Months Ended   Six Months Ended
    June 30,   June 30,
    2019   2018   2019   2018
Cash flow from operating activities:                
Net income   $185,534   $197,686   $365,466   $384,826
Adjustments to reconcile net income to net cash provided by operating activities:                
Depreciation of property and equipment   3,644   4,144   7,219   8,032
Amortization of intangible assets   1,782   940   3,564   1,880
Stock-based compensation   25,974   20,827   50,806   43,141
Realized loss on marketable securities   9   87   486   89
Decrease (increase) in trade and other receivables, net   (6,787)   341   174,537   181,736
Increase (decrease) in deferred revenues, trade payables and other accrued liabilities   19,905   (12,013)   3,182   7,194
Deferred income taxes, net   2,736   1,096   6,289   5,043
Net cash provided by operating activities   232,797   213,108   611,549   631,941
                 
Cash flow from investing activities:                
Cash paid in conjunction with acquisitions, net of acquired cash   -   -   (5,509)   -
Investment in property and equipment   (5,121)   (4,767)   (14,701)   (9,439)
Net cash used in investing activities   (5,121)   (4,767)   (20,210)   (9,439)
                 
Cash flow from financing activities:                
Proceeds from issuance of shares upon exercise of options   11,709   79,152   63,000   99,097
Purchase of treasury shares   (324,955)   (249,549)   (629,949)   (498,957)
Payments related to shares withheld for taxes   (4,444)   (3,124)   (5,092)   (3,423)
Net cash used in financing activities   (317,690)   (173,521)   (572,041)   (403,283)
                 
Unrealized gain (loss) on marketable securities, net   24,920   (2,169)   51,155   (25,559)
                 
Increase (decrease) in cash and cash equivalents, marketable securities and short term deposits   (65,094)   32,651   70,453   193,660
                 
Cash and cash equivalents, marketable securities and short term deposits at the beginning of the period   4,174,671   4,009,054   4,039,124   3,848,045
                 
Cash and cash equivalents, marketable securities and short term deposits at the end of the period   $4,109,577   $4,041,705   $4,109,577   $4,041,705


     
Investors: Kip E. Meintzer   Media: Ekram Ahmed
Check Point Software Technologies   Check Point Software Technologies
+1.650.628.2040   +1.650.628.2260
ir@checkpoint.com   press@checkpoint.com
     

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