Companies mentioned in this article: Check Point Software Technologies Ltd.
SAN CARLOS, CA -- (Marketwired) -- 10/26/15 -- Check Point® Software Technologies Ltd. (NASDAQ: CHKP), the largest pure-play security vendor globally, today announced its financial results for the third quarter ended Sept. 30, 2015. Total Revenue: $404 million, representing a 9 percent increase year-over-year Non-GAAP Operating Income: $228 million, representing 56 percent of revenues Non-GAAP EPS: $1.04, representing a 12 percent increase year-over-year Deferred Revenues: $772 million, representing a 17 percent increase year-over-year
"We had very good financial results in the third quarter. Revenues were toward the high-end of our projections, while earnings exceeded projections. Our combined products and software blades revenue continued to post double-digit growth, driven primarily by data center appliances, mid-size appliances, and software blades," said Gil Shwed, founder and chief executive officer, "Mobile devices are becoming the weakest link in cyber security, and we are committed to staying one step ahead and prevent these threats. This quarter we extended our technology to smartphones and tablets, while introducing new and innovative threat prevention solutions for cloud and network infrastructure."
Financial Highlights for the Third Quarter of 2015: Total Revenue: $404 million compared to $370 million in the third quarter of 2014. GAAP Operating Income: $205 million compared to $197 million in the third quarter of 2014. Non-GAAP Operating Income: $228 million compared to $215 million in the third quarter of 2014. GAAP Net Income and Earnings per Diluted Share: GAAP net income was $168 million compared to $161 million in the third quarter of 2014. GAAP earnings per diluted share were $0.92 compared to $0.84 in the third quarter of 2014. Non-GAAP Net Income: Non-GAAP net income was $188 million compared to $177 million in the third quarter of 2014. Non-GAAP earnings per diluted share were $1.04 compared to $0.93 in the third quarter of 2014. Deferred Revenues : As of Sept. 30, 2015, deferred revenues were $772 million compared to $660 million as of Sept. 30, 2014. Cash Flow: Cash flow from operations increased by 13 percent to $228 million from $202 million in the third quarter of 2014. Share Repurchase Program : During the third quarter of 2015, the company repurchased 3.1 million shares at a total cost of $250 million. Cash Balances, Marketable Securities and Short Term Deposits: $3,612 million as of Sept. 30, 2015, compared to $3,656 million as of Sept. 30, 2014.
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."
BUSINESS HIGHLIGHTS:
We launched the following new products and technologies:
Mobile Threat Prevention : To battle today's mobile threat environment, Check Point announced Mobile Threat Prevention , a new mobile security solution for stopping mobile threats on iOS and Android. Check Point Mobile Threat Prevention provides the highest level of protection against malware targeted at smartphones and tablets.
SandBlast Zero-Day Protection: A new advanced threat prevention solution designed to provide a level of cyber protection unmatched in today's market. By utilizing CPU-level threat detection to uncover threats at the pre-infection level, Check Point SandBlast elevates threat defense with evasion-resistant malware detection and comprehensive protection from even the most dangerous attacks, significantly reducing the risk of expensive breaches.
Cloud Security: Check Point vSEC was designed for private cloud environments and works with VMware NSX to extend comprehensive, best-in-class security. The integrated solution allows customers to accelerate security deployment in virtualized datacenter environments for east-west traffic. The solution is designed to prevent zero-day attacks, APTs and other security threats within the private cloud.
We received the following industry accolades:
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. Check Point solutions also delivered the lowest reported price per protected Mbps of traffic according to the latest published report.
Leader in the Gartner 2015 Magic Quadrant for Unified Threat Management : Check Point is positioned as a Leader in the Gartner Magic Quadrant for Unified Threat Management for the fifth consecutive time.(i)
Leader in the Gartner 2015 Magic Quadrant for Mobile Data Protection : Celebrating its ninth consecutive year as a Leader in the Gartner 2015 Magic Quadrant for Mobile Data Protection , Check Point continues to secure the mobile space and recently announced Mobile Threat Prevention .(ii)
Number One in Worldwide Firewall Equipment Market Share: Check Point is the leader in worldwide market share in 2Q 2015 for Firewall Equipment, according to the Gartner Market Share: Enterprise Network Equipment by Market Segment, Worldwide reports.(iii)
Top Position in Worldwide Combined Firewall and UTM Appliance Market: Check Point continued to be the number one vendor in worldwide combined Firewall and UTM appliance revenue for 2Q 2015, according to the IDC Worldwide Quarterly Security Appliance Tracker.(iv)
We also expanded our partnership with VMware:
Charter Membership in the AirWatch Mobile Security Alliance : Together, Check Point and AirWatch will drive new ways for customers to protect the growing number of devices accessing corporate data and networks, delivering a comprehensive solution for stopping mobile threats before they start.
Our security research organization has also continued to expose vulnerabilities in today's internet infrastructure, these included critical vulnerabilities in mobile equipment and applications including:
WhatsApp Web Vulnerabilities: Check Point security researchers recently discovered significant vulnerabilities that exploit the WhatsApp Web logic and allow attackers to trick victims into executing arbitrary code on their machines in a new and sophisticated way. These vulnerabilities put up to 200 million WhatsApp users at risk and it was quickly remediated by WhatsApp.
Discovered Certifi-gate Vulnerability in Android: At Black Hat, Check Point's mobile security research team announced the discovery of " Certifi-gate ," a vulnerability that allows applications to gain illegitimate privileged access rights, typically used by remote support applications that are either pre-installed or personally installed on the device. Attackers can exploit Certifi-gate to gain unrestricted device access, allowing them to steal personal data, track device locations, and turn on microphones to record conversations and more. We estimate that the Certfi-gate vulnerability exists in hundreds of millions of devices.
BrainTest related Mobile Malware: Check Point Mobile Threat Prevention multiple instances of a mobile malware variant infecting mobile devices. The malware, packaged within an Android game app called BrainTest , affected between 200,000 to million users. The Apps containing the malware were removed by Google subsequent to Check Point's report.
"This quarter we experienced significant growth in the sales of our advanced threat prevention technologies, including the SandBlast solutions and Anti-bot. In addition, we launched our mobile threat prevention solution to address our customers growing mobile security needs. These new technologies demonstrate our commitment to stay one step ahead of cyber security threats," Concluded Shwed.
Fourth Quarter 2015 Investor Conference Participation Schedule: UBS Global Technology Conference Nov. 17, 2015 - San Francisco, CA Credit Suisse Annual Technology Conference Dec. 2, 2015 - Scottsdale, AZ Raymond James Supply Chain Conference* Dec. 8, 2015 - New York, NY Barclays Global Technology Conference* Dec. 9, 2015 - San Francisco, CA Cowen Cyber Security & Networking Summit* Dec., 15, 2015 - New York, NY
* Investor meetings only
Members of Check Point's management team will 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 Oct. 26, 2015 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 Nov. 1, 2015 on the company's website or by telephone at +1.201.612.7415, replay ID number 13622818.
About Check Point Software Technologies Ltd. Check Point Software Technologies Ltd. ( www.checkpoint.com ), the largest pure-play security vendor globally, provides industry-leading solutions, and protects customers from cyberattacks with an unmatched catch rate of malware and other types of attacks. Check Point offers a complete security architecture defending enterprises' 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.
©2015 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 our introduction of new technologies and solutions and the functionality of such technologies and solutions. Our expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results 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 and earnings per 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.
(1) G00263955. Adam Hils, Greg Young, Jeremy D'Hoinne. 22 April 2015.
(2) Gartner, Inc., Market Share: Enterprise Network Equipment by Market Segment, Worldwide, 1Q15, Christian Canales, Petr Gorodetskiy, Naresh Singh, and Joe Skorupa, June 2015. Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner's research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.
(i-ii) Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner's research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.
(3) Source: IDC Worldwide Quarterly Security Appliance Tracker 1Q2015, June 4, 2015. (i) Gartner, Magic Quadrant for Unified Threat Management, Jeremy D'Hoinne, Adam Hils, Greg Young, August 7, 2014, ID Number: G00261973 Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner's research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. (ii) Gartner, Magic Quadrant for Mobile Data Protection, John Girard, October 8, 2015. (iii) Gartner, Inc., Market Share: Enterprise Network Equipment by Market Segment, Worldwide, 2Q15, Christian Canales, Petr Gorodetskiy, Naresh Singh, and Joe Skorupa, September 2015. (iv) IDC Worldwide Quarterly Security Appliance Tracker 2Q2015, September 14, 2015. CHECK POINT SOFTWARE TECHNOLOGIES LTD. CONSOLIDATED STATEMENT OF INCOME (In thousands, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 (unaudited) (unaudited) (unaudited) (unaudited) Revenues: Products and licenses $ 135,218 $ 126,029 $ 381,799 $ 358,310 Software Blades subscriptions 79,622 67,164 230,598 192,664 Total revenues from products and software blades 214,840 193,193 612,397 550,974 Software updates and maintenance 189,016 177,177 559,369 524,200 Total revenues 403,856 370,370 1,171,766 1,075,174 Operating expenses: Cost of products and licenses 24,400 24,076 69,333 66,489 Cost of software blades subscriptions 2,351 1,269 5,662 3,871 Total cost of products and software blades 26,751 25,345 74,995 70,360 Cost of Software updates and maintenance 20,107 19,324 58,080 54,078 Amortization of technology 546 60 1,262 180 Total cost of revenues 47,404 44,729 134,337 124,618 Research and development 37,495 32,605 109,249 99,022 Selling and marketing 90,463 74,741 258,605 223,176 General and administrative 23,860 20,914 68,848 56,558 Total operating expenses 199,222 172,989 571,039 503,374 Operating income 204,634 197,381 600,727 571,800 Financial income, net 8,285 7,313 24,905 21,760 Income before taxes on income 212,919 204,694 625,632 593,560 Taxes on income 45,176 43,647 134,370 119,772 Net income $ 167,743 $ 161,047 $ 491,262 $ 473,788 Basic earnings per share $ 0.94 $ 0.86 $ 2.72 $ 2.50 Number of shares used in computing basic earnings per share 177,519 187,293 180,335 189,736 Diluted earnings per share $ 0.92 $ 0.84 $ 2.66 $ 2.45 Number of shares used in computing diluted earnings per share 181,804 190,984 184,846 193,360 CHECK POINT SOFTWARE TECHNOLOGIES LTD. RECONCILIATION OF GAAP TO NON GAAP FINANCIAL INFORMATION (In thousands, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 (unaudited) (unaudited) (unaudited) (unaudited) GAAP operating income $ 204,634 $ 197,381 $ 600,727 $ 571,800 Stock-based compensation (1) 19,956 16,979 56,534 46,037 Amortization of intangible assets and acquisition related expenses (2) 3,309 518 7,912 1,588 Non-GAAP operating income $ 227,899 $ 214,878 $ 665,173 $ 619,425 GAAP net income $ 167,743 $ 161,047 $ 491,262 $ 473,788 Stock-based compensation (1) 19,956 16,979 56,534 46,037 Amortization of intangible assets and acquisition related expenses (2) 3,309 518 7,912 1,588 Taxes on the above items (3) (2,556) (1,751) (5,504) (8,619) Non-GAAP net income $ 188,452 $ 176,793 $ 550,204 $ 512,794 Diluted GAAP Earnings per share $ 0.92 $ 0.84 $ 2.66 $ 2.45 Stock-based compensation (1) 0.11 0.09 0.31 0.24 Amortization of intangible assets and acquisition related expenses (2) 0.02 - 0.04 - Taxes on the above items (3) (0.01) - (0.03) (0.04) Diluted Non-GAAP Earnings per share $ 1.04 $ 0.93 $ 2.98 $ 2.65 Number of shares used in computing diluted Non- GAAP earnings per share 181,804 190,984 184,846 193,360 (1) Stock-based compensation: Cost of products and licenses $ 17 $ 14 $ 47 $ 52 Cost of software updates and maintenance 396 293 1,110 718 Research and development 3,295 2,241 8,536 6,995 Selling and marketing 4,193 3,526 12,112 9,728 General and administrativ e 12,055 10,905 34,729 28,544 19,956 16,979 56,534 46,037 (2) Amortization of intangible assets and acquisition related expenses: Amortization of technology- cost of revenues 546 60 1,262 180 Research and development 1,897 - 4,249 - Selling and marketing 866 458 2,401 1,408 3,309 518 7,912 1,588 (3) Taxes on the above items (2,556) (1,751) (5,504) (8,619) Total, net $ 20,709 $ 15,746 $ 58,942 $ 39,006 CHECK POINT SOFTWARE TECHNOLOGIES LTD. CONDENSED CONSOLIDATED BALANCE SHEET DATA (In thousands) ASSETS September 30, December 31, 2015 2014 (unaudited) (audited) Current assets: Cash and cash equivalents $ 258,030 $ 261,970 Marketable securities and short-term deposits 1,041,088 1,050,492 Trade receivables, net 219,054 366,700 Prepaid expenses and other current assets 75,236 68,673 Total current assets 1,593,408 1,747,835 Long-term assets: Marketable securities 2,313,184 2,370,471 Property and equipment, net 44,366 41,549 Severance pay fund 5,323 5,491 Deferred tax asset, net 17,744 14,368 Goodwill and other intangible assets, net 839,011 741,960 Other assets 45,132 27,144 Total long-term assets 3,264,760 3,200,983 Total assets $ 4,858,168 $ 4,948,818 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Deferred revenues $ 614,128 $ 651,281 Trade payables and other accrued liabilities 294,573 281,554 Total current liabilities 908,701 932,835 Long-term liabilities: Long-term deferred revenues 158,343 132,732 Income tax accrual 265,570 235,705 Deferred tax liability, net 306 504 Accrued severance pay 9,369 9,483 433,588 378,424 Total liabilities 1,342,289 1,311,259 Shareholders' equity: Share capital 774 774 Additional paid-in capital 935,878 859,124 Treasury shares at cost (3,823,224) (3,126,685) Accumulated other comprehensive income (loss) 5,773 (1,070) Retained earnings 6,396,678 5,905,416 Total shareholders' equity 3,515,879 3,637,559 Total liabilities and shareholders' equity $ 4,858,168 $ 4,948,818 Total cash and cash equivalents, marketable securities and short-term deposits $ 3,612,302 $ 3,682,933 CHECK POINT SOFTWARE TECHNOLOGIES LTD. SELECTED CONSOLIDATED CASH FLOW DATA (In thousands) Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 (unaudited) (unaudited) (unaudited) (unaudited) Cash flow from operating activities: Net income $ 167,743 $ 161,047 $ 491,262 $ 473,788 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of property and equipment 2,658 2,244 7,541 6,683 Amortization of intangible assets 990 518 2,622 1,588 Stock-based compensation 19,956 16,979 56,534 46,037 Realized loss (gain) on marketable securities 176 (152) 97 (306) Decrease in trade and other receivables, net 28,973 22,167 124,176 152,182 Increase (decrease) in deferred revenues, trade payables and other accrued liabilities 14,388 913 32,098 (128,587) Excess tax benefit from stock-based compensation (3,772) (874) (6,073) (2,826) Deferred income taxes, net (3,285) (381) (3,116) (6,068) Net cash provided by operating activities 227,827 202,461 705,141 542,491 Cash flow from investing activities: Cash paid in conjunction with acquisitions, net of acquired cash - - (96,544) - Investment in property and equipment (4,361) (3,584) (10,206) (8,115) Net cash used in investing activities (4,361) (3,584) (106,750) (8,115) Cash flow from financing activities: Proceeds from issuance of shares upon exercise of options 20,074 14,067 54,089 61,485 Purchase of treasury shares (249,763) (192,401) (736,445) (573,271) Excess tax benefit from stock-based compensation 3,772 874 6,073 2,826 Net cash used in financing activities (225,917) (177,460) (676,283) (508,960) Unrealized gain (loss) on marketable securities, net 4,150 (8,248) 7,261 613 Increase (decrease) in cash and cash equivalents, marketable securities and short term deposits 1,699 13,169 (70,631) 26,029 Cash and cash equivalents, marketable securities and short term deposits at the beginning of the period 3,610,603 3,642,784 3,682,933 3,629,924 Cash and cash equivalents, marketable securities and short term deposits at the end of the period $ 3,612,302 $ 3,655,953 $ 3,612,302 $ 3,655,953