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 Check Point Software Technologies Reports 2018 Third Quarter Financial Results
   Wednesday, October 24, 2018 5:00:00 AM ET

SAN CARLOS, Calif., Oct. 24, 2018 (GLOBE NEWSWIRE) -- Check Point® Software Technologies Ltd. (NASDAQ: CHKP), today announced its financial results for the third quarter ended September 30, 2018.

  • Check Point Software Acquires Dome9 to Transform Cloud Security
  • Total Revenue: $471 million, a 4 percent increase year over year
  • Deferred Revenues: $1,148 million, an 11 percent increase year over year
  • GAAP Operating Income: $226 million, representing 48 percent of revenues
  • Non-GAAP Operating Income: $250 million, representing 53 percent of revenues
  • GAAP EPS: $1.25, a 7 percent increase year over year
  • Non-GAAP EPS: $1.38, a 6 percent increase year over year


“Third quarter results reached the top end of our projections, with better than anticipated strength coming from the US and Europe,” said Gil Shwed, Founder and CEO of Check Point Software Technologies. “Today we announced the acquisition of Dome9. This new addition to Check Point’s Infinity architecture delivers enhanced Cloud Security with advanced active policy enforcement and multi-cloud protection capabilities.  The combination of Dome9 and Infinity CloudGuard product family further differentiates Check Point in the rapidly evolving Cyber Security environment,” Shwed concluded.

Financial Highlights Third Quarter of 2018:

  • Total Revenue: $471 million compared to $455 million in the third quarter of 2017, a 4 percent increase year over year. Revenues were above the midpoint of our guidance.
  • GAAP Operating Income: $226 million compared to $225 million in the third quarter of 2017, representing 48 percent and 49 percent of revenues in the third quarter of 2018 and 2017, respectively.
  • Non-GAAP Operating Income: $250 million compared to $251 million in the third quarter of 2017, representing 53 percent and 55 percent of revenues in the third quarter of 2018 and 2017, respectively.
  • GAAP Taxes on Income: $45 million compared to $44 million in the third quarter of 2017.
  • GAAP Net Income and Earnings per Diluted Share: GAAP net income was $198 million compared to $193 million in the third quarter of 2017. GAAP earnings per diluted share were $1.25 compared to $1.16 in the third quarter of 2017, a 7 percent increase year over year.
  • Non-GAAP Net Income and Earnings per Diluted Share: Non-GAAP net income was $219 million compared to $215 million in the third quarter of 2017.  Non-GAAP earnings per diluted share were $1.38 compared to $1.30 in the third quarter of 2017, a 6 percent increase year over year.
  • Deferred Revenues: As of September 30, 2018, deferred revenues were $1,148 million compared to $1,036 million as of September 30, 2017, an 11 percent increase year over year.
  • Cash Flow: Cash flow from operations of $249 million compared to $260 million in the third quarter of 2017.
  • Cash Balances, Marketable Securities and Short Term Deposits: $4,072 million as of September 30, 2018, compared to $3,865 million as of September 30, 2017.
  • Share Repurchase Program: During the third quarter of 2018, we purchased approximately 2.6 million shares at a total cost of approximately $300 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.”

Business Highlights:

Check Point Software to Acquire Dome9 to Transform Cloud Security: Announced in a separate press release today, this acquisition enhances Check Point’s fully consolidated Infinity architecture and its CloudGuard security offering with advanced active policy enforcement and multi-cloud protection capabilities.

Check Point Software Technologies Recognized as a 2018 Gartner Peer Insights Customers’ Choice for Unified Threat Management: Gartner Peer Insights Customers’ Choice constitute the subjective opinions of individual end-user reviews, ratings, and data applied against a documented methodology; they neither represent the views of, nor constitute an endorsement by, Gartner or its affiliates.

Check Point Software Technologies Named a Leader in 2018 Gartner Magic Quadrant for Unified Threat Management (SMB Multifunction Firewalls) for Seventh Consecutive Year: Check Point’s Next Generation Firewall (Check Point Security Gateways) continues to have one of the largest UTM market share and continues to focus on enhancing threat prevention technologies, including anti-ransomware and CPU level emulation capabilities. Its solutions assist companies in protecting their data from advanced fifth-generation threats and attacks. It is the seventh consecutive year that Check Point has been listed as a Leader for UTM by Gartner.

BlackBerry and Check Point Software Announce a Global Partnership to Mitigate Cybersecurity Threats: The companies have entered a global ISV (Independent Software Vendor) partnership. The strategic agreement is the first of its kind for Check Point, and includes joint go-to-market planning and selling of Check Point’s market-leading mobile threat defense solution, SandBlast Mobile , along with BlackBerry UEM and BlackBerry Dynamics.

Check Point Announces SandBlast Mobile 3.0, the First to Provide Threat Prevention Technology to Enterprise Mobile Devices: SandBlast Mobile 3.0 becomes the only solution in the category to offer threat prevention technology for the enterprise, allowing employees to safely conduct business using their mobile devices. This industry-leading mobile security solution enhances unique on-device technology is designed to prevent malicious malware, botnets and phishing attacks on mobile applications.

Check Point Introduces Generation V Security Gateway for Enterprises and Data Centers: Combining broad threat prevention with purpose-built hardware, this latest addition to the Check Point 23000 family delivers the power to inspect SSL-encrypted traffic without compromising on performance, up time, or scalability. The 23900 security gateway offers high levels of security performance with 128 Gbps of firewall throughput in a compact 2U chassis. It supports connectivity standards up to 100 GbE and features modular expansion options with up to 42 network interfaces.

Check Point’s Research Team (https://research.checkpoint.com/ ) exposes vulnerabilities and attacks to ensure our customers have the highest levels of prevention and protection.  In the third quarter, our publications included the following:

Faxploit: Check Point researchers made a groundbreaking discovery into how corporate and home IT networks can be infiltrated via fax machines using nothing more than a mere fax number.

Man-in-the-Disk: Check Point Research revealed shortcomings in Android’s External Storage that can result in the silent installation of unrequested, potentially malicious, apps to the user’s phone and the denial of service for legitimate apps, causing applications to crash.

FakesApp: Check Point Research found new vulnerabilities in WhatsApp that could allow threat actors to intercept and manipulate messages sent in both private and group conversations, giving attackers immense power to create and spread misinformation from what appears to be trusted sources.

Massive Malvertising Campaign: Check Point Research uncovered a large Malvertising campaign that involved multiple parties in the online advertising chain to distribute malicious content, via multiple Exploit Kits, to online users everywhere.

World Cup Espionage Apps: Check Point Research analyzed malware that had been placed on the smartphones of Israeli army soldiers. The highly invasive malware was part of an espionage campaign that Israeli security agencies attributed to the Hamas terrorist group.

Big Bang APT Attack: Check Point Research analyzed the comeback of an APT surveillance attack against institutions across the Middle East, specifically the Palestinian Authority. The malware takes a screenshot of the infected machine and sends it to a command and control server.

Black Rose Lucy: Check Point Research intercepted a new Malware-as-a-Service product developed by a Russian speaking team. It could easily become a new ‘cyber swiss army knife’ that enables worldwide hacker groups to orchestrate a wide range of attacks.

Domestic Kitten: Check Point Research revealed an extensive and targeted attack that used fake mobile applications to collect sensitive information about those considered a threat to the Iranian government. The malware collected data including contact lists stored on the victim’s mobile device, phone call records, SMS messages, geo-location of the victim, photos, surrounding voice recordings and more.

CeidPageLock: A rootkit distributed by the RIG Exploit Kit that tries to tamper with the homepage of a victim’s browser to generate fraudulent ad revenue for attackers. Check Point researchers took a deeper look at how it works.

Interactive Mapping of APT-C-23: In reference to Check Point Research’s publication about the Big Bang APT Group, it was discovered this was actually part of a larger APT campaign. Check Point Research mapped out the larger picture of how all these campaigns are connected.

Conference Call and Webcast Information
Check Point will host a conference call with the investment community on October 24, 2018, at 8:30 AM EDT/5:30 AM PDT. To listen to the live webcast or replay, please visit the website www.checkpoint.com/ir .

Fourth Quarter Investor Conference Participation Schedule:

  • Morningstar  Management Behind The Moat Conference
    November 7, 2018Chicago, IL
  • UBS Global Technology Conference
    November 13, 2018San Francisco, CA
  • Credit Suisse 22nd Annual TMT Conference
    November 27, 2018Scottsdale, AZ
  • Wells Fargo 2018 Technology Summit
    December 4, 2018Park City, Utah

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.

©2018 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 the Check Point Infinity architecture, and our participation in investor conferences during the fourth quarter of 2018.  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 27, 2018. 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 or include certain items. 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 the 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 Nine Months Ended
 September 30, September 30,
 2018 2017 2018 2017
 (unaudited) (unaudited) (unaudited) (unaudited)
Revenues:       
  Products and licenses$121,130 $128,703 $364,935 $393,317
  Security subscriptions 136,354  120,328  395,681  350,339
Total revenues from products and security subscriptions 257,484  249,031  760,616  743,656
            
  Software updates and maintenance 213,339  205,596  630,303  604,994
Total revenues 470,823  454,627  1,390,919  1,348,650
        
Operating expenses:       
  Cost of products and licenses 21,683  24,374  62,656  74,467
  Cost of security subscriptions 4,375  3,824  12,101  13,253
Total cost of products and security subscriptions 26,058  28,198  74,757  87,720
  Cost of Software updates and
  maintenance
 22,608  23,090  65,666  65,166
  Amortization of technology 546  546  1,638  1,638
Total cost of revenues 49,212  51,834  142,061  154,524
        
  Research and development 50,531  49,222  154,183  141,682
  Selling and marketing 124,142  105,963  368,393  326,831
  General and administrative 20,834  22,674  62,793  68,207
Total operating expenses 244,719  229,693  727,430  691,244
        
Operating income 226,104  224,934  663,489  657,406
Financial income, net 17,234  12,223  48,509  33,902
Income before taxes on income 243,338  237,157  711,998  691,308
Taxes on income 45,108  44,455  128,942  127,693
Net income$198,230 $192,702 $583,056 $563,615
            
Basic earnings per share$1.27 $1.19 $3.71 $3.45
Number of shares used in computing basic earnings per share 155,941  162,104  157,026  163,502
            
Diluted earnings per share$1.25 $1.16 $3.64 $3.37
Number of shares used in computing diluted earnings per share 159,050  166,153  160,131  167,447
            


CHECK POINT SOFTWARE TECHNOLOGIES LTD.
SELECTED FINANCIAL METRICS

 (In thousands, except per share amounts)

  Three Months Ended Nine Months Ended
  September 30, September 30,
  2018 2017 2018 2017
  (unaudited) (unaudited) (unaudited) (unaudited)
         
Revenues  $470,823 $454,627 $1,390,919 $1,348,650
Non-GAAP operating income  249,750  250,840  735,871  732,283
Non-GAAP net income  219,271  215,297  647,345  628,803
Diluted Non-GAAP Earnings per share $1.38 $1.30 $4.04 $3.76
Number of shares used in computing diluted Non-GAAP earnings per share  159,050  166,153  160,131  167,447
             


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,
  2018  2017  2018  2017 
  (unaudited) (unaudited) (unaudited) (unaudited)
         
GAAP operating income $226,104  $224,934  $663,489  $657,406 
Stock-based compensation (1)  21,310   22,647   64,451   65,100 
Amortization of intangible assets and acquisition related expenses (2)  2,336   3,259   7,931   9,777 
Non-GAAP operating income $249,750  $250,840  $735,871  $732,283 
         
GAAP net income $198,230  $192,702  $583,056  $563,615 
Stock-based compensation (1)  21,310   22,647   64,451   65,100 
Amortization of intangible assets and acquisition related expenses (2)  2,336   3,259   7,931   9,777 
Taxes on the above items (3)  (2,605)  (3,311)    (8,093)    (9,689)
Non-GAAP net income $219,271  $215,297  $647,345  $628,803 
         
Diluted GAAP Earnings per share $1.25  $1.16  $3.64  $3.37 
Stock-based compensation (1)  0.13   0.14   0.40   0.39 
Amortization of intangible assets and acquisition related expenses (2)  0.02   0.02   0.05   0.06 
Taxes on the above items (3)  (0.02)  (0.02)    (0.05)    (0.06)
Diluted Non-GAAP Earnings per share $1.38  $1.30  $4.04  $3.76 
         
Number of shares used in computing diluted Non-GAAP earnings per share  159,050   166,153   160,131   167,447 
         
(1) Stock-based compensation:        
  Cost of products and licenses $41  $38  $117  $77 
  Cost of software updates and maintenance  921   700   2,458   1,932 
  Research and development  4,741   4,383   12,989   11,981 
  Selling and marketing  5,179   4,978   14,917   13,442 
  General and administrative  10,428   12,548   33,970   37,668 
   21,310   22,647   64,451   65,100 
         
(2) Amortization of intangible assets and acquisition related expenses:        
  Amortization of technology-cost of revenues  546   546     1,638     1,638 
  Research and development  974   1,897   3,845   5,691 
  Selling and marketing  816   816   2,448   2,448 
   2,336   3,259   7,931   9,777 
                 
(3) Taxes on the above items  (2,605)  (3,311)    (8,093)    (9,689)
                 
Total, net $21,041  $22,595  $64,289  $65,188 
                 


CHECK POINT SOFTWARE TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED BALANCE SHEET DATA

(In thousands)

ASSETS

 September 30,  December 31,
 2018 2017
 (unaudited) (audited)
Current assets:   
Cash and cash equivalents$324,481 $245,014
Marketable securities and short-term deposits 1,445,683  1,165,716
Trade receivables, net 312,688  472,223
Prepaid expenses and other current assets 51,657  81,478
Total current assets 2,134,509  1,964,431
    
Long-term assets:   
Marketable securities 2,301,606  2,437,315
Property and equipment, net 78,578  77,767
Deferred tax asset, net 110,515  119,431
Goodwill and other intangible assets, net 827,587  830,407
Other assets 53,534  33,575
Total long-term assets 3,371,820  3,498,495
    
Total assets$5,506,329 $5,462,926

LIABILITIES AND
SHAREHOLDERS’ EQUITY

Current liabilities:   
Deferred revenues$834,776  $878,287 
Trade payables and other accrued liabilities 340,593   328,638 
Total current liabilities 1,175,369   1,206,925 
    
Long-term liabilities:   
Long-term deferred revenues 313,557   308,286 
Income tax accrual 375,247   337,453 
Accrued severance pay 9,735   10,139 
  698,539   655,878 
    
Total liabilities 1,873,908   1,862,803 
    
Shareholders’ equity:   
Share capital 774   774 
Additional paid-in capital 1,461,431   1,305,130 
Treasury shares at cost (6,601,600)  (5,893,182)
Accumulated other comprehensive loss (33,391)  (15,634)
Retained earnings 8,805,207   8,203,035 
Total shareholders’ equity 3,632,421   3,600,123 
        
Total liabilities and shareholders’ equity$5,506,329  $5,462,926 
Total cash and cash equivalents, marketable securities and short-term deposits$4,071,770  $ 3,848,045 
        


CHECK POINT SOFTWARE TECHNOLOGIES LTD.
SELECTED CONSOLIDATED CASH FLOW DATA

(In thousands)

 Three Months Ended Nine Months Ended
 September 30, September 30,
  2018   2017   2018   2017 
 (unaudited) (unaudited) (unaudited) (unaudited)
Cash flow from operating activities:       
Net income$198,230  $192,702  $583,056  $563,615 
Adjustments to reconcile net income to net cash provided by operating activities:       
                
Depreciation of property and equipment     4,273       3,292   12,305   9,290 
Amortization of intangible assets 940   940   2,820   2,820 
Stock-based compensation 21,310   22,647   64,451   65,100 
Realized loss on marketable securities 237   29   326   172 
Decrease in trade and other receivables, net 13,156   55,001   194,892   196,935 
Increase (decrease) in deferred revenues, trade payables and other accrued liabilities 8,730   (16,300)  15,924   (24,906)
Deferred income taxes, net 2,148   1,512   7,191   28,506 
Net cash provided by operating activities 249,024   259,823   880,965   841,532 
        
Cash flow from investing activities:       
        
Investment in property and equipment (3,677)  (8,412)  (13,116)  (22,487)
Net cash used in investing activities (3,677)  (8,412)  (13,116)  (22,487)
        
Cash flow from financing activities:       
Proceeds from issuance of shares upon exercise of options 83,273   56,324   182,370   120,030 
Purchase of treasury shares (299,982)  (249,769)  (798,939)  (745,618)
Payments related to shares withheld for taxes (894)  (772)  (4,317)  (4,836)
Net cash used in financing activities (217,603)  (194,217)  (620,886)  (630,424)
        
Unrealized (loss) gain on marketable securities, net 2,321   999   (23,238)  6,954 
        
Increase in cash and cash equivalents, marketable securities and short term deposits 30,065   58,193   223,725   195,575 
        
Cash and cash equivalents, marketable securities and short term deposits at the beginning of the period 4,041,705   3,806,406   3,848,045   3,669,024 
        
Cash and cash equivalents, marketable securities and short term deposits at the end of the period$4,071,770  $3,864,599  $4,071,770  $3,864,599 
 


  
INVESTOR CONTACT:
Kip E. Meintzer
Check Point Software Technologies
+1.650.628.2040
ir@checkpoint.com
MEDIA CONTACT:
Chris Navalta
Check Point Software Technologies
+1.650.628.2260
press@checkpoint.com

opk_check-point_logo_horizontal.jpg

Source: Check Point Software Technologies Ltd.


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