Check Point Software Technologies Reports 2019 Second Quarter Financial Results

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 21^st 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.