Check Point Software Technologies Reports 2019 Third Quarter Financial Results

Check Point® Software Technologies Ltd. (NASDAQ: CHKP), today announced financial results for the third quarter ended September 30, 2019.

Third Quarter 2019:

• Total Revenue: $491 million, 4 percent increase year over year
• Deferred Revenues: $1,242 million, 8 percent increase year over year
• GAAP Operating Income: $214 million, representing 44 percent of revenues
• Non-GAAP Operating Income: $246 million, representing 50 percent of revenues
• GAAP EPS: $1.25, Non-GAAP EPS: $1.44

“During the third quarter our security subscriptions continued to drive results with 13 percent growth. This was underscored by expanded customer adoption of our cloud solutions,” said Gil Shwed, Founder and CEO of Check Point Software Technologies. “We continued to increase the breadth of our offerings with the introduction of CloudGuard Connect and CloudGuard Edge, providing enterprises with industry leading threat prevention driven by a cloud service.”

Financial Highlights for the Third Quarter of 2019:

• Total Revenue: $491 million compared to $471 million in the third quarter of 2018, a 4 percent increase year over year.
• GAAP Operating Income: $214 million compared to $226 million in the third quarter of 2018, representing 44 percent and 48 percent of revenues in the third quarter of 2019 and 2018, respectively.
• Non-GAAP Operating Income: $246 million compared to $250 million in the third quarter of 2018, representing 50 percent and 53 percent of revenues in the third quarter of 2019 and 2018, respectively.
• GAAP Taxes on Income: $47 million compared to $45 million in the third quarter of 2018.
• GAAP Net Income & Earnings per Diluted Share: GAAP net income was $188 million compared to $198 million in the third quarter of 2018. GAAP earnings per diluted share were $1.25, same as third quarter of 2018.
• Non-GAAP Net Income & Earnings per Diluted Share: Non-GAAP net income was $217 million compared to $219 million in the third quarter of 2018. Non-GAAP earnings per diluted share were $1.44 compared to $1.38 in the third quarter of 2018, a 4 percent increase year over year.
• Deferred Revenues: As of September 30, 2019, deferred revenues were $1,242 million compared to $1,148 million as of September 30, 2018, an 8 percent increase year over year.
• Cash Balances, Marketable Securities & Short Term Deposits: $4,055 million as of September 30, 2019, compared to $4,072 million as of September 30, 2018.
• Cash Flow: Cash flow from operations of $244 million compared to $249 million in the third quarter of 2018.
• Share Repurchase Program: During the third quarter of 2019, the company repurchased approximately 2.9 million shares at a total cost of approximately $323 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

We announced several new products delivering advanced threat prevention through cloud services, for small and branch offices and expanding the data center performance at the high end.

Product Announcements

• New Solution for Enterprise Branch Office Security Delivered from the Cloud: Check Point CloudGuard Connect and CloudGuard Edge allow enterprises to deploy branch office security in minutes from the cloud or on premise. The solution is integrated with leading SD-WAN providers like VMware and Silver Peak and provides a unified threat and access management platform that reduces OPEX by up to 40%.
• Innovative Series of Small / Branch Office Appliances: The new 1500 series security gateways empower small and midsize businesses with Enterprise Grade Security. The new appliances feature 100% block score for malware prevention, up to 2 times more performance with up to 4 Gbps Firewall and 660 Mbps of full Threat Prevention. The solution delivers out-of-box Zero Touch provisioning, mobile app for security on the go and a unified management portal.
• Latest Data Center Security Appliances: Check Point introduced the 16000 model and 26000 turbo security gateways. The 16000 Base, 16000 Plus and the 26000 Turbo deliver up to 30 Gbps of Gen V Threat Prevention security and are extensions of Check Point’s new gateway appliance series 16000 and 26000, which were introduced in June.

Industry Recognition

• Check Point Software Technologies Achieves FedRAMP Milestone: Check Point achieved Federal Risk and Authorization Management Program (FedRAMP) “In Process” status for FedRAMP Moderate. The In-Process status signifies the addition of Check Point’s SandBlast Next Generation Threat Emulation and SandBlast Mobile offerings to the FedRAMP marketplace, which are certified solutions for Federal, State and Local Governments, Healthcare and Financial verticals.
• Received Highest Security Effectiveness Score in Second NSS Labs Breach Prevention Systems Test: Check Point earned the highest security effectiveness score in NSS Labs’ second Breach Prevention Systems (BPS) Group Test. NSS Labs tested Check Point’s Next Generation Firewall Security Gateway, Threat Prevention and Advanced Endpoint Security, earning the solution a “Recommended” rating for its security effectiveness and TCO per protected Mbps.
• Check Point SandBlast Endpoint Protection Recognized as a Leader by Independent Research Firm: In the Forrester research report, Check Point was recognized as a “Leader” and received the highest possible scores in the malware prevention, exploit prevention, secure configuration management, data security, mobile and zero-trust framework alignment criteria.
• Check Point SandBlast Mobile Recognized as the Security Leader In Mobile Threat Defense Industry Test: In Miercom’s Mobile Threat Defense Industry Assessment, Check Point achieved a 99% security rating and earned the Certified Secure Award for SandBlast Mobile.

Check Point’s Research

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 publication highlights included the following:

• Exposed a large scale malware campaign utilizing Facebook: We recently revealed a large-scale, multi-year campaign, which was using Facebook pages to spread malware across mobile and desktop environments, focusing on targets in Libya. Following our report, Facebook took down the related pages and accounts which were linked to prominent Libyan political and military figures.
• Revealed Security Flaw that Leaves Over 1 Billion Android Smartphones Vulnerable: Our researchers identified a security flaw in Android-based phones that leaves users vulnerable to advanced phishing attacks. In these attacks, a remote agent can trick users into accepting new phone settings that can route their Internet traffic through a proxy controlled by the attacker.
• DSLR Cameras Vulnerable to Ransomware and Malware: Through the USB and connections to Wi-Fi networks, DSLR cameras are vulnerable to ransomware and malware attacks. Check Point Research revealed critical vulnerabilities in the Picture Transfer Protocol.
• Vulnerabilities in the SQLite database – SELECT code execution: Vulnerabilities in the SQLite database could have led to Remote Code Execution. The research team illustrated these vulnerabilities by creating a rogue SQLite database that exploits the software used to open it.
• Remote Desktop Protocol Vulnerability as a result of a designed flaw in a Microsoft product: The Hyper-V Connection: Check Point Research discovered a vulnerability in the popular RDP service that put host devices at risk of compromise, the result of a design flaw in the Microsoft Terminal Services Client.
• Rancor: The Year of The Phish – A Chinese APT group attacking a Southeast Asian Government: The Check Point Research team discovered a targeted, 7 month, spear-phishing attack against the Southeast Asian government employees, using hundreds of malicious documents sent from real e-mail addresses belonging to government officials. Check Point’s Threat Emulation and Threat Extraction caught the malware used in this attack.
• The Eye on the Nile-a cyber-operation against civil rights activities in Egypt: Check Point’s research team uncovered an operation against civil rights activists, as well as Amnesty members in Egypt. Following an initial report by Amnesty International in March, CPR uncovered the scope and means of a sophisticated attack allegedly linked to the Egyptian ministry and government site.
• Biggest Vulnerabilities of the Cloud Environment: Check Point 2019 Cloud Security Report with over 670 cybersecurity and IT professionals, provide deep insight into the latest trends, key challenges and solutions for cloud security. The report revealed that unauthorized access (42%), insecure interfaces (42%), misconfigurations of the Cloud platform (40%) and account hijacking (39%) are the biggest vulnerabilities in the public cloud.

Conference Call and Webcast Information
Check Point will host a conference call with the investment community on October 28, 2019, 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.

Third Quarter Investor Conference Participation Schedule:

• Jefferies 2019 Cybersecurity Summit
  November 12, 2019 – SF, CA
• Credit Suisse 23^rd Annual Technology Conference
  December 2, 2019 – Scottsdale, AZ
• Wells Fargo TMT Summit 2019
  December 4, 2019 – Las Vegas, NV
• Raymond James 2019 Technology Investor Conference
  December 10, 2019 – NY, NY
• Cowen 6^th Annual Networking & Cybersecurity Summit
  December 11, 2019 – NY, NY

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.