Check Point Software Technologies Reports 2015 Second Quarter Financial Results
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SAN CARLOS, CA -- (Marketwired) -- 07/22/15 -- Check Point� Software Technologies Ltd. (NASDAQ: CHKP), the worldwide leader in securing the Internet, today announced its financial results for the second quarter ended June 30, 2015.
- Total Revenue: $395 million, representing a 9 percent increase year over year
- Non-GAAP Operating Income: $221 million, representing a 7 percent increase year over year
- Non-GAAP EPS: $0.99, representing an 11 percent increase year over year
- Deferred Revenues: $780 million, representing an 18 percent increase year over year
"We continued to post good financial results in the second quarter. Total revenues from products and software blades subscriptions delivered 11 percent growth, which was driven by strong demand across industries and business segments. Data Center, Super High-End and SMART-1 Management appliances drove product revenue growth. Subscription growth was driven by demand for our new and innovative technologies including Threat Emulation and Threat Extraction which combat advanced cyber-attacks," said Gil Shwed, founder and chief executive officer of Check Point Software Technologies.
Financial Highlights for the Second Quarter of 2015:
- Total Revenue: $395 million compared to $363 million in the second quarter of 2014.
- GAAP Operating Income: $199 million compared to $190 million in the second quarter of 2014.
- Non-GAAP Operating Income: $221 million compared to $207 million in the second quarter of 2014.
- GAAP Net Income and Earnings per Diluted Share: GAAP net income was $163 million compared to $160 million in the second quarter of 2014. GAAP earnings per diluted share were $0.88 compared to $0.83 in the second quarter of 2014.
- Non-GAAP Net Income and Earnings per Diluted Share: Non-GAAP net income was $183 million compared to $172 million in the second quarter of 2014. Non-GAAP earnings per diluted share were $0.99 compared to $0.89 in the second quarter of 2014.
- Deferred Revenues: As of June 30, 2015, deferred revenues were $780 million compared to $660 million as of June 30, 2014.
- Cash Flow: Cash flow from operations increased to $193 million from $168 million in the second quarter of 2014.
- Share Repurchase Program: During the second quarter of 2015, the company repurchased 2.9 million shares at a total cost of $245 million compared to $194 million in the second quarter of 2014.
- Cash Balances, Marketable Securities and Short Term Deposits: $3,611 million as of June 30, 2015, compared to $3,643 million as of June 30, 2014. The change reflects our strong cash flow, offset by expanded share repurchase program and the Company's recent acquisitions.
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 - The acquisition of Lacoon Mobile Security expands Check Point's mobile security portfolio by adding advanced mobile application threat emulation, behavioral risk analysis and real-time anomaly detection capabilities.
Critical Infrastructure Security - The launch of the 1200R security gateway appliance is an extension of Check Point's solutions for Industrial Control Systems (ICS) and critical infrastructure. The 1200R is a ruggedized security gateway appliance purposely-built for deployment in remote often harsh environments. It delivers full visibility and granular control of SCADA traffic to prevent network, devices and logical process attacks.
Cloud Security - Check Point vSEC designed for VMware NSX to extend comprehensive, best-in-class security to private cloud environments. The integrated solution allows customers to accelerate security deployment in virtualized datacenter environments for east-west traffic. The solution prevents zero-day attacks, APTs and other security threats within the private cloud.
We have also expanded our research and security partnerships, including:
2015 Check Point Security Report - Check Point issued its annual Security Report, based on collaborative research and in-depth analysis from more than 16,000 Threat Prevention gateways and 1 million smartphones. The report revealed that 96% of organizations are using high-risk applications and that there was an increase in security incidents across all categories: more data leakage incidents, additional attacks and malware and an increase in malicious sites being accessed. The report is available at http://www.checkpoint.com/securityreport.
Discovered Massive Vulnerability in Magento eCommerce Platform - Check Point's Malware and Vulnerability Research Group recently discovered a critical RCE (remote code execution) vulnerability in eBay's Magento web ecommerce platform, affecting nearly two hundred thousand online shops. If exploited, the vulnerability would give the attacker the ability to compromise an online store based on the Magento platform, including credit card information and other customer financial and personal data.
Check Point and FireEye Partnership - Check Point and FireEye announced the sharing of threat intelligence to protect mutual customers from modern advanced attacks. As part of this cooperation, Check Point's ThreatCloud and Next Generation Threat Prevention solutions and the FireEye NX platform will share the latest threat intelligence in real-time, allowing customers to update firewall security policies dynamically based on the intelligence from both platforms.
We received the following industry accolades:
Leader in the Gartner Magic Quadrant for Enterprise Network Firewall - Check Point is positioned as a Leader in the Gartner Magic Quadrant for Enterprise Network Firewall. The company has been in the Leaders quadrant since 1997.(1)
Number One in Worldwide Firewall Equipment Market Share - Check Point led in the worldwide market share for Firewall Equipment for Q1 2015, according to the Gartner Market Share: Enterprise Network Equipment by Market Segment, Worldwide reports.(2)
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 Q1 2015, according to the IDC Worldwide Quarterly Security Appliance Tracker.(3)
"We are pleased with the increased demand for our latest technologies to combat cyber-attacks and the healthy interest in our mobile threat prevention technologies. We continue to execute on our vision for a consolidated security platform that addresses tomorrow's security needs," Shwed concluded.
Third Quarter 2015 Investor Conference Participation Schedule:
- Needham 2015 Software and Services Conference August 5, 2015 - New York, NY
- Pacific Crest 17th Annual Global Technology Leadership Forum August 11, 2015 - Vail, CO
- Citi 2015 Global Technology Conference September 10, 2015 - New York, NY
- Deutsche Bank 2015 Technology Conference September 16-17, 2015 - Las Vegas, NV (1x1 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.
Conference Call and Webcast Information Check Point will host a conference call with the investment community on July 22, 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 July 29, 2015 on the company's website or by telephone at +1.201.612.7415, replay ID number 13614245.
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 cyber-attacks 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 to the increased demand for, and penetration of, our latest technologies to combat cyber-attacks and the interest in our mobile threat prevention technologies; our continued execution on our vision for a consolidated security platform that addresses tomorrow's security needs; and our expectations for our products, services and technology and the market acceptance thereof. 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 for the year ended December 31, 2014, 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.
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
----------------------- -----------------------
June 30, June 30,
----------------------- -----------------------
2015 2014 2015 2014
----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited)
Revenues:
Products and licenses $ 132,284 $ 124,342 $ 246,581 $ 232,281
Software Blades
subscriptions 76,627 63,743 150,976 125,500
----------- ----------- ----------- -----------
Total revenues from products
and software blades 208,911 188,085 397,557 357,781
Software updates and
maintenance 186,423 174,513 370,353 347,023
----------- ----------- ----------- -----------
Total revenues 395,334 362,598 767,910 704,804
----------- ----------- ----------- -----------
Operating expenses:
Cost of products and
licenses 23,973 22,353 44,933 42,413
Cost of software blades
subscriptions 1,787 1,092 3,311 2,602
----------- ----------- ----------- -----------
Total cost of products and
software blades 25,760 23,445 48,244 45,015
Cost of Software updates
and maintenance 19,303 17,506 37,973 34,754
Amortization of technology 540 60 716 120
----------- ----------- ----------- -----------
Total cost of revenues 45,603 41,011 86,933 79,889
Research and development 36,230 33,451 71,754 66,417
Selling and marketing 92,126 79,821 168,142 148,435
General and administrative 22,297 18,394 44,988 35,644
----------- ----------- ----------- -----------
Total operating expenses 196,256 172,677 371,817 330,385
----------- ----------- ----------- -----------
Operating income 199,078 189,921 396,093 374,419
Financial income, net 8,582 7,298 16,620 14,447
----------- ----------- ----------- -----------
Income before taxes on
income 207,660 197,219 412,713 388,866
Taxes on income 45,024 37,563 89,194 76,125
----------- ----------- ----------- -----------
Net income $ 162,636 $ 159,656 $ 323,519 $ 312,741
=========== =========== =========== ===========
Basic earnings per share
$ 0.90 $ 0.84 $ 1.78 $ 1.64
=========== =========== =========== ===========
Number of shares used in
computing basic earnings
per share 180,416 189,933 181,767 190,972
=========== =========== =========== ===========
Diluted earnings per share
$ 0.88 $ 0.83 $ 1.74 $ 1.61
=========== =========== =========== ===========
Number of shares used in
computing diluted earnings
per share 185,140 193,380 186,391 194,566
=========== =========== =========== ===========
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
RECONCILIATION OF GAAP TO NON GAAP FINANCIAL INFORMATION
(In thousands, except per share amounts)
------------------------ ------------------------
Three Months Ended Six Months Ended
------------------------ ------------------------
June 30, June 30,
------------------------ ------------------------
2015 2014 2015 2014
----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited)
GAAP operating income $ 199,078 $ 189,921 $ 396,093 $ 374,419
Stock-based compensation
(1) 18,801 16,587 36,578 29,058
Amortization of
intangible assets and
acquisition related
expenses (2) 3,317 535 4,603 1,070
----------- ----------- ----------- -----------
Non-GAAP operating
income $ 221,196 $ 207,043 $ 437,274 $ 404,547
=========== =========== =========== ===========
GAAP net income $ 162,636 $ 159,656 $ 323,519 $ 312,741
Stock-based compensation
(1) 18,801 16,587 36,578 29,058
Amortization of
intangible assets and
acquisition related
expenses (2) 3,317 535 4,603 1,070
Taxes on the above items
(3) (1,844) (4,679) (2,948) (6,868)
----------- ----------- ----------- -----------
Non-GAAP net income $ 182,910 $ 172,099 $ 361,752 $ 336,001
=========== =========== =========== ===========
Diluted GAAP Earnings
per share $ 0.88 $ 0.83 $ 1.74 $ 1.61
Stock-based compensation
(1) 0.10 0.08 0.11 0.15
Amortization of
intangible assets and
acquisition related
expenses (2) 0.01 - 0.03 0.01
Taxes on the above items
(3) - (0.02) (0.02) (0.04)
----------- ----------- ----------- -----------
Diluted Non-GAAP
Earnings per share $ 0.99 $ 0.89 $ 1.86 $ 1.73
=========== =========== =========== ===========
Number of shares used in
computing diluted Non-
GAAP earnings per share 185,140 193,380 186,391 194,566
=========== =========== =========== ===========
(1) Stock-based
compensation:
Cost of products and
licenses $ 16 $ 22 $ 30 $ 38
Cost of software
updates and
maintenance 400 240 714 425
Research and
development 2,862 2,661 5,241 4,754
Selling and marketing 4,323 3,874 7,919 6,202
General and
administrative 11,200 9,790 22,674 17,639
----------- ----------- ----------- -----------
$ 18,801 $ 16,587 $ 36,578 $ 29,058
----------- ----------- ----------- -----------
(2) Amortization of
intangible assets and
acquisition related
expenses:
Amortization of
technology-cost of
revenues $ 540 $ 60 $ 716 $ 120
Research and
development 1,897 - 2,352 -
Selling and marketing 880 475 1,535 950
----------- ----------- ----------- -----------
$ 3,317 $ 535 $ 4,603 $ 1,070
----------- ----------- ----------- -----------
(3) Taxes on the above
items $ (1,844) $ (4,679) $ (2,948) $ (6,868)
----------- ----------- ----------- -----------
Total, net $ 20,274 $ 12,443 $ 38,233 $ 23,260
=========== =========== =========== ===========
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED BALANCE SHEET DATA
(In thousands)
ASSETS
June 30, December 31,
2015 2014
------------ ------------
(unaudited) (audited)
Current assets:
Cash and cash equivalents $ 215,991 $ 261,970
Marketable securities and short-term deposits 1,011,113 1,050,492
Trade receivables, net 243,223 366,700
Prepaid expenses and other current assets 78,341 68,673
------------ ------------
Total current assets 1,548,668 1,747,835
------------ ------------
Long-term assets:
Marketable securities 2,383,498 2,370,471
Property and equipment, net 42,663 41,549
Severance pay fund 5,571 5,491
Deferred tax asset, net 16,888 14,368
Goodwill and other intangible assets, net 840,001 741,960
Other assets 47,704 27,144
------------ ------------
Total long-term assets 3,336,325 3,200,983
------------ ------------
Total assets $ 4,884,993 $ 4,948,818
============ ============
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Deferred revenues $ 634,708 $ 651,281
Trade payables and other accrued liabilities 276,422 281,554
------------ ------------
Total current liabilities 911,130 932,835
------------ ------------
Long-term liabilities:
Long-term deferred revenues 145,631 132,732
Income tax accrual 264,036 235,705
Deferred tax liability, net 372 504
Accrued severance pay 9,796 9,483
------------ ------------
419,835 378,424
------------ ------------
Total liabilities 1,330,965 1,311,259
------------ ------------
Shareholders' equity:
Share capital 774 774
Additional paid-in capital 905,771 859,124
Treasury shares at cost (3,586,136) (3,126,685)
Accumulated other comprehensive income (loss) 4,684 (1,070)
Retained earnings 6,228,935 5,905,416
------------ ------------
Total shareholders' equity 3,554,028 3,637,559
------------ ------------
Total liabilities and shareholders' equity
$ 4,884,993 $ 4,948,818
============ ============
Total cash and cash equivalents, marketable
securities and short-term deposits $ 3,610,602 $ 3,682,933
============ ============
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
SELECTED CONSOLIDATED CASH FLOW DATA
(In thousands)
Three Months Ended Six Months Ended
------------------------- -------------------------
June 30, June 30,
------------------------- -------------------------
2015 2014 2015 2014
------------ ----------- ----------- ------------
(unaudited) (unaudited) (unaudited) (unaudited)
Cash flow from
operating activities:
Net income $ 162,636 $ 159,656 $ 323,519 $ 312,741
Adjustments to
reconcile net income
to net cash provided
by operating
activities:
Depreciation of
property and
equipment 2,541 2,248 4,883 4,439
Amortization of
intangible assets 998 535 1,632 1,070
Stock-based
compensation 18,801 16,587 36,578 29,058
Realized gain on
marketable securities (7) (143) (79) (154)
Decrease (increase) in
trade and other
receivables, net (26,167) (15,128) 95,203 130,015
Increase (decrease) in
deferred revenues,
trade payables and
other accrued
liabilities 36,658 11,594 17,709 (129,500)
Excess tax benefit
from stock-based
compensation (2,084) (2,674) (2,301) (1,952)
Deferred income taxes,
net (650) (4,703) 169 (5,687)
------------ ----------- ----------- ------------
Net cash provided by
operating activities 192,726 167,972 477,313 340,030
------------ ----------- ----------- ------------
Cash flow from
investing activities:
Cash paid in
conjunction with
acquisitions, net of
acquired cash (62,413) - (96,544) -
Investment in property
and equipment (3,164) (2,328) (5,845) (4,531)
------------ ----------- ----------- ------------
Net cash used in
investing activities (65,577) (2,328) (102,389) (4,531)
------------ ----------- ----------- ------------
Cash flow from
financing activities:
Proceeds from issuance
of shares upon
exercise of options 2,228 - 34,015 47,418
Purchase of treasury
shares (244,997) (194,000) (486,682) (380,869)
Excess tax benefit
from stock-based
compensation 2,084 2,674 2,301 1,952
------------ ----------- ----------- ------------
Net cash used in
financing activities (240,685) (191,326) (450,366) (331,499)
------------ ----------- ----------- ------------
Unrealized gain (loss)
on marketable
securities, net (9,392) 6,272 3,111 8,860
------------ ----------- ----------- ------------
Increase (decrease) in
cash and cash
equivalents,
marketable securities
and short term
deposits (122,928) (19,410) (72,331) 12,860
Cash and cash
equivalents,
marketable securities
and short term
deposits at the
beginning of the
period 3,733,530 3,662,194 3,682,933 3,629,924
------------ ----------- ----------- ------------
Cash and cash
equivalents,
marketable securities
and short term
deposits at the end
of the period $ 3,610,602 $ 3,642,784 $ 3,610,602 $ 3,642,784
============ =========== =========== ============
Source: Check Point Software Technologies Ltd.
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