SOURCE: Check Point Software Technologies Ltd.

Check Point Software Technologies Ltd.

July 18, 2012 05:00 ET

Check Point Software Technologies Reports 2012 Second Quarter Financial Results

REDWOOD CITY, CA--(Marketwire - Jul 18, 2012) - 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, 2012.

  • Total Revenue: $328.6 million, representing a 9 percent increase year over year
  • Non-GAAP Operating Income: $193.6 million, representing 59 percent of revenues
  • Non-GAAP EPS: $0.77, representing a 13 percent increase year over year
  • Share Repurchase Program: Expanded on-going program up to 1 billion dollars

"I'm pleased with the continued growth of our revenues and earnings in the second quarter. We've seen great acceptance of our new security appliances as a platform of choice for security consolidation. During the quarter, enterprise appliance units grew by over 20% and continued to drive market share gains," said Gil Shwed, founder, chairman, and chief executive officer of Check Point Software Technologies. "These results underscore the strength of Check Point's market position especially in light of the current macro-economic environment."

Today, the company announced in a separate release that the board of directors authorized the expansion of the on-going share repurchase program up to one billion dollars. Under the expanded plan, Check Point is authorized to repurchase up to one billion dollars of its outstanding shares during the next two years.

Financial Highlights:

  • Total Revenue: $328.6 million, an increase of 9 percent, compared to $300.6 million in the second quarter of 2011.
  • GAAP Operating Income: $180.5 million, an increase of 20 percent, compared to $150.1 million in the second quarter of 2011. GAAP operating margin was 55 percent, compared to 50 percent in the second quarter of 2011.
  • Non-GAAP Operating Income: $193.6 million, an increase of 13 percent, compared to $171.0 million in the second quarter of 2011. Non-GAAP operating margin was 59 percent, compared to 57 percent in the second quarter of 2011.
  • GAAP Net Income and Earnings per Diluted Share: GAAP net income was $150.0 million, an increase of 17 percent, compared to $128.0 million in the second quarter of 2011. GAAP earnings per diluted share were $0.71, an increase of 18 percent, compared to $0.60 in the second quarter of 2011.
  • Non-GAAP Net Income and Earnings per Diluted Share: Non-GAAP net income was $161.8 million, an increase of 11 percent, compared to $145.5 million in the second quarter of 2011. Non-GAAP earnings per diluted share were $0.77, an increase of 13 percent, compared to $0.68, in the second quarter of 2011. 
  • Deferred Revenues: As of June 30, 2012, we had deferred revenues of $536.6 million, an increase of 17 percent, compared to $457.0 million as of June 30, 2011. 
  • Cash Flow: Cash flow from operations was $157.5 million, compared to $175.5 million in the second quarter of 2011.
  • Share Repurchase Program: During the second quarter of 2012, we repurchased 1.4 million shares at a total cost of $75 million.
  • Cash Balances, Marketable Securities and Short Term Deposits: $3,201.8 million as of June 30, 2012, an increase of $512.0 million, compared to $2,689.8 million as of June 30, 2011.

For information regarding the Non-GAAP financial measures discussed in this release, please see "Use of Non-GAAP Financial Information" and "Reconciliation of GAAP to Non-GAAP Financial Information."

Business Highlights

During the second quarter and up to today, the company has launched several new products and technologies, including:

DDoS Protector™ Appliances - Check Point expanded into a new and critical security market segment. These new solutions combat a wide range of Distributed Denial of Service (DDoS) attacks and are integrated with Check Point Security Management environment.

Security Acceleration Module - The Security Acceleration Module with advanced SecurityCore™ technology enables customers in high-performance and low latency environments, such as financial trading and investment companies, to significantly boost network performance by accelerating key security operations. Customers are able to achieve 110 Gbps of firewall throughput and sub-five micro second (5 µs) latency -- enabling the industry's highest-performing two rack-unit firewall.

Check Point ThreatCloud™ - The first collaborative network of its type to fight cybercrime. A network that automatically detects and shares new attack information in real time by collecting and correlating attack information from Check Point customer's gateways and a dedicated attack sensor network. 

Anti-Bot Software Blade - Check Point shipped a new software blade that can be activated on every Check Point enterprise gateway, delivering the industry's most sophisticated and integrated solution to fight software bots and protect against advanced threats and sophisticated malware.

New Software Version R75.40 & New Secure OS (GAiA) - This includes more than 100 new features, including the Anti-Bot Software Blade, an updated Anti-Virus Software Blade powered by Check Point ThreatCloud. R75.40 also includes the company's new integrated secure operating system (GAiA) that simplifies the operations and unifies the capabilities of all the company's new and previous appliance and software lines.

ZoneAlarm Free Antivirus + Firewall - This new product is the most complete free Internet security solution for consumers. It combines the world's No.1 firewall with award-winning antivirus into one easy-to-use product that protects consumers against online attacks.

Check Point Virtual Systems - New solution for private cloud environments and data centers that enables the consolidation of up to 250 security gateways on a single hardware platform.

Industry Accolades

Computerworld Hong Kong Awards 2012 - Check Point was recognized for ten years of IT excellence and received four prestigious awards for its Firewall / VPN Software Blade, Identity Awareness Software Blade, IPS Software Blade, and 4600 Appliance.

2012 Frost & Sullivan Asia Pacific ICT Award - Named "Network Security Vendor of the Year", this is the third time Check Point has received this prestigious distinction.

IPv6 Industry Certification - R75.40 and unified operating system (OS), Check Point GAiA™, tested at the UNH Interoperability Laboratory and achieved industry certification from the IPv6 Forum.

Shwed concluded, "We continued to expand our network security arsenal with the addition of Check Point's ThreatCloud™, Anti-Bot software blades, DDoS Protector™ Appliances and the latest edition of Check Point Virtual Systems further strengthening our leadership position in network security for enterprises of all sizes, data centers and cloud environments."

Third Quarter 2012 Investor Conference Participation Schedule:

  • Pacific Crest 14th Annual Global Technology Leadership Forum
    August 13, 2012 - Vail, CO
  • Oppenheimer 15th Annual Technology, Internet and Communications Conference
    August 15, 2012 - Boston, MA
  • Citi 2012 Technology Conference
    September 5, 2012 - New York, NY
  • Deutsche Bank 2012 dbAccess Technology Conference
    September 11, 2012 - Las Vegas, NV
  • ThinkEquity's 9th Annual Growth Conference
    September 13, 2012 - New York, NY

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 July 18, 2012 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 25, 2012 on the company's website or by telephone at +1.201.612.7415, replay ID number 397366, account # 215.

About Check Point Software Technologies Ltd.
Check Point Software Technologies Ltd. (www.checkpoint.com), the worldwide leader in securing the Internet, provides customers with uncompromised protection against all types of threats, reduces security complexity and lowers total cost of ownership. Check Point first pioneered the industry with FireWall-1 and its patented stateful inspection technology. Today, Check Point continues to develop new innovations based on the Software Blade Architecture, providing customers with flexible and simple solutions that can be fully customized to meet the exact security needs of any organization. Check Point is the only vendor to go beyond technology and define security as a business process. Check Point 3D Security uniquely combines policy, people and enforcement for greater protection of information assets and helps organizations implement a blueprint for security that aligns with business needs. Customers include tens of thousands of organizations of all sizes, including all Fortune and Global 100 companies. Check Point's award-winning ZoneAlarm solutions protect millions of consumers from hackers, spyware and identity theft. 

©2012 Check Point Software Technologies Ltd. All rights reserved

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, operating margin and earnings per share, which are adjustments from results based on GAAP to exclude non-cash equity-based compensation charges, amortization of acquired intangible assets, other than temporary impairment of marketable securities, net, and the related tax effects. 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.

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,
    2012   2011   2012   2011
    (unaudited)   (unaudited)   (unaudited)   (unaudited)
Revenues:                        
  Products and licenses   $ 123,155   $ 119,288   $ 233,337   $ 224,546
  Software updates, maintenance and subscription     205,494     181,356     408,428     357,372
Total revenues     328,649     300,644     641,765     581,918
                         
Operating expenses:                        
  Cost of products and licenses     20,671     18,983     40,275     36,635
  Cost of Software updates, maintenance and subscription    
16,745
   
15,623
   
32,784
   
29,920
  Amortization of technology     536     7,850     3,394     15,699
Total cost of revenues     37,952     42,456     76,453     82,254
                         
  Research and development     27,262     27,524     54,104     55,167
  Selling and marketing     65,815     64,785     124,914     123,294
  General and administrative     17,092     15,833     32,876     29,823
Total operating expenses     148,121     150,598     288,347     290,538
                         
Operating income     180,528     150,046     353,418     291,380
Financial income, net     9,774     10,832     20,236     21,360
Income before taxes on income     190,302     160,878     373,654     312,740
Taxes on income     40,321     32,887     80,047     62,659
Net income   $ 149,981   $ 127,991   $ 293,607   $ 250,081
Earnings per share (basic)   $ 0.73   $ 0.62   $ 1.43   $ 1.20
Number of shares used in computing earnings per share (basic)    
205,482
   
207,129
   
205,798
   
207,650
Earnings per share (diluted)   $ 0.71   $ 0.60   $ 1.39   $ 1.16
Number of shares used in computing earnings per share (diluted)    
211,320
   
214,565
   
211,894
   
215,240
                         
                         
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,  
    2012     2011     2012     2011  
    (unaudited)     (unaudited)     (unaudited)     (unaudited)  
                                 
GAAP operating income   $ 180,528     $ 150,046     $ 353,418     $ 291,380  
Stock-based compensation (1)     11,920       9,900       21,705       18,145  
Amortization of intangible assets (2)     1,181       11,032       5,185       22,063  
Non-GAAP operating income   $ 193,629     $ 170,978     $ 380,308     $ 331,588  
                                 
GAAP net income   $ 149,981     $ 127,991     $ 293,607     $ 250,081  
Stock-based compensation (1)     11,920       9,900       21,705       18,145  
Amortization of intangible assets (2)     1,181       11,032       5,185       22,063  
Gain on Sale of marketable securities previously impaired (3)     -       (649 )     -       (2,017 )
Taxes on the above items (4)     (1,260 )     (2,759 )     (1,763 )     (5,688 )
Non-GAAP net income   $ 161,822     $ 145,515     $ 318,734     $ 282,584  
                                 
GAAP Earnings per share (diluted)   $ 0.71     $ 0.60     $ 1.39     $ 1.16  
Stock-based compensation (1)     0.06       0.04       0.10       0.08  
Amortization of intangible assets (2)     0.01       0.05       0.02       0.10  
Gain on Sale of marketable securities previously impaired (3)     -       (0.00 )     -       (0.01 )
Taxes on the above items (4)     (0.01 )     (0.01 )     (0.01 )     (0.02 )
Non-GAAP Earnings per share (diluted)   $ 0.77     $ 0.68     $ 1.50     $ 1.31  
                                 
Number of shares used in computing Non-GAAP earnings per share (diluted)     211,320       214,565       211,894       215,240  
                                 
(1) Stock-based compensation:                                
  Cost of products and licenses   $ 22     $ 19     $ 38     $ 30  
  Cost of software updates, maintenance and subscription     238       255       305       445  
  Research and development     2,614       2,022       4,553       3,455  
  Selling and marketing     2,738       1,690       4,827       3,581  
  General and administrative     6,308       5,914       11,982       10,634  
    $ 11,920     $ 9,900     $ 21,705     $ 18,145  
                                 
(2) Amortization of intangible assets:                                
  Amortization of technology-cost of revenues     536       7,850       3,394       15,699  
  Selling and marketing     645       3,182       1,791       6,364  
      1,181       11,032       5,185       22,063  
(3) Gain on Sale of marketable securities previously impaired     -       (649 )     -       (2,017 )
(4) Taxes on the above items     (1,260 )     (2,759 )     (1,763 )     (5,688 )
Total, net   $ 11,841     $ 17,524     $ 25,127     $ 32,503  
                                 
                                 
CHECK POINT SOFTWARE TECHNOLOGIES LTD.  
CONDENSED CONSOLIDATED BALANCE SHEET DATA  
(In thousands)  
   
ASSETS  
  June 30,     December 31,  
  2012     2011  
  (unaudited)     (audited)  
Current assets:              
Cash and cash equivalents $ 291,062     $ 493,546  
Marketable securities and short-term deposits   1,080,710       865,994  
Trade receivables, net   249,242       357,418  
Prepaid expenses and other current assets   51,139       53,045  
Total current assets   1,672,153       1,770,003  
               
Long-term assets:              
Marketable securities   1,830,040       1,519,865  
Property and equipment, net   36,558       36,639  
Severance pay fund   5,867       6,052  
Deferred tax asset, net   23,127       25,296  
Other intangible assets, net   21,055       26,239  
Goodwill   727,875       727,875  
Other assets   17,802       16,094  
Total long-term assets   2,662,324       2,358,060  
               
Total assets $ 4,334,477     $ 4,128,063  
               
               
LIABILITIES AND  
SHAREHOLDERS' EQUITY  
   
Current liabilities:              
Deferred revenues $ 474,073     $ 490,655  
Trade payables and other accrued liabilities   276,317       271,815  
Total current liabilities   750,390       762,470  
               
Long-term deferred revenues   62,492       61,523  
Income tax accrual   230,861       219,469  
Deferred tax liability, net   -       1,274  
Accrued severance pay   10,212       10,236  
    303,565       292,502  
               
Total liabilities   1,053,955       1,054,972  
               
Shareholders' equity:              
Share capital   774       774  
Additional paid-in capital   662,226       630,508  
Treasury shares at cost   (1,662,510 )     (1,543,886 )
Accumulated other comprehensive income   13,380       12,650  
Retained earnings   4,266,652       3,973,045  
Total shareholders' equity   3,280,522       3,073,091  
Total liabilities and shareholders' equity $ 4,334,477     $ 4,128,063  
               
Total cash and cash equivalents, marketable securities and short-term deposits $ 3,201,812     $ 2,879,405  
               
               
CHECK POINT SOFTWARE TECHNOLOGIES LTD.  
SELECTED CONSOLIDATED CASH FLOW DATA  
   
(In thousands)  
   
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2012     2011     2012     2011  
    (unaudited)     (unaudited)     (unaudited)     (unaudited)  
Cash flow from operating activities:                                
Net income   $ 149,981     $ 127,991     $ 293,607     $ 250,081  
Adjustments to reconcile net income to net cash provided by operating activities:                                
Depreciation of property and equipment     1,830       1,824       3,782       3,553  
Amortization of intangible assets     1,181       11,032       5,184       22,063  
Stock-based compensation     11,920       9,900       21,705       18,145  
Realized gain on marketable securities     (159 )     (2,481 )     (97 )     (2,481 )
Decrease (increase) in trade and other receivables, net     (7,300 )     (3,319 )     105,861       79,906  
Increase (decrease) in deferred revenues, trade payables and other accrued liabilities    
(1,130
)    
35,622
      (2,239 )     21,764  
Excess tax benefit from stock-based compensation     (143 )     (2,035 )     235       (2,088 )
Deferred income taxes, net     1,347       (3,025 )     4,822       (3,829 )
Net cash provided by operating activities     157,527       175,509       432,860       387,114  
                                 
Cash flow from investing activities:                                
Cash paid in conjunction with acquisitions, net of acquired cash     -       (985 )    
-
     
 (6,501
)
Investment in property and equipment     (1,283 )     (1,623 )     (3,701 )     (3,484 )
Net cash used in investing activities     (1,283 )     (2,608 )     (3,701 )     (9,985 )
                                 
Cash flow from financing activities:                                
Proceeds from issuance of shares upon exercise of options    
 2,070
     
8,036
     
41,624
     
 39,551
 
Purchase of treasury shares     (75,000 )     (75,000 )     (149,999 )     (150,000 )
Excess tax benefit from stock-based compensation     143       2,035       (235 )     2,088  
Net cash used in financing activities     (72,787 )     (64,929 )     (108,610 )     (108,361 )
                                 
Unrealized gain (loss) on marketable securities, net     (2,799 )     9,633       1,858       6,094  
                                 
Increase in cash and cash equivalents, marketable securities and short term deposits    
 80,658
     
117,605
     
322,407
     
 274,862
 
                                 
Cash and cash equivalents, marketable securities and short term deposits at the beginning of the period    
 3,121,154
     
2,572,203
     
2,879,405
     
 2,414,946
 
                                 
Cash and cash equivalents, marketable securities and short term deposits at the end of the period   $
 3,201,812
    $
2,689,808
    $
3,201,812
    $
 2,689,808
 

Contact Information

  • INVESTOR CONTACT:
    Kip E. Meintzer
    Check Point Software Technologies
    +1.650.628.2040
    ir@checkpoint.com

    MEDIA CONTACT:
    James Rivas
    Check Point Software Technologies
    +1.650.628.2215
    press@checkpoint.com