SOURCE: Check Point Software Technologies Ltd.

Check Point Software Technologies Ltd.

January 23, 2013 05:07 ET

Check Point Software Technologies Reports Fourth Quarter and Full Year 2012 Financial Results

SAN CARLOS, CA--(Marketwire - Jan 23, 2013) - Check Point® Software Technologies Ltd. (NASDAQ: CHKP)

Full Year 2012:

  • Total Revenues: $1,342.7 million, representing an 8 percent increase year over year
  • Non-GAAP Operating Income: $798.9 million, representing 59 percent of revenues versus 58 percent year over year
  • Non-GAAP EPS: $3.19, representing an 11 percent increase year over year
  • Cash Flow From Operations: $815.8 million, representing a 14 percent increase year over year
  • Share Repurchase Program: $466.2 million, representing a 55 percent increase year over year

Fourth Quarter 2012:

  • Total Revenues: $368.6 million, representing a 3 percent increase year over year
  • Non-GAAP Operating Income: $222.9 million, representing 60 percent of revenues, same as last year
  • Non-GAAP EPS: $0.91, representing an 8 percent increase year over year
  • Cash Flow From Operations: $202.4 million, representing a 17 percent increase year over year

Check Point® Software Technologies Ltd. (NASDAQ: CHKP), the worldwide leader in securing the Internet, today announced financial results for the fourth quarter and full-year ending December 31, 2012.

"Throughout 2012, customers continued to adopt the Software Blades Architecture and further consolidated their security infrastructure with our new appliance portfolio. Revenues from software blades had a significant contribution to our growth with over a 50% increase this year. Overall financial results were good with non-GAAP EPS growth of 11 percent for the year. Cash flow from operations reached $816 million dollars representing 14 percent growth for the year. In the fourth quarter, cash flow from operations was $202 million dollars representing 17 percent growth," said Gil Shwed, founder, chairman and chief executive officer at Check Point Software Technologies.

Financial Highlights for the Fourth Quarter of 2012

  • Total Revenues: $368.6 million, an increase of 3 percent, compared to $356.8 million in the fourth quarter of 2011.
  • GAAP Operating Income: $210.5 million, an increase of 9 percent, compared to $192.6 million in the fourth quarter of 2011. GAAP operating margin was 57 percent, compared to 54 percent in the fourth quarter of 2011.
  • Non-GAAP Operating Income: $222.9 million, an increase of 4 percent, compared to $213.7 million in the fourth quarter of 2011. Non-GAAP operating margin was 60 percent, same as in the fourth quarter of 2011.
  • GAAP Net Income and Earnings per Diluted Share: GAAP net income was $174.0 million, an increase of 9 percent, compared to $159.8 million in the fourth quarter of 2011. GAAP earnings per diluted share were $0.85, an increase of 13 percent, compared to $0.75 in the fourth quarter of 2011.
  • Non-GAAP Net Income and Earnings per Diluted Share: Non-GAAP net income was $185.1 million, an increase of 4 percent, compared to $178.1 million in the fourth quarter of 2011. Non-GAAP earnings per diluted share were $0.91, an increase of 8 percent, compared to $0.84 in the fourth quarter of 2011. 
  • Deferred Revenues: As of December 31, 2012, Check Point had deferred revenues of $589.7 million, an increase of 7 percent, compared to $552.2 million as of December 31, 2011. 
  • Cash Flow: Cash flow from operations was $202.4 million, an increase of 17 percent, compared to $173.2 million in the fourth quarter of 2011. 
  • Share Repurchase Program: During the fourth quarter of 2012, the company repurchased 3.6 million shares at a total cost of $160.1 million.
  • Cash Balances and Marketable Securities: $3,295.4 million as of December 31, 2012, an increase of $416.0 million, compared to $2,879.4 million as of December 31, 2011.

Financial Highlights for the Year Ended December 31, 2012

  • Total Revenues: $1,342.7 million, an increase of 8 percent, compared to $1,247.0 million in 2011.
  • GAAP Operating Income: $746.5 million, an increase of 16 percent, compared to $642.2 in 2011. GAAP operating margin was 56 percent, compared to 51 percent in 2011.
  • Non-GAAP Operating Income: $798.9 million, an increase of 10 percent, compared to $725.9 million in 2011. Non-GAAP operating margin was 59 percent, compared to 58 percent in 2011.
  • GAAP Net Income and Earnings per Diluted Share: GAAP net income was $620.0 million, an increase of 14 percent, compared to $544.0 million in 2011. GAAP earnings per diluted share were $2.96, an increase of 17 percent, compared to $2.54 in 2011.
  • Non-GAAP Net Income and Earnings per Diluted Share: Non-GAAP net income was $667.9 million, an increase of 9 percent, compared to $613.6 million in 2011. Non-GAAP earnings per diluted share were $3.19, an increase of 11 percent, compared to $2.87 in 2011.
  • Cash Flow: Cash flow from operations was $815.8 million, an increase of 14 percent, compared to $714.9 million in 2011.
  • Share Repurchase Program: The Company repurchased 9.5 million shares at a total cost of $466.2 million during 2012.

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."

2012 Business Highlights
Over the course of 2012, Check Point introduced new and innovative products focused on fighting cyber threats and making enterprises more secure including:

  • Check Point ThreatCloud™ - The first collaborative network to fight cybercrime. ThreatCloud gathers attack data from thousands of gateways and sensors around the world and distributes the intelligence to participating security gateways. In the fourth quarter, the company continued to expand the ThreatCloud offering with the introduction of new managed security services.
  • Anti-Bot Software Blade - The Anti-bot software blades address one of the key cyber threats used by the most sophisticated attacks. Bots are malicious software agents that hide inside personal computers awaiting instructions from their remote operators. They are utilized to steal data and attack other computers as well as other malicious activities. The anti-bot software blades detect the bot presence on the network using a multi-dimensional approach and block their activity. 
  • New Appliance Product Line Transition - Over 90 percent of appliances sold during the fourth quarter were from the new appliance product line. Our 2012 Appliances models are optimized for Check Point's Software Blade Architecture™ and deliver approximately three times the performance of previous generations.
  • New Secure OS (GAiA) - GAiA is our new secure operating system that unifies the operations of the company's new and existing appliances, integrating the functions and features of multiple product lines.
  • Software Version R75.40 - New software version for the company's core network security products. This version includes more than 100 new features, including the Anti-Bot Software Blade and an updated version of the company's Anti-Virus Software Blades powered by Check Point ThreatCloud.
  • 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.
  • 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 the 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 floors, 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.

Industry Accolades & New Research:
Check Point continued to receive industry recognition and published a whitepaper on a new attack, including:

  • Top Position in Worldwide Combined Firewall and UTM Appliance Market - Check Point is positioned as the number one vendor in worldwide combined Firewall and UTM appliance revenue for Q2 2012 according to the IDC Worldwide Q2 2012 Security Appliance Tracker.
  • Leader in Gartner's Magic Quadrant for Mobile Data Protection - Check Point is recognized as a leader for its ability to encrypt data and secure mobile endpoints.
  • 2012 Frost & Sullivan Asia Pacific ICT Award - Named "Network Security Vendor of the Year." This is the third time that Check Point has received this prestigious distinction.
  • MIS Asia Top 100, Singapore - Global Top 75 IT Vendors.
  • IT Pro Editor's Choice 2012 Hong Kong - Check Point DDoS Protector Appliance and Check Point Threat Prevention Gateway 
  • SMB World Awards 2012, Hong Kong - Check Point DDoS Protector Appliance
  • New Eurograbber Attack - Check Point along with Versafe, uncovered a highly sophisticated attack, called Eurograbber, which was used to steal millions from corporate and private banking customers across Europe. The two companies published "A Case Study of Eurograbber: How 36 million euros was stolen via malware."

"During the year, we expanded the power of the Software Blades Architecture by introducing the Check Point ThreatCloud, the industry's first collaborative network to fight cyber threats globally with thousands of gateways worldwide that contribute attack information into ThreatCloud. In 2013, we will continue to innovate and extend our leadership, focusing on threat prevention and mobile security," said Gil Shwed, founder, chairman and chief executive officer at Check Point Software Technologies.

First Quarter Investor Conference Participation Schedule:

  • Stifel Nicolaus Technology & Telecommunications Conference
    February 6, 2013 - San Francisco, CA
  • Goldman Sachs Technology & Internet Conference
    February 13, 2013 - San Francisco, CA
  • Morgan Stanley Global Technology, Media and Telecommunications Conference
    February 25, 2013 - San Francisco, CA
  • Raymond James 33rd Annual Institutional Investor Conference
    March 4, 2013 - Orlando, FL
  • UBS Technology Conference
    March 13, 2013 - London, UK

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 January 23, 2013 at 8:30 AM ET/5:30 AM PST. 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 January 30, 2013 on the company's website or by telephone at +1.201.612.7415, replay ID number 407539.

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.

©2013 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 that, in 2013, we will continue the focus on threat prevention with further expansion of our mobile security offerings and will continue to innovate and lead the internet security industry. 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 filed with the Securities and Exchange Commission on April 9, 2012. 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, 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, loss (gain) on sale of marketable securities previously impaired, 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.

 
 
 
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
CONSOLIDATED STATEMENT OF INCOME
 
(In thousands, except per share amounts)
 
    Three Months Ended   Year Ended
    December 31,   December 31,
    2012   2011   2012   2011
    (unaudited)   (unaudited)   (unaudited)   (audited)
Revenues:                        
  Products and licenses   $ 150,907   $ 158,229   $ 505,280   $ 503,475
  Software updates, maintenance and subscription     217,667     198,529     837,415     743,511
Total revenues     368,574     356,758     1,342,695     1,246,986
                         
Operating expenses:                        
  Cost of products and licenses     26,216     25,648     87,097     81,043
  Cost of software updates, maintenance and subscription    
17,918
   
17,483
   
68,082
   
63,469
  Amortization of technology     294     7,623     3,982     31,171
Total cost of revenues     44,428     50,754     159,161     175,683
                         
  Research and development     29,290     26,917     111,911     110,147
  Selling and marketing     65,930     68,414     255,345     253,800
  General and administrative     18,455     18,062     69,743     65,182
Total operating expenses     158,103     164,147     596,160     604,812
                         
Operating income     210,471     192,611     746,535     642,174
Financial income, net     9,644     10,041     40,332     41,040
Income before taxes on income     220,115     202,652     786,867     683,214
Taxes on income     46,129     42,840     166,867     139,248
Net income   $ 173,986   $ 159,812   $ 620,000   $ 543,966
Earnings per share (basic)   $ 0.87   $ 0.78   $ 3.04   $
2.63
Number of shares used in computing earnings per share (basic)     200,230     206,083     203,918     206,917
                         
Earnings per share (diluted)   $ 0.85   $ 0.75   $ 2.96   $ 2.54
Number of shares used in computing earnings per share (diluted)     204,258     212,807     209,170     213,922
                         
   
CHECK POINT SOFTWARE TECHNOLOGIES LTD.  
RECONCILIATION OF GAAP TO NON GAAP FINANCIAL INFORMATION  
(In thousands, except per share amounts)  
   
    Three Months Ended     Year Ended  
    December 31,     December 31,  
    2012     2011     2012     2011  
    (unaudited)     (unaudited)     (unaudited)     (unaudited)  
                                 
GAAP operating income   $ 210,471     $ 192,611     $ 746,535     $ 642,174  
Stock-based compensation (1)     11,552       10,195       45,287       39,835  
Amortization of intangible assets (2)     922       10,848       7,028       43,925  
Non-GAAP operating income   $ 222,945     $ 213,654     $ 798,850     $ 725,934  
                                 
GAAP net income   $ 173,986     $ 159,812     $ 620,000     $ 543,966  
Stock-based compensation (1)     11,552       10,195       45,287       39,835  
Amortization of intangible assets (2)     922       10,848       7,028       43,925  
Gain on sale of marketable securities, previously impaired (3)     -       -       -       (2,017 )
Taxes on the above items (4)     (1,359 )     (2,742 )     (4,372 )     (12,120 )
Non-GAAP net income   $ 185,101     $ 178,113     $ 667,943     $ 613,589  
                                 
GAAP Earnings per share (diluted)     0.85     $ 0.75     $ 2.96     $ 2.54  
Stock-based compensation (1)     0.06       0.05       0.22       0.19  
Amortization of intangible assets (2)     0.01       0.05       0.03       0.21  
Gain on sale of marketable securities, previously impaired (3)     -       -       -       (0.01 )
Taxes on the above items (4)     (0.01 )     (0.01 )     (0.02 )     (0.06 )
Non-GAAP Earnings per share (diluted)   $ 0.91     $ 0.84     $ 3.19     $ 2.87  
                                 
Number of shares used in computing Non-GAAP earnings per share (diluted)     204,258       212,807       209,170       213,922  
                                 
(1) Stock-based compensation:                                
  Cost of products and licenses   $ 18     $ 17     $ 68     $ 58  
  Cost of software updates, maintenance and subscriptions     222       229       761       909  
  Research and development     2,090       1,852       8,594       7,471  
  Selling and marketing     2,404       1,979       9,677       7,888  
  General and administrative     6,818       6,118       26,187       23,509  
      11,552       10,195       45,287       39,835  
                                 
(2) Amortization of intangible assets:                                
                                 
  Amortization of technology - cost of revenues     294       7,623       3,982       31,171  
  Selling and marketing     628       3,225       3,046       12,754  
      922       10,848       7,028       43,925  
                                 
(3) Gain on sale of marketable securities, previously impaired     -       -       -       (2,017 )
                                 
(4) Taxes on the above items     (1,359 )     (2,742 )     (4,372 )     (12,120 )
                                 
Total, net   $ 11,115     $ 18,301     $ 47,943     $ 69,623  

* Year ended December 31, 2011 include a non-cash gain of $ 2.0 million related to our marketable securities in accordance with ASC 320.

   
CHECK POINT SOFTWARE TECHNOLOGIES LTD.  
CONDENSED CONSOLIDATED BALANCE SHEET DATA  
   
(In thousands)  
   
ASSETS  
   
    December 31,     December 31,  
    2012     2011  
    (unaudited)     (audited)  
Current assets:                
Cash and cash equivalents   $ 574,802     $ 493,546  
Marketable securities and short-term deposits     928,535       865,994  
Trade receivables, net     373,755       357,418  
Prepaid expenses and other current assets     47,827       53,045  
Total current assets     1,924,919       1,770,003  
                 
Long-term assets:                
Marketable securities     1,792,027       1,519,865  
Property and equipment, net     36,973       36,639  
Severance pay fund     6,038       6,052  
Deferred tax asset, net     25,553       25,296  
Other intangible assets, net     19,211       26,239  
Goodwill     727,875       727,875  
Other assets     19,797       16,094  
Total long-term assets     2,627,474       2,358,060  
                 
Total assets   $ 4,552,393     $ 4,128,063  
                 
LIABILITIES AND  
SHAREHOLDERS' EQUITY  
   
Current liabilities:                
Deferred revenues   $ 524,627     $ 490,655  
Trade payables and other accrued liabilities     346,568       271,815  
Total current liabilities     871,195       762,470  
                 
Long-term deferred revenues     65,063       61,523  
Income tax accrual     259,547       219,469  
Deferred tax liability, net     -       1,274  
Accrued severance pay     10,279       10,236  
      334,889       292,502  
                 
Total liabilities     1,206,084       1,054,972  
                 
Shareholders' equity:                
Share capital     774       774  
Additional paid-in capital     693,212       630,508  
Treasury shares at cost     (1,955,328 )     (1,543,886 )
Accumulated other comprehensive income     14,606       12,650  
Retained earnings     4,593,045       3,973,045  
Total shareholders' equity     3,346,309       3,073,091  
Total liabilities and shareholders' equity   $ 4,552,393     $ 4,128,063  
Total cash and cash equivalents, marketable securities and short-term deposits   $ 3,295,364     $ 2,879,405  
   
CHECK POINT SOFTWARE TECHNOLOGIES LTD.  
SELECTED CONSOLIDATED CASH FLOW DATA  
   
(In thousands)  
   
    Three Months Ended     Year Ended  
    December 31,     December 31,  
    2012     2011     2012     2011  
    (unaudited)     (unaudited)     (unaudited)     (unaudited)  
Cash flow from operating activities:                                
                                 
Net income   $ 173,986     $ 159,812     $ 620,000     $ 543,966  
Adjustments to reconcile net income to net cash provided by operating activities:                                
                                 
Depreciation of property and equipment     1,851       2,260       7,861       7,620  
Amortization of intangible assets     922       10,848       7,028       43,925  
Stock-based compensation     11,552       10,195       45,287       39,835  
Increase in trade and other receivables, net     (126,966 )     (156,527 )     (11,746 )     (78,590 )
Gain on sale of marketable securities, previously impaired     -       -       -       (2,017 )
Realized gain on marketable securities     (943 )     (208 )     (1,436 )     (672 )
Increase in deferred revenues, trade payables and other accrued liabilities     157,384       152,635       161,344       179,722  
Excess tax benefit from stock-based compensation     (9,510 )     (3,208 )     (11,129 )     (7,956 )
Deferred income taxes, net     (5,828 )     (2,581 )     (1,453 )     (10,959 )
Net cash provided by operating activities     202,448       173,226       815,756       714,874  
                                 
Cash flow from investing activities:                                
Cash paid in conjunction with acquisitions, net of acquired cash     -       (15,060 )    
-
     
 (21,616
)
Investment in property and equipment     (3,319 )     (1,721 )     (8,195 )     (7,195 )
Net cash used in investing activities     (3,319 )     (16,781 )     (8,195 )     (28,811 )
                                 
Cash flow from financing activities:                                
Proceeds from issuance of shares upon exercise of options    
 5,551
     
20,115
     
61,011
     
 71,493
 
Purchase of treasury shares     (160,106 )     (75,000 )     (466,164 )     (300,000 )
Excess tax benefit from stock-based compensation     9,510       3,208       11,129       7,956  
Net cash used in financing activities     (145,045 )     (51,677 )     (394,024 )     (220,551 )
                                 
Unrealized gain (loss) on marketable securities, net     (5,504 )     (1,833 )     2,422       (1,053 )
                                 
Increase in cash and cash equivalents, marketable securities and short-term deposits    
 48,580
     
102,935
     
415,959
     
 464,459
 
                                 
Cash and cash equivalents, marketable securities and short-term deposits at the beginning of the period    
 3,246,784
     
2,776,470
     
2,879,405
     
 2,414,946
 
Cash and cash equivalents, marketable securities and short-term deposits at the end of the period   $ 3,295,364     $
2,879,405
    $
3,295,364
    $ 2,879,405  
                                 

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