SOURCE: Check Point Software Technologies Ltd.

Check Point Software Technologies Ltd.

April 14, 2011 05:00 ET

Check Point Software Technologies Reports Record 2011 First Quarter Financial Results

REDWOOD CITY, CA--(Marketwire - Apr 14, 2011) - Check Point® Software Technologies Ltd. (NASDAQ: CHKP)

  • Total Revenue: $281.3 million, representing a 15 percent increase year over year

  • Non-GAAP Operating Income: $160.6 million, representing 57 percent of revenues

  • Non-GAAP EPS: $0.64, representing a 16 percent increase year over year

Check Point® Software Technologies Ltd. (NASDAQ: CHKP), the worldwide leader in securing the Internet, today announced its financial results for the first quarter ending March 31, 2011.

"I am pleased to begin 2011 on such a high note. Check Point delivered record first quarter results that exceeded our own projections with growth driven by our high-end network security appliance product lines and the great performance of our annuity software blades including IPS and the new Application Control Software Blade," said Gil Shwed, founder, chairman, and chief executive officer of Check Point Software Technologies.

Financial Highlights:

  • Total Revenue: $281.3 million, an increase of 15 percent, compared to $245.1 million in the first quarter of 2010.
  • GAAP Operating Income: $141.3 million, an increase of 22 percent, compared to $115.9 million the first quarter of 2010. GAAP operating margin was 50 percent, compared to 47 percent in the first quarter of 2010.
  • Non-GAAP Operating Income: $160.6 million, an increase of 17 percent, compared to $137.6 million in the first quarter of 2010. Non-GAAP operating margin was 57 percent, compared to 56 percent in the first quarter of 2010.
  • GAAP Net Income and Earnings per Diluted Share: GAAP net income was $122.1 million, an increase of 25 percent, compared to $98.0 million in the first quarter of 2010. GAAP earnings per diluted share were $0.57, an increase of 24 percent, compared to $0.46 in the first quarter of 2010.
  • Non-GAAP Net Income and Earnings per Diluted Share: Non-GAAP net income was $137.1 million, an increase of 17 percent, compared to $116.8 million in the first quarter of 2010. Non-GAAP earnings per diluted share were $0.64, an increase of 16 percent, compared to $0.55 in the first quarter of 2010.
  • Deferred Revenues: As of March 31, 2011, we had deferred revenues of $460.4 million, an increase of 10 percent, compared to $419.8 million as of March 31, 2010.
  • Cash Flow: Cash flow from operations was $211.6 million, a decrease of 3 percent, compared to $217.8 million in the first quarter of 2010.
  • Share Repurchase Program: During the first quarter of 2011, we repurchased 1.52 million shares at a total cost of $75 million.
  • Cash Balances, Marketable Securities and Short Term Deposits: $2,572.2 million as of March 31, 2011, an increase of $520.5 million, compared to $2,051.7 million as of March 31, 2010.

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:
In the first quarter of 2011, Check Point introduced 3D Security -- a new vision that redefines security as a three-dimensional business process -- uniquely combining policies, people and enforcement for stronger protection of information assets in 21st century IT environments.

Check Point's latest software release R75 is the first step in making 3D Security a reality. With five new or improved Software Blades -- Application Control, Identity Awareness, Data Loss Prevention, Intrusion Prevention and Mobile Access -- R75 enables businesses to gain greater visibility, user awareness and multi-dimensional security in a single solution.

Check Point continues to deliver advanced and award-winning solutions that customers trust:

  • Check Point Achieved 100% in Firewall, Identity Awareness and Application Control Enforcement in NSS Labs Next Generation Firewall Testing -- Check Point is the first vendor to complete NSS Labs' rigorous third-party testing and receive a certified stamp of recommendation.

  • Check Point Achieved 97.3 Percent Security Effectiveness in NSS Labs Intrusion Prevention Group Test -- The IPS Software Blade achieved 97.3 percent security effectiveness, setting a new standard for integrated IPS.

  • CRN Magazine Channel Champion, Network Security -- Software Blade Architecture™, DLP Software Blade, IPS Software Blade and UTM-1 appliances

  • PC Market Best of IT Award, Hong Kong -- Check Point Endpoint Security

  • CRN Magazine Channel Champion, India -- Network Security

  • Network Computing Security and Hardware Product of the Year -- Check Point UTM-1


In addition, Vice President of Global Field Operations, Amnon Bar-Lev, was also named a 2011 Channel Chief by CRN Magazine, recognizing his role in the strategic development and success of Check Point's channel community.

Shwed concluded, "Check Point's continued growth is a testament to the quality of our security products and the success of our strategy. We have a single focus in mind -- securing our customer's IT environment. Our 3D Security vision that just launched takes security to the next level by defining security as a business process combining policy, people and enforcement to create the best protection for every enterprise."

Second Quarter Investor Conference Participation Schedule:

  • Jeffries 2011 Global Technology, Internet, Media and Telecommunications Conference
    May 11, 2011 - NY, NY
  • JP Morgan 39th Annual Global Technology, Media and Telecommunications Conference
    May 15, 2011 - Boston, MA
  • Cowen & Company Technology, Media and Telecommunications Conference
    June 1, 2011 - NY, NY
  • Bank of America 2011 Technology Conference
    June 2, 2011 - NY, 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 April 14, 2011 at 8:30 AM ET/5:30 AM PT. To listen to the live webcast, please visit Check Point's website at: www.checkpoint.com/ir. A replay of the conference call will be available through April 21, 2011 at the company's website www.checkpoint.com/ir or by telephone at +1.201.612.7415, replay ID number 370478, account # 215.

About Check Point Software Technologies Ltd.
Check Point Software Technologies Ltd. (www.checkpoint.com), the worldwide leader in securing the Internet, is the only vendor to deliver Total Security for networks, data and endpoints, unified under a single management framework. Check Point 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 innovate with the development of the Software Blade Architecture™. The dynamic Software Blade Architecture delivers secure, flexible and simple solutions that can be fully customized to meet the exact security needs of any organization or environment. Check Point customers include tens of thousands of businesses and organizations of all sizes including all Fortune 100 companies. Check Point's award-winning ZoneAlarm solutions protect millions of consumers from hackers, spyware and identity theft.

©2011 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 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.
                CONDENSED CONSOLIDATED STATEMENT OF INCOME
                 (In thousands, except per share amounts)



                                                      Three Months Ended
                                                    -----------------------
                                                           March 31,
                                                    -----------------------
                                                       2011        2010
                                                    ----------- -----------
                                                    (unaudited) (unaudited)
Revenues:
  Products and licenses                             $   105,258 $    91,038
  Software updates, maintenance and services            176,016     154,039
                                                    ----------- -----------
Total revenues                                          281,274     245,077
                                                    ----------- -----------

Operating expenses:
  Cost of products and licenses                          17,652      16,505

  Cost of software updates, maintenance and services     14,297      12,245
  Amortization of technology                              7,849       8,066
                                                    ----------- -----------
Total cost of revenues                                   39,798      36,816


Research and development                                 27,643      24,322
Selling and marketing                                    58,509      54,776
General and administrative                               13,990      13,302
                                                    ----------- -----------
Total operating expenses                                139,940     129,216
                                                    ----------- -----------

Operating income                                        141,334     115,861
Financial income, net                                    10,528       7,193
                                                    ----------- -----------
Income before taxes on income                           151,862     123,054
Taxes on income                                          29,772      25,013
                                                    ----------- -----------
Net income                                          $   122,090 $    98,041
                                                    =========== ===========

Earnings per share (basic)                          $      0.59 $      0.47
                                                    =========== ===========
Number of shares used in computing earnings per
 share (basic)                                          208,177     209,014
                                                    =========== ===========

Earnings per share (diluted)                        $      0.57 $      0.46
                                                    =========== ===========
Number of shares used in computing earnings per
 share (diluted)                                        214,934     213,523
                                                    =========== ===========





                  CHECK POINT SOFTWARE TECHNOLOGIES LTD.
         RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
                 (In thousands, except per share amounts)



                                                      Three Months Ended
                                                    ----------------------
                                                           March 31,
                                                    ----------------------
                                                       2011        2010
                                                    ----------  ----------
                                                    (unaudited) (unaudited)

GAAP operating income                               $  141,334  $  115,861
Stock-based compensation (1)                             8,245       8,933
Amortization of intangible assets (2)                   11,031      12,763
                                                    ----------  ----------
Non-GAAP operating income                           $  160,610  $  137,557
                                                    ==========  ==========

GAAP net income                                     $  122,090  $   98,041
Stock-based compensation (1)                             8,245       8,933
Amortization of intangible assets (2)                   11,031      12,763
Gain on Sale of marketable securities previously
 impaired(3)                                            (1,368)          -
Taxes on the above items (4)                            (2,929)     (2,948)
                                                    ----------  ----------
Non-GAAP net income                                 $  137,069  $  116,789
                                                    ==========  ==========

GAAP Earnings per share (diluted)                   $     0.57  $     0.46
Stock-based compensation (1)                              0.04        0.04
Amortization of intangible assets (2)                     0.05        0.06
Gain on Sale of marketable securities previously
 impaired(3)                                             (0.01)          -
Taxes on the above items (4)                             (0.01)      (0.01)
                                                    ==========  ==========

Non-GAAP Earnings per share (diluted)               $     0.64  $     0.55
                                                    ==========  ==========

Number of shares used in computing Non-GAAP
 earnings per share (diluted)                          214,934     213,523
                                                    ==========  ==========

(1) Stock-based compensation:
  Cost of products and licenses                     $       11  $       11
  Cost of software updates, maintenance and
   services                                                190         227
  Research and development                               1,433       1,648
  Selling and marketing                                  1,891       2,246
  General and administrative                             4,720       4,801
                                                    ----------  ----------
                                                         8,245       8,933
                                                    ----------  ----------

(2) Amortization of intangible assets:
  Amortization of technology-
  Cost of revenues                                       7,849       8,066
  Research and development                                   -         685
  Selling and marketing                                  3,182       4,012
                                                    ----------  ----------
                                                        11,031      12,763
                                                    ----------  ----------

(3) Gain on Sale of marketable securities
 previously impaired                                    (1,368)          -
                                                    ----------  ----------
(4) Taxes on the above items                            (2,929)     (2,948)
                                                    ----------  ----------

Total, net                                         $   14,979  $   18,748
                                                    ==========  ==========





                  CHECK POINT SOFTWARE TECHNOLOGIES LTD.
                 CONDENSED CONSOLIDATED BALANCE SHEET DATA
                              (In thousands)

                                  ASSETS

                                                   March 31,   December 31,
                                                      2011        2010
                                                  -----------  -----------
                                                  (unaudited)   (audited)
Current assets:
Cash and cash equivalents                         $   339,224  $   551,777
Marketable securities and short term deposits         743,526      537,718
Trade receivables, net                                199,068      283,192
Prepaid expenses and other current assets              40,260       44,247
                                                  -----------  -----------
Total current assets                                1,322,078    1,416,934
                                                  -----------  -----------

Long-term assets:
Marketable securities                               1,489,453    1,325,451
Property and equipment, net                            37,197       37,065
Severance pay fund                                      6,709        6,532
Deferred tax asset, net                                23,155       18,122
Other intangible assets, net                           55,734       66,765
Goodwill                                              717,052      717,052
Other assets                                           17,045       17,381
                                                  -----------  -----------
Total long-term assets                              2,346,345    2,188,368
                                                  -----------  -----------

Total assets                                      $ 3,668,423  $ 3,605,302
                                                  ===========  ===========

                   LIABILITIES AND SHAREHOLDERS' EQUITY


Current liabilities:
Deferred revenues                                 $   421,873  $   424,158
Trade payables and other accrued liabilities          203,012      239,104
                                                  -----------  -----------
Total current liabilities                             624,885      663,262
                                                  -----------  -----------

Long-term deferred revenues                            38,560       40,394
Income tax accrual                                    190,515      169,370
Deferred tax liability, net                             1,293        1,721
Accrued severance pay                                  11,750       11,224
                                                  -----------  -----------
                                                      242,118      222,709

                                                  -----------  -----------
Total liabilities                                     867,003      885,971
                                                  -----------  -----------

Shareholders' equity:
Share capital                                             774          774
Additional paid-in capital                            604,749      580,276
Treasury shares at cost                            (1,368,505)  (1,306,382)
Accumulated other comprehensive income                 13,233       15,584
Retained earnings                                   3,551,169    3,429,079
                                                  -----------  -----------
Total shareholders' equity                          2,801,420    2,719,331
                                                  -----------  -----------
Total liabilities and shareholders' equity        $ 3,668,423  $ 3,605,302
                                                  ===========  ===========
Total cash and cash equivalents, marketable
 securities and short term deposits               $ 2,572,203  $ 2,414,946
                                                  ===========  ===========






                  CHECK POINT SOFTWARE TECHNOLOGIES LTD.
                  SELECTED CONSOLIDATED CASH FLOW DATA
                              (In thousands)



                                                     Three Months Ended
                                                  ------------------------
                                                          March 31,
                                                  ------------------------
                                                      2011         2010
                                                  -----------  -----------
                                                  (unaudited)  (unaudited)
Cash flow from operating activities:
Net income                                        $   122,090  $    98,041
Adjustments to reconcile net income to net cash
 provided by operating activities:
Depreciation and amortization of property, plant
 and equipment                                          1,729        1,841

Amortization of intangible assets                      11,031       12,763
Stock-based compensation                                8,245        8,933
Increase in trade and other receivables, net           83,225      100,043

(Decrease) Increase in deferred revenues, trade
 payables and other accrued liabilities               (13,858)         409
Excess tax benefit from stock-based compensation          (53)      (1,833)
Deferred income taxes, net                               (804)      (2,392)
                                                  -----------  -----------
Net cash provided by operating activities             211,605      217,805
                                                  -----------  -----------

Cash flow from investing activities:
Cash paid in conjunction with acquisitions             (5,516)           -
Investment in property and equipment                   (1,861)        (896)
                                                  -----------  -----------
Net cash used in investing activities                  (7,377)        (896)
                                                  -----------  -----------

Cash flow from financing activities:
Proceeds from issuance of shares upon exercise of
 options                                               31,515       32,060
Purchase of treasury shares                           (75,000)     (50,000)
Excess tax benefit from stock-based compensation           53        1,833
                                                  -----------  -----------
Net cash used in financing activities                 (43,432)     (16,107)
                                                  -----------  -----------

Unrealized (loss) gain on marketable securities,
 net                                                   (3,539)       3,937
                                                  -----------  -----------

Increase in cash and cash equivalents and
 marketable securities                                157,257      204,739

Cash and cash equivalents, marketable securities
 and short term deposits at the beginning of the
 period                                             2,414,946    1,846,999
                                                  -----------  -----------
Cash and cash equivalents, marketable securities
 and short term deposits at the end of the period $ 2,572,203  $ 2,051,738
                                                  ===========  ===========

Contact Information

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

    MEDIA CONTACT:
    Stephanie Look
    Check Point Software Technologies
    +1.650.628.2171
    press@checkpoint.com