Check Point Software Technologies Reports 2018 First Quarter Financial Results - Check Point Software (NASDAQ:CHKP)

SAN CARLOS, Calif., April 25, 2018 (GLOBE NEWSWIRE) -- Check Point® Software Technologies Ltd. CHKP, today announced its financial results for the first quarter ended March 31, 2018.

First Quarter 2018:

Total Revenue: $452 million, a 4 percent increase year over year
Deferred Revenues: $1,166 million, a 10 percent increase year over year
GAAP Operating Income: $213 million, representing 47 percent of revenues
Non-GAAP Operating Income: $239 million, representing 53 percent of revenues
GAAP EPS: $1.16, a 7 percent increase year over year
Non-GAAP EPS: $1.30, a 9 percent increase year over year
Cash flow from operations: $419 million, an 18% increase year over year

"First quarter revenues were above the midpoint of our projections while EPS reached the top of our guidance range," said Gil Shwed, Founder and CEO of Check Point Software Technologies. "The global cyber threat landscape is becoming increasingly sophisticated. Attacks are now in their 5^th generation, while 97 percent of enterprises are not prepared for these attacks and remain primarily focused on protections for 2^nd or 3^rd generation attacks. During the first quarter we introduced the Infinity Total Protection Gen V prevention solution, along with its CloudGuard family of security products, and both solutions generated nice wins in the quarter," Shwed continued.

Financial Highlights for the First Quarter of 2018:

Total Revenue: $452 million compared to $435 million in the first quarter of 2017, a 4 percent increase year over year. Revenues were above the midpoint of our guidance.
GAAP Operating Income: $213 million compared to $211 million in the first quarter of 2017, representing 47 percent and 48 percent of revenues in the first quarter of 2018 and 2017, respectively.
Non-GAAP Operating Income: $239 million compared to $233 million in the first quarter of 2017, representing 53 percent and 54 percent of revenues in the first quarter of 2018 and 2017, respectively.
GAAP Taxes on Income: $41 million compared to $39 million in the first quarter of 2017.
GAAP Net Income and Earnings per Diluted Share: GAAP net income was $187 million compared to $183 million in the first quarter of 2017. GAAP earnings per diluted share were $1.16 compared to $1.08 in the first quarter of 2017, a 7 percent increase year over year.
Non-GAAP Net Income and Earnings per Diluted Share: Non-GAAP net income was $210 million compared to $202 million in the first quarter of 2017. Non-GAAP earnings per diluted share were $1.30 compared to $1.20 in the first quarter of 2017, a 9 percent increase year over year.
Deferred Revenues: As of March 31, 2018, deferred revenues were $1,166 million compared to $1,063 million as of March 31, 2017, a 10 percent increase year over year.
Cash Flow: Cash flow from operations of $419 million compared to $355 million in the first quarter of 2017, which included a tax refund of $45 million related to a prior year.
Share Repurchase Program: During the first quarter of 2018, the company repurchased approximately 2.4 million shares at a total cost of approximately $249 million.
Cash Balances, Marketable Securities and Short Term Deposits: $4,009 million as of March 31, 2018, compared to $3,848 million as of December 31, 2017.

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."

First Quarter Key Highlights
New Product of the Year – Check Point Infinity: Check Point Infinity Voted ‘New Product of the Year' at Network Computing Awards 2018. Check Point Infinity delivers a broad set of security technologies to protect organizations against the most advanced and unknown Gen V threats and can now be deployed using Check Point Infinity Total Protection (ITP). ITP is a game-changing new consumption model with a simple all-inclusive, per-user, per-year subscription offering. The solution provides the key elements of a security infrastructure, including the network security hardware and hardware upgrades, network security software, endpoint, mobile and cloud security software, security updates, support and subscriptions all as a single annuity subscription.

CloudGuard™ Product Family: Protecting enterprises from Gen V cyber-attacks on cloud applications and infrastructure. CloudGuard is the industry's first set of technologies designed to provide advanced security and threat prevention for software-as-a-service (SaaS) applications and infrastructure-as-a-service (IaaS) solutions. CloudGuard SaaS is designed to prevent account hijacking, utilizing patent-pending ID-Guard technology for cloud-based applications such as Microsoft Office365, Google G-Suite, Salesforce, ServiceNow, Slack, Box, Dropbox and more. Formerly vSEC and now a member of the CloudGuard family, CloudGuard IaaS provides advanced Gen V security/threat prevention of attacks on infrastructure and workloads for leading public and private cloud platforms, including: Amazon Web Services, Google Cloud Platform, Microsoft Azure, Cisco ACI, OpenStack, VMware NSX, VMware Cloud on AWS, VMware ESX, Alibaba Cloud, KVM, Hyper-V and more.

‘Gen V' Security Management: The latest Smart-1 Appliances power Gen V security management by consolidating multiple consoles and enabling collection, correlation and analysis of security events, monitoring the state of security and managing security policies for all sizes of enterprise in a single device. The New Gen V Smart-1 family boosts performance by up to 8x, enabling collection of up to 100,000 logs/sec and provides high capacity storage for security event analysis.

The Israel Prize: Check Point founder & CEO Gil Shwed was awarded the prestigious Israel Prize for his contributions to the Israeli technology industry. The Israel Prize is an award handed out by the State of Israel and is generally regarded as the state's highest honor. It's awarded to those who have displayed excellence in their field(s), or contributed strongly to Israeli culture or the State. It was awarded by the president, prime minister, speaker of the Israeli parliament, minister of education, and the president of the Supreme Court in a ceremony that closed Israel's 70th Independence Day celebrations.

"I was personally moved when I received the call announcing the decision to award me the Israel Prize. The prize is a testament to the global leadership that Check Point has achieved, the company's importance to Israel and the role that the innovation generated by our employees plays in the future of cyber-security," concluded Shwed.

Conference Call and Webcast Information
Check Point will host a conference call with the investment community on April 25, 2018, at 8:30 AM ET/5:30 AM PT. To listen to the live webcast or replay, please visit the website at: www.checkpoint.com/ir.

Second Quarter Investor Conference Participation Schedule:

Jefferies 2018 Global Technology, Media and Telecom Conference
May 9, 2018 – Beverly Hills, CA
J.P. Morgan 46^th Annual Technology, Media and Telecom Conference
May 16, 2018 – Boston, MA
Cowen & Company 46^th Annual Technology Media & Telecom Conference
May 30, 2018 – New York, NY
Bank of America Merrill Lynch 2018 Global Technology Conference
June 5, 2018 – San Francisco, CA (Meetings Only)
2018 Baird Global Consumer, Technology & Services Conference
June 7, 2018 – New York, NY (Meetings Only)
Nasdaq 38^th Investor Conference
June 12, 2018 – London, UK (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.

About Check Point Software Technologies Ltd.
Check Point Software Technologies Ltd. (www.checkpoint.com) is a leading provider of cyber security solutions to governments and corporate enterprises globally. Its solutions protect customers from cyber-attacks with an industry leading catch rate of malware, ransomware and other types of attacks. Check Point offers a multilevel security architecture that defends enterprises' cloud, network and mobile device held information, plus the most comprehensive and intuitive one point of control security management system. Check Point protects over 100,000 organizations of all sizes.

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 regarding our products and solutions, including the Check Point Infinity architecture, CloudGuard™ Product Family, and Gen V security management, and our participation in investor conferences during the second quarter of 2018. Our expectations and beliefs regarding these matters may not materialize, and actual results or events in the future are subject to risks and uncertainties that could cause actual results or events 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 28, 2017. 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 operating income, net income and earnings per diluted share, which are adjustments from results based on GAAP to exclude, as applicable, stock-based compensation expenses, 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.

CHECK POINT SOFTWARE TECHNOLOGIES LTD.
CONSOLIDATED STATEMENT OF INCOME

(In thousands, except per share amounts)

	Three Months Ended
	March 31,
	2018		2017
	(unaudited)		(unaudited)
Revenues:
Products and licenses	$	118,139	$	126,326
Security subscriptions		127,251		112,064
Total revenues from products and Security subscriptions		245,390		238,390
Software updates and maintenance		206,936		197,060
Total revenues		452,326		435,450

Operating expenses:
Cost of products and licenses		19,378		23,886
Cost of security subscriptions		3,641		4,080
Total cost of products and security subscriptions		23,019		27,966
Cost of Software updates and maintenance		20,677		20,785
Amortization of technology		546		546
Total cost of revenues		44,242		49,297

Research and development		53,363		46,092
Selling and marketing		119,758		106,187
General and administrative		21,538		23,044
Total operating expenses		238,901		224,620

Operating income		213,425		210,830
Financial income, net		14,860		10,368
Income before taxes on income		228,285		221,198
Taxes on income		41,145		38,647
Net income	$	187,140	$	182,551

Basic earnings per share	$	1.18	$	1.11
Weighted-average number of shares used in computing basic earnings per share		158,192		165,110

Diluted earnings per share	$	1.16	$	1.08
Weighted-average number of shares used in computing diluted earnings per share		161,711		168,539

CHECK POINT SOFTWARE TECHNOLOGIES LTD.
SELECTED FINANCIAL METRICS
(In thousands, except per share amounts)

	Three Months Ended
	March 31,
	2018		2017
	(unaudited)		(unaudited)

Revenues	$	452,326	$	435,450
Non-GAAP operating income		238,998		233,164
Non-GAAP net income		209,891		201,500
Diluted Non-GAAP Earnings per share	$	1.30	$	1.20
Number of shares used in computing diluted Non-GAAP earnings per share		161,711		168,539

CHECK POINT SOFTWARE TECHNOLOGIES LTD.
RECONCILIATION OF GAAP TO NON GAAP FINANCIAL INFORMATION

(In thousands, except per share amounts)

	Three Months Ended
	March 31,
	2018			2017
	(unaudited)			(unaudited)

GAAP operating income	$	213,425		$	210,830
Stock-based compensation (1)		22,314			19,075
Amortization of intangible assets and acquisition related expenses (2)		3,259			3,259
Non-GAAP operating income	$	238,998		$	233,164

GAAP net income	$	187,140		$	182,551
Stock-based compensation (1)		22,314			19,075
Amortization of intangible assets and acquisition related expenses (2)		3,259			3,259
Taxes on the above items (3)		(2,822	)		(3,385	)
Non-GAAP net income	$	209,891		$	201,500

Diluted GAAP Earnings per share	$	1.16		$	1.08
Stock-based compensation (1)		0.14			0.11
Amortization of intangible assets and acquisition related expenses (2)		0.02			0.02
Taxes on the above items (3)		(0.02	)		(0.01	)
Diluted Non-GAAP Earnings per share	$	1.30		$	1.20

Number of shares used in computing diluted Non-GAAP earnings per share		161,711			168,539

(1) Stock-based compensation:
Cost of products and licenses	$	37		$	16
Cost of software updates and maintenance		686			557
Research and development		4,036			3,685
Selling and marketing		5,290			2,732
General and administrative		12,265			12,085
		22,314			19,075

(2) Amortization of intangible assets and acquisition related expenses:
Amortization of technology-cost of revenues		546			546
Research and development		1,897			1,897
Selling and marketing		816			816
		3,259			3,259
(3) Taxes on the above items		(2,822	)		(3,385	)

Total, net	$	22,751		$	18,949

CHECK POINT SOFTWARE TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED BALANCE SHEET DATA

(In thousands)

ASSETS
	March 31,			December 31,
	2018			2017
	(unaudited)			(unaudited)
Current assets:
Cash and cash equivalents	$	213,100		$	245,014
Marketable securities and short-term deposits		1,297,172			1,165,716
Trade receivables, net		288,469			472,223
Prepaid expenses and other current assets		45,135			81,478
Total current assets		1,843,876			1,964,431

Long-term assets:
Marketable securities		2,498,782			2,437,315
Property and equipment, net		78,552			77,767
Deferred tax asset, net		114,477			119,431
Goodwill and other intangible assets, net		829,468			830,407
Other assets		57,076			33,575
Total long-term assets		3,578,355			3,498,495

Total assets	$	5,422,231		$	5,462,926

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Deferred revenues	$	861,682		$	878,287
Trade payables and other accrued liabilities		316,016			328,638
Total current liabilities		1,177,698			1,206,925

Long-term liabilities:
Long-term deferred revenues		304,372			308,286
Income tax accrual		348,509			337,453
Accrued severance pay		10,232			10,139
		663,113			655,878

Total liabilities		1,840,811			1,862,803

Shareholders' equity:
Share capital		774			774
Additional paid-in capital		1,321,757			1,305,130
Treasury shares at cost		(6,116,958	)		(5,893,182	)
Accumulated other comprehensive loss		(33,446	)		(15,634	)
Retained earnings		8,409,293			8,203,035
Total shareholders' equity		3,581,420			3,600,123
Total liabilities and shareholders' equity	$	5,422,231		$	5,462,926
Total cash and cash equivalents, marketable securities and short-term deposits	$	4,009,054		$	3,848,045

CHECK POINT SOFTWARE TECHNOLOGIES LTD.
SELECTED CONSOLIDATED CASH FLOW DATA

(In thousands)

	Three Months Ended
	March 31,
	2018			2017
	(unaudited)			(unaudited)
Cash flow from operating activities:
Net income	$	187,140		$	182,551
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment		3,888			2,981
Amortization of intangible assets		940			940
Stock-based compensation		22,314			19,075
Realized loss on marketable securities		2			75
Decrease in trade and other receivables, net		181,395			191,182
Increase (decrease) in deferred revenues, trade payables and other accrued liabilities		19,207			(52,753	)
Deferred income taxes, net		3,947			11,362
Net cash provided by operating activities		418,833			355,413

Cash flow from investing activities:

Investment in property and equipment		(4,672	)		(7,953	)
Net cash used in investing activities		(4,672	)		(7,953	)

Cash flow from financing activities:
Proceeds from issuance of shares upon exercise of options		19,945			24,382
Purchase of treasury shares		(249,408	)		(247,862	)
Payments related to shares withheld for taxes		(299	)		(209	)
Net cash used in financing activities		(229,762	)		(223,689	)

Unrealized gain (loss) on marketable securities, net		(23,390	)		3,964

Increase in cash and cash equivalents, marketable securities and short term deposits		161,009			127,735

Cash and cash equivalents, marketable securities and short term deposits at the beginning of the period		3,848,045			3,669,024

Cash and cash equivalents, marketable securities and short term deposits at the end of the period	$	4,009,054		$	3,796,759

INVESTOR CONTACT: Kip E. Meintzer Check Point Software Technologies +1.650.628.2040 ir@checkpoint.com		MEDIA CONTACT: Adolph Hunter Check Point Software Technologies +1.650.628.2260 press@checkpoint.com

Market News and Data brought to you by Benzinga APIs