Check Point® Software Technologies Ltd. (NASDAQ: CHKP)
- Revenue: $245.1 million, representing a 26 percent increase
year over year
- Non-GAAP Operating Income: $137.6 million, representing a 26
percent increase year over year and reflecting 56 percent of
revenues
- Non-GAAP EPS: $0.55, representing a 22 percent increase year
over year
- Deferred Revenues: $419.8 million, representing a 29 percent
increase year over year
- Cash Flow from Operations: $217.8 million, representing a 27
percent increase year over year
Check Point® Software Technologies Ltd. (NASDAQ: CHKP), the
worldwide leader in securing the Internet, today announced record
financial results for the first quarter ended March 31, 2010.
"We delivered record first quarter results, attaining the top
end of our projections for both revenues and earnings per share,
while experiencing healthy growth across all regions," said Gil
Shwed, chairman and chief executive officer of Check Point
Software. "Our software blade architecture continues to make
inroads with our annuity based software blades helping to drive
services revenues. In addition to these great results, we delivered
a record $218 million of operating cash flow for the quarter and
now have cash balances exceeding $2 billion."
- Total Revenues: $245.1 million, an
increase of 26 percent, compared to $195.0 million in the first
quarter of 2009.
- GAAP Operating Income: $115.9 million, an
increase of 26 percent, compared to $92.3 million in the first
quarter of 2009. The GAAP operating income in the first quarter of
2010 included additional amortization of intangible assets net of
taxes in the amount of $3.3 million related to the acquisition of
the Nokia security appliance business, which was completed during
the second quarter of 2009.
- Non-GAAP Operating Income: $137.6
million, an increase of 26 percent, compared to $109.0 million in
the first quarter of 2009. Non-GAAP operating margin was 56
percent, same as in the first quarter of 2009.
- GAAP Net Income and Earnings per Diluted
Share: GAAP net income was $98.0 million, an increase of 21
percent, compared to $80.9 million in the first quarter of 2009.
GAAP earnings per diluted share were $0.46, an increase of 21
percent, compared to $0.38 in the first quarter of 2009. GAAP net
income in the first quarter of 2010 included additional
amortization of intangible assets net of taxes in the amount of
$3.3 million (which represented $0.02 in GAAP earnings per diluted
share) related to the acquisition of the Nokia security appliance
business, which was completed during the second quarter of
2009.
- Non-GAAP Net Income and Earnings per Diluted
Share: Non-GAAP net income was $116.8 million, an increase of
22 percent, compared to $95.5 million in the first quarter of 2009,
and non-GAAP EPS was $0.55, an increase of 22 percent compared to
$0.45 in the first quarter of 2009.
- Deferred Revenues: As of March 31, 2010,
we had deferred revenue of $419.8 million, an increase of 29
percent, compared to $325.0 million as of March 31, 2009.
- Cash Flow: Cash flow from operations was
$217.8 million, an increase of 27 percent compared to $171.8
million in the first quarter of 2009.
- Share Repurchase Program: During the
first quarter of 2010, we repurchased 1.5 million shares at a total
cost of $50 million.
Recent Business Highlights Include:
Since the beginning of the year, Check Point has introduced
several new products and technologies.
- Check Point Data Loss Prevention (DLP)
solution -- a network-based solution that helps businesses
move data loss protection from detection to prevention by
preemptively protecting sensitive information such as regulatory,
confidential and proprietary information from unintentional
loss.
- The new SmartEvent Software Blade -- a
unified security management solution for real-time event visibility
across multiple security systems, including Firewall, Intrusion
Prevention (IPS), Data Loss Prevention (DLP) and endpoints.
- Significant antivirus and URL performance
improvements -- streaming technology dramatically increases
software blades performance, benefiting Check Point security
gateways through a software upgrade at no additional cost. In
addition, Check Point extended its patented SecureXL acceleration
technology to UTM-1 appliances, significantly boosting firewall
throughput performance.
- Check Point Abra -- a secure virtual
desktop solution deployed from an encrypted USB stick that provides
companies with a secure and affordable alternative to allowing
third-party PC's access to the network.
- ZoneAlarm DataLock Automated Encryption for
Small Businesses and Consumers -- equipped with Pre-boot
Authentication, ZoneAlarm DataLock prevents unauthorized users from
accessing stored information, automatically encrypting all hard
drive content to protect private and confidential data on laptops
and netbooks.
During the first quarter, Check Point won several awards and
industry accolades.
For the sixth time, Check Point won the SC Magazine Reader Trust
Award for Best Enterprise Firewall.
In the Asia Pacific region, Check Point earned five awards --
two PC Market Hong Kong Best of I.T. Awards, one for Check Point
Endpoint Security and the other for Check Point UTM-1 Total
Security Appliances; CRN India named Check Point Channel Champion
for overall network security; and PC3 Platinum Brand Election 2009
in Hong Kong recognized both Check Point Endpoint Security and
Check Point SSL VPN Solutions.
Check Point's vice president of global field operations, Amnon
Bar-Lev, was named a 2010 Channel Chief by the Everything Channel's
CRN for the third consecutive year.
Mr. Shwed concluded, "The first quarter marked a great start for
the year. We posted record results and further expanded our
addressable market by entering two new exciting markets: secure
virtual desktop with Abra and Data Loss Prevention with our DLP
solution. With the introduction of these latest technology
innovations and security solutions, Check Point is well positioned
to address the security needs of any size business."
Conference Call and Webcast Information Check Point will host a
conference call with the investment community on April 26, 2010 at
8:30 AM ET/5:30 AM PT. To listen to the live webcast, please visit
Check Point's website at http://www.checkpoint.com/ir. A replay of
the conference call will be available through May 3, 2010 at the
company's website http://www.checkpoint.com/ir or by telephone at
+1 201.612.7415, passcode # 348753, 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 able 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.
©2010 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
operating income, operating margin, net income and earnings per
share, which are adjusted from results based on GAAP to exclude
non-cash equity-based compensation charges, amortization of
acquired intangible assets and the related tax affects. 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's management
also believes the non-GAAP financial information provided in this
release is useful to investors' understanding and assessment of
Check Point's on-going core operations and prospects for the
future. 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.
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended
------------------------
March 31,
------------------------
2010 2009
----------- -----------
(unaudited) (unaudited)
Revenues:
Products and licenses $ 91,038 $ 71,744
Software updates, maintenance and services 154,039 123,268
----------- -----------
Total revenues 245,077 195,012
----------- -----------
Operating expenses:
Cost of products and licenses 16,505 7,686
Cost of software updates, maintenance and
services 12,245 7,769
Amortization of technology 8,066 5,800
----------- -----------
Total cost of revenues 36,816 21,255
Research and development 24,322 19,787
Selling and marketing 54,776 47,072
General and administrative 13,302 14,617
----------- -----------
Total operating expenses 129,216 102,731
----------- -----------
Operating income 115,861 92,281
Financial income, net 7,193 8,413
----------- -----------
Income before income taxes 123,054 100,694
Taxes on income 25,013 19,773
----------- -----------
Net income $ 98,041 $ 80,921
=========== ===========
Earnings per share (basic) $ 0.47 $ 0.39
=========== ===========
Number of shares used in computing earnings per
share (basic) 209,014 210,153
=========== ===========
Earnings per share (diluted) $ 0.46 $ 0.38
=========== ===========
Number of shares used in computing earnings per
share (diluted) 213,523 212,083
=========== ===========
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
RECONCILIATION OF NON-GAAP TO GAAP FINANCIAL INFORMATION
(In thousands, except per share amounts)
--------------------------
Three Months Ended
--------------------------
March 31,
--------------------------
2010 2009
------------ ------------
(unaudited) (unaudited)
GAAP operating income $ 115,861 $ 92,281
Stock-based compensation (1) 8,933 7,803
Amortization of intangible assets (2) 12,763 8,893
------------ ------------
Non-GAAP operating income $ 137,557 $ 108,977
============ ============
GAAP net income $ 98,041 $ 80,921
Stock-based compensation (1) 8,933 7,803
Amortization of intangible assets (2) 12,763 8,893
Taxes on the above items (3) (2,948) (2,123)
------------ ------------
Non-GAAP net income $ 116,789 $ 95,494
============ ============
GAAP Earnings per share (diluted) $ 0.46 $ 0.38
Stock-based compensation (1) 0.04 0.04
Amortization of intangible assets (2) 0.06 0.04
Taxes on the above items (3) (0.01) (0.01)
------------ ------------
Non-GAAP Earnings per share (diluted) $ 0.55 $ 0.45
============ ============
Number of shares used in computing Non-GAAP
earnings per share (diluted) 213,523 212,083
============ ============
(1) Stock-based compensation:
Cost of products and licenses $ 11 $ 8
Cost of software updates, maintenance and
services 227 193
Research and development 1,648 1,258
Selling and marketing 2,246 1,740
General and administrative 4,801 4,604
------------ ------------
8,933 7,803
------------ ------------
(2) Amortization of intangible assets:
Amortization of technology 8,066 5,800
Research and development 685 -
Selling and marketing 4,012 3,093
------------ ------------
12,763 8,893
------------ ------------
(3) Taxes on the above items (2,948) (2,123)
------------ ------------
Total, net $ 18,748 $ 14,573
============ ============
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED BALANCE SHEET DATA
(In thousands)
ASSETS
March 31, December 31,
2010 2009
------------- -------------
(unaudited) (audited)
Current assets:
Cash and cash equivalents $ 588,266 $ 414,085
Marketable securities 453,935 469,913
Trade receivables, net 183,305 283,668
Prepaid expenses and other current assets 36,478 34,544
------------- -------------
Total current assets 1,261,984 1,202,210
------------- -------------
Long-term assets:
Marketable securities 1,009,537 963,001
Property and equipment, net 37,991 38,936
Severance pay fund 6,301 6,314
Deferred tax asset, net 16,685 16,307
Other intangible assets, net 101,429 114,192
Goodwill 708,458 708,458
Other assets 17,833 20,176
------------- -------------
Total long-term assets 1,898,234 1,867,384
------------- -------------
Total assets $ 3,160,218 $ 3,069,594
============= =============
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Deferred revenues $ 380,879 $ 384,255
Trade payables and other accrued
liabilities 165,507 169,011
------------- -------------
Total current liabilities 546,386 553,266
------------- -------------
Long-term deferred revenues 38,898 41,005
Income tax accrual 140,300 132,908
Deferred tax liability, net 9,466 11,636
Accrued severance pay 11,213 11,061
------------- -------------
Total liabilities 746,263 749,876
------------- -------------
Shareholders' equity:
Share capital 774 774
Additional paid-in capital 546,446 527,874
Treasury shares at cost (1,223,531) (1,199,752)
Accumulated other comprehensive income 15,888 12,555
Retained earnings 3,074,378 2,978,267
------------- -------------
Total shareholders' equity 2,413,955 2,319,718
------------- -------------
Total liabilities and shareholders' equity $ 3,160,218 $ 3,069,594
============= =============
Total cash and cash equivalents and
marketable securities $ 2,051,738 $ 1,846,999
============= =============
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
SELECTED CONSOLIDATED CASH FLOW DATA
(In thousands)
Three Months Ended
----------------------------
March 31,
----------------------------
2010 2009
------------- -------------
(unaudited) (unaudited)
Cash flow from operating activities:
Net income $ 98,041 $ 80,921
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of property,
plant and equipment 1,841 2,812
Amortization of intangible assets 12,763 8,893
Stock-based compensation 8,933 7,803
Increase in trade and other receivables, net 100,043 80,707
Increase (decrease) in deferred revenues,
trade payables and other accrued liabilities 409 (6,884)
Realized loss on marketable securities - 1,896
Excess tax benefit from stock-based
compensation (1,833) (2,471)
Deferred income taxes, net (2,392) (1,890)
------------- -------------
Net cash provided by operating activities 217,805 171,787
------------- -------------
Cash flow from investing activities:
Investment in property and equipment (896) (1,394)
------------- -------------
Net cash used in investing activities (896) (1,394)
------------- -------------
Cash flow from financing activities:
Proceeds from issuance of shares upon exercise
of options 32,060 23,789
Purchase of treasury shares (50,000) (52,288)
Excess tax benefit from stock-based
compensation 1,833 2,471
------------- -------------
Net cash used in financing activities (16,107) (26,028)
------------- -------------
Unrealized gain on marketable securities, net 3,937 2,622
------------- -------------
Increase in cash and cash equivalents and
marketable securities 204,739 146,987
Cash and cash equivalents and marketable
securities at the beginning of the period 1,846,999 1,443,832
------------- -------------
Cash and cash equivalents and marketable
securities at the end of the period $ 2,051,738 $ 1,590,819
============= =============
INVESTOR CONTACT: Kip E. Meintzer Check Point Software
Technologies +1 650.628.2040 ir@checkpoint.com MEDIA
CONTACT: Amber Rensen Check Point Software Technologies +1
650.628.2070 press@checkpoint.com
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