Check Point® Software Technologies Ltd. (NASDAQ: CHKP)
- Revenue: $273.2 million, representing a 17 percent increase
year over year
- Product Revenues: $106.4 million, representing a 22 percent
increase year over year
- Non-GAAP Operating Income: $156.9 million, representing a 23
percent increase year over year or 57 percent of revenues versus 55
percent a year ago
- Non-GAAP EPS: $0.63, representing a 21 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 third quarter ended September 30,
2010.
"I am very pleased that we were able to deliver all-time record
quarterly results this quarter. We exceeded the high-end of our
projections in both revenues and earnings per share," said Gil
Shwed, chairman and chief executive officer at Check Point. "This
growth was a result of strong network security product sales across
all regions with particular strength coming from the America's and
Asia Pacific."
Financial Highlights for the Third Quarter of
2010
- Total Revenues: $273.2 million, an
increase of 17 percent, compared to $233.6 million in the third
quarter of 2009.
- GAAP Operating Income: $135.1 million, an
increase of 28 percent, compared to $105.5 million in the third
quarter of 2009. GAAP operating margin was 49 percent, compared to
45 percent in the third quarter of 2009.
- Non-GAAP Operating Income: $156.9
million, an increase of 23 percent, compared to $127.5 million in
the third quarter of 2009. Non-GAAP operating margin was 57
percent, compared to 55 percent in the third quarter of 2009.
- GAAP Net Income and Earnings per Diluted
Share: GAAP net income was $114.5 million, an increase of 25
percent, compared to $91.5 million in the third quarter of 2009.
GAAP earnings per diluted share were $0.54, an increase of 26
percent, compared to $0.43 in the third quarter of 2009.
- Non-GAAP Net Income and Earnings per Diluted
Share: Non-GAAP net income was $132.6 million, an increase of
21 percent, compared to $109.5 million in the third quarter of
2009. Non-GAAP earnings per diluted share were $0.63, an increase
of 21 percent, compared to $0.52 in the third quarter of 2009.
- Deferred Revenues: As of September 30,
2010, we had deferred revenues of $396.3 million, an increase of 10
percent, compared to $360.1 million as of September 30, 2009.
- Cash Flow: Cash flow from operations was
$144.6 million, an increase of 15 percent, compared to $126.1
million in the third quarter of 2009.
- Share Repurchase Program: During the
third quarter of 2010, we repurchased 1.44 million shares at a
total cost of $50 million.
- Cash Balances and Marketable Securities:
$2,256 million as of September 30, 2010, an increase of $520
million, compared to $1,736 million as of September 30, 2009.
Recent Business Highlights Include:
- Introduction of Check Point Application
Control Software Blade - Enables Web 2.0 security through a
unique combination of technology, user awareness and broad
application control from the world's largest application
classification database, the Check Point AppWiki, with over 50,000
Web 2.0 widgets and more than 4,500 Internet applications.
- Security Gateway Virtual Edition (VE) Software
Blade - Provides businesses with one-click security protection
for private and public clouds with VMsafe integration.
- Series 80 Appliance - Designed for remote
and branch offices, the new appliance delivers stronger security at
1.5 gigabit per second for under $2,500.
- Multi-Domain Management Software Blades -
Provides virtual security management to businesses of all sizes and
simplifies management by segmenting security into virtual domains
based on location, business unit or security functions.
- New Check Point R71 Training and Certification
Programs - Interactive programs to teach security
professionals how to deploy, maintain and optimize the latest
Software Blade Architecture™ protections.
In addition, Check Point validated its commitment to the
continual promotion of the open development, evolution and secure
use of the Web with the appointment of Check Point Fellow, Robert
Hinden, to the Board of Trustees for the Internet Society, the
organization that facilitates the creation of standards for the
future of Internet infrastructure.
Check Point products also continued to receive awards and
certifications from around the world, including:
- Information Security Magazine's Readers'
Choice Awards:
-
- Gold Medal - Check Point IPS Software Blade and IPS-1
Appliance
- Gold Medal - Check Point's Safe@Office and UTM-1 family of
appliances
- Silver Medal - Check Point Endpoint Security
- Virus Bulletin's VB100 Award - ZoneAlarm®
Internet Security Suite was recognized in the August comparative
review of antivirus solutions. Check Point's Endpoint Security was
also ranked highly in Virus Bulletin's RAP (Reactive and Proactive)
averages quadrant test based on its superior ability to proactively
detect new and unknown malware samples.
- Common Criteria EAL4+ Certification -
Check Point Media Encryption
- Best International Innovation - Check
Point Abra at the 2010 Information Security Day (ITBN) Conference
in Hungary
- Readers' Choice Awards - Check Point
Firewall Software Blade from Computerworld Malaysia and
Singapore
Mr. Shwed concluded. "It is great to see the success of our
strategy reflected in our record all-time-high quarterly results.
The Software Blade Architecture combined, with a unique focus on
our customers' security needs, continues to drive Check Point's
industry leadership. "
Fourth Quarter Investor Conference
Participation Schedule:
- Wells Fargo Securities 2010 Technology, Media
and Telecom Conference November 9, 2010 - New York, NY
- Credit Suisse 2010 Global Technology
Conference December 1, 2010 - Scottsdale, AZ
- Barclay's 2010 Technology Conference
December 8, 2010 - San Francisco, CA
Members of Check Point's management team will present at these
conferences and will discuss the latest company strategies and
initiatives. Check Point's conference presentations are expected to
be available via webcast at the company's web site. To view these
presentations and access the most updated information on presenters
and the schedule, please visit the Investor Relations section of
the company's web site at http://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 October 20, 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 October 27, 2010 at the company's website
http://www.checkpoint.com/ir or by telephone at +1 201.612.7415,
passcode # 385515, 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 uncompromising
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, restructuring and other
acquisition related charges and the related tax affects. Management
uses both GAAP and non-GAAP information in evaluating and operating
the 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.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
----------------------- -----------------------
September 30, September 30,
----------------------- -----------------------
2010 2009 2010 2009
----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited)
Revenues:
Products and licenses $ 106,399 $ 86,883 $ 301,341 $ 241,428
Software updates,
maintenance and
services 166,795 146,759 478,021 410,867
----------- ----------- ----------- -----------
Total revenues 273,194 233,642 779,362 652,295
----------- ----------- ----------- -----------
Operating expenses:
Cost of products and
licenses 18,799 17,848 51,591 40,579
Cost of software updates,
maintenance and services 14,910 10,783 40,702 31,119
Amortization of
technology 8,311 7,471 24,527 20,501
----------- ----------- ----------- -----------
Total cost of revenues 42,020 36,102 116,820 92,199
Research and development 26,165 22,426 76,294 65,681
Selling and marketing 55,872 56,379 169,267 160,390
General and
administrative 14,075 13,190 43,357 40,487
Restructuring and
other acquisition
related costs - 67 588 9,101
----------- ----------- ----------- -----------
Total operating expenses 138,132 128,164 406,326 367,858
----------- ----------- ----------- -----------
Operating income 135,062 105,478 373,036 284,437
Financial income, net 7,243 7,825 21,569 24,368
----------- ----------- ----------- -----------
Income before income taxes 142,305 113,303 394,605 308,805
Taxes on income 27,790 21,839 79,188 60,817
----------- ----------- ----------- -----------
Net income $ 114,515 $ 91,464 $ 315,417 $ 247,988
=========== =========== =========== ===========
Earnings per share (basic) $ 0.55 $ 0.44 $ 1.52 $ 1.18
=========== =========== =========== ===========
Number of shares used in
computing earnings per
share (basic) 207,239 208,738 208,049 209,465
=========== =========== =========== ===========
Earnings per share
(diluted) $ 0.54 $ 0.43 $ 1.49 $ 1.17
=========== =========== =========== ===========
Number of shares used in
computing earnings per
share (diluted) 211,637 211,688 211,339 211,790
=========== =========== =========== ===========
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
RECONCILIATION OF SELECTED GAAP MEASURES TO NON GAAP MEASURES
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
------------------------ ------------------------
September 30, September 30,
------------------------ ------------------------
2010 2009 2010 2009
----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited)
GAAP operating income $ 135,062 $ 105,478 $ 373,036 $ 284,437
Stock-based
compensation (1) 8,701 7,695 26,714 22,769
Amortization of
intangible assets (2) 13,114 14,301 38,770 36,647
Restructuring and other
acquisition related
costs (3) - 67 588 9,101
----------- ----------- ----------- -----------
Non-GAAP operating
income 156,877 $ 127,541 439,108 $ 352,954
=========== =========== =========== ===========
GAAP net income $ 114,515 $ 91,464 $ 315,417 $ 247,988
Stock-based
compensation (1) 8,701 7,695 26,714 22,769
Amortization of
intangible assets (2) 13,114 14,301 38,770 36,647
Restructuring and other
acquisition related
costs (3) - 67 588 9,101
Taxes on the above
items (4) (3,703) (4,040) (9,676) (10,662)
----------- ----------- ----------- -----------
Non-GAAP net income $ 132,627 $ 109,487 $ 371,813 $ 305,843
=========== =========== =========== ===========
GAAP Earnings per share
(diluted) $ 0.54 $ 0.43 $ 1.49 $ 1.17
Stock-based
compensation (1) 0.04 0.04 0.13 0.11
Amortization of
intangible assets (2) 0.06 0.07 0.18 0.17
Restructuring and other
acquisition related
costs (3) - - - 0.04
Taxes on the above
items (4) (0.01) (0.02) (0.04) (0.05)
----------- ----------- ----------- -----------
Non-GAAP Earnings per
share (diluted) 0.63 $ 0.52 $ 1.76 $ 1.44
=========== =========== =========== ===========
Number of shares used
in computing Non-GAAP
earnings per share
(diluted) 211,637 211,688 211,339 211,790
=========== =========== =========== ===========
(1) Stock-based
compensation:
Cost of products and
licenses $ 10 $ 14 $ 38 $ 35
Cost of software
updates, maintenance
and services 322 236 780 536
Research and
development 2,403 1,998 5,744 4,771
Selling and
marketing 1,776 1,769 5,572 4,485
General and
administrative 4,190 3,678 14,580 12,942
----------- ----------- ----------- -----------
8,701 7,695 26,714 22,769
----------- ----------- ----------- -----------
(2) Amortization of
intangible assets:
Amortization of
technology 8,311 7,471 24,527 20,501
Research and
development 685 - 2,055 -
Selling and
marketing 4,118 6,830 12,188 16,146
----------- ----------- ----------- -----------
13,114 14,301 38,770 36,647
----------- ----------- ----------- -----------
(3) Restructuring and
other acquisition
related costs - 67 588 9,101
----------- ----------- ----------- -----------
(4) Taxes on the above
items (3,703) (4,040) (9,676) (10,662)
----------- ----------- ----------- -----------
Total, net $ 18,112 $ 18,023 $ 56,396 $ 57,855
=========== =========== =========== ===========
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED BALANCE SHEET DATA
(In thousands)
ASSETS
September 30, December 31,
2010 2009
------------- -------------
(unaudited) (audited)
Current assets:
Cash and cash equivalents $ 438,785 $ 414,085
Marketable securities 515,448 469,913
Trade receivables, net 165,712 283,668
Prepaid expenses and other current assets 38,265 34,544
------------- -------------
Total current assets 1,158,210 1,202,210
------------- -------------
Long-term assets:
Marketable securities 1,302,266 963,001
Property and equipment, net 37,329 38,936
Severance pay fund 6,237 6,314
Deferred tax asset, net 19,956 16,307
Other intangible assets, net 79,972 114,192
Goodwill 714,803 708,458
Other assets 18,076 20,176
------------- -------------
Total long-term assets 2,178,639 1,867,384
------------- -------------
Total assets $ 3,336,849 $ 3,069,594
============= =============
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Deferred revenues $ 362,918 $ 384,255
Trade payables and other accrued liabilities 195,582 169,011
------------ ------------
Total current liabilities 558,500 553,266
------------ ------------
Long-term deferred revenues 33,430 41,005
Income tax accrual 155,137 132,908
Deferred tax liability, net 5,687 11,636
Accrued severance pay 10,967 11,061
------------ ------------
205,221 196,610
------------ ------------
Total liabilities 763,721 749,876
------------ ------------
Shareholders' equity:
Share capital 774 774
Additional paid-in capital 563,494 527,874
Treasury shares at cost (1,306,030) (1,199,752)
Accumulated other comprehensive income 23,220 12,555
Retained earnings 3,291,670 2,978,267
------------ ------------
Total shareholders' equity 2,573,128 2,319,718
------------ ------------
Total liabilities and shareholders' equity $ 3,336,849 $ 3,069,594
============ ============
Total cash and cash equivalents and marketable
securities $ 2,256,499 $ 1,846,999
============ ============
CHECK POINT SOFTWARE TECHNOLOGIES LTD.
SELECTED CONSOLIDATED CASH FLOW DATA
(In thousands)
Three Months Ended Nine Months Ended
------------------------ ------------------------
September 30, September 30,
------------------------ ------------------------
2010 2009 2010 2009
----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited)
Cash flow from
operating activities:
Net income $ 114,515 $ 91,464 $ 315,417 $ 247,988
Adjustments to
reconcile net income
to net cash provided
by operating
activities:
Depreciation and
amortization of
property, plant and
equipment 1,730 2,189 5,305 7,225
Decrease (increase) in
trade and other
receivables, net (7,939) (50) 115,714 85,050
Increase in deferred
revenues, trade
payables and other
accrued liabilities 19,876 15,494 22,025 24,769
Realized loss (gain) on
marketable securities (781) - (781) 1,896
Stock-based
compensation 8,701 7,695 26,714 22,768
Amortization of
intangible assets 13,114 14,301 38,770 36,647
Excess tax benefit from
stock-based
compensation (1,082) (2,474) (4,042) (6,988)
Deferred income taxes,
net (3,558) (2,487) (7,807) (8,729)
----------- ----------- ----------- -----------
Net cash provided by
operating activities 144,576 126,132 511,315 410,626
----------- ----------- ----------- -----------
Cash flow from
investing activities:
Cash paid in
conjunction with
acquisitions, net of
acquired cash (333) - (13,957) (57,540)
Investment in property
and equipment (1,441) (1,043) (3,585) (3,644)
----------- ----------- ----------- -----------
Net cash used in
investing activities (1,774) (1,043) (17,542) (61,184)
----------- ----------- ----------- -----------
Cash flow from
financing activities:
Proceeds from issuance
of shares upon
exercise of options 12,568 20,166 46,566 62,469
Purchase of treasury
shares (50,000) (50,000) (150,000) (152,286)
Excess tax benefit from
stock-based
compensation 1,082 2,474 4,042 6,988
----------- ----------- ----------- -----------
Net cash used in
financing activities (36,350) (27,360) (99,392) (82,829)
----------- ----------- ----------- -----------
Unrealized gain on
marketable securities,
net 9,131 8,255 15,119 25,719
----------- ----------- ----------- -----------
Increase in cash and
cash equivalents and
marketable securities 115,583 105,984 409,500 292,332
Cash and cash
equivalents and
marketable securities
at the beginning of
the period 2,140,916 1,630,180 1,846,999 1,443,832
----------- ----------- ----------- -----------
Cash and cash
equivalents, and
marketable securities
at the end of the
period $ 2,256,499 $ 1,736,164 $ 2,256,499 $ 1,736,164
=========== =========== =========== ===========
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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