Check Point Software Technologies Reports 2012 Third Quarter Financial Results
SAN CARLOS, CA--(Marketwire - Oct 17, 2012) - Check Point® Software Technologies Ltd. (NASDAQ: CHKP), the worldwide leader in securing the Internet, today announced its financial results for the third quarter ended September 30, 2012.
Total Revenue: $332.4 million, representing an 8 percent increase year-over-year
Non-GAAP Operating Income: $195.6 million, representing 59 percent of revenues
Non-GAAP EPS: $0.79, representing a 10 percent increase year over year
"Third quarter results continued to be good with healthy growth in enterprise appliance units and software blade sales. Our revenues and earnings per share came in at the upper half of our projections," said Gil Shwed, founder, chairman, and chief executive officer of Check Point Software Technologies. "Geographically, North America continued to deliver great results with double digit growth in product and service revenues."
Financial Highlights:
Total Revenue: $332.4 million, an increase of 8 percent, compared to $308.3 million in the third quarter of 2011.
GAAP Operating Income: $182.6 million, an increase of 15 percent, compared to $158.2 million in the third quarter of 2011. GAAP operating margin was 55 percent, compared to 51 percent in the third quarter of 2011.
Non-GAAP Operating Income: $195.6 million, an increase of 8 percent, compared to $180.7 million in the third quarter of 2011. Non-GAAP operating margin was 59 percent, the same as in the third quarter of 2011.
GAAP Net Income and Earnings per Diluted Share: GAAP net income was $152.4 million, an increase of 14 percent, compared to $134.1 million in the third quarter of 2011. GAAP earnings per diluted share were $0.73, an increase of 16 percent, compared to $0.63 in the third quarter of 2011.
Non-GAAP Net Income and Earnings per Diluted Share: Non-GAAP net income was $164.1 million, an increase of 7 percent, compared to $152.9 million in the third quarter of 2011. Non-GAAP earnings per diluted share were $0.79, an increase of 10 percent, compared to $0.72, in the third quarter of 2011.
Deferred Revenues: As of September 30, 2012, we had deferred revenues of $505.9 million, an increase of 11 percent, compared to $454.5 million as of September 30, 2011.
Cash Flow: Cash flow from operations was $180.4 million, an increase of 17%, compared to $154.5 million in the third quarter of 2011.
Share Repurchase Program: During the third quarter of 2012, we repurchased 3.2 million shares at a total cost of $156.1 million.
Cash Balances, Marketable Securities and Short Term Deposits: $3,246.8 million as of September 30, 2012, an increase of $470.3 million, compared to $2,776.5 million as of September 30, 2011.
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
During the quarter, we announced the new Check Point Virtual Systems -- Latest solution for private cloud environments and data centers enabling the consolidation of up to 250 security gateways on a single hardware platform. Customers can now secure multiple network segments by selecting any combination of Check Point software blades, which are capable of simplifying security, reducing costs and boosting performance.
We've continued to receive industry recognition worldwide including:
Top Position in IDC 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 positioned as a leader in Gartner's Magic Quadrant for Mobile Data Protection, 2012. The company is recognized for its ability to encrypt data and secure mobile endpoints.
NSS Labs "Recommended" Rating -- Check Point IPS Software Blade earned NSS Labs' coveted "Recommended" rating for the second year in a row.
Shwed concluded, "We are pleased with IDC's recognition of Check Point's number one position in security appliance sales this past quarter. We believe that with our appliances and software blades architecture we deliver the deepest and broadest security solutions available in the market."
Fourth Quarter 2012 Investor Conference Participation Schedule:
Wells Fargo Securities Media & Technology Conference
November 7, 2012 - New York, NYUBS Global Technology Conference
November 15, 2012 - New York, NYCredit Suisse Annual Technology Conference
November 27, 2012 - Scottsdale, AZ29th Annual NASDAQ OMX Investor Program
December 4, 2012 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 October 17, 2012 at 8:30 AM ET/5:30 AM PT. 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 October 24, 2012 on the company's website or by telephone at +1.201.612.7415, replay ID number 401438.
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.
©2012 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, gain on sale of marketable securities previously impaired or other than temporary impairment of marketable securities, net, and the related tax effects. 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 | Nine Months Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||
Revenues: | |||||||||||||
Products and licenses | $ | 121,036 | $ | 120,700 | $ | 354,373 | $ | 345,246 | |||||
Software updates, maintenance and subscription | 211,320 |
| 619,748 |
| |||||||||
Total revenues | 332,356 | 308,310 | 974,121 | 890,228 | |||||||||
Operating expenses: | |||||||||||||
Cost of products and licenses | 20,606 | 18,760 | 60,881 | 55,395 | |||||||||
Cost of software updates, maintenance and subscription | 17,380 |
| 50,164 |
| |||||||||
Amortization of technology | 294 | 7,849 | 3,688 | 23,548 | |||||||||
Total cost of revenues | 38,280 | 42,675 | 114,733 | 124,929 | |||||||||
Research and development | 28,517 | 28,063 | 82,621 | 83,230 | |||||||||
Selling and marketing | 64,501 | 62,091 | 189,415 | 185,385 | |||||||||
General and administrative | 18,412 | 17,297 | 51,288 | 47,120 | |||||||||
Total operating expenses | 149,710 | 150,126 | 438,057 | 440,664 | |||||||||
Operating income | 182,646 | 158,184 | 536,064 | 449,564 | |||||||||
Financial income, net | 10,452 | 9,638 | 30,688 | 30,998 | |||||||||
Income before taxes on income | 193,098 | 167,822 | 566,752 | 480,562 | |||||||||
Taxes on income | 40,691 | 33,748 | 120,738 | 96,407 | |||||||||
Net income | $ | 152,407 | $ | 134,074 | $ | 446,014 | $ | 384,155 | |||||
Earnings per share (basic) | $ | 0.75 | $ | 0.65 | $ | 2.17 | $ | 1.85 | |||||
Number of shares used in computing earnings per share (basic) | 203,928 | 206,311 | 205,170 |
| |||||||||
Earnings per share (diluted) | $ | 0.73 | $ | 0.63 | $ | 2.12 | $ | 1.79 | |||||
Number of shares used in computing earnings per share (diluted) | 208,717 | 213,412 | 210,831 | 214,505 | |||||||||
CHECK POINT SOFTWARE TECHNOLOGIES LTD. | |||||||||||||||||
RECONCILIATION OF GAAP TO NON GAAP FINANCIAL INFORMATION | |||||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||
GAAP operating income | $ | 182,646 | $ | 158,184 | $ | 536,064 | $ | 449,564 | |||||||||
Stock-based compensation (1) | 12,029 | 11,495 | 33,734 | 29,640 | |||||||||||||
Amortization of intangible assets (2) | 922 | 11,013 | 6,107 | 33,076 | |||||||||||||
Non-GAAP operating income | $ | 195,597 | $ | 180,692 | $ | 575,905 | $ | 512,280 | |||||||||
GAAP net income | $ | 152,407 | $ | 134,074 | $ | 446,014 | $ | 384,155 | |||||||||
Stock-based compensation (1) | 12,029 | 11,495 | 33,734 | 29,640 | |||||||||||||
Amortization of intangible assets (2) | 922 | 11,013 | 6,107 | 33,076 | |||||||||||||
Gain on sale of marketable securities previously impaired(3) | - | - | - | (2,017 | ) | ||||||||||||
Taxes on the above items (4) | (1,250 | ) | (3,689 | ) | (3,013 | ) | (9,378 | ) | |||||||||
Non-GAAP net income | $ | 164,108 | $ | 152,893 | $ | 482,842 | $ | 435,476 | |||||||||
GAAP Earnings per share (diluted) | $ | 0.73 | $ | 0.63 | $ | 2.12 | $ | 1.79 | |||||||||
Stock-based compensation (1) | 0.06 | 0.05 | 0.16 | 0.14 | |||||||||||||
Amortization of intangible assets (2) | 0.01 | 0.05 | 0.03 | 0.15 | |||||||||||||
Gain on sale of marketable securities previously impaired(3) |
| - |
| (0.01 | ) | ||||||||||||
Taxes on the above items (4) | (0.01 | ) | (0.01 | ) | (0.02 | ) | (0.04 | ) | |||||||||
Non-GAAP Earnings per share (diluted) | $ | 0.79 | $ | 0.72 | $ | 2.29 | $ | 2.03 | |||||||||
Number of shares used in computing Non-GAAP earnings per share (diluted) |
| 213,412 |
| 214,505 | |||||||||||||
(1) Stock-based compensation: | |||||||||||||||||
Cost of products and licenses | $ | 12 | $ | 11 | $ | 50 | $ | 41 | |||||||||
Cost of software updates, maintenance and subscription |
| 235 |
| 680 | |||||||||||||
Research and development | 1,951 | 2,164 | 6,504 | 5,619 | |||||||||||||
Selling and marketing | 2,445 | 2,328 | 7,272 | 5,909 | |||||||||||||
General and administrative | 7,387 | 6,757 | 19,369 | 17,391 | |||||||||||||
$ | 12,029 | $ | 11,495 | $ | 33,734 | $ | 29,640 | ||||||||||
(2) Amortization of intangible assets: | |||||||||||||||||
Amortization of technology-cost of revenues | 294 | 7,849 | 3,688 | 23,548 | |||||||||||||
Selling and marketing | 628 | 3,164 | 2,419 | 9,528 | |||||||||||||
922 | 11,013 | 6,107 | 33,076 | ||||||||||||||
(3) Gain on Sale of marketable securities previously impaired | - | - | - | (2,017 | ) | ||||||||||||
(4) Taxes on the above items | (1,250 | ) | (3,689 | ) | (3,013 | ) | (9,378 | ) | |||||||||
Total, net | $ | 11,701 | $ | 18,819 | $ | 36,828 | $ | 51,321 | |||||||||
CHECK POINT SOFTWARE TECHNOLOGIES LTD. | ||||||
CONDENSED CONSOLIDATED BALANCE SHEET DATA | ||||||
(In thousands) | ||||||
ASSETS | ||||||
September 30, | December 31, | |||||
2012 | 2011 | |||||
(unaudited) | (audited) | |||||
Current assets: | ||||||
Cash and cash equivalents | $ | 330,391 | $ | 493,546 | ||
Marketable securities and short-term deposits | 1,119,878 | 865,994 | ||||
Trade receivables, net | 240,911 | 357,418 | ||||
Prepaid expenses and other current assets | 50,266 | 53,045 | ||||
Total current assets | 1,741,446 | 1,770,003 | ||||
Long-term assets: | ||||||
Marketable securities | 1,796,515 | 1,519,865 | ||||
Property and equipment, net | 35,505 | 36,639 | ||||
Severance pay fund | 5,818 | 6,052 | ||||
Deferred tax asset, net | 22,146 | 25,296 | ||||
Other intangible assets, net | 20,132 | 26,239 | ||||
Goodwill | 727,875 | 727,875 | ||||
Other assets | 18,428 | 16,094 | ||||
Total long-term assets | 2,626,419 | 2,358,060 | ||||
Total assets | $ | 4,367,865 | $ | 4,128,063 | ||
LIABILITIES AND | ||||||||
SHAREHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Deferred revenues | $ | 449,614 | $ | 490,655 | ||||
Trade payables and other accrued liabilities | 301,300 | 271,815 | ||||||
Total current liabilities | 750,914 | 762,470 | ||||||
Long-term deferred revenues | 56,330 | 61,523 | ||||||
Income tax accrual | 241,050 | 219,469 | ||||||
Deferred tax liability, net | - | 1,274 | ||||||
Accrued severance pay | 9,987 | 10,236 | ||||||
307,367 | 292,502 | |||||||
Total liabilities | 1,058,281 | 1,054,972 | ||||||
Shareholders' equity: | ||||||||
Share capital | 774 | 774 | ||||||
Additional paid-in capital | 674,195 | 630,508 | ||||||
Treasury shares at cost | (1,802,819 | ) | (1,543,886 | ) | ||||
Accumulated other comprehensive income | 18,375 | 12,650 | ||||||
Retained earnings | 4,419,059 | 3,973,045 | ||||||
Total shareholders' equity | 3,309,584 | 3,073,091 | ||||||
Total liabilities and shareholders' equity | $ | 4,367,865 | $ | 4,128,063 | ||||
Total cash and cash equivalents, marketable securities and short-term deposits | $ | 3,246,784 | $ | 2,879,405 | ||||
CHECK POINT SOFTWARE TECHNOLOGIES LTD. | ||||||||||||||||
SELECTED CONSOLIDATED CASH FLOW DATA | ||||||||||||||||
(In thousands) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
Cash flow from operating activities: | ||||||||||||||||
Net income | $ | 152,407 | $ | 134,074 | $ | 446,014 | $ | 384,155 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
Depreciation of property and equipment | 2,228 | 1,808 | 6,010 | 5,360 | ||||||||||||
Amortization of intangible assets | 922 | 11,013 | 6,107 | 33,076 | ||||||||||||
Stock-based compensation | 12,029 | 11,495 | 33,734 | 29,640 | ||||||||||||
Realized gain on marketable securities | (396 | ) | - | (493 | ) | (2,481 | ) | |||||||||
Decrease (increase) in trade and other receivables, net | 9,359 | (1,971 | ) | 115,219 | 77,936 | |||||||||||
Increase in deferred revenues, trade payables and other accrued liabilities |
| 5,323 |
|
| ||||||||||||
Excess tax benefit from stock-based compensation | (1,854 | ) | (2,660 | ) | (1,619 | ) | (4,748 | ) | ||||||||
Deferred income taxes, net | (448 | ) | (4,549 | ) | 4,374 | (8,378 | ) | |||||||||
Net cash provided by operating activities | 180,447 | 154,533 | 613,307 | 541,647 | ||||||||||||
Cash flow from investing activities: | ||||||||||||||||
Cash paid in conjunction with acquisitions, net of acquired cash |
| (55 | ) |
|
| ) | ||||||||||
Investment in property and equipment | (1,175 | ) | (1,989 | ) | (4,876 | ) | (5,473 | ) | ||||||||
Net cash used in investing activities | (1,175 | ) | (2,044 | ) | (4,876 | ) | (12,029 | ) | ||||||||
Cash flow from financing activities: | ||||||||||||||||
Proceeds from issuance of shares upon exercise of options |
|
|
|
| ||||||||||||
Purchase of treasury shares | (156,059 | ) | (75,000 | ) | (306,058 | ) | (225,000 | ) | ||||||||
Excess tax benefit from stock-based compensation | 1,854 | 2,660 | 1,619 | 4,748 | ||||||||||||
Net cash used in financing activities | (140,368 | ) | (60,513 | ) | (248,978 | ) | (168,874 | ) | ||||||||
Unrealized gain (loss) on marketable securities, net | 6,068 | (5,314 | ) | 7,926 | 780 | |||||||||||
Increase in cash and cash equivalents, marketable securities and short term deposits |
|
|
|
| ||||||||||||
Cash and cash equivalents, marketable securities and short term deposits at the beginning of the period |
|
|
|
| ||||||||||||
Cash and cash equivalents, marketable securities and short term deposits at the end of the period | $ | 3,246,784 | $ |
| $ |
| $ | 2,776,470 | ||||||||
