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Check Point (CHKP) Q4 Earnings & Revenues Beat Estimates

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Zacks Equity Research
·4 min read
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Check Point Software Technologies Ltd. CHKP reported fourth-quarter 2020 results, wherein both top and bottom lines beat the Zacks Consensus Estimate. The company’s non-GAAP earnings per share of $2.17 beat the consensus mark of $2.11. The figure also climbed 7% year over year.

Revenues for the reported quarter came in at $564 million, up 4% year on year. Moreover, the figure exceeded the Zacks Consensus Estimate of $555.1 million. Growth in SaaS and IaaS cloud solutions drove the top line. In addition, the work-from-home-related solutions — Mobile Access and Sandblast Agent — continued to witness strong traction.

Quarter Details

Subscription revenues came in at $180 million, increasing 10% year over year, on solid demand for its advanced solutions, primarily CloudGuard, Sandblast Zero-day threat prevention and Infinity solutions. During the fourth quarter, the company secured several Infinity deals in various industries, including government, telecommunication and industrial.

Check Point Software Technologies Ltd. Price, Consensus and EPS Surprise

Check Point Software Technologies Ltd. Price, Consensus and EPS Surprise
Check Point Software Technologies Ltd. Price, Consensus and EPS Surprise

Check Point Software Technologies Ltd. price-consensus-eps-surprise-chart | Check Point Software Technologies Ltd. Quote

Revenues of $161 million from products and licenses inched up 1.7%. Products are currently in the process of transitioning to cloud solutions, which is included in the subscription line.

Total revenues from product and security subscriptions came in at $340 million, up 6% year on year.

Software update and maintenance revenues increased to $224 million from the $222 million reported in the year-ago quarter.

As of Dec 31, 2021, deferred revenues were $1.48 billion, up 7% year over year, reflecting strength in security subscription.

Region wise, the Americas generated 43% of total revenues; Europe, Middle East and Africa accounted for 45%; and the Asia Pacific contributed 12%.

Non-GAAP operating income for the reported quarter came in at $285 million, up 1.8% year over year. Non-GAAP operating margin remained flat at 51%.

Balance Sheet & Other Financial Details

Check Point exited the fourth quarter with cash and cash equivalents, marketable securities and short-term deposits of $4 billion compared with the previous quarter’s $3.9 billion.

The company generated cash worth $293 million from operational activities during the fourth quarter and $1.15 billion in full-year 2020.

It repurchased 2.7 million shares for about $323 million during the December-end quarter. During full-year 2020, the company bought back 11.4 million shares for $1.3 billion.

Outlook

Check Point has issued the guidance for first-quarter and full-year 2021. For the ongoing quarter, the company projects revenues between $485 million and $515 million (mid-point $500 million). It forecasts adjusted earnings per share in the range of $1.45 to $1.55 (mid-point $1.50). The Zacks Consensus Estimate for the current-quarter revenues and earnings is pegged at $500.4 million and $1.50 per share, respectively.

For full-year 2021, Check Point estimates revenues to be in the range of $2.08-$2.18 billion and adjusted earnings per share between $6.45 and $6.85. The Zacks Consensus Estimate for the ongoing-year revenues and earnings is pegged at $2.11 billion and $6.93 per share, respectively.

Zacks Rank and Stocks to Consider

Check Point currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader technology sector include Shopify SHOP, Zoom Video Communications ZM and Apple AAPL, all flaunting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Shopify, Zoom and Apple is currently pegged at 32.5%, 25% and 11.5%, respectively.

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