• Revenue: $308.3 million, representing a 13 percent increase year over year;
• Non-GAAP Operating Income: $180.7 million, representing a 15 percent increase year over year, and 59 percent of revenues versus 57 percent year over year;
• Non-GAAP EPS: $0.72, representing a 14 percent increase year over year;
• Deferred Revenues: $454.5 million, representing a 15 percent increase year over year.
“I am very pleased that we delivered record results for the third quarter. We exceeded our projections as a result of growth in all regions. Our software blade platform continues to gain traction in the marketplace, while our annuity software blades have provided significant contribution to our revenue and deferred revenue growth,” said Gil Shwed, founder, chairman and chief executive officer at Check Point Software Technologies.
Financial Highlights for the Third Quarter of 2011
• Total Revenues: $308.3 million, an increase of 13 percent, compared to $273.2 million in the third quarter of 2010.
• GAAP Operating Income: $158.2 million, an increase of 17 percent, compared to $135.1 million in the third quarter of 2010. GAAP operating margin was 51 percent, compared to 49 percent in the third quarter of 2010.
• Non-GAAP Operating Income: $180.7 million, an increase of 15 percent, compared to $156.9 million in the third quarter of 2010. Non-GAAP operating margin was 59 percent, compared to 57 percent in the third quarter of 2010.
• GAAP Net Income and Earnings per Diluted Share: GAAP net income was $134.1 million, an increase of 17 percent, compared to $114.5 million in the third quarter of 2010. GAAP earnings per diluted share were $0.63, an increase of 17 percent, compared to $0.54 in the third quarter of 2010.
• Non-GAAP Net Income and Earnings per Diluted Share: Non-GAAP net income was $152.9 million, an increase of 15 percent, compared to $132.6 million in the third quarter of 2010. Non-GAAP earnings per diluted share were $0.72, an increase of 14 percent, compared to $0.63 in the third quarter of 2010.
• Deferred Revenues: As of September 30, 2011, Check Point had deferred revenues of $454.5 million, an increase of 15 percent, compared to $396.3 million as of September 30, 2010.
• Cash Flow: Cash flow from operations was $154.5 million, an increase of 7 percent, compared to $144.6 million in the third quarter of 2010.
• Share Repurchase Program: During the third quarter of 2011, the company repurchased 1.37 million shares at a total cost of $75 million.
• Cash Balances and Marketable Securities: $2,776 million as of September 30, 2011, an increase of $520 million, compared to $2,256 million as of September 30, 2010.
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.”
Check Point launched two new high-end appliances targeted at large enterprises, data centers and service providers:
• The 61000 Security System - the industry’s fastest security gateway offers scalable performance for data centers, telecommunication and cloud service providers, with a multi-bladed hardware platform that is potentially capable of future performance of more than 1Tbps in a single firewall and 200 Gbps this year. The new system supports 70 million concurrent connections and 600,000 sessions per second – bringing unparalleled security performance to multi-transaction environments.
• 21400 Appliance - combines high-speed networking technologies with firewall throughput of up to 100 Gbps and IPS throughput of up to 21 Gbps (default profile). The Check Point 21400 is optimized for a full range of software blade protections, providing large enterprises and data centers with industry-leading security and performance.
During the quarter Check Point continued to build on the 3D Security vision with the introduction of the R75.20 release based on the Software Blade Architecture™, The R75.20 release heightens security with Integrated URL Filtering, SSL Inspection and Expanded Data Loss Prevention. This new software blade provides granular control for web surfing in real-time and uniquely integrates with Application Control for unified enforcement of all Web controls. It also enables businesses to inspect SSL-encrypted traffic across all software blades. R75.20 further extends the Check Point DLP solution that now enables customers to protect against internal data leaks.
In addition, Check Point introduced a new metric for security performance – SecurityPower™. The new metric allows customers to estimate their security needs and compare it to the SecurityPower Units (SPU) rating of each security solution – improving the accuracy of performance measurements for appliances under security attack and during day-to-day operations.
In the beginning of October, the company released a new line of appliances and latest annuity software blade:
• Six New Appliance Models – The new appliances represent a refresh of Check Point’s current hardware offerings and are designed to address the security needs of any size business. These new appliances are optimized for Check Point’s Software Blade Architecture™ and deliver three times the performance of previous enterprise versions at comparative pricing.
• Anti-Bot Software Blade – The latest annuity software blade designed to help businesses discover, prevent and remediate bot attacks utilizing a unique ThreatSpect™ detection engine that analyzes traffic and discovers bots by correlating multiple risk factors. The solution is integrated into every gateway to provide businesses with multi-layered protection against bot attacks, Advanced Persistent Threats (APTs) and other forms of malware threats.
Recent Industry Accolades
• Leader in the Gartner Magic Quadrant for Mobile Data Protection – For the 11th time, Check Point is acknowledged for its comprehensive endpoint solutions that secure data on mobile platforms such as laptops, smartphones, and removable media.
• Endpoint Security R80 – Named “Best Buy” and received a 5-Star rating in a comparative product review conducted by SC Magazine.
Shwed concluded,“During the quarter we’ve raised the bar for security across the industry by increasing the levels of security functionality and setting new records for security performance. We opened the fourth quarter with the most significant update to our appliance product portfolio to date by delivering three times the performance across the entire enterprise appliance product line. We continue to deliver on our 3D security vision, enabling customers to consolidate their security infrastructure with enhanced protections and increased performance.”
Fourth Quarter Investor Conference Participation Schedule:
• Wells Fargo Global Technology, Media and Telecommunications Conference
November 8, 2011 – NY, NY
• UBS Technology, Media and Telecommunications Conference
November 15, 2011 – New York, NY
• Morgan Stanley Global Technology, Media and Telecommunications Conference
November 17, 2011 – NY, NY
• Credit Suisse First Boston Technology, Media and Telecommunications Conference
November 30, 2011 – Scottsdale, AZ
• Barclays Technology Conference
December 7, 2011 – San Francisco, CA
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 website. To view these presentations and access the most updated information please visit the company's website at 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 18, 2011 at 8:30 AM ET/5:30 AM PT. To listen to the live webcast, please visit Check Point’s website at: checkpoint.com/ir. A replay of the conference call will be available through October 25, 2011 at the company's website checkpoint.com/ir or by telephone at +1.201.612.7415, replay ID number 380561, account # 215.
About Check Point Software Technologies Ltd
Check Point Software Technologies Ltd (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 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.
©2011 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, restructuring and other acquisitions related costs, gain on sale of marketable securities previously impaired, 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.
Safe Harbor Statement
Certain statements in this press release are forward-looking statements. Forward-looking statements include statements regarding Check Point’s belief that its new 61000 security system is potentially capable of future performance of more than 1Tbps in a single firewall and 200 Gbps this year. Because these statements pertain to future events they are subject to various risks and uncertainties, and actual results could differ materially from Check Point's current expectations and beliefs. Factors that could cause or contribute to such differences include, but are not limited to: any foreseen and unforeseen developmental or technological difficulties with regard to Check Point's products; and other factors and risks discussed in Check Point's Annual Report on Form 20-F for the year ended December 31, 2010, which is on file with the Securities and Exchange Commission. Check Point assumes no obligation to update information concerning its expectations.