Check Point Software Technologies Reports 2013 First Quarter Financial Results

Check Point Software Technologies Reports 2013 First Quarter Financial Results 
SAN CARLOS, CA -- (Marketwired) -- 04/22/13 --  Check Point(R)
Software Technologies Ltd. (NASDAQ: CHKP), the worldwide leader in
securing the Internet, today announced its financial results for the
first quarter ending March 31, 2013. 


 
--  Total Revenue: $322.7 million, representing a 3 percent increase year
    over year
--  Non-GAAP Operating Income: $189.1 million, representing 59 percent of
    revenues
--  Non-GAAP EPS: $0.79, representing a 7 percent increase year over year
--  Cash Flow from Operations: $331.4 million, representing a 20 percent
    increase year over year

  
"In the first quarter we significantly advanced attack prevention with
the introduction of our leading-edge Threat Emulation Software Blade
that prevents infections from undiscovered exploits, zero-day and
targeted attacks. We were also recognized for our security leadership
by Gartner, IDC and NSS Labs. This recognition underscores our
product leadership and dedication to providing the best security to
our customers," said Gil Shwed, founder, chairman, and chief
executive officer of Check Point Software Technologies. 
Financial Highlights for the First Quarter of 2013: 


 
--  Total Revenue: $322.7 million compared to $313.1 million in the first
    quarter of 2012.
--  GAAP Operating Income: $177.0 million compared to $172.9 million in
    the first quarter of 2012. GAAP operating margin was 55 percent, same
    as in the first quarter of 2012.
--  Non-GAAP Operating Income: $189.1 million compared to $186.7 million
    in the first quarter of 2012. Non-GAAP operating margin was 59
    percent, compared to 60 percent in the first quarter of 2012.
--  GAAP Net Income and Earnings per Diluted Share: GAAP net income was
    $148.0 million compared to $143.6 million in the first quarter of
    2012. GAAP earnings per diluted share were $0.73 compared to $0.68 in
    the first quarter of 2012.
--  Non-GAAP Net Income and Earnings per Diluted Share: Non-GAAP net
    income was $159.3 million compared to $156.9 million in the first
    quarter of 2012. Non-GAAP earnings per diluted share were $0.79
    compared to $0.74 in the first quarter of 2012.
--  Deferred Revenues: As o
f March 31, 2013, deferred revenues were $586.4
    million compared to $542.2 million in the first quarter of 2012.
--  Cash Flow: Cash flow from operations was $331.4 million compared to
    $275.3 million in the first quarter of 2012.
--  Share Repurchase Program: During the first quarter of 2013, the
    company repurchased 2.64 million shares at a total cost of $131.6
    million.
--  Cash Balances, Marketable Securities and Short Term Deposits: $3,523.4
    million as of March 31, 2013, an increase of $402.2 million, compared
    to $3,121.2 million as of March 31, 2012.

  
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 
Check Point continued to deliver innovative security solutions this
past quarter with the introduction of advanced new products and
technology that protect both enterprises and consumers. 
Threat Emulation Software Blade - An innovative solution that
prevents infections from new exploits, undiscovered threats, and
targeted attacks. Check Point Threat Emulation inspects suspicious
documents and emulates how they run in a virtual environment to
discover malicious behavior and to prevent malware from entering the
network. 
Compliance Software Blade - The industry's first integrated
compliance solution to leverage an extensive knowledgebase of
regulatory requirements and IT security best practices, while
providing a real-time view of compliance. Check Point's Compliance
Software Blade ensures that security policies are aligned with global
regulations and validates that appropriate security levels are
maintained -- shortening audit times, improving security, and
reducing costs for businesses. 
New Data Center Appliance: 21700 Model - Provides market leading
security and the fastest performance in a compact 2U chassis,
protecting large enterprises and data centers with Check Point's
award-winning Software Blade Architecture. It offers maximum security
performance straight out of the box with 78 Gbps of firewall
throughput, 25 Gbps of IPS throughput, and a 2,922 SecurityPower(TM)
unit (SPU) rating. The 21700 is the third model in the 21000 series
and increases the top performance by approximately 50 percent since
the launch.  
New Enterprise-Class Security in a Desktop Package: 1100 Model -
Provides enterprise-class security in a compact desktop appliance
perfect for small branch and remote offices. For the first time,
small offices can benefit from the full software blade architecture
starting at under $1,000.  
ZoneAlarm 2013 Security Products - The new 2013 products, which are
Windows 8 compatible, are the first to integrate a Facebook Privacy
Scan and Do Not Track technologies. ZoneAlarm products also offer
improved performance and security through advanced antivirus and
firewall capabilities.  
Industry Accolades 
Leader in Gartner's Magic Quadrant for Enterprise Network Firewall -
Check Point is positioned as a leader in Gartner's Magic Quadrant for
Enterprise Network Firewall. The company has been in the leader's
quadrant for 16 consecutive years.  
Top Position in Worldwide Combined Firewall and UTM Appliance Market
- Check Point continued to be the number one vendor in worldwide
combined Firewall and UTM appliance revenue for 2012, according to
the IDC Worldwide 2012 Security Appliance Tracker.  
Triple NSS Labs "Recommend" Rating - Check Point achieved the top
score in security effectiveness and management in the latest NSS
Labs' Next Generation Firewall (NGFW) group test. Check Point also
excelled in NSS Labs' latest round of Network Firewall and Intrusion
Prevention System (IPS) tests -- earning a total of three "Recommend"
ratings. 
SC Magazine Reader Trust Award - SC Magazine readers selected Check
Point for best enterprise firewall and best IPS solution in 2013.  
CRN Channel Chief Award - Check Point President, Amnon Bar-Lev, has
been named one of UBM Tech Channel's CRN 2013 Channel Chiefs. This is
the sixth time Mr. Bar-Lev has been included on the prestigious list
of the most influential and powerful leaders in the IT channel. 
In addition, Check Point issued its 2013 Security Report, uncovering
major security risks that impact organizations worldwide. The new
report examines top security threats, risky web applications that
compromise network security, and loss of data caused by employees
unintentionally. Most importantly, it provides security
recommendations on how to protect against these threats. The report
is available at www.checkpoint.com. 
Second Quarter 2013 Investor Conference Participation Schedule: 


 
--  Jeffries Global TMT Conference
     May 7, 2013 - New York, NY
    
    
--  J.P. Morgan 41st Annual Technology, Media and Telecom Conference
     May
    16, 2013 - Boston, MA
    
    
--  Barclays Global Technology, Media and Telecom Conference
     May 22, 2013
    - New York, NY
    
    
--  Cowen & Company 41st Annual Technology Media & Telecom
    Conference
     May 30, 2013 - New York, NY
    
    
--  Bank of America Merrill Lynch 2013 Global Technology Conference
     June
    5, 2013 - 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 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 April 22, 2013 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 April 29, 2013 on the company's
website or by telephone at +1.201.612.7415, replay ID number 412273. 
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 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(TM). 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. 
Copyright2013 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, 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   
                                                   -------------------------
                                                           March 31,        
                                                   -------------------------
                                                       2013         2012    
                                                   ------------ ------------
                                                    (unaudited)  (unaudited)
Revenues:                                                                   
  Products and licenses                            $    106,530 $    110,182
  Software updates, maintenance and subscription        216,200      202,934
                                                   ------------ ------------
Total revenues                                          322,730      313,116
                                                   ------------ ------------
                                                                            
Operating expenses:                                                         
  Cost of products and licenses                          18,849       19,604
  Cost of software updates, maintenance and                                 
   subscription                                          17,854       16,039
  Amortization of technology                                294        2,858
                                                   ------------ ------------
Total cost of revenues                                   36,997       38,501
                                                                            
                                                                            
  Research and development                               29,314       26,842
  Selling and marketing                                  61,829       59,099
  General and administrative                             17,586       15,784
                                                   ------------ ------------
Total operating expenses                                145,726      140,226
                                                   ------------ ------------
                                                                            
Operating income                                        177,004      172,890
Financial income, net                                     8,842       10,462
                                                   ------------ ------------
Income before taxes on income                           185,846      183,352
Taxes on income                                          37,886       39,726
                                                   ------------ ------------
Net income                                         $    147,960 $    143,626
                                                   ============ ============
                                                                            
Earnings per share (basic)                         $       0.75 $       0.70
                                                   ============ ============
Number of shares used in computing earnings per                             
 share (basic)                                          198,459      206,114
                                                   ============ ============
                                                                            
Earnings per share
 (diluted)                       $       0.73 $       0.68
                                                   ============ ============
Number of shares used in computing earnings per                             
 share (diluted)                                        202,594      212,469
                                                   ============ ============
                                                                            
                                                                            
                   CHECK POINT SOFTWARE TECHNOLOGIES LTD.                   
          RECONCILIATION OF GAAP TO NON GAAP FINANCIAL INFORMATION          
                                                                            
                  (In thousands, except per share amounts)                  
                                                                            
                                                     Three Months Ended     
                                                 -------------------------- 
                                                          March 31,         
                                                 -------------------------- 
                                                     2013          2012     
                                                 ------------  ------------ 
                                                  (unaudited)   (unaudited) 
                                                                            
GAAP operating income                            $    177,004  $    172,890 
Stock-based compensation (1)                           11,170         9,785 
Amortization of intangible assets (2)                     922         4,004 
                                                 ------------  ------------ 
Non-GAAP operating income                        $    189,096  $    186,679 
                                                 ============  ============ 
                                                                            
GAAP net income                                  $    147,960  $    143,626 
Stock-based compensation (1)                           11,170         9,785 
Amortization of intangible assets (2)                     922         4,004 
Taxes on the above items (3)                             (760)         (503)
                                                 ------------  ------------ 
Non-GAAP net income                              $    159,292  $    156,912 
                                                 ============  ============ 
                                                                            
GAAP Earnings per share (diluted)                $       0.73  $       0.68 
Stock-based compensation (1)                             0.06          0.05 
Amortization of intangible assets (2)                       -          0.02 
Taxes on the above items (3)                                -         (0.01)
                                                 ============  ============ 
                                                                            
Non-GAAP Earnings per share (diluted)            $       0.79  $       0.74 
                                                 ============  ============ 
Number of shares used in computing Non-GAAP                                 
 earnings per share (diluted)                         202,594       212,469 
                                                 ------------  ------------ 
(1) Stock-based compensation:                                               
  Cost of products and licenses                  $         18  $         16 
  Cost of software updates, maintenance and                                 
   subscription                                           199            67 
  Research and development                              1,987         1,939 
  Selling and marketing                                 2,260         2,089 
  General and administrative                            6,706         5,674 
                                                 ------------  ------------ 
                                                       11,170         9,785 
                                                 ------------  ------------ 
                                                                            
(2) Amortization of intangible assets:                                      
  Amortization of technology- Cost of revenues            294         2,858 
  Selling and marketing                                   628         1,146 
                                                 ------------  ------------ 
                                                          922         4,004 
                                                 ------------  ------------ 
                                                                            
                                                                            
(3) Taxes on the above items                             (760)         (503)
                                                 ------------  ------------ 
                                                                            
Total, net                                       $     11,332  $     13,286 
                                                 ============  ============ 
                                                                            
                                                                            
                   CHECK POINT SOFTWARE TECHNOLOGIES LTD.                   
                 CONDENSED CONSOLIDATED BALANCE SHEET DATA                  
                                                                            
                               (In thousands)                               
                                                                            
                                   ASSETS                                   
                                                   March 31,   December 31, 
                                                     2013          2012     
                                                 ------------  ------------ 
                                                  (unaudited)    (audited)  
Current assets:                                                             
Cash and cash equivalents                        $    252,771  $    574,802 
Marketable securities and short-term deposits       1,132,310       928,535 
Trade receivables, net                                276,178       373,755 
Prepaid expenses and other current assets              50,806        47,827 
                                                 ------------  ------------ 
Total current assets                                1,712,065     1,924,919 
                                                 ------------  ------------ 
                                                                            
Long-term assets:                                                           
Marketable securities                               2,138,310     1,792,027 
Property and equipment, net                            37,539        36,973 
Severance pay fund                                      5,995         6,038 
Deferred tax asset, net                                26,093        25,553 
Other intangible assets, net                           18,289        19,211 
Goodwill                                              727,875       727,875 
Other assets                                           20,220        19,797 
                                                 ------------  ------------ 
Total long-term assets                              2,974,321     2,627,474 
                                                 ------------  ------------ 
                                                                            
Total assets                                        4,686,386  $  4,552,393 
                                                 ============  ============ 
                    
                                                        
                              LIABILITIES AND                               
                            SHAREHOLDERS' EQUITY                            
                                                                            
Current liabilities:                                                        
Deferred revenues                                $    516,870  $    524,627 
Trade payables and other accrued liabilities          411,361       346,568 
                                                 ------------  ------------ 
Total current liabilities                             928,231       871,195 
                                                 ------------  ------------ 
                                                                            
Long-term deferred revenues                            69,487        65,063 
Income tax accrual                                    276,961       259,547 
Deferred tax liability, net                             1,788             - 
Accrued severance pay                                  10,526        10,279 
                                                 ------------  ------------ 
                                                      358,762       334,889 
                                                                            
                                                 ------------  ------------ 
Total liabilities                                   1,286,993     1,206,084 
                                                 ------------  ------------ 
                                                                            
Shareholders' equity:                                                       
Share capital                                             774           774 
Additional paid-in capital                            711,142       693,212 
Treasury shares at cost                            (2,066,313)   (1,955,328)
Accumulated other comprehensive income                 12,785        14,606 
Retained earnings                                   4,741,005     4,593,045 
                                                 ------------  ------------ 
Total shareholders' equity                          3,399,393     3,346,309 
                                                 ------------  ------------ 
Total liabilities and shareholders' equity       $  4,686,386  $  4,552,393 
                                                 ============  ============ 
Total cash and cash equivalents, marketable                                 
 securities and short-term deposits              $  3,523,391  $  3,295,364 
                                                 ============  ============ 
                                                                            
                                                                            
                   CHECK POINT SOFTWARE TECHNOLOGIES LTD.                   
                    SELECTED CONSOLIDATED CASH FLOW DATA                    
                                                                            
                               (In thousands)                               
                                                     Three Months Ended     
                                                 -------------------------- 
                                                          March 31,         
                                                     2013          2012     
                                                 ------------  ------------ 
                                                  (unaudited)   (unaudited) 
Cash flow from operating activities:                                        
Net income                                       $    147,960  $    143,626 
Adjustments to reconcile net income to net cash                             
 provided by operating activities:                                          
Depreciation of property, plant and equipment           2,016         1,952 
Amortization of intangible assets                         922         4,004 
Stock-based compensation                               11,170         9,785 
Decrease in trade and other receivables, net           94,376       113,161 
Realized loss (gain) on marketable securities          (1,114)           62 
Increase (decrease) in deferred revenues, trade                             
 payables and other accrued liabilities                83,496        (1,110)
Excess tax benefit from stock-based compensation       (4,171)          378 
Deferred income taxes, net                             (3,213)        3,475 
                                                 ------------  ------------ 
Net cash provided by operating activities             331,442       275,333 
                                                 ------------  ------------ 
                                                                            
Cash flow from investing activities:                                        
Investment in property and equipment                   (2,582)       (2,418)
                                                 ------------  ------------ 
Net cash used in investing activities                  (2,582)       (2,418)
                                                 ------------  ------------ 
                                                                            
Cash flow from financing activities:                                        
Proceeds from issuance of shares upon exercise                              
 of options                                            26,645        39,554 
Purchase of treasury shares                          (131,637)      (74,999)
Excess tax benefit from stock-based compensation        4,171          (378)
                                                 ------------  ------------ 
Net cash used in financing activities                (100,821)      (35,823)
                                                 ------------  ------------ 
                                                                            
Unrealized gain (loss) on marketable securities,                            
 net                                                      (12)        4,657 
                                                 ------------  ------------ 
                                                                            
Increase in cash and cash equivalents and                                   
 marketable securities                                228,027       241,749 
                                                                            
Cash and cash equivalents, marketable securities                            
 and short term deposits at the beginning of the                            
 period                                             3,295,364     2,879,405 
                                                 ------------  ------------ 
Cash and cash equivalents, marketable securities                            
 and short term deposits at the end of the                                  
 period                                          $  3,523,391  $  3,121,154 
                                                 ============  ============ 

  
INVESTOR CONTACT: 
Kip E. Meintzer 
Check Point Software Technologies 
+1.650.628.2040
ir@checkpoint.com 
MEDIA CONTACT:
James Rivas
Check Point Software Technologies
+1.650.628.2215 
press@checkpoint.com 
 
 
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