Check Point Software Reports 2024 First Quarter Financial Results

Rhea-AI Summary

Check Point Software Technologies (NASDAQ: CHKP) reported strong financial results for the first quarter of 2024. Total revenues were $599 million, up 6% year over year. Security subscription revenues grew by 15%. GAAP operating income was $194 million, while non-GAAP operating income reached $252 million. GAAP EPS increased by 5% to $1.60, and non-GAAP EPS rose by 13% to $2.04. The company introduced new security technologies and saw significant growth in its recurring revenue streams.

Positive

• Total revenues for the first quarter of 2024 were $599 million, a 6% increase year over year.
• Security subscription revenues reached $263 million, up 15% compared to the previous year.
• GAAP operating income was $194 million, representing 32% of total revenues.
• Non-GAAP operating income stood at $252 million, accounting for 42% of total revenues.
• GAAP EPS was $1.60, a 5% increase year over year.
• Non-GAAP EPS reached $2.04, showing a 13% increase from the previous year.
• The company achieved strong double-digit growth in Infinity Platform agreements, now constituting over 13% of total revenues.
• Aggregate recurring revenues now make up 83% of total revenues.
• Check Point introduced Quantum Force, a new line of security gateways, and launched new technologies like Harmony SaaS and Infinity AI Copilot.
• Deferred revenues as of March 31, 2024, were $1,826 million, a 2% increase year over year.
• Cash balances, marketable securities, and short-term deposits totaled $3,035 million as of March 31, 2024.
• Cash flow from operations was $361 million during the first quarter of 2024.
• The company repurchased approximately 2.0 million shares at a total cost of approximately $325 million in the first quarter of 2024.

Negative

• None.

Insights

Financial Analyst

Check Point Software's reported revenue of $599 million represents a steady year-over-year growth of 6%, with a noteworthy increase of 15% in Security Subscription Revenues. This indicates a strong market demand for the company's cybersecurity solutions and suggests a solid recurring revenue base, which is now stated to be 83% of total revenues. The consistent growth in the Infinity Platform agreements, now over 13% of total revenues, underscores the growing importance of comprehensive security platforms in the industry.

Despite the increase in revenues, there is a slight contraction in GAAP Operating Income from 35% to 32% of total revenues. Investors may want to monitor the company's operating expenses to understand the factors contributing to this compression. An increase in Non-GAAP EPS by 13% year over year is a strong indicator of profitability and could be a positive sign for shareholders.

It is also important to consider the company's strong balance sheet with $3,035 million in cash and equivalents, along with a solid cash flow from operations at $361 million. The share repurchase program, which saw 2.0 million shares bought back at a cost of $325 million, reflects management's confidence in the company's value and is often seen as a positive signal about future prospects.

Tech Market Analyst

The introduction of Quantum Force and new technologies like Harmony SaaS and Infinity AI Copilot highlights Check Point's commitment to innovation and its adaptive response to evolving cybersecurity threats. The company’s strategic focus on next-generation firewall technology and AI-powered security solutions caters to the needs of organizations aiming to enhance their security posture in the face of sophisticated cyber threats.

For investors, the company’s product innovation is a significant factor as it can lead to sustained revenue growth and customer retention. Investors typically look for companies that are not simply maintaining market share but actively expanding it through cutting-edge technologies and solutions that meet contemporary security challenges.

The Deferred Revenues increase to $1,826 million, a modest 2% year over year, offers a glimpse into future revenue and could be a sign of stable future earnings. This metric is an indicator of the company's ability to secure income in advance and often correlates with predictable future cash flows.

Investment Analyst

While the company’s performance and strategic developments are promising, investors should maintain a balanced view and consider potential risks such as market competition and technology disruption. The cybersecurity industry is highly competitive, with new players continually entering the market. Investors should evaluate the company’s position relative to its competitors and its ability to maintain a technological edge.

Furthermore, investors should evaluate Check Point Software’s valuation metrics in comparison to industry peers. A thorough analysis would include price-to-earnings ratios, growth projections and market capitalization to ensure that the company's stock is priced appropriately relative to its growth potential and financial health.

REDWOOD CITY, Calif., April 25, 2024 (GLOBE NEWSWIRE) -- Check Point® Software Technologies Ltd. (NASDAQ: CHKP), today announced its financial results for the quarter ended March 31^st, 2024.

First Quarter 2024:

• Total Revenues: $599 million, a 6 percent increase year over year
• Security Subscription Revenues: $263 million, a 15 percent increase year over year
• GAAP Operating Income: $194 million, representing 32 percent of total revenues
• Non-GAAP Operating Income: $252 million, representing 42 percent of total revenues
• GAAP EPS: $1.60, a 5 percent increase year over year
• Non-GAAP EPS: $2.04, a 13 percent increase year over year

“The first quarter yielded great results with revenues and EPS at the top end of our projections. We delivered strong double-digit growth in Infinity Platform agreements, now constituting over 13 percent of total revenues. Our aggregate recurring revenues now represent 83 percent of total revenues,” stated Gil Shwed, Founder & CEO of Check Point Software Technologies. “We introduced Quantum Force, a new line of security gateways empowering organizations of all sizes with next-generation firewall technology. In addition, we launched new technologies including Harmony SaaS protecting SaaS platforms and data, and Infinity AI Copilot, an AI-powered security assistant enhancing security effectiveness across organizations.”

 Financial Highlights for the First Quarter of 2024

• Total Revenues: $599 million compared to $566 million in the first quarter 2023, a 6 percent increase year over year.
• GAAP Operating Income: $194 million compared to $200 million in the first quarter 2023, representing 32 percent and 35 percent of total revenues in the first quarter 2024 and 2023, respectively.
• Non-GAAP Operating Income: $252 million compared to $238 million in the first quarter 2023, representing 42 percent of total revenues in both the first quarter 2024 and 2023.
• GAAP Taxes on Income: $33 million compared to $35 million in the first quarter 2023.
• GAAP Net Income & Earnings per Diluted Share: GAAP net income was $184 million same as in the first quarter 2023. GAAP earnings per diluted share were $1.60 compared to $1.52 in the first quarter 2023, a 5 percent increase year over year.
• Non-GAAP Net Income & Earnings per Diluted Share: Non-GAAP net income was $235 million compared to $218 million in the first quarter 2023. Non-GAAP earnings per diluted share were $2.04 compared to $1.80 in the first quarter 2023, a 13 percent increase year over year.
• Deferred Revenues: As of March 31, 2024, deferred revenues were $1,826 million compared to $1,797 million as of March 31, 2023, a 2 percent increase year over year.
• Cash Balances, Marketable Securities & Short-Term Deposits: $3,035 million as of March 31, 2024, compared to $2,960 million as of December 31, 2023.
• Cash Flow from Operations: Cash flow of $361 million compared to $386 million in the first quarter 2023.
• Share Repurchase Program: During the first quarter of 2024, the company repurchased approximately 2.0 million shares at a total cost of approximately $325 million.

For information regarding the non-GAAP financial measures discussed in this release, as well as a reconciliation of such non-GAAP financial measures to the most directly comparable GAAP financial measures, please see “Use of Non-GAAP Financial Information” and “Reconciliation of GAAP to Non-GAAP Financial Information.”

Conference Call & Video Cast Information

Check Point will host a conference call with the investment community on April 25, 2024, at 8:30 AM ET/5:30 AM PT. To listen to the live videocast or replay, please visit the website www.checkpoint.com/ir.

Second Quarter 2024 Investor Conference Participation Schedule

• 2024 RSA Analyst/Investor Booth Tours
  May 7-8, 2024, SF, CA – Group Meetings
• Needham 19^th Annual Technology, Media, and Consumer Conference
  May 16, 2024, Virtual – 1x1’s
• J.P. Morgan 52^nd Annual Technology, Media, and Telecom Conference
  May 20-22, 2024, Boston, MA – Fireside Chat & 1x1’s
• Oppenheimer 25^th Annual Israeli Conference
  May 26, 2024, Tel Aviv, Israel – Fireside Chat & 1x1’s
• Cowen 52^nd Annual TMT Conference
  May 29, 2024, NY, NY – Fireside Chat & 1x1’s
• Jefferies Software Summit
  May 30, 2024, Newport Coast, CA – 1x1’s
• Baird 2023 Global Consumer, Technology & Services Conference
  June 4, 2024, SF, CA – 1x1’s
• Bank of America Merrill Lynch 2023 Global Technology Conference
  June 5-6, 2024, SF, CA – 1x1’s
• Nasdaq Investor Conference
  June 11, 2024, London, UK – 1x1’s
  

Members of Check Point's management team anticipate attending these conferences and events to discuss the latest company strategies and initiatives. Check Point’s conference presentations, if applicable, will be available via webcast on the company’s web site. To hear 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.

To follow this and other Check Point news visit:

• LinkedIn: https://www.linkedin.com/company/check-point-software-technologies
• YouTube: http://www.youtube.com/user/CPGlobal
• Blog: http://blog.checkpoint.com/
• X (Formerly known as Twitter): http://www.twitter.com/checkpointsw

About Check Point Software Technologies Ltd.

Check Point Software Technologies Ltd. (www.checkpoint.com) is a leading AI-powered, cloud-delivered cyber security platform provider protecting over 100,000 organizations worldwide. Check Point leverages the power of AI everywhere to enhance cyber security efficiency and accuracy through its Infinity Platform, with industry-leading catch rates enabling proactive threat anticipation and smarter, faster response times. The comprehensive platform includes cloud-delivered technologies consisting of Check Point Harmony to secure the workspace, Check Point CloudGuard to secure the cloud, Check Point Quantum to secure the network, and Check Point Infinity Core Services for collaborative security operations and services.

Legal Notice Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements generally relate to future events or our future financial or operating performance. Forward-looking statements in this press release include, but are not limited to, statements related to our expectations regarding our products and solutions, and our participation in investor conferences and events during the second quarter of 2024. Our expectations and beliefs regarding these matters may not materialize, and actual results or events in the future are subject to risks and uncertainties that could cause actual results or events to differ materially from those projected. These risks include our ability to continue to develop platform capabilities and solutions; customer acceptance and purchase of our existing solutions and new solutions; the market for IT security continuing to develop; competition from other products and services; the transition of our CEO into the role of Executive Chairman and the related succession process; and general market, political, economic and business conditions, including acts of terrorism or war. The forward-looking statements contained in this press release are also subject to other risks and uncertainties, including those more fully described in our filings with the Securities and Exchange Commission, including our Annual Report on Form 20-F filed with the Securities and Exchange Commission on April 2, 2024. The forward-looking statements in this press release are based on information available to Check Point as of the date hereof, and Check Point disclaims any obligation to update any forward-looking statements, except as required by law.

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, net income, and earnings per diluted share, which are adjustments from results based on GAAP to exclude, as applicable, stock-based compensation expenses, amortization of intangible assets and acquisition related expenses 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 to assist the investment community in visualizing 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 the business internally and has determined that it is important to provide this information to investors.

© 2024 Check Point Software Technologies Ltd. All Rights Reserved

CHECK POINT SOFTWARE TECHNOLOGIES LTD.
CONSOLIDATED STATEMENT OF INCOME
(Unaudited, in millions, except per share amounts)
		Three Months Ended
		March 31,
		2024			2023
Revenues:
Products and licenses		$	100.3		$	108.0
Security subscriptions			263.4			228.2
Total revenues from products and security subscriptions			363.7			336.2
Software updates and maintenance			235.1			230.0
Total revenues			598.8			566.2
Operating expenses:
Cost of products and licenses			19.9			26.2
Cost of security subscriptions			16.5			12.3
Total cost of products and security subscriptions			36.4			38.5
Cost of Software updates and maintenance			28.7			26.8
Amortization of technology			5.8			2.8
Total cost of revenues			70.9			68.1
Research and development			99.2			91.5
Selling and marketing			206.2			177.7
General and administrative			28.6			29.1
Total operating expenses			404.9			366.4
Operating income			193.9			199.8
Financial income, net			22.6			19.1
Income before taxes on income			216.5			218.9
Taxes on income			32.6			34.8
Net income		$	183.9		$	184.1
Basic earnings per share		$	1.64		$	1.54
Number of shares used in computing basic earnings per share			112.3			119.8
Diluted earnings per share		$	1.60		$	1.52
Number of shares used in computing diluted earnings per share			115.2			121.1

CHECK POINT SOFTWARE TECHNOLOGIES LTD.
SELECTED FINANCIAL METRICS
(Unaudited, in millions, except per share amounts)
		Three Months Ended
		March 31,
		2024			2023
Revenues		$	598.8		$	566.2
Non-GAAP operating income			252.0			238.4
Non-GAAP net income			234.5			217.9
Non-GAAP diluted earnings per share		$	2.04		$	1.80
Number of shares used in computing diluted
Non-GAAP earnings per share			115.2			121.1

CHECK POINT SOFTWARE TECHNOLOGIES LTD.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(Unaudited, in millions, except per share amounts)
		Three Months Ended
		March 31,
		2024			2023
GAAP operating income		$	193.9		$	199.8
Stock-based compensation (1)			41.6			32.7
Amortization of intangible assets and acquisition related expenses (2)			16.5			5.9
Non-GAAP operating income		$	252.0		$	238.4
GAAP net income		$	183.9		$	184.1
Stock-based compensation (1)			41.6			32.7
Amortization of intangible assets and acquisition related expenses (2)			16.5			5.9
Taxes on the above items (3)			(7.5)			(4.8)
Non-GAAP net income		$	234.5		$	217.9
GAAP diluted earnings per share		$	1.60		$	1.52
Stock-based compensation (1)			0.36			0.27
Amortization of intangible assets and acquisition related expenses (2)			0.15			0.05
Taxes on the above items (3)			(0.07)			(0.04)
Non-GAAP diluted earnings per share		$	2.04		$	1.80
Number of shares used in computing diluted Non-GAAP earnings per share			115.2			121.1
(1) Stock-based compensation:
Cost of products and licenses		$	0.1		$	0.1
Cost of software updates and maintenance			2.2			1.2
Research and development			14.7			10.6
Selling and marketing			15.9			11.3
General and administrative			8.7			9.5
			41.6			32.7
(2) Amortization of intangible assets and acquisition related expenses:
Amortization of technology-cost of revenues			5.8			2.8
Research and development			1.6			1.9
Selling and marketing			9.1			1.2
			16.5			5.9
(3) Taxes on the above items			(7.5)			(4.8)
Total, net		$	50.6		$	33.8

CHECK POINT SOFTWARE TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED BALANCE SHEET DATA
(In millions)
ASSETS
		March 31,			December 31,
		2024 (Unaudited)			2023 (Audited)
Current assets:
Cash and cash equivalents		$	536.6		$	537.7
Marketable securities and short-term deposits			1,065.8			992.3
Trade receivables, net			386.3			657.7
Prepaid expenses and other current assets			79.1			70.0
Total current assets			2,067.8			2,257.7
Long-term assets:
Marketable securities			1,432.9			1,429.7
Property and equipment, net			79.6			80.4
Deferred tax asset, net			91.4			81.8
Goodwill and other intangible assets, net			1,735.0			1,748.5
Other assets			99.9			97.4
Total long-term assets			3,438.8			3,437.8
Total assets		$	5,506.6		$	5,695.5

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Deferred revenues		$	1,347.0		$	1,413.8
Trade payables and other accrued liabilities			433.9			502.3
Total current liabilities			1,780.9			1,916.1
Long-term liabilities:
Long-term deferred revenues			478.9			493.9
Income tax accrual			446.0			436.1
Other long-term liabilities			34.0			28.4
			958.9			958.4
Total liabilities			2,739.8			2,874.5
Shareholders’ equity:
Share capital			0.8			0.8
Additional paid-in capital			2,808.0			2,732.5
Treasury shares at cost			(13,354.6)			(13,041.2)
Accumulated other comprehensive gain			(39.4)			(39.2)
Retained earnings			13,352.0			13,168.1
Total shareholders’ equity			2,766.8			2,821.0
Total liabilities and shareholders’ equity		$	5,506.6		$	5,695.5
Total cash and cash equivalents, marketable securities, and short-term deposits		$	3,035.3		$	2,959.7

CHECK POINT SOFTWARE TECHNOLOGIES LTD.
SELECTED CONSOLIDATED CASH FLOW DATA
(Unaudited, in millions)
		Three Months Ended
		March 31,
		2024			2023
Cash flow from operating activities:
Net income		$	183.9		$	184.1
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment			7.3			6.9
Amortization of intangible assets			13.5			3.3
Stock-based compensation			41.6			32.7
Decrease in trade and other receivables, net			265.4			285.1
Decrease in deferred revenues, trade payables and other accrued liabilities			(140.6)			(127.1)
Deferred income taxes, net			(10.1)			0.6
Net cash provided by operating activities			361.0			385.6
Cash flow from investing activities:
Investment in property and equipment			(6.5)			(4.2)
Net cash used in investing activities			(6.5)			(4.2)
Cash flow from financing activities:
Proceeds from issuance of shares upon exercise of options			45.6			34.1
Purchase of treasury shares			(325.0)			(324.9)
Payments related to shares withheld for taxes			(1.1)			(1.0)
Net cash used in financing activities			(280.5)			(291.8)
Unrealized gain on marketable securities, net			1.6			26.6
Increase in cash and cash equivalents, marketable securities, and short-term deposits			75.6			116.2
Cash and cash equivalents, marketable securities, and short-term deposits at the beginning of the period			2,959.7			3,503.2
Cash and cash equivalents, marketable securities, and short-term deposits at the end of the period		$	3,035.3		$	3,619.4

 

INVESTOR CONTACT:	MEDIA CONTACT:
Kip E. Meintzer	Gil Messing
Check Point Software	Check Point Software
+1.650.628.2040	+1.650.628.2260
ir@checkpoint.com	press@checkpoint.com

FAQ

What were Check Point Software's total revenues for the first quarter of 2024?

Total revenues for the first quarter of 2024 were $599 million.

How much did Security Subscription Revenues increase by in the first quarter of 2024?

Security Subscription Revenues grew by 15% in the first quarter of 2024.

What was the GAAP Operating Income for Check Point Software in the first quarter of 2024?

GAAP Operating Income was $194 million for the first quarter of 2024.

What percentage of total revenues did Non-GAAP Operating Income represent in the first quarter of 2024?

Non-GAAP Operating Income accounted for 42% of total revenues in the first quarter of 2024.

How much did GAAP EPS increase by in the first quarter of 2024?

GAAP EPS increased by 5% in the first quarter of 2024.

What percentage of total revenues did deferred revenues represent as of March 31, 2024?

Deferred revenues were $1,826 million as of March 31, 2024, a 2% increase year over year.