Check Point Software Reports Over 22% Eps Growth in the Second Quarter

Rhea-AI Summary

Check Point Software Technologies Ltd. (NASDAQ: CHKP) announced its Q2 2023 financial results, showing a 3% increase in total revenues to $589 million. Security subscription revenues increased by 14%, while product and license revenues decreased by 12%. GAAP EPS grew by 25% to $1.70, and non-GAAP EPS increased by 22% to $2.00. The company's priority remains driving revenue growth through a prevention-first approach.

Positive

• Total revenues increased by 3% year over year, demonstrating growth.
• Security subscription revenues saw a significant 14% increase, indicating a positive trend in demand for advanced security solutions.
• GAAP and non-GAAP EPS both showed substantial increases, reflecting strong financial performance.
• Deferred revenues increased by 7% year over year, indicating future revenue growth potential.
• The company's priority of focusing on a prevention-first approach to drive revenue growth is a positive strategic move.

Negative

• None.

SAN CARLOS, Calif., July 26, 2023 (GLOBE NEWSWIRE) -- Check Point® Software Technologies Ltd. (NASDAQ: CHKP), today announced its financial results for the second quarter ended June 30, 2023.

Second Quarter 2023:

• Total Revenues: $589 million, a 3 percent increase year over year
• Product and License Revenues: $117 million, a 12 percent decrease year over year
• Security Subscription Revenues: $239 million, a 14 percent increase year over year
• Deferred Revenues: $1,774 million, a 7 percent increase year over year
• GAAP Operating Income: $221 million, representing 38 percent of revenues
• Non-GAAP Operating Income: $263 million, representing 45 percent of revenues
• GAAP EPS: $1.70, a 25 percent increase year over year
• Non-GAAP EPS: $2.00, a 22 percent increase year over year

“The second quarter delivered robust profitability with over 22 percent growth in EPS. Our platform security strategy realized continued success, as Infinity revenues surpassed 10 percent of total revenues for the quarter,” said Gil Shwed, Founder and CEO of Check Point Software. “This was further emphasized by a 14 percent increase in security subscription revenues that encompasses our advanced security solutions such as ThreatCloud AI, CloudGuard, and Harmony E-mail. This mitigated some of the impact from customers delaying network security refresh projects. As we move forward, our priority remains driving revenue growth by delivering a prevention-first approach, with a focus on collaborative cyber security where multiple products work in concert to protect against the most sophisticated threats."

Financial Highlights for the Second Quarter of 2023:

• Total Revenues:$589 million compared to $571 million in the second quarter of 2022, a 3 percent increase year over year.
• GAAP Operating Income: $221 million compared to $209 million in the second quarter of 2022, representing 38 percent and 37 percent of total revenues in the second quarter of 2023 and 2022, respectively.
• Non-GAAP Operating Income: $263 million compared to $249 million in the second quarter of 2022, representing 45 percent and 44 percent of total revenues in the second quarter of 2023 and 2022, respectively.
• GAAP Taxes on Income: $41 million compared to $45 million in the second quarter of 2022.
• GAAP Net Income: $202 million compared to $174 million in the second quarter of 2022.
• Non-GAAP Net Income: $238 million compared to $209 million in the second quarter of 2022.
• GAAP Earnings Per Diluted Share: $1.70 compared to $1.36 in the second quarter of 2022, a 25 percent increase year over year.
• Non-GAAP Earnings Per Diluted Share: $2.00 compared to $1.64 in the second quarter of 2022, a 22 percent increase year over year.
• Deferred Revenues: As of June 30, 2023, deferred revenues were $1,774 million compared to $1,666 million as of June 30, 2022, a 7 percent increase year over year.
• Cash Balances, Marketable Securities and Short-Term Deposits: $3,515 million as of June 30, 2023, compared to $3,676 million as of June 30, 2022.
• Cash Flow: Cash flow from operations of $191 million compared to $212 million in the second quarter of 2022. The second quarter of 2023 includes $16 million of expenses related to our currency hedging transactions and $22 million of tax expenses compared to $47 million of expenses related to our currency hedging transactions and $30 million of tax expenses in the second quarter of 2022.
• Share Repurchase Program: During the second quarter of 2023, the company repurchased approximately 2.6 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 and Webcast Information
Check Point will host a conference call with the investment community on July 26, 2023, at 8:30 AM ET/5:30 AM PT. To listen to the live video cast or replay, please visit the website: www.checkpoint.com/ir.

Third Quarter Investor Conference Participation Schedule:

• KeyBanc Technology Leadership Forum
  August 6-8, 2023, Vail, CO – Fireside Chat & 1x1’s
• Oppenheimer 26^h Annual Virtual Technology, Internet & Communications Conference
  August 8-9, 2023 – Virtual 1x1’s
• Deutsche Bank 2023 Technology Conference
  August 30 - 31, 2023, Dana Point, CA – Fireside Chat & 1x1’s
• Goldman Sachs 2023 Communicopia + Technology Conference
  September 5, 2023, San Francisco, CA – Fireside Chat &1x1’s
• Citi 2023 Global Technology Conference
  September 6-8, 2023, New York, NY – Fireside Chat & 1x1’s
• Piper Sandler 2023 Growth Frontiers Conference
  September 11-13, 2023, Nashville, TN – 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.

About Check Point Software Technologies Ltd.
Check Point Software Technologies Ltd. (www.checkpoint.com) is a leading provider of cyber security solutions to corporate enterprises and governments globally. Check Point Infinity’s portfolio of solutions protects enterprises and public organizations from 5th generation cyberattacks with an industry leading catch rate of malware, ransomware, and other threats. Infinity comprises four core pillars delivering uncompromised security and generation V threat prevention across enterprise environments: Check Point Harmony, for remote users; Check Point CloudGuard, to automatically secure clouds; and Check Point Quantum, to protect network perimeters and datacenters, all controlled by the industry’s most comprehensive, intuitive unified security management; Check Point Horizon, a prevention-first security operations suite. Check Point protects over 100,000 organizations of all sizes.

Follow Check Point via:
Twitter: http://www.twitter.com/checkpointsw
Facebook: https://www.facebook.com/checkpointsoftware
Blog: http://blog.checkpoint.com
YouTube: http://www.youtube.com/user/CPGlobal
LinkedIn: https://www.linkedin.com/company/check-point-software-technologies

©2023 Check Point Software Technologies Ltd. All rights reserved.

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 driving revenue growth, expectations related to cybersecurity and other threats, and our participation in investor conferences during the third quarter of 2023. 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; and general market, political, economic and business conditions, including as a result of the impact of the Covid-19 pandemic. 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 27, 2023. 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 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.

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

CHECK POINT SOFTWARE TECHNOLOGIES LTD.
CONSOLIDATED STATEMENT OF INCOME
(Unaudited, in millions, except per share amounts)
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Revenues:
Products and licenses	$	116.9		$	133.2		$	224.9		$	249.1
Security subscriptions		238.9			209.9			467.1			411.5
Total revenues from products and security subscriptions		355.8			343.1			692.0			660.6
Software updates and maintenance		232.9			228.0			462.9			453.2
Total revenues		588.7			571.1			1,154.9			1,113.8
Cost of products and licenses		22.6			36.7			48.8			68.1
Cost of security subscriptions		13.6			9.5			25.9			19.5
Total cost of products and security subscriptions		36.2			46.2			74.7			87.6
Cost of Software updates and    maintenance		27.3			25.7			54.1			51.2
Amortization of technology		2.4			2.9			5.2			6.1
Total cost of revenues		65.9			74.8			134.0			144.9
Research and development		87.4			86.3			178.9			172.8
Selling and marketing		185.6			170.6			363.3			329.2
General and administrative		28.4			30.6			57.5			57.9
Total operating expenses		367.3			362.3			733.7			704.8
Operating income		221.4			208.8			421.2			409.0
Financial income, net		21.3			9.7			40.4			16.8
Income before taxes on income		242.7			218.5			461.6			425.8
Taxes on income		40.7			44.9			75.5			82.8
Net income	$	202.0		$	173.6		$	386.1		$	343.0
Basic earnings per share	$	1.71		$	1.37		$	3.23		$	2.69
Number of shares used in computing basic earnings per share		118.0			126.5			119.6			127.4
Diluted earnings per share	$	1.70		$	1.36		$	3.20		$	2.66
Number of shares used in computing diluted earnings per share		119.2			127.7			120.8			128.8

CHECK POINT SOFTWARE TECHNOLOGIES LTD.
SELECTED FINANCIAL METRICS
(Unaudited, in millions, except per share amounts)
		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2023			2022			2023			2022
Revenues		$	588.7		$	571.1		$	1,154.9		$	1,113.8
Non-GAAP operating income			263.1			248.7			501.5			487.3
Non-GAAP net income			238.3			209.3			456.2			412.9
Diluted Non-GAAP Earnings per share		$	2.00		$	1.64		$	3.78		$	3.21
Number of shares used in computing diluted Non-GAAP earnings per share			119.2			127.7			120.8			128.8

CHECK POINT SOFTWARE TECHNOLOGIES LTD.
RECONCILIATION OF GAAP TO NON GAAP FINANCIAL INFORMATION
(Unaudited, in millions, except per share amounts)
		Three Months Ended								Six Months Ended
		June 30,								June 30,
			2023				2022				2023				2022
GAAP operating income		$	221.4			$	208.8			$	421.2			$	409.0
Stock-based compensation (1)			36.2				33.7				68.9				66.1
Amortization of intangible assets and acquisition related expenses (2)			5.5				6.2				11.4				12.2
Non-GAAP operating income		$	263.1			$	248.7			$	501.5			$	487.3
GAAP net income		$	202.0			$	173.6			$	386.1			$	343.0
Stock-based compensation (1)			36.2				33.7				68.9				66.1
Amortization of intangible assets and acquisition related expenses (2)			5.5				6.2				11.4				12.2
Taxes on the above items (3)			(5.4	)			(4.2	)			(10.2	)			(8.4	)
Non-GAAP net income		$	238.3			$	209.3			$	456.2			$	412.9
Diluted GAAP Earnings per share		$	1.70			$	1.36			$	3.20			$	2.66
Stock-based compensation (1)			0.30				0.26				0.57				0.51
Amortization of intangible assets and acquisition related expenses (2)			0.05				0.05				0.10				0.10
Taxes on the above items (3)			(0.05	)			(0.03	)			(0.09	)			(0.06	)
Diluted Non-GAAP Earnings per share		$	2.00			$	1.64			$	3.78			$	3.21
Number of shares used in computing diluted Non-GAAP earnings per share			119.2				127.7				120.8				128.8
(1) Stock-based compensation:
Cost of products and licenses		$	0.1			$	0.1			$	0.2			$	0.2
Cost of software updates and maintenance			1.8				1.3				3.0				2.3
Research and development			11.8				10.3				22.4				20.8
Selling and marketing			14.8				10.3				26.1				21.4
General and administrative			7.7				11.7				17.2				21.4
			36.2				33.7				68.9				66.1
(2) Amortization of intangible assets and acquisition related expenses:
Amortization of technology-cost of revenues			2.4				2.9				5.2				6.1
Research and development			2.0				2.2				3.9				4.2
Selling and marketing			1.1				1.1				2.3				1.9
			5.5				6.2				11.4				12.2
(3) Taxes on the above items			(5.4	)			(4.2	)			(10.2	)			(8.4	)
Total, net		$	36.3			$	35.7			$	70.1			$	69.9

CHECK POINT SOFTWARE TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED BALANCE SHEET DATA
(In millions)
ASSETS
			June 30,			December 31,
			2023 (Unaudited)			2022 (Audited)
Current assets:
Cash and cash equivalents			$	286.0		$	196.0
Marketable securities and short-term deposits				1,299.4			1,441.6
Trade receivables, net				413.4			644.2
Prepaid expenses and other current assets				55.1			50.0
Total current assets				2,053.9			2,331.8
Long-term assets:
Marketable securities				1,930.1			1,865.6
Property and equipment, net				78.4			82.8
Deferred tax asset, net				68.1			77.6
Goodwill and other intangible assets, net				1,289.3			1,295.5
Other assets				71.5			71.5
Total long-term assets				3,437.4			3,393.0
Total assets			$	5,491.3		$	5,724.8

LIABILITIES AND
SHAREHOLDERS’ EQUITY
Current liabilities:
Deferred revenues	$	1,307.2			$	1,363.4
Trade payables and other accrued liabilities		453.7				475.8
Total current liabilities		1,760.9				1,839.2
Long-term liabilities:
Long-term deferred revenues		467.1				514.4
Income tax accrual		416.2				419.7
Other long-term liabilities		20.7				22.2
		904.0				956.3
Total liabilities		2,664.9				2,795.5
Shareholders’ equity:
Share capital		0.8				0.8
Additional paid-in capital		2,621.6				2,500.7
Treasury shares at cost		(12,418.8	)			(11,802.1	)
Accumulated other comprehensive gain		(91.1	)			(97.9	)
Retained earnings		12,713.9				12,327.8
Total shareholders’ equity		2,826.4				2,929.3
Total liabilities and shareholders’ equity	$	5,491.3			$	5,724.8
Total cash and cash equivalents, marketable securities and short-term deposits	$	3,515.5			$	3,503.2

CHECK POINT SOFTWARE TECHNOLOGIES LTD.
SELECTED CONSOLIDATED CASH FLOW DATA
(Unaudited, in millions)
	Three Months Ended								Six Months Ended
	June 30,								June 30,
		2023				2022				2023				2022
Cash flow from operating activities:
Net income	$	202.0			$	173.6			$	386.1			$	343.0
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment		5.3				5.5				12.2				10.5
Amortization of intangible assets		2.9				3.4				6.2				6.7
Stock-based compensation		36.2				33.7				68.9				66.1
Realized loss on marketable securities		0.7				-				0.7				-
Decrease (increase) in trade and other receivables, net		(59.9	)			(6.5	)			225.2				246.9
Increase (decrease) in deferred revenues, trade payables and other accrued liabilities		(2.2	)			1.0				(129.3	)			(65.8	)
Deferred income taxes, net		6.0				1.0				6.6				2.3
Net cash provided by operating activities		191.0				211.7				576.6				609.7
Cash flow from investing activities:
Payment in conjunction with acquisitions, net of acquired cash		-				-				-				(48.3	)
Investment in property and equipment		(3.6	)			(6.7	)			(7.8	)			(11.4	)
Net cash used in investing activities		(3.6	)			(6.7	)			(7.8	)			(59.7	)
Cash flow from financing activities:
Proceeds from issuance of shares upon exercise of options		51.0				28.5				85.1				95.4
Purchase of treasury shares		(324.9	)			(325.0	)			(649.8	)			(650.0	)
Payments related to shares withheld for taxes		(6.7	)			(5.8	)			(7.7	)			(6.5	)
Net cash used in financing activities		(280.6	)			(302.3	)			(572.4	)			(561.1	)
Unrealized gain (loss) on marketable securities, net		(10.7	)			(26.9	)			15.9				(96.2	)
Increase (decrease) in cash and cash equivalents, marketable securities and short term deposits		(103.9	)			(124.2	)			12.3				(107.3	)
Cash and cash equivalents, marketable securities and short term deposits at the beginning of the period		3,619.4				3,800.3				3,503.2				3,783.4
Cash and cash equivalents, marketable securities and short term deposits at the end of the period	$	3,515.5			$	3,676.1			$	3,515.5			$	3,676.1

FAQ

What are Check Point Software Technologies Ltd.'s Q2 2023 financial results?

Check Point Software Technologies Ltd. announced its Q2 2023 financial results, including a 3% increase in total revenues to $589 million, a 14% increase in security subscription revenues, and a 12% decrease in product and license revenues.

What is the GAAP and non-GAAP EPS for Check Point Software Technologies Ltd. in Q2 2023?

The GAAP EPS grew by 25% to $1.70, and non-GAAP EPS increased by 22% to $2.00 for Check Point Software Technologies Ltd. in Q2 2023.

What is Check Point Software Technologies Ltd.'s priority moving forward?

Check Point Software Technologies Ltd.'s priority remains driving revenue growth by delivering a prevention-first approach, with a focus on collaborative cybersecurity where multiple products work in concert to protect against the most sophisticated threats.