We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Check Point (CHKP) Q1 Earnings & Revenues Beat, Guides Well
Read MoreHide Full Article
Continuing with its upbeat performance for the third straight quarter, Check Point Software Technologies Ltd. (CHKP - Free Report) yesterday reported strong results for first-quarter 2017, wherein revenues and earnings came at the higher-end of the company’s expectations and surpassed the respective Zacks Consensus Estimate.
Check Point’s adjusted earnings per share (including stock-based compensation but excluding amortization of intangible assets) of $1.10 beat the Zacks Consensus Estimate of $1.07. Adjusted earnings also climbed approximately 13.4% on a year-over-year basis, driven mainly by higher revenues and a lower share count, which were partially offset by higher operating expenses.
On a non-GAAP (excluding stock-based compensation and amortization of intangible assets) basis, the cybersecurity company posted earnings of $1.20, which matches the higher end of its own guidance range of $1.15–$1.20 and marked a 13.2% year-over-year improvement.
Check Point Software Technologies Ltd. Price, Consensus and EPS Surprise
First-quarter revenues came in at $435.5 million, up 7.7% year over year, and beat the Zacks Consensus Estimate of $432 million. The figure was also close to the upper end of the company’s guidance range of $420–$440 million (mid-point $430 million). Transition of customers to the company’s higher valued packages and shift of revenues from products to subscriptions as a result of bundling of new appliances mainly contributed to Check Point’s overall revenue growth.
Another factor contributing to overall growth was the increased number of large deal signings. The number of new customers who signed deals worth $1 million or more was 50, a 16% increase from the year-ago quarter’s tally of 43. Moreover, customers, who signed deals worth $50,000 and more, contributed 70% to the total order value, up from 69% registered in first-quarter 2016.
Segment wise, the company witnessed sales growth of 13.1% in Products & Software Blades and 1.9% in Software Updates and Maintenance. The company also reported a 27.2% surge in subscription revenues at Software Blades.
Geographically, the Americas contributed 48% to revenues and Europe accounted for 35%, while Asia-Pacific, Japan, and the Middle East and Africa added the remaining 17%.
Operating Results
On a year-over-year basis, adjusted gross profit (including stock-based compensation but excluding amortization of intangible assets) increased 7.5% to $386.7 million. However, as a percentage of revenues, gross profit contracted 20 basis points (bps) to 88.8%.
Adjusted operating expenses (including stock-based compensation but excluding amortization of intangible assets) rose 11.9% year over year to $214.1 million as the company continued to make investments. The increase may also be attributed to higher research and development, and selling and marketing expenses, as well as to acquisitions made over the past year. As a percentage of revenues, operating expenses escalated 140 basis points (bps).
Adjusted operating income (including stock-based compensation but excluding amortization of intangible assets) came in at $214.1 million, up nearly 4.2% year over year. However, margins contracted 160 bps as a percentage of revenues primarily due to higher operating expenses.
Adjusted net income (including stock-based compensation but excluding amortization of intangible assets and other one-time items calculated on a proportionate tax basis) was $185.3 million or $1.10 per share, up from $170.4 million or 97 cents reported last year.
Balance Sheet & Cash Flow
Check Point exited the quarter with cash balances of approximately $3.797 billion. During the quarter, the company generated operating cash flow of $355 million. In addition, Check Point repurchased about 2.6 million shares for a total cost of $248 million in the first quarter.
Outlook
Taking into account the back-to-back quarters of favorable business trends, Check Point provided a strong revenue and earnings guidance for the second quarter and reaffirmed outlook for full-year 2017.
The company expects to generate revenues between $440 million and $465 million (mid-point $452.5 million). The mid-point of the guidance is slightly lower than the Zacks Consensus Estimate of $453.6 million. Non-GAAP earnings are projected in a range of $1.17–$1.25 per share. GAAP earnings per share are anticipated to be 17 cents lesser than the non-GAAP figure. The Zacks Consensus Estimate is pegged at $1.11 per share.
For 2017, Check Point continues to anticipate generating revenues between $1.85 billion and $1.90 billion (mid-point $1.875 billion). The mid-point of the guided range is higher than the Zacks Consensus Estimate of $1.87 billion. Non-GAAP earnings are projected in a range of $5.05–$5.25 per share. GAAP earnings per share are anticipated to be 70 cents lesser than the non-GAAP figure. The Zacks Consensus Estimate is pegged at $4.71 per share.
Our Take
Check Point started 2017 on a strong note, reporting better-than-expected results for the first quarter. The robust year-over-year upside in the top and bottom lines was encouraging. Buoyed by a robust quarterly performance, the company provided a solid outlook for the second quarter.
Moving ahead, rapid adoption of Check Point’s data center appliances and continuous enhancements in data center product lines are expected to provide ample top-line support. The company’s focus on enhancing mobile capabilities will aid it to tap greater larger opportunities. Furthermore, Check Point’s strategy of growing through acquisitions is praiseworthy.
Additionally, we believe that Check Point Software will continue to benefit from strong demand for cybersecurity solutions. Note that the financial well-being, brand image and reputation of enterprises, and governments are always exposed to the risk of cyber threats. Consequently, cybersecurity has become a mission-critical, high-profile requirement.
Nonetheless, changing customer spending behavior, intensifying competition, an uncertain economic environment and currency fluctuations remain headwinds.
Notably, Check Point has been clocking solid returns over the last six months and gained approximately 23.5%, outperforming 14.5% growth recorded by the Zacks categorized Computer-Software industry.
Some better-ranked stocks in the Computer-Software space are Adobe Systems (ADBE - Free Report) , Magic Software (MGIC - Free Report) and Imperva , all carrying a Zacks Rank #2 (Buy).
Adobe, Magic Software and Imperva have expected long-term EPS growth rate of 16.6%, 10% and 21.7%, respectively.
Zacks' Hidden Trades
While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them?
Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors.
Image: Bigstock
Check Point (CHKP) Q1 Earnings & Revenues Beat, Guides Well
Continuing with its upbeat performance for the third straight quarter, Check Point Software Technologies Ltd. (CHKP - Free Report) yesterday reported strong results for first-quarter 2017, wherein revenues and earnings came at the higher-end of the company’s expectations and surpassed the respective Zacks Consensus Estimate.
Check Point’s adjusted earnings per share (including stock-based compensation but excluding amortization of intangible assets) of $1.10 beat the Zacks Consensus Estimate of $1.07. Adjusted earnings also climbed approximately 13.4% on a year-over-year basis, driven mainly by higher revenues and a lower share count, which were partially offset by higher operating expenses.
On a non-GAAP (excluding stock-based compensation and amortization of intangible assets) basis, the cybersecurity company posted earnings of $1.20, which matches the higher end of its own guidance range of $1.15–$1.20 and marked a 13.2% year-over-year improvement.
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. Quote
Revenues
First-quarter revenues came in at $435.5 million, up 7.7% year over year, and beat the Zacks Consensus Estimate of $432 million. The figure was also close to the upper end of the company’s guidance range of $420–$440 million (mid-point $430 million). Transition of customers to the company’s higher valued packages and shift of revenues from products to subscriptions as a result of bundling of new appliances mainly contributed to Check Point’s overall revenue growth.
Another factor contributing to overall growth was the increased number of large deal signings. The number of new customers who signed deals worth $1 million or more was 50, a 16% increase from the year-ago quarter’s tally of 43. Moreover, customers, who signed deals worth $50,000 and more, contributed 70% to the total order value, up from 69% registered in first-quarter 2016.
Segment wise, the company witnessed sales growth of 13.1% in Products & Software Blades and 1.9% in Software Updates and Maintenance. The company also reported a 27.2% surge in subscription revenues at Software Blades.
Geographically, the Americas contributed 48% to revenues and Europe accounted for 35%, while Asia-Pacific, Japan, and the Middle East and Africa added the remaining 17%.
Operating Results
On a year-over-year basis, adjusted gross profit (including stock-based compensation but excluding amortization of intangible assets) increased 7.5% to $386.7 million. However, as a percentage of revenues, gross profit contracted 20 basis points (bps) to 88.8%.
Adjusted operating expenses (including stock-based compensation but excluding amortization of intangible assets) rose 11.9% year over year to $214.1 million as the company continued to make investments. The increase may also be attributed to higher research and development, and selling and marketing expenses, as well as to acquisitions made over the past year. As a percentage of revenues, operating expenses escalated 140 basis points (bps).
Adjusted operating income (including stock-based compensation but excluding amortization of intangible assets) came in at $214.1 million, up nearly 4.2% year over year. However, margins contracted 160 bps as a percentage of revenues primarily due to higher operating expenses.
Adjusted net income (including stock-based compensation but excluding amortization of intangible assets and other one-time items calculated on a proportionate tax basis) was $185.3 million or $1.10 per share, up from $170.4 million or 97 cents reported last year.
Balance Sheet & Cash Flow
Check Point exited the quarter with cash balances of approximately $3.797 billion. During the quarter, the company generated operating cash flow of $355 million. In addition, Check Point repurchased about 2.6 million shares for a total cost of $248 million in the first quarter.
Outlook
Taking into account the back-to-back quarters of favorable business trends, Check Point provided a strong revenue and earnings guidance for the second quarter and reaffirmed outlook for full-year 2017.
The company expects to generate revenues between $440 million and $465 million (mid-point $452.5 million). The mid-point of the guidance is slightly lower than the Zacks Consensus Estimate of $453.6 million. Non-GAAP earnings are projected in a range of $1.17–$1.25 per share. GAAP earnings per share are anticipated to be 17 cents lesser than the non-GAAP figure. The Zacks Consensus Estimate is pegged at $1.11 per share.
For 2017, Check Point continues to anticipate generating revenues between $1.85 billion and $1.90 billion (mid-point $1.875 billion). The mid-point of the guided range is higher than the Zacks Consensus Estimate of $1.87 billion. Non-GAAP earnings are projected in a range of $5.05–$5.25 per share. GAAP earnings per share are anticipated to be 70 cents lesser than the non-GAAP figure. The Zacks Consensus Estimate is pegged at $4.71 per share.
Our Take
Check Point started 2017 on a strong note, reporting better-than-expected results for the first quarter. The robust year-over-year upside in the top and bottom lines was encouraging. Buoyed by a robust quarterly performance, the company provided a solid outlook for the second quarter.
Moving ahead, rapid adoption of Check Point’s data center appliances and continuous enhancements in data center product lines are expected to provide ample top-line support. The company’s focus on enhancing mobile capabilities will aid it to tap greater larger opportunities. Furthermore, Check Point’s strategy of growing through acquisitions is praiseworthy.
Additionally, we believe that Check Point Software will continue to benefit from strong demand for cybersecurity solutions. Note that the financial well-being, brand image and reputation of enterprises, and governments are always exposed to the risk of cyber threats. Consequently, cybersecurity has become a mission-critical, high-profile requirement.
Nonetheless, changing customer spending behavior, intensifying competition, an uncertain economic environment and currency fluctuations remain headwinds.
Notably, Check Point has been clocking solid returns over the last six months and gained approximately 23.5%, outperforming 14.5% growth recorded by the Zacks categorized Computer-Software industry.
Check Point currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the Computer-Software space are Adobe Systems (ADBE - Free Report) , Magic Software (MGIC - Free Report) and Imperva , all carrying a Zacks Rank #2 (Buy).
Adobe, Magic Software and Imperva have expected long-term EPS growth rate of 16.6%, 10% and 21.7%, respectively.
Zacks' Hidden Trades
While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them?
Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors.
Click here for Zacks' secret trade>>