Check Point (CHKP) Tops Q3 Earnings & Revenue Estimates

Zacks Equity Research
·4-min read

Check Point Software Technologies Ltd. CHKP reported third-quarter 2020 results, wherein both top and bottom lines beat the Zacks Consensus Estimate. The company’s non-GAAP earnings per share of $1.64 beat the consensus mark of $1.53. The figure also climbed 14% year over year.

Revenues for the reported quarter came in at $509 million, up 4% year over year. Moreover, the figure exceeded the Zacks Consensus Estimate of $502.5 million. Growth in SaaS and IaaS cloud solutions drove the top line. In addition, work-from-home-related solutions — Mobile Access and Sandblast Agent — continued to witness strong traction.

Quarter Details

Subscription revenues came in at $169 million, increasing 10% year over year, on strong demand for its advanced solutions, primarily CloudGuard, Sandblast Zero-day threat prevention and Infinity solutions. During the third quarter, the company secured several Infinity deals in various industries, including government, telecommunication and industrial.

Revenues of $120.2 million from products and licenses inched up 1.6%. Products are currently in the process of transitioning to cloud solutions, which is included in the subscription line.

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. Price, Consensus and EPS Surprise

Check Point Software Technologies Ltd. price-consensus-eps-surprise-chart | Check Point Software Technologies Ltd. Quote

Total revenues from product and security subscriptions came in at $289 million, up 6% year over year.

Software update and maintenance revenues inched up to $220 million from the $218.7 million reported in the year-ago quarter.

As of Jun 30, deferred revenues were $1.3 billion, up 5% year over year, reflecting strength in security subscription.

Region wise, the Americas generated 46% of total revenues; Europe, Middle East and Africa accounted for 42%; and the Asia Pacific contributed 12%.

Non-GAAP operating income for the reported quarter came in at $265 million, increasing 7.5% year over year. Non-GAAP operating margin expanded 190 basis points to 52.1%.

Balance Sheet & Other Financial Details

Check Point exited the third quarter with cash and cash equivalents, marketable securities and short-term deposits of $3.90 billion compared with the previous quarter’s $3.96 billion.

The company generated cash worth $248 million from operational activities, down from the previous quarter’s $252 million.

It repurchased 2.7 million shares for about $325 million during the September-end quarter.

Outlook

Check Point has issued the guidance for the fourth quarter. For the ongoing quarter, the company projects revenues between $525 million and $575 million (mid-point (550 million). It forecasts adjusted earnings per share in the range of $1.98 to $2.18 (mid-point $2.09). The Zacks Consensus Estimate for the current-quarter revenues and earnings is pegged at $554.3 million and $2.06 per share, respectively.

Zacks Rank and Stocks to Consider

Check Point currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader technology sector include Zoom Video Communications ZM, salesforce.com, inc. CRM and Sapiens International Corporation SPNS, all sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Zoom, Salesforce and Sapiens is currently pegged at 25%, 15.7%, and 5%, respectively.

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