Data Center, Mobile Threat Prevention Drive Soaring Sales, Profits for Check Point

Success around the data center, midsize appliances and mobile threat prevention facilitated sizable sales and profit gains for Check Point Software Technologies.

Revenue for the San Carlos, Calif.-based company climbed 9 percent from $370 million last year to $404 million this year. That edged out Seeking Alpha estimates of $403 million.

Net income also increased 6 percent from $177 million last year to $188 million this year, or $1.04 per share, beating out Seeking Alpha projections of 98 cents per share.

[RELATED: Check Point Takes Shot At Palo Alto Networks' WildFire With New Threat Detection Solution]

"Customers are not protected today," Gil Shwed, Check Point founder and CEO, said during the earnings call Monday. "Customers do not do the maximum they can to get the level of security they need."

Check Point increased the size of its workforce by 20 percent – or more than 600 people – over the past year to support the company's several thousand new customers, Payne said. The new positions in the first half of 2015 were primarily salespeople, Payne said, while hiring in the past quarter has focused on other functions such as product development.

Even though Check Point beat expectations, Wall Street responded unfavorably to the news, with the company's stock price falling 2.1 percent Monday morning to $78.74 per share. Earnings were announced before the market opened Monday.

Software Blades subscriptions drove much of the growth for Check Point, with year-over-year sales increasing 18.5 percent to $79.6 million due to continued penetration in the application control and anti-bot spaces, Payne said. Check Point's best-selling blades are focused on intrusion prevention, application control, anti-spam and email security, anti-bot and threat extraction, according to Payne.

Check Point's products and licenses practice posted more modest gains, with revenue increasing 7.3 percent to $135.2 million. And the company's software updates and maintenance business grew 6.7 percent over the past year to $189.2 million.

The company saw increased interest in large deals, with customer transactions worth more than $1 million jumping by 14 percent over the past year, Payne said. Seventy percent of Check Point's client deals are worth more than $50,000, according to Payne.

Check Point executives also touted SandBlast, the vendor's new advanced threat detection and prevention offering launched in early September. SandBlast's biggest differentiator is that it can detect threats before anything bad happens, Payne said, while competing products can only detect the problem after the infected site has been allowed through and wreaking havoc for 12 to 48 hours.

"We should work harder to expose the difference between marketing hype and technology that actually works," Payne said during the call.

Data center appliances have been the more consistent area of strength within the channel, Shwed said, while security management, enterprise applications and midsize applications have also performed well in the channel most of the time. Check Point's channel investments are focused around verticals, critical infrastructure, cloud and data centers, and mobility and threat prevention, according to Shwed.

Going forward, Shwed said Check Point expects to double down on its mobile threat prevention platform, which was launched in August to stop malware targeted at smartphones and tablets. Mobile devices are the backdoor into breaching enterprise organizations, with Shwed arguing that Check Point's offering is several steps ahead of the rest of the industry.

"Mobile security is a green field in the security marketplace," he said, noting that mobile device developers typically pay little attention to whether or not the entire infrastructure is secure.

Check Point delivered revenue gains across all geographies, with growth in the Americas slightly lower than the rest of the world, according to CFOTal Payne. The Americas now comprise 48 percent of Check Point's total sales, Payne said.

For its next quarter, Shwed said Check Point expects to deliver earnings of $1.10 to $1.18 per share on sales of $440 million to $470 million.

PUBLISHED OCT. 26, 2015