Check Point CEO: Dome9's Capabilities Are 'Far Better' Than Anything Else In Marketplace

Check Point Software Technologies CEO Gil Shwed said Dome9 stands apart from its peers by going beyond detection and reporting to provide true prevention against cloud-based threats.

The San Carlos, Calif.-based platform security vendor said only Tel Aviv, Israel-based Dome9 combines active prevention, network security and threat detection with compliance in a multi-cloud environment. Check Point looked at several other companies and technologies in the space, Shwed said, but ended up passing on all of them since they didn't have as comprehensive an offering as Dome9.

"I think the Dome9 capabilities are far better than anything else in the marketplace," Shwed told Wall Street analysts during an earnings call Wednesday. "We are very happy to be working with them."

[Related: Check Point Buys Emerging Public Cloud Security Vendor Dome9]

Check Point said Wednesday morning that it had purchased 100-employee cloud security startup Dome9 for $175 million in cash. The deal will reduce Check Point's earnings per share by 7 cents a quarter, Shwed said, and isn't expected to have a material impact on revenue.

One of the largest challenges in the public cloud environment, Shwed said, is to ensure the enforcement of corporate security policies across all elements of the cloud infrastructure. Dome9 verifies that cloud apps have the right security setting and manages the native cloud security features to Amazon Web Services, Microsoft Azure and Google Cloud, according to Shwed.

"Dome9 is not just a feature," Shwed said. "Dome9 is a platform that's very, very strategic to us because it knows how to manage security and enforce security in very large, very complicated, and very heterogeneous cloud environments."

The cloud is not a single entity that's simple to manage, according to Shwed. Instead, in the AWS cloud alone, there are probably around 300 different services, and Shwed said businesses need to ensure that security is automatically applied anytime the service is activated. If that fails to happen, Shwed said the service can unintentionally become a backdoor to the company and its enterprise data.

To combat that, Shwed said Dome9 has the ability to automatically set security policies for the entire cloud, automatically detect when things go wrong, and automatically remediate them. For instance, if a user left his or her data open on a storage server in the cloud for the night, Shwed said Dome9 would automatically reset the permission to locked even if nobody is around to see the alert.

Having Dome9 in its arsenal increases Check Point's ability to reach into customers where the company isn't present today, Shwed said. That's because Dome9 can be leveraged as a cloud service and doesn't require that any on-premises software or hardware be present, according to Shwed.

Specifically, Shwed said Dome9 will make it possible for Check Point to get into environments where there isn't an advanced security gateway like CloudGuard present and provide management. And for existing Check Point customers, Shwed said Dome9 will help them further extend their security controls.

Check Point plans to put incentives in place for Dome9's management to stay, and Shwed said leaders from the company's past few acquisitions have stayed for three or four years after the deal closed. Shwed anticipates that it will take a couple of months to fully integrate Dome9's employees and all the different departments and provide truly unified protection.

Check Point's revenue for the quarter ended Sept. 30 climbed to $470.8 million, up 3.6 percent from $454.6 million the year prior. That beat Seeking Alpha's estimate of $465.9 million.

Net income for the quarter jumped to $198.2 million, or $1.25 per diluted share, up 2.9 percent from $192.7 million, or $1.16 per diluted share, in the same quarter last year. On a non-GAAP basis, net income came in at $219.3 million, or $1.38 per diluted share, up 1.8 percent from $215.3 million, or $1.30 per diluted share, the year before. This edged out Seeking Alpha's projection of $1.36 per share.

Check Point's stock price fell $2.55, or 2.25 percent, in trading midday Wednesday to $110.60 per share. Earnings were announced before the market opened Wednesday.

The company's software updates and maintenance sales in the third quarter jumped to $213.3 million, up 3.8 percent from $205.6 million last year. Most of Check Point's growth in the quarter was driven by security subscription revenue, with year-over-year sales climbing to $136.4 million, up 13.3 percent from $120.3 million last year.

Check Point's product and licenses practice, meanwhile, saw sales tumble to $121.1 million, down 5.9 percent from $128.7 million the year prior.

The company reported 58 customer transactions worth more than $1 million in the quarter, said CFO and COO Tal Payne. From a geographic standpoint, Payne said 47 percent of Check Point's revenue came from the Americas, 37 percent came from Europe, and the remaining 16 percent came from Asia-Pacific, Japan, the Middle East and Africa.

For the coming quarter, Shwed said Check Point expects to deliver non-GAAP earnings of $1.56 to $1.67 per share on sales of $500 million to $528 million. Analysts had been projecting non-GAAP earnings of $1.36 per share on revenue of $466 million, according to Reuters.