Check Point Software Reports Record Fourth Quarter and Fiscal Year 2008 Financial Results
Fiscal Year 2008:
Revenue: $808.5 million – 11% increase year over year
Operating Income Non-GAAP: $425.8 – 15% increase year over year
EPS Non-GAAP: $1.78 – 12% increase year over year
Deferred Revenues: $330.8 million – 21% increase year over year
Cash Flow from Operations: $429.9 million – 16% increase year over year
Redwood City, CA — Check Point® Software Technologies Ltd. (NASDAQ: CHKP), the worldwide leader in securing the Internet, today announced its financial results for the fourth quarter and fiscal year ended December 31, 2008.
“Our financial results for the year continued to underscore the success of our Total Security strategy. This was an all time record quarter and fiscal year for Check Point,” said Gil Shwed, chairman and chief executive officer at Check Point. “As a result of the technology leadership of our products and the great work of our teams worldwide, we were able to achieve revenue growth of 11 percent to $808 million and non-GAAP operating income growth of 15 percent to $426 million.”
Financial Highlights for the Fourth Quarter Ended December 31, 2008:
* Total Revenues: $217.6 million, compared to $206.7 million in the fourth quarter of 2007.
* Operating Income: GAAP operating income was $103.7 million, or 48 percent of revenues, compared to $88.2 million, or 43 percent of revenues in the fourth quarter of 2007.
Non-GAAP operating income was $120.7 million, or 55 percent of revenues, compared to $107.4 million, or 52 percent of revenues in the fourth quarter of 2007.
* Net Income: GAAP net income was $86.5 million compared to $87.9 million in the fourth quarter of 2007.
Non-GAAP net income was $105.6 million compared to $102.5 million in the fourth quarter of 2007.
* Earnings per Diluted Share (EPS): GAAP EPS was $0.41 compared to $0.39 in the fourth quarter of 2007.
Non-GAAP EPS was $0.50 compared to $0.46 in the fourth quarter of 2007.
* Deferred Revenues: $330.8 million, which represented an increase of $57.1 million, or 21 percent, compared to deferred revenues of $273.7 as of December 31, 2007.
* Share Repurchase Program: During the fourth quarter of 2008, Check Point repurchased approximately 3.4 million shares at a total cost of $66.7 million.
“During the course of the year we continued to experience good performance from all geographies including the United States and Europe. The investments we have made in emerging markets began to pay off as we realized over 20 percent growth in Asia and Eastern Europe and over 40 percent growth in Latin America and the Middle East,” said Shwed. “We continued to demonstrate our operational discipline by completing 2008 with record operating margins (Non-GAAP) of 53 percent for the full year and 55 percent in the fourth quarter.”
Financial Highlights for the Year Ended December 31, 2008
* Revenues: $808.5 million, an increase of 11 percent compared to $730.9 million in 2007.
* Operating Income: GAAP operating income was $356.5 million, or 44 percent of revenues, compared to $279.6 million, or 38 percent of revenues in 2007.
Non-GAAP operating income grew by 15 percent and was $425.8 million, or 53 percent of revenues, compared to $370.6 million, or 51 percent of revenues in 2007.
* Net Income: GAAP net income was $324.0 million, an increase of 15 percent, compared to $281.1 million in 2007.
Non-GAAP net income was $386.0 million, an increase of 8 percent compared to $358.7 in 2007.
* Earnings per Diluted Share (EPS): GAAP EPS was $1.50, an increase of 20 percent, compared to $1.25 in 2007.
Non-GAAP EPS was $1.78, an increase of 12 percent, compared to $1.59 in 2007.
* Cash Flow: Cash flow from operations was $429.9 million, an increase of 16 percent, compared to $371.6 million in 2007.
* Cash and Investments Balance: $1.444 billion as of December 31, 2008 compared to $1.242 billion in 2007.
* Share Repurchase Program: During 2008, Check Point repurchased approximately 10.9 million shares at an approximate total cost of $239.5 million of the 2008 and the 2007 plans approved by the board. There is approximately $233.7 million remaining of the $400 million authorized under Check Point’s share repurchase program in 2008.
For information regarding the non-GAAP financial measures discussed in this release, please see “Use of Non-GAAP Financial Information” and “Reconciliation of Non-GAAP to GAAP Financial Information.”
Check Point Total Security
In 2008 we launched our Total Security strategy that combines network, data and endpoint protections into a unified security architecture to deliver uncompromised security: a unified line of gateways, a single agent ensures endpoint security, and a single management console all designed to provide a standardized and efficient security infrastructure to improve security, reduce complexity and ultimately lower total cost of ownership.
Expanded Security Appliance lines
In addition, we expanded our network security appliance solutions with the introduction of five new models of the UTM-1 line of security appliances, and a new line of Power-1 high end security appliances that set a new mark for price/performance at a cost of less than $4/Mbps.
Innovation in End Point Security
Finally, we introduced and shipped the industry’s first and only single agent for endpoint security that includes a personal firewall, remote-access VPN, anti-virus/anti-spyware, media/port security, and data security utilizing our market leading full disk encryption. Our security architecture can be scaled to businesses of any size and is managed with Check Point’s market leading SmartCenter management solutions.
Nokia’s Security Appliance Business Proposed Acquisition
During the fourth quarter we announced an agreement to further expand our network security appliance line with the proposed acquisition of Nokia’s Enterprise Security Business. Over the last decade, Nokia has partnered with Check Point by providing a hardware platform (appliance) that runs Check Point security software. Nokia’s appliances have been utilized by 85% of the Fortune 500 companies. 220,000 Nokia appliances have been installed with over 23,000 customers worldwide. Nokia decided to exit the enterprise market segment, and we are pleased to have the opportunity to acquire the security appliance part of Nokia’s business. Once the acquisition is completed, Check Point expects to be able to provide customers with an expanded line of integrated gateway solutions, with a single source for development, delivery and service. The acquisition is expected to close in the first quarter of 2009.
Concluded Shwed, “I’d like to thank our customers, partners and employees for the great results we generated in 2008 despite the challenging economic environment. While it’s hard to predict the effect of the economy on our market, we will continue to invest and innovate. We are starting 2009 with an even more exciting technology roadmap that we believe will revolutionize the security market and extend the reach of our Total Security vision.”
Conference Call and Webcast Information
Check Point will host a conference call with the investment community on January 27, 2009 at 8:30 AM ET/5:30 AM PT. To listen to the live webcast, please visit Check Point’s website at http://www.checkpoint.com/ir. A replay of the conference call will be available through February 10, 2009 at the company’s website http://www.checkpoint.com/ir or by telephone at +1.201.612.7415, replay ID number 308697.
About Check Point Software Technologies Ltd.
Check Point Software Technologies Ltd. (www.checkpoint.com) is the leader in securing the Internet. Check Point offers total security solutions featuring a unified gateway, single endpoint agent and single management architecture, customized to fit customers’ dynamic business needs. This combination is unique and is a result of our leadership and innovation in the enterprise firewall, personal firewall/endpoint, data security and VPN markets.
Check Point’s pure focus is on information security. Through its NGX platform, Check Point delivers a unified security architecture to protect business communications and resources, including corporate networks and applications, remote employees, branch offices and partner extranets. The company also offers market-leading endpoint and data security solutions with Check Point Endpoint Security products, protecting and encrypting sensitive corporate information stored on PCs and other mobile computing devices. Check Point’s award-winning ZoneAlarm solutions protect millions of consumer PCs from hackers, spyware and identity theft. Check Point solutions are sold, integrated and serviced by a network of Check Point partners around the world and its customers include 100 percent of Fortune 100 companies and tens of thousands of businesses and organizations of all sizes.
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 net income, operating income and earnings per share, which are adjustments from results based on GAAP to exclude non-cash equity-based compensation charges recorded in accordance with SFAS 123R, acquired in-process R&D expense (related to the Protect Data acquisition), amortization of intangible assets (related to the acquisitions of Zone Labs, NFR & Protect Data), other than temporary impairment of marketable securities in accordance with SFAS 115, and the related tax affect. 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 in order 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.
Safe Harbor 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, including, but not limited to, statements related to our plans to further increase the breadth of our security solutions portfolio, and to continue delivering products based on our unified security architecture; our plan to continue to innovate and deliver products to address our customers’ security requirements – at every size of organization worldwide; and our expectations regarding our proposed acquisition of the security appliance part of Nokia’s business, including our expectations with respect to the closing of the acquisition and our expectations for the business once the acquisition is completed. Because these statements pertain to future events they are subject to various risks and uncertainties, actual results could differ materially from Check Point’s current expectations and beliefs. Factors that could cause or contribute to such differences include, but are not limited to: Check Point’s development and delivery of its security products; general market conditions in the Check Point’s industry; economic and political uncertainties; the impact of political changes and weaknesses in various regions of the world, including hostilities or acts of terrorism in Israel, where Check Point’s international headquarters are based; inclusion of network security functionality in third-party hardware or system software; any foreseen and unforeseen developmental or technological difficulties with regard to Check Point’s products; changes in the competitive landscape, including new competitors or the impact of competitive pricing and products; rapid technological advances and changes in customer requirements to which Check Point is unable to respond expeditiously, if at all; a shift in demand for products such as Check Point’s; factors affecting third parties with which Check Point has formed business alliances; the timely availability and customer acceptance of Check Point’s new and existing products; in connection with Check Point’s proposed acquisition of Nokia’s security appliance business, the inability to obtain necessary regulatory approval or to obtain them on acceptable terms, or the inability of the parties to satisfy the conditions to closing; the inability to integrate successfully Nokia’s security appliance business within Check Point or to realize synergies from such integration; costs related to the acquisition of Nokia’s security appliance business; and the economic environment of the industries in which Check Point and Nokia’s security appliance business operate. The forward-looking statements contained in this press release are subject to other factors and risks, including those discussed in Check Point’s Annual Report on Form 20-F for the year ended December 31, 2007, which is on file with the Securities and Exchange Commission. Check Point assumes no obligation to update these forward-looking statements.
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