Check Point Software Reports Record Third Quarter 2011 Financial Results

Redwood City, CA — Tue, 18 Oct 2011

• Revenue: $308.3 million, representing a 13 percent increase year over year
• Non-GAAP Operating Income: $180.7 million, representing a 15 percent increase year over year, and 59 percent of revenues versus 57 percent year over year
• Non-GAAP EPS: $0.72, representing a 14 percent increase year over year
• Deferred Revenues: $454.5 million, representing a 15 percent increase year over year

Check Point® Software Technologies Ltd. (NASDAQ: CHKP), the worldwide leader in securing the Internet, today announced its financial results for the third quarter ending September 30, 2011.

“I am very pleased that we delivered record results for the third quarter. We exceeded our projections as a result of growth in all regions. Our software blade platform continues to gain traction in the marketplace, while our annuity software blades have provided significant contribution to our revenue and deferred revenue growth,” said Gil Shwed, founder, chairman and chief executive officer at Check Point Software Technologies.

Financial Highlights for the Third Quarter of 2011

• Total Revenues: $308.3 million, an increase of 13 percent, compared to $273.2 million in the third quarter of 2010.
• GAAP Operating Income: $158.2 million, an increase of 17 percent, compared to $135.1 million in the third quarter of 2010. GAAP operating margin was 51 percent, compared to 49 percent in the third quarter of 2010.
• Non-GAAP Operating Income: $180.7 million, an increase of 15 percent, compared to $156.9 million in the third quarter of 2010. Non-GAAP operating margin was 59 percent, compared to 57 percent in the third quarter of 2010.
• GAAP Net Income and Earnings per Diluted Share: GAAP net income was $134.1 million, an increase of 17 percent, compared to $114.5 million in the third quarter of 2010. GAAP earnings per diluted share were $0.63, an increase of 17 percent, compared to $0.54 in the third quarter of 2010.
• Non-GAAP Net Income and Earnings per Diluted Share: Non-GAAP net income was $152.9 million, an increase of 15 percent, compared to $132.6 million in the third quarter of 2010. Non-GAAP earnings per diluted share were $0.72, an increase of 14 percent, compared to $0.63 in the third quarter of 2010.
• Deferred Revenues: As of September 30, 2011, Check Point had deferred revenues of $454.5 million, an increase of 15 percent, compared to $396.3 million as of September 30, 2010.
• Cash Flow: Cash flow from operations was $154.5 million, an increase of 7 percent, compared to $144.6 million in the third quarter of 2010.
• Share Repurchase Program: During the third quarter of 2011, the company repurchased 1.37 million shares at a total cost of $75 million.
• Cash Balances and Marketable Securities: $2,776 million as of September 30, 2011, an increase of $520 million, compared to $2,256 million as of September 30, 2010.

For information regarding the Non-GAAP financial measures discussed in this release, please see “Use of Non-GAAP Financial Information” and “Reconciliation of GAAP to Non-GAAP Financial Information.”

Business Highlights

Check Point launched two new high-end appliances targeted at large enterprises, data centers and service providers:

• The 61000 Security System - the industry’s fastest security gateway offers scalable performance for data centers, telecommunication and cloud service providers, with a multi-bladed hardware platform that is potentially capable of future performance of more than 1Tbps in a single firewall and 200 Gbps this year. The new system supports 70 million concurrent connections and 600,000 sessions per second – bringing unparalleled security performance to multi-transaction environments.
  
  
• 21400 Appliance - combines high-speed networking technologies with firewall throughput of up to 100 Gbps and IPS throughput of up to 21 Gbps (default profile). The Check Point 21400 is optimized for a full range of software blade protections, providing large enterprises and data centers with industry-leading security and performance.

During the quarter Check Point continued to build on the 3D Security vision with the introduction of the R75.20 release based on the Software Blade Architecture™, The R75.20 release heightens security with Integrated URL Filtering, SSL Inspection and Expanded Data Loss Prevention. This new software blade provides granular control for web surfing in real-time and uniquely integrates with Application Control for unified enforcement of all Web controls. It also enables businesses to inspect SSL-encrypted traffic across all software blades. R75.20 further extends the Check Point DLP solution that now enables customers to protect against internal data leaks.

In addition, Check Point introduced a new metric for security performance – SecurityPower™. The new metric allows customers to estimate their security needs and compare it to the SecurityPower Units (SPU) rating of each security solution – improving the accuracy of performance measurements for appliances under security attack and during day-to-day operations.

Latest Announcements

In the beginning of October, the company released a new line of appliances and latest annuity software blade:

• Six New Appliance Models – The new appliances represent a refresh of Check Point’s current hardware offerings and are designed to address the security needs of any size business. These new appliances are optimized for Check Point’s Software Blade Architecture™ and deliver three times the performance of previous enterprise versions at comparative pricing.
  
  
• Anti-Bot Software Blade – The latest annuity software blade designed to help businesses discover, prevent and remediate bot attacks utilizing a unique ThreatSpect™ detection engine that analyzes traffic and discovers bots by correlating multiple risk factors. The solution is integrated into every gateway to provide businesses with multi-layered protection against bot attacks, Advanced Persistent Threats (APTs) and other forms of malware threats.

Recent Industry Accolades

• Leader in the Gartner Magic Quadrant for Mobile Data Protection – For the 11th time, Check Point is acknowledged for its comprehensive endpoint solutions that secure data on mobile platforms such as laptops, smartphones, and removable media.
  
  
• Endpoint Security R80 – Named “Best Buy” and received a 5-Star rating in a comparative product review conducted by SC Magazine. 

Shwed concluded, “During the quarter we’ve raised the bar for security across the industry by increasing the levels of security functionality and setting new records for security performance. We opened the fourth quarter with the most significant update to our appliance product portfolio to date by delivering three times the performance across the entire enterprise appliance product line. We continue to deliver on our 3D security vision, enabling customers to consolidate their security infrastructure with enhanced protections and increased performance.”