Check Point Software Technologies Ltd.
) reported third quarter 2013 adjusted earnings (including
stock-based compensation but excluding amortization of intangible
assets) of 80 cents per share, which beat the Zacks Consensus
Estimate by a couple of cents.
Check Point's third quarter revenues of $344.1 million not
only increased 3.5% from the year-ago quarter but also came ahead
of the Zacks Consensus Estimate of $343 million. Reported
revenues were within management's guided range of $330.0 million
to $350.0 million.
The year-over-year revenue growth was aided by a 5.6% increase
in Software Updates, Maintenance and Services revenues and a
marginal increase (up 0.04% year over year) in revenues from
products and licenses.
Check Point reported growth in its Application Control and
Anti-Bot applications. Moreover, the company also witnessed
growth in its new small appliances business that waslaunched last
quarter, and an increase in sales from data center
During the quarter, Check Point launched the latest version of
Software Blade Architecture and data center applications such as
Check Point Security Gateway R77, Check Point Threat Emulation
and 13500 Data Center Appliance Launch.
Geographically, the Americas contributed 46% of the revenues,
Europe accounted for 36% and Asia Pacific, Japan, Middle East and
Africa region contributed the remaining 18%.
Adjusted gross profit (including stock-based compensation but
excluding amortization of intangible assets) increased 3.3% year
over year to $304.1 million while margins decreased 21 basis
points from the year-ago quarter to 88.4%, primarily due to
Total operating expenses increased 5.5% year over year as the
company continued to invest in the business and hiring for
research and development, sales and marketing and technological
support. As a percentage of revenues, operating expenses
increased 63 basis points.
Operating income (including stock based compensation but
excluding amortization of intangible assets) came in at $187.2
million, up 2.0% year over year. Operating margin decreased 85
basis points year over year to 54.4%.
Adjusted net income (including stock-based compensation but
excluding amortization of intangible assets) was $160.1 million
or 80 cents per share, up from $153.2 million or 73 cents in the
comparable quarter last year.
Balance Sheet & Cash Flow
Check Point exited the quarter with cash, cash equivalents and
marketable securities of approximately $1.26 billion, up from
$1.24 billion in the previous quarter. Trade receivables were
$256.7 million. Cash flow from operations was $195.4 million,
down from $204.7 million in the previous quarter.
During the quarter, Check Point repurchased 2.3 million shares
at a total cost of $128.3 million.
Check Point delivered better-than expected third-quarter
results, which topped the Zacks Consensus Estimate on both counts
primarily driven by growth across its software and data center
The rapid adoption of Check Point's data center appliances and
the continuous enhancements in the data center product lines are
expected to provide adequate support to revenue growth.
However, stiff competition from
Cisco Systems Inc.
Juniper Networks Inc.
); an uncertain economic environment, competitive pressures,
currency headwinds and Check Point's significant European
exposure are concerns.
Currently, Check Point carries a Zacks Rank #3 (Hold).
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