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Check Point Software Technologies, Ltd. (CHKP)
Q1 2010 Earnings Call
April 26, 2010 8:30 am ET
Gil Shwed – CEO
Tal Payne – CFO
Kip Meintzer – IR
Sterling Auty – JPMorgan
Brad Zelnick – Macquarie Research
Shaul Eyal – Oppenheimer
Katherine Egbert - Jefferies & Co.
Daniel Ives - Friedman, Billings, Ramsey
Michael Turits - Raymond James
Brian Freed - Morgan Keegan
Jeff Evenson – Sanford Bernstein
Keith Weiss – Morgan Stanley
Jonathan Ho – William Blair
Todd Raker - Deutsche Bank
Sarah Friar - Goldman Sachs
Phil Winslow - Credit Suisse
Walter Pritchard – Citi
Scott Zeller – Needham & Company
Kash Rangan – BAS-Merrill Lynch
Previous Statements by CHKP
» Check Point Software Technologies Ltd. Q4 2008 Earnings Call Transcript
» Check Point Software Technologies Ltd. Q2 2008 Earnings Call Transcript
» Check Point Software Technologies Ltd. Q1 2008 Earnings Call Transcript
Welcome to all of you joining today. This is Kip Meintzer, Head of Global Investor Relations for Check Point Software. On the call with me today are Gil Shwed, Chairman and CEO, and Tal Payne, Chief Financial Officer. We'd like to thank all of you for joining us today to discus Check Point’s financial results for first quarter of 2010.
As a reminder this call is being webcast live on our website and is being recorded for replay. To access the live webcast and replay information, please visit the company's website at www.checkpoint.com. For your convenience, the conference call replay will be available through May 3rd. If you'd like to reach us after the call, please contact Investor Relations at +1-650-628-2050.
Now before we begin with management's presentation, I would like to bring the following to your attention. During the course of this call Check Point representatives will make certain forward-looking statements. These forward-looking statements may include our expectations regarding the demand for our security products, our expectations regarding the introduction of new products and the success of those products, and our expectations regarding our business and financial outlook for the second quarter 2010.
Other statements which may be made in response to questions which refer to our beliefs, plans, expectations, or intentions are also forward-looking statements for the purposes of the Safe Harbor provided by the Private Securities Litigation Reform Act.
Because these statements pertain to future events they are subject to various risks and uncertainties and 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 the risks discussed in Check Point’s Annual Report on Form 20-F, for the year ended December 31, 2009, which is on file with the Securities and Exchange Commission. As a reminder Check Point assumes no obligation to update its forward-looking statements.
Now, I would like to turn the call over to Tal Payne, Check Point's Chief Financial Officer.
Thank you Kip, good morning and good afternoon to everyone joining us on the call today. I’m happy once again to begin the review of an excellent quarter. This quarter we achieved record first quarter results which came in at the high end of our projections, as it continued to demonstrate solid growth across all regions.
Our revenues for the first quarter increased by 26% over the same period in 2009 while our non-GAAP EPS was $0.55 representing 22% growth year over year.
Before I proceed further into the numbers let me remind you that our first quarter GAAP financial results include equity based compensation expenses according to ASC 718, expenses relating to our acquisitions including the motivation of intangible and the related tax effects from such items. Keep in mind that the non-GAAP information is presented excluding these items.
In our press release which has been posted on our website we present GAAP and non-GAAP results along with reconciliation tables which highlight this data as well as the reasons for our presentation of non-GAAP information.
Now let’s take a look at the financial highlights for the quarter, in the first quarter revenues came in at the high end of our projections. Revenues reached $245.1 million, representing an increase of 26% compared to $195 million in the first quarter of 2009.
This high growth rate is attributed mainly to the acquisition of Nokia security appliance business from last April, the software blade architecture, and the new appliances we launched last year, which I’ll discuss in a minute.
Moving forward I would like to remind you the anniversary of Nokia’s appliance business acquisition will be in mid April and our future growth excluding future acquisitions is expected to be organic. We had growth across all geographies with our Americas delivering 26% and Europe 31% growth for the quarter.
Revenue distribution by geography for the quarter was as follows, Americas contributed 43% of the revenues, Europe was 42%, and Asia Pacific and Japan, Middle East and Africa regions contributed the remaining 15%.
You will notice that this quarter we changed the way we report our revenues by geography. Since the beginning of the year we have reorganized the sales to Middle East and Africa as part of Asia Pacific and Japan regions.
Looking at the revenues by type, our product and license revenues were $91 million representing 27% growth over the same quarter a year ago. This growth came in mainly out of the integrated appliance product led by IP [series], Power-1, UTM and Smart-1 appliances showed strong growth compared to the sales in the quarter in 2009.
Our software update and maintenance revenues reached an all time high of $154 million this quarter, a 25% increase year over year. The increase was driven by the consolidation of the IP Series service, our [annuity] blade and security services. The growth in deferred revenues was also significant this quarter.