Release Date: October 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Check Point Software Technologies Ltd (CHKP, Financial) reported a 7% increase in revenues, reaching $635 million, which was above the midpoint of their projections.
- The company's non-GAAP EPS grew by 9% to $2.25, also surpassing the midpoint of projections.
- Subscription revenue saw a significant increase of 12%, driven by strong demand for the Infinity consolidated platform.
- The company completed the acquisition of Cyberint, enhancing their threat intelligence capabilities and expanding their SOC offerings.
- Check Point Software Technologies Ltd (CHKP) continues to see strong demand for its Harmony email security, which has exceeded $100 million in ARR, showcasing high double-digit growth.
Negative Points
- Calculated billings growth was affected by several deals being pushed from Q3 to Q4, particularly in Europe, impacting the quarter's financial results.
- Operating expenses increased by 9% due to continued investment in workforce and acquisition-related expenses, which could pressure margins.
- Despite positive growth, the company faces challenges in achieving double-digit growth consistently, with current growth rates remaining in the mid-single digits.
- There is some uncertainty regarding the timing of revenue recognition for product revenues related to Infinity deals, which could lead to volatility in financial results.
- The company noted softness in certain regions, particularly in Europe, which is traditionally a challenging market during Q3 due to seasonal factors.
Q & A Highlights
Q: Gil, on the billings miss, was it due to several large contracts, and what are your views on the potential M&A strategy with the new leadership?
A: Gil Shwed, CEO, explained that the billings miss was due to a few deals slipping from Q3 to Q4, mainly in Europe, but they are expected to close soon. Regarding M&A, he mentioned that while Check Point has done 10 acquisitions in the last five years, there are no immediate plans for mega acquisitions. The focus remains on generating the best security and profitable growth.
Q: Can you expand on the positive internal indicators you mentioned, and is 6% growth sustainable for the future?
A: Gil Shwed, CEO, noted that while the cybersecurity industry is seeing increased demand due to rising attacks, Check Point's internal indicators, especially in the US market, are positive. However, he remains cautious about making specific predictions for 2025, emphasizing a healthy pipeline and positive energy in the Americas.
Q: What's your position on vendor financing, and what needs to happen for Check Point to achieve double-digit growth?
A: Roei Golan, CFO, stated that Check Point does not engage in vendor financing but offers flexible billing terms, especially with Infinity agreements. For double-digit growth, he highlighted significant investments in new offerings and acquisitions, like Parameter 81, and the growing adoption of Infinity and Harmony products.
Q: How is the integration of Parameter 81 progressing, and what is the adoption rate of the SASE solution among high-end enterprises?
A: Gil Shwed, CEO, reported positive traction with Parameter 81, noting a sequential increase in sales and a few seven-digit deals in the pipeline for Q4. He expressed optimism about the SASE platform's future growth and integration.
Q: With the success of Infinity contracts and recurring revenue products, how is this impacting the business model?
A: Roei Golan, CFO, explained that products like Harmony email and SASE are driving subscription revenue growth. Infinity, now 15% of total revenues, is expected to become more significant, supporting overall growth without negatively impacting the rest of the business.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
