Check Point shares rise slightly on earnings beat

Shares in Check Point Software Technologies Ltd. rose slightly in regular trading today after the cybersecurity company beat expectations on earnings in its latest quarter.

For its second quarter that ended June 30, Check Point reported earnings per share of $2 before costs such as stock compensation. That was up 22% from $1.64 in the same quarter of last year, on revenue of $589 million, up 3% year-over-year. Analysts had expected adjusted earnings per share of $1.90 and revenue of $589 million.

Check Point saw increased revenue across the board, with its product and license revenue up 12% year-over-year, to $117 million, and security subscription revenue up 14%, to $239 million. The company’s deferred revenue also rose 7% year-over-year, to $1.774 billion.

Notably, Check Point’s cash balance, marketable securities and short-term deposits fell to $3.515 billion, compared with $3.676 billion the year prior. The decline was in part the result of the company repurchasing 2.6 million shares in the quarter at a cost of about $325 million.

Highlights in the quarter included Check Point landing an unnamed large pharmaceutical company that chose the company’s Harmony Email security product thanks to its high catch rate versus the competition. Check Point also landed a large bank that decided to replace its existing solution that was missing phishing emails.

“Our platform security strategy realized continued success, as Infinity revenues surpassed 10% of total revenues for the quarter,” Gil Shwed, founder and chief executive officer of Check Point, said in the company’s earnings release. “This was further emphasized by a 14% increase in security subscription revenues that encompasses their advanced security solutions such as ThreatCloud AI, CloudGuard and Harmony E-mail.”

Check Point said it expects adjusted earnings per share of $1.97 to $2.07 in its fiscal second quarter on revenue of $570 million to $605 million. For the full year 2023, the company expects adjusted earnings per share of $7.70 to $8.30 on revenue of $2.34 billion to $2.51 billion.

After the earnings report was delivered at the beginning of regular trading, Check Point shares closed up 2.6%, to $132.11.

On the same day Check Point delivered its earnings, Shwed offered an unusual comment on Israeli politics. In an interview with YNet News, Shwed said he would not base a company in Israel today because of changes to the country’s judiciary that those on the left have opposed.

“The exact events are difficult for all of us and are tearing Israeli society apart,” Shwed said in the interview. “I am working to prevent that rift from infiltrating my company.”

“TheCUBE is an important partner to the industry. You guys really are a part of their events and they really appreciate you coming and I know people appreciate the content you create as well” – Andy Jassy

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Check Point Software Technologies Non-GAAP EPS of $2.00 beats by $0.10, revenue of $589M in-line

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Check Point (CHKP) to Report Q2 Earnings: What's in the Offing?

Check Point Software Technologies CHKP is scheduled to report its second-quarter 2023 results on Jul 26.

For the second quarter, Check Point estimates revenues in the range of $570-$605 million ($587.5 million at the midpoint). The Zacks Consensus Estimate for revenues is pegged at $588 million, suggesting a year-over-year increase of 3%.

The company anticipates non-GAAP earnings in the range of $1.85-$1.95 per share ($1.90 at the midpoint). The Zacks Consensus Estimate stands at $1.89 per share, indicating a year-over-year increase of approximately 15.2%.

The company’s earnings outpaced estimates in the trailing four quarters, the average surprise being 3.7%.

Check Point Software Technologies Ltd. price-eps-surprise | Check Point Software Technologies Ltd. Quote

Check Point’s second-quarter top-line is likely to have benefited from continued strong performance across its Security Subscriptions and Software Updates and Maintenance segments, partially offset by weakness at its Products and Licenses division. Increased pricing across multiple product lines is likely to have aided the company’s top- and bottom-line performances in the quarter under discussion.

Check Point’s Security Subscriptions segment is likely to have benefited from growing demand for network security gateways to support higher capacities amid the hybrid work environment. This is expected to have spurred the demand for CHKP’s remote access virtual private network solutions. Solid demand for its CloudGuard, Quantum, Harmony, Horizon threat prevention and Infinity solutions is anticipated to have aided the segment’s top-line performance.

Our estimates for CHKP’s Security Subscriptions segment are pegged at $225.1 million, depicting a year-over-year increase of 7.3%. Their revenue estimate of $233.1 million for Software Updates and Maintenance division signifies improvement of 2.2% from the year-ago quarter’s $228 million.

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Nonetheless, weakening global economy amid ongoing macroeconomic and geopolitical issues might have led enterprises postpone their large IT spending plans. This might have hurt Check Point’s Products and Licenses performance in the second quarter. Their estimate for the segment’s revenue stands at $127.7 million, signifying a 4.1% from the year-ago quarter’s $133.2 million.

The firm’s continued investments in cloud infrastructure, workforce enhancement and marketing activities might have clipped margins during the quarter to be reported.

Our proven model does not conclusively predict an earnings beat for Check Point this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here.

CHKP has an Earnings ESP of 0.00% and a Zacks Rank #2 at present. You can uncover the best stocks to buy or sell before they’re reported with their Earnings ESP Filter.

Per their model, Tyler Technologies TYL, Alphabet GOOGL and Spotify Technology SPOT have the right combination of elements to post an earnings beat in upcoming releases.

Tyler has an Earnings ESP of +0.54% and flaunts a Zacks Rank #1 at present. The company is scheduled to report second-quarter 2023 results on Jul 26. TYL’s earnings beat the Zacks Consensus Estimate in three of the preceding four quarters, missing once, the average surprise being 2.8%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for TYL’s quarterly earnings is pegged at $1.86 per share, suggesting a year-over-year decrease of 1.1%. Its quarterly revenues are estimated to increase 4.7% year over year to $490.7 million.

Currently, Alaphabet has an Earnings ESP of +2.49% and carries a Zacks Rank #2. The company is set to report its second-quarter 2023 results on Jul 25. GOOGL’s earnings surpassed the Zacks Consensus Estimate in one of the trailing four quarters, missing thrice and delivering an average negative earnings surprise of 4.4%.

The Zacks Consensus Estimate for GOOGL’s second-quarter earnings is pegged at $1.32 per share, implying a year-over-year surge of 9.1%. The company is estimated to report revenues of $60.24 billion, which suggests a surge of 4.8% from the year-ago quarter.

Spotify has an Earnings ESP of +30.98% and a Zacks Rank #3 at present. The company is set to report its second-quarter 2023 results on Jul 25, before market open. SPOT’s earnings missed the Zacks Consensus Estimate in each of the trailing four quarters, the average negative surprise being 20.2%.

The Zacks Consensus Estimate for Spotify’s second-quarter loss is pegged at 84 cents per share, indicating a 7.7% increase from the year-ago quarter’s loss of 91 cents. The consensus mark for revenues is pegged at $3.53 billion, suggesting a year-over-year increase of 15.8%.

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