Check Point Software Reports Financial Results for the First Quarter of 2006
Monday April 24, 4:00 am ET
Strong Cash Flow and Growth in Deferred Revenues
REDWOOD CITY, Calif.--(BUSINESS WIRE)--April 24, 2006--Check Point® Software Technologies Ltd. (Nasdaq:CHKP - News), the worldwide leader in securing the Internet, today announced its financial results for the first quarter ended March 31, 2006.
Financial Highlights for the First Quarter of 2006:
Revenues: $133.6 million, a decrease of 3 percent compared to $137.7 million in the first quarter of 2005.
Deferred Revenues: $178.9 million, an increase of $9.9 million or 6 percent over deferred revenues as of December 31, 2005.
Net Income - GAAP: $61.6 million, a decrease of 16 percent compared to $73.7 million in the first quarter of 2005. Equity based compensation expenses in the amount of $11.1 million are being reported for the first time in the first quarter of 2006 GAAP results pursuant to SFAS 123®. This expense was not included in the 2005 results.
Net Income - Non GAAP: $75.1 million, a decrease of 1 percent compared to $75.8 million in the first quarter of 2005. Non-GAAP net income excludes equity based compensation expenses and acquisition related charges(1).
Earnings per Diluted Share - GAAP: $0.25, a decrease of 13 percent compared to $0.29 in the first quarter of 2005. Equity based compensation expenses are included in the first quarter of 2006 GAAP results pursuant to SFAS 123®.
Earnings per Diluted Share - Non GAAP: $0.31, an increase of 3 percent compared to $0.30 in the first quarter of 2005. Non-GAAP EPS excludes equity based compensation expenses and acquisition related charges.
Share Repurchase Program: During the first quarter of 2006, Check Point purchased 3.0 million shares at a total cost of approximately $63.9 million.
Cash Flow: total cash flow, excluding share buy back, was $129.5 million, an increase of 26% compared to the first quarter of 2005 and the largest in Check Point's history. Cash flow from operations was $112.0 million, an increase of 15 percent compared to the first quarter of 2005.
See "Use of Non-GAAP Financial Information" and "Reconciliation between GAAP and Non-GAAP Statement of Income" below for more information regarding Check Point's use of Non-GAAP measures.
"Our first quarter financial results demonstrated the strength in our subscription business driven by customer loyalty, the success of our SmartDefense program and the resulting strong operating cash flow and increase in deferred revenues," said Gil Shwed, chairman and chief executive officer of Check Point Software. "In general, our financial results were impacted by a change in our decision to acquire Sourcefire, lower product revenues and a slower pace of growth in our industry."
During the first quarter of 2006, we introduced product enhancements strengthening our unified security architecture. Introductions during the quarter included:
Connectra -- delivered enhanced and most comprehensive SSL VPN with new security, application and performance features.
Eventia Analyzer 2.0 -- launched simplified security event management (SEM) that automatically prioritizes security events for decisive, intelligent action, and has extended support to the endpoint and correlates data for anti-virus applications, personal firewalls and operating systems.
VPN-1 Edge NGX -- unveiled extended security protection for remote offices with advanced intrusion prevention and anti-virus to complement its firewall and VPN technologies and ensure that branch offices have protection from worms and viruses.
Partial List of Awards in the First Quarter 2006:
Named VARBusiness Magazine Five-Star Vendor for Channel Partner Program -- certified as a Five-Star Partner for commitment and strength of programs for IT integrators, resellers and consultants.
Recognized by CRN as 2006 Channel Champion and for Channel Chief, Kevin Maloney -- named 2006 Channel Champion in network security software category based on results from study indicating channel leadership. Channel Chief recognition is granted to influential executives who consistently defend, promote and execute effective channel partner programs and strategies.
Received Two Coveted Security Awards from SC Magazine -- granted Best Enterprise Firewall and Best Remote Access VPN Solution for IPSec awards.
Mr. Shwed continued, "We are entering the second quarter with a high level of activity and many initiatives in our pipeline. The upcoming version of VPN-1 NGX will significantly change our core product lines, elevating the level of functionality, security, manageability and performance and continue to raise the bar for the best internet security."
Conference Call and Webcast Information
Check Point will host a conference call with the investment community on April 24, 2006 at 8:30 AM ET/5:30 AM PT. To listen to the live webcast, please visit Check Point's website at http://www.checkpoint.com/ir
. A replay of the conference call will be available through May 8, 2006 at the Company's website http://www.checkpoint.com/ir
or by telephone at (973) 341-3080, pass code 7246520. http://biz.yahoo.com/bw/060424/20060424005486.html?.v=1