GlobeNewswire Inc | Jul 26, 2021 05:00AM EDT

July 26, 2021

SAN CARLOS, Calif., July 26, 2021 (GLOBE NEWSWIRE) -- (NASDAQ: CHKP), today announced its financial results for the second quarter ended June 30, 2021.

Second Quarter 2021

-- Total Revenue: $526 million, a 4 percent increase year over year -- Deferred Revenues: $1,472 million, a 10 percent increase year over year -- GAAP Operating Income: $222 million, representing 42 percent of revenues -- Non-GAAP Operating Income: $257million, representing 49 percent of revenues -- GAAP EPS: $1.38,same as last year -- Non-GAAP EPS: $1.61, a 2 percent increase year over year -- Cash flow from operations: $264 million, a 4 percent increase year over year

We had a good second quarter. Strong execution drove double-digit growth across CloudGuard and Harmony, and triple-digit growth in Infinity platform sales. Overall we grew our security subscription revenues by 12 percent, said Gil Shwed, Founder and CEO of Check Point Software Technologies. Weve seen a 93 percent increase in ransomware attacks, as Gen V attacks are now the new norm. We believe organizations can stop the next cyber pandemic by adopting a prevention-first approach to security across the network, cloud and remote users.

Financial Highlights for the Second Quarter of 2021

-- Total Revenue:$526 million compared to $506 million in the second quarter of 2020, a 4 percent increase year over year. -- GAAP Operating Income: $222 million compared to $221 million in the second quarter of 2020, representing 42 percent and 44 percent of revenues in the second quarter of 2021 and 2020, respectively. -- Non-GAAPOperating Income: $257 million compared to $253 million in the second quarter of 2020, representing 49 percent and 50 percent of revenues in the second quarter of 2021 and 2020, respectively. -- GAAP Taxes on Income: $47 million compared to $43 million in the second quarter of 2020. -- GAAP Net Income: $186 million compared to $196 million in the second quarter of 2020. -- Non-GAAP Net Income: $217 million compared to $225 million in the second quarter of 2020. -- GAAP Earnings per Diluted share: $1.38 same as in the second quarter of 2020. -- Non-GAAP Earnings per Diluted share:$1.61 compared to $1.58 in the second quarter of 2020, a 2 percent increase year over year. -- Deferred Revenues: As of June 30, 2021, deferred revenues were $1,472 million compared to $1,338 million as of June 30, 2020, a 10 percent increase year over year. -- Cash Balances, Marketable Securities and Short Term Deposits: $4,002 million as of June 30, 2021, compared to $3,959 million as of June 30, 2020. -- Cash Flow: Cash flow from operations of $264 million compared to $252 million in the second quarter of 2020, a 4 percent increase year over year. -- Share Repurchase Program: During the second quarter of 2021, the company repurchased approximately 2.7 million shares at a total cost of approximately $325 million.

For information regarding the non-GAAP financial measures discussed in this release, as well as a reconciliation of such non-GAAP financial measures to the most directly comparable GAAP financial measures, please see Use of Non-GAAP Financial Information and Reconciliation of GAAP to Non-GAAP Financial Information.

Business Highlights

In June, Check Point Software Technologies extended the capabilities of its solution to deliver advanced protection for complex hybrid data centers.

-- Check Point R81.10 software: New version of the Cyber Security platform delivers major improvements in security operational efficiency with unified security management from the web browser and parallel multi-admin support. -- The latest Quantum Maestro 175: Enables Quantum gateway orchestration to the capacity and performance of 52 gateways in minutes, giving companies elastic flexibility with Terabit per second threat prevention throughput -- Quantum Smart-1: Security Management appliances provide advanced protections for complex hybrid data centers with automated operations and an ultra-scalable platform.

To support the new work from anywhere (WFA) environment, organizations accelerated their transition to the cloud which left them vulnerable to cloud-targeted attacks. Check Point expanded the capabilities of its unified , to deliver application-first workload protection with Check Point CloudGuard Workload Protection. This fully automated cloud workload security solution empowers security teams with tools to automate security across applications, Application Programing Interfaces (APIs) and microservices from development to runtime via a single interface.

Check Point extended its multi-cloud support through the integration of , the digital intelligence and technology backbone of Alibaba Group and a global leader in cloud computing and artificial intelligence. Alibaba Clouds customers will benefit from enhanced cloud network security and posture management, while other organizations have the opportunity to leverage Alibaba Cloud within their multi-cloud environments.

Partnerships & Customers

Throughout the quarter, Check Point demonstrated its ongoing commitment to provide cyber-security education and training at all levels. In May, Check Point launched the with its Platinum Elite ATC Partners - Arrow Electronics, Red Education and Westcon Security. Check Point is the first security solutions provider to address the knowledge gap in the industry by offering a dedicated certified education program specializing in cloud security globally.

In April, Check Point Software introduced new initiatives to its channel sales model to further accelerate benefits and profits for partners. The four new initiatives in further increase value to partners, and accelerate their access to benefits and rewards for sales-generating activities through closer collaboration with Check Point.

In July, Check Point Software became a sponsor of new Industry 4.0 immersive experience center based in Wichita. The sponsorship identifies the need for cyber security as a core component of any secure smart factory and enables Check Point customers access to experience the advanced manufacturing methods and technologies at the heart of digital transformation.

Research & Cyber Security

Ransomware attacks continue to Surge, hitting a 93% increase year over year Check Point Research (CPR) issued an updated data snapshot of , including attacks per organizations by industry and regional attack trends. CPR found that average number of ransomware attacks each week increased by 20% in the last two months, 41% in the last six months, and 93% in the last 12 months. The recent attack on a that the acceleration in sophisticated ransomware attacks is continuing. Following this attack, Check Point Research warned of a new ransomware threat called Triple Extortion.

Vulnerabilities in Applications & Infrastructure:

Security Flaws in Atlassians Platform Led to Account Takeover in One Click: Check Point Research (CPR) identified security flaws on , the team collaboration and productivity platform used by 180,000 customers worldwide. With just one click, an attacker could have used the flaws to take over accounts and control some of Atlassians applications, including Jira and Confluence.

Four Security Vulnerabilities were found in Microsoft Office: affected products in the Microsoft Office suite, including Excel and Office online. If exploited, the vulnerabilities would grant an attacker the ability to execute code on targets via malicious Office documents, such as Word (.DOCX), Excel (.XLS) and Outlook (.EML). The vulnerabilities are the result of parsing mistakes made in legacy code found in Excel95 File Formats, giving researchers reason to believe that the security flaws have existed for several years.

Misconfiguration of third party cloud services exposed data of over 100 million users: After examining 23 Android applications on Google Play, Check Point discovered that mobile app developers have exposed the personal data of over 100 million users through a variety of . Personal data included emails, chat messages, location, passwords and photos which, in hands of hackers, could lead to fraud and identity-theft.

Companies 5 Million Personal identifiable information records detected on an AWS service due to misconception of users: By analyzing and enumerating public , CPR retrieved over five million personally identifiable information records and credit card transactions of companies, including a global sportswear manufacturer.

Android users privacy at risk as Check Point Research identifies vulnerability on Qualcomm's mobile station modems: Check Point Research (CPR) found a security vulnerability in (MSM), the chip responsible for cellular communication in nearly 40% of the worlds phones. If exploited, the vulnerability would have allowed an attacker to use Android OS itself as an entry point to inject malicious and invisible code into phones, granting them access to SMS messages and audio of phone conversations.

Malware and Campaigns Research:

Cybercriminals go after Amazon Prime Day Shoppers: Cybercriminals brand ahead of the annual shopping event in order to trick consumers into credential theft of their email addresses, payment details and passwords, and more. In the run-up to Amazon Prime Day 2021, nearly 80% of domains containing the word Amazon were potentially dangerous.

New ToxicEye RAT is the latest to use Telegram for command & control: There is a where hackers use Telegram, the instant messaging app with over 500 million active users, as a command and control system to distribute malware into organizations. Even when Telegram is not installed or being used, the system allows hackers to send malicious commands and operations remotely via the instant messaging app.

Research & Recognitions

We continued our focus on security through innovation, industry research and recognition including:

Secure Access Service Edge (SASE) Solutions are the Future: Survey Uncovers Organizations Security Priorities for Hybrid Working Check Point revealed the results from a showing how organizations have been impacted by the pandemic, particularly when it comes to IT and security strategies. The survey of 450 IT and security professionals revealed the impact that the pandemic has had on organizations as well as their security priorities for the hybrid workplace

Check Point Software Technologies Recognized as a Microsoft Security 20/20 Partner Award Winner for Most Transformative Integration Partner: At the second annual held May 12, 2021, Microsoft announced award winners in 18 categories spanning security, compliance and identity. This year, Check Point Software is a winner for Microsoft Security 20/20 Most Transformative Integration Partner award. The company was honored among a global field of top Microsoft partners for demonstrating excellence in innovation, integration, and customer implementation with Microsoft technology.

MITRE Engenuity ATT&CK Evaluations Highlight Check Point Softwares Leadership in Endpoint Security: In the , Check Point Harmony Endpoint successfully detected 100% of the unique techniques used during the evaluations. Furthermore, Check Point Harmony Endpoint achieved the highest technique detection level for 96% of the unique techniques used in the evaluations.

Conference Call and Webcast InformationCheck Point will host a conference call with the investment community on July 26, 2021, at 8:30 AM ET/5:30 AM PT. To listen to the live video cast or replay, please visit the website: .

Third Quarter Investor Conference Participation Schedule:

-- Oppenheimer 24thAnnual Virtual Technology, Internet & Communications ConferenceAugust 9, 2021 Virtual 1x1s -- Nasdaq Virtual Asia Investor ConferenceAugust 9-10, 2021 Virtual 1x1s -- KeyBanc Virtual Technology Leadership ForumAugust 11, 2021 Virtual Fireside Chat & 1x1s -- BMO 2021 Virtual Technology SummitAugust 24, 2021 Virtual Fireside Chat & 1x1s -- Deutsche Bank 2021 Technology ConferenceSeptember 9-10, 2021 Physical 1x1s -- Citi 2021 Global Technology Virtual ConferenceSeptember 13, 2021 Virtual 1x1s -- Piper Sandler 2021 Virtual Global Technology ConferenceSeptember 14, 2021 Virtual 1x1s -- Jefferies 2021 Virtual Technology ConferenceSeptember 14, 2021 Virtual 1x1s -- Morningstar Management Behind The Moat Virtual ConferenceSeptember 15, 2021 Virtual 1x1s

Members of Check Point's management team are expected to present at these conferences and discuss the latest company strategies and initiatives. Check Points conference presentations are expected to be available via webcast on the company's web site. To access these presentations and the most updated information please visit the company's web site at . The schedule is subject to change.

About Check Point Software Technologies Ltd.Check Point Software Technologies Ltd. () is a leading provider of cyber security solutions to governments and corporate enterprises globally. Check Point Infinitys portfolio of solutions protects enterprises and public organizations from 5thgeneration cyber-attacks with an industry leading catch rate of malware, ransomware and other threats. Infinity comprises three core pillars delivering uncompromised security and generation V threat prevention across enterprise environments: Check Point Harmony, for remote users; Check Point CloudGuard, to automatically secure clouds; and Check Point Quantum, to protect network perimeters and datacenters, all controlled by the industrys most comprehensive, intuitive unified security management. Check Point protects over 100,000 organizations of all sizes.

2021 Check Point Software Technologies Ltd. All rights reserved

Legal Notice Regarding Forward-Looking StatementsThis press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statementsgenerally relate to future events or our future financial or operating performance.Forward-looking statements in this press release include, but are not limited to, statements related to our expectations regarding our products and solutions and partnerships, the effects on our business of the COVID-19 pandemic, expectations related to our new channel initiatives, and our participation in investor conferences during the third quarter of 2021. Our expectations and beliefs regarding these matters may not materialize, and actual results or events in the future are subject to risks and uncertainties that could cause actual results or events to differ materially from those projected. These risks include our ability to continue to develop platform capabilities and solutions; customer acceptance and purchase of our existing solutions and new solutions; the continued effects on our business of the COVID-19 pandemic, the market for IT security continuing to develop; competition from other products and services; and general market, political, economic and business conditions. The forward-looking statements contained in this press release are also subject to other risks and uncertainties, including those more fully described in our filings with the Securities and Exchange Commission, including our Annual Report on Form 20-F filed with the Securities and Exchange Commission on April 2, 2021. The forward-looking statements in this press release arebased on information available to Check Point as of the date hereof, and Check Point disclaims any obligation to update any forward-looking statements, except as required by law.

Use of Non-GAAP Financial InformationIn addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Check Point uses non-GAAP measures of operating income, net income and earnings per diluted share, which are adjustments from results based on GAAP to exclude, as applicable, stock-based compensation expenses, amortization of intangible assets and acquisition related expenses and the related tax affects. Check Points management believes the non-GAAP financial information provided in this release is useful to investors understanding and assessment of Check Points ongoing core operations and prospects for the future. Historically, Check Point has also publicly presented these supplemental non-GAAP financial measures in order to assist the investment community to see the Company through the eyes of management, and thereby enhance understanding of its operating performance. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of the non-GAAP financial measures discussed in this press release to the most directly comparable GAAP financial measures is included with the financial statements contained in this press release. Management uses both GAAP and non-GAAP information in evaluating and operating business internally and as such has determined that it is important to provide this information to investors.

CHECK POINT SOFTWARE TECHNOLOGIES LTD. CONSOLIDATED STATEMENT OF INCOME

(Unaudited, in millions, except per share amounts)

Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020

Revenues:

Products and $ 119.1 $ $ 228.4 $ 232.8licenses 122.6

Security 183.7 164.0 361.1 322.8subscriptions

Total revenuesfrom products 302.8 286.6 589.5 555.6and security subscriptions

Softwareupdates and 223.3 219.0 444.2 436.5maintenance

Total revenues 526.1 505.6 1,033.7 992.1

Operatingexpenses:

Cost ofproducts and 23.2 22.5 44.8 43.4licenses

Cost ofsecurity 8.7 6.1 16.7 12.6subscriptions

Total cost ofproducts and 31.9 28.6 61.5 56.0security subscriptions

Cost of Softwareupdates and 25.6 24.0 50.9 47.2maintenance

Amortization 1.7 1.6 3.4 3.2of technology

Total cost of 59.2 54.2 115.8 106.4revenues



Research and 67.5 62.4 135.9 124.6development

Selling and 148.9 140.4 288.9 283.4marketing

General and 28.2 27.7 56.0 56.2administrative

Totaloperating 303.8 284.7 596.6 570.6expenses

Operating 222.3 220.9 437.1 421.5income

Financial 10.4 18.7 23.0 38.0income, net

Income beforetaxes on 232.7 239.6 460.1 459.5income

Taxes on 46.7 43.2 91.2 84.4income

Net income $ 186.0 $ $ 368.9 $ 375.1 196.4

Basic earnings $ 1.39 $ $ 2.74 $ 2.63per share 1.39

Number ofshares used incomputing 133.7 141.5 134.8 142.8basic earningsper share

Diluted earnings per $ 1.38 $ 1.38 $ 2.71 $ 2.58share

Number ofshares used incomputing 134.8 142.6 136.1 145.3dilutedearnings pershare

CHECK POINT SOFTWARE TECHNOLOGIES LTD.SELECTED FINANCIAL METRICS(Unaudited, in millions, except per share amounts)

Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020

Revenues $ 526.1 $ 505.6 $ 1,033.7 $ 992.1

Non-GAAPoperating 257.1 253.2 503.4 484.4income

Non-GAAPnet 217.0 225.0 428.2 430.9income

DilutedNon-GAAP $ 1.61 $ 1.58 $ 3.15 $ Earnings 2.96per share

Number ofsharesused incomputing 134.8 142.6 136.1 145.3dilutedNon-GAAPearningsper share

CHECK POINT SOFTWARE TECHNOLOGIES LTD.RECONCILIATION OF GAAP TO NON GAAP FINANCIAL INFORMATION

(Unaudited, in millions, except per share amounts)

Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020

GAAP operating $ 222.3 $ 220.9 $ $ income 437.1 421.5

Stock-basedcompensation 29.9 28.0 56.5 54.4 (1)

Amortization ofintangibleassets and 4.9 4.3 9.8 8.5acquisition relatedexpenses (2)

Non-GAAP operating $ 257.1 $ 253.2 $ 503.4 $ 484.4 income

GAAP net income $ 186.0 $ 196.4 $ 368.9 $ 375.1

Stock-basedcompensation 29.9 28.0 56.5 54.4 (1)

Amortization ofintangibleassets and 4.9 4.3 9.8 8.5acquisition relatedexpenses (2)

Taxes on the ) ) (7.0 ) (7.1 )above items (3) (3.8 (3.7

Non-GAAP net $ $ $ $ income 217.0 225.0 428.2 430.9

Diluted GAAPEarnings per $ 1.38 $ 1.38 $ 2.71 $ 2.58 share

Stock-basedcompensation 0.22 0.20 0.42 0.37 (1)

Amortization ofintangibleassets and 0.04 0.03 0.07 0.06acquisition relatedexpenses (2)

Taxes on the (0.03 ) (0.03 ) (0.05 ) (0.05 )above items (3)

DilutedNon-GAAP $ $ $ 3.15 $ 2.96Earnings per 1.61 1.58 share

Number ofshares used incomputingdiluted 134.8 142.6 136.1 145.3 Non-GAAPearnings pershare

(1) Stock-basedcompensation:

Cost ofproducts and $ 0.1 $ 0.1 $ 0.2 $ 0.2 licenses

Cost ofsoftware 1.1 1.0 2.0 1.9updates and maintenance

Research and 7.2 5.5 13.7 10.3development

Selling and 10.5 8.8 18.8 16.6marketing

General and 11.0 12.6 21.8 25.4administrative

29.9 28.0 56.5 54.4

(2)Amortization ofintangibleassets and acquisitionrelatedexpenses:

Amortization oftechnology-cost 1.7 1.6 3.4 3.2 of revenues

Research and 1.3 0.9 2.6 1.7development

Selling and 1.9 1.8 3.8 3.6marketing

4.9 4.3 9.8 8.5

(3.8 ) (3.7 ) (7.0 ) (7.1 )(3) Taxes on the above items

$ 31.0 $ 28.6 $ 59.3 $ 55.8 Total, net

CHECK POINT SOFTWARE TECHNOLOGIES LTD.CONDENSED CONSOLIDATED BALANCE SHEET DATA

(Unaudited, in millions)

ASSETS

June 30, December 31,

2021 2020

Current assets:

Cash and cash equivalents $ $ 255.7 356.6

Marketable securities and 1,502.8 1,432.0short-term deposits

Trade receivables, net 368.4 540.8

Prepaid expenses and other 50.1 50.1current assets

Total current assets 2,277.9 2,278.6

Long-term assets:

Marketable securities 2,142.6 2,311.9

Property and equipment, net 85.0 88.1

Deferred tax asset, net 40.6 34.4

Goodwill and other intangible 1,036.5 1,040.7assets, net

Other assets 76.9 85.5

Total long-term assets 3,381.6 3,560.6

Total assets $ $ 5,839.2 5,659.5

LIABILITIES ANDSHAREHOLDERS EQUITY

Current liabilities:

Deferred revenues $ 1,087.3 $ 1,108.6

Trade payables and other accrued liabilities 434.6 435.2

Total current liabilities 1,521.9 1,543.8

Long-term liabilities:

Long-term deferred revenues 385.1 373.3

Income tax accrual 452.1 422.8

Other long-term liabilities 29.8 33.1

867.0 829.2

Total liabilities 2,388.9 2,373.0

Shareholders? equity:

Share capital 0.8 0.8

Additional paid-in capital 2,106.1 2,028.4

Treasury shares at cost (9,942.5 ) (9,319.0 )

Accumulated other comprehensive gain 22.0 40.7

Retained earnings 11,084.2 10,715.3

Total shareholders? equity 3,270.6 3,466.2

$ 5,659.5 $ 5,839.2 Total liabilities and shareholders? equity

Total cash and cash equivalents, marketable $ 4,002.0 $ 3,999.6 securities and short-term deposits

CHECK POINT SOFTWARE TECHNOLOGIES LTD.SELECTED CONSOLIDATED CASH FLOW DATA

(Unaudited, in millions)

Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020

Cash flowfromoperating activities:

Net income $ 186.0 $ $ 368.9 $ 375.1 196.4

Adjustmentsto reconcilenet incometo net cash provided byoperatingactivities:

Depreciationof property 5.5 4.4 10.2 9.0and equipment

Amortizationof 2.1 2.0 4.2 4.0intangible assets

Stock-based 29.9 28.0 56.5 54.4compensation

Realizedgain on (0.2 ) (0.5 ) (1.5 ) (0.7 )marketable securities

Decrease(increase)in trade and (24.9 ) (7.0 ) 175.3 176.1other receivables,net

Increase(decrease)in deferredrevenues,trade 63.3 23.6 24.0 (17.0 )payables andotheraccruedliabilities

Deferredincome 1.9 5.5 0.5 10.5 taxes, net

Net cashprovided by 263.6 252.4 638.1 611.4operating activities

Cash flowfrominvesting activities:

Investmentin property (3.3 ) (3.9 ) (7.1 ) (12.3 )and equipment

Net cashused in (3.3 ) (3.9 ) (7.1 ) (12.3 )investing activities

Cash flowfromfinancing activities:

Proceedsfromissuance of 14.4 3.7 47.5 26.6shares upon exercise ofoptions

Purchase oftreasury (324.7 ) (324.7 ) (649.6 ) (649.7 )shares

Paymentsrelated toshares (4.9 ) (4.1 ) (5.8 ) (4.8 )withheld fortaxes

Net cashused in (315.2 ) (325.1 ) (607.9 ) (627.9 )financing activities

Unrealizedgain (loss)on (6.0 ) 46.3 (20.7 ) 39.5marketable securities,net

Increase(decrease)in cash andcashequivalents, (60.9 ) (30.3 ) 2.4 10.7marketable securitiesand shorttermdeposits

Cash andcashequivalents,marketablesecuritiesand short 4,062.9 3,989.7 3,999.6 3,948.7 termdeposits atthebeginning ofthe period

Cash andcashequivalents,marketable securities $ 4,002.0 $ 3,959.4 $ 4,002.0 $ and short 3,959.4termdeposits atthe end ofthe period



INVESTOR CONTACT: MEDIA CONTACT:Kip E. Meintzer Gil MessingCheck Point Software Technologies Check Point Software Technologies+1.650.628.2040 +1.650.628.2260ir@checkpoint.com press@checkpoint.com