Check Point Q2 Earnings & Revenues Beat Expectations

Check Point Software Technologies CHKP reported second-quarter 2024 results, wherein both the bottom and top lines surpassed the Zacks Consensus Estimate and improved year over year.

The IT security solutions provider reported non-GAAP earnings of $2.17 per share, beating the Zacks Consensus Estimate of $2.16. The bottom line increased 8% from the year-ago quarter's earnings of $2 per share.

Check Point's quarterly revenues increased 7% year over year to $627.4 million and surpassed the Zacks Consensus Estimate of $624 million. The upside was driven by double-digit growth in security subscription revenues.

Quarterly Details

Security subscription revenues were $272 million, which increased 14% year over year, driven by the adoption of cloud solutions and strong demand for the Harmony product family. Our model estimate for security subscription revenues was pegged at $273.4 million, up 14.3%.

Products and licenses revenues increased 1.03% year over year to $118.1 million. Our model estimate for products and licenses revenues was pegged at $112.96 million, which decreased 3.4% year over year. Products that are currently in the process of transitioning to cloud solutions have been included in the subscription line.

Total revenues from product and security subscriptions were $389.8 million, up 9.6% year over year.

Software updates and maintenance revenues increased to $237.6 million from $232.9 million reported in the year-ago quarter. Our model estimate for software updates and maintenance revenues was pegged at $236.88 million.

As of Jun 30, 2024, deferred revenues were $1.82 billion, up 2% year over year.

Non-GAAP operating income for the second quarter of 2024 totaled $265 million, up from $263 million reported in the year-ago quarter. Non-GAAP operating margin was 42%, which decreased from 44.5% reported in the year-ago quarter.

Balance Sheet & Other Details

Check Point exited the second quarter with cash and cash equivalents, marketable securities and short-term deposits of $3.1 billion compared with the previous quarter's $3 billion.

The company generated cash worth $200 million from operational activities during the second quarter of 2024.

It repurchased approximately 2.1 million shares for about $325 million during the reported quarter.

Guidance

For the third quarter of 2024, CHKP expects revenues between $615 million and $650 million. Non-GAAP earnings are anticipated in the range of $2.19-$2.29 per share.

Zacks Rank & Stocks to Consider

Currently, Check Point carries a Zacks Rank #3 (Hold).

Arista Networks ANET, Apple and Cognizant Technology Solutions CTSH are some better-ranked stocks that investors can consider in the broader sector. Arista Network sports a Zacks Rank #1 (Strong Buy), whereas Apple and Cognizant Technology Solutions carry Zacks Rank #2 (Buy) each at present.

Arista Networks' shares have gained 38.4% year to date. ANET is set to report second-quarter 2024 results on Jul 30.

Shares of Apple have gained 13.5% year to date. AAPL is set to report third-quarter fiscal 2024 results on Aug 1.

Shares of Cognizant Technology Solutions have lost 3.8% year to date. CTSH is set to report second-quarter 2024 results on Jul 31.

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