This site uses cookies to ensure the best viewing experience for our readers.
Check Point CEO says government should not aid the cyber industry

Check Point CEO says government should not aid the cyber industry

The Nasdaq listed cybercompany reported $509 million in revenues in the third quarter of 2020

Sophie Shulman | 15:41  22.10.2020
Nasdaq-listed network and cloud security company Check Point Software Technologies Ltd. has surpassed market forecasts for the third quarter of 2020.

The Israeli cyber giant led by CEO Gil Shwed concluded the recent quarter with $509 million total revenue, slightly above the projected $504 million. Having reported $491 in revenues in the third quarter of 2019, it constitutes a 4% increase year over year.

Check Point founder and CEO Gil Shwed. Photo: Amit Shaal Check Point founder and CEO Gil Shwed. Photo: Amit Shaal Check Point founder and CEO Gil Shwed. Photo: Amit Shaal
The company’s Non-GAAP operating income was $231 million, representing 45% of total revenues for the quarter. Net income rose by 7% to $217 million. Adjusted earnings jumped 14% to $1.64 per share, above analysts' forecasts, which factored in the effects of the Covid-19 outbreak and stood at $1.53 per share.

Cash flow from operations reached $248 million, up slightly from $244 million in the third quarter of 2019. During the third quarter, the company invested approximately $325 million in stock repurchasing.

“We executed well in the third quarter and delivered another successful virtual quarter,” Shwed said following the release of the financial results. “The highest leap was recorded in the cloud operations sector, which increased by 57%. The world has yet to open up, the opposite is true. Only 16% of the workforce around the world is going into the office, compared to 20% in the previous quarter. We are witnessing organizations suffering from the economic crisis, many of them are wary of carrying out upgrades, so as far as we’re concerned, the pandemic is hurting, not helping business.”

Shwed added that levels of uncertainty are still high. “Europe is entering a major second wave, and the U.S. is still in the midst of the first one, on top of the elections. I hope that the virus’s impact on the cyber industry remains small, but the world economy is shifting.”

“Naturally, like every other citizen of the world, we are concerned by the economic situation. It must be noted though that so far the impact on the industry has been minimal. I do not believe that the government should come to the aid of our industry, but it should help in other places,” Shwed continued, offering examples of where government assistance could be beneficial. “Aiding stores and retail businesses transition to ecommerce platforms and helping set up a delivery infrastructure for all stores would be of great assistance during this period of crisis. It’s possible to develop an infrastructure that will get a shirt I ordered from a store to my house in 15 minutes, and you don’t need tech people to run such an operation. You can take the people who lost their jobs and convert them to the new role.”

Shwed also made a rare reference to the condition of the capital market, which appears to be out of sync with the real economy and to the valuations of privately-owned cyber companies who have been raising capital vigorously in recent months. “The capital market is extremely high, it’s true for everyone and naturally we are benefiting from it too, with our share price nearing record levels,” he said. Tal Payne, Check Point’s CFO noted that start-up companies’ multipliers are still very high compared to Check Point’s.

Check Point shares have risen 10% since the beginning of the year and the company is currently trading at $17.5 billion, reflecting a P/E ratio of 22 on expected earnings.

Check Point expects revenues of $525-575 million in the fourth quarter, which is traditionally considered to be strong, and a net income of $2-2.18 per share. In this way, the company will be able to meet its original forecast that it provided before the Covid-19 outbreak and exceed $2 billion in revenues for 2020.

Following his stately proposals, Shwed returned to his main topic of interest — issues of cyber protection: “In the cyber sector we have experienced a very fruitful quarter for our research department with many hacks and vulnerabilities. There was even a vulnerability detected on Instagram that allows a smartphone to be used as a spying device. People may not think that viewing photos on Instagram is dangerous, but it is. Ransomware attacks are also frightening,” he said.

“We expanded our Secure Access Service Edge (SASE) offering during the quarter with the acquisition of Odo Security, a new cloud-based technology that delivers the next generation of secure remote access to enterprises. It will integrate with Check Point’s Infinity architecture threat prevention capabilities and provide an easy and secure solution to address the growing needs that enterprises have to enable secure remote access for their employees to any application,” he said

share on facebook share on twitter share on linkedin share on whatsapp share on mail

TAGS