Check Point solidifies position as Israel's highest-valued company with Q1 results
The cybersecurity powerhouse beat first-quarter forecasts with 7% growth in revenue to $543 million and has seen its valuation climb to $17 billion over recent weeks despite a rocky market
Check Point, which has regained over recent weeks its status as the highest-valued Israeli company, published on Wednesday impressive financial results for the first quarter of 2022.
The company's revenue grew at an annual rate of 7% to $543 million, higher than analysts expectations of $535 million. Cash flow from operations rose slightly to $398 million and net income fell slightly from $211 million to $204 million. Earnings per share were $1.57, above market expectations of $1.55 per share.
"The first quarter opened strongly," said Tal Payne, the Israeli cybersecurity giant's CFO. "We continue to see an acceleration in sales and in long-term contracts."
The big improvement was in sales of Check Point's subscriber solutions with growth of 14%. Against this background, and when neutralizing the services section, sales of the products together with subscription fees have, for the first time in many years, achieved a double-digit growth rate.
Check Point has undergone a deep reorganization in its marketing and sales and brought Oracle's VP of marketing to lead the move. According to Gil Shwed, CEO and founder of Check Point, the company's cloud sales have already exceeded the $100 million mark.
"The supply chain continues to be a challenging issue all over the world, and like everyone else we pay more for the raw materials and that's why we are able to deliver the products to customers. It no longer takes a day or two as it once did, but a week or two, but competitors deliver more slowly, it even takes them months. These challenges will not end in the next quarter, but we hope they will towards the end of the year," Payne said.
Beyond the increase in raw material-related costs, Check Point also increased its workforce in sales and development by 15%, which is one of the reasons for the increase in operating expenses from $208 million a year ago to $238 million in this quarter.
Along with the acceleration in the rate of growth and increase in costs, Check Point maintains high profitability, with an operating profit margin of 44%. This is the main reason why Check Point shares have risen, contrary to the general direction in technology stocks in the last six months, recording an impressive 12% increase to reach a market cap of $17 billion.