Covid-19 and no flights mean more money for Check Point as Q2 profits soar
IT security powerhouse beats analysts' predictions with revenue climbing 4% to $506 million and diluted earnings per share surging 15%
"We beat the analysts' revenue predictions by $18 million, and that hasn't happened to us in years," said Check Point founder and CEO Gil Shwed. "Our improved profit is unfortunately not just the result of our activity, but also a byproduct of a sharp decline in air travel by employees which effectively all but disappeared in the first four months of the year."
Shwed said the second-quarter results were driven by strong sales execution despite the rising impact of the Covid-19 pandemic and warned against an upcoming cyber pandemic. "Humanity needs to prepare for the cyber pandemic that will come. I don't want to predict anything, but you need to remember that unlike a medical pandemic in which one person usually infects one or two other people, in a cyber pandemic one computer can infect dozens and that can multiply within seconds and minutes."
Shwed said that subscriptions have become the company's growth engine, with $164 million coming in from security subscriptions alone, around a 10% increase from the previous year. "We broadened our basket of products and we revamped almost all of Check Point's products. We did all of this without even boarding one flight and in a world which up until now we could have only read about in science fiction books," Shwed added.
Check Point's report stated that the impact of Covid-19 on cybersecurity was evident in "new and sophisticated cyber threats, taking advantage of organizations’ and employees’ shift to a 'new normal'."
According to a Check Point survey conducted earlier in the quarter among 270 IT and security professionals to examine how organizations managed their cybersecurity during the coronavirus pandemic, over 86% of respondents said their biggest IT challenge during the pandemic was moving to mass remote working, and that their biggest security concern was maintaining VPN capacity for staff.
Check Point's GAAP operating income in the second quarter was $221 million, representing 44 percent of revenue, with GAAP net income reaching $196 million compared to $186 million in the second quarter of 2019. The company's cash flow from operations hit $252 million, an 8% increase year over year. Check Point’s cash balances, marketable securities and short term deposits were at just under $4 billion as of June 30.