AP NEWS

Check Point Software Technologies Reports 2018 Fourth Quarter and Full Year Financial Results

January 30, 2019

SAN CARLOS, Calif, Jan. 30, 2019 (GLOBE NEWSWIRE) -- Check Point® Software Technologies Ltd. (NASDAQ: CHKP), today announced its financial results for the fourth quarter and full year ended December 31, 2018.

Fourth Quarter 2018:

-- Total Revenues: $526 million, a 4 percent increase year over year -- Deferred Revenues: $1,338 million, a 13 percent increase year over year -- GAAP EPS: $1.51, a 4 percent increase year over year -- Non-GAAP EPS: $1.68, a 6 percent increase year over year

Full Year 2018:

-- Total Revenues: $1,916 million, a 3 percent increase year over year -- GAAP EPS: $5.15, a 7 percent increase year over year -- Non-GAAP EPS: $5.71, a 7 percent increase year over year

“We finished the year with record results. Our revenues were toward the top of our projections and non-GAAP EPS exceeded. Our Security Subscriptions Business continued to increase, driven by cloud, mobile and zero-day advanced threat prevention technologies. We expanded our cloud security offering with the delivery of CloudGuard SaaS solution, and the acquisition of Dome9 and ForceNock,” said Gil Shwed, Founder and CEO of Check Point Software Technologies. “We started 2019 with many new innovations including two new threat prevention optimized security appliances and the new Maestro product line that provides Cloud-type HyperScale technology to reach unprecedented levels of security.” Shwed concluded.

Financial Highlights Fourth Quarter of 2018:

-- Total Revenues: $526 million compared to $506 million in the fourth quarter of 2017, a 4 percent increase year over year. -- GAAP Operating Income:$250 million compared to $267 million in the fourth quarter of 2017, representing 48 percent and 53 percent of revenues in the fourth quarter of 2018 and 2017, respectively. -- Non-GAAP Operating Income: $279 million compared to $292 million in the fourth quarter of 2017, representing 53 percent and 58 percent of revenues in the fourth quarter of 2018 and 2017, respectively. -- GAAP Taxes on Income: $29 million compared to $40 million in the fourth quarter of 2017. -- GAAP Net Income and Earnings per Diluted Share:GAAP net income was $238 million compared to $239 million in the fourth quarter of 2017. GAAP earnings per diluted share were $1.51 compared to $1.46 in the fourth quarter of 2017, a 4 percent increase year over year. -- Non-GAAP Net Income and Earnings per Diluted Share: Non-GAAP net income was $264 million compared to $259 million in the fourth quarter of 2017. Non-GAAP earnings per diluted share were $1.68 compared to $1.58 in the fourth quarter of 2017, a 6 percent increase year over year. -- Deferred Revenues: As of December 31, 2018, deferred revenues were $1,338 million compared to $1,187 million as of December 31, 2017, a 13 percent increase year over year. -- Cash Flow: Cash flow from operations of $249 million, which included a cost of $16 million related to the acquisition of Dome9, compared to $248 million in the fourth quarter of 2017. -- Cash Balances, Marketable Securities and Short Term Deposits:$4,039 million as of December 31, 2018, compared to $3,848 million as of December 31, 2017. -- Share Repurchase Program:During the fourth quarter of 2018, we purchased approximately 2.8 million shares at a total cost of approximately $305 million.

Financial Highlights for the Year Ended December 31, 2018:

-- Total Revenues: $1,916 million compared to $1,855 million in 2017, a 3 percent increase year over year. -- GAAP Operating Income:$914 million compared to $924 million in 2017, representing 48 percent and 50 percent of revenues in 2018 and 2017, respectively. -- Non-GAAP Operating Income: $1,015 million compared to $1,024 million in 2017, representing 53 percent and 55 percent of revenues in 2018 and 2017, respectively. -- GAAP Taxes on Income: $158 million compared to $168 million in 2017. -- GAAP Net Income and Earnings per Diluted Share:GAAP net income was $821 million compared to $803 million in 2017. GAAP earnings per diluted share were $5.15 compared to $4.82 in 2017, a 7 percent increase year over year. -- Non-GAAP Net Income and Earnings per Diluted Share: Non-GAAP net income was $911 million compared to $888 million in 2017. Non-GAAP earnings per diluted share were $5.71 compared to $5.33 in 2017, a 7 percent increase year over year. -- Cash Flow:Cash flow from operations of $1,130 million compared to $1,090 million in 2017. -- Share Repurchase Program:During 2018, we purchased approximately 10.3 million shares at a total cost of approximately $1,104 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:Maestro Network Security Solution: Check Point Maestro is a revolutionary new architecture that enables businesses of any size to enjoy the power of flexible cloud-level security platforms, and to seamlessly expand their existing security gateways to hyperscale capacity. Maestro enables a single gateway to expand to the capacity and performance of 52 gateways in minutes, giving companies elasticity and enabling massive Terabit/second firewall throughput.

6000 Series Gateways: The new 6500 and 6800 security appliances set new standards of protection against advanced fifth-generation threats, while offering superior performance. The 6500 and 6800 gateways deliver the power to inspect SSL-encrypted network traffic without compromising on performance or uptime. The 6500 provides 20Gbps raw firewall bandwidth, and 3.4Gbps of threat prevention output. The 6800 provides 42Gbps raw firewall bandwidth and 9Gbps threat prevention output.

SandBlast for Education: Purpose-built content control and cybersecurity solution for school-provided devices. This solution protects Classrooms from Cybercriminals and Online Bullying and provides high levels of security for schools using Google Chromebooks.

Check Point Named a Leader in IDC MarketScape Report on Mobile Threat Management: SandBlast Mobile addresses rapidly evolving mobile security threats to enterprise data on devices. It is the second-consecutive year Check Point was named a leader in this category with its SandBlast Mobile security solution.

We continued our focus on cloud security through innovation and acquisitions including:

Dome9 Acquisition: The acquisition enhances Check Point’s fully consolidated Infinity architecture and its CloudGuard security offering with advanced active policy enforcement and multi-cloud protection capabilities.

ForceNock Acquisition: A web application and API protection startup acquisition that will strengthen Check Point offerings and capabilities with advanced machine learning protection.

General Availability for CloudGuard SaaS: CloudGuard SaaS is designed to protect enterprises that use SaaS applications and cloud-based email to prevent targeted attacks intended to steal sensitive data. CloudGuard SaaS provides protection against zero-days and phishing attacks, as well as employee account takeovers. Additionally, it can discover unsanctioned use of SaaS applications and prevent data leakage, while providing instant threat visibility.

CloudGuard integrates with AWS Security Hub: This integration, together with the addition of Dome9 to the CloudGuard portfolio, allows enterprises to access multi-layered security and continuous compliance capabilities from the central console of AWS Security Hub.

Check Point Research https://research.checkpoint.com uncovered numerous findings that included Fortnite, Adobe PDF Reader and DJI Drones. We also published new findings about malware families including multiple types of Ransomware, malware on computers and mobile devices.

Vulnerabilities in Applications & Infrastructure:

DJI Drone Vulnerabilities: Check Point Research discovered a vulnerability in the cloud infrastructure of the world’s leading drone manufacturer, DJI. If exploited, it could grant an attacker access to a user’s DJI account without the user being aware of it and provide access to the victim’s flight logs, photos and videos taken during a flight, GPS locations and flight paths, a live camera view and information connected to the user’s account including profile information.

Hacking Fortnite: Check Point Research discovered multiple vulnerabilities in Epic Games’ online platform that could have allowed hackers to take over accounts, view personal account information, purchase Fortnite’s virtual in-game currency and eavesdrop on and record players’ in-game chatter and background home conversations.

50 Adobe Vulnerabilities in 50 Days: Check Point Research discovered 50 vulnerabilities in Adobe Reader in 50 days. Over time, we would expect to see less vulnerabilities. However, the number of vulnerabilities discovered is increasing year on year.

Ransomware Research:

Dr. Shifro Ransomware: Check Point Research reveals how a Russian company, named ‘Dr. Shifro’, claims to legitimately provide file decryption services to ransomware victims, though in fact merely pays the ransomware’s author themselves and passes on the cost to the victim – at a massive profit margin.

New Strain of Olympic Destroyer: Check Point Research noticed new activity from Hades, the APT group behind the infamous Olympic Destroyer attack that disrupted the 2018 Winter Olympics.

New Ramnit Campaign: Check Point Research discovered a new Ramnit campaign emerged in the wild, distributing malware used mainly for stealing sensitive data via web-injects.

Zooming in on Domestic Kitten: Check Point researchers reveal an extensive and targeted attack that has been taking place since 2016 using mobile applications. The attack uses fake decoy content to entice their victims to download malicious applications, which are in fact loaded with spyware, to collect sensitive information about them.

Emergence of New Azorult: Check Point Research spotted a new version of Azorult in the wild being delivered through the RIG exploit kit, as well as other sources. Azorult is a long known information stealer and malware downloader.

Godzilla Loader: Research into the Godzilla ‘downloader’, or ‘dropper’, highlighted how this malware is being developed on the Dark Web in real time and how it operates on the victim’s machine.

Conference Call and Webcast Information Check Point will host a conference call with the investment community on January 30, 2019, at 8:30 AM EST/5:30 AM PST. To listen to the live webcast or replay, please visit the website www.checkpoint.com/ir.

First Quarter 2019 Investor Conference Participation Schedule:

-- Goldman Sachs Technology & Internet Conference 2019 February 12, 2019 – San Francisco, CA -- Morgan Stanley 2019 Media, Telecommunications & Technology Conference February 27, 2019 – San Francisco, CA -- Susquehanna 8th Annual Semi & Technology Conference March 12, 2019 – New York, NY -- Piper Jaffray Security Symposium March 14, 2019 – Chicago, IL

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

About Check Point Software Technologies Ltd.Check Point Software Technologies Ltd. ( www.checkpoint.com ) is a leading provider of cyber security solutions to governments and corporate enterprises globally. Its solutions protect customers from cyber-attacks with an industry leading catch rate of malware, ransomware and other types of attacks. Check Point offers a multilevel security architecture that defends enterprises’ cloud, network and mobile device held information, plus the most comprehensive and intuitive one point of control security management system. Check Point protects over 100,000 organizations of all sizes.

©2019 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 statements generally 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, customer and market acceptance of our products and solutions, and our participation in investor conferences during the first quarter of 2019. 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 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 27, 2018. The forward-looking statements in this press release are based 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 Information In 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 or include certain items. Check Point’s management believes the non-GAAP financial information provided in this release is useful to investors’ understanding and assessment of Check Point’s 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 the 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 (In thousands, except per share amounts) Three Months Ended Year Ended -------------------- ------------------------ December 31, December 31, -------------------- ------------------------ 2018 2017 2018 2017 --------- --------- ----------- ----------- (unaudited (unaudited (unaudited) (audited) ) ) Revenues: Products and licenses $ 160,622 $ 165,709 $ 525,557 $ 559,026 Security subscriptions 146,642 130,013 542,323 480,352 - ------- - ------- - --------- - --------- Total revenues from products and security subscriptions 307,264 295,722 1,067,880 1,039,378 Software updates and maintenance 218,292 210,286 848,595 815,280 - ------- - ------- - --------- - --------- Total revenues 525,556 506,008 1,916,475 1,854,658 - ------- - ------- - --------- - --------- Operating expenses: Cost of products and licenses 29,293 29,743 91,949 104,210 Cost of security subscriptions 5,624 5,616 17,725 18,869 - ------- - ------- - --------- - --------- Total cost of products and security subscriptions 34,917 35,359 109,674 123,079 Cost of Software updates and maintenance 23,228 22,534 88,894 87,700 Amortization of technology 1,173 546 2,811 2,184 - ------- - ------- - --------- - --------- Total cost of revenues 59,318 58,439 201,379 212,963 Research and development 57,340 50,704 211,523 192,386 Selling and marketing 132,461 106,596 500,854 433,427 General and administrative 26,152 23,758 88,945 91,965 - ------- Total operating expenses 275,271 239,497 1,002,701 930,741 - ------- - ------- - --------- - --------- Operating income 250,285 266,511 913,774 923,917 Financial income, net 16,557 13,127 65,066 47,029 - ------- - ------- - --------- - --------- Income before taxes on income 266,842 279,638 978,840 970,946 Taxes on income 28,593 40,330 157,535 168,023 Net income $ 238,249 $ 239,308 $ 821,305 $ 802,923 - ------- - ------- - --------- - --------- Basic earnings per share $ 1.53 $ 1.49 $ 5.24 $ 4.93 - ------- - ------- - --------- - --------- Number of shares used in computing basic earnings per share 155,445 160,398 156,632 162,720 - ------- - ------- - --------- - --------- Diluted earnings per share $ 1.51 $ 1.46 $ 5.15 $ 4.82 - ------- - ------- - --------- - --------- Number of shares used in computing diluted earnings per share 157,389 164,334 159,447 166,662 - ------- - ------- - --------- - ---------

CHECK POINT SOFTWARE TECHNOLOGIES LTD. SELECTED FINANCIAL METRICS (In thousands, except per share amounts) Three Months Ended Year Ended -------------------- ------------------------ December 31, December 31, -------------------- ------------------------ 2018 2017 2018 2017 --------- --------- ----------- ----------- (unaudited (unaudited (unaudited) (unaudited) ) ) Revenues $ 525,556 $ 506,008 $ 1,916,475 $ 1,854,658 Non-GAAP operating income 279,141 292,129 1,015,012 1,024,412 Non-GAAP net income 263,702 259,224 911,047 888,027 Diluted Non-GAAP Earnings per share $ 1.68 $ 1.58 $ 5.71 $ 5.33 Number of shares used in computing diluted Non-GAAP earnings 157,389 164,334 159,447 166,662 per share

CHECK POINT SOFTWARE TECHNOLOGIES LTD. RECONCILIATION OF GAAP TO NON GAAP FINANCIAL INFORMATION (In thousands, except per share amounts) Three Months Ended Year Ended ------------------------ ---------------------------- December 31, December 31, ------------------------ ---------------------------- 2018 2017 2018 2017 - ------- - - ------- - - --------- - - --------- - (unaudited) (unaudited) (unaudited) (unaudited) GAAP operating income $ 250,285 $ 266,511 $ 913,774 $ 923,917 Stock-based compensation (1) 24,875 22,359 89,326 87,459 Amortization of intangible assets and acquisition 3,981 3,259 11,912 13,036 related expenses (2) Non-GAAP operating income $ 279,141 $ 292,129 $ 1,015,012 $ 1,024,412 - ------- - - ------- - - --------- - - --------- - GAAP net income $ 238,249 $ 239,308 $ 821,305 $ 802,923 Stock-based compensation (1) 24,875 22,359 89,326 87,459 Amortization of intangible assets and acquisition 3,981 3,259 11,912 13,036 related expenses (2) Taxes on the above items (3) (3,403 ) (5,702 ) (11,496 ) (15,391 ) - ------- - - ------- - - --------- - - --------- - Non-GAAP net income $ 263,702 $ 259,224 $ 911,047 $ 888,027 - ------- - - ------- - - --------- - - --------- - Diluted GAAP Earnings per share $ 1.51 1.46 $ 5.15 4.82 Stock-based compensation (1) 0.16 0.13 0.56 0.52 Amortization of intangible assets and acquisition 0.03 0.02 0.07 0.08 related expenses (2) Taxes on the above items (3) (0.02 ) (0.03 ) (0.07 ) (0.09 ) - ------- - - ------- - - --------- - - --------- - Diluted Non-GAAP Earnings per share $ 1.68 $ 1.58 $ 5.71 $ 5.33 - ------- - - ------- - - --------- - - --------- - Number of shares used in computing diluted Non-GAAP 157,389 164,334 159,447 166,662 earnings per share - ------- - - ------- - - --------- - - --------- - (1) Stock-based compensation: Cost of products and licenses $ 27 $ 38 $ 144 $ 115 Cost of software updates and maintenance 943 694 3,401 2,626 Research and development 4,655 4,252 17,644 16,233 Selling and marketing 5,883 4,836 20,800 18,278 General and administrative 13,367 12,539 47,337 50,207 - ------- - - ------- - - --------- - - --------- - 24,875 22,359 89,326 87,459 - ------- - - ------- - - --------- - - --------- - (2) Amortization of intangible assets and acquisition related expenses: Amortization of technology-cost of revenues 1,173 546 2,811 2,184 Research and development 1,992 1,897 5,837 7,588 Selling and marketing 816 816 3,264 3,264 3,981 3,259 11,912 13,036 (3) Taxes on the above items (3,403 ) (5,702 ) (11,496 ) (15,391 ) - ------- - - ------- - - --------- - - --------- - Total, net $ 25,453 $ 19,916 $ 89,742 $ 85,104 - ------- - - ------- - - --------- - - --------- -

CHECK POINT SOFTWARE TECHNOLOGIES LTD. CONDENSED CONSOLIDATED BALANCE SHEET DATA (In thousands) ASSETS December December 31, 31, 2018 2017 ----------- ----------- (unaudited) (audited) Current assets: Cash and cash equivalents $ 303,627 $ 245,014 Marketable securities and short-term deposits 1,448,152 1,165,716 Trade receivables, net 495,390 472,223 Prepaid expenses and other current assets 74,738 81,478 - --------- - --------- Total current assets 2,321,907 1,964,431 - --------- - --------- Long-term assets: Marketable securities 2,287,345 2,437,315 Property and equipment, net 78,514 77,767 Deferred tax asset, net 84,688 119,431 Goodwill and other intangible assets, net 991,539 830,407 Other assets 64,220 33,575 - --------- - --------- Total long-term assets 3,506,306 3,498,495 - --------- - --------- Total assets $ 5,828,213 $ 5,462,926 - --------- - ---------

LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Deferred revenues $ 980,175 $ 878,287 Trade payables and other accrued liabilities 351,695 328,638 - ---------- - - ---------- - Total current liabilities 1,331,870 1,206,925 - ---------- - - ---------- - Long-term liabilities: Long-term deferred revenues 357,779 308,286 Income tax accrual 356,750 337,453 Accrued severance pay 9,425 10,139 - ---------- - - ---------- - 723,954 655,878 - ---------- - - ---------- - Total liabilities 2,055,824 1,862,803 - ---------- - - ---------- - Shareholders’ equity: Share capital 774 774 Additional paid-in capital 1,597,800 1,305,130 Treasury shares at cost (6,844,702 ) (5,893,182 ) Accumulated other comprehensive loss (24,497 ) (15,634 ) Retained earnings 9,043,014 8,203,035 - ---------- - - ---------- - Total shareholders’ equity 3,772,389 3,600,123 - ---------- - - ---------- - Total liabilities and shareholders’ equity $ 5,828,213 $ 5,462,926 - ---------- - - ---------- - Total cash and cash equivalents, marketable securities and short-term $ 4,039,124 $ 3,848,045 deposits - ---------- - - ---------- -

CHECK POINT SOFTWARE TECHNOLOGIES LTD. SELECTED CONSOLIDATED CASH FLOW DATA (In thousands) Three Months Ended Year Ended ---------------------------- ----------------------------- December 31, December 31, ---------------------------- ----------------------------- 2018 2017 2018 2017 - --------- - - --------- - - ---------- - - --------- - (unaudited) (unaudited) (unaudited) (unaudited) Cash flow from operating activities: Net income $ 238,249 $ 239,308 $ 821,305 $ 802,923 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of property and equipment 4,097 3,586 16,402 12,876 Amortization of intangible assets 1,566 940 4,386 3,760 Stock-based compensation 24,875 22,359 89,326 87,459 Realized loss on marketable securities 1,477 4 1,803 176 Decrease in trade and other receivables, net (215,293 ) (185,036 ) (20,401 ) 11,899 Increase in deferred revenues, trade payables and 158,587 130,781 174,511 105,875 other accrued liabilities Deferred income taxes, net 35,562 36,124 42,753 64,630 - --------- - - --------- - - ---------- - - --------- - Net cash provided by operating activities 249,120 248,066 1,130,085 1,089,598 - --------- - - --------- - - ---------- - - --------- - Cash flow from investing activities: Cash paid in conjunction with acquisition, net of (154,902 ) - (154,902 ) - acquired cash Investment in property and equipment (4,033 ) (6,297 ) (17,149 ) (28,784 ) - --------- - - --------- - - ---------- - - --------- - Net cash used in investing activities (158,935 ) (6,297 ) (172,051 ) (28,784 ) - --------- - - --------- - - ---------- - - --------- - Cash flow from financing activities: Proceeds from issuance of shares upon exercise of 171,129 7,488 353,499 127,518 options Purchase of treasury shares (304,926 ) (249,704 ) (1,103,865 ) (995,322 ) Payments related to shares withheld for taxes (307 ) (561 ) (4,624 ) (5,397 ) - --------- - - --------- - - ---------- - - --------- - Net cash used in financing activities (134,104 ) (242,777 ) (754,990 ) (873,201 ) - --------- - - --------- - - ---------- - - --------- - Unrealized gain (loss) on marketable securities, 11,273 (15,546 ) (11,965 ) (8,592 ) net - --------- - - --------- - - ---------- - - --------- - Increase (decrease) in cash and cash equivalents, (32,646 ) (16,554 ) 191,079 179,021 marketable securities and short term deposits Cash and cash equivalents, marketable securities and short term deposits at the beginning of the 4,071,770 3,864,599 3,848,045 3,669,024 period - --------- - - --------- - - ---------- - - --------- - Cash and cash equivalents, marketable securities $ 4,039,124 $ 3,848,045 $ 4,039,124 $ 3,848,045 and short term deposits at the end of the period - --------- - - --------- - - ---------- - - --------- -

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

AP RADIO
Update hourly