Check Point CEO: We Need To Do More, Work More With Our Channel Partners

Check Point CEO Gil Shwed said the company can capture more opportunities by working better with large systems integrators that provide customers with a fully integrated approach to security.

Although plenty of growth potential exists for all levels of channel partners, Shwed said that SIs – and not just the local reseller – can help the San Carlos, Calif.-based enterprise security vendor address the need for full integration. Even though Check Point Software Technologies already fulfills and does all its business jointly with partners, Shwed said opportunities exist for further investment.

"Overall, we need to do more and work more with our partners to explore that opportunity and get to them," Shwed told Wall Street analysts Wednesday in discussing the security technology developer's 2018 first quarter financial results.

[RELATED: Check Point Pushes Subscription Package To Boost Partner Margins, Lower Costs For Clients]

Shwed also poured cold water on the potential for radical change in the endpoint security space, arguing that most customers would be extremely reluctant to uproot everything they're doing around the endpoint today.

"The impact that all of the network security companies can have on the endpoint is very, very limited," Shwed said. "It's very hard to replace a full endpoint suite."

The more robust greenfield for Check Point lies around augmenting clients' existing endpoint offerings with advanced technologies such as SandBlast and the company's browser extension capabilities, which Shwed said can check all of the downloads a user makes through a web browser.

And for organizations seeking more basic endpoint security features, Shwed said Check Point's anti-virus engine is much better than those offered by direct competitors in the network security space. From a differentiation standpoint, Shwed said Check Point is the only vendor with the necessary architecture in place to manage the holistic security ecosystem as a single unit.

Competitors typically lack Check Point's capabilities around mobile and cloud security, Shwed said, particularly as it relates to cloud-based SaaS applications. And while peers can take benchmarks around bits and pieces of their technology capabilities, Shwed said only Check Point delivers an overall message around full protection.

"None of our competitors do full prevention at this point," Shwed said. "To do first-time prevention is really unique to us."

Check Point's revenue in the first quarter ended March 31 climbed to $452.3 million, up 3.9 percent from $435.5 million the year prior. This was in line with Seeking Alpha's estimate.

Net income for the quarter jumped to $187.1 million, or $1.16 per diluted share, up 2.5 percent from $182.6 million, or $1.08 per diluted share, in the same quarter last year. On a non-GAAP basis, net income came in at $209.9 million, or $1.30 per share, up 4.2 percent from $201.5 million, or $1.20 per share, the year before. This edged out Seeking Alpha's projection of $1.28 per share.

Check Point's stock price fell $7.99 (7.76%) in trading Wednesday morning to $94.92 per share, which is the lowest the company's stock has traded since January 2017. Earnings were announced before the market opened Wednesday.

The company's software updates and maintenance sales in the fourth quarter jumped to $206.9 million, up 5 percent from $197 million last year. Most of Check Point's growth in the quarter was driven by security subscription revenue, with year-over-year sales climbing to $127.3 million, up 13.6 percent from $112.1 million last year.

Check Point's products and licenses practice, meanwhile, saw sales tumble to $118.2 million, down 6.5 percent from $126.3 million the year prior.

The company reported 44 customer transactions worth more than $1 million in the quarter, said CFO and COO Tal Payne, and that 71 percent of its transactions were worth more than $50,000. From a geographic standpoint, Payne said 47 percent of Check Point's revenue came from the Americas, 36 percent came from Europe, and the remaining 17 percent came from Asia-Pacific, Japan, the Middle East and Africa.

For the coming quarter, Shwed said Check Point expects to deliver non-GAAP earnings of $1.25 to $1.35 per share on sales of $445 million to $475 million. Analysts had been projecting non-GAAP earnings of $1.35 per share on revenue of $476.4 million, according to Seeking Alpha.