Check Point profit tops estimates but 2020 outlook withdrawn on virus uncertainty

TEL AVIV (Reuters) - Check Point Software Technologies CHKP.O reported a forecast-beating rise in quarterly net profit on Monday, boosted by higher demand for network security as more people work remotely during the coronavirus outbreak.

FILE PHOTO: The logo of network security provider Check Point Software Technologies Ltd is seen at their headquarters in Tel Aviv, Israel August 14, 2016. REUTERS/Baz Ratner

But the company withdrew its full-year forecast issued in February and said that for the first time it would not provide an outlook for the upcoming quarter.

Chief Executive Gil Shwed said the level of certainty around future business was low as customers do not know how they will be affected by the changing environment around the pandemic.

Subscriptions account for more than 75% of revenue, with most of that already booked for the second quarter, while expenses are steady.

“April seems like a good month so far,” Shwed told reporters during a Zoom video conference. “The signs are good but the scenarios are great about what can happen in the world.”

Israel-based Check Point earned $1.42 per diluted share excluding one-time items in the first quarter, up from $1.32 a year earlier. Revenue grew 3% to $486 million.

It was forecast to earn $1.38 a share on revenue of $480.4 million, according to I/B/E/S data from Refinitiv.

Cybersecurity tops the information technology priority list to protect a remote workforce and Check Point “is front and centre on this trend”, said Daniel Ives, managing director of equity research at Wedbush Securities.

“The company withdrawing guidance is not a surprise as it’s essentially playing blindfolded darts given the uncertain backdrop,” he said.

Shwed said one customer, a global courier, had seen the number of remote access users surge to 80,000 from the normal 8,000 with much of the world under some form of lockdown.

Check Point said there had been a “dramatic rise” in cyber attacks with an average of more than 14,000 related to the pandemic occurring each day and a daily peak of 20,000 in April, including malicious domains with coronavirus-related names. The company’s researchers found 16 malicious mobile apps masquerading as legitimate coronavirus apps.

Productivity had risen despite Check Point having 94% of its workforce in Israel and 99% internationally working from home by March 31, Shwed said, although 14% of local workers are now in the office.

The company has also had to contend with a lack of components in the supply chain and the closure of some logistics centres.

Shwed could not say how many employees would continue working remotely once restrictions were lifted.

“We will see what we can learn from this,” Shwed said. While it is now much easier to hold virtual meetings, he added: “Not everything will remain with us.”

Check Point bought back 3 million shares in the quarter worth $325 million as part of its share repurchase programme.

Editing by Kirsten Donovan