Check Point Software cuts 2018 revenue, profit forecast

TEL AVIV (Reuters) - Network security provider Check Point Software Technologies CHKP.O cut its revenue and profit forecasts for 2018, despite just beating earnings estimates in the first quarter, saying it was taking longer to close deals for a new key product.

Israel-based Check Point on Wednesday forecast 2018 earnings per share (EPS) excluding one-time items of $5.45-$5.75 on revenue of $1.85-$1.93 billion.

In late January, it had forecast adjusted EPS of $5.50-$5.90 on revenue of $1.9-$2.0 billion, while analysts on average were estimating EPS of $5.73 on revenue of $1.948 billion, according to Thomson Reuters I/B/E/S.

Check Point’s shares were down 7 percent at $95.75 in early Nasdaq trade.

“We see all kinds of changes in our business and some are affecting our forecast,” Chief Executive Officer Gil Shwed told a news conference.

“Overall sales are softer than what I would like to see,” he said, but added he did not believe the company was losing out to competitors.

Check Point has been moving more of its revenue to subscriptions, which now account for about 70 percent of revenue, but these subscriptions boost deferred revenue at the expense of current revenue.

In addition, the company has made changes in its sales organization in the United States, in part to help market its new product, Infinity Total Protection, a unified platform for network, cloud and mobile security, which is also sold on a subscription basis. Infinity was launched last quarter.

“We see opportunities in Infinity but sometimes these deals take a lot more time,” Shwed said. “Each deal is a few million dollars but is spread out over a few years.”

Check Point earned $1.30 per diluted share excluding one-time items in the first quarter, up from $1.20 a year earlier. Revenue grew 4 percent to $452 million.

It was forecast to earn $1.28 a share on revenue of $452 million, according to Thomson Reuters I/B/E/S.

“The global cyber threat landscape is becoming increasingly sophisticated. Attacks are now in their 5th generation, while 97 percent of enterprises are not prepared for these attacks and remain primarily focused on protections for 2nd or 3rd generation attacks,” Shwed said.

For the second quarter, Check Point forecast revenue of $445-$475 million and adjusted EPS of $1.25-$1.35. Analysts estimate revenue of $476 million and adjusted EPS of $1.35.

Reporting by Tova Cohen; Editing by Steven Scheer and Mark Potter