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Check Point Reports Solid Q2 Results; Stock Price Drops 4.5%

Story Highlights

Check Point’s revenue and earnings for the second quarter exceeded expectations. However, declining operating metrics remain a concern.

Security software services provider Check Point Software Technologies Ltd. (NASDAQ: CHKP) reported better-than-expected results for the second quarter ended June 30, 2022. Both revenue and earnings surpassed the consensus estimates. However, the shares of the company declined 4.5% during the normal trading hours. This could be attributed to wider market concerns.

Revenue, Earnings Rise

Check Point’s revenue for the quarter came in at $571 million, up 9% from the previous year. Further, the figure topped the consensus estimate of $560 million. The year-over-year rise of 11.8% and 14.3% in revenues from Products and licenses, and Security subscriptions, respectively, drove the overall growth in revenues for the company.

The company reported earnings per share (EPS) of $1.64, which denotes a growth of 2% from the year-ago quarter. Moreover, the figure surpassed the consensus estimate of $1.61.

A Look at the Key Operating Metrics

Check Point reported an operating income of $249 million compared to $257 million in the year-ago quarter.

The company generated cash flow from operations of $212 million, down from $264 million in the second quarter of 2021.

Meanwhile, during the second quarter, Check Point repurchased roughly 2.6 million shares for a cost of about $325 million.

Management’s Commentary

CEO of Check Point, Gil Shwed said, “We are pleased with our second quarter results. Over the past quarter, cyber-attacks have increased by 32 percent while advanced attacks like ransomware have grown by 59 percent, underscoring why cyber-security is so critical to keep our world going. Our strategic vision of a consolidated prevention-first security architecture is more relevant than ever to combat today’s cyber challenges.”

Wall Street’s Take

Overall, the Wall Street community is cautiously optimistic about the stock with a Moderate Buy consensus rating based on five Buys, four Holds, and two Sells. The CHKP average price target of $139.27 implies the stock has upside potential of 17% from current levels. Shares have declined 5.5% over the past year.

Bloggers Are Optimistic

Overall, 92% of bloggers on TipRanks are bullish on Check Point, compared to the sector average of 65%.

Key Takeaways

Check Point’s results for the second quarter have been robust. Both revenue and earnings have clocked year-over-year growth even amid a tough economic environment. However, the company’s decline in some of the key operating metrics leaves a sour taste.

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