Cloud Security, Managed Detection and Response (MDR), Network Detection and Response
New ‘rockets’ aim to expand cloud security, email security and MDR businesses
Michael Novinson (Michael Novinson) •
April 27, 2022
Check Point is aggressively expanding its sales force and building “rockets” focused on three emerging technology areas to land more contracts with customers outside of network security.
The San Carlos, Calif.-based platform security provider plans to combine a 25% increase in its sales force with dedicated investments in cloud security, email security and security. managed detection and response to win new customers and increase wallet share with existing customers, according to Founder and CEO Gil Shwed. Shwed says Check Point needs to be “much more aggressive” in pursuing business opportunities.
“One of the things that holds us back is that we have very loyal customers. They love us. They stay with us,” Shwed told investors Wednesday. “But they only work with us on the firewall side, on the network security side, and we have to work really hard to get high in the organization and get into other projects in other areas.”
Check Point announced in February that it would bring developers, sales and marketing staff closer together in three key areas to become more agile and accelerate investment and growth. The first and biggest rocket is Check Point’s CloudGuard business, which builds on five acquisitions the company has made in recent years and already has hundreds of employees and more than $100 million in sales.
The midsize rocket is focused on Harmony Email and leverages the company’s acquisition of email security startup Avanan for $234 million in August 2021, Shwed said. And the smaller rocket focuses on Check Point’s fledgling MDR business, which in February had just a few employees and no revenue. Shwed seeks to apply Check Point’s prevention-centric approach to MDR to thwart irregularities earlier (see: Checkpoint: 50,000 attempts to swap ransomware attack targets).
“I think these rockets are starting to work well,” Shwed says. “Hopefully we will see more results and better results later in the year from this.”
To serve Check Point’s long-time network security customers, the company launched the Quantum Lightspeed 250 firewall in January, which offers 250 gigabits per second performance. Check Point first used Nvidia’s ASIC chip in its Lightspeed product line, and in February Shwed called Nvidia “the most capable ASIC vendor in the world today.”
Check Point hasn’t shipped too many Lightspeed firewalls yet, but Shwed says the company has major customers who are very excited about it and already have a good pipeline of booked orders. The product line hasn’t had much of an impact on Check Point’s revenue to date, though Shwed says the traction for Lightspeed is mostly positive.
“We come into so many environments where our competitors were, we replace the competitor’s product, and we see that the product has been enabled with very, very basic rudimentary security capabilities,” Shwed says. “And when we start enabling more advanced security features, we find so many things that can be stopped.”
Check Point announced plans in February to increase the size of its sales force by 25%, and Shwed said Wednesday that the company is already halfway there and expects to meet its headcount target of two or three months here. Shwed expects the largest sales force to generate revenue in the second half of 2022 and give the company the capacity it needs for 2023.
Shwed says he was previously more focused on improving the productivity of individual salespeople, but now realizes this can be done in conjunction with increased investment in staff. The increased productivity and size of the workforce simultaneously leads to greater overall sales capability and provides a buffer in case one aspect doesn’t go as planned, he says.
“I learned that I wanted to invest more in the business, and maybe we could have done that in the past as well.”
Go-to-market investments include the hiring of former Oracle and Intel chief marketing officer Rupal Hollenbeck in March to lead global sales and marketing operations. Shwed says he tasked Hollenbeck with expanding Check Point’s partnership ecosystem and relationships, tightly integrating the sales and marketing departments, and expanding the company’s reach to more customers and customers. more segments.
“We were very impressed with Rupal,” says Shwed. “She has a very impressive record and clearly understands what it is to lead a large-scale organization.”
Check Point also continued to hire in other parts of the organization, including research and development, where Shwed says the company has already met its year-end hiring targets. Despite difficult hiring conditions, Check Point has been more successful than expected in onboarding top talent, which Shwed says has resulted in higher than expected expenses for the company.
“We hired too many people, but I think it was the right thing to do,” Shwed says. “We are building the right infrastructure.”
Subscription revenue grows by double digits
Check Point’s revenue jumped to $542.7 million in the quarter that ended March 31, up 6.9% from $507.6 million a year earlier. . This exceeded Seeking Alpha’s sales estimate of $535.3 million.
The company’s net income fell to $169.4 million, or $1.30 per diluted share, down 7.4% from $182.9 million, or $1.33 per diluted share , the previous year. On a non-GAAP basis, net income fell to $203.6 million, or $1.57 per diluted share, down 3.6% from $211.2 million, or 1, $54 per diluted share, last year. That beat Seeking Alpha’s non-GAAP earnings estimate of $1.55 per share.
Check Point’s stock is down $5.58 – 4.12% – at $129.93 per share early in the afternoon. The results were released before the market opened on Wednesday.
The company’s software updates and maintenance revenue grew to $225.2 million, up 1.9% from $220.9 million last year. Check Point’s security subscription revenue jumped to $201.6 million, up 13.6% from $177.4 million a year earlier. And the company’s product and licensing revenue soared to $115.9 million, up 6% from $109.3 million last year.
The Americas accounted for 43% of Check Point’s revenue in the first quarter, while Europe, the Middle East and Africa, or EMEA, generated 44% of revenue and Asia- Pacific was responsible for the remaining 13% of revenue, according to CFO and COO Tal Payne. She says Check Point was pleased with improved performance in the Americas as well as strong double-digit growth in new business bookings across all regions.
For the quarter ending June 30, Shwed says Check Point expects non-GAAP net income of $1.55 to $1.65 on earnings of between $545 million and $575 million.