Check Point profit tops estimates but uncertainty clouds outlook

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

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

However, for a second consecutive quarter the Israel-based company said it would not provide an outlook for the next quarter, having already withdrawn the full-year forecast issued in February.

Despite a healthy business pipeline uncertainty is very high, Chief Executive Gil Shwed told a virtual news conference. He noted that many countries are suffering from a second wave of the virus and people are spending less, which will hurt businesses.

Check Point earned $1.58 per diluted share excluding one-time items in the second quarter, up from $1.38 a year earlier. Revenue grew 4% to $506 million.

Profit also benefited from lower expenses as travel and face-to-face sales meetings ground to a halt.

It was forecast to earn $1.44 a share on revenue of $488 million, according to I/B/E/S data from Refinitiv.

Shwed said it has been a long time since the company beat forecasts by such a large margin.

Its shares were up 5.7% at $131.50 in pre-market Nasdaq trade.

The COVID-19 pandemic has accelerated migration to cloud computing by many organisations and attacks have increased against networks managing critical infrastructure for energy, manufacturing, transportation and utilities, the company said.

While some high-tech companies have begun to lay off workers, Check Point increased its headcount in the past quarter and is not planning to let anyone go.

The company is also seeking acquisitions, though Shwed said that valuations for potential targets have not declined despite the crisis.

Check Point bought 3.1 million shares in the quarter, worth $325 million, as part of its share buyback programme.

Reporting by Tova Cohen; Editing by Steven Scheer and David Goodman