According to a recent Visiongain report, the global Cyber Security market is expected to generate $98.8 billion in revenues in 2018 driven by increasing cyber-attacks, coupled with the higher penetration of cloud, mobility, and bring-your-own-device (BYOD) trends. Tel Aviv, Israel-based, Check Point Software Technologies Ltd. (Nasdaq: CHKP) is seeing strong traction in the segment.

Check Point’s Financials

Founded in 1993 by Gil Shwed, Check Point was known to be the pioneer in the FireWall-1 and the Stateful inspection technology. Since its inception, the company’s products have helped secure its customers against Internet-based threats using an innovative Software Blade architecture that provides customizable, yet inexpensive, security solutions. Over the past fifteen years, Check Point has added several capabilities through acquisitions including the security appliance business from Nokia and the application database from FaceTime Communications. Today, its customer list spans various industries, organization sizes, and regions.

Check Point recently reported its second quarter results. Revenues for the quarter grew 2% to $467.8 million, ahead of the market’s forecast of $460.9 million. It reported earnings of $197.7 million or $1.24 per share. On an adjusted basis, it delivered an EPS of $1.37, which was also ahead of the market’s forecast of $1.31.

By segment, Security subscription revenues grew 12% to $132.1 million. Revenues from the products division fell 9% over the year to $125.7 million. Software updates and maintenance revenues increased 4% to $210 million.

Geographically, the Americas accounted for 48% of the quarter’s revenues, followed by Europe’s 36% share. Asia Pacific, Japan, and the Middle East and Africa accounted for the remaining 16%.

Among key metrics, the number of new customers who signed deals more than $1 million grew to 58 and customers who signed deals worth $50,000 and more accounted for 76% to the total order value.

For the current quarter, Check Point forecast revenues of $454-$474 million with an adjusted EPS of $1.30-$1.40. It expects to end the current year with revenues of $1.85-$1.93 billion and an EPS of $5.45-$5.75. The Street has forecast revenues of $466 million for the current quarter with an EPS of $1.36. It expects the company to end the year with revenues of $1.9 billion and an EPS of $5.67.

Check Point’s Competition

Competition is tough in the cybersecurity market and Check Point appears to be struggling to keep pace with this competition. According to a recent IDC research report, the worldwide security appliance market is dominated by Cisco, which accounted for 16.4% of the market in the first quarter of the year. Cisco’s position has remained unchanged over the year, but its market share has grown from 15.3% a year ago. Palo Alto Networks is the second largest player with 13.9% market share, compared with 12.8% share a year ago. Check Point meanwhile, saw its share reduce from 12.5% in the first quarter of 2017 to 11.5% in the first quarter of 2018. Palo Alto and Cisco are racing at a faster pace ahead of Check Point.

To address these concerns, Check Point recently entered into an agreement with BlackBerry Limited that will allow it to deliver joint go-to-market planning and selling of Check Point’s mobile threat defense solution called SandBlast Mobile, along with BlackBerry UEM and BlackBerry Dynamics. The agreement will help deliver streamlined customer experience and improve service delivery by allowing BlackBerry to resell and serve as a single point of contact for professional services and support.

Check Point is also addressing security concerns through product upgrades. It recently announced the launch of its new 23900 security gateway that will set a new standard of protection against fifth generation of cyber-attacks targeting enterprise and data center networks. Check Point 23000 family integrates comprehensive threat prevention with purpose-built hardware to deliver maximum security performance.

There are quite a few security players out there for organizations to choose from. I would like to understand from the users about the key parameters that they consider when they choose their security vendor. What makes them choose Check Point over others? What can Check Point do to gain more customers?

Check Point’s stock is currently trading at $114.34 with a market capitalization of $17.9 billion. It had touched a 52-week high of $120.81 earlier last month. It has recovered from the 52-week low of $93.76 that it had fallen to in May this year.