Check Point CEO Says Security Vendor Is Starting To See Benefits Of Shift To Subscription Services

Check Point Software Technologies is continuing its push toward a recurring revenue model with its software blades -- a push that CEO Gil Shwed said is starting to gain traction with customers.

"We are going in the right direction, in terms of moving more and more revenue into an annuity business," Shwed said on the Tel Aviv, Israel-based security company's first-quarter earnings call Wednesday.

Software blade subscriptions for the quarter were up more than 18 percent over the same period last year, to 88 million. That growth brings software blade subscriptions to more than 21 percent of the company's total revenue for the quarter, up from 19 percent in the same quarter last year, the remainder coming from products and licenses.

[Related: Check Point Software Technologies Revamps Entire Platform Under Single Management Console]

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"I think the blade strategy has been very successful for us. … I think we are doing very well," Shwed said. "All of that is new business and new technology and new annuities."

Total revenue for the quarter, which ended March 31, were $404 million, up 9 percent year over year. Net income for the quarter was $167 million, up nearly 4 percent from $161 million in the first quarter of last year.

CFO Tal Payne highlighted the launch of multiple new products in the quarter as a big driver for the company's revenue growth. Most recently, in January, Check Point launched its 15000 Series and 23000 Series appliances, which focus on providing advanced threat protection and platform security to data center and high-end enterprise clients.

Check Point has also recently launched new threat-prevention appliances for small businesses and branch offices, the 1400, 3000 and 5000 series, as well as a new security management platform called Check Point R80.

The new appliances are bundled with the company's next-generation threat-prevention capabilities, which Payne said have "great potential to increase customer security and renewals." Shwed said the products are currently seeing a "small percentage of adoption."

"I think, overall, I'm very happy with the strategy," he said. "The nice thing about the strategy is that it has evolved. Every year we bring new blades to the marketplace, and there's different opportunities to grow with these blades."

Check Point will continue to expand its portfolio in the coming months and years, Shwed said. In particular, he said, the company will look to expand into "nontraditional markets," including critical infrastructure security, the Internet of Things and national security.

"All of these areas present significant security challenges and opportunities," Shwed said.

These new launches present the opportunity for Check Point to engage with new customers, Shwed said, an area that is normally "outside our comfort zone." That push is a big focus for the security vendor going forward, Shwed said, with big investments in sales and marketing expected to continue as the company looks to add new customers and new projects.

"We will do more of that, but it takes time," Shwed said.

Check Point said it expects revenue for the second quarter to be between $405 million and $435 million. It said it expects Non-GAAP earnings per share between $1.02 and $1.09 per share. These numbers take into account that the launch of new products will affect buying patterns and changes in security spending overall that make the market difficult to predict, Shwed said.