Check Point CEO Gil Shwed: ‘It's Time To Reinvest In Our Partners’


Check Point CEO Gil Shwed has promised to invest in working better with the company's partners following the blockbuster hire of VMware channel superstar Frank Rauch.

The San Carlos, Calif.-based platform security giant historically relied on partners for its entire business, but over the past few years, Shwed said the company had taken more ownership over directing its own business. The company has done an amazing job with that, Shwed said, and now has the opportunity to couple the increased ownership with a reinvigorated channel.

"It's time to reinvest in our partners … and get a bigger leverage for our business," Shwed told Wall Street analysts during the company's earnings call.

[Related: Check Point Buys Cybersecurity Startup ForceNock To Boost API Protection]

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Check Point's sales investments include not only Rauch, who started in January as the company's global channel chief, Shwed said, but also last year's hire of Chief Customer Officer Dan Yerushalmi and the selection of a new leader for the company's Asian sales organization.

The company grew its headcount by 11 percent in 2018 as it looks to deliver sales coverage that covers more customers in more areas spanning more accounts, according to Shwed. But the company's sales investment is more focused around quality rather than quantity, Shwed said, particularly as it relates to driving new customer acquisition and talking directly with the C-suite in both new and existing accounts.

"There's a great level of interest in our approach and platform," Shwed said. "We're making great progress, but we have a ways to go to see the full impact of these changes."

Check Point plans to adopt some new approaches to its channel this year, which Shwed said will primarily be around working together and managing customer activity. The company also plans to invest this year in a new channel program, but Shwed doesn't expect the economic impact from the program to be felt until 2020.

From a sales compensation standpoint, Shwed said Check Point isn't planning to increase commissions but rather intends to use some of the money to incentivize actions such as going after new customers.

The company is most focused on driving change in the behavior of its own salespeople and the channel toward the beginning of the process so that they do the right thing and pursue new customers and C-level executives, according to Shwed.

Check Point's revenue for the quarter ended Dec. 31 climbed to $525.6 million, up 3.9 percent from $506 million. That beat Seeking Alpha's estimate of $517.6 million.

Net income for the quarter jumped to $238.2 million, or $1.51 per diluted share, down 0.4 percent from $239.3 million, or $1.46 per diluted share. On a non-GAAP basis, net income came in at $263.7 million, or $1.68 per diluted share, up 1.7 percent from $259.2 million, or $1.58 per diluted share, the year before. This edged out Seeking Alpha's projection of $1.63 per share.

For the full year, sales grew to $1.92 billion, up 3.3 percent from $1.85 billion the year before. Net income, meanwhile, improved to $821.3 million, or $5.15 per diluted share, up 2.3 percent from $802.9 million, or $4.82 per diluted share, a year earlier.

Check Point's stock climbed $0.31, or 0.28 percent, in trading midday Wednesday to $111.07 per share. Earnings were announced before the market opened Wednesday.

The company's software updates and maintenance sales in the fourth quarter jumped to $218.3 million, up 3.8 percent from $210.3 million last year. Most of Check Point's growth in the quarter was driven by security subscription revenue, with year-over-year sales growing to $146.6 million, up 12.8 percent from $130 million last year.

Check Point's product and licenses practice, meanwhile, saw sales tumble to $160.6 million, down 3.1 percent from $165.7 million the year prior.

The company reported 102 customer transactions worth more than $1 million in the quarter, said CFO and COO Tal Payne. From a geographic standpoint, Payne said 45 percent of Check Point's revenue came from the Americas, 39 percent came from Europe, and the remaining 16 percent came from Asia-Pacific, Japan, the Middle East and Africa.

For the coming year, Shwed said Check Point expects to deliver non-GAAP earnings of $5.85 to $6.25 per share on sales of $1.94 billion to $2.04 billion. Analysts had been projecting non-GAAP earnings of $6.05 per share in 2019 on revenue of $1.99 billion, according to Reuters.