Cybersplit: Check Point shares fall, Commvault rises on quarterly earnings

Check Point Software Technologies Ltd. and Commvault Systems Inc. both saw significant price moves in today’s trading, but in opposite directions, after reporting gains for the three months ended September 30.

Shares of Check Point, one of the largest cybersecurity companies in the world, fell by more than 13%. Commvault, which primarily sells data protection software, rose 24%. There is some overlap between the companies’ feature sets: both offer tools that help customers detect malicious files.

Disappointing growth

Check Point makes software that companies use to protect their cloud environments, on-premise servers and other assets against cyber attacks. It also offers a range of firewall appliances, the Quantum series. The products are used by more than 100,000 customers worldwide.

The company ended the third quarter ended September 30 with revenue of $635 million, up 7% from the same period a year earlier. However, that was not enough to meet the consensus estimate. Analysts polled by Zacks did expected the company records $635.4 million.

Check Point’s Harmony Email tool, which helps protect employee inboxes from phishing campaigns and other threats, outpaced the company as a whole with “double-digit” revenue increases year over year. The product exceeded $100 million in annualized recurring revenue for the first time in the third quarter. Check Point also reported double-digit growth at its Infinity Global Services unit, which provides cybersecurity-related professional services such as breach remediation.

The company ended the quarter with net income of $274 million. This equates to adjusted earnings of $2.25 per share, up 9% from the same period a year ago, matching the consensus estimate.

For the current quarter, Check Point forecasts adjusted earnings of $2.60 to $2.70 per share, on revenue between $675 million and $715 million.

Quarter that exceeds expectations

Commvault credits the gains during today’s trading session to the fact that both revenue and profit exceeded expectations last quarter. It sells software that companies use to backup and restore their files. It also provides tools for related tasks, such as verifying the reliability of an organization’s data recovery procedures.

The company generated $233 million in revenue in the second quarter, up 16.1% from last year. That amount is also 5.5% higher than the $221.05 million projected according to the Zacks Consensus Estimate.

Much of Commvault’s growth has been driven by its subscription business, including its software-as-a-service data protection tools and certain other products. The company’s revenue rose 37% to $134.04 million, above the $123 million forecast by analysts. Commvault says its subscription offering now has 10,500 customers, up from 8,300 a year earlier.

The company also provided an update on its SaaS products, which account for a significant portion of subscription revenue. Commvault says annualized recurring revenue from these products increased 64% year over year to $215 million. The SaaS segment’s net dollar retention rate, a metric that tracks how existing customers increase their spend over time, was 127%.

Commvault’s earnings also exceeded analyst expectations. The company generated net income of $37.6 million, which equates to 83 cents per share on an adjusted basis. The market expected 75 cents per share.

The company estimates it will end the current quarter with revenue of $243 million to $247 million, which would represent a 13% year-over-year increase at the midpoint. Full-year revenue is expected to be between $952 million and $957 million.

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