(Add forecast, CEO quotes)
By Tova Cohen
TEL AVIV, Feb 3 (Reuters) - Israel-based network security provider Check Point Software Technologies beat quarterly profit expectations on Monday as it saw an increase in subscriptions for its cloud products.
Chief Executive Gil Shwed told reporters that Check Point was in a transformation process, moving from a traditional product business into a subscription business model.
This switch over the past few years had hampered the pace of revenue growth as subscription sales are spread out over several years rather than in one-off payments for products.
In the fourth quarter of last year Check Point said it earned $2.02 per diluted share excluding one-off items, up from $1.68 a year earlier. Revenue grew 3% to $544 million.
Analysts had forecast it would earn $1.99 a share on revenue of $542.5 million, according to I/B/E/S data from Refinitiv.
"Over the last decade we introduced our security-as-a-service subscription model," Shwed said in a statement. "In 2019 subscription reached over $600 million in revenues and was driven by cloud, mobile and zero-day advanced threat prevention technologies."
Check Point said its total revenue rose 4% last year to $1.995 billion and it forecast 2020 revenue of $2.0 billion-$2.1 billion and adjusted EPS of $6.25 to $6.65. Analysts were estimating revenue of $2.07 bln and EPS of $6.44.
For the first quarter the company estimates revenue of $475 million-$495 million and EPS of $1.37-$1.43.
"Check Point is going through a number of model and execution changes with its focus now on the cloud and the 2020 outlook reflects this dynamic," said Daniel Ives, managing director of equity research at Wedbush Securities.
Check Point is seeking more acquisitions after making three small ones in 2019 and one in late 2018. Cloud security and threat prevention remain the company's main growth drivers.
Check Point said it bought back 2.9 million shares in the fourth quarter, worth $325 million, as part of its share repurchase programme and announced a $2 billion extension to the programme with authorisation to buy back up to $325 million each quarter. (Reporting by Tova Cohen, Editing by Steven Scheer/Susan Fenton)