Why Cloud Growth Could Fuel a Revenue Turnaround for Check Point Software

Check Point Software Technologies (NASDAQ: CHKP) released uninspiring fourth-quarter results, and management expects low-single-digit revenue growth to continue in 2020. But the cybersecurity specialist's performance could improve in the medium term thanks to its cloud business.

According to a study from Mordor Intelligence, the cybersecurity market Check Point addresses is poised to grow 14.5% annually by 2025. In comparison, the company's recent results look much less exciting. During the fourth quarter, revenue increased by only 3.5% year over year to $543.8 million. And because its research and development and sales and marketing expenses grew faster than revenue, operating income even decreased by 0.4%. In addition, the outlook doesn't show any sign of acceleration: Based on the midpoint of guidance, management expects revenue to increase by 2.8% in 2020.

That growth rate looks even weaker when compared to some cloud-based security players. For instance, the endpoint security company CrowdStrike and the identity management specialist Okta grew their last-quarter revenue by 98% and 45%, respectively, compared to last year.

Source Fool.com