Network security company Check Point Software Technologies Ltd. (NASDAQ:CHKP) had a decent fourth-quarter performance, but it wasn't blemish-free and management still has execution issues to overcome in the Americas region. Let's take a look at the earnings update investors got this week.

Check Point fourth-quarter earnings: The raw numbers

Starting with the headline numbers:

  • Revenue of $506 million came in at the midpoint of guidance.
  • Non-GAAP EPS of $1.58 exceeded the guidance range of $1.45 to $1.55.
  • Non-GAAP operating income of $292 million represented an increase of 9.7% from the same period last year.
Illustration with names of infamous malware attacks

Image source: Getty Images.

What happened in the quarter?

Revenue growth of just 4% in the quarter represented the lowest quarterly growth rate since 2013. This was also the second quarter in a row that products and licenses revenue decreased. Additionally, it was also the second quarter running in which Americas revenue declined. It's possible that all three are related -- here's why.

Check Point growth by revenue stream

Data source: Check Point Software Technologies Ltd.

What's going on with Check Point in the U.S.?

While it's true Check Point's revenue has been shifting toward security subscriptions, if you add revenue from products and licenses [P&L] to security subscriptions and compare it with the same quarter last year, the increase is just 2.8%. It was a point made by Piper Jaffray analyst Andrew Nowinski on the earnings call. CFO Tal Payne replied that "America was weaker so as a result that's the 3% that you see in the P&L."

The reason for the weakness in the U.S.? It's a continuation of what CEO Gil Shwed called "execution challenges" on the third-quarter earnings call. In a nutshell, Check Point has been making substantial changes to its sales organization and strategy in the U.S. "The changes we have implemented in the field didn't bear fruits yet and as noted before it will take a few quarters to ramp up the level of productivity and results as we expect," Payne said in the conference call this week.

Check Point's sales and marketing 

As one of the established industry leaders, Check Point has long been known for having technological expertise, but the security market is highly competitive, with fast-growing companies like Palo Alto Networks and Fortinet trying to grab market share

That's why Check Point decided to step up sales and marketing efforts by rearranging the sales force. Given the industry-leading margins and more than $1 billion in free cash flow, the company has the financial firepower to make these changes, but clearly, they are taking time to come to fruition.