Q1 2020 Earnings Call
Welcome to check point software technologies first quarter 2020 financial results.
At this time, all participants I know with only mode question and answers that she will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero and their telephone keypad. Please note. This conference is being recorded I will now turn the conference over here Whos Kip Meintzer global head.
That's really shouldn't they can you maybe it.
Thank you sure I'd like to thank all of you for joining it stayed at Scott's checkpoints first quarter 2020 financial results joining me remotely today on the color Gil Shwed founder and CEO, along with our CFO and COO Scalping as a reminder, this call's webcast live on our website and as recorded for replay the access.
It's a live webcast a replay information please visit the company's website, a checkpoint dot com for your convenience. The conference call replay will be available through may 4th if you'd like to reach its after the call. Please contact investor relations bike email I'd get bad checkpoint Dot com before we begin with management's presentation I would like to highlight the following.
During the course of this presentation checkpoints representatives may make certain forward looking statement.
Forward looking statements within the meaning of section 27 day of the Securities Act of 1933 and section 21 of the Securities Exchange Act of 1934 include but are not limited to statements related to checkpoints expectations regarding business financial performance and customers the introduction of new products programs.
The success of those products and programs environment for security threats and trends in the market our strategy and focus areas demands for our solutions the impact of cobot 19 on our business, including on our product development sales and marketing efforts and on our financial condition or results of operation.
The impact of Cobot 19 on our customer suppliers and business partners and the macro economic environment as a whole because these statements pertain to future events. They are subject to risks or uncertainties actual results could differ materially from checkpoints current expectations and beliefs factors that could cause or contribute just.
Such differences are contained in checkpoints earnings press release issued on April 27, 2020, which is available on our website and other factors and risks, including those discussed and checkpoint annual report on form 20-F for the year ended December 31st 2019, which is on file with the Securities Exchange Commission.
Checkpoint assumes no obligation to update information concerning his expectations or beliefs, except as required by law in our press release, which has been posted on our website, we present GAAP and non-GAAP results along with a reconciliation of such results as well as the reasons for our presentation have non-GAAP information now I'd like to turn the call over to Tal Payne.
For a review of our financial results.
Thank you.
Good morning, and good afternoon, everyone joining us on the call today I.
I Hope you and your family stay healthy in doing this unprecedented guide.
During this period.
We always do isn't showing the health and safety with all the bars to either on the deal as we continue to serve our customers.
They get away elaborate on the call the 19 effects on different aspects of our business.
So that they came to operate Jonathan.
And provide updates to our guidance.
During the quarter, which is St elevated business activity levels and delivered results towards the upper house the ball Guy that.
Revenues for the quarter increased by 3% year over year.
$486 million an hour no doubt bps grew by 7% to $1.40 system.
[laughter] fold into the numbers, let me remind you that that would get financial results include stock based compensation charges.
They should have acquired intangible assets and acquisition related expenses as one of the related taxes.
Keep in mind is because of all non-GAAP information disasters, excluding these items.
Now, let's take a look at the financial highlights for the quarter.
[laughter] security subscription revenue was $269 million at five cents increase year over year.
If it fits your revenues continued to be strong with them for single year over year, reaching 259 million Dawn.
So it's amazing its revenues increased to $217 million.
Nothing one person golf year over year.
On the products I was born in pushing remote access VPN solution.
And he's getting up networks where needed.
Other hands full backs up continues to transition posh after the calculation, which I'm getting into subscription line I.
The reduction in the fall to fly these naturally driving you got worse support level.
I don't know what's your revenues is driven by our advanced solution may need cloud and sounds like zero base threat prevention.
It's indicative of an invasion solution also started to flowing to the revenues and show nice trends.
During the quarter, we hadn't syndication deals in variety of industries, including government.
Telecommunication and industrial.
We also sold both in our PR business most gallons anything you see annual run rate increased over 100% year over year.
Let's see where famous alone last week, we finished the launch of the new ones and security Gateway Sealy once a week, there's always someone that wants to deal with they perfection bundled by default.
Oh, the Blincyto bundles and next generation threat protection and you could be.
That's really the new package carries higher volume. According to a go through the fair value of software blade separated from that lies right.
And recognize over into service period.
As a result do you expect sister ships from product you have been used to defend revenues.
We'd be recognized over 12 months.
That means that depends on the pace of the transition and that's why it's mix and we have more color in the coming quarters.
[laughter] revenues as a wash the first once or twice they reached $1.349 billion a.
The growth of 36 million bonus or fleet was then all the March 31st 2019.
Hi, My name is conditioned by geography for the quarter was as follows 46%, although revenues gainful Americas, 43% of revenue came from Europe Middle East in Africa reserves.
The remaining 11% came from Asia Pacific.
This quarter, we had a strong execution in America and the girls games for most regions in the U.S.
We're still staying in financial services in the healthcare vertical.
Non-GAAP operating margin for the quarter with 48% compared to 50 cents last year.
Oh induction relates to be increased investments in our workforce and cloud infrastructure in the year over year comparison.
It wasn't as high as any plans as a result of the higher level of revenue.
And the nature state Mitchell saving relating to the new environments. For example from flat you know what you always cost and move to virtualize event.
Oh financial income this quarter, which $19 million.
Non interest income is expected to be slightly reduced during the remainder of the year as a result on interest rates in the way.
Effective non-GAAP tax rate. So the quota was 18% inline with expectations remember it can be 1% that wants to send down fluctuations.
Net income for the first quota of 10 to 2100 $79 million a $1.23 cents per diluted share.
Non-GAAP net income was $206 million or $1.42 cents per diluted share any precise 7% from the first quarter of 2019.
Cents above the midpoint of our guide.
Okay got it said as of March 31st in class $4 billion.
Now what are the strongest companies in the industry was significant cash balances and know that.
At all.
The company has exceptional about inches and we couldn't handle a very wide range of synergies in the future.
What's your what's your bar cashes invested in marketable securities.
Unrealized gain as of March 31st was $21 million.
Well, that's the Neil boiler marketable securities.
All right there at the minimal aim right.
We revealed the security that the fair value was no wasn't the book value and deemed to be temporary reduction hence no impairment was recorded only be.
Operating cash flow was $359 million.
Actually with some customers continues to be strong.
As a reminder, we had our body sheet against currency fluctuations the hedge effects, our cash flow with minimal effect on LP and then as intended.
During the quarter the dollar strengthened against the Israeli shekel, we've only resulting in a hedge costs of approximately $12 million.
On cash flow versus cash income of seven and a half million dollars last year.
Operating cash flow natural hedge effect is similar to last year.
On the margin, we expect to see some of our customers watching a disproportion economic impact.
I like it to be quite is constrained and are working with them to handle the famous density and show continued service to help our customers.
That's really.
It would have an effect on some of the second quarter catching up.
Yes, I believe we approved an extension of our buyback program for additional Colombia, and up to 325 $25 million per quarter.
During the quarter, we continued our buyback program in first a 3 million shares for $325 million full capacity at an average price of hundred intend on.
Now, let's turn the call all but two guilford he's gone.
Thank you Paul Im hopeful that we weren't joining us today.
Yeah listen I really appreciate your time and attention to be before you wouldn't begin to discuss the business I'd like to wish.
Well if you want your federally hopefully quick return to normal fuel freedom.
Well, let me start with my review of the quarter Gerard football.
Walter let it for me to almost every financial metrics despite being Charlotte.
The world's first for all the quarter because the here in our usual minner boxing old free major CPX were 60 customer and partner.
We have to record levels up there and that's a wrong I'm falls and people in order for location, that's cool New Orleans and Vietnam.
Oh, we must address what we're seeing great enthusiasm and we're seeing very hard right from the participants.
The mixture from began six is a hard to believe with only three months ago. We got good folder physically celebrating innovation and crawled into good.
Both the beyond the New Orleans convergence and Jerome always emergency hospitals for Cardinal Barbara station, just we illustrate how quickly the world has changed.
Before brosnan, Ginger and how we dealt with them.
Let me provide some color on the business this quarter I said [laughter] previously wonderful closed the quarter on quarter valuable.
It was almost every fundamental measure.
We saw some smoke signals into traditional into merger marching forward business or security appliances.
Walter.
So nice momentum in a workflow technology.
Despite the low bones in many parts of the world, we've seen and Dr. business environment. During the quarter, we had the wrong ones for some demand increased more technical services.
By customers peddling golfer infrastructure in preparation for increased network.
Customers accelerating the completion of a project like all the circumstances as well.
Gentlemen, good lingo remote talked with you.
We've been doing for many years.
Oh products work are you just saw with sevenfold increase in crop we can be very Oh, we do you have broad buckets, if they've been very for many organization for example, when I before bookstores before some told you to Corona borrows exposure remotely, Quebec burst through the whole Worby, we're able to mortgage corporation something that will never done before.
[music].
Well no major global corporations expendable, you remove docs that.
8000 Baby just like you falls end users in a nonrecurring people got hundreds, Turkey falls and use it or not too long.
Sure.
Well, maybe more examples like these across all industry financial services transportation industrial healthcare remote.
On the expense of global dishevelled.
In other cases, right before Colm, what they could be month month and licenses the customer older deal.
In terms of [laughter] bodes well for remote office solution. We can talk to absorb it is also recall them well for users compare different most of the remote DOCSIS I'd love to see.
But the other universities function from the truck wants to be an endpoint security came with Bell your score volume. They can go were strong digital for this quarter excuse if you were providing the highest level of security.
In the cloud space, we continue to see momentum almost doubling goldcorp works value from but there's much comparing to last year.
We're starting to see a most likely to deal with are based on the understanding of the mission critical nature of the cloud and to secure working with our called me Wonder.
We also customer wins, there, but we felt we added one of the world's largest retailers.
And one of the larger huh.
[laughter] Brent.
Overall, the very well during the Americas.
Keep in mind vote, the Corona viruses like less business and do you want to Miss Waldorf compared to all did you over.
Well, let me come from judge were business practices.
We're only box at the movie comes in a big worried the last Sunday March.
Now, let me show with your some of the changes we say inside your question.
Before I go back to talk about door to come all of them customers. If they loved them in the beginning we managed to conduct Dorothy next week the consequences, we Brooklyn attendance and complete the last won the first we call said worse, what do we want but no. We started to see a challenging environment. One that's kept changing every couple of the.
It doesn't supply church, all the good well when money factory isms enjoy malware supply chain, Doug had been some components are made in China.
Beginning.
February people can make sure came back from the lunar year became so far in some clothes fostering we started the dressing virtual why did the fresh start we've begun to pro doctoral forward you walked through much large small.
When we began to see look though.
Sure the more and more comfort.
In February this was primarily a shelf I mean, the beginning of March something opium companies started implements you could look though I feel the until February most of what we're marketing conferences and international business travel well still running pretty much as usual, but soon.
The first week of March at least it's pretty much smoke and we hope to withdraw so we're dropping live events accordingly.
Logistically told an interesting right. All these old we managed to keep or supply chain operating effectively and we continue to address.
The only comfort when she products to India Rox's was shut down.
Well there last few days over the quarter.
Meanwhile, you mean in mid March the rules in Israel bickering Freestor, we had to reduce the multiple I'm pleased with are allowed to problem to deal with.
I'm deal then our development quoted geared towards a technical services were all gone exclusively for all moral.
They rely on Lovebox system on site development environment in a short period of time, we built a new one borrow month, which would allow.
Remote.
Work for all these functions within a week, we moved almost in power goodies, they shouldn't worry most workplace.
For example, or technical assistance in Jersey license, they cotton about India are not operating remote and produce very high level.
Actually higher than normal.
Oh, thanks to the engagement and commitment of our employees.
We managed to get through March 31st you ended the quarter for your remote to me, but we're going for spiritualism bulk water, we won't see the tremendous volume afford or what's the process. Since you quickly before just all we're supposed to be most challenging getting for thing you don't worry story, Washington experience for all.
Getting back to our business before on the bars, the 70 Bucks a business in several countries puts you must be on par World said. This many times is right you'd be the slowing.
The major caused the decline this quarter, where do you carry Charlie.
I must say the door employees and partners in old country.
I don't think Rosebel softwood from departments have shown great level up engagement and continued to work in sports on where customers and partners who loved disappear.
Last week, we expended being FEMA Nicky Architexture. According to plan and launch them you brought.
Finicky, you only argued that the industry the deliveries and wants to do with you, we but you only for the architecture and prevention across the cloud mobile is important and are you feeling that.
We extended the largest scenario.
You touched on the complete new line up network security Gateway.
The quantum federal security appliances. The first will include the hardest live little secure would you prevent you from somebody on the books we've ever.
Provides higher levels of security by bundling goes, but you were big threat prevention technology.
Well just was actually pretty good docs and stop them immediately optical Baird. Your door, John you could you talk and let the my worry.
Our applies to the better performance it mostly schedule, but we have over Hyperscale technology and doing it and then even more energy efficient better.
Your plans, but those are the lower subscription rate can be the street and therefore, the lieberman lowered the open over competitors.
The quantum theorist includes 50 more though starting at the original branch offices at the wrong fog falls in Boulder and going all the way the highest them data center performance. That's can scale up to one minute hospira beats the maestro hyperscale.
My first security is one part of the business another important area. The CLO, we continue to see increase being broken our cloud solution.
These combined to go restricting the America makes me very pleased we will refer sweetener execution.
Now, let's take a look at the second quarter the remainder of the here.
Well she still remote work actually enabled me to me more partners employees over the last few weeks. The good news, but everyone is going to gauge kill me give them working hard to Delever business results.
All right when results were trending well so far.
You know southern we conducted it seems with security professionals realized increases we are working remotely and the additional Fred that's where we're facing just the results of the current environment.
Situation continues we would love to strengthens the security environment to mitigate both <unk> and to close burning a hole, but are introduced about.
Keep in mind, but the effect on the pandemic can be worse with limited in the first quarter. That's the big changes can be worse, only beginning the lux and Bazell smart.
Many projects were actually accelerated last well during like.
[noise], they're voting circumstances will impact all of us it's already evident in some industries like troponin will probably be but the Fox. That's most of the world is under a home look though.
Bumped to create changes in the de mob sector and the Macquarie Porno me.
The level of certainty we have best we'll be focusing on future business is very low.
That's a result.
I can share some of my assumption into the second quarter, but one provide formal projection.
And we take all revenue model over 75% before business is comprised of one would be settled out most of which is already in the rest depends on how the quadrupled since.
Since the majority of our business comes in the last month the quarter, it's hard to predict what will happen in the called me two month.
Whatever business, we freed looks would never seen before wherever it will stay stable or whatever it will accelerate from current levels.
On the expense side door spend more than is relatively stable, mostly depends on lower headcount, there's no significant change in our headcount or hiring obviously.
The range of the assumption is the revenue more they'll be why the probabilities, we find switch them all youre on though it depends by the way.
With our way way beyond our control all over the world.
Therefore, I cannot provide projections already but can be variable for the next water for the reminder.
So I believe it's when we pull differently.
Well, we're putting this but you should guidance for the year.
To summarize we managed to save for the quarter on a storm smokes me so far over the last decade would build to school based on for me with your revenues, which is more predictable combined with lower employees partners and our balance sheet is provide dog.
We more stability into the future customers actually it's probably more value for such funds.
I would like to Franco where customers partners and and employees for their continued support the vacation and you know vacancy or we remain committed to our long term strategy and expects to emerge from big challenge is stronger than before.
I'd like to central for joining us today, which you were getting hills and wish with our freedom, we used to all of US shortly I would like to open to cold for your Folsom questions. Thanks very much.
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Our first question is from Karl Keirstead with Deutsche Bank. Please proceed.
Oh. Thank you good morning, Guillen and talk congrats on helping checkpoint manage through this crisis as well as it sounds like you you have I wanted to just ask you about the decision not to provide guidance or it sounds like a the Q1 actually came in relatively in line, if not slightly better than that.
Good point.
Gil you mentioned that April results are actually trending relatively well so far so perhaps you could elaborate what it doesn't sound like Youre experiencing you know new deal push outs that some of your software peers are seeing so what do you worry could change.
Looking forward that reduces the visibility of things have actually tracks relatively well so far maybe you could just explain that for us. Thank you.
Thank you first I think I'm very pleased with we have the results it's got into first quarter, but let's remember that core wrong then got.
Had the big impacts the most of the world only you'd like in March I mean, most of the world on during the last few days March.
We did see some some deals in the last few days.
But to a point because people were moved to whole blocks evolved and things like that we've seen many offers by the way it's once more.
But I couldn't be I mean I have.
And the Mavinga almost two months no month into how when we went through this crisis, you'll see the commitment.
Everyone, who can go were partners, including customers, where we believe were customers were on their local bone in steel insisted on doing the business but.
If they said it happens only in the last thing real changes, especially in the World Cup and only in the last.
10 based to a week over the quarter when many of the orders were all good sign broke that and it wasn't met through the channel processing gets gifting. It was so we enjoy them.
I remember we started they really in a pretty good momentum if when you look over but optimistic haven't baked <unk> trending to say, it's a nice month, it's expected actually you've been a slight good one, but we're saying getting it but we're seeing good enviroment.
Constantly changing and the regulation.
The changes in everything that's happening concern everyday I got I don't want to give anyone idea, but they international shipping could change every day.
HM government.
Sure interesting, what's your loved what loved our changing every single day, but most important it's not just the external forces, which again are you.
Then probably the most posture and these are all sitting at home.
Oh, we're in higher.
Consumption model changes and went to Consumptions.
Aging they call nobody is bound to change wherever it will happen in may or June I don't know <unk>. Some of it will happen in May June for short wherever it will happen in almost all the October I also been no, but something we change people aren't changing where buying patterns.
Some companies are getting like we see at least here.
For the Big Roastery is they are doing very well, but most of the obvious sector. It's terrible invest we booked for to be doing so we saw.
No the clothing company in Q1, it's probably do them to fix much my big projects My IP procurement, but could you talk you free.
I will be in a completely different situation. When we did just went down by 60 70 or 80%.
I can't predict that I can tell you know from again I want to the more transparency of unusual your so so.
We're seeing.
We're seeing business.
I think alone in a pretty good pace.
If they said they didn't really appreciate both customers partners and employees for their hard work. We're all trying very very hard okay. Some some easy to keep business running but democracy corn will be forced to sell more that change and it will change where how you see it will have significant impact insignificant impact.
I don't know there that's the reason, but it's hard to provide guidance.
Before I get them, saying, that's X millions of dollars in these countries or industries, it's been very well be easier to quantify but.
But at this point, we really didn't really don't hold me taken were largest six don't know do more examples financial institution, where the during the quarter, we financial institution in Q1, I can't even gets walk between.
What do.
They make will have on the performance in investment them for you always do well financial institution in Q2 in Q3 somebody accelerate.
If you remember because they need more Ben we doing supporting people online some might say, but the environment changing so quickly. So we have to freeze all the future plans and stop all MONY Central project I, you know kind of warm wet and they I must tell you what we all the calls that they made due primarily to partner than partners exactly.
Pretty good day, because they see a very wide range of customers and that is not very close the procurement departments.
Oh I'm sorry.
I told what everybody's trying to movies, but where is the very very high level of uncertainty. So we hope to leave would be on certain do you have to be sport.
Got it okay. That's very clear an understandable. Thank you guillen and best of luck over the coming months.
Thank you very much.
Our next question is from Shaw ER with Oppenheimer. Please proceed.
Thank you hi, good afternoon, I feel good morning to kit two quick questions on money and.
Have you seen you just mentioned.
Partners and the fact, they provide you with it good color and people what's happening out there have you been indeed early park.
Probably a final two weeks, maybe even three weeks of Mark as things have Colbert 19 continues to unfold on began to unfold action have you seen a little bit Oh, Okay, then being from some of your customers.
Again the question, if we've seen some urgent, especially when our customers over spending down yeah, you know from VPN access product for some of the high end applying the ads as comp I mean are have been using a two way.
Oh, Okay. So from what work environment has been coupled with all of sudden coming with asking some accelerated spending.
Yep.
Yeah, I didnt get patterns on but well positive twox side, yes, like when she some customers with the purchase very quickly expended or even you victory and environments and again when I mentioned examples like moving from 8000 users where do you follow them users and scaling up to 150000 Bucks quota coverage.
Users every day, but do you do involve some spending an expansion them and volume good equipment right away in one case, we actually took equipment, which was a plan for another projects and use it for the VPN extension and hopefully they will buy more equipment for the all the soldier.
In some cases, we were really rushing equipment fostering shipping get even before we got the order. So we can help the customer get them find another phenomenal because we sold in many many customers is but they understood that something is changing in the world and things might happen. So I see managers that rough well just somebody simply.
Lets complete the probes before we'd be environments. We tried before we love hard time getting done were budget there before we would need to getting the quikticket manner. So some project excellence into force water.
On the sometime by the way we did the projects, but got delayed them got comfortable being the first Walter and I mentioned Q threes and like your.
Like are you totally.
Yeah, you, Okay, sorry, not where we did see in the six there on the business the business declined the business, which would <unk> deep into Iraq, and again would be for thought there one difference where you live but all relate to put the situation.
And so I got in the first quarter, we so.
You talked to the tour.
More business when you drop if you factor that were below overall like most of them, but we had the very first quarter, especially in the Americas went nowhere, saying between investing in the Americas very important the first quarter. It was the quarter, but we've been proud we are there any circumstances locally grown up in the Americas and the rest of the world.
It was the difference project.
Understood. Thank you said transparency told maybe.
It can you provide us with the a number of 70 could transaction checkpoint is had given the quarter.
So actually we would you didn't disclose it we said she wants to go the damage done to babysit materially metrics, but just to make you feel Boston goal that we get any sports 56 customer transactions over $1 million compared to 47 in between.
He already last year Q1.
Understood. Thank you for that a good luck stay healthy everyone.
Our next question is from Gregg Moskowitz with Mizuho. Please proceed.
[laughter]. Thank you very much and good afternoon Guillen Tal I guess my first question is I was wondering if there was any way to estimate the positive impact to Americas.
Revenue, where billings from the increase remote access requirement I, perhaps by looking at activity levels over that you know the last 10 days at the quarter and comparing that with what you saw a year ago, where if there was any way other way to want to parse that.
How do you have any specific numbers again overall I don't think he told me. He would you effect on the quarter because again, we also do deals before postpone the middle but were going down and again that used to one of the cases, there was a large deals the Beatles blend anyway, well planned for a number of yours, but you'll stick with them for BP and instead of course.
For a bumper purpose, if they want them. So I hope that we get.
They don't originals deal again, if again I'll guarantee that we spoke in its place, but it's not there yet you.
And I think overall the trend can be a married up with you. So wasn't the result of Corona cause results to.
Working hard with customers and partners and again, we're seeing what we're doing it for them.
It's nice to see what is bearing fruit and we're actually seeing some results.
Okay, that's out there and I always say.
I would tell I think Atlantic I started the quarter strongest finishes junk so each one of the across the quarter, we didn't see strength in Turkey calls like this financially savvy season, they helped get which might have some relation to syndicate 1009 day in day increase so their remote access something like.
Okay. That's very helpful. Thank you both for that and then just as a follow up I I did want to ask about the S. C ran space.
One of your competitors has a lot of momentum there and another one of your competitors. It's you know sugar has recently followed suit with an acquisition and I'd love to hear more Gil just kind of its a if you could sort of elaborate on why you are they partnering strategy of your willingness space a as opposed to perhaps coming after the market more more directly and then also.
If you can just talk about a you don't demand expectations for Frisky went going forward I think I'd be very helpful.
Okay. So first it doesn't really good subject and that's the one is a very.
Interesting area, we're looking into that like everyone else I'm following its for the last word for years.
Historically been the networking area I mean, that's working usually done that's working guy and people who are dedicated to bet are doing better and did usually they agree that means the problem with Lucas thing to two combined remote access or things like that we our security I mean.
Provides security for remote office.
To do the remote DOCSIS towards the clinic CV bio itself would never would be this route and again I'm talking about going 25 years back. If you look it's always VPN products. For example, there or started to roll 1990, fives I think.
And so we are so we have a lot of experiencing that the industry, we never replaced equipment or hardware from the big networking give indoors and that's why we see and by the way specifically on the one for all that was one from this word there weren't.
Their leaders, we have a high volume and leaving the market well, it's still relatively toward the month, that's why we chose.
It will take the software approach and to partner with several several of them University via where several offers and that provides a security to be the environment.
Right now, we're actually doing quite well with them and the fact that some of our company stores. The made the acquisition and provide products in that space actually helps out in some areas expend the relationship.
What will happen in the long run.
Yeah, I wish I knew I think it's going to be an interesting dynamics.
Okay. Thank you Gil stay well in all the best.
Our next question is from Brad Zelnick with Credit Suisse. Please proceed.
Thanks, very much and hats off to you.
Well I feared that your results demonstrate.
During these trying times.
And one for Tom deal for those of us trying to better understand customer buying behaviors or.
During these unique times and <unk>.
Maybe as well a bit it's intuitive that would you provide is not discretionary.
So what does the customer doing whose deferring a purchase, especially when they faced significant traffic.
That's really working their existing appliances for longer or the rerouting traffic to the cloud and just based on your learnings from the past you feel you.
You saw in March as it isn't that pull forward or push out Oh man.
I think it varies a lot by customers.
For example, where our customers but target.
Very good.
Yeah, Victor has the Georgia challenges in moving to remote DOCSIS and therefore, the she older attention to remote talks incident and still probably security project.
Customers.
Just had difficulties in general and they and they slow down investments Nike project I mean, yeah. Let me tell you when do you probably could be that's bets business. We have some customers. There were supposed to them. We worked with them seems there they need heartbreaking.
No when he was pretty much went from amazing gears and limited demand shopping adult men 90, 90% to 99% of the business overnight and.
I will give you even invest into three topics, we supported by moving to work from home and bid and we had some projects there, but that's a server your revenue generating but there is the main thing first when you work with the customer on the project and then it will lead to something a week later hotspots. Indeed fired the free weeks later due in part.
Do you mean father, and we form of deal for the longer on how we support them and make the right concession to support them, which is the right seem to do in two weeks later or weeks later, even the procurement team is not working anymore, because they're the slate.
Breaking but features reality unfortunately.
Yes, we see.
So again I don't want preparing to make a few fixture here right now what would be stuck in the movie most customers are driving business. The like I'm actually I mean before very for me, what's very interesting.
How the world.
Coping with one of some of the biggest change if we've ever seen in our lifetime over such a short period of time and coping it I'm keeping business, but like I don't want to sell Mega thing I'd, just say, but.
We can think I'm always a situation around Boston, we can't assume the Fox we managed to wear.
Oh reviving be situation for let's say you're right.
It depends where do you look at between they.
Hi to nine weeks without a change of the Mcforty club for me.
Means that it's going to continue with with the Big brother would seem everything we've seen completely accelerate it would seem company slowing we still people without a hard to get and don't sorry, the deal because they're not at the office. We've seen people that are making all the airports to sign every deal even though they already met some of the worst countries and worse.
In the World I mean, the macro level of everything on the market level.
Thank you.
He will make the demarco, let them stay stable the wrong assumption it and I hope if I'm wrong I hope, we will see a school slightly moving forward them definitely so now you can happen based on what I've seen in the last eight or nine weeks.
Thanks, so much killed.
Thank you.
Right Okay.
I can just follow up one for you and I appreciate the business is very much not.
Can you give us an update on how April bookings have trended relative to use on March.
So I've said they are we talking I've mentioned, but we usually don't get uptick in the middle of the quarter, but besides I did go outside my way so far it looks like a decent mobs and levels of business that was slightly higher or higher than I mean, the cool demasi if I'm comparing it to January this year.
In April of last year, that's the rights comparable in terms of seasonality right. Now again, we're not overnight. We're still if we weren't they used to go but they opt to where this morning, if one was better moms them both month.
It's slightly better.
But oh by the way, but with respect to expect with but again, it's not the for victory for anything because I think what's what we're seeing in May bring you also slightly spillover from the ended the quarter and again with customers.
Pattern, but I can see customers understand but the world changing going to things like if I can complete the project smaller should complete no. We're not wait customers than say the profession alert, especially on the level, we've seen by the what's happening in demand.
Yeah inlet stops in servers, and I mean, I'm sorry, not from the Mark for what you're seeing it sounded like I'm thinking to myself in the markets. One day and then starts it we're saying, okay, we'll need laptops, we have laptops.
Months ago, let's find older less books that we can now that button in the long term or get even short term, we would buy more laptop itself I mean, what I told my supply or give me the inventories, but you can give me and I've seen but I'll just mention than others, but I missed one day when I was feeling the early pandemic whatever works really.
Really hard to deal with just the office environment, and we worked very long hours and I still hang around them.
And tried to meet its many people it's like Jim I once one day I stopped by the end drugs like shoulder delivery guy delivering could be good cartwheel computers. All me, if I said impressive and so on it. So how are your business, but it's still going to close.
You can't believe it I'm working about when people pulling them every day every business in the country by by the way. He was speaking about businesses is buying all the equipment, which they can get.
Because there are getting ready for for something that's once again that was more than a month ago. It's a certain point get stopes and you said you have good bad or the macroeconomic or the economic concerns at my jumped to 40 Bips anymore. So just give you a small example from me think the delivery guy because he's the one actually but they're just doing the work.
Thank you very much be well everybody.
Oh I get that frankly, I would just adds if somebody is true we started they were good but remember the majority of the booking is coming in the last month and therefore, its workforce you know, they're not because we need.
Good for any quarter, including Keith.
Our next question is from Michael.
Tourettes with Raymond James Please proceed.
Hi, guys, what everybody and hope everybody as well they'll become not to the BP and question and remote access.
As you did obviously stapleton.
In the press release when talking about it since that there was some increase for that do you have any sense when it gets more and now where they need to be a in terms of capacity because they can interrupt not access, but what are they still need.
In order to get up to work on requirements.
And I think it varies a lot by industry has been by country or they don't have good. They thought we might suggest we're starting learned how to move to these new world and assess the new requirements. Because these are always Oh, we had no. The pipeline of projects that were planning to your end of that Sunday. So people can plan for that that wouldn't.
Moving to projects in saying my remote DOCSIS looked work you really need to solution no different jumping up by the way one thing would be the up into our business in the rest of the world.
I think what used to say.
Oh, I'm, sorry, no thinking they think that used to take two days those two weeks are now taking six hours.
But planning general free we still have long term planning, but we're moving to very local execution execution of its measured by big.
The recent I'd say right because.
I mean, if youre not.
I would be but that they must go you said my workforce will go home and build to whatever they can now you're saying, Okay. I was 60, we all read performance.
Lets me were visits that maybe it's working and I'm five and maybe not outside to start a new project, because if I'm going to stay that way a driver optimized I mean, that's more it's just something by the way even also doing going on many of these area.
When you start to new projects that may be again, it's not a six month project. It's maybe you know with 20 fold the story to must project instead, well what used to be an annual project am.
Having said all of that.
I don't think it's over.
But again, that's what I'm, saying about unpredictable at bottom. It's maybe we'll see looking three weeks. The world would you want to work and people start going to be all peacemakers somewhat bifurcation and always talked about remote access project is going to translate into something different and she's to how we closed the gap by the way one thing that I can't predict.
Yes, but by moving towards Botox is companies open huge amount of holding for security.
Jim I.
I mean, the corporate networks, you know opening ways it wasn't opened before.
Hi, there and hackers are gone public smoked there's no doubt about that we already so situation like late last week when the A. I think was the NHS the Chinese means that you won't Florida.
Then make research.
In the World Health organization, where all have to do me a huge way. So there's than you would've been used security threats and many new opposed to close.
Mhm services, we agreed to conduct did show.
The professionals are very much a well, but we are concerned about that doesn't mean, they were able to translate it yet.
Motion to create new projects or to budget I think that's really wouldn't go.
Okay next caller.
Our next question is from Walter Pritchard with Citi. Please proceed.
[laughter]. Thanks tell wondering if you could give us an update I don't think we've had a number like this in a while but it's relevant how much your business you get unless the million dollar deals that how much of your business comes in from you know larger projects and then your pipeline for a long time versus sort of transactional piece that you sort of house.
Less visibility and it comes through the channel.
So yeah, we didn't provide this kind of before I think that when we talked about the deal that was a question before how many transactions are.
How many we said transactions over 1 million.
Oh customers Express yourself for 1 million economy, showing nice increase that it's probably from those turns accident you can get around maybe you can fluctuate between quarters right. So on the revenues is very different than on the bookings on the revenue side. It's no. That's not really say, we do have locked transaction, but it's not going to be 20, or 30 or 40.
For central Bob if I read it equally spread over many many transaction doesn't mean number do you still there's about it and we said I think 57 transactions like this this quarter.
I remember when you have like it many times because its multi years and therefore, we forget the bookings and then he said you haven't used but less effect I imagine you didn't Miss the C Corps.
Okay, and then tell just another question you brought up on the a quantum appliances. It sounds like you're deferring more revenue than you had in the past could you maybe I know there's been a you know probably decade long discussion here around you know more deferral of appliance revenue could you help us understand what has changed with quantum and maybe if there's any sort.
It is a benchmark you can give us from a year ago were five years ago in terms of how much more of the sale, you're deferring versus what you're seeing with this current generation.
Sure. So we decided to study so I can tell you had Dan miles that I can give you that feels to me. So it happens every time, we launched a new product line and we bundled with it I subscription package, which is a higher level then before if you remember I think in 2006 or seven to 10 2016 or 17.
We've been dealt with a new family instead of next generation firewall or do we bundle next generation threat prevention and then we saw a shift from front just wrapping up into the subscription they launched we bundle on the cornerstone we'd been data set on the end GDP like the old family. We've been goes it sounds left which is the idea.
That's all had higher dollar values I know cases into their subscription going through that deferred revenue is embedded recognized so what do they say, it's understandable revenues, we can instead of coming.
At the time of the setting up the card that is being the fed over four quarters. So [noise] fundraisers perspective, obviously, it's clear it's very very good because your customers are using higher level of security and they know.
That kids and their here after he wants to see them using Heath and it really Nathan therefore, each week and.
And now the driver for the girls into subscription best the logical doing securing the documents and then they you after enjoying an additional dollars into subscription and now there are two estimate how much. It is we need to understand what the customer.
Well I think I forgot what circumstances that line. This is every house it would be if they go down if they go up in the level. Okay. [noise] definitely can end up having zero if at all we can end up maybe in a different you're now you're having they <unk> and the fact don't you percentage that maybe 10 to 20, new your daughters.
Right I think it's probably best in class in the subscription over four quarters any can even doing different things getting 26 brought that because it looks you talked about to Ohio plant and we will enjoy both can be brought up then into subscription so.
I said in a few quarters, you will have much more visibility what I would feel with throughout the customer that you're going to go and based on that that would if you'd be able to give you more calories that things are next quarter.
Great. Thank you.
Yes.
We have reached the end of our question and answer session I like to turn the call back over to Kip <unk> Mincer for closing remarks.
Thank you guys. That's all for joining US today, we hope you're all safe and ER. We look forward I'm speaking to you during the during the quarter. Thank you bye bye.
This concludes today's conference you may disconnect your lines at this time and thank you for your participation.