Q4 2020 Radware Ltd Earnings Call
Yeah.
Ladies and gentlemen, thank you for standing by and welcome to the Radware.
Quarter for 'twenty and 'twenty earnings Conference call at this time, all participant lines are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to press star one on your telephone. Please be advised that today's conference is being recorded.
And if you require any further assistance. Please press star zero and I would now like to hand, the conference over to your speaker today and not aeron.
And the barn.
<unk> President of Investor Relations. Thank you. Please go ahead and Madam.
Thank you Cindy good morning, everyone and welcome to Rod was fourth quarter and full year 2020 earnings conference call.
Joining me today.
President and Chief Executive Officer, and one of them average.
Chief Financial Officer.
A copy of today's press release and financial statements as well as the Investor kit for the fourth quarter and available in the Investor Relations section of our website.
During today's call, we may make projections or other forward looking statements regarding future events or the future financial performance of the company.
These forward looking statements are subject to various risks and uncertainties and actual results could differ materially from rod, whereas current forecast and estimates.
Factors that could cause or contribute to such differences include but are not limited to impacts from the COVID-19, pandemic general business conditions, and our ability to address changes and our industry changes and demand for products, the timing and the amount of orders and other risks detailed from time to time and redwoods filing.
We refer you to the documents the company files or furnishes from time to time with the SEC.
Typically the company's last annual report on form 20-F as filed on April 2nd 'twenty and 'twenty.
We undertake no commitment to revise or update any forward looking statements in order to reflect events or circumstances. After the day of such statement is made.
So there's no debt in March management will participate individuals Banbury and cybersecurity and Dev Ops conference.
I'll now turn the call to always Isabelle.
Thank you on that and good morning, everyone.
The fourth quarter was the liquids quoting for God willing and many areas.
We enjoyed healthy business activity, including a significant number of large high quality wins, we've stopped logos that growth multiples where it goes.
This was reflected in record revenues and bookings and then.
Book to bill ratio significantly above one.
The list goes on.
<unk> reached a record of $174 million up 12% from December last year.
We had record bookings and our cloud and subscription business and.
And the cloud and subscription growth accelerated from 30% and Q3 to.
35% and Q4.
With roughly a year into the pandemic. It is clear that COVID-19 triggered acceleration and the digital transformation of leading enterprises.
And the rushing to serve their customers online.
Physical lockdown and forced our customers to deploy more applications and the public cloud.
And this combination of remote working more critical applications on Boeing and.
The hybrid cloud environment and significantly expanded the attack surface.
Applications and the services that were not previously exposed to extend on internet traffic on now at least.
The impact on February activity is clear and it is significant and.
And we are fighting the fight the war on behalf of our customers and.
And let me share some data points with them.
The number of Ddos attacks and mitigated a dollar scrubbing centers in the fourth quarter.
More than two and a half times larger than in the first quarter and on.
Approximately 20% higher than in the third quarter.
The total number of web application attacks, we blocked in the fourth school to almost double from the first quarter.
And the number of beds, both requests we detected increased almost 30% between the third and the fourth quarters.
The attack and motivations of batteries and include activity from foreign governments group seeking financial gains and political activities.
We spoke continuous waves of bunch somewhere attacks on the key financial services companies and expansion will be the tech waves to manufacturing and other larger enterprises.
Our broad and deep attack mitigation solutions spanning Ddos and web application firewall Bot management, API security and cloud post true security played a major role in our success.
One of our hybrid cloud Ddos customers, a leading stock exchange.
<unk> multiple waves of attacks followed by a run from litho threatening to launch a much larger attack.
In anticipation of these attacks the customer diverted all of its traffic to our scrubbing centers.
After a few weeks of benefiting from the advantages of and always on hybrid cloud Ddos protection they elected to upgrade the contract permanently.
We see more and more customers in the face of these larger and more frequent attack waves.
We redeemed the Ddos protection contracts to Hollywood and comprehensive Ddos plans.
The increased cyber attack intensity, coupled with greater complexity and brings into focus.
The strength and the efficacy of our.
Security algorithms and the importance of sophisticated and automated attack detection and mitigation.
For example, we signed a new logo, a leading European airline for our book management solution. After it was the subject of massive account takeover attacks.
We on boarded the customer through our cloud both service and immediately started to block the account takeover attacks.
These attacks constitute up to 50 per cent of the customer website logging on things.
We also saw record quarter for our public cloud security products, and the cloud native and predictable.
It extends our security portfolio from the data center application protection into public cloud workloads and broadens the reach of our completes the securities portfolio.
And it provides multilayer protection to reduce leased by continuously verify and compliance and identifying publicly exposed assets.
Cloud make these protects significantly 45 other customers cloud bolster by holiday and the environment and by providing advanced attack detection to stop data theft attempts.
Ah Mongo or two full weans, it and online video first company.
They added 1200 cloud workloads to the 1500 workloads they purchased only two months severity.
As a result of significant growth and go business, which triggered an expansion of the Amazon Web services environment.
'twenty and 'twenty was an excellent deal for us with our OEM partners checkpoint and Cisco Nokia.
And our investments really beetles bookings from other strategic partners combined nearly doubled from 2019 to 'twenty and 'twenty.
You know you dispose many challenges to new logo acquisition, we were able to continuously winning major new logos through our OEM partners.
Q4 continued the strength and we won a fortune 100 industrial company and.
On a fortune 100 aerospace company among many others.
Our strong market position.
Knowledge and also by industry experts in November and Gartner published its report about critical capabilities for cloud web application and API prediction.
Each ranked our cloud WAF service with the highest score in two out of four use cases.
Security use case and the high security use case.
In December what runs knowledge solutions announced that it has named <unk> is a 'twenty 'twenty technology leader in the book management market.
The firm praised our book manager for the comprehensive protection. It provides through its and 10 base deep behavioral analysis.
Collective book Intelligence and device fingerprinting.
Finally, I would like to share with you the highlights of our plans for 'twenty 'twenty one.
We are strongly focused on growth and more specifically we plan to center on our efforts to continue to grow.
And with cloud and subscriptions.
We intend to continue to strengthen our data center and application security solutions for the hybrid enterprise and benefit from our competitive advantage to grow our business.
We will continue to leverage our strategic partnerships and ensure we capture the opportunities do.
Taking into account on a strong solution offering.
Both markets, we operating all strategic partnerships and other devoted team and go.
Very confident and the other is long term growth prospects I will now go on over the call to go on.
Thank you volume and thank you all for joining us for a review and analysis of our fourth quarter and full year results.
Fourth quarter revenue on Iraq.
$69 million.
And of our guidance and up 2% year over year.
For the full year revenue was off $250 million decreased 1% from 2019.
From a regional perspective, we are very pleased with the performance and the Americas, where revenue grew 8% for the full year and as a result reached $114 4 million going on or 46 per cent of total liquidity went through revenue.
Revenues from EMEA increased 4% and reached $78 $4 million and 2020 and revenues from Asia Pacific were $57 $3 million on down 19% compared to 2019.
And as Roy noted the change and the attack surface disturbance and acceleration and the digital transformation of leading enterprises.
Drove growth and our cloud and subscription business.
Our cloud and product subscription revenue together with maintenance revenues comprise all retail and go and renewals with presented 66% of the total in 2020 compared to 63% and 2019.
AOR, which normalizes timing differences and booking and booking and revenue recognition Bruce a record $174 million before the end of December up 12% from December 2019.
Within the total cloud services and public subscription and they are all grew 35% more than December 2019.
I will now discuss expenses and profit all and non-GAAP income.
The differences between the GAAP and non-GAAP results for the quarter are detailed in our press release.
Gross margin for the fourth quarter was $83 one per cent stimulus to 83% and Q4 19.
For the full year gross margin was 82 eight per ton compared with 83, 1% and 2019.
Our gross margin and each period is affected by the specific product and geographic mix by the proportion of the cloud and subscription and that period and by the cost of the cloud operations and the pace of opening new scrubbing centers.
Overall, we haven't been successful in maintaining high gross margins over the past few U and we expect to continue doing so.
Operating expenses in Q4 were $48 3 million compared.
Compared with $46 $4 million in Q4 19.
And the continued impact of higher headcount costs, including commissions on a strong bookings quarter and was partially offset by lower travel expenses and Q4.
However, the significant U S dollar weakening during the quarter caused a larger than expected FX impact to total approximately 800000 total this quarter.
We ended 2020 with 1122 employees compared with 1094 at the end of the previous year.
Operating expenses for the full year, we're at $182 million compared to $176 million and 2019.
The increase was the result of higher investment and headphones and higher commissions, partially offset by lower travel expenses.
Operating profit and margin in Q4 were 9 million and throw it all and $13, one compared with nine 5 million and Golar and.
And 14, 2%, respectively in Q4 2019.
For the full year operating profit and margin were $25 million and <unk> 10 per cent compared was $33 5 million and rollout and 13, 3% and 2019.
Q4 financial income of $2 2 million was lower than in the past two years due to the declining yield on marketable securities and the impact we had anticipated and discussing on previous calls.
We expect financial income to moderately decline further throughout 2021.
For the full year tax rate was 13, 1% up from 8% and 2019 due to tax benefits and we had in 2019.
2021 tax rate to increase to 14 to 15 per cent.
Net income for Q4 was $9 $8 million or 21 cents per diluted share.
If it wasn't for the.
FX impact on operating expenses net income would have been $11 3 million or.
<unk> 24 cents per diluted share.
Net income for the full year was 30.
<unk> 8 million or 64% 64 cents.
Per diluted share compared with $40 6 million or 84 cents per diluted share from 2019.
Donnelley and onto the balance sheet and cash flow items.
We have a very strong balance sheet, we had another quarter or two on collections.
Net net cash provided by operating activities to be $16 1 million for the fourth quarter and the real growth of $61 8 million for the full U up 17% from 2019.
During the quarter, we reported approximately 341000 shows for a total of $5 8 million.
During the full value, we spent approximately $45 3 million on.
On share buybacks.
We ended 2020 with approximately 449 million and cash.
Cash and bank deposits and marketable securities.
Let me provide you on our guidance for the first quarter of 2021.
We are well positioned to accelerate our growth given the healthy markets and which we operate and a focus on cloud and subscription and we expect.
To continue with balancing investment and our growth initiatives, including the cloud business and our strategic partnerships.
We expect Q1 revenues to be between 64, $65 5 million.
Reflecting year over year growth of approximately 8%.
The midpoint and the gross margin to be approximately 82 five per cent.
We expect the strength of deeply and shackled to call you on it.
The increase in our total operating expenses throughout 2021.
And the magnitude of the eight book to be higher than in 'twenty and 'twenty.
We expect our operating expenses to be between 47, 5% and $49 million.
This opex level reflects a $1 3 million negative impact from FX compared to Q1, 'twenty and 'twenty rates.
We did Q1 'twenty 'twenty, one and EPS is expected to be between 13 and 15.
If we kept exchange rates net at Q1, 'twenty and 'twenty levels on our focus for Opex in Q1, 'twenty, one would have been approximately 46, 2% to $47 7 million and.
And expected EPS would have been higher by approximately three soon.
I will now open the call for Q&A.
As a reminder to ask a question you will need to press star one on your telephone to withdraw your question press, the pound or hash key and please standby, while we compile the Q&A roster.
Your first question comes from George Notter with Jefferies.
Hi, guys, thanks very much.
I guess I wanted to start out and maybe buy.
Asking about the investments you guys are making and the business that you know I think 2020 was a year of investing and the people and selling and marketing resources, particularly in.
And the United States region can you talk about your priorities as you look into 2021 and and you know.
And how you see investing and the business going forward.
Okay. So we continue to ramp investments as Don mentioned and also how are you.
Reported and my remarks, we think we're well positioned so we will continue to hire and all.
And similarly internationally, we will be more selective and then we continue to put a lot of investment into our cloud platform Cloud service depot cloud delivery and so on so.
And those disappointed with the ethics that played against us, but we continue to be investing the business given the opportunity we see.
Got it Okay, and then I know it sounded like the APAC region was.
And with softer for you guys.
This quarter I think even for the year, but can you can you just talk about.
How you see APAC going forward is that an area, where you can invest more aggressively and get that business growing again or.
Something structural and fundamental about that market corrections COVID-19 debt.
You had your less enthusiastic about that area of the world.
Yeah.
So I think several factors played into our performance and any pick one we believe that that was the region that will be targets.
And from the pandemic.
And then economically second.
And what Youre seeing and our revenues ease a bit delayed view, although booking, especially as we move more and more into subscription. So if you look on my comments from the first half of the.
Talking about APAC weakness and so on and I think now you are seeing with the full extent and the revenue figures.
However on the on the on the good side, we've seen and H to improve performance and APAC.
I think all over all our booking is the solid for the second half of this and I think youre going to see it in the coming quarters, even day in the Pea.
And then as well.
Having said that we do see today, our major opportunity and North America and.
And that would be our prime focus of investment while we expect the other regions to grow even even in a bit from modest numbers.
Great. Okay. Thank you very much.
Thank you and your next question comes from Charlie Rosner with Barclays.
Hi, This is Peter and debt on for Tom Thanks for taking the question.
And I wanted to ask about the strong and EMEA performance.
Direct result of some of the order strength, you mentioned last quarter, just kind of flowing through the revenue or was there anything unusual.
Unexpected there.
I think also in EMEA and we've seen thick enough improves the results.
I think you'd try and it starts to make a make its way to the to the P&L and.
And again and I think we're performing well the wins that we have there are significant and.
And the cloud business and the subscription businesses are doing well and.
And so all in all you know if you need you need me to run Cal Regents North America's first and then stick and EMEA and <unk>.
And third these APAC so definitely we're not we're currently satisfied with the trends we're seeing there.
Okay great.
And I wondered if you could comment on how you see the gross margin should actually in 2021. After the nice recovery. We saw in Q4 is there an opportunity to keep driving sequential growth there.
Based on mix from the cloud and subscription.
Our growth rate.
Yeah, and so as I mentioned day hour.
And gross margin is affected by product and.
On a geography mix and one hand. So this is something that we take into consideration that as Roy mentioned the focus on North America will probably at some AG book.
On the other and there was a cloud and subscription.
And can predicting trends, while the non cloud subscription and our software and they can be very high gross margin and <unk>.
And with this are accompanied with hosting and and investment so with margins over there on the RMB two below so overall.
And we're taking all into consideration and as mentioned for the first quarter, we guided something like a three to five per cent, which is in line with what we achieved and the last if you will so the potential is there, but right now seeing all day trend and all of the revenue mix that we forecast.
And that's willing to write the 80 283 per cent.
And I. Thank you.
Your next question comes from Alex Henderson with Needham.
So.
Good to see your numbers today.
I was hoping you could talk a little bit about the split between enterprise and service provider.
And it's interesting to us.
And that's that two are with Cisco.
Reported last night, where the service provider was up 5% and enterprise was down 19 get your.
Service provider was down nine and enterprise up 13, and so could you help us understand a little bit what's going on there.
And it doesn't look like the pop and sorts of problems, particularly different.
Different so yeah, and that's consistent with our full year and 19 so.
But what what's going on there is that a function on the shift to cloud.
And much more of an enterprise business and we would expect service provider to gradually decline as a percentage of sales or what.
And so I believe this is a trend we're seeing out of it and he said there are other quarters and our numbers overall, given our focus on enterprise security and cloud security as a service obviously, that's much more of an enterprise play and then the carrier place. So the more we do that and.
And the moral of focuses on the broad enterprise can be traditional enterprise cloud native enterprise and so on but that's where the growth is coming on the carriers I think there was overall a good market do but currently we are way more focused on the enterprise market and so other L. A strategic partnerships.
With the Cisco Security group, and and checkpoint and that's what we're seeing the growth and the big opportunity.
So we should expect gradual decline as a percentage of sales, but not necessarily a decline and the service provider business.
Exactly.
Alright and and.
And back to the cloud and subscription, obviously, a nice acceleration and 30% and <unk> 35 per cent and core great great numbers.
Can you help us out and says.
And with the scaling of this relative to the base.
You know within.
The overall company subscription numbers and they are our numbers.
Obviously can't be.
And if you're up 12% and total that would suggest that the rest of the business wasn't up very much and theirs.
Cloud and subscription business.
Business is is really the bulk of what's going on.
And driving overall growth and is that a fair statement and becoming a large enough percentage.
So that we can start to see an acceleration and they are as a result and that mix shift.
Yeah.
So it is a growing number and.
And if you recall and the second quarter, we had 10% total ALLL growth now we're at 12 and and that's the movement is driven by cloud and subscription and <unk>.
Well, so maybe let me recap.
Totally on all of it is comprised of the cloud subscriptions of the product subscriptions and together we called those Clos.
And product subscription and that's where the growth facility, 35% income come from and.
And the other large component is our service contracts maintenance contracts on.
Appliances softer whole Hollywood, which is the more traditional business.
And this we had.
The total was 174, if you look on the on cloud and product subscriptions, each range $75 million to $80 million. So we'd say.
And it's becoming a very significant portion of the over the overall, it's close to 50% already and we believe as we continue to grow with debt.
The debate that you've mentioned and we hopefully will see a stimulation and the total yellow.
That makes sense so inherently.
Inherently a product subscription contract.
Will encompass the service contract that you historically have gotten on perpetual products. So.
And that that's a natural cannibalization does.
Does the declining opportunity to cannibalize the existing business.
Results and some deceleration is that becomes less and less factor.
And I think a lot of the the products, we sell a subscription on not cause.
And <unk> existing products. So for example, all of our management and analytic software all our automation and self.
So all of that is sold only in subscription and so there was no perpetual equivalent to cannibalize. The other some other capabilities as a product add ons debt, we said that the audible subscription, but again, they're not cannibalizing any profit perpetual and there is some.
And <unk>.
And that you're right and those cannibalization. So overall you know we would we would love the service go on trucks and so on to keep steady while we aggressively grow the product subscriptions and the cloud subscription.
That's very helpful. Thank you very much.
Just one more question if I could.
And as we looked at the rapid shift to cloud to digital transformations.
To kubernetes and <unk> adoption.
And obviously.
That's putting significant pressure on how do I secure workloads and the cloud you've seen a lot of announcements from companies ranging from cloud flared and Lee scalar.
Net the targeting that a number of acquisitions.
Other it's Vmware whether it's.
And stack lock silver and IBM.
Disney cloud over it rapid seven how do you see the security.
And <unk>.
In the cloud the poor kubernetes workloads.
Relative to where you're positioned either across the.
Pre deploy the run time.
Inside the container or data and light domains a domain.
And you know portion of the market with what portion of that are you going after and then what portions are you not going after.
Okay.
And I think the three areas that we focused on specifically you know for kubernetes workloads, we're going off the web application firewall for D and workloads lending in debt Kubernetes framework and that's inside the customer BPC. So that's the first the second like for any other application.
Net is apps not excluded we provide cloud security other therapies. It can be API security it can be both it could be worse, and so on and third and they run on the public cloud we pulled the posture of the V. P. C of the customer I've mentioned that we had a record quarter did as well and.
And that's literally scuba and Eddy So note leading all the a P eyes off the cloud platform AWS Azure and so on and with that providing better compliance better and how they need and recommendations and detecting attacks and it'll be go on the other than what we're not.
Good enough, though is we're not putting agents on the servers. So for example, what's called cloud workload protection, it's not true.
And you'll be beats and northern markets we are.
Going after we are agent place.
We're not going after the and disciplined Docomo and NTT security sales of the infrastructure, we're really keeping ourselves at the application and in the cloud workload level and I think we're doing very well and we're seeing very strong day demand.
Demand from other customers.
Great job Ah I appreciate the answer and so you're making great progress. Thanks Corey.
Thank you.
Your next question comes from Andrew King with Colliers Securities.
Hey, guys. Thanks for taking my question. So obviously on those last year, we've really seen Cisco partnership really ramp well, but could you just give us a little bit more of a color into how the.
Hi.
Check point, and Nokia OEM partnerships are ramping and going to be focusing your investments.
And investments for those to ramp them.
Yeah, so actually all of them did very well the field.
And you know also this quarter so checkpoint it also.
And group.
<unk> doubled the business was checkpoint in 'twenty and 'twenty again major wins and in leading global 1000 Fortune 500 customers. So very very strong new logos to Adler as well as expansions and banking.
And in manufacturing and carriers and so on so there's definitely good momentum there and we actually as part of our investments with 'twenty 'twenty. One we're ramping investments also on the checkpoint side.
And last but not least Nokia, it's obviously focused on the Korean market, but also do we had a very nice wins and major telecom groups and they're helping us actually.
Incumbents from competition, given the complete architecture and complete solution and also and Nokia we are adding more capabilities more resources to the partnerships all and all.
I think the three Oems at this point.
And executing well I think the potential is still much bigger than where we are and we need to execute together with them to leverage debt, but if.
And if you think about it with checkpoint and Cisco on the enterprise side and Cisco Nokia on the carrier side we.
They're very good access to all the.
Leading carriers and the Fortune 1000, global 2000 companies around the world and we are working very hard to leverage that axis.
Great. Thank you.
Your next question comes from Joshua Tilton, with Ehrenburg capital markets.
Yeah, Hi, guys. Thanks for taking my question.
I just wanted to touch on the growth for the full year.
Do you kind of expect it to remain at the level that you've guided to two per Q1 or.
Or is this going on maybe somehow accelerate through the remainder of the year and then also if you could just kind of give us.
How we should think about the mix of recurring versus nonrecurring revenue in 2021 first 2020 that would be great.
So we didn't guide 2021, and it's too early from our view, although you know we mentioned on local favorite equal with and a lot of great start and we are very optimistic.
But the Q1 with a midpoint of 8% right. Now this is what we have and on.
And I assume that the next quarter, we'll have more visibility.
To talk about the day, they did do it for nine quarters.
The recurring revenue this year, we achieved a 66 per cent, which was a bit higher than what we expected.
And and.
What we mentioned at the beginning of deal with.
65%, so we assume that the next year, we will continue and we use our cloud.
And subscription so the portion should grow.
The same trend will continue I hope to grow it a bit on this one this is already really high level and the target is to continue to do it.
And then.
Just one more follow up from me is there any chance you can kind of give us a sense of where the gross margin is on the cloud subscription and subscription business versus the.
The upfront profit business.
No. Unfortunately no.
And.
And too many assumptions that we need to do and order flow to convince you ought to talk about it.
And also I want I want to explain you know each of the cloud services.
Different growth smaller jeans and in different stages of scaling.
And the cloud business you know when we're opening new nodes there can be big fluctuations in gross margin from one quarter to the other and its until you know we fully populate those nodes that it goes back to those levels. So it fluctuates a lot between services between periods.
And and a disciplined distinct will Don mentioned is 82.5% guide for the full year is what we would like to standby.
Okay.
Alright, thanks, guys congrats on the quarter.
Yeah.
Your next question comes from E Soo Lee with Oppenheimer.
Thank you for taking my question and congrats on a strong set of results.
Maybe first question from Boy just.
Wanted to comment and just wanted to get your comments on the elevated threat hybrid environment.
You mentioned earlier that Ddos is at its peak spot on.
Taxes that you guys well and echo.
Operations and all external research that.
And again growth is over 100% and then no and December you've seen a slew of breaches and I'll start.
Starting with some other cyber security firm that is lost on some.
On the Sunburst speech was wondering has this.
Our Q and.
Our pipeline whether in the first half of 2021, maybe some commentary and so on that guidance.
No. Obviously, you know the increased cyber activities driving more and more business.
Think it's becoming clearer and clearer to each and every enterprise around the world that they must increase their defenses that the threat is real and that is critical to their business and.
And do you need to really aimed for a very very secure high and solution.
And I think given on our focus on really the high end security to provide the best security in the world to applications and data centers, we are enjoying that day.
And that trend, we so as we've mentioned throughout the EU and continuously into 2021 already we know we're seeing very large enterprises that theyre, taking us because of leaf strength and security because the ability to block <unk>.
And the others are more challenged with so and it definitely and we are.
We're seeing the impact on pipeline and.
And on bookings on related.
Right and then just a quick follow with the Ross can you I know well I mentioned earlier that the check point relationship.
And going well.
Wanted to get your comments on the.
The other two like I I know Nokia is newer.
How about Cisco I last year, I think the guidance was tens of millions of dollars a day.
And just wanted to get your colors on.
What's your expectation for 2021 for those three vendors Cisco check point, and that's up and that's yet and Thats. It from me guys.
Yes.
Let the ROI and take their strategic day, one, but we mentioned a few years ago that we expect it to be tens of millions of dollars.
And I really and we don't disclose the number but you can imagine if we are able to be <unk> versus last year that was two weeks versus the previous year young and.
And a very good situation, we are very comfortable with this one but again, we don't disclose who don't break. This revenue was yes, and as I've mentioned checkpoint also did a very good deal and solely from Nokia. So at this point all of them are growing rapidly with us I've mentioned that as a group the they practically doubled and.
And we believe the potential is still there for more definitely.
And as I've mentioned, our focus on the larger enterprises with them and with Nokia and Cisco and the large scale deals should deliver better and better results.
Thank you very much again, Ryan and I have good day.
Thank you.
Your next question comes from Alex Henderson with Needham.
Yeah, just a couple of housekeeping questions if I could.
The 800000 and FX hit is that all on the interest income and expense line.
No. The 800 of these day that I mentioned.
Part of the when we guided last quarter.
And the 46 to 47.
So one good thing is that there were some expenses on.
On the commission and a very good day, a quarter in terms of booking and and day 100.
Is the FX that impacted and the Opex and the due to the stuff on the Israeli.
Israeli shekel, so it's not so there's no translation and the interest income and expense line at all and then.
No its not day interested on the the up and the translation effect is ready to ship from yours, though at.
And all.
Perfect and did you get you and it's about a head count number on it.
And I caught it.
We live in and 1122.
And you can think.
And just just I know you don't want to forecast anything beyond the first quarter, but.
Can you talk a little bit about the magnitude of the impact you think are in retrospect.
Net take Covid event had in this.
The first quarter versus the second quarter, and how that projected over the course of the year based on your best.
Forensic analysis after the fact, obviously the second quarter.
Should have much higher growth rate than any other quarter given that was the quarter that had the biggest impact but I think you also had some impact and one two so could you talk a little bit about.
And what we should be thinking about in terms of the magnitude of that impact over the course of the year.
Yeah.
And it's really hard to tell you know initially and the U.
There were project delays and day, where obviously civil segments that were practically shut down and the world almost two and.
To date like true.
And.
And we'll speak to other deals and so and also our exposure there is limited on.
The other day and you know initially of people.
And shifted to work from home, we've seen capacity increases, but I think.
And as the year progressed and.
And the main impact that we saw is not from Covid or maybe we got used to it its more from the heightened security.
Activity and hacking activity around the world and to.
And to the extent that these the directly related to COVID-19 or not I don't know I don't have a view on that but that's I think what's driving the the main pipeline and activity the main and business growth and and so on and so we are way more linked to that debt since today than two D. A car.
And the impact on on Covid and.
And it's by the way one of the reasons when we look into next day little bit hard to tell.
The fact that you know countries are entering and exiting the lockdowns.
And that we are seeing continued delays on budgets and so on where we are not seeing delays and we're actually seeing increased investments in cyber security and hence we are even more focused on debt on the enterprise and more focused on cloud as a delivery option because debt that does not require any.
Physical and.
Access to location or two and application. So all in all I think we're well positioned we are growing cloud service business.
Hi security capabilities.
Really fits extremely well with the heightened attack activity and the fact people need cloud services and in this environment.
Right I understand the point, but we have decided to coin we're down two 3% from the first quarter and three three per cent revenues and the second quarter and last year.
And obviously, it's improved substantially as security became a much bigger focus and the back half of the year and I'm sure. That's why your business is accelerating and I'm just trying to understand the mechanics around the TK.
They're a little bit since we can have a better sense of whether that.
That should be the highest growth quarter or whether you expect just the momentum and do business ends up being.
More important and therefore, we shouldn't shouldn't look at those comps and so relevant.
Yeah.
We don't have guidance for the second quarter at this point and.
You know generally if you look on the last several other use.
Oh I see.
The last couple of years also before Covid actually Q2 was lower than Q1 and in revenue for us and it's not to say that's what the and we're going to have no. We really don't have any thoughts on on Q2 at this point beyond our growing growing visibility.
The truck and you already see debt in Q1, we are growing of course.
9% and meet the boards were expecting good good deal.
From diverse, but I cannot quantify it for you.
Exact COVID-19, even but it's really hard.
Alright, Thank you I appreciate.
The response.
I'm showing no further questions at this time I would like to turn the conference back to Roy <unk>.
Okay. Thank you, everyone and have a great day.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
Yes.
Yes.
Okay.
Moving forward.
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