Q1 2024 Check Point Software Technologies Ltd Earnings Call
Patients and joining me today are founder and CEO Gil <unk>, and our Chief Financial Officer, Roy Golan before we begin I'd like to remind everyone that this conference call is being recorded and will be available for replay on our website at checkpoint dot com during the formal presentation. All participants are in listen only mode to be followed by.
A Q&A session. During this presentation check point Representatives may make forward looking statements within the meaning of the securities acts of the early 19 hundreds. These statements involve risks and uncertainties that could cause actual results to differ materially from those projected in the forward looking statements factors that could cause actual results.
To differ materially include but are not limited to those discussed in check point software latest file filings with the Securities and Exchange Commission any forward looking statements speak only as of the date hereof and checkpoint software undertakes no obligation to update publicly any forward looking statement.
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 of non-GAAP information. If you have any questions. Please.
Please feel free to contact Investor relations by E Mail at <unk> checkpoint Dot Com now I would like to turn the call over to Roy Golan.
Thank you Keith and great to see who is here with us at one moment I'll show on my screen.
Thanks.
Can you see my screen, we can.
Okay great.
Thank you Keith and I am excited to be able with you actually we started the year very strong with finished stick Waddell Q1.
EPS of $2 <unk>, a 13% increase <unk> and net income was $235 million 10, 8% increase year over year.
Also our revenue was well above the midpoint of our projections it actually grew by 6% to $599 million.
6 million was above the midpoint of our projects and while the EPA. So I've mentioned grew by 30% and was full sense about the midpoint of our projections.
So, let's move to the revenues and deferred revenues and billings. So as indicated on the revenue side, we grew by 6%.
Deferred revenues grew by 2% to $1.826 billion, while our current deferred revenue short term deferred revenues grew by 2% also two $1.347 billion, our calculated billing reached $517 million, which represents 7% growth the <unk>, while our calculate our short term.
Is it building reached 532 million% to 3% Brookfield.
Our remaining performance obligation reached almost $2.2 billion with 6% growth year over year.
And that draw it was driven by strong demand this quarter in the first quarter with double digit growth in total new business annualized booking and show you also in the next few slides.
The reflection.
So the revenues growth of 6% was driven mainly by subscription revenues another strong quarter for the subscription revenue that grew by 15% to $263 million that is mainly driven by strong performance of our infinity Infinity consolidated platform and <unk> and.
Both of them.
Contributed significantly to this growth.
In terms of as mentioned the new business acceleration the annualized new business bookings growth is something that we showed you last quarter also we did see the turnaround in Q4, we show we presented to you that we grew double digit in Q1, we saw we saw the new business book annualized bookings grew double digits again in an accelerated way and higher growth than in.
Q4, so I think thats and again, that's because of <unk>.
Healthy and strong demand to our products during the quarter.
In terms of Infinity infill.
Infinity revenues grew by double digit revenue growth and becoming more and more significant to our business from revenue perspective, it's already exceeded 13% one 314% of our revenues.
And in terms of annualized booking gets even higher so we expect that the revenues that this portion from the revenues will go will be bigger in the in the next few quarters.
As we move to the global revenue distribution. So we can see here that the EMEA.
44, 46% of our revenues came from EMEA.
42% of the revenues came from Americas, while the remaining 12% came from APAC important to note that the revenues grew in all geographies.
We did see an increase in all geographies and also in the new business broke that I mentioned in the previous slide we did see we did see.
This growth in all geographies with.
Important to note with it was led by EMEA with very strong business new business growth in EMEA.
Now, let's move to the P&L this quarter. So our gross profit grew.
<unk> grew by 7% to $536 million of prevent 90% gross margin.
Yes.
And so on.
Compared to 89% gross margin last deal.
What are your thoughts.
Our total operating expenses increased by 8% to $284 million with this was mainly as a result of our continued investments in our walk forward I remind you that we did the free acquisition last deals so that's that.
Okay.
Speaker Change: I'm sure you're all of a sudden like Ed.
Ed.
Speaker Change: So I think this group of the Glen.
Speaker Change: <unk> bye.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Revenue grew by 50%.
The fourth acquisition healing the operating expenses.
Speaker Change: So two answers.
Keith we're keeping betting in the cloud and infrastructure and all the sales and marketing so all of that.
Speaker Change: Given the strong performance.
Speaker Change: <unk> finished.
Speaker Change: Beautiful.
Drove the 8% growth increasing the ultimate inexpensive and we finished with operating income of $252 million.
Speaker Change: Okay.
Speaker Change: And both of them.
Speaker Change: Contrary to significantly to this growth.
Speaker Change: In terms of as mentioned business pillar.
66% growth, which represents 42% operating margin similar to last year.
Speaker Change: Yeah.
Speaker Change: When you.
Speaker Change: So we see the neurology.
Now, let's move to the net income so our net income grew by 8% to $235 million. We can see here that the financial income we did see an increase in the financial income as a result of higher interest rates in the market.
Speaker Change: Okay.
Speaker Change: We presented it was that did you.
Speaker Change: So I always tell the newbies.
Speaker Change: Yeah.
Speaker Change: Well, thank you for that.
Speaker Change: I think thats it.
Speaker Change: Has been strong demand through our process.
And similar tax state tax expenses and tax rates.
Speaker Change: During the quarter.
And we finished with.
We finished with EPS of $2 <unk> <unk>, 13% growth in <unk>.
Speaker Change: In terms of the P D K infinity revenues.
Speaker Change: It's been growing.
Speaker Change: Downfall business are millennials.
Moving to our cash flow and cash position. So we finished the quarter with slightly more than $3 billion in cash marketable security and short term deposits.
Speaker Change: Sorry.
Speaker Change: One.
Speaker Change: Revenues.
Speaker Change: In terms of analyst King live in Iowa.
We purchased during the quarter $325 million.
Speaker Change: The revenue.
Speaker Change: Olson from Granularly goal it would be good.
Sure.
In average price of $159 per share.
Speaker Change: In the next few quarters.
Our operating cash flow was strong with $361 million.
Speaker Change: As we move to the globe.
Speaker Change: So we can scale that EMEA a fault.
Speaker Change: 50% of our revenue.
To summarize our financial so.
Speaker Change: A footprint.
Revenues and EPS reached the top end of our projections, we did see acceleration in our quarterly revenues mainly came probe on the subscription that came from Infinity now minimill performance, we do see a strong acceleration in our new business annualized booking another quarter with double digit annualized new business bookings and strong profitability.
Speaker Change: We knew standpoint.
Speaker Change: Thank you.
Speaker Change: Right.
Speaker Change: All geographies.
Speaker Change: She had in geography.
Speaker Change: And you.
Speaker Change: Well thank you.
Speaker Change: Yeah.
Speaker Change: She'd be spoken geographies with.
Speaker Change: In the imports.
Speaker Change: Its lead in.
Turning stone profitability.
Speaker Change: And you will see an impact.
6% operating income growth, 8% net income growth and double digit growth in EPS, 13% growth.
Speaker Change: Let's move to the.
Speaker Change: Quarter so.
And now I'll turn the call over to Gary.
Speaker Change: April seven two final thoughts.
Speaker Change: ICD 10.
We can't be <unk>.
Speaker Change: So 2019.
Speaker Change: Both of mine life.
Speaker Change: Al.
Speaker Change: In slide eight.
No. It's a muted myself story so.
Speaker Change: For me.
Speaker Change: This many of those out of our continued investment in work.
Good morning, everyone and thank you referred the presentation and overtime a muted I hope you see the presentation ready to go for the business update I'll start with a quick recap of what were you already shared with you I think we had a pretty good quarter in the first quarter.
Speaker Change: In the fleet that is built for that.
Speaker Change: It looks like.
Speaker Change: Uh huh.
Speaker Change: And keep in the Caribbean.
Speaker Change: Okay.
Speaker Change: So.
Great results revenue EPS topically projection double digit subscription growth continues to be recurring revenue, which I think is an important factor because I think we're moving more and more of our business to be an annuity model represents 83% of total revenues. So again another good indicator overall.
Speaker Change: With Enbrel.
Speaker Change: Then expenses efficiency.
Speaker Change: Hello.
Speaker Change: Lola.
Speaker Change: Okay.
Speaker Change: And Jonathan.
Speaker Change: Okay.
Speaker Change: Hello, Phil.
Speaker Change: Now let's go there.
Jonathan: Oh yeah.
Overall, I think we are putting huge focus on what we call new business activity.
Jonathan: Our net income.
Jonathan: 200 and beyond.
New business activity include everything from signing up new logos, new customers to new refresh cycle expansion upsell everything for the existing customers and we had double digit new business growth, which I think is very very important with our customers are growing revised a refreshing with us are becoming up to date.
Jonathan: You see here the management income we did see increase in the financial income is of high interest rate.
Jonathan: And as Miller said.
Jonathan: Exactly.
Jonathan: We finished the day, we finished with EPS.
Jonathan: That type of event.
Jonathan: Great.
Jonathan: Moving to slide 10 finished.
And are getting the best security.
Jonathan: We've slipped beyond the multiple you pay interest on deposits.
Part of that is the overall infinity platform new customers some major public sector wins.
Jonathan: Okay.
Jonathan: $225 million.
And I think infinity just to be for the rest of the presentation. We used the terminology for several things at our overall architecture, our overall platform.
Jonathan: Sure.
Jonathan: One of them.
Jonathan: Yes.
Jonathan: Okay. So.
Jonathan: It was <unk> 61.
I think is very important but it's also specific kind of what we call infinity.
Jonathan: To start off.
<unk>.
Jonathan: Oh.
Contracts and these are deals with customers are usually doing for long term with including big parts of the platform and not just one product. So all of these are growing and growing very very nicely and last but not least.
Jonathan: As it relates to the total.
Jonathan: We did see Philip.
Jonathan: Okay.
Jonathan: And for Mccormick.
Jonathan: Mccormack.
Jonathan: At least for acceleration.
Jonathan: <unk> been a simulator and.
One of the key drivers of our business remains our security gateways the network in the center of everything.
Jonathan: Yeah.
Jonathan: And when you'll be booking and.
Jonathan: Danny.
This quarter, we did a major refresh of our entire product line the quantum force.
Jonathan: Okay.
Jonathan: A 6% operating income growth eight net income growth in the industry.
The new name of the new lineup of appliances will talk more about that.
Jonathan: Yes.
Jonathan: No.
Speaker Change: And now I'll turn the call.
Should be important and significant for the.
Speaker Change: Yeah.
Jonathan: Okay.
The checkpoint customers and gaining more value from what we do so just.
Jonathan: Okay.
We can look at customers that.
Jonathan: Okay.
Been with us.
Jonathan: Self storage.
Sorry.
Jonathan: Good day.
Switch to quickly so you'll see many new customers on our platform.
Jonathan: Every one of them.
Jonathan: Sure.
Jonathan: So the hope is prison.
Jonathan: Gopher.
All geographies Europe Asia U S and.
Jonathan: Start with a quick recap.
Jonathan: We already do.
And a very important area of the public sector.
Jonathan: The previous quarter.
19, new government agencies in 40 countries just in the first quarter and that's also very nice summer very small some are huge summer.
Jonathan: Resolved Avenue, we stop Jakob.
Jonathan: Subscription roles can.
Jonathan: In the new which I think is an important factor because I think we're moving more and more business.
Multimillion dollar.
Jonathan: Yes.
Deals for many years.
Jonathan: And then total.
So again, all industries manufacturing telcos.
Jonathan: Now, 85% total revenues.
Speaker Change: Good day.
Jonathan: Okay.
Infrastructure energy so on very very important.
Jonathan: We are putting huge focus ultra <unk>.
Jonathan: Business activity.
Jonathan: And you'll be getting every from Scott.
In the first quarter. We also held our CTX conference I think some of you attended the first with the first.
Jonathan: Customers to Europe.
Jonathan: <unk> expansion.
Sell side dominantly strike that we had in Las Vegas, and Thats important because thats, where we govern together our field employees our partners our customers and share all our renewals for the year. So we did all of our product launches. These are frequent influences one in Asia, one in Europe and the last one was in Las Vegas in the U S.
Jonathan: Ever.
Jonathan: We're seeing from existing customers and we have done.
Jonathan: New business growth, which is very very important that our customers are growing with us.
Jonathan: Some weird.
Jonathan: Becoming up today are getting the best security.
Jonathan: That is overall.
Jonathan: Okay.
Jonathan: Some public sector wins.
Overall over 18000 participants both physical and virtual.
Jonathan: And I think we finished just to be for the rest of Asia.
Almost half and half so that was great for the first time, we return to full force physical conference tons of energy I think everything was very very well received and I think youll see here, we get the highest scores ever on this conference we measure the performance of the conference on every aspect and this year, we got the high.
Jonathan: All of you.
Jonathan: Several feet tall argues for overall platform.
Jonathan: Shrink is therefore them, but it also seems to be kind of.
Jonathan: T D.
Jonathan: Deal.
Jonathan: Any contrary.
Jonathan: Okay.
Jonathan: Are these the consumers are really doing for long term.
Jonathan: Big Hearts of plus four 1%.
Scored in checkpoint history. So we're very happy about that and I think it indicates something also Caribbean <unk> move to the customers.
Jonathan: Only a very very nice and last but not least.
Jonathan: One of the key drivers for this.
Partners for the new launches and the relevancy and the importance of value with checkpoint provides various securities.
Jonathan: It remains our 60.
Jonathan: The gateways the networking for February.
Jonathan: This is.
Jonathan: Dangerous differential for entire product from one to four.
And one of the key messages was our infinity platform or checkpoint to supply companies now I know that many people in the industry speak today about the platform everybody speaks to the platform and it looks like it's part of the wave, but I think it's very important to understand we launched the infinity architecture, the infinity platform in <unk>.
Jonathan: The.
Jonathan: Blue line of appliances will talk more about that.
Jonathan: Sure.
Jonathan: Significant four.
Jonathan: The checkpoint customers.
Jonathan: Mortgage promos.
Jonathan: Jeff.
Jonathan: We look at that.
Speaker Change: Got it.
Speaker Change: Okay great.
<unk> thousand 18, six years ago or five.
Speaker Change: Switch to clean.
Jonathan: We see tremendous cost curves for class.
In some years ago.
And since then we are building it were building it to be a very very unique platform. A platform that is now AI powered more than 50 security engines that are delivered from the cloud and contain AI technology.
Jonathan: Platform.
Jonathan: The oil piece.
Josh: Hey, Josh.
Josh: Hum.
Josh: In the area of public sector.
Josh: Yeah.
Josh: Oh God.
Josh: Foreign countries jobs in the first quarter.
Technology, that's part of overall of over 80 different security engine.
Josh: So.
Josh: Very nice start very full some are huge.
Analyze and prevent all types of attacks.
Josh: Multimillion dollar.
Josh: For many years.
And one of the major value series, our free seas being a consolidated platform, where you can manage everything to be ever comprehensive one addressing all the key attack vectors and the one which we're putting a lot of emphasis this year being the strongest.
Speaker Change: So again all industry.
Josh: During the call.
Josh: Infrastructure.
Speaker Change: So on very well.
Josh: Okay.
Josh: In the first quarter also held.
Speaker Change: So I think some of you attended to inverse.
The real platform not the <unk>.
Josh: So donnelley strike, we had in Las Vegas.
Mark to market picture, but the true architecture.
Josh: That's important because Victoria.
Collaborative platform and Thats, where I would put a lot of our focus in 2020 for making sure that all the technologies and products to work together to elevate the level of security. So this is not just information sharing between different aspects of the security infrastructure, which is also a proactive action. So if we see.
Josh: For field employees our partners.
Josh: Uh huh.
Josh: Im sure all of them.
Josh: Sure.
Josh: Products' lung disease.
Speaker Change: Good morning.
Josh: And that one.
Josh: <unk> in the U S.
Josh: Overall.
Josh: Sure.
Josh: Participants, both physical and virtual.
Somebody poking around our network scaling it we can take away to Tucker and block it all over the network on the cloud.
Josh: Or whatnot.
Josh: So therefore.
Speaker Change: Thank you.
Josh: Two four.
Josh: Music conference tons of G. I think it was very very well, Steve I think you can we get the high.
And on many other places if we identify an infected the endpoint, we can quarantine vet endpoint fruit the network and make sure we.
Josh: Exploring several concrete measure performance of conference.
Josh: This year, we got the highest scores in.
Top of the damage contain them.
Josh: In computer resource rehab.
Contain the risk and stop the attack and Thats, the only platform, where I think we truly do that and do it in a very very effective manner. So this is again a true platform with all the elements are orchestrated work together in a collaborative manner and I think the value of collaboration is going to pay off with the highest level of security.
Josh: To that.
Josh: And in the company's total <unk>.
Josh: Yeah.
Josh: And partners.
Josh: Launches.
Josh: Relevant to.
Josh: The momentum is there.
Josh: Check point provides.
Josh: And perfect.
Josh: Just one.
Josh: In T plus from our check point to supply company.
That's a big focus for to put in the conference. Another important element is as I mentioned, our new product launches and these are the <unk> product, which we launched the AI copilot with lakes to managed security with <unk>.
Josh: Three today.
Josh: Everybody today.
Josh: Slide part of the way, but I think it's there.
Josh: Sure.
Josh: Third the Infinity plus two folds.
<unk> language again, simplifying many management tasks and once again elevate the level of security because things with people didn't do before because we took too much too many too much time, because we were too too complicated we can do now in a matter of seconds with AI technology.
Josh: Six years ago or so.
Josh: Some years.
Josh: Okay.
Josh: We're being we're built to be there.
Josh: Nick.
Josh: The platform itself.
Josh: High-powered more.
Josh: Security engine.
And new technology for securing cloud applications SaaS.
Josh: From the cloud.
Josh: Okay.
Josh: The community that's part overall.
Confused with.
<unk> <unk> technology.
Josh: Different securities.
Josh: And <unk>.
Remote access, but we went into the market.
Speaker Change: All right.
In the acquisition, we did in <unk>.
Speaker Change: One of the major <unk>.
In Q3, but <unk> is a different one also based on some acquired technology from last year, and new technology and the products that will come later in the year that actually protect your SaaS applications on the cloud.
Josh: Yeah.
Josh: Lastly, you can manage everything we ever comprehensive addressing.
Josh: Victory.
Josh: The one which we are putting a lot of peers.
Josh: The sugars.
Josh: Hum.
And again part of the platform sort of everything and last and not least as I mentioned with these our quantum force gateways.
Josh: Tom.
Josh: The mark to market nature, but the.
Josh: Texture cloud platform that's right.
Josh: Our focus in 2000 before making sure that all the technologies.
This is very very important because that drives a big part of our business. So if we see that the previous generation of quantum appliances and you can see here the new line of appliances Amazing line you can see the performance ranges here between <unk> and free ex performance optimized for AI.
Josh: We celebrate level of degrees.
Josh: So vishal just for sharing between different.
Josh: Six of the strong.
Josh: Strong results we've actually.
Josh: If we see somebody.
Josh: Networks can lead.
Mentioned, the over 50, AI engines and with the highest.
Josh: Can make better Tucker.
Josh: And then.
Josh: The cloud.
<unk> prevention ratio in the industry 99, eight based on the Myer Com results. So we are very proud of it and I think that will should give us a lot of power to go to the market with new customers to upgrade and refresh the existing customers and again. It starts it takes time for customers to evaluate.
Josh: For many of our lease.
Josh: Feet.
Josh: Identified.
Josh: Perfect.
Josh: He can quarantine endpoint fruit in that mix.
Josh: Yeah.
Josh: Still contained.
Josh: Maintain them.
Josh: Contained to stop the attack.
Speaker Change: All right.
Josh: Thanks.
The new the new hardware and new software, but I think it's a very big promise.
Josh: But do it in a very very minor.
Jonathan Frank Ho: So let's begin.
Josh: True platform with Bolivia.
The rest of the year.
Josh: Some work too.
Last but not least I manage I've mentioned, the infinity AI copilot and you can see a simple demo here, we're trying to get a simple managerial task.
Josh: Bring to collaborate.
Josh: The value of <unk> Corporation.
Josh: Payroll level.
Josh: Securities.
Josh: That's.
Josh: When the Congress.
Emily can't access the SAP server why can't you do that again in the past it was a long process analyzing globe analyzing things here. It's Super simple you asked the question. It tell you Emily actually attempted to do better there was a rule with blocking here at ask you do you want to weather and changed the rule based so she can actually access with <unk>.
Josh: <unk>.
Josh: <unk>.
Josh: Our new product line. These are the key products.
Josh: We launched the pilot.
Josh: With Lake manage surety.
Josh: Natural language against simplicity management us once again.
Speaker Change: Thank you.
You say, yes policy being installed boom.
Speaker Change: Two things.
Speaker Change: Before I took too much too many too much.
Boom it's done.
Speaker Change: Two to create that can do now.
These tasks when you do them with our product if you are an expert.
Josh: In the Metro second AI.
I mean, it takes you a few minutes. If you are not expert it can take much longer if youre doing it with a competitive product. It can take you many many.
Josh: New technologies, securing cloud SaaS.
Josh: Uh huh.
Josh: In concert with.
Josh: We have some.
Josh: Hello.
Even ours to analyze the situation to find the right place, especially for larger enterprises with hundreds of thousands of rules and we need to.
Josh: Remote access.
Josh: Tomorrow.
Josh: In acquisition.
Josh: In Q3 <unk>.
Josh: So based on that.
Josh: S somewhat.
Diagnose the situation and so on and if again.
Josh: From last year.
Josh: New pathology and the product to come late in the year actually.
Our AI copilot has not limited just for visa material task. It can do everything from asking are we protecting against the latest threat and again it will go and pull the latest threats from the REIT databases check the configuration of all the security installation and we'll tell you, yes, youre protected or no.
Josh: Perfect.
Josh: So <unk> on the cloud.
Josh: And again part of the platform.
Josh: Ethanol.
Josh: That is our quantum force to get <unk>.
Josh: This is very very important because it drives part of our business. So if we divide the previous generation of Quant clients you can see here the new lineup Glen says it make line.
Click here to get updated.
I believe by the way that AI will play a major role in the world in general, but in our industry can make.
Some bigger evolutions in what we're doing now is just the first step we will see much more so just before we finish speaking of AI.
Josh: To X <unk>.
Josh: <unk> formation optimized for <unk> mentioned, the over <unk> engines and with the highest.
Major partnership we announced in the AI space is about securing.
Josh: Prevention retro in the industry for 99, eight based on demand for coal.
The AI cloud infrastructure.
I'm sure you all know when you all follow some of the biggest investment in our world today are building AI server farms in the cloud that delivers always wonderful value of AI.
Speaker Change: So very proud of.
Josh: We give up.
Josh: A lot of.
Josh: Okay.
Josh: New customers to upgrade and refresh the existing customers and started.
These are based primarily on Nvidia chip sets and what we announced last month was the first AI infrastructure firewall, which means that we can now embed the checkpoint firewall to protect the AI servers in the cloud on the AI chip sets from Nvidia, We launched this partnership based on the work that we're doing.
Josh: Started taking customers value the new.
Josh: New hardware and then you saw but I think it's very fresh.
Josh: For the rest of the.
Josh: Plus the northeast I meant I meant the infinity.
Josh: And you can see a several year.
Josh: Okay.
Josh: Okay.
Josh: Cereals.
For many years several years, we've nvidia even before the AI generation, but based on where we have a lot of our software that can run on Nvidia chipsets later in the year, we will make it available and I hope that we will present, a very interesting market opportunity and very very important because right now <unk>.
Josh: Clearly capex is getting server why can't you do parcels alone process utilizing both analyzing.
Josh: Huge.
Josh: After the quarter.
Josh: Still heavily.
Josh: Third to prove with blocking.
Josh: Q do you.
Josh: Instead of roof space, so she cannot be.
Josh: Server you say, yes, Paul is being used.
Much of the infrastructure of it's up there in the cloud remains exposed to the open internet and its level of protection is far from being sufficient from where we want to be so I think this represents a number of business opportunity and there is many many more around the transformation to AI. So.
Josh: Boom done.
Josh: Yeah.
Josh: Our reported.
Josh: Again, it takes human nature or no.
Josh: Taking much longer to do.
Speaker Change: Good luck.
Speaker Change: Can take.
Speaker Change: Maybe maybe.
Speaker Change: Even our too.
To summarize my presentation in Q1.
Speaker Change: John.
Speaker Change: Okay.
We had a strong start to 2024, the infinity platform investments are delivering returns with different products with email growing with many other products are growing with the sales of the infinity agreements for.
Speaker Change: This would have hundreds of thousands tools and we need.
Speaker Change: Okay.
Speaker Change: The situations.
Speaker Change: Yes.
Speaker Change: AIG is not limit for materials.
Speaker Change: Briefing fracking.
Our sophisticated comprehensive security architecture for customers growing quite fast, which is a great potential for the future, but already generating 14% of our business revenues EPS at the top of our projection subscription growth new business growth. So both on the quantitative on did the qualitative measures.
Speaker Change: Thanks.
Speaker Change: Right.
Speaker Change: Yes, It will go in the late spring.
Speaker Change: Okay right debate check the configuration.
Speaker Change: The <unk> solution and we yes, you protect remote click here to get bigger.
Speaker Change: I believe.
Speaker Change: Yeah.
I think we've done pretty well to start the year and we're looking forward for the next few quarters and hope that we keep that.
Speaker Change: Robert brings us can make.
Speaker Change: Some bigger balloon them now.
Speaker Change: That would be much more cleanly.
Speaker Change: Speaking of site.
Good start for the year.
Speaker Change: Pedro.
And before I finish and open it for your questions, maybe speak a little bit about our projections for the second quarter.
Speaker Change: The.
Speaker Change: The AI space is about securing.
Speaker Change: Hey, Claudia for sure.
Speaker Change: <unk>.
Sorry, the projection.
Speaker Change: Okay.
Speaker Change: They're building.
Disappeared note, we didnt disappear they will be right here.
Speaker Change: AI server farm the cloud that deliverable.
So projections are generally in line with what we've talked to the first quarter and the beginning of the year revenues are going to be between 607 million to $637 million.
Speaker Change: Wonderful value AI.
Speaker Change: So base.
Speaker Change: Lithia chipsets and we are now.
Speaker Change: Months.
Speaker Change: Dr <unk>.
Speaker Change: We can now.
<unk> earnings.
Earnings per share is expected to be between $2 10 to $2 20 <unk>.
Speaker Change: Sure.
Speaker Change: That's the servers in the cloud.
Speaker Change: On the.
GAAP EPS approximately <unk> 44 cents.
Speaker Change: From the media will.
Speaker Change: With respect <unk>.
Less than that I think this is kind of where we've been very consistent with.
Speaker Change: Familiar.
Speaker Change: We didn't even toward the AI generation, but.
Where we started and I hope that we will going to have a good reminder, for the year. So thank you very much and I'll be very happy to open the call for.
Speaker Change: We have a default.
Speaker Change: So it can run on there.
Speaker Change: Chipsets later in the year, we will make it available.
Speaker Change: <unk> will present, a very interesting market for agility and various people because no model today.
Questions.
All right as always please remember one question.
During your period.
Speaker Change: Sure Vin.
First step is going to be Joseph Gallo Jefferies, followed by Sally Ani is bofa.
Speaker Change: But the open internet.
Speaker Change: Perfect.
Speaker Change: Apart from B C.
Awesome. Thanks for the question I wanted to start high level, how would you characterize the business environment in <unk> and then what's embedded in guidance I'm not sure. If I saw a calendar 'twenty for guidance and then given your combos with customers how are they viewing that or cyber budgets, what areas are being prioritized any sense of fatigue seen by others I know you called out.
Speaker Change: Where we want to be so it can be.
Speaker Change: For these <unk> and verge many many more around.
Speaker Change: Speedway.
Speaker Change: To summarize my Temptation Q1.
Speaker Change: We added <unk> to 'twenty.
Speaker Change: Okay.
Speaker Change: Excuse me.
Speaker Change: Sure.
Strength in EMEA.
Speaker Change: Yeah.
As the U S budget lagging relatively so.
Speaker Change: For product <unk>.
Speaker Change: Sales of <unk>.
That was a very comprehensive question I'll try to answer it first we had a good quarter. So I think I've already conveyed that in terms of the environment around us. It was kind of mixed I'm not as positive as I've seen from our results.
Speaker Change: Unity agreements for <unk>.
Speaker Change: <unk> coffee <unk> tea.
Speaker Change: Sure for tumors.
Speaker Change: Fast, which is great potential for the pivotal regenerate 13% of the business revenues EPS at the top of our projection subscription.
Jim.
On one hand, the security marketplace remains healthy so I don't have any.
Speaker Change: Description growth new business growth.
I mean, I think that's going to be good and going for us for several years, but I don't think with customers started.
Speaker Change: The quantitative on did the qualitative measures.
Speaker Change:
Speaker Change: Well to start the year.
<unk> big budgets.
Speaker Change: And they're looking for.
We have been before they are keeping relatively tight on some of their budgets, especially for some of the areas that we are in.
Speaker Change: For the next few quarter and hope to keep her.
Speaker Change: Good.
Our industry remains very competitive.
Speaker Change: Before I finish let me.
Speaker Change: Christian maybe speaking about our projections for the quarter.
And I think that.
Again, while we haven't seen much effect in the first quarter I do anticipate we'll see more competitive pressure moving forward. So I think overall, it's a good market, but it's not we haven't we've definitely returned from the down market that we've been into a year ago into a more stable healthy market, but we're still noted the mark.
Speaker Change: Jim.
Speaker Change: The project team.
Speaker Change: Okay.
Speaker Change: Disappeared.
Speaker Change: Great.
Speaker Change: Sure.
Speaker Change: So project.
Speaker Change: In.
Speaker Change: Okay.
I'd like to be in from the geography standpoint, our strength that we've seen was was very strong in Europe U S was good new business grew but a little bit more tight.
Thank you our next step is tally Ani.
Hey can you hear me followed by Adam <unk>.
I don't know why my video doesn't show up I don't know if you can see me or not but.
How youre doing.
Thank you Okay I have a question.
The I look at the quarter and then I look at what could drive double digit growth for next year.
And if I work with your model and I assume that products are flat.
Maintenance is like plus 2%.
And subscription is up 15, which is what we have seen this quarter I'm getting 67% growth I'm, not getting 10% and you talked in the past about the opportunity to grow total revenues by double digits, no timeline, but to grow so what are the assumptions or what needs to happen.
Four for revenues to grow double digits is it about product revenue growing again double digits or is it about subscription accelerating.
What are the components that need to happen for you to grow double digits and again no timeline on it I just wanted to understand how.
Our growth accelerates from here.
We have talked about.
A good question. So I think there are several factors first of all product revenue needs to grow I mean, he doesn't need to grow by the way double digit it needs to grow at least high single digit it's something that we need we.
Opening big budgets.
We have been before they are keeping relatively tied to some of their budgets, especially for some of the areas that we are in.
We need to execute better and I think with the new product in the fall that we launched in Q1.
Definitely can drive refresh more refresh and can drive growth in product revenues in terms of what else I think that the most the main drivers for the growth should be the sassy.
Speaker Change: Our industry remains very competitive.
Speaker Change: And I think that.
Speaker Change: Again, while we haven't seen much effect in the first quarter I do anticipate we'll see more.
They may 31 acquisition that we just acquired it.
Speaker Change: Okay.
Speaker Change: Competitive.
Two quarters ago, it's still not significant to our business. We just acquired and we talked about integration as it takes time, but I think that the potential. These together with the continued their strong growth in the Omani email.
Speaker Change: No. We haven't we definitely returned from the down market, but we've been into a year ago into a more stable healthy market, but we're still not at the market I like it to be and from the geography standpoint, our strength that we've seen was was very strong in Europe U S was good.
And the refresh I think thats can drag can bring us ultimately to double digits again without any timeline, but I think that's the potential.
Great I love your background flowers. Thank you.
Speaker Change: New business grew by a little bit more tight.
Speaker Change: Thank you our next step is tally Ani.
Alright next does Adam Tindle from Raymond James followed by shallow Liao from TD Cowen.
Speaker Change: Hey can you hear me followed by Adam <unk>.
Alright. Thank you Gil I just wanted to start with a competitive environment question in observing that you're posting nearly 7% billings growth here will see actual results, but probably outpaces, both fortinet Palo Alto this quarter based on their guidance. Your new business is growing double digits. Just wondering if you could maybe touch on the rationale and sustainability.
Speaker Change: I don't know why my veto doesn't show up I don't know if you can see me or not but.
Speaker Change: How youre doing.
Speaker Change: Thank you Okay I have a question.
Speaker Change: I look at the quarter and then I look at what could drive double digit growth for next year.
<unk> of that trend, where youre outperforming those competitors from a growth standpoint, and secondly, as we look forward one of those competitors on their last earnings call announced an intent to pursue a very aggressive pricing strategy. Just wondering if you could maybe touch on your thoughts and unexpected response for that thank you.
Speaker Change: I work with your model and I assume that products are flat.
Speaker Change: Maintenance is like plus 2%.
Speaker Change: And.
Speaker Change: And subscription is up but we have seen this quarter I'm getting 67% growth I'm, not getting 10% and you talked in the past about the opportunity to grow total revenues by double digits.
Thank you. So first you are right. There is some pressure on the industry I think we so big part of it last year, our competitors are seeing it a little bit of delay I don't know how much of a delay.
Speaker Change: Okay.
Speaker Change: What are the assumptions.
Speaker Change: Or what needs to happen for for revenues to grow double digit is it about product revenue growing in double digits or is it about subscription accelerating what is what are the components that need to happen for you to grow double digits and again no timeline on it I just wanted to understand.
Is about financial issues that.
And how much of it is whereas the markets versus where is their financial results, but we've seen a huge pressure in the market a year ago I think we're getting out of it they seems to be based on again. The reports you are talking about a little bit behind us in that cycle.
Speaker Change: Our growth accelerates from here.
Speaker Change: So I think we have.
Speaker Change: That's a good question. So I think there are several hospitals.
I think the fact that they are under pressure and seeing.
Speaker Change: While the <unk> rule I mean, he doesn't need to grow by the way double digit like this to grow at least high single digit it's something that we need then we need to execute it better and I think with the new product in the past composite relaunch in Q1 in that definitely can drive refresh more refresh and can drive growth in product revenues.
Pursuing aggressive strategies means that we will have a more competitive market.
Let's.
Evident.
I do think with customers' needs to buy the best security I don't think if you buy.
The second best security for free it's not very good and guidance I think it's not.
Speaker Change: In terms of what else I think that the more let's say.
Speak about other companies and venture both of them, but if you open now the reports you will see the superiority of the checkpoint technology not just in blocking and the higher prevention rate like we've seen with Myer com, an almost perfect score, but we have products vulnerabilities and even failing to fix these products from their abilities on timely manners and explore.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: The main drivers for the growth should be there faster than they may 31 acquisition that we just acquired.
Speaker Change: Part of the goal its still not significant to our business. We just acquired them. We've talked about the integration takes time, but I think that that's that's the potential. These together with the continued strong growth in domine email and the and the refresh I think thats been Blake can bring us up to double digits again without any debt.
Hosing big parts of our infrastructure based on some of our competitors' products. These are and by the way. These are not new trends. If there's things you can see.
Speaker Change: Potential.
Speaker Change: Okay, a lot of background flowers.
That you can track some of it is published publicly and you can see that we do commit to the best security and I urge every customer and I think we definitely can do a better job in educating the market of it not compromising on securities not even for free.
Speaker Change: Thank you.
Jonathan: Okay.
Jonathan: Alright. The next is Adam Tindle from Raymond James followed by shell.
Jonathan: GTT gallon alright.
Speaker Change: Alright. Thank you Gil I just wanted to start with competitive environment question in observing that you're posting nearly 7% billings growth here will see actual results, but probably outpaces, both fortinet Palo Alto this quarter based on their guidance. Your new business is growing double digits. Just wondering if you could maybe touch on the rationale and sustainability.
<unk>.
I think it should be our key message get let's win with the best security.
Alright.
Our next.
Person up his salary out followed by gathered Ela voyages.
Jonathan: That trend, where youre outperforming those competitors from a quote.
Jonathan: Yes.
Thank you Hey, good afternoon guys.
Jonathan: Standpoint.
Gil any word about the CEO search.
Jonathan: On our last earnings call announced and intend to pursue a very aggressive pricing strategy. Just wondering if you could maybe touch on your thoughts and unexpected response for that thank you.
And.
As we think about the new business or even the renewals that you had.
Speaker Change: Thank you so first <unk>.
I think you've mentioned several more.
Speaker Change: Right. There is some pressure on the industry, we so big part of it last year, our competitors seeing it a little bit of delay I don't know how much of circulating rig is about financial issues.
Multimillion dollar transactions, but you guys have any eight.
<unk> related transactions this quarter.
Yes, Okay. So I think.
Jonathan: And how much of it is where's the market versus towards their financial results look we've seen a huge pressure in the market a year ago I think we're getting out of it very seems to be based on again. The reports you are talking about a little bit behind us in that cycle.
I'll start with the CEO search I think we.
Talked about the intention last quarter, we seem to have started the process is going to be a good structured well fault of process and we've been at the beginning of the process. It will take time I think like we said last time.
And it's moving on.
Jonathan: I think the fact that they are under pressure and seeing.
In terms of large deal we had deal all sizes, we have some new wins that are eight digit deal. It's a digit for multiple years. So the impact on the first year is going to be again, where he can better with me on the numbers, but I think for the first year, it's only seven digit, but we had few large new customers with.
Speaker Change: In pursuing aggressive strategies means that we will have a more competitive market.
Jonathan: <unk>.
Jonathan: Evident.
Jonathan: I do think with customers' needs to buy the best security I don't think if you buy.
Jonathan: The second best security for free it's not very good in.
Jonathan: And guys I think it's not a I hate to speak about other companies and best for both of them, but if you open now the reports you will see the superiority of the checkpoint technology not just in blocking and the higher prevention rate like we've seen with Myer com, an almost perfect score, but when products vulnerabilities and even failing fixed products from their ability.
A digit contract.
Yes.
And we have.
Southern Europe, and your new logos would they did a.
One new logo would say with data digital contracting and <unk> and we had several.
It doesn't mean that the billing was a digit and remind you because the billing can be flexible in terms of the bookings that we had.
Jonathan: On timely manners, and exposing big parts of our infrastructure based on some of our competitors' products. These are and by the way. These are not new trends with these things you can see.
<unk>.
Deals.
Thank you.
Alright, our next.
Speaker up is Gabriella Borgias, followed by Jonathan Ho.
Jonathan: But your contract some of it is published publicly and you can see that we do commit to the best security and I urge every customer and I think we definitely can do a better job in educating the market of it not compromising on securities not even for free so with.
Hi, and thank you for taking our question.
Taken key dynamic in around 10 refresh cycle, particularly as if the comp to net trading that cropped up for refresh.
Physicians on how they're thinking about best firewall footprint in the firewall budget.
Jonathan: I think should be our key message get let's win with the best majority.
Passing patch it on an apples to apples what do you see in terms of pricing as customers think about box upgrade cycle. Thank you.
Jonathan: Alright.
Jonathan: Our next.
Jonathan: <unk>.
So whether it's an excellent question I think first overall. These two markets are all of these markets will converge and what you'll see is kind of mesh network. What it includes the remote users the branch offices data centers, the cloud private and public cloud data centers all of these needs to be interconnected and I think that's one of the great benefits of a checkpoint.
Jonathan: Perfect.
Jonathan: So.
Jonathan: Yeah, followed by Gabrielle <unk>, Hey, good afternoon guys.
Jonathan: Gil any word about our CEO search.
Jonathan: <unk>.
Jonathan: As we think about the new business, so even the renewals.
Jonathan: Pat.
Can provide in the marketplace. There are today, if you look at the market where are today standalone vendors are doing a decent job in the SaaS market. Some in branch offices and remote users, but most converged with the rest of the enterprise with the data centers and so on there are companies.
Speaker Change: I think you've mentioned several more.
Jonathan: Multimillion dollar transactions, but did you guys have any eight.
Jonathan: <unk> related transactions this quarter.
Speaker Change: Yes, Okay. So I think I'll start with the CEO search I think we.
Jonathan: Talked about the intention last quarter, we seem to have started the process is going to be a good.
With that do more of the data center security, but again don't have the SaaS model and there are companies that have both but we are not today.
Jonathan: Structured well fault of processing within the beginning of the process It will take.
Speaker Change: We said last time.
Integrated we are working on the platform when everything is going to be integrated over the network in terms of budget I expect a lot of it to come from the same budget and by the way.
Jonathan: And it's moving on.
Jonathan: In terms of large deals we have deal all signs with some new wins that are eight digit deal with a digit for multiple years of the impact on the first year is going to be but again <unk> is.
The benefit is not as the mesh architecture, we call. It also a hybrid architecture. It's also with customers can use the same policy is the same high level of security.
Jonathan: Better.
Jonathan: Number is but I think for the first year. It was 72, but we had a few large new customers with a digital contracts.
Get the most optimized deployment in the most optimal deployment can be sometimes on premise can be sometimes on device and can be sometimes in the cloud. It's very important baidu hate when you think about it when people deploy networking solutions.
Jonathan: Yes.
Jonathan: Since then we have to.
Jonathan: Some of our newer and your new logos.
Josh: One new logo would say with eight the Egypt contract again, we'll deal and we had several.
Invest total for energy to get the fastest speeds to get the lowest latency, but for example in all these cases doing things on device or on premise delivers 100 times better results than doing it in the cloud in some areas shifting away to the cloud may also make sense, but that's where it's important that you have the hybrid structure.
Josh: It doesn't mean that the billing was aged and remind you because the beauty of the flexibility in terms of the bookings.
Speaker Change: You too.
Josh: Deals.
Josh: Okay.
Josh: Alright, our next.
Gabriela Borges: Speaker up is Gabriella voyages, followed by Jonathan Ho.
Gabriella: Hi, and thank you for taking the question.
That delivers the optimal not just the best security, but also the optimal performance and I think we will have both in.
Jonathan Frank Ho: I would love to take on key dynamics and.
Josh: Around the refresh cycle, particularly as if the continent.
In terms of the budgets.
Right now we are seeing good traction on the subsea side, but it's still at least in our business still in the small mainly small medium customers, but it's also the right now the product offering, but we acquired we will integrated.
Speaker Change: And that product refresh any observations on how they're thinking about best firewall footprint firewall budget. This is beth.
Josh: Gotcha.
Josh: Okay.
Josh: Okay.
This year to be this kind of overall architecture and platform. It works together.
Josh: Okay.
Speaker Change: Thank you.
Any size so that is important on the refresh cycle of our data center the core of our business.
Speaker Change: So whether it's an excellent question I think first overall these two markets are all of these markets, we converge and what you see as kind of permission network. What it includes the remote users or branch offices data centers, the cloud private and public cloud data centers all of it needs to be interconnected that's one of the great.
I see good and healthy.
Activity, especially on the high end on the big data centers.
But I don't see today with budgets are open up budgets are still relatively tight there. So while I do expect and we do see some signs for improvement in the second half of the year and while I do think with our forest product family will open some of it it still hasn't happened and budgets are still tight.
Josh: Sure.
Josh: Providing the marketplace. There are today, if you look at the market where are today standalone vendors are doing.
Josh: A decent job in the Saudi market, some retro officer remote users, but most converged with the rest of the enterprise with the data centers and so on there are companies that are.
These spendings.
Thank you for the call.
Alright next step is Jonathan Ho followed by Joshua Tilton.
Josh: Do more of the data center security, but again don't have the <unk> more than there are companies that have both but we are not today integrated we are working on a platform when everything is going to be integrated over the network in terms of budget I expect a lot of it to come from the same budget and by the way.
Hi, Good morning can you maybe help us understand how your infinity contracts that you already have in place have been growing and specifically what type of uplift you see from customers that maybe have had these contracts in place for a while now thank you.
Josh: Okay.
So first most of it I don't want to give too specific data because it is kind of.
Josh: The picture is also with customers can use the same policies the same high level security.
Confidential I don't want to fall into the or on the wrong gears.
Josh: But to get the most optimized deployment in the most optimal deployment can be sometimes on premise can be sometimes on device and can be sometimes in the cloud. It's very important baidu hate when you think about it when people deploy networking solutions.
But generally speaking we do see with infinity customers are or no just committing for a longer period of time and getting more comprehensive security, but are committing to us to a much bigger budgets.
And again, we've done that comparison, because you know, it's a simple trick to convert the customer for a simple products buying into a longer term contract when we actually don't increase the value or sometimes even the opposite so we did a very fair.
Josh: Invest total for energy to get the fastest speeds to get the lowest latency, but for example in all these cases doing things on device or on premise delivers a 100 times better results than doing it in the cloud in some areas shifting away to cloud may also make sense, but that's where it's important that you have the hybrid struck.
Analysis of our Infinity agreement customers in almost all the cases, there is a significant growth in the customer the amount of customer business with the customer does with us. Some of it also grows over time and I think.
Josh: <unk> delivers the optimal not just the best security, but also the optimal performance and I think we will have both.
Josh: In terms of the budgets.
Josh: Right now we are seeing good traction on the subsea side, but it's still at least in our business still in the small AG small medium customers, but it's also the right now the product.
What I've seen generally where you can comment most of these contracts when they are being renewed were being renewed in the.
In a bigger way.
Yeah, Yeah, Yeah, Yeah, Yeah, I mean, we do see that most of the other to engage with us and Infinity on also in daily Noonday Infinity, It's usually with higher spending annual spending so that may end up taking more product Provost E mail or.
Josh: Great.
Josh: And with required we will integrated this year to be this kind of overall architecture and platform. It works together at any size.
Josh: That is important on the refresh cycle of our data center the core of our business am I see good in the healthy.
It could just as you saw it again in <unk>.
We see that the positive side.
Josh: Typically, especially on the high end on the big data centers, but I don't see today with budgets are open up budgets are still relatively tight there. So while I do expect and we do see some signs for improvement in the second half of the year and while I do think with our forest product family will open some of.
Thank goodness.
Excellent. Thank you.
Next up is Joshua Tilton, followed by Rob Owens.
Hey, guys Guillermo.
Yes, yes.
Alright.
Just one from me I guess.
Any way you could just help us understand what was the impact to the quarter from some of these newer appliances.
Josh: It still hasn't happened and budgets are still.
They started shipping in the quarter, but was there any benefit or maybe even a negative as people kind of just weighted to buy some of this newer stuff and then maybe just how should we think about the pace of growth throughout the rest of the year.
Josh: These spendings.
Speaker Change: Thank you for the call.
Josh: Alright next step is Jonathan Ho followed by Joshua Tilton.
Jonathan Frank Ho: Hi, Good morning can you maybe help us understand how your infinity contracts that you already have in place have been growing and specifically what type of.
As you see some of your customers look to adopt the newer hardware.
So I can make gastar Gielan then okay. So I think in terms of the foundation that allows us with it.
Also we did see positive traction mainly on the IR site.
Josh: The uplift.
Josh: Do you see from customers that maybe have had these contracts in place for a while now. Thank you most of it I don't want to give too specific data because it is kind of.
Of that quantum foster classes, but again the transition. It takes time it takes time because significant part of our customer needs to do so litigation International litigation in order to in order to implement a new product. So that's my two.
Josh: Confidential I don't want to fall into the or on the wrong gears.
Josh: But generally speaking, we do see that infinity customers R.
Josh: No just committing for a longer period of time and getting more comprehensive security, but are committing to us to a much bigger budgets much again without comparison.
Sometimes even negative effect in this quarter I think we did see a healthy transition we did see some nice dsos or with the new product with the new product that we launched.
And as your question for the remaining for the AV deal, citing again, we hope to see that it mainly on the second half of deal, we're going to see more and more of our customers, taking the new product that hopefully will drive growth what product.
Josh: Simple.
Josh: Corner to Costar for simple products buying into a longer term contract when we actually don't increase the value or sometimes even the opposite so we did a very fair.
Because as I mentioned, it it might take a quarter or two until the certification processes is.
Josh: Analysis of our Infinity agreement customers in almost all the cases very significant growth in the customer at the amount of customer business with the customer does with us.
Is is going on and hopefully it will help us to grow our product also in the second half of it.
Thank you guys. Thanks, Matt.
Josh: Some of it also grows over time and I think what <unk> seen generally where you can.
Alright next step as Rob Owens, followed by Brad Zelnick.
Josh: [laughter].
Great. Thanks, Kipp Gil in your prepared remarks, you talked about AI infrastructure firewall and I was hoping you could maybe build on those comments because that feels like a net new opportunity potentially for the space. Thanks.
Josh: Most of these contracts when they are being renewed were being renewed.
Josh: In a bigger way.
Speaker Change: Yes, I mean, we do see that most of the other engagement.
Josh: Also in daily Noonday Infinity, it's usually with highest ending annual spending so that may end up taking more product provost email or.
But we are absolutely right thats, a net new opportunity versus hundreds of thousands of.
AI servers now deployed around the world mainly with few hundred.
Josh: It could just as you saw it again.
Josh: We see that the positive side.
Service cloud AI service providers that are building that infrastructure.
Josh: The integrators.
Speaker Change: Excellent. Thank you.
Speaker Change: Next up is Joshua Tilton, followed by Rob Owens.
They are buying pretty complicated systems that are based on the AI on the Nvidia designs and the Nvidia chipsets.
Joshua Alexander Tilton: Hey, guys good morning.
Speaker Change: Yes, yes.
Speaker Change: Alright.
Speaker Change: Just one from me I guess.
I've looked into ways designed they're pretty complicated very different by the way I'm sure that you followed the <unk> industry, but when looking into the architecture of design wins are very different than traditional servers.
Josh: Any way you could just help us understand what was the impact of the quarter from some of these newer appliances.
Josh: They started shipping in the quarter, but was there any benefit or maybe even a negative as people kind of just weighted to buy some of this newer stuff and then maybe just how should we think about the pace of growth throughout the rest of the year.
Traditional server is mainly one CPU here versus like three or four different types of processors each one in charge of different activities.
Josh: As you see some of your customers look to adopt.
Josh: Sure.
Josh: For hardwood.
And we are where we are and these are as you probably know these costs.
Josh: So I can make is target and then okay. So I think in terms of the foundation that allows us we have with Dupont on pulse, we did see positive traction mainly on the IR site.
Close to $200000 per server and <unk>.
Usually in a typical.
Josh: It's one of the classes, but again the foundation. Some it takes time it takes time because significant part of our customer needs to do certification in Dennis certification in order to in order to implement a new product. So that's my two.
The installation versus.
We were pleased with her being installed so he's a pretty big infrastructures.
First in terms of the security challenge most of these remain open to the Internet because we utilize the high speed links because we are installed on the cloud environment. We're relatively open on lean to the internet, which means that if people heck through that and get through our network linked to the internet.
Josh: Sometimes even negative effect in this quarter I think we did see a healthy condition. We did see some nice DSO, so with the new product with the new product that we launched.
Josh: And as your question for the remaining for the AV deal, citing again, we hope to see that mainly on the second Apple deal, we're going to see more and more of our customers taking the new product.
They can do all kinds of bad stuff to the infrastructure from poisoning.
The learning process of day, our model and if that happens you need to retrain. It you can't even fix the arrow you need to do the training again to hacking into the books and taking over it and these are pretty big damages today because of the cost of the time on wet infrastructure, where.
Speaker Change: Hopefully it will drive growth last quarter.
Speaker Change: Because as I mentioned, it it might take a quarter or two until the certification processes is.
Speaker Change: Is the is going on and hopefully it will help us to grow out what I saw in the second half.
Where we are sitting in fact going back to the design web design is different types of processors, we are actually installing our software on the network processor of these boxes. So we don't impact the performance of the entire AI, but we are but we will be sitting on the network processor, we can control the flow.
Speaker Change: Thank you guys. Thanks, a lot alright next step as Rob Owens, followed by Brad Zelnick.
Rob Owens: Great. Thanks, Kipp Gil in your prepared remarks, you talked about an AI infrastructure firewall and I was hoping you could maybe build on those comments because that feels like a net new opportunity potential to defer the space. Thanks.
Speaker Change: So you're absolutely right, that's a net new opportunity versus hundreds of thousands of.
Make it a true firewall for the traffic between the Internet.
And the cloud or the the AI server itself the way I call it at least.
Speaker Change: AI servers now deployed around the world mainly with few hundred.
And make sure that the.
Speaker Change: Service cloud AI service providers that are building that infrastructure.
Great communication remain the clean very few morphemes few more features or interesting technological approaches like monitoring more security on which the entire device, but we will be able to implement two based on the current architecture. As I said. This is not this is a new product brand new market, which is high.
Speaker Change: They're buying pretty complicated systems that are based on the AI on the Nvidia designs and the Nvidia chip sets.
Speaker Change: I've looked into ways designed they're pretty complicated very different by the way I'm sure that you followed the <unk> industry, but we're looking into the architecture of design wins are very different than traditional servers.
Time estimating it because we've just started.
Talking to these vendors last month.
Speaker Change: In the.
So I think in terms of technology is that it is in the near mid term.
Speaker Change: The traditional server versus mainly one CPU here versus like three or four different types of processors each one in charge of different activities.
Time frame and the reason for that but it's not just an idea. We are running on these chipsets from India video for quite a long time. Some of it architecture has been part of our lightspeed products, where it's like two years old. So the technology dividend, we didn't start that development of technology today, we're making it a little bit different.
Speaker Change: And we are where we are and these are as you probably know these costs.
Speaker Change: Close to $200000 per server and.
Speaker Change: Usually in a typical.
Speaker Change: The installation versus thousands of leads that are being installed.
<unk> based on the specifics of the implementation, but that means that we expect a relatively short development cycle and we are starting the business development cycle in terms of understanding the structure of D. A.
Speaker Change: Big infrastructures.
Speaker Change: First in terms of the security challenge most of these remain open to the Internet because we utilize the high speed links because we are installed on the cloud environment. We're relatively open a lean to the internet, which means that if people <unk> and get frugal network linked to the Internet.
Kind of the supply chain and the.
<unk> shown here to get to visit to get to these customers.
Speaker Change: They can do all kinds of bad stuff to the infrastructure from poisoning.
And I think we can be pretty big absolutely.
Alright next step as Brad Zelnick, followed by Patrick Colville.
Speaker Change: The learning process of day on mobile and if that happens you need to retrain. It you can't even fix the arrow you need to do the training.
Great and you guys see me hear me.
And it is on sale.
Speaker Change: Yeah again.
Okay videos on Norwalk and snow yes.
Speaker Change: Heading into the box and taking over it and these are pretty big damages today because of the cost of the time on wet infrastructure, where we are sitting funds going back to the design web design or different types of processors. We are actually installing our software on the network processor of these boxes. So we don't impact the performance.
Great to see you guys I've got one for Gil and one for <unk>.
Cash flow I know is always going to be lumpy from quarter to quarter, but as we think about the full year is there anything to consider maybe timing or duration wise that would keep directionally at least cash flow growth somewhat in line with net income growth and then just for you Gil.
Speaker Change: <unk> of the entire AI, but we are but we will be sitting on the network processor, we can control the flow or make it a true firewall for the traffic between the internet and the cloud or the the AI server itself the way I call it at least.
M&A.
Checkpoint has always been very responsible capital allocation and M&A in particular are very disciplined buying some of the most innovative technology out there, but we're now at a moment, where it seems like there is dislocation in the private market I think we've all seen some shocking headlines, suggesting serious valuation compression why is this not a time to finally get aggressive to accelerate.
Speaker Change: And make sure that the vet communication remain the Cleveland few morphine fume.
Speaker Change: A few more features or interesting technological approaches like monitoring more security on its entire device, but we will be able to implement two based on the current architecture. As I said. This is not this is a new product.
<unk> in the market through M&A.
Thanks.
Okay. So I'll start with the cash flow. So first of all regarding the cash. So first of all for Q1. So Q1, we've seen our gasoline you need to remember that Q1 cash flow was mainly has been affected by the bidding in Q4, because most of the collection in Q1 is coming from the bidding in Q4, because most of it is in December same thing in Q1 that most of the bidding is coming in March.
Speaker Change: So market switch.
Speaker Change: Hi time estimating it could.
Speaker Change: Just started.
Speaker Change: To these vendors last month.
Speaker Change: Well I think in terms of technology is the season, the near mid term.
So although you did see 7% growth in building most of it we didn't collect in Q1 and in Q4 billion was down by 1% therefore that affected the cash flow in Q1.
Speaker Change: Time frame and the reason for that but it's not just an idea. We are running on these chipsets from India and video for quite a long time. Some of it architecture has been part of our lightspeed products, that's like two years old.
So you can expect the cash flow in Q2, I think for if were looking on for the full year. So it depends on the on the execution and the billing I think that we do see a stability in the duration. We did see as I mentioned in sales in Q4 I saw that the duration is pretty stable since Q3 last deal. So I think again its already low so I think that the comparables are already.
Speaker Change: So the technology that we didn't started development with technology today, we're making it a little bit differently.
Speaker Change: Based on the specifics of implementation, but that means that we expect a relatively short development cycle and we are starting the business development cycle in terms of understanding the structure of D.
So I don't think that there will be a duration effect on the billing.
And hopefully if the billing will grow same as in Q1, and even IL. That's all factors of course, okay.
Speaker Change: Kind of the supply chain in the distribution chain here to get to to get to these customers.
In terms of M&A first you're absolutely right for should be opportunity in the marketplace. We are aggressively looking and I'm seeing probably every week or two some interesting opportunity that we're evaluating.
Speaker Change: And we essentially <unk> absolutely.
Speaker Change: Alright next step as Brad Zelnick vault.
Brad Alan Zelnick: Hello, Bob.
Speaker Change: Patrick Cornell and you guys see me hear me.
The valuations are still not there in terms of being more rational.
Brad Alan Zelnick: And can deliver themselves.
What you see if you look at latest acquisition, you'll see companies with.
Brad Alan Zelnick: Okay. My videos on now we can see you.
Brad Alan Zelnick: Great to see you guys I've got one for Gil and one for <unk>.
$10 million to $20 million in revenue some even less threats are being sold for hundreds of millions of dollars.
Brad Alan Zelnick: Cash flow I know is always going to be lumpy from quarter to quarter, but as we think about the full year is there anything to consider maybe timing or duration wise that would keep directionally at least cash flow growth.
So.
Again, it doesn't mean that we can do it we need the several deals like that we did free M&A deals last year.
We did some deals like that last year.
But it's hard to find really quality companies.
Brad Alan Zelnick: In line with net income growth and then just for you Gil.
Brad Alan Zelnick: M&A.
The opportunities with companies that have more significant revenue stream I havent seen some really interesting one there are a few in distressed situations. When they are but we're losing hundreds of millions of dollars and again. Our hope here is not to get is to get something that they don't have the growth momentum usually.
Gil: <unk> has always been very responsible in capital allocation and M&A in particular very disciplined buying some of the most innovative technology out there, but we're now at a moment, where it seems like this dislocation in the private market I think we've all seen some shocking headlines, suggesting serious valuation compression why is this not a time to finally get aggressive to accelerated consolidation.
We have the growth momentum when valuation is not a is not a very rational.
Brad Alan Zelnick: <unk> in the market through M&A.
Brad Alan Zelnick: Okay.
Brad Alan Zelnick: The cash flow.
So we are looking at the one that either have super interesting technology that we can tuck into our platform and I think that would create an opportunity even if the devaluation is hard to justify in the short term at least.
Brad Alan Zelnick: Oh.
Brad Alan Zelnick: Regarding the cash so first of all for Q1, so Q1 within our gasoline to remember the Q1 cash flow was mainly affected by the bidding and <unk> because most of the collection in Q1 is coming from the bidding in Q4.
Brad Alan Zelnick: But most of it is in December same thing in Q1 that most of the bidding is coming in March. So you did see 7% growth in building most of it we didn't collect in Q1 and in Q4, our billings was down by 1% therefore that affected the cash flow in Q1.
There are opportunities that will be more sizeable, but then at least the way I look at it we will need some rationale for the valuations and I think it is.
Still not where I think it will be it will get better in the future.
Brad Alan Zelnick: So you can expect the cash flow in Q2, I think for if were looking on for the full year. So it depends on the on the execution and the billing I think that we do see a stability in the duration. We did see as I mentioned in sales in Q4 I saw that the duration is pretty stable since Q3 last deal. So I think again its already low so I think that the comparables are already.
Alright.
This is Patrick <unk>, followed by a team of baloney.
Terrific.
My question is about like a CPE X versus now so what was entered into many at the <unk> conference.
Last month.
There was a lot of.
That's interesting tailwind the launch of the force firewalls.
Brad Alan Zelnick: So I don't think that there will be a duration effect on the billing and hopefully if the billing will grow same as in Q1 and even higher.
In my opinion, much improved messaging around the kind of platform and subscriptions.
Lina partner motion was announced but in your remarks today, you would have to kind of playing us down in terms of these factors. It seems like the messaging you want us to takeaways is the cycle is getting better and these things are coming later I guess.
Brad Alan Zelnick: It's also possible.
Brad Alan Zelnick: In terms of M&A first.
Brad Alan Zelnick: Yeah.
Speaker Change: Absolutely right for should be opportunity in the marketplace. We are aggressively looking at <unk>, probably are weaker too some interesting opportunity, but we're evaluating.
Is that how I should interpret it or whether.
Brad Alan Zelnick: The valuations are similar to there in terms of being more rational.
Product subscription.
Brad Alan Zelnick: What you see if you look at latest acquisition, you'll see companies with.
Partner.
Changes that impacted this quarter.
Brad Alan Zelnick: $10 million to $20 million in revenue some even less as they are being sold for one hundreds of millions of dollars.
I think the opportunities there I think we've done what we've done the right thing.
Brad Alan Zelnick: So.
Brad Alan Zelnick: Again, it doesn't mean that we can do it we need the several deals like that we did three M&A deals last year and we did some deals like that last year.
Super exciting new products in terms of the quantum force in terms in terms of budget.
<unk> and refresh and so all the market is still not where in the industry's competitive so and by the way sometimes it takes time now again, what I'm, saying is not is a very positive message in Q4, we launched some of the Super High end appliances, we did very silent loans, we do in their public launch we went for specific accounts and we sold <unk>.
Brad Alan Zelnick: But it's hard to find really quality companies.
Brad Alan Zelnick: The opportunities with companies that have more significant revenue stream I havent seen some really interesting one there are a few in distressed situation. When they are but we're losing hundreds of millions of dollars and again. Our hope here is not to get is to get something that they don't have the growth momentum usually.
Acceptance of these new models and this continued in the first quarter in the first quarter. We did the more general release of the entire appliance line 10 models from the low end to the high end and this is less targeted and we see that it takes a little bit more time for the take up now again, we had amazing numbers in Q1 don't get me wrong, and I think I'm done.
Brad Alan Zelnick: Yeah.
Brad Alan Zelnick: Growth.
Brad Alan Zelnick: Momentum valuation is not is not a very rational.
Brad Alan Zelnick: So we are looking at the ones that either have super interesting technology that we can tuck into our platform and I think that would create an opportunity even if the devaluation is hard to justify in the short term at least.
We've talked about the double digit growth in new business and so on so all of these are amazing results.
But you are right I am trying to calm it down a little bit because I don't see with customers the opening there.
Brad Alan Zelnick: Our opportunities that will be more sizeable, but then at least the way I look at it we will need some rationale for the evaluations and there I think.
Pockets at least not now maybe I mean, the expectation is that more of it will happen in the second half of the year and we will do a more massive refresh how we get more months of refresh requires the customers to free budget to do the certification the testing the implementation and I think we are set up to do all of it we are amazed.
Brad Alan Zelnick: Still not where I think it will be we'll get there in the future.
Speaker Change: Thank you Brian.
Brad Alan Zelnick: Patrick <unk>, followed by a team of baloney.
Brad Alan Zelnick: Terrific.
Speaker Change: My question is about like a CPE X versus now so what was interesting to me at the <unk> Conference last month was that there was a lot of.
Zinc price performance we have.
Great value in terms of the best security.
We have added.
Speaker Change: Interesting tailwind the launch of the force firewalls.
Everything that we know when we need.
Speaker Change: In my opinion, much improved messaging around the <unk> platform and subsea.
We have the services and by the way our services business.
Speaker Change: Okay.
Ones that help customers implement and design is growing very very fast. So that's a good sign because there is a huge shortage of.
Speaker Change: <unk>.
Speaker Change: Lina partner motion was announced but in your remarks today would that be kind of playing us down in terms of these factors. It seems like the messaging you want us to takeaways is the cycle is getting better and these things are coming later.
Yeah.
Skills in the entire cyber space worldwide, and we have when we built an amazing arm, which we call it the infinity platform services.
Speaker Change: Yes.
Speaker Change: Is that how I should interpret it or where the.
The Infinity Global services.
Can deliver amazing services is that planning and deployment and this is growing very fast with our customers. So I think we're set up to take advantage of it but at least for now I do see some tightening in the market yes.
Speaker Change: Product subscription.
Speaker Change: At a partner.
Speaker Change: Changes that impacted this quarter.
Speaker Change: The opportunities there I think we've done what we've done the right men working super exciting new products in terms of the quantum enforced in terms in terms of budget.
Alright next step is for T mobile on a followed by Joel Fishbein.
Speaker Change: <unk> and refresh and so on the market is still not where in the industry's competitive so and by the way sometimes it takes time now again, what I'm, saying is not is a very positive message in Q4, we launched some of the Super High end appliances, we did very silent launch during their public launch we went for specific okay.
Hey, good morning, good afternoon, and thank you for taking my question. This one's for you I wasn't 100% clear as to what were the driving forces behind another double take shape.
Bookings growth performance.
And I was hoping you could break that down between the four pillars MPL business and just wait.
Speaker Change: Yeah.
Speaker Change: Counts and we saw great acceptance of these new models and this continued in the first quarter in the first quarter, we need a more general release of the entire appliance line 10 models from the low end to the high end and this is less targeted and we see what it takes a little bit more time for the take up now again, we have amazing numbers in Q1 don't get me wrong and I think we've.
Are we at a high level.
For the last eight quarters or so you've consistently been around 45% ish operating margin envelope.
For us for a lot of us you've known the business for a very long time, where you stack.
Having maybe closer to 50%.
Brady Martin So im curious whats the path back to those levels from here.
Speaker Change: We've talked about the double digit growth in new business and so on so all of these are amazing results, but.
Almost a two year cycle.
Speaker Change: But you are right I am trying to calm it down a little bit because I don't see what customers they're opening.
Michael Thank you.
Thank you so as for the first question regarding the new business I think what we did see what drove this growth is I think <unk> mentioned the services, we do see more and more customers, taking our infinity global services.
Speaker Change: Pockets at least not now maybe I mean expectation is bit more effect will happen in the second half of the year and we'll do a more massive refresh how we get more months of refresh requires the customers to free budget to do the certification testing implementation and I think we are set up to do all of it we are amazing.
It's something we did see a very nice growth there in terms of new business. So that's one of the factors second we did see as we mentioned we did see a very nice traction for the high end appliances. So thats also drove our new business growth together with the Armani, EMA, which is consistently growing and increasing its AOR as of quarter end.
Speaker Change: Price performance we have.
Speaker Change: Great value in terms of the best security.
Speaker Change: We have however.
That was the main driver main driver for the new business that we've seen.
Speaker Change: Sure.
Speaker Change: And everything that we know when we need we have the services and by the way our services business the ones that help customers implement and design is growing very very fast with a good sign because there is a huge shortage of.
As for the operating margin. So I remind you again in terms of first half of this year, the adult and margins deal I think we guided between 42 to 43 four bookings on the full year.
The operating margin and that's mainly because of again, well keep investing and it's mainly because the acquisition that we've done last year.
Speaker Change: Skills in the entire cyber space worldwide, and we have when we built an amazing arm, which we call it the infinity platform services.
Half of our expenses this year and then we just acquired them at the end of Q3. So that has a dilutive effect on the short term hopefully we'll be able to increase the operating margin in the long term if will this acquisition together as I mentioned, we I got asked I was asked about how we can reach double digit growth in revenues I think.
Speaker Change: Our the Infinity Global services.
Speaker Change: Can deliver amazing services is that planning and deployment and this is growing very fast with our customers. So I think we're set up to take advantage of that but at least for now I do see some tightening in the market yes.
The double digit growth in revenue, if we are going to drive it by necessity and the email and more product growth I think that can drive us back to a better two higher operating margin also I think will also today in a very good operating margin but.
Speaker Change: Alright next step is for T mobile on a followed by Joel Fishbein.
Speaker Change: And good morning, good afternoon, and thank you for taking my question. This one's for you I wasn't 100% clear as to where the driving forces behind.
I think that the main drivers is the.
Higher growth.
Right.
Speaker Change: Another.
Joel P. Fishbein: In other capital needs.
Joel P. Fishbein: New business bookings growth performing convert I was hoping you could break that down between the four pillars of your business and just secondly at a high level.
Thank you.
Alright next step as Joel Fishbein, followed by Ray Mcdonough.
Thanks for taking my question I guess Gill for you a follow up on <unk> question with regard to the partnership with Nvidia could you just give us a little bit more color on how that would work from.
Speaker Change: For the last eight quarters or so you've consistently been around 45% ish operating margin envelope and fresh for lattice you've known the business for a very long time, where we stand.
Looking through Nvidia and getting paid through Nvidia or will you have to work with the customer itself will checkpoint be shipping with the chips, just a little bit more color on that it sounds like a very big opportunity I know you're trying to.
Speaker Change: Having any closer to 50%.
Speaker Change: Mark and so I'm curious, what's the path back to those levels shrinking or is it.
Speaker Change: Almost a two year 16.
Speaker Change: Tycho Thank you.
Speaker Change: Thank you so as for the first question regarding the new business I think what we did see what drove this growth as <unk> mentioned the services, we do see more and more customers, taking our infinity global services.
We meet our expectations in the near term, but just from a longer term perspective, how will that work. Thank you.
First let's still working progress that we are doing the partnership in the technology implementation is done through <unk> and I think they really.
Tycho: It's something we did see a very nice growth there in terms of new business. So thats one of the factors second with ECM. We mentioned, we did see a very nice traction towards the high end appliances.
Our support people first we launched it on their developer conference on stage. So this is big in terms of the business model. It's still work in progress. My guess is that a lot of it will come either fruit.
Speaker Change: So that's all.
Speaker Change: So that drove our new business growth together with the Armani, EMA, which is consistently growing and increasing its ALLL every quarter.
<unk>.
The companies that are building. The Bulks is based on the Nvidia chipset or will come directly with the customers and the customers being the cloud service provider, which is not a huge number of customers in the world. Its few hundred customers overall.
Speaker Change: That was the main driver main driver for video business with the switching as for the operating margin. So I'll mango again in terms of first half of.
Speaker Change: <unk> don't have any marketing still athene, we guided between 42 to 43 four bookings on the full year.
Speaker Change: The operating margin and that's mainly because of again, well keep investing and it's mainly because the acquisition that we've done last year that are part of our expenses. This deal in May and we just acquired the <unk> fleet. So that has a need.
So it's very direct approach.
It's very targeted approach and prove that and I think we still need to find the right distribution model to get into the customers. The software might be already you know ready to use or available within the chipset.
Speaker Change: You'll see the effect on the short term hopefully, we'll be able to increase the operating margin in the long term.
Designed with where I believe in video.
Thank you.
Speaker Change: Acquisition together as I mentioned, we I was asked about how we can reach double digit growth in revenues I think the double digit drop in revenue. If we are going to drive it by necessity and the email and more products go up and that can drive us back to a better two higher operating margin.
Alright next step as Ray Mcdonald, followed by Dan Ives.
Great. Thanks for taking the question Brian I just wanted to follow up on both Brad and <unk> question I think when we spoke a lot about the drivers of potential drivers I should say of double digit revenue growth and we touched a little bit about how we get back to 50% operating margins or so over the long run, but when we think about the incrementals.
Speaker Change: Well I think.
Speaker Change: We're also today in a very good operating margin, but I think that the main drivers is there.
Speaker Change: Higher growth on the topline.
Pressures due to competitive dynamics in the Opex investments you guys have made and we think about.
Speaker Change: Thanks.
Speaker Change: Alright next step as Joel Fishbein, followed by Ray Mcdonough.
What it might take from a channel perspective, and go to market perspective in terms of <unk>.
Joel P. Fishbein: Thanks for taking my question I guess Gill for you a follow up on <unk> question with regard to the partnership with Nvidia on could you just give us a little bit more color on how that would work for me.
Investments in those channels to help drive some of the new boxes and refresh activity.
How should we think about.
Medium term to long term free cash flow growth and.
Raymond Michael McDonough: Working through Nvidia and getting paid through Nvidia or will you have to work with the customer itself will be.
And how that might relate to double digit revenue growth. If you get there understand billings is going to be a big portion of that but how much opex investments are going to be needed to to drive that double digit revenue growth over time, right and then just a clarification question.
Speaker Change: Be shipping with the chips, just a little bit more color on that it sounds like a very big opportunity I know you're trying to.
Speaker Change: We meet our expectations in the near term, but just from a longer term perspective, how will that work. Thank you.
Can you help us understand how much inorganic contribution there was to billings this quarter end.
Speaker Change: First of all it's still work in progress that we are doing the partnership in the technology implementation is done through <unk> and I think they really saw.
And another clarification, just the full year revenue guide I, just want to make sure thats unchanged.
Speaker Change: Our support people.
So I'll start with the last one the full year guidance might change same one in terms of the second question regarding the inorganic. So I think we did the early myself you want I think the other ones are not significant at all but eliminated 81 acquisition that helped us.
Speaker Change: Two loans.
Speaker Change: It'll vary developer conference on stage. So this is.
Speaker Change: In terms of the business model, it's still work in progress My guess is that a lot of it will come <unk>.
<unk> had approximately $7 million of revenue so.
Speaker Change: The companies that are building the bulk so based on Nvidia chipset or we come directly with the customers and the customers being the cloud service provider, which is not a huge number of customers in the world. Its few hundred customers overall.
$7 million of billings, So I mean, that's a so approximately a 1.1 and then something points. So that's in terms of that.
Dan.
So your question about the required investment so again I don't want to take to go into the numbers I think that we invested a lot in the last few years off in the go to market <unk> in the product side, we will have much better much broader portfolio.
Speaker Change: So it's very direct approach.
Speaker Change: A very targeted approach approve that and I think we still need to find the right distribution model to get into the customers. The software might be already you know ready to use or available within the chipsets.
To add a few years ago I think of course yourself on what we saw margin went down from one side of that but I think the disinvest and hopefully will drive aisle and we it's not that that will stop investing we are keep investing in hopefully we're going to continue to invest in we did much better portfolio that we have today it would be able to drive double digit Roe and Av.
Speaker Change: The inventory bleed into video.
Speaker Change: Thank you.
Speaker Change: Alright next step as Ray Mcdonald, followed by Dan Ives.
Raymond Michael McDonough: Great. Thanks for taking the question.
Raymond Michael McDonough: Brad I just wanted to follow up on both proud of the team's question and we spoke a lot about the drivers of potential drivers I should say of double digit revenue growth and we touched a little bit about.
Of course, it will drive double digit growth organic and also the billings and the cash flow. So I think all the questions are linked to the same thing that again I don't see I don't think that were going to stop into invest I don't think that we've gone up as well.
Raymond Michael McDonough: How we get back to 50% operating margins or so over the long run, but when we think about the incremental pressures due to competitive dynamics in the Opex investments you guys have me and we think about.
To promise any specific margin, but I think we have a very good margin today operating margin optimally would be even better in the neck.
Meet them over the long term.
And but again it depends on our execution and hopefully would be able to drive higher growth and higher operating margin.
Raymond Michael McDonough: What it might take from a channel perspective, and go to market perspective in terms of investments.
Raymond Michael McDonough: Investments in those channels to help drive some of the new boxes and refresh activity.
Maybe I'll take it a little bit differently here, giving you a very long perspective ive been asked about.
Raymond Michael McDonough: How should we think about.
Raymond Michael McDonough: Medium term long term free cash flow growth and.
Our operating margin since our IPO in 1996 and since then we started with.
Raymond Michael McDonough: And how that might relate to double digit revenue growth. If you get there I understand billings is going to be a big portion of that but how much opex investments are going to be needed to to drive that double digit revenue growth over time, right and then just a clarification question.
Also relatively high margin and people say can we sustained women my answer by the way he hasn't changed my focus is not in growing the margin. My focus is in growing a healthy business and I think we've done that over now for almost 31 years growing a healthy business.
Raymond Michael McDonough: Can you help us understand how much inorganic contribution there.
Raymond Michael McDonough: <unk>.
No.
Number one priority retire right now is not on their profitability is actually on the on the growth and I think we need to invest in growth over the last few years, we've invested a lot in building a cloud rocket and we've invested a lot in building the harm.
Raymond Michael McDonough: Since this quarter and another clarification just for full year revenue guide I just want to make sure. That's unchanged. So I'll start with the last one the full year guide as much range same one in terms of the second question regarding the inorganic. So I think we did the early myself you want I think the other ones are not significant at all.
Mooney email email offerings, we've invested.
Raymond Michael McDonough: The AQR acquisition that helped us.
A lot in the in other parts of the platform and in our research and our many many of our capabilities in the go to market. We built many different organizations to support that and to support a much better growth and I think we still did vet, while preserving I think industry record of not just <unk>.
Raymond Michael McDonough: <unk> had approximately $7 million of revenue so.
Raymond Michael McDonough: $7 million.
Raymond Michael McDonough: Billings, so I mean, that's a.
Raymond Michael McDonough: So approximately a 1.1 and then something points. So that's in terms of that.
Raymond Michael McDonough: <unk>.
Raymond Michael McDonough: So your question about the required investment so again I don't want to take to go into the numbers I think between invested a lot in the Atlanta in the last few years off in the go to market <unk> in the product side.
Industry very high operating margins.
I think many of these things will come to fruition in the future and when we will invest more now one thing that did change between now too.
Raymond Michael McDonough: Have much better much broader portfolio yields were you.
Raymond Michael McDonough: <unk> ago, a thing of course is still from what we saw margin went down from one side of that but I think that this investment hopefully with drive all in with smelters at West of investing we are keeping this.
The nineties or between now to even 15 years ago, and I think that is important to take into account.
But when you're growing your business and when you compete with the new business in the past it was high investment, but decent margins today, almost our entire industry is at a loss.
Raymond Michael McDonough: Okay.
Raymond Michael McDonough: And hopefully that.
Raymond Michael McDonough: We have to date would be able to drive double digit Roe.
Raymond Michael McDonough: And of course, it will drive double digit growth organic and also the billings.
Raymond Michael McDonough: And the cash flow. So I think all the questions are linked with the same thing that again.
I spoke last week in the conference.
<unk> Company's conference I've talked about with where the industry needs to rationalize them grow into.
Raymond Michael McDonough: See I don't think this is going to stop in to invest I don't think that we've gone out.
Raymond Michael McDonough: We want to promise any specific margin, but I think we have a very good margin today operating margin hopefully will be even better in the neck.
Into a profitable business model I asked in the room, let's say where were about 100 people, how many businesses Europe profitable.
Raymond Michael McDonough: Mr. Morgan the long term.
Four people raise their hands may be free.
Speaker Change: Gotcha, and but again, it really depends on our execution and hopefully would be able to drive higher growth and higher operating margin.
And there were so proud because we said if you ask that question two years ago. It was zero in the room, so we need to understand that when when we combined businesses when we acquired businesses.
Speaker Change: Maybe I'll take it a little bit differently here, giving your very long perspective, ive been asked about.
And when we invest in new business model, we're not competing in the terms of let's build a profitable business and do that we are we are struggling with businesses that.
Mr. Morgan: Our operating margin since our IPO in 1996 and since the peak back then we started with.
Mr. Morgan: Also relatively high margin and people say can we sustain women my answer by the way. He Hasnt changed my focus is not in growing the margin my focus is in growing a healthy baby.
What needs to be growth into into vet healthy business smart.
I think we're doing it very responsibly, but the focus is not the margin focus is healthy growth and I hope that this will remain that way also in the future.
Mr. Morgan: Yes.
Raymond Michael McDonough: And I think we've done that over now for a 31 year is growing a healthy business now the number one priority retire right now is not on their profitability is actually on the on the growth and I think we need to invest in growth over the last few years, we've invested a lot in building our cloud roke and we've invested a lot in building that.
Alright.
Thank you very much.
For participating looks like Dan Ives had to go pick up a nice colorful outfit. So is that going to be able to answer that ask us questions. So with that well. Thank you all and we will see you during the quarter. Thank you very much. Thank you.
Raymond Michael McDonough: The harmonious E mail email offerings, we've invested.
Raymond Michael McDonough: A lot in the other parts of the platform and in our research and our many many of our capabilities in the go to market. We built many different organizations to support that and to support a much better growth and I think we still did vets, while preserving I think industry record that not just in.
Okay.
Raymond Michael McDonough: Industry very high operating margins.
Raymond Michael McDonough: I think many of these things will come to fruition in the future and when we will invest more now one thing that did change between now to.
Raymond Michael McDonough: The 90.
Raymond Michael McDonough: Sure.
Raymond Michael McDonough: We know we've been 15 years ago, and I think that is important to take into account, but when you're growing your business and when you compete with the new business in the past it was high investment, but decent margins today, almost our entire industry is a close.
Raymond Michael McDonough: I spoke last week in the conference.
Raymond Michael McDonough: Growth companies conference I've talked about with where the industry needs to rationalize them grow.
Raymond Michael McDonough: To a profitable business model and I asked in the room, let's say where were about 100 people, how many businesses a year ago.
Raymond Michael McDonough: Four people raising their hands may be free.
Raymond Michael McDonough: And there were so proud because we said if you ask that question two years ago. It was zero in the room, so we need to understand that when when we combined businesses when we acquired businesses.
Raymond Michael McDonough: When we invest in new business model, we're not competing in the terms of let's build a profitable business and that we are we are struggling with businesses that.
Raymond Michael McDonough: What needs to be brutal.
Raymond Michael McDonough: Okay.
Raymond Michael McDonough: Okay.
Raymond Michael McDonough: Into that healthy business mode.
Raymond Michael McDonough: I think we're doing it's very responsibly, but the focus is not the margin focus is healthy growth and I hope with which we remained with way also in the future.
Speaker Change: Alright, Thank you very much for participating it looks like <unk> have to go pick up a nice colorful outfits. So is that going to be able to answer that ask us questions. So with that well. Thank you all and we will see you during the quarter. Thank you.
Speaker Change: Very much thank you.
Speaker Change: Okay.