Q3 2024 Check Point Software Technologies Ltd Earnings Call
you have joined the meeting as an ten de and will be muted throughout the meeting give me my s
Speaker Change: Global Head of Investor Relations and joining me today, our founder and CEO Gil Shwed and Chief Financial Officer Roy Golan. Before we begin, I'd like to remind everyone that the conference is being recorded and will be available for replay.
Speaker Change: On our website at checkpoint.com, during the formal presentation, all participants.
Speaker Change: are in Listen Only Mode to be followed by a Q&A session.
Speaker Change: During the presentation, check points for representatives may make forward-looking statements, forward-looking statements, generally relate to future events.
Speaker Change: or our future financial or operating performance.
Speaker Change: The statements involved risk and uncertainties that could cause acts of results to differ, materially from those projected in the forward-looking statements.
Speaker Change: Any forward-looking statements made speak only as of the day-to-year-up and just point under take no obligation to update publicly any forward-looking statements.
Speaker Change: In our press release, which has been posted on our website, we present Gap and Nung app results.
Speaker Change: along with the reconciliation of such results.
Speaker Change: as well as reasons for our presentation of non-gap information.
Speaker Change: If you have any questions, that's what's called. Please feel free to contact Investor Relations by email at kipethcheckpoint.com. Now, I'd like to turn the call over to Roy Golan.
Roy Golan: Thank you, Kip and thank you everyone for joining the core one moment of open day.
Roy Golan: The End
Roy Golan: The End
Speaker Change: What's in patient? Can you see my food?
Speaker Change: [inaudible]
Speaker Change: The World of the World
Speaker Change: The End
Speaker Change: You're on the run, yeah. Yeah, yeah. The song's light. Yeah, yeah.
Speaker Change: So, can you see now?
Speaker Change: Yes.
Speaker Change: Thank you. Thank you. So we have a very good hotel. We'll start with the revenues in EPS and the first quarter. Our revenues grew by 7%.
Speaker Change: to $635 million, $3 million above the midpoint of our projections. A unknown gap EP has grew by 9% to $2.25. A one-sense above the midpoint of our projections. So, overworld, very good results.
Speaker Change: and I'm going into our revenues and our business. As I mentioned, the revenues grew by 7% of our subscription revenue grew by 12% to 277 million dollars.
Speaker Change: The Carcolated Billing Bridge, 562 million dollars, which represents 6% growth in Roei Golan.
Speaker Change: Group by 5% to a 563 million dollar.
Speaker Change: The calculated billing cost was affected by several bills that were pushed from Q3 to Q4 that we expected them to close by September 30th, were pushed to Q4 and mainly in Europe and we do expect that this will provide us a benefit of approximately 3 points to the billing in Q4.
Speaker Change: A sum of them were already closed in October and the majority will be closed before the end of the year.
Speaker Change: So that's a thing important to mention regarding our feelings.
Speaker Change: A S for the revenue, so revenue that I mentioned grew by 7% that was driven mainly by product and subscription revenues.
Speaker Change: That's good to 396 million dollars. That's mainly driven from storm demand for infinity consolidated platform. Our only image that's keep doing everything.
Speaker Change: Strong demand and we did see also demand and we see the product revenue group by 4% so we see the increase also in the demand for appliances.
Speaker Change: I mentioned the infinity, same thing, there's another great quarter. It's continuing to flow in accelerated ways to the revenues. Another quarter with Tom Dabba did its growth, he overreels, becoming more and more significant to our total revenues.
Speaker Change: and the National is approximately 50% percent of our total revenues. And we see more and more customers, existing customers and new logos that adopt India outclass form and answering the earnings on the one above all products and services.
Speaker Change: Now let's look at the revenue by Geos, so America has the in terms of revenue, the American it consists 41% of our revenues and group 3%.
Speaker Change: It is important to know that in terms of new business booking, actually America had a very good quarter, continued, and failed two quarters in 2024 with the WDG dropping new business.
Speaker Change: In May, revenues will be 46% of all total revenues and they grew by 7% here over the year.
Speaker Change: I mentioned already about the building effect in email, so it's also, again, so we did see some some village that were put from Q-frame Q for in Europe, but again.
Speaker Change: and we expect that there would be close by the end of the year and in A-Pak we did see a 70% growth in revenues also in terms of new business A-Pakete very good photo and
Speaker Change: So I think that's the revenues by Geogolfi's
Speaker Change: Moving to our P&L and so our gross profit will increase by 5% to 500 ticks.
Speaker Change: and the Biclemian Dollar.
Speaker Change: and presenting 89% growth margin. Our albeit inexpensive increased by 9% to 289 million dollars. This is mainly the result of our continuing investment in our workforce.
Speaker Change: Organically and also the additional expenses related to a week-to-week acquisition of the 30-metre 81 that we closed in the end of Q-free last year.
Speaker Change: Am...
Speaker Change: Now, on on Gapfe operating income was 274 million dollars, while on net income grew by 5% to 25 million dollars, and the EPS was to the non-Gap EPS was $2.25, grew by 9% EOV. A Gap EPS was $1.80%.
Speaker Change: As for the cash flow and our cash position, so we are very good at the very strong operating cash flow, we close the quarter with $249 million operating cash flow.
Speaker Change: a grow compared to last year, our cash balance is amounted to 2.9 billion dollars while also this quarter we closed the acquisition of cyber-in.
Speaker Change: and the next cash paid for this acquisition of $186 million, Gil will have more of this acquisition in this life. And we continue to do our buy-back with the purchase for the quarter-325 million dollars of sales at the never-alcohol price of $180 to $1.2.
Speaker Change: To summarize our financial, so again, revenues in EPS, both above the midpoint of our projection, our revenues, the accelerated to 7% mainly driven by strong infinity and our money, emails to the performance and another quarter which from whose stability is strong, we're looking cash flow.
Speaker Change: So, in general, again, a good quarter for us in Q3 and looking at for Q4, Gil
Speaker Change: Thank you very much for your time. I'm very excited to be here and share some of the...
Speaker Change: [inaudible]
Speaker Change: which I think is something very good.
Gil Shwed: And I think what's more important is that we continue to grow and continue to invest in additional area. One area that's very important and focus on this quarter is expanding our infinity global services. That's a very important unit that we have over 3,400 customers, which is...
Speaker Change: Pretty big!
Speaker Change: On that.
Speaker Change: And the main step that we did here was to get into the Sokmark and the Security Operation with the cyber-interquisition which is all about threat intelligence and what it means. It does show you that we are pretty consistent about making a position, expanding, trying out new things and I think actually you'll see even some examples. They actually most of them actually work pretty well, so this is our 10th acquisition in just five years.
Speaker Change: Luckeg, little bit on customers, you can see that we continue to win deals, this is a combination of new customers existing customers, but you see the names, these are impressive names of customers that...
Speaker Change: Allow us to share their names and you can see it from all over, from the Deutsche Bors in Germany, to myoclinic in the US, to US Department of State, which shows us to protect some of your most important assets of the United States.
Speaker Change: Portion Formatiques.
Speaker Change: in Germany.
Speaker Change: Automotive Siemens, American customers, and Braise Checkpoint, customers like what we do.
Speaker Change: and this is reflected both in growing existing customers, winning new customers and winning in many different categories. In the last few quarters we spoke a little bit about wins in the public sector and that continues to be important. You see here over 40 countries, 65 new government agencies in the public sector. Let's just from...
Speaker Change: The 3rd quarter, but it's not just public sectors, financial services, 14 new customers in 23 countries.
Speaker Change: Health Care 28 new customers in 17 countries and I think the least goes on in on additional sectors, just to demonstrate the positive success that I think we have and the potential that we have because I think these numbers can be much much higher in the future.
Speaker Change: I've talked a little bit about email and email has been one of the most critical entry points for a malware into organization. We protect the network and I think that's the most important element.
Speaker Change: and but email continued to be a vector which is connected to the network where malware gets into the organization and we've realized few years ago that it's experiencing a quite interesting trip.
Speaker Change: Transition in the marketplace from on-prem, email to Cloud-based email and that's a big opportunity for us. And that's where we acquired Avanane.
Speaker Change: This will require other than to get into that space and through that space, we became one of the fastest growing and providing the best security for email and you can see we've...
Speaker Change: In three years, we've quadriped this business. Our ARR now is way over a hundred million dollars. We're getting more and more large enterprise customers.
Speaker Change: to buy into this platform and the pipeline is good and the field is very, very positive about that. You can see high double digit growth here, year over year, well over 50% growth in the amount of business that we do.
Speaker Change: So this is something quite positive and quite good to see in our business where actually our strategy works, the platform works and our acquisition works.
Speaker Change: Thanks for everybody that made that happen. And this may be the next one which I hope is going to be another example like that. And that's expanding our portfolio into the SOC, into the Security Operations Center.
Speaker Change: For us I think it's very important strategically to get to be not just on the network, not just on the cloud but also to be in the center with the soaked.
Speaker Change: and then we found a very unique opportunity here.
Speaker Change: and this external threat management.
Speaker Change: External Exposure Platforms, we acquire Cyberrinton and the Mental Expand what we do.
Speaker Change: We have over 118 employees that just joined Czech Point with Cyberine.
Speaker Change: We have a way over 200 enterprise customers with some very big names, Fortune 500, even Fortune 100 And I think even Fortune 50 names amongst the customer list, a fast growing company, still relatively small, but I think very promising So what we actually look at.
Speaker Change: Cyber-ins can the organization asset. It can be web servers that are all over the internet, not just the main network, it can be the main network From the company and it's mainly many, many other assets that we don't see.
Speaker Change: Like what people write about us in the darkwood? What people write us on their not darkwood on the open web?
Speaker Change: and there are amazing things you can find, for example, employees with lost their credential. So, somebody has an information on how to get into our company because some employees for got their new username and password.
Speaker Change: There can be many, many different resources like that, hidden certificates, cloud keys, a lot of things that get...
Speaker Change: I would call them lost, they're not all lost sometimes they're being stolen sometimes they're being manipulated because they were stolen from third parties not from our employees but from third parties and they find themselves into the dark web and people can use them to attack us.
Speaker Change: So what's I bring does is content constantly scan our assets, our open web and the dark web. Find these kinds of vulnerabilities.
Speaker Change: Check them out and give us the real time report of this is the things you need to close.
Speaker Change: All of that is an interesting market sector.
Speaker Change: Let's watch a checkpoint, because we always save it. We are above the best security we are prevention. Not about reports.
Speaker Change: and that's what we want to create together with the cyber-intecosition.
Speaker Change: Turning it into actual prevention. So when we see the ten employees credentials were compromised, if it's really were compromised credentials, we can lock down the accounts.
Speaker Change: If we see maybe a server on the internet but same
Speaker Change: and actually imitating our company. Let's buy it away another asset that cyber inside. Companies that copy a company website and use it to trick their employees.
Speaker Change: We have the ways to do take down.
Speaker Change: It's a very impressive operation that something within minutes can do a take down of a malicious asset like that.
Speaker Change: or impersonating us at Like With.
Speaker Change: We can, in the future, we want to be able to turn on network security capabilities and many other capabilities.
Speaker Change: To move that from here is a report and here is a more work for you Mr. Sisos to actually the opposite Here is a report and here is the 50 things we did for you in the last day in the last week in the last month
Speaker Change: To close vulnerabilities, real vulnerabilities, not just potential vulnerabilities.
Speaker Change: And I believe that's a play on triple different things. It's a play on men and services. It's a play on the sock. It's a play working with the seesaw and it's a play mainly.
Speaker Change: for the platform and the collaborative security, how we demonstrate, how we take different elements of the cybersecurity space and show that they can actually work together and generate more value.
Speaker Change: So I'm very excited about what acquisition we completed with the Fingon del Aste.
Speaker Change: Few days of the quarters, or we didn't have much financial impacts on last quarter, but hopefully in the next few years it will have a bigger and bigger impact and hopefully will be here a couple of years from now and will be able to show similar results to the one that we had with the email and the ones that will have on sassy and few other areas that I believe
Speaker Change: presents great addition to our platform and great growth potential for checkpoint.
Speaker Change: So that's the cyber interquisition and if I need to summarize, I think overall we had
Speaker Change: Very solid quarter, very good quarter, revenues in EPS about the midpoint of our projection. Real, so mentioned that in the last few quarter we are seeing, this is the internal indicators that I'm seeing, not just the revenues that you see outside.
Speaker Change: Very positive indicators in the Americas in the US, which is the most important market. So we are seeing some good signs there.
Speaker Change: Infinity Delivers Continued Strength.
Speaker Change: Harmony, he made, exceeded the $100 million ARR and we extended our SOC offering and transforming.
Speaker Change: Security Operation and threat intelligence through the cyber-intecosition.
Speaker Change: I think that we had a very good quarter, very proud of what our team did and even more excited about what the team can achieve moving forward. So thank you very much and I think before we open the call for questions maybe a little bit about projections for...
Speaker Change: The 4th quarter and for the full year.
Speaker Change: and
Speaker Change: So, for the full year we are actually not changing our guidance within where well within the range that we published before.
Speaker Change: and maybe I'll start with the full year with...
Speaker Change: A little bit more complicated, but let's start with the complicated. You see, obviously, the range for the year has narrowed. The range for the year has went up. If we started the year from $24,75 to $26,25 billion in revenues.
Speaker Change: It's now on the right side of the center and the midpoint is right side of where we start at the year. So I'm very proud that this year we've all the things that we've done, we've all the changes, we've all the challenges that some of the market faced, we so far haven't faced too much of that.
Speaker Change: We're not going to finish at the midpoint but finish
Speaker Change: A Buffed Amit Point and Vets True to our revenues and Vets True also to our EPS. We started the year with a broad range for EPS from $8.70 to $9.30.
Speaker Change: and we are going to finish it between $9.5 to $9.15.
Speaker Change: Well over the midpoint that we started the year and that actually you can calculate from that what's the range for the quarter, but the range for the quarter is going to be...
Speaker Change: Very consistent with our original plans, revenue $675 million to $716 million, earning per share between $2.60 to $2.70, got PPS is expected to be approximately $0.45 less.
Speaker Change: You know my regular caveat with projecting the future is always very challenging, high level
Speaker Change: Of I certainty results can be better, which does can be worse.
Speaker Change: But I do feel that we're getting into the fourth quarter with Healthy Pipeline and energetic workforce and a lot of things coming.
Speaker Change: Not just in the self-pite line, but in the product pipeline new innovation, your positions, and Q4 is going to be a very interesting and exciting quarter for us. And I'm looking forward to that. So thank you very much, and I think we can open the call for your request. Thank you.
Speaker Change: Alright, as always, please keep your questions to one if possible and first up we'll have Shaoli Al followed by Adam Tindall.
Speaker Change: Ciao!
Speaker Change: Thank you, I'd be happy to be here on the building, I get to regional thoughtlessness in the near.
Speaker Change: and the technical sleepy quarter. Did you have any eight-digit contracts? Was it several seven-digit related transactions? And maybe that can switch another one.
Speaker Change: Now, since you've announced the Doug replacing you out of a certain December, one of the prevailing views on the streets, at least that we've been getting.
Speaker Change: is that given a dark strong VC background, Kip Meintzer is likely to embark on an M&A spree accelerating growth in the teens lowering operating margins, mid-high 30s, you've got to see the numbers out there. Interested in hearing your views along these lines, thank you for that.
Speaker Change: So it's two separate subjects. I would try to answer the billing thing. We are by the way not managing too much of the billing. We are becoming more and more sensitive of that because you are an analyst.
Speaker Change: Watching that we're trying to build healthy pipeline of good deals.
Speaker Change: If we can give customers immediate billing, it's good, if we can actually let them use the fact that we are not short on cash and give them a long-term billing which...
Speaker Change: Lower Billings, it's also good for us as long as we get good healthy business and I think that's what we are doing
Speaker Change: and we are more and more sensitive to that. I think Roei in this mention that we had.
Speaker Change: Cutter of deals with slips for a Q-3 to Q-4, no impact on the financial results.
Speaker Change: This is the revenue, the impact on the immediate results, it actually will result. It should have come forward and some of them already arrived in the beginning of October. So I won't look at it as anything, I hope it's not anything with...
Speaker Change: Indicating for something we should be aware of and I think overall I may have to read that.
Speaker Change: About the transition over the past few months, I'm working on a transition plan with Nadal. It's working extremely well, I'm very happy about everything we're doing and very happy about the potential.
Speaker Change: I think we're going to embark on new expansion, new strategies, new things, but for the immediate term I will not expect any major changes. I think we've done 10 acquisitions over the last five years. We're going to do some acquisitions. I don't think that our strategy now to be...
Speaker Change: Megat position that we wouldn't have done otherwise.
Speaker Change: I think we want to keep our operation a little discipline and again my focus was never imagined, my focus was always about how we generate wood security, best security, healthy growth, profitable growth, I don't think that better gender is changing.
Speaker Change: And I think over time, checkpoint will see changes and I think that we're going to see very positive changes in checkpoint because the doubt brings...
Speaker Change: Amazing energy and amazing skills the checkpoint needs So I'm super excited about that and I'm not going and I don't think that at least in the short term you're going to see any big changes long term I think we want to we always want to build a better future and a better strategy
Speaker Change: Next up is Adam Kindle, followed by Taliyani.
Adam Kindle: Alright, thanks. Good morning. Gil at the end there, you talked about how you're seeing internal indicators that we may not see as much from the reporting standpoint, but those internal indicators that you see are very positive.
Adam Kindle: I wonder if you could expand on that. I know it's probably a little too early to talk about fiscal 25.
Adam Kindle: Based on your guidance here, you're going to finish this year out about 6% growth, which is a tougher comparison. But it sounds like those internal indicators are very positive. I wonder if that's a level that you might be able to hold in terms of growth on a future basis. Thanks.
Speaker Change: So most of the first I think if we look at the industry we read that we all know that cyber is needed, we all know that
Speaker Change: Network Security Remain the Center Peace of Security
Speaker Change: We all see the level of attacks rising, I don't think we mentioned it here but on the last year there's been like 56, 67%
Speaker Change: The Sand Grove Finale Cyber attacks on the U.S. and almost all over the world. So, and the attacks are becoming more sophisticated. So, yes, we will lead more cybersecurity, Vetsam macro. We've also been reading some reports about...
Speaker Change: Potential refresh, network security and the reinforcement of the importance of network security, but that's a little bit about macro. Within checkpoint, I don't have any strong indications for 2020-25 for Q4.
Speaker Change: First I'm always careful and I'm in this quarter, it's particular, there's so many moving parts in checkpoint so I would be a little bit careful, but we started the quarter with...
Speaker Change: Healthy Pipeline, Pipeline, with justified the projection that we give. So I'm so much when saying I'm seeing some good positive energy.
Speaker Change: I think that the U.S. market is always the best indicator and the most important market.
Speaker Change: The last few quarters have been quite positive on the deal flow that we've seen in the Americas and that's great. I don't know if you remember, but we've also had management changes.
Speaker Change: in the leadership of our Americans organization and so on there.
Speaker Change: It's not coming in a vacuum and it's too early to say that the organization is going to rise next year to its full potential, which is much higher. But at least seeing two or three quarters of the US performs well, it's actually a very good indicator that shows that I hope that we're taking market care gaining customers.
Speaker Change: and the fighting where we need to fight.
Speaker Change: Next up is Sally Oni followed by Joseph Gala. Joseph Gala.
Joseph Gala: Sorry I need to whisper because I'm in public space.
Speaker Change: First question is what's your position on vendor financing? We've seen other companies in the space being more aggressive on vendor financing and providing financing to customers.
Speaker Change: Second one is more strategic. Reuse, spoke about double digits grow for a while and the ability to get a double digit growth.
Speaker Change: The Beat, you're beating the numbers, but the Beat is very dismal, he's very minimal.
Speaker Change: And the question is, what needs to happen? You have so many products and so many acquisitions and so many refreshes and what needs to happen for you to break this mid-singles digit growth kind of rate and get to sustainable double digit growth. Thanks.
Speaker Change: Hey, hey, you want to stop there, Gil and I'll let you start with you, you let the...
Gil Shwed: So I'll start to know what the second question is on the double digit. So when I was asked, I mean, I was asking about it. We've been asked about it for few quarters. I think that's what we thought that in order to be in double digit, I think we are positioning today much better.
Gil Shwed: to accelerate the road and what we've been in the past. And because we've felt so cool, we did some very significant investments. The last one that we did, not the last one, because the last one is cyberwind, but we did the significant acquisition of Peremester 81.
Gil Shwed: We expanded also, we have a totally new study offering. We invest a lot of both on R&D side, on the go-to market side. We told that it's going to take a bit time that we're going to see to have a significant effect on our business. But definitely, that's one of the main agents that should drive us to accelerated growth and more than what?
Gil Shwed: The meeting is a digital that you mentioned. And again, infinity. Infinity will be seeing that through the infinity we see more and more customers that are taking not only the fire or not only the network security quantum, they are buying more of our products, they are using telephone, the email security.
Gil Shwed: Many of this cast-melves are taking the infinity of the Ammonie email. We are starting to see in the last few quarters also cast-melves that are taking the Ammonie Satsi.
Speaker Change: So I think again, it's something that that's how we should, I mean that's the main driver that you bring us to accelerated growth And the second question again, can I, you know, what will the first one that you meant that you are?
Speaker Change: Vender Find Alvin.
Speaker Change: Our financing.
Speaker Change: So actually again, we are...
Speaker Change: I'm going talking a lot about infinity. The thing with infinity is the flexibility also.
Speaker Change: that we are providing to our customers. The flexibility or it's not only about when they can use the lances and when they're using it in the last and it's also around the building stone.
Speaker Change: So we have seen more and more in seeing any agreements that there are some, flexible, there are some, building terms that are more flexible. I don't want to call it fine, but there are much more flexible, doesn't.
Speaker Change: Standard Deal. So we don't see, we don't do any financing, but again we are providing, I think that we have our cash position today and the strength of our balance sheet, we definitely can be more flexible in terms of bidding terms and that's what we are doing today, many within finities.
Speaker Change: So that's...
Speaker Change: That's my question, that's my answer for that.
Speaker Change: and Indian Health South. Thank you.
Speaker Change: To get.
Speaker Change: Thank you. Next up is Joseph Gallo followed by Brad Zellnik.
Joseph Gallo: Hey guys, thanks for the question. Maybe to follow up on the Prenderity one comment. How are you tracking towards having that fully integrated in 4Q? How is the pipeline building there? And then when you talk to customers, what is the willingness, particularly in the high-end enterprise? What is the willingness to eventually adopt that Satshi solution? And when can we expect that to happen?
Speaker Change: Thanks. We actually seek some positive traction in Purbitor 81. If you remember, we started the year ago, I think it's a very important...
Speaker Change: Elements for our network security platform to have that Sassy cloud delivery security as part of the platform.
Speaker Change: We started and we are selling it for the last year, the sales are going fine and we started by integrating. So first I think we are doing fine on the integration timeline.
Speaker Change: Second, I think last quarter we've seen some Q3, we've seen some nice jump in the amount of quarterly sales and that's a very positive indicator It's still small, so I'm not pointing it as the big finger, the big achievement, but when you have sale growing in a few percent every quarter and then a double digit growth, I'm talking sequentially, it's a very positive change in the trend, which means that it's picking up and for Q4 we have a few seven-deal digits
Speaker Change: On the Sassy Plot form and not the way it's connected to us. So overall there's all the reasons to be optimistic about that and hopefully we'll be able to even accelerate some of the things we're doing but you know that's my job as CEO is to ask everybody to accelerate.
Speaker Change: Very job is to do the best possible, that way can and I think we're doing a good job there.
Speaker Change: Thank you. Alright, next up is Brad Zellnik followed by Robo and...
Brad Zellnik: Thank you so much for taking my questions. Maybe just to start with you, Gil, it's good to hear that you expect next quarter to see three points of benefit to billing's growth.
Speaker Change: which comes from deals that slip down to the quarter, I think it's more like five points.
Speaker Change: of Growth if they had a slip from Q3. But naturally, deal slip every quarter. Is there anything specific to check point, the environment, or competitively that explains for these deals slipping when you think about...
Speaker Change: Do your root causal analysis and maybe for Roei, we continue to hear the success that you're having with infinity contracts and recurring revenue products like harmony and cloud gourd as these continue to contribute more to the mix and what sounds like even exceeding your own internal expectations.
Speaker Change: What impact is that having on the model and how should we think about that going forward? Thank you.
Speaker Change: So I think overall we had a pretty positive quarter. I've looked very in depth to another like the quarter and we had many regions in the world when we had some very good results and we have few
Speaker Change: Few regions in the world where we had some softness Again, I'm talking about poor and free levels beyond the big geos, even within geoburphillies The Americas were some areas, but did extremely well, but were some areas that would be soft overall America's US was excellent for a class
Speaker Change: Water.
Speaker Change: For example, again I'm talking about the internal indicators. So it's a similar case in other territories. I think Europe in Q3 is always a challenge. On one hand, we do get business business continues, but on the other hand, it's very hard to change things.
Speaker Change: Overall, as I said, I think we had the pretty decent results when I look competitively, I think we're doing fine. We're, I think we're winning. We're seeing more. If I looked at the last few quarters, our growth in key indicators like production buildings were very good. So clearly, by the way, I'm soaking all the time about cyber and cyber growth and I think cyber is one of the
Speaker Change: of St. Pauler competitors. I hope with this.
Speaker Change: Not a long-term reflection, I hope it's...
Speaker Change: Maybe result of everything, but I think that compared to that we are actually gaining sharing the core markets.
Speaker Change: and Vetser Policy Team. Obviously, like every time I would like to see more growth in the market overall and more growth for CzechPun.
Speaker Change: and then soil question brother round the mix so we definitely see that the harmony, many the harmony, the harmony, the image, the meaning.
Speaker Change: Growing very significant, we just disclosed that we exceeded the 100 million dollar ARR, higher than the 100 million dollar ARR, and it definitely becoming more and more significant or subscription revenues.
Speaker Change: So these together with the society that we expect that will be more significant but mainly from 2025 and after we're going to complete the integration, I think that's definitely to drive our growth and to drive the subscription and revenue's growth.
Speaker Change: and I think that's what we see and we also see the moment with the email continues and with the other pod up, such as it's a...
Speaker Change: and accelerating. Roei, I think he also was trying to inquire about timing with hardware around the affinity contract and things along that line.
Speaker Change: Okay, so also it's something that we've reflected in our guidance, I have to say what's going on with infinity today that in sentences becoming I mentioned 15% of our total revenues.
Speaker Change: and some photos even in the products can be even higher in the product revenues. The thing we did with the product revenues related to infinity is that...
Speaker Change: In Standard of these, when we are selling appliances, so usually you know we are getting the author in it, the revenue is recognized, the close to the when the tea is when the author is received.
Speaker Change: In Infinity, they have the flexibility, they are buying a Lourne. They are not buying the kind of Lourne, they are building them for Lourne, for example, for one year. And they have the flexibility whenever they want to use to...
Speaker Change: To pull the allowance and then only we can recognize revenues. Because the infinity is becoming more and more significant to the product revenues.
Speaker Change: We have less in terms of when we are having older that are being recommended immediately so that's definitely that
Speaker Change: is easier to predict but when we have orders that are full, that in the control of the customer wants to utilize it, so there is some kind of volatility that can have around the product revenue when it will be recognized, because we cannot recognize revenue from products when they are buying allowance, only allowance, we cannot recognize only when we deliver the product.
Speaker Change: Thank you so much guys, great to see you.
Speaker Change: Alright, next up, Robo and followed by Roger Boy.
Robo: Good afternoon and thank you for taking my question. Gil and your prepared remarks you did talk about new customer acquisition across different verticals and GOs. The question is, are you seeing an inflection relative to new customer acquisition? It's not something you guys have called out recently.
Robo: and Lithuania customers, where are you landing with what products and who are you displacing? Thanks.
Gil Shwed: And the good question, I think it's across the board. Obviously most of the new customers are still network security customers, which is good because that's the core market and that's...
Gil Shwed: where we have the highest potential to gain share.
Gil Shwed: We do have email us a great entry point to win some new customers and in many cases we want to grow it into other products as well
Gil Shwed: and there's a few other examples I think, well on the Sassy side, there's also some area that we're winning some customers, so I think all of them exist. But having said all of that and even looking at the model and saying, you know, we got we see a little business, it's great, we acquire a new customer and then we can cross-sele it and upsell it, that's great.
Gil Shwed: Steel, the vast majority, even of new customers, is our core network security, customers, and that I think of their imposing thing.
Fabian Meintzer: Fabian Meintzer.
Fabian Meintzer: Great. I guess the spirit of the question then, it's a where are you seeing displacement?
Fabian Meintzer: Who do you think you're taking share from and the core networks of carry?
Speaker Change: I think we're taking share from all our competitors but it's still I think in very small numbers that I don't think I don't want to brag about that I think
Speaker Change: We can do in the future, I think, by the way, I'll give you an example. Some of the largest customers, they adopted a policies that says they're working with dual vendors. And for both security reasons, business reasons, and many other reasons, adopted a strategy with their buying from two different vendors.
Speaker Change: I think we're seeing in some of them that new orders are coming to us. After a few years they tried to balance it and maybe gave.
Speaker Change: Some more orders to competitors to kind of balance the account and have a competitor with a presence in the account Now if they get to choose who gives them the best value, who gives the best security they are buying more and more checkpoints So I've seen a few examples of customers that are good lawyer long term customers that haven't purchased new products from us
Speaker Change: for two or three years and suddenly buying again more from us and growing with us. So let's suppose it's a thing, trying to think about more examples, I think we're seeing it all over. It's not the usual names.
Speaker Change: Great thanks for the color.
Speaker Change: Alright, next step is Roger Boyd followed by Hamza Fadolla.
Roger Boyd: Thanks, Kip.
Roger Boyd: You can continue to talk about the importance of building around the sock and IGS with XDR and MDR continues to sound like it's doing well.
Roger Boyd: You've now entered Cyberton to the platform. Some of your key competitors have been a little more aggressive in their push into the sim and security analytics market. It's just wondering your perspective on that and given all this disruption in the sim market, why not go after that a little more directly.
Speaker Change: I'm to be very honest, I think first something we're looking at, we're trying to see what can be done and so on. I'm not sure that at this point we have a real good opportunity to be a leader in the scene. Based on the technology we have, based on the players that exist.
Speaker Change: Based on the technologies based on the cost structure, yes there are some maybe inflection points in that market and changes and AI can change things But it's not a simple entry point, so we are there. We are playing a little bit with that with XDR and Sourver technologies
Speaker Change: But I'm not sure that that's the market we should grab right away. Of course, if we will find some breakthrough internally or externally that can change. But at this point I don't think that's our...
Speaker Change: Major Grove. But again, I think the cyber into it can be a very brilliant entry to the SOC with kind of something that I think has a unique value proposition and can prove to be valuable in a very short period of time.
Speaker Change: The End
Speaker Change: Thank you.
Speaker Change: Was there more to your question?
Speaker Change: Next up is Hamza Farwala followed by Shayan Sattil.
Hamza Farwala: Good morning. Thank you for taking my question. Gil, I had a question for you regarding just network security architectures in general. So, network traffic is gone up by some measures 20% plus.
Hamza Farwala: St. Cove Ed, you know, you launched new appliances earlier this year. We're seeing healthy growth again in the product revenue. I'm curious as enterprises are considering refreshing some of that hardware. How long do you think this refresh can last?
Hamza Farwala: especially as some organizations are looking to remain hybrid and maybe on-premise for longer than we thought a couple of years ago.
Hamza Farwala: M...
Gil Shwed: Obviously it's taking longer than I wanted to happen. I think we are seeing a healthy, refresh cycle, we are getting them, we are winning them. I would have liked to see more of that coming and faster. And I think our new product line is definitely something that can show that. I mean, we have more bandwidth, more capabilities.
Gil Shwed: Everything will do.
Gil Shwed: and work on the data that growth in network traffic. We have our clustering technologies and our astral hyper scaling technologies. So I think we are very well positioned to win a bigger share of that and to do it faster, I think, as I mentioned before.
Gil Shwed: As much as I am optimistic about our result, my positive about our results, optimistic about the future. I think we had a year that the year wasn't all green for everyone. Let's put it in a careful way.
Gil Shwed: This year's so far. So the fact that we have growth in products and so on is actually a good indicator in the ideal year. I would like to see much higher growth based on where we are.
Gil Shwed: The End
Gil Shwed: Thank you.
Speaker Change: Alright next up is Cheyenne Patel followed by Gabriella Borges.
Cheyenne Patel: I'm going to have to know, I'd like to question on the go-to market and I just specifically the channel partner program that you guys launched.
Cheyenne Patel: The beginning of the year, just curious how that's going, how that compares to what you expected and just kind of any feedback so far on that.
Speaker Change: I think we're getting very good feedback from everything I hear from our channel organization. We just completed a few channel conferences in different parts of the world. And I got only positive feedback. I don't know that it has any material big impact on the results so far. But I think that...
Speaker Change: The sentiment from the channel is definitely becoming better and better and the feedback is all positive.
Speaker Change: Thank you.
Speaker Change: Alright, next up is Gabriella Borges followed by Sacket Kalea.
Gabriella Borges: Hey, good, thanks for taking my question, Tim. I wanted to follow up on some of the opportunity that you might have with the embedded DPU.
Gabriella Borges: and the trip to the city.
Speaker Change: I think it's something we talked about, I don't remember it was in Q1 or Q2 or the beginning of Q2 I think
Speaker Change: That's a huge opportunity to go and secure the hyper-scalers of AI and to be on the AI hard-earned infrastructure.
Speaker Change: It's in the very beginning of things we've just started to build some senior sales leadership to focus on that We are working with Nvidia and other AI first scalers to get that out
Speaker Change: To early to say what impact will it have and how big is the potential but I think it's a very unique value proposition that we have in something that the world will definitely need.
Speaker Change: I'm a strip, thank you.
Speaker Change: Alright, of next sake at Kalea followed by Joel P. Fishvine Jr.
Speaker Change: Okay, great. Hey guys, thanks for taking my question here.
Speaker Change: and Roei, maybe for you. I think we talked about infinity being about 15% of total revenue. And that's clearly growing a lot faster than the overall.
Speaker Change: I guess I'd love to talk about the other 85% a little bit and maybe longer term, as you think about this model in the future, infinity is clearly going to become a bigger mix.
Speaker Change: But the question is, is that going to come at the expense of the other 85, meaning can the 15 and 85 both grow together or does a 15 that does, from an absolute dollar terms does that 85 need to go down over time? Does it make sense?
Speaker Change: Yes, good question, so I think that's an Italy, it can go together. It doesn't look like it can go together, I can tell you that what we see within Finiited that
Speaker Change: That in 20 is driving the road, I mean, driving the road so we see that more customers are adopting infinity.
Speaker Change: More growth there than what we see that customers are not adopting anything. It doesn't say that it's cost-timers that are in the other 85, we don't see any growth. For example, we just mentioned Ammon E-mail. Ammon E-mail.
Speaker Change: Of course, there is a person that is part of infinity, but there is a person that is just sort of stand alone and is growing very fast.
Speaker Change: Same thing with other products, so it's, so again, it can definitely grow a lot. I think that our future will be infinity. I mean, we, we...
Speaker Change: We think that in the end, this 15% will grow every quarter. You're going to see more and more. I'm going to see that more significant will be more significant on top of business. Every quarter.
Speaker Change: And I think that's the future of... and again that's the plus on that's the future of Czechoslovakia and that will drive the globe to looking.
Speaker Change: Very nice young people in the world, and I'm very happy to see the success of the competitive things. First, how many people move to the platform and the more technologies and get to commit to us for longer term. And then are they actually growing? Because converting and existing constructs, we've been in affinity to an infinity contract.
Speaker Change: When you get no growth is not...
Speaker Change: It's good from a commitment to technology, but it's not driving with. And overall, our infinity customers are driving high growth. I think on the average last time I've checked, it's not in the last quarter. Infinity customers were growing 20% faster than low infinity customers. So, if I took a group of customers...
Speaker Change: Day 1 and then two years later we've been finitivated with existing contracts, they were kind of stable, we've been finitivated a group by 20%. And that's why we still think that moving customers to infinity is good not just from a technology standpoint but also from May.
Speaker Change: From the value that we provide and the value that we get.
Speaker Change: Thank you.
Speaker Change: Alright, that's Joel P. Fish Finds, Jr., followed by John the Fuji.
Speaker Change: Good morning, just a quick question. At CPX24, you really spoke a lot about seeing the CNAP market.
Speaker Change: How Integral is seen at the gain traction in this move to double digit growth and can you elaborate on where you think you are in that market. Thanks.
Speaker Change: So I think we started here with the challenging conditions in the cloud market I think the last two or three quarters has actually been far more positive in terms of growing the overall cloud business
Speaker Change: Steel, I think the judgment is still out, what's the potential that we have, which areas will we win? Will it be more cloud network security or more seen-up?
Speaker Change: On that, I think we did a very good job in modernising our cinema products. In the eyes I looked, I did a deep dive into the product after a few weeks ago and I was very impressed with what we got, I compared it to competitive products and I thought that we should be very proud of what we have.
Speaker Change: Still having said all of that, there is a bigger, a long road to get the maximum potential for us at Seemup and there is a good question, which I don't know, the answer, wherever we should focus more on Seemup or more on other cloud technologies to win and provide value in the cloud space.
Speaker Change: Thank you.
Speaker Change: Alright, next up is John the Foocee followed by Ben Bollin.
Speaker Change: Thanks. Gil, questions for you. You said yourself that Europe is always soft in the quarter.
Speaker Change: Was this more than usual and if so, what caused that? You mentioned some struggles of some of your competitors.
Speaker Change: Are you applying softer demand for network security in general? Or is it more incremental macro-sauce to the new expected in Europe? Or is this simply an execution issue for those deals at flipped on the part of checkpoint?
Speaker Change: Frankly, I don't have the full answer and I don't want to miss lead last quarter. For example, even though Europe is usually weak in Q3, we want some giant deal in Europe, which made this tough compared. I'm not using Veta Sebexus and they didn't open with it because I think the fact that we have a large deal last year means that we should have had two this year and not just repeat the same thing, but that's made it a little bit.
Speaker Change: Taffer, Comparer for Europe, for specific country, from last year when we won a giant deal in the 3rd quarter.
Speaker Change: I don't have any strong attribution, I do see some weakness with the competitive market and some competitors that are struggling The tourist struggling, again I don't know about Visculture, I know about 3 U-Squaters So I don't have all the good answer at the end of the day, I think we finish the quarter in a very positive way
Speaker Change: Healthy numbers, all the financial numbers are right. We are tracking with orders that we think we're sleeping, are actually being won in the fourth quarter and so far.
Speaker Change: It's going well.
Speaker Change: We even had some large quarters from Q4, the right earlier in the quarter which always a good indication.
Speaker Change: Now, usually you always expect to deal with all the rise in the last minute, so we just seen couple of deal that arrived ahead of time, which is a positive indicator overall. I think we gave our projection for a fourth quarter taking all the different elements into consideration.
Speaker Change: Okay, thank you, Gil.
Speaker Change: Alright, next up is Ben Bowlen followed by Andrew the Winsky.
Ben Bowlen: Good morning, thank you for taking the question. I'm interested in how the current guidance is.
Ben Bowlen: The framework thinks about budget-plus opportunity in 4K of this year versus prior years, and then additional item, just any thoughts on how competitive landscape might be influencing the duration of sales cycles or close rates. Thank you.
Speaker Change: So, you need to go first for the guidance. So, for the guidance, the meat point of the guidance didn't take into account any significant budget flush. And that we be in this in this field.
Speaker Change: And I remind you that two years ago I think it was, we didn't see any budget for something that we didn't see in the past, a year ago we did see a bit more budget flush, and then two years ago this quarter again we do expect some budget flush but not significant, not to didn't take into account, we didn't take into account significant budget flushing
Speaker Change: In our guidance and the other question was along the cell cycle and deoation then? Yeah, how come competition and bundling discounting might be influencing the length of the cell cycle and your thoughts and clothes rates?
Speaker Change: So we did a lot of looking on a summit that we are monitoring all the time, the close rates, we are looking on the closer, we didn't see any significant change in the close rates, I mean in the end, the close rates, I mean I'm not talking about these statistics, these results lead from push to point to free and part of them already close in Q4, talking about in...
Speaker Change: The clothes were in the quarter, we didn't see any cyclists can change. The self-cycle, nothing special that we see in this quarter that it's longer than.
Speaker Change: In previous quarters again, 3 depends on the date, on the customer, of course, infinity to something, usually it's a...
Speaker Change: it's a ga it' a mul million dollar de soit's involved more more approval appro oversecondcket can take longer but nothing that it unique that we've in this quarter
Speaker Change: Thank you.
Speaker Change: Next up is Andrew Nguyenski followed by a Patrick Colville.
Andrew Nguyenski: Thank you, Good afternoon, so I want to ask about...
Speaker Change: Billings, yeah. So in Q2, you know, you had a few large deals, I think pay up front, which boosted your billing stroll.
Speaker Change: by a point and a half. And then if you normalize this quarter, if you normalize the deals that pushed out, you're going to actually would have accelerated that thing from 8 and a half to 11%.
Speaker Change: So I'm wondering, how do you think about the growth rate in Q4, the normalized growth rate, given the positive translete scenes from Q1 now to Q2 to Q3, a continued acceleration in your building's growth?
Speaker Change: So we don't provide any guidance around building. I can do. I can say that based on what we're looking on the farm and based on how...
Speaker Change: Waffers, you all saw on the expectation around the building. Again, the building should expect it because of the benefit, first of all, we do see the song pipeline not related even to the slip distance, we are seeing the song pipeline for you.
Speaker Change: Second, we do want to have a expect to have a benefit that's why Wattay mentioned about the sleep deals.
Speaker Change: from Q3. So I think we're going to, again, we don't provide any guidance, but we definitely expect and anticipate that from the finances we see today and again we need to be cautious because it's funnab. We do expect to have a tone-quarter in Q4.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: Alright, our next step is Patrick Coleville followed by Greg Mastowitz who will probably be our last question of the day.
Speaker Change: Alright, thank you so much for having me on.
Patrick Coleville: I guess I want to ask about the guidance, so you might have to see the guidance raised at the midpoint I know you know you check point don't guide line by line but...
Patrick Coleville: Should we expect if everything goes to plan in 4QQ as sustained re-exilaration in the product line? And then I guess just a tactical question in terms of the inorganic contribution from cyber and in 4QQ, can you give us some kind of guideposts?
Patrick Coleville: On that one.
Patrick Coleville: Yeah.
Patrick Coleville: So...
Speaker Change: Right now, as I mentioned, the product rev, I mean, again, we don't disclose the separation between the products and the other line items in the revenues, but we do expect another good quote on the product. We see a very good pipeline for their clients' or demand in the clients' apps to say that significant portion of this pipeline for the product is coming from infinity to infinity.
Speaker Change: So there is some kind of, I don't want to call it a risk, but there is some kind of situation that it won't be recognized this quarter.
Speaker Change: will be recognized in 2025. So there is. So therefore we are providing a guide. So I think that the guidance is widening you for because it's significant, we have a significant product.
Speaker Change: Significant product revenue is usually in Q4 and with the infinity that's the main risk that we see today.
Speaker Change: We're in the deals, but recognizing the revenues, like... Even is only for an annuity business model, growth business model is good, but for the short term, we are transitioning more and more on the business model to We're sharing the revenues on that.
Speaker Change: Yes, and then partly the second question that you have again.
Speaker Change: It was, you know, congrats on the cyber and acquisition, you know, nice, and talk off the portfolio. Can you give some guide rails around if there's going to be any inorganic for new series for Q?
Speaker Change: So, cyber-in-tender, we both cyber-in, they had already a nice ARL that we acquired them. Again, we don't expect it to have a significant effect on Q4. I would say less than 1.11% of our total revenues in Q4.
Speaker Change: The End
Speaker Change: Alright, our last question is the day it's going to come from Greg Mustewitz.
Greg Mustewitz: Alright, thank you guys very much. Two quick ones. First, I apologize if I missed it, but Roei RPO, I know a crew, 10% last quarter. In Q2, obviously this quarter you had some sub-deal, so I'm sure that had an impact, but what was the RPO growth in Q3? And then secondly, follow up on Cyborin since it did actually close just before the end of the Q3. Are you able to clarify what they added to a deferred revenue? Thank you.
Speaker Change: So first around the IPO, I'll be able to actually grow by 8% in Q-3 And on the cyberimpact, there was no effect on the PNL side, and on cyberimpact, because it was closing the last few days of the quarter It is, but it is, I think, less than 1% of all, I think in total it has
Speaker Change: As a Fox 1.1 and a half points on the calculated beatings that you want to get your scene.
Speaker Change: Thank you very much.
Speaker Change: Alright ladies and gentlemen, thank you for joining us today. I'm sure we'll be talking to you throughout the day and throughout the quarter. We'll look forward to seeing you guys at the year end in January. Have a great day.
Speaker Change: Thank you very much everyone.