Q1 2025 Check Point Software Technologies Ltd Earnings Call
have joined the meeting as an attendee and will be muted throughout the meeting.
Greetings and welcome to the Check Point Software 2025 First Quarter, Financial Results, Video Conference
I'm Kipi Meintzer, Global Head of Investor Lations, and joining me on the call today, our Chief Executive Officer, Nadav Zafrir, and our Chief Financial Officer, Roei Golan Before we begin, I'd like to remind everyone this conference is being recorded and will be available for replay on our website at checkpoint.com During the formal presentation, all participants are in listen only mode that will be followed by a Q&A session. During this presentation, checkpoints representatives may make forward-looking statements
Thanks.
Our future financial end or operating performance, the statements above risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. Any forward-looking statements made speak only as the date hereof and Check Point undertakes no obligation to update publicly any forward-looking statements.
In our press release, which has been posted on our website, we present gap and non-GAAP results.
along with a reconciliation of such results, as well as the reasons for our presentation of non-GAAP information.
Speaker Change: If you have any questions after the call, please feel free to contact investor relations by email at Kip at Checkpoint.com Now, it's my pleasure to turn the call over to Roy Golan.
Roei Golan: Thank you, Kip, and thank everyone for joining the call. So in the third quarter of 2025, we did see a continuing strong demand for quantum force appliances that drove our revenues above the midpoint of our guidance. Our revenues grew by 7% to $638 million.
Roei Golan: 4 million above the midpoint of our projections, while our non-GAAP EPS was $2.21 per diluted tails, 3 cents above the midpoint of our projection, and represent 9% growth or failure.
Roei Golan: Moving into the deferred revenues, our deferred revenues grew by 5% to $1,950 million Our calculated 50 billion reached $553 million, which represents 7% growth in E-Ovellale, while our current calculated
Roei Golan: Let me remind you that our billing is affected by duration and payment term and I also want to remind you about the next quarter modeling that in the second quarter of the last year we did have a benefit of approximately two points from upfront billing from two large multi-undeal in the second quarter of the last year.
Roei Golan: So, as I mentioned, we did see another strong quarter of demand for my account of foster appliances Since launching these appliances in the beginning of 2024, we do see strong trend of demand for this new appliances And that was the main driver for the revenues growth in this quarter and resulted 14% growth in the products and license revenues So, as you can see, we have a lot of demand for this new appliances, and we have a lot of demand for this new appliances, and we have a lot of demand for this new appliances
Roei Golan: Moving into infinity, so another strong quarter for infinity, we continue to flow in, which continue to flow in an accelerated way to the revenues with a strong double digit growth, E.O. Villile .
Roei Golan: Same as in previous quartets, the revenues from Infinity Agreement will keep increasing and already exceeded 15% of our total revenues We can see more and more customers adapting our platform, which is answering the needs and the one umbrella of products and services [inaudible]
Roei Golan: We're looking on our global revenue distribution, so we can see that 45% of our revenues came from Emea, which represent 5% growth in Ovellil, 42% came from America, with 6% growth in Ovellil, while the remaining 13% came from Asia Pacific, with 12% growth in Ovellil.
Roei Golan: Moving into our PNL, so as indicated, our revenues grew by 7% while our growth profit grew by 5% to 564 million dollars that present 88% growth margin.
Roei Golan: Our operating expenses increased by 7% to $325 million. This increase was mainly as a result of our recent acquisition of cyber-in that was closed in the end of the Q3 last year, and the continued investment in our workforce organically during the quarter.
Roei Golan: Our non-GAAP operating income continues to be strong at $259 million or 41% operating margin. Our net income was $246 million, a 75% growth in Ovalil, while our non-GAAP PPS grew by 9% to $2.21 $259 million.
Roei Golan: Moving into our cash flow, so our operating cash flow was from this quarter . . . .
Roei Golan: With $421 million present 70% growth in Overil, if we are excluding the reduction in the income tax paid, the growth was 14% in Overil
I'll catch Binance SSS off the end of the day.
Roei Golan: Our cash balances of the end of the quarter were $2.9 billion. During the quarter, we continued our buy-back program and purchased approximately 1.5 million shelves for $325 million at an average price of $211.11.
You are on mute, Nadav.
Hey folks, great to be with you again.
Speaker Change: As Roy said, indeed a solid quarter and when we look at the appliances demand, I think this was where he shows a trajectory that's been going on for the last four or five quarters. So it's a continuous, a positive trajectory which makes us optimistic.
Speaker Change: If you remember, we met last time, my first time as CEO at the end of January , and I told you that I was going to be focusing on listening and learning, with a target of meeting over 100 customers
Partners, prospects, and hundreds of our own check pointers. [inaudible]
Speaker Change: So, 100 days, my first 100 days are over, plus 28 days and counting. So, happy to report that I think I exceeded my target of the meetings that I told you I was going to do when listening to our partners, customers, etc.
Speaker Change: I think that regarding our strategy, which we are articulated, which is to provide the leading platform for the hybrid mesh architecture at the end of the day, it resonates well with everybody I've met so far and is well received. [inaudible]
Speaker Change: Also very pleased to say that in speaking to channel partners, I believe there's a genuine want to reinforce the partner with Check Point and we definitely intend to double down on that
Speaker Change: And then finally, February was our CPX, which is our user conferences. We had them across the world, so traveling the world, meeting Check Pointers and thousands of customers and partners in Vienna and Bangkok and Vegas.
Speaker Change: We enthuse me at least in our potential going forward in our strategy.
Speaker Change: You know, what we emphasize to the world is that we believe first and foremost that when you're securing a hyper connected world in the AI era.
Speaker Change: First and foremost, we need to remind ourselves that everybody else that's security is about security. As I've shared with you our strategies to provide a real platform for this hyper connected reality, and I think it literally provides the best prevention that there is out there today.
Um...
Speaker Change: When you think about the hybrid mesh architecture, you always need to remember [inaudible]
that we're living in a hyper-connected reality.
and in this hybrid mesh architecture.
Speaker Change: I believe that the Infinity platform really provides the best solution that there is out there today based on the flexibility and it meshes together or brings together our three families or products [inaudible]
Our quantum projects, our cloud-gore products, and our harmony products [inaudible]
Speaker Change: and the way we are providing this, I think, optimizes for flexibility, performance and cost and at the end of the day by providing this agility, not only we can provide a better security but also a better user experience.
Speaker Change: And finally, when you look at organizations and enterprise today, probably the second line item in their budget is cloud and this flexible hybrid approach allows for a better capability to control that cloud cost.
Speaker Change: Beyond that in Q1, we also announced our partnership with Whiz.
Speaker Change: The reason I bring it up here is I think it exemplifies what we mean when we say that a real platform is also an open platform with an open-garden approach and architecture so it's not just with the with is a good example of how you bring together one plus one best of read and provide our customers with the best security in this hyper-connected reality.
Speaker Change: Also, please, with the latest recognitions of industry analysts, you can see here, and I think they're well deserved.
Speaker Change: When I look into our focus, two areas, one is Fassi, which is front and center in our architecture, we're articulated that, and that's where we're focusing, and the other of course is artificial intelligence. [inaudible]
Speaker Change: When you think about Fancy, when you look at what we've done already, so first of all, we're already serving thousands of customers and in terms of user experience, literally 10x faster and that counts in different situations.
Speaker Change: And this hybrid approach allows for the flexibility and at the end of the day we have also embedded the Check Point security engines and we're talking about dozens, almost a hundred AI agents that are running and being supported by or supported from the cloud.
Speaker Change: I'm going forward. This is a major focus that I'm overlooking myself because of its criticality to our architecture. Thank you.
Speaker Change: Our focus is obviously on scaling this larger and larger enterprises As I told you last time, we intend to do open a new R&D Center in India that works well [inaudible]
Speaker Change: We're getting a great talent there and we're constantly going to improve the unified policy across the hybrid mesh network, improve user experience and the fiber practitioner experience going forward. [inaudible]
Speaker Change: Beyond the hybrid mesh and the sassy, which is front and center, obviously artificial intelligence is changing the world. I don't think it's just a technological revolution but literally a new dimension. .
Speaker Change: And so when you think about it, at least from a cyber perspective, the first thing you need to understand is that enterprises must embrace this new technology. They have to embrace it, they have to leverage it, but they want to do it in a responsible, secure way, that's where we come in.
Speaker Change: So, in our CPX events, we launched and continued to reinforce Gen AI security as an example.
Speaker Change: But it's not only to look at the attacker's perspective of what they can do but also leveraging AI for security, and that's where Infinity Code Pilot integrated into our product was also showcased, and again today we have thousands of organizations across the globe using it already.
Speaker Change: Going forward at the same time, we're going to continue to focus on both [inaudible]
Speaker Change: How do you secure AI, and how do you embrace AI and leverage AI to facilitate simplification and automation all the way to fully AI-driven access control policy, which is where our roadmap is taking us.
Speaker Change: I think that when you think about a new dimension, one thing that you need to be as humble . . .
Speaker Change: I think as humans we have the limitation of imagination, right? Where is this world going? And last time we spoke, we spoke about starting an AI security research center which is already functioning but this is also an opportunity for me to introduce Jonathan Zanger.
Speaker Change: who will be joining us in the next few weeks at our new CTO.
Speaker Change: If you're not sort of within the cyber and AI community, his name might not mean much, but believe me he's one of those sharpest and most talented minds I've ever had the pleasure to work with.
Speaker Change: I know from our service days, in the last few years, he's been in the startup world, and within the communities, he's really well recognized, talent, both in AI and cyber, based on his national defense, academia, startup experience.
Speaker Change: And I also believe that him choosing us as a show of confidence in our strategy and where we're going and ultimately he's also a talent magnet and as you probably know in this AI world he's told about the talent and the critical mass of talent that you can bring into the organization
Speaker Change: And that's going to be one of his tasks going forward. I'm really proud that he's joining us.
Speaker Change: This is probably also a good time to acknowledge our current CTO, which you all know, Dr. Doridore Dr. Doridore, John DiFucci, John DiFucci, John DiFucci, John DiFucci,
Speaker Change: You know, I've known for it for almost 30 years. I think she's one of the most recognized leaders in cyber globally and in checkpoints specifically she's an icon. She was a part of building this company and I couldn't be more. [inaudible]
Speaker Change: You know, appreciative of what she's done. She is agreed to stay at the Check Point Fellow and a consultant. In the next few weeks, Jonathan will have to feel really, really, really gigantic shoes. So, congratulations to both.
Speaker Change: And speaking of news and again going back to our January discussion we spoke about the way we're going to orchestrate and focus
Speaker Change: Our go-to-market approach, and we spoke about creating a new division that works on FAST
We're going to be focusing on securing the workforce. The workforce.
Speaker Change: When you think about the hybrid modern workforce, we work from everywhere and anywhere, we have different intents and different personas and different identities.
Speaker Change: and multiple devices and there are too many segmented solutions right now for different channels and devices and this lack of a unified solution is being taken advantage of by the hackers [inaudible]
Speaker Change: Because hackers are always going to come through the cracks, even if you have disparate the specific products that are doing a good job if you can't unify it, they're going to come through the cracks [inaudible]
Speaker Change: And so the idea is to design and offer and just secure employees in the modern hybrid mesh environment and provide a single product experience.
Speaker Change: We're going to be pulling together different products that we have, and we're going to be pulling this into our infinity platform and leveraging assets such as threat to a cloud AI.
Speaker Change: Again, I'm happy to introduce Gil Friedrich. For those of you who don't know Gil Friedrich who's going to be leading this new newly formed division to focus on the workforce.
Speaker Change: Gil joined us about three and a half years ago through the very successful acquisition of Abenon in 6X, the business so far.
Speaker Change: We announced not so long ago that we already crossed $112 million of RR Our goal is to cross the $200 million of RR within the next year
Speaker Change: Building on this success and the resection of this technology, we're going to put together different products to create the single product experience. So when we talk about email, endpoint, and other products, this is a newly formed division that I'm very, very optimistic about.
And so welcome to Jonathan, welcome to Gil [inaudible]
Speaker Change: And I think that's pretty much what I had to report back over Q1. I don't know.
So I'll kick back to you.
Kip Meintzer: Thank you, Nadav. We're going to start out with a little commentary around our business outlook.
Kip Meintzer: Obviously, we're seeing a nice pipeline build to the second quarter and the second half at 25 5
Kip Meintzer: We're very pleased with the customer response about the Infinity platform and also our quantum force appliances. You know, security spending for us is healthy, but we recognize it's not immune to budget concerns. Although history has shown it is.
Insulated from most cuts.
from a macroeconomic uncertainty. [inaudible]
Kip Meintzer: Specifically, around tariffs, we haven't seen any behavior so far, cancelled project, extended sale cycles, etc. However, you recognize these sales cycles usually occur at the end of the quarter. As such, we think it's prudent to take this into consideration. And so, for the second quarter, we're looking at these dynamics in giving you our business.
Kip Meintzer: Fowler, so revenues are expected to be 642-682, that's 2-9% year-over-year growth.
Kip Meintzer: non-GAAP EPS is expected to be 232 to 242, your over your growth of 7 to 12 percent, Gap EPS is expected to be approximately 55 percent less. Our FYI 2025 remains unchanged.
Kip Meintzer: And a little bit of modeling commentary to reiterate off of what
Kip Meintzer: Roy said earlier. Last year in the second quarter, we had a 3-8-figured deal that told 130 million. Two of those were paid up front. They contribute about 2% benefit to the calculated Billington.
Kip Meintzer: in the quarter. With that, we're going to open the call for Q&A, and no need to raise your hands, folks. There's a predetermined list of folks.
Kip Meintzer: So we'll leave it at that. First up is going to be Robbie Owens from Piper Sandler, followed by Joseph Gallo from Jeffries.
Great, thanks, Kip, and good afternoon, everybody.
Speaker Change: We're hoping you could drill down just a little bit more into the business outlook commentary slide that you just provided at Kip Redden.
Speaker Change: Maybe as you think about the forward pipe, the obvious questions or puts and takes around that the refresh cycle which seem to come through in product revenue Thank you.
Speaker Change: This Court, but also just where are conversations with customers around tariffs and you know appetite to spend in this environment understanding that
Speaker Change: Security is typically resilient. We've seen that historically, but some of these things can push out as they sweat assets. So, just in color from the customer conversations would be appreciated. Thanks.
Roei Golan: Where do you want to start? Yeah, I'll start. So again, I have to say that again, as of today and we had the multiple discussion with ourselves today, Bill.
Roei Golan: We don't see, and based on what we see in the environment today, we don't see any effect either today from what's going on in the mathematical economy environment.
Roei Golan: We actually see that the pipeline is building very nicely with you mentioned the quantum force appliances that we see the positive trend in the last few quarters I have to say that when I'm looking on the pipeline specifically for the quantum force appliances for the second quarter so
Roei Golan: Look very good, but again it's something that we we cannot avoid the volatility and what's going on in the market and as we all know. Thank you very much.
Roei Golan: Most of the business is coming in the last month of the quarter, especially in the last two weeks [inaudible]
Roei Golan: We see that every day we have news and something can be changed again as of today we don't see anything but when we beat the guidance for the next quarter we took into account more prudent approach in terms of
Roei Golan: There might be because of the macroeconomic, more bills that will be slipped to the second half of the year, and that's the main factor real.
Speaker Change: Yeah, Rob, I don't have a lot to add to be honest. As Roy said, I speak to our channels and customers, and obviously sales leaders all the time trying to be out there and understand what the sentiment is. We haven't seen anything. The only thing I can add to that, and again this is looking back doesn't mean that this will repeat itself. [inaudible]
In these terms of uncertainty and volatility, especially as our...
Speaker Change: You know, the offense is arming itself with very sophisticated AI capabilities. Unfortunately, I think we'll see we'll also see an up.
Speaker Change: and Optic on the offense side. So I think from a customer perspective, this cyber budget line item will probably be at the bottom of the list of something to cut. But again, this is looking back, looking into the future, who knows? [inaudible]
Thanks.
Speaker Change: Next up is Joseph Gallo, followed by Adam Tindle of Raymond James.
Speaker Change: Hey guys, thanks for the question. Maybe just following up on products.
Adam Tindall: How should we think about the runway left and the refresh and product versus subscription revenue growth this year? And then is there any increased cost of good sold from the tariff? Thanks.
Adam Tindall: Yeah, so I'll start with the second question around the talib, so...
Adam Tindall: We are manufacturing, today most of our manufacturing is done in Taiwan and with the third-party ODM.
Adam Tindall: We are working closely with them mainly around the development that happened in the last few weeks. I do have to say that even with the high tariffs that for now we are not in post, but even with these high tariffs that might be in post.
Adam Tindall: The Max Exposure on us will not be significant and will be expected to be less than at the point to our total margin but we are talking about the Max Exposure and we are doing a lot of work around doing some adjustment to our supply chain to try to minimize this additional cost. [inaudible]
Thank you. Bye.
Adam Tindall: In terms of product, we started to see this research cycle accelerating, I think, in the second half of last year in 2024.
Adam Tindall: First of all, we have the research of our existing install base that we do see a very nice ramp up in the last few quarters [inaudible]
Adam Tindall: We see that they really like the new appliances that we launched a year ago and we actually see the acceleration in our revenues grow from products that mainly include these outwell [inaudible]
Adam Tindall: As for the remaining of the leafless, so I think, first of all, we have the leafless of Alex Listing, Storbitz, but definitely the division, opportunity, outside.
Adam Tindall: Our competitors also some of them mentioned that they have a large resource cycle that expect to start sometime in the second half of 2025, and we last in 2026 so we think that this...
Adam Tindall: This should last, I mean, there is this reflection, this trend, we should expect it to last in the next, we last until the end of 2026 I think that we need also to take into account macroeconomics [inaudible]
Adam Tindall: An environment that sometimes you know because of uncertainty there will be some customer that will decide to threaten in their asset but right now we don't see that but again you know you don't know I mean we still there is a lot of uncertainty to the around it.
Thank you
All right, our next caller is Bryant Abram [inaudible]
Brian Essex, followed by Keith Bachman,
All right, thank you.
There we go.
Adam Tindall: All right, we on? Yeah, yeah, all right, thanks, Kip. Nadav just wanted to ask you, you know, one thing about being at CPX, it was really evident that
You're very engaged with customers, partners, employees [inaudible]
Adam Tindall: Particularly employees, the number of employees that commented that you're pushing them to grow the business.
Adam Tindall: You know, maybe more forcefully than has been done in the past maybe if you could help but help me understand what kind of [inaudible]
Speaker Change: What kind of incentives, initiatives, and benchmarks are you holding your management team to that are meaningful to call out, that kind of hold their feet to the fire to the accelerate growth? [inaudible]
Speaker Change: Yeah, so I would say that first and foremost, and we've spoken about this in different instances, we're focusing on accelerating our growth.
Speaker Change: In order to do that, we're also expanding our spend on go-to-market, the way we are orchestrated around go-to-market. And also, I think culturally, being more vocal and closer to our customer.
Speaker Change: I think that from a cultural perspective the word that what I like the phrase that I like to use and I'm pushing is sense of urgency [inaudible]
Speaker Change: From a compensation commission, we are more focused on ARR than we were before.
Speaker Change: Arr, and then finally a target of putting ambitious achievable targets and making sure that we are all accountable for those targets.
Speaker Change: He, every employee in the company, by the way, not just the people that are forward looking and talking to customers but also the folks here, they're doing most of the R&D.
That's helpful. Thank you. We'll keep it to one.
Speaker Change: All right, I had a big faux pas there, the next question is actually Mr. Pistol and that'll be followed by Mr. Bachman
Speaker Change: Nadav, you get Kip one slide to read and he forget how to do the Q&A, so.
Speaker Change: He's lost too much weight, you know, he can't think for it. Oh, there we go, there we go. Love it. Thanks guys, I wanted to ask, obviously I think this...
Speaker Change: Keith Neym here is the growth acceleration and product in particular but the flip side just to get it out there Nadav is from the margin standpoint I know Roy unpacked a little bit of the drivers but we're nearing 40% EBIT margin sales and marketing that record levels you did have a filing into a quarter where you're expanding corporate headquarters.
Speaker Change: I think a lot of this makes sense as growth accelerates, but I think it would be helpful to maybe put some parameters around this. Just how you think about the optimal operating model, what you would need to see, for example, to take margins into the 30s, how you think about the balance of growth versus investment, probably speaking. Thanks.
Yeah I'll start and Roei, you can follow up.
Roy: I shared this last time in the strategy or the targets haven't changed, we need to gradually improve our growth but we want to do it in a responsible prudent manner to create sustainable growth.
Speaker Change: So I think we do have flexibility in our margin but we need to do it very carefully and like you said we need to see the uptick that that brings.
Speaker Change: So I do think there is some flexibility there. As you can see, no big changes in Q1 or minimal changes to our operating margins in Q1. I don't see that changing in the very near future, but we are following very close thing and seeing where every dollar we put into go to market. .
Speaker Change: What it brings, and how it affects our total financial situation. [inaudible]
Speaker Change: Where you want to add anything to that? So we mentioned, I think we discussed it in the CPX that we are doing also also part of what we've done with Weiss, we are doing more focusing on where we need to invest. It doesn't need that all investment needs to be increasing. Essentially, I think we need...
Speaker Change: We are looking, Afina Davies doing, since he joined in terms of he decided where we need multiple focuses, we discussed a lot of hybrid mesh and other items, and we are moving budgets from high areas [inaudible]
Speaker Change: In that we let focus to either that we need to focus more, like Sastie, like AI, in the end when we are looking on the full budget, on the full operational, I don't think that we don't expect in the near time to see any significant change to our operating margin in order to accelerate our top line. [inaudible]
Speaker Change: Alright, our next question comes from Keith Bachman, followed by Shaul Eyal .
Keith Bachman: Many thanks, team. I wanted to try to get more update on Perimeter 81, your SASI solution. I'll break it into a couple parts. As we think about the year unfolding,
Keith Bachman: How do you think about the enhancements that you need or want on the solution side? You talked a little bit about this CPX, but maybe update us on go-to-market activities.
Keith Bachman: and then see as we get to end a year, what does success look like and what metrics might you be able to provide to us, whether it's contribution to ARR, number of customers, anything along those lines but just maybe just a broader update on your Sassy Solution and Primord 81. Many thanks.
Keith Bachman: Well, thank you. So I'll get started and Roy is going to take a little bit of maybe about the frangers. I'll start with the product side. On the product side, there are two things that are three things we're focused on.
Keith Bachman: Number one, we have a relatively nascent solution if you look at the incumbents in the market
Keith Bachman: I think it's a unique solution sometimes when you come late to the market, you can already see the kind of mistakes that were done and come with a more modern solution and I think the hybrid approach allows us not just to give a better user experience, but also to provide security based on the parameters of identity and 10 geography and location and based on those you can consume the security from the right place, especially in the world that's moving from the attacker's perspective and the speed of AI, I think this is crucial. Thank you very much.
Keith Bachman: So, but having said that, we still have a feature parity that we need to complete, and I'm following that very, very, very closely, and the other is to go up the stack and turn your very large enterprise. So, let's go up the stack and turn your enterprise.
Keith Bachman: So, that's the other thing. On the go-to market side, the way I look at it is to really try to go out there and showcase, you know, everywhere we can but also with existing very successful deployments in large enterprise of what this really means to provide this hybrid architecture. What does it really mean to have a better user experience? What does it really mean that you have a better control of your cloud cost to go out and prove that? What does it mean to have a better user experience? What does it mean to have a better user experience?
Keith Bachman: with our partners, with our channels and industry events such as the one happening next week at RSA.
I think that for me success is...
Keith Bachman: First of all, can we actually showcase in large enterprise that's consuming this?
Keith Bachman: What are they saying? I think if they come and say listen, this action works better because…
Keith Bachman: Because, sadly, unlike other products in security, is right in front of the long tail of hundreds of thousands and times, sometimes tens of thousands of employees of one enterprise. And the feedback that you get is very direct. [inaudible]
Keith Bachman: So that's on the user experience side, and we're seeing the same thing here at checkpoint once we're deploying this here.
Speaker Change: What's the user experience? What does it mean? What does it allow us to do? Because at the end of the day we not only want to secure and prevent, we also want to get better user experience.
. . . .
Speaker Change: The other thing is how this as an infinity platform sale, that's the other metric or perimeter that I want to look at. Not as a sassy stand alone, but sassy as a part of my hardwood mesh and the infinity platform
Speaker Change: So, that's another method that we need to look at closely I can tell you very openly that so far so good but it's only the beginning of the journey I'm following this very very closely it's one of the eye and to the question about investment this is one area where we don't have lack of resources
All right. Thank you.
Speaker Change: Next question is coming from Shaul Eyal, followed by Shrenik Kutharis
Speaker Change: Thank you. Good afternoon, guys. Nadav, on the heels of your with announcement partnership and thank you for this slide. You've got to put up. We've been getting some questions from investors on on weather. Thank you very much.
Speaker Change: Check Point is actually giving up on CNAF or is actually double downing on CNAF, maybe doing one category out of the broader.
Speaker Change: Cloud Security Arena, so maybe if you can address that, and maybe Roei, just a word about the mix between ULOGos and existing customers with this quarter. Thank you.
Speaker Change: Yeah, thanks for that, Joel. So, I want to be very direct and very simple about this when we're doubling down on cloud.
We are focusing on partnerships when it comes to observability.
Speaker Change: and CNAP specifically. And we are repurposing these resources in the areas that are core and strategic for us, such as Sassy.
Speaker Change: I want to be very clear on that, and we're very transparent internally with our customers, with our channels, and we're within a migration process within our existing customers to start using Whiz, and we are able to actually showcase within our unified platform. Again, I believe this is also the right philosophy when you think about [inaudible]
and Open Platform. So, that's a very direct answer.
Shaul Eyal: And to your question, Shaul, about existing custom and new custom, so I think that we are looking on now with product revenue, so...
Shaul Eyal: Of course, the majority is coming from reflection from our existing customers, but definitely we do see Arctic in our new business form.
Shaul Eyal: from New Lobos, from appliances. Again, I think since we launched, I think it's launched in new families, last year.
Shaul Eyal: The price performance of this appliance has become much more attractive.
Shaul Eyal: In the market, then it was in before and definitely we do see that in the competition .
Shaul Eyal: I would add one thing about new customer's role. I spoke about Gil Friedrich and the newly formed workforce division.
Shaul Eyal: That is one of the ways that we expect to win new logos with sometimes even different buyers within the enterprise.
Thank you.
Speaker Change: Alright, next up is Shrenik Kothari, followed by Andrew Nowinski from Wells Fargo [inaudible]
Andrew Nowitzki: Great job, you guys here, right? Nice, nice little vest there. Yeah, that's the rest of the occasion. So you did touch up on
Andrew Nowitzki: tariffs and global macro uncertainty, and also around the Israeli Taiwan-based supply chain.
Some of your relatives, kind of characters.
Andrew Nowitzki: Installation, the non-US status, kind of helped you win business from other hardware heavy pears and
in areas like Europe, Canada.
Andrew Nowitzki: And anything you've seen in terms of screen rates, upticking, or competitive, you know...
take-off or take-out activities specific to these dynamics.
Roei Golan: And then from a margin standpoint, where quickly I wrote you, you mentioned...
Stubbs of due basis points.
of Impact.
assuming that it's based on...
Roei Golan: Some of the existing or the original data framework just wanted to clarify what could that change for the better if things are evolving in the right direction.
Roei Golan: So I'll start maybe because it's a short one that's based on the 32% that's the italics that for now it's not imposed but that's based the less than half a point is related to the 32% that's not for the 10% that's already imposed.
Yeah, I'll say from my perspective that um...
Roei Golan: You know, these are early days in uncertainty right now with such...
Roei Golan: George, that I'll be very honest. I'm not counting on having an advantage over our peers at this point. I do believe that in an era
Roei Golan: that, with the volatility that we have, unfortunately, we will see an uptick in attacks and in the sophistication of attacks.
Roei Golan: I believe that our approach of prevention first and that security is about security will be heightened and well received and I'm optimistic that we can get our points based on that [inaudible]
God, thanks a lot
Speaker Change: Alright, next up is Andy Nowinski, followed by Tal Liani of B of A
Speaker Change: Okay, good morning. Thank you for the question. So, Nadav, you know, you have a very impressive background. I'm sure you've seen more cyber attacks and most executives in the market. So I'm wondering, have you been able to leverage your background to speak with CSOs and how? Well, I don't know.
Speaker Change: The Achilles heel of Check Point, and then just a quick clarification, the maintenance decline in this quarter, is that just a lagging impact? I think that lags, even though product revenue is really strong, typically has a lagging impact. It's a lagging impact that comes.
Speaker Change: Dr. Oplator, thank you. I can start and Adam, maybe Eliega, guarding the support. So, yeah, it's lagging. We do expect it to pick up in the second half of the year if you want to see the trend continue with the refresh and definitely we expect it to be. Thank you.
Speaker Change: To be positive back in the second half of the deal, Nadav to your finger. Yeah, the answer is yes.
Speaker Change: I always, you know, from the nays and days when the internet started and I've been doing this for the last 30 years remind myself that at the end of the day it's a learning competition between offense and defense [inaudible]
Speaker Change: That's true for Check Point. When we protect Check Point, that was true in my previous life when I was at the frontline protecting a national infrastructure.
Speaker Change: It's always a learning competition, and in a learning competition what you need to do is appreciate how the world is changing, try to imagine different futures, assign probability, come back to the present and decide how you want to a lot your risk management and your budget.
Speaker Change: I'm super passionate about this and I've seen it from many, many different aspects in the last 30 years and for me to talk to leaders in the enterprise world whether it's board, CEOs, CFOs, CIOs, and CSOs
Speaker Change: It's something that I'm very passionate about and I am very enthusiastic about I'm very enthusiastic about going out there and talking about how we approached as a check point generally specifically I think that all of us are, you know sort of. [inaudible]
Speaker Change: Trying to understand how we leverage this incredible new technology that's a double-edged sword, we all get it, and so I think if we can be a good partner for the journey of embracing AI for our customers
That's a very, very important capability that we have...
Jonathan Zanger, joining us in that respect.
Speaker Change: being able to hire some of the best talent in the industry, trying to imagine what it's going to look like. I don't fool myself. We're going to imagine a thousand scenarios and we're going to get hit, but the scenario is a thousand and one.
What's by thinking about it practicing it, simulating it? [inaudible]
Speaker Change: I think it's a great advantage. Now, when you think about Check Point with 30 years of experience, 100,000 customers, the vast data that we have, the fact that we've seen every mutation and every permutation, doesn't mean that we're going to get it all right, but I think it means that we're in a good spring world. [inaudible]
Thank you [inaudible]
Speaker Change: Alright, next step is Tal Liani, followed by Patrick Colville.
Hello, here you go, now you can see me also. [inaudible]
Nadav, I have a kind of high level question for you.
So...
Speaker Change: The stock went up following your entry to the company and what we are looking for now is for the growth not to be in the 6-7% area. That's not exciting. We wanted to see above 10% [inaudible]
Speaker Change: And the question is how long does it take you and what needs to happen to get to this 10% level in order to justify additional upside in the stock? And I just want to look at the numbers differently.
Speaker Change: I know that firewalls will go to a refresh cycle, but firewall market is not going to grow in the long term and when I look...
Speaker Change: at your other parts of the portfolio. Outside of firewall, it needs to grow substantially to get to 10%, if I remove this firewall, refresh temporary kind of...
Speaker Change: You know, upside, it needs to grow substantially to get to a sustainable 10% level. So how do you get there? What do you need to add? What do you do with go to market? I know these are big questions, but I think that's what you're going to drive the share price from here. [inaudible]
Yeah, first of all, I agree.
Speaker Change: Take as an example the newly formed workforce division led by Gil Friedrich.
Speaker Change: is one way or one vector to get there to that sustainable double digit growth that we are aiming to achieve. And like you said, I don't expect anything to happen overnight and we want to reach it in a sustainable manner. [inaudible]
Speaker Change: Having said that, this is an example which I'm happy to elaborate on. You know, Gil came here as an acquisition. It was a very successful acquisition. This is completely outside of our quantum business. This is completely outside of our sort of...
Speaker Change: 30 years of experience, and in a very mature sort of saturated market, but we've been able to innovate and get a meaningful part of this market again brought some to 120 million. Thank you very much.
Speaker Change: and leading this into 200 million within our goal is to get to 200 million. That's becoming meaningful and adding other components to this and creating a distinct division that's working on that. That's one way to get there. [inaudible]
Speaker Change: The other is to reinvigorate and focus on our go to market. I think that any and you can look at our spend and it will grow.
Speaker Change: I think that we have some of the best products out there, if you ask me one thing that surprised me is how little the world knows about what we're doing, we need to be more vocal, we've been shy, we need to be more vocal, we will be. [inaudible]
Speaker Change: The other thing is focus, focus, focus. That's why we decided to get out of different businesses and we spoke about that focus on our hardware-miss platform approach. So where we play, we play the win, where we play, we play the become a podium player. We play, we play, we play, we play, we play.
Speaker Change: Beyond that, we're obviously always looking at potential acquisitions to close some of the gaps that we have in our strategy, and getting some of the best leaders and talent in the world, and I think that will you combine all that?
Speaker Change: That's the strategy that I don't fool myself that this is going to happen over a night and I don't fool myself that we're not going to have our hurdles along the way, but I can tell you that I'm optimistic and we'll come back to report every quarter. [inaudible]
Bye-bye.
Speaker Change: All right, thank you. Next up is Patrick Colville, followed by Jonathan Ho, William Blair.
Jonathan Ho: Thank you so much for taking my question. I guess I want to focus on the demand environment. I mean the message in the prepared remarks was very clear that
Jonathan Ho: No effects on the macro. I think I just want to make sure that we're clear on the timing of that comment. Do those comments refer to post?
Jonathan Ho: Clothes, you know, the quarters are post-march and including the last few weeks [inaudible]
Jonathan Ho: And then, you know, if I think back to 2020, Check Point, you know, this quarter of five years ago pulled the Fiscal Year Guidance. You know, was there a world where you considered pulling the Fiscal Year Guidance and what would have put some takes there. Thank you.
Jonathan Ho: So I'll start maybe, I'm a filter-fully, yeah, that's based on what we see. I mean, the comments are based on what we see today. Not based what we've seen in the last quote. I mean, that's following the Liberation Day and all the development.
Jonathan Ho: since this announcement in the Liberation Day. So I have to say again, I don't want to compare to 2020, I'm talking about what we see, do see today.
Jonathan Ho: We are, as Nadav also mentioned, we are doing a lot of, we add a lot of discussions with channels, with customers, with ourselves leaders.
Jonathan Ho: As of today, we're talking today in this morning, we don't see any changes in the market environment in terms of the demand for the security, for the security, as I said, actually even the python is building up for this quarter mainly around the quantum force appliances. [inaudible]
And that's what we see today.
Jonathan Ho: It doesn't mean that we won't see a change because there is, we all see what's going on in the market, we all see the volatility, and it doesn't mean that it won't be changed in the next few weeks. That's why we need to be more cautious in terms of when we'll provide the guidance for the second quarter.
Jonathan Ho: But, definitely based on what we see, that's currently what we see today on the demand. And, therefore, we also didn't change the guidance for the full deal. I mean, because that's based on what we see today. We didn't think that there is a need to change the full deal guidance. And that's what we see today on the demand.
Speaker Change: Hey, Patrick, thanks for wearing the competitive gear. Hey, next up is Jonathan Ho followed by Brad Zelnick.
Jonathan Ho: Hi, good morning. You know, Nadav, you spoke a little bit about reinvigorating sort of the messaging and the go-to market for the company. Can you talk a little bit about the messaging around the hybrid mesh firewall and maybe how that's resonating with customers, how you can maybe change the narrative around? Yeah, that's right.
Jonathan Ho: Check Point Over Time, just give us a little bit more detail.
Jonathan Ho: Thank you. Yeah, for sure. My favorite topic. You know, the debate around whether the world is going to be on-prem or in the cloud or multi-cloud whether we're going to be working from the offices or working remotely. I think that debate is over the answer is yes, yes and yes. We're going to be doing both and that's sort of the hybrid environment. We're going to be doing both and that's sort of the hybrid environment. We're going to be doing both and that's sort of the hybrid environment.
Jonathan Ho: Now, the hyperconactivity that the world is going into is also not going to change. AI is not going to change that Some people anticipate that AI will change the way we operate, but at least in the foreseeable future we need to remember that at the end of the mesh [inaudible]
Jonathan Ho: There are humans like you and I, and we're fallible, and we get lazy, and sometimes we do stupid things, and sometimes we're useful idiots. And so the idea of providing a platform for the hybrid mesh is the idea of acknowledging that this is the real architecture that the world has embraced.
Jonathan Ho: and that you need a platform to support that. At front and center of this hybrid mesh is the network. If you cannot have, you know, the trust that your infrastructure is actually your infrastructure, that is very, very difficult to operate. [inaudible]
Jonathan Ho: And real security starts with prevention because in the AI world if you don't prevent it it'll be it might be too late [inaudible]
Jonathan Ho: Trying to run after it, after it's reached your network through your SOC system, for example, could mean that you're just telling a story and telling everybody about the past, but the damage is already done.
Jonathan Ho: The second thing is user experience, the day of the day, you and I and all of us are traveling the world, we have multiple devices
Jonathan Ho: We are looking for user experience with security and we don't want to give up on our user experience speed and capability to work from anywhere and anywhere.
Jonathan Ho: from everywhere and anywhere. And so that's sort of the hybrid mesh reality when we look at it at the center of that we're providing a suite of products so that the end of the day you have a unified management the infinity platform. [inaudible]
Jonathan Ho: from our threat cloud AI. What that means is that you're getting flexibility because sometimes you're going to receive and consume security from an endpoint device.
Jonathan Ho: Sometimes you want your data center to be able to connect directly. Sometimes you want to, and you're working in a multi-cloud environment. That's sort of the essence of what we're saying with a hybrid mesh platform.
Jonathan Ho: Beyond that, you also must remember that it's not only about security and usability, it's also about cost [inaudible]
Jonathan Ho: The cyber approach allows you to optimize the connectivity, not just per security and usability but also per cost. [inaudible]
Jonathan Ho: That's the message that we're going out there to the world with.
Jonathan Ho: Now we're augmenting this with a single product experience at the workforce level and both of those are complementing this hybrid mesh environment. It's not everything and that's why it's an open platform.
Jonathan Ho: I can tell you that so far it's resonating there is a it's a process because this is sort of a concept that it's not that hasn't been around so we need to invest
Jonathan Ho: in explaining and showcasing and to the point that we spoke about before it also means that we're going to have to offer our marketing game. [inaudible]
Thank you, I can see the passion [inaudible]
Speaker Change: All right, next up is Brad Zelnick, followed by Saket Kalia
Brad Zelnick: Great, thanks, Kip, and nice to see everybody. Nadav, along the lines of Tal Liani's question checkpoints in as strong a position as we've seen in years.
Brad Zelnick: And everybody's got a lot of enthusiasm that you're here to win and not just win small but to win big.
Speaker Change: The company's on a strong footing, has a really strong balance sheet. Now that you're over 100 days in, how are you thinking about corporate development opportunities? And what criteria are you using as you're looking at deals? Thanks.
Speaker Change: Thank you. So the criteria is very straightforward. We have our North Star and our strategy and our focus areas. Acquisitions are a means to fulfill that strategy.
Speaker Change: So, that's how we're looking at it. It's not a very broad aperture, but like we said, Satsi AI, so that's where we're looking.
Speaker Change: You know, unified management, that's where we're looking. And there are many opportunities out there. And so our, you know, we last time we spoke announced that Roy Carrer is joining us.
Speaker Change: and alongside with Alon Ely, you lease this, they're constantly looking and we have a real appetite sometimes it will be to accelerate the road map.
Speaker Change: Sometimes it will be because somebody something we will see is truly novel and it's not just an add-on but something that can actually be thought. And so we're looking at both and stay tuned.
Speaker Change: All right, next up is Saket Kalia, followed by Roger Boyd
Saket Kalia: Okay, great. Hey guys, thanks for fitting me in here. Nadav, maybe to go back to the sassy discussion, again, front and center, no shortage of resources.
Speaker Change: Maybe the question is, how do you sort of see the swim lanes in this market developing? You know, you have some established pure play sassy vendors like the Z Scalers and others in the private side?
Speaker Change: You have other firewall vendors that are providing this as well. Maybe you have some that are very focused on secure web gateway, some that are really focused on private access or VPN of the service. Where do you see Check Point Sassy sort of fitting into this market as you think about Sassy in the coming years? Yeah, that's right.
Yeah, great question, so um...
Speaker Change: The first thing I want to say is that we're focused on enterprise customers when we think about the hybrid mesh architecture at its best.
These organizations are usually... [inaudible]
Quite complex!
Speaker Change: They have some of everything, they have data centers, they have branches, they have multi-clouds and they work in different geographies with different regulations regulations.
Speaker Change: with many moving parts and a changing environment that they must embrace and continue the competition. So that's the kind of customer that we're looking at. So we're talking about big and complex.
Speaker Change: Many of our customers are also financial organizations with incredible regulation needs. They're industrial companies that are working globally and you're seeing what's happening in the world right now.
Speaker Change: Our focus is, first and foremost, to come up with a solution and I think we're already showcasing how this works that allows, that doesn't compromise security for usability [inaudible]
Speaker Change: And this is where the unique architecture that we have at our sassy which is hybrid, I think is going to win Most of the incumbents have a cloud only sassy [inaudible]
Speaker Change: And I'll be very honest, it made a lot of sense when they come up with this many years ago. [inaudible]
Speaker Change: But I think now having the ability and the flexibility to be both on-prem and cloud multi-cloud is a big advantage.
and then beyond that it's the unified approach.
Speaker Change: So that you can look at your connectivity infrastructure as one and build on that so that's where I think we can win. [inaudible]
Speaker Change: Again, being very transparent, we don't have all the features, we have to mature some of our things.
And that we're going to focus both internally.
Speaker Change: and by Corp Dev to make sure that we find the right solutions and with a big sense of urgency because this is still a relatively nascent approach, the Sassy approach.
Speaker Change: If you look at the market today, I think that below 20% of enterprises is already embracing this but it will continue to grow because that's what a margin in infrastructure calls for
Speaker Change: All right, our last question of the day is going to come from Roger Boyd of UBS.
Roger Boyd: Awesome. Thanks, Kip. I wondered if you can come back to the macro assumptions and the commentary around the potential for slip deals in 2Q. When I look at the revenue and EPS guides for 2Q in the full year, I think they're still pretty good, and I know you don't guide to it, but...
Roger Boyd: Whatever you could speak to any direction, anality around your expectations for billions or RPO in 2Q or any color on the 1.5 versus 2.5 seasonality, acknowledging the color you gave around large deals in the year go quarter. Thanks.
Golan Ya Amir, Ya Amir
Roger Boyd: Yes, so for building, we are not providing, I'll start with building an IPO, we are not providing any guidance for building an IPO. I do as we did we did mention that. [inaudible]
Roger Boyd: In the second quarter last year, we did have a two-large deal that will build up from the benefit of approximately two points [inaudible]
Roger Boyd: Lastill, but we should think about, again, building should grow in line with what we see in the revenues, so you should think something in this area.
In terms of, again, what's taking into the guidance guidance, again, say it.
Roger Boyd: Again, we didn't see anything as of today . . . . . . . . .
Roger Boyd: Of course, the significant portion of our revenues is already in our backlog mainly the subscription and support but I remind you all that the main uncertainty but the main revenues that we still need to bring out the product revenues that usually are coming are going to be in the next few months.
Roger Boyd: Our building and our work organized immediately. And in terms of that, we do see…
Nadav Zafrir: Very good pipeline for the quantum force appliances, both for Q2 and for the second half of the year, even I would say that for the second half of the year we do see even a better even stronger pipeline and we do expect that again.
Nadav Zafrir: Taking aside the macro environment effect, because we never, I mean, it's tough to expect, to predict that, but putting aside the macro environment, we do expect to see an acceleration in terms of the quantum force refresh in the second half of the year.
Yeah, well, thank you.
Nadav Zafrir: All right everyone, we appreciate you guys attending the call today and we look forward to seeing it throughout the quarter and have a great day out there. Bye bye now. Thank you.