“We expect subscription revenues will continue to lead growth, showing 13% year-over-year growth.”

In context

“Tal Payne (CFO): Can you hear me? Can you see the presentation? Wonderful. Okay. Great. Thank you, Kip. Good morning and good afternoon to everyone joining us on the call today. I'm pleased to begin the review of the fourth quarter. Revenues for the quarter were $599 million, which is above the midpoint of our guidance of $17 million, quite nice. Earnings per share reached $2.25 above the top end of our guidance, which was $2.22, $0.03 above the top end of our guidance. Before I proceed further into the numbers, let me remind you that our GAAP financial results include stock-based compensation charges, amortization of acquired intangible assets and acquisition related expenses as well as the related tax effects. Keep in mind that, as applicable, non-GAAP information is presented excluding these items. Now let's dive deeper into the numbers, and I will start with the revenues. Revenues for the quarter, as you can see, were $599 million, a 6% increase year-over-year. On the right side, you can see the billing. Billing grew to $851 million, representing a 14% growth in our billing, a significant acceleration from the 8% in Q4 last year. Deferred revenues showed strong growth as well, with a 15% increase, reaching $1.77 billion. Moving into the drivers, first, let's talk about products. Security subscriptions continued to accelerate, reaching $371 million, a growth of 9% year-over-year, along with product increasing nicely with Maestro being a differentiator and driving wins with customers. We've seen strength across many product categories, from SMB to large enterprise this quarter. So, it was a strong quarter for products. Subscription revenues met our expectations, showing an acceleration to 14% from 10% last year, reaching $204 million for the quarter. The main drivers include double-digit growth in Harmony and significant growth in our cloud offerings. Moving to revenues by geography, 49% of the revenues came from EMEA, 40% from the Americas, and 11% from Asia Pacific. EMEA had a remarkable quarter and led the revenue growth. When calculating, you will see slightly lower results in America and APAC; however, all three regions had strong bookings and grew well with new customers across several countries. As usual, there's a gap between the revenues and the bookings due to timing. Gross profit remained strong at $524 million, with a margin of 88%. We delivered to our customers while facing higher costs due to supply chain constraints. As you know, there's a supply constraint in the market that affects our operations. Many components had increased costs, leading to a higher cost of goods sold, resulting in a slight margin reduction of about 1% to 1.5%, depending on the quarter. We believe this is a temporary situation until the supply chain returns to normal, potentially in the second half of next year. Our new pillars, CloudGuard and Harmony, continue to show excellent results with double-digit growth. The gross margin on Harmony Connect and Harmony Security is lower than on Quantum, which contributes to this margin reduction. Overall, we achieved very strong results despite the constraints, meeting our targets and delivering to our customers. Operating expenses reached $239 million, an 11% growth, primarily driven by increased headcount, which expanded as planned at 9% year-over-year. The dollar also weakened against other currencies this quarter, noticeably impacting R&D expenses. Thus, we expect operating expenses to increase by 11%. Our operating income was robust at $285 million, translating to an operating margin of 47%. We planned for this but reached it later than expected. We also see promising bookings, and our net income margin is strong at 49%. Cash flow and cash position remain solid at $3.8 billion. Our operating cash flow was $294 million, an increase of 1%. Including the hedge effect, our operating cash flow would show a 9% growth year-over-year, which is significant. During the quarter, our buyback program continued, utilizing $325 million to buy shares, totaling 2.8 million shares at an average price of $116. Moving to the full year, we are very pleased with the 2021 results. Here, we see our results compared to the original guidance provided early last year. Revenues for the year reached $2,167 million, marking a 5% year-over-year increase, $37 million above the midpoint of our guidance. Our non-GAAP EPS stood at $7.02, exceeding the high end of our guidance of $6.85 by $0.17. Noteworthy is the billings for the full year, showing 11% growth for nearly $2.4 billion in deferred revenues, which increased by 15% year-over-year. The success for the year was driven by our focus on the Infinity strategy and our three pillars: the Quantum, CloudGuard, and Harmony, which all performed well, showing strong growth. We expect subscription revenues will continue to lead growth, showing 13% year-over-year growth. Looking at the full P&L, gross margins were strong at 88.7%. Operating expenses increased by 7%. Most of the income increase came towards the end of the year, affecting the P&L at a lower rate, but we expect that to change early next year. We will see an estimated effect on next year's margins of around 1%. The weakening of the dollar caused a $20 million impact on the full year, but despite this, our results remain impressive in light of the $20 million hit. We forecast for next year remains the same, projecting growth in the face of challenges. Our guidance covers a wide revenue range of $2.2 billion to $2.375 billion, equating to a 6% to 10% growth rate. Non-GAAP EPS is expected between $6.90 and $7.50.”