“We plan to make this available later in the year, which I believe will open up a compelling market opportunity.”

In context

“Gil Shwed (CEO): I apologize, I muted myself. Sorry. So good morning, everyone, and thank you, Roei, for the presentation. And now that I'm unmuted, I hope you see the presentation. Ready to go for the business update. I'll start with a quick recap of what Roei already shared with you. I think we had a pretty good quarter in the first quarter. Great results, revenue, EPS at the top of the projection, double-digit subscription growth continues to be recurring revenue, which I think is an important factor because we are moving more and more of our business to be an annuity model. It now represents 83% of total revenues. So again, another good indicator. Overall, I think we are putting a huge focus on what we call new business activity. And new business activity includes everything from signing up new logos and new customers to new refresh cycles, expansion, upsell, everything for the existing customers. And we had double-digit new business growth, which I think is very, very important that our customers are growing with us, refreshing with us, becoming up to date, and getting the best security. Part of that is the overall Infinity platform, new customers, some major public sector wins. And I think Infinity just to be through the rest of the presentation, we use the terminology for several things. It's our overall architecture, our overall platform which is very important, but it's also a specific kind of what we call Infinity deals or Infinity contracts, and these are deals that customers are usually doing for long term, but including big parts of the platform and not just one product. So all of these are growing and growing very, very nicely. One of the key drivers of our business continues to be our security gateways, as the network is central to everything we do. This quarter, we completed a major refresh of our entire product line, now called Quantum Force. I will discuss this more later, but what is crucial for Check Point customers is to gain more value from our offerings. We have welcomed many new customers across various regions, including Europe, Asia, and the U.S. A significant area for us is the public sector, where we secured 19 new government agencies in 40 countries this quarter. These deals vary in size, from small to multimillion-dollar contracts that span several years. Our reach extends across industries such as manufacturing, telecommunications, infrastructure, and energy, all of which are very important to us. In the first quarter, we also held our CPX conference, which included our first sell-side analyst track in Las Vegas. This event is critical as it brings together our field employees, partners, and customers to share our annual goals and product launches. The conferences were held in Asia, Europe, and the U.S., attracting over 18,000 participants, both in-person and virtually, with almost equal attendance from both. It was great to return to a full-scale physical conference filled with energy, and all feedback was highly positive, achieving the highest scores in Check Point's history for this event. This success reflects the enthusiasm of our customers and partners for our new product launches and the value Check Point offers in security. And one of the key messages was our Infinity platform or Check Point as a platform company. Now I know that many people in the industry speak today about the platform. Everybody speaks today as the platform, and it looks like it’s part of the wave. But I think it’s very important to understand. We launched the Infinity architecture, the Infinity platform in 2018, 6 years ago or 5 and some years ago. And since then, we've been building it. We're building it to be a very, very unique platform, a platform that's now AI powered with more than 50 security engines that are delivered from the cloud and contain AI technology. That's part of an overall of over 80 different security engines that analyze and prevent all types of attacks. And one of the major values here is our 3Cs being a consolidated platform where you can manage everything together, a comprehensive one, addressing all the key attack vectors, and the one which we are putting a lot of emphasis this year being the strongest in the real platform, not the architecture but a true architecture, a collaborative platform. And that's where I put a lot of our focus in 2024, making sure that all the technologies and products work together to elevate the level of security. So this isn't just information sharing between different aspects of the security infrastructure. This is also proactive action. So if we see somebody poking around our network, scanning it, we can take that attacker and block it all over on the network, on the cloud and on many other places. If we identified an infected endpoint, we can quarantine that endpoint through the network and make sure we stop the damage, contain them, contain the risk, and stop the attack. And that’s the only platform where I think we truly do that and do it in a very, very effective manner. So this is, again, a true platform where all the elements are orchestrated and work together in a collaborative manner. And I think the value of collaboration is going to pay off with the highest level of security. So that's a big focus that we put in the conference. Another important element is our new product launches, and these are the three key products that we introduced. The AI copilot is designed to manage security using natural language, which simplifies many management tasks and enhances security. Tasks that previously took too long or were too complicated can now be completed in seconds with AI technology. We also launched a new technology for securing cloud applications, specifically SaaS. It should not be confused with SASE, which is the technology for remote access introduced through our Q3 acquisition. SaaS is based on some technology we acquired last year, alongside new innovations that aim to protect your cloud-based SaaS applications. This is an integral part of our platform. Lastly, I want to highlight our Quantum Force gateways, which are crucial as they significantly contribute to our business. The latest generation of Quantum appliances showcases impressive performance, ranging from two to three times optimization for AI, featuring over 50 AI engines and achieving the highest threat prevention ratio in the industry at 99.8%, according to Miercom results. We take pride in this, and it should empower us to attract new customers while upgrading and refreshing our existing customer base. While it takes time for customers to evaluate the new hardware and software, I believe we have a robust promise for the remainder of the year. Last but not least, I mentioned the Infinity AI copilot and you can see a simple demo here. We are trying to get a simple managerial task. Emily can't access the SAP server. Why can't she do that? Again, in the past, it was a long process, analyzing issues, analyzing things. Here, it's super simple. You asked the question. It tells you Emily actually attempted to do that but there was a rule blocking her. I asked you, 'Do you want to add there and change the rule base so she can actually access that server?' You say, yes, policy being installed, boom, it's done. These tasks, when you do them with our product, if you're an expert, I mean, it takes you a few minutes. If you're not an expert, it can take you much longer. If you're doing it with a competitive product, it can take you many, many hours to analyze the situation, to find the right place, especially for large enterprises that have hundreds of thousands of rules, and they need to diagnose the situation and so on. And again, our AI copilot is not limited just for the managerial tasks. It can do everything from asking, are we protecting against the latest threat? And again, it will go and pull the latest threat from the right databases, check the configuration of all the security installation, and will tell you, yes, you're protected or no. Click here to get updated. I believe, by the way, AI will play a major role in the world in general, but in our industry, it can make some big revolution. And what we're doing now is just the first step. We will see much more. So just before we finish speaking of AI, a major partnership we announced in the AI space is about securing the AI cloud infrastructure. So I'm sure you all know that some of the largest investments today are in building AI server farms in the cloud that provide significant value through AI, primarily utilizing NVIDIA chipsets. Last month, we announced the introduction of the first AI infrastructure firewall, enabling us to integrate the Check Point firewall to safeguard the AI servers in the cloud operating on NVIDIA chipsets. This partnership is built on years of collaboration with NVIDIA, even before the AI era, allowing our software to function on their chipsets. We plan to make this available later in the year, which I believe will open up a compelling market opportunity. Currently, much of the AI infrastructure in the cloud is vulnerable to the open Internet and lacks adequate protection, which is not where we aim to be. I see this as another business opportunity, with many more emerging as we transition to AI. To summarize my presentation on Q1, we had a strong start to 2024. The Infinity platform investments are delivering returns. We have various products with email growing along with many other offerings. The sales of the Infinity agreements for a sophisticated comprehensive security architecture for customers are increasing rapidly, which holds great potential for the future and is already generating 13% of our business. Revenues and EPS are at the top of our projections, with strong subscription growth and new business growth. Both quantitative and qualitative measures indicate that we have started the year well, and we are optimistic about the upcoming quarters as we hope to maintain this positive momentum. Before I finish and open the floor for your questions, I would like to discuss our projections for the second quarter. The projections are generally consistent with what we shared in the first quarter and at the beginning of the year. Revenues are expected to be between $607 million and $637 million. Earnings per share is anticipated to be between $2.10 and $2.20, with GAAP EPS approximately $0.44 less. This aligns with our consistent performance since the start of the year, and I hope we will continue to have a successful remainder of the year. Thank you very much, and I am happy to open the call for your questions.”