Greetings. Welcome to Check Point Software Technologies' first quarter 2020 financial results. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Kip E. Meintzer, Global Head of Investor Relations. Thank you. You may begin.
Thank you, Sherry. I'd like to thank all of you for joining us today to discuss Check Point's first quarter 2020 financial results. Joining me remotely today on the call are Gil Shwed, Founder and CEO, along with our CFO and COO, Tal Payne. As a reminder, this call is webcast live on our website and is recorded for replay. To access the live webcast and replay information, please visit the company's website at checkpoint.com. For your convenience, the conference call replay will be available through May 4th. If you'd like to reach us after the call, please contact Investor Relations by email at kip@checkpoint.com. Before we begin with management's presentation, I would like to highlight the following. During the course of this presentation, Check Point's representatives may emit certain forward-looking statements.
These forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21 of the Securities Exchange Act of 1934 include, but are not limited to, statements related to Check Point's expectations regarding business, financial performance, and customers, the introduction of new products programs and the success of those products and programs, the environment for security threats and trends in the market, our strategy and focus areas, demand for our solutions, the impact of COVID-19 on our business, including on our product development, sales, and marketing efforts, and on our financial condition and results of operation, the impact of COVID-19 on our customers, suppliers, and business partners, and the macroeconomic environment as a whole. Because these statements pertain to future events, they are subject to risks and uncertainties. Actual results could differ materially from Check Point's current expectations and beliefs.
Factors that could cause or contribute to such differences are contained in Check Point's earnings press release issued on April 27th, 2020, which is available on our website, and other factors and risks, including those discussed in Check Point's annual report on Form 20-F for the year ended December 31st, 2019, which is on file with the Securities and Exchange Commission. Check Point assumes no obligation to update information concerning its expectations or beliefs, except as required by law. In our press release, which has been posted on our website, we present GAAP and non-GAAP results, along with a reconciliation of such results, as well as the reasons for our presentation of non-GAAP information. Now I'd like to turn the call over to Tal Payne for a review of our financial results.
Thank you, Kip. Good morning and good afternoon to everyone joining us on the call today. I hope you and your family stay healthy during these unprecedented times. During this period, our top priority is ensuring the health and safety of all of our employees around the globe as we continue to serve our customers. Today, Gil will elaborate on the COVID-19 effects on different aspects of our business, steps we are taking to operate through the pandemic, and provide updates to our guidance. During the quarter, we sustained elevated business activity levels and delivered results towards the upper half of our guidance. Revenues for the quarter increased by 3% year-over-year to $486 million, and our non-GAAP EPS grew by 7% to $1.42.
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, as applicable, non-GAAP information is presented excluding these items. Now let's take a look at the financial highlights for the quarter. Products and security subscription revenues were $269 million, a 5% increase year-over-year. Our subscription revenues continue to be strong, with 10% growth year-over-year, reaching $159 million. Our software update and maintenance revenues increased to $217 million, representing 1% growth year-over-year. On the product side, we saw an increase in remote access VPN solutions and in scaling up networks where needed. On the other hand, products are continuing to transition partially to the cloud solutions, which are included in the subscription line.
The reduction in the product line is naturally driving lower support levels. The growth in our subscription revenues is driven by our advanced solutions, mainly cloud and SandBlast Zero Day Threat Prevention. Infinity consolidation solution also started to flow into the revenues and show nice trends. During the quarter, we had Infinity deals in a variety of industries, including government, telecommunication, and industrial. We also saw growth in our cloud business. Both cloud and Infinity annual run rate increased over 100% year-over-year. Last week, we finished the launch of the new Quantum Security Gateway series. Quantum includes our SandBlast Network Zero-Day Protection, bundled by default. Our old appliances bundle the Next Generation Threat Prevention, NGTP. Naturally, the new package carries higher value. According to accounting rules, the fair value of software blades is separated from the appliance price, deferred, and recognized over the service period.
As a result, we expect to see shifts from product revenue to deferred revenue that will be recognized over 12 months. The annual effect depends on the pace of the transition and the appliance mix, and we will have more color in the coming quarter. The sales revenues as of March 31st, 2020, reached $1,349 million a growth of $36 million, or 3% over March 31st, 2019. Revenue distribution by geography for the quarter was as follows: 46% of the revenues came from Americas, 43% of revenues came from Europe, Middle East, and Africa region. The remaining 11% came from Asia Pacific. This quarter, we had a strong execution in Americas, and the growth came from most regions in the U.S. We have seen strength in financial services and the healthcare vertical. Non-GAAP operating margin for the quarter was 48% compared to 50% last year.
The reduction relates to the increased investment in our workforce and cloud infrastructure in a year-over-year comparison. This margin is higher than planned as a result of the higher level of revenues and the natural savings relating to the new environment, for example, from slightly lower travel costs and move to virtualized events. Our financial income this quarter reached $90 million. Financial income is expected to be slightly reduced during the remainder of the year as a result of reduced interest rates in the U.S. Effective non-GAAP tax rates for the quarter was 18%, in line with our expectations. Remember, it can be 1% up, 1% down fluctuation. GAAP net income for the first quarter of 2020 was $179 million, or $1.23 per diluted share.
Non-GAAP net income was $206 million, or $1.42 per diluted share, an increase of 7% from the first quarter of 2019, and $0.02 above the midpoint of our guidance. Our cash balances as of March 31st increased to $4 billion. We are one of the strongest companies in the industry with significant cash balances and no debt at all. The company has exceptional balance sheets, and we can handle a very wide range of scenarios in the future. Majority of our cash is invested in marketable securities. Unrealized gain as of March 31st was $21 million. We invest in U.S. dollar marketable securities that are rated at a minimum of A-. We reviewed the securities that the fair value was lower than the book value and deemed it to be temporary reduction, hence no impairment was recorded or needed. Operating cash flow was $359 million.
Collection from customers continued to be strong. As a reminder, we hedge our balance sheet against currency fluctuation. The hedge affects our cash flow with minimal effect on our P&L as intended. During the quarter, the dollar strengthened against the Israeli shekel, resulting in a hedge cost of approximately $12 million on cash flow versus cash income of $7.5 million last year. Our operating cash flow, net of hedge effect, is similar to last year. On the margin, we expect to see some of our customers who are seeing a disproportionate economic impact are likely to be credit-constrained and are working with them to adopt their payment terms to ensure continued service to help our customers. Naturally, it will have an effect on some of the second quarter cash flow.
In February, we approved an extension of our buyback program for additional $2 billion and up to $325 million per quarter. During the quarter, we continued our buyback program and purchased 3 million shares for $325 million, the full capacity, at an average price of $110. Let's turn the call over to Gil for his comments.
Thank you, Tal, and hello to everyone joining us today. This is an unusual period, and I really appreciate your time and attention today. Before I even begin to discuss the business, I'd like to wish all of you and your families good health and a quick return to your full freedom. Now, let me start with my review of the quarter. As you heard from Tal, we had a good first quarter. We managed to meet almost every financial metric despite the huge challenge that the world faced throughout the quarter. We began the year in our usual manner, conducting our three major CPX 360 customer and partner events. We had a record level of attendance, around 9,000 people in our three locations, Bangkok, New Orleans, and Vienna. Our messages were received with great enthusiasm, and we received very high praise from the participants.
Looking at the picture from the event, it is hard to believe that only three months ago, we gathered thousands of people physically celebrating innovation and crowded together. Both the Vienna and the New Orleans Convention Center are now emergency hospitals for coronavirus patients, just to illustrate how quickly the world has changed. Before I address these changes and how we dealt with them, let me provide some color on the business this quarter. As I said previously, we managed to close the quarter on a quite high note and exceeded almost every financial measure. We saw some strong signals in the traditional and emerging parts of our business. Our security appliances had a good quarter, and we saw nice momentum in our cloud technologies. Despite the lockdowns in many parts of the world, we've seen an active business environment.
During the quarter, we had around 20% demand increase in our technical services, driven by customers scaling up their infrastructure in preparation for increased network demand. Customers accelerating the completion of projects in light of the circumstances, as well as the implementation and scaling of remote access VPN, something we've been doing for many years. Our products web pages saw a sevenfold increase in traffic in these areas. Our VPN products have saved the day for many organizations. For example, we enabled quarantined doctors that were sent home due to coronavirus exposure, to remotely connect back to the hospital, where they were able to monitor patients, something that was never done before. We helped major global corporations expand employee remote access from 8,000 daily users to 80,000 users. In another case, it was 130,000 users that are now utilizing our VPN solution.
We have many more examples like this across all industries, financial services, transportation, industrial, healthcare, and others. Some of these expansions drove additional business. In other cases, we were able to accommodate the demand with equipment and licenses the customer already owned. In terms of the effectiveness of remote access solution, we conducted survey amongst over 1,000 of our users comparing different methods of remote access. I'm glad to say that the end-user satisfaction from the Check Point VPN endpoint security came with the highest score, validating our strategy of enabling connectivity while providing the highest level of security. In the cloud space, we continue to see a good momentum, almost doubling our contract value from that business comparing to last year.
We're starting to see a nice pipeline of deals that are based on the understanding of the mission-critical nature of the cloud and the security needs that are coming with it. We also had some nice customer wins. In the Americas, we added one of the world's largest retailers and one of the world's leading food brands. Overall, we had a very good quarter in the Americas. Keep in mind, though, that the coronavirus had less business impact in the U.S. this quarter compared to other geographies. While many countries changed their business practices starting in February, it only impacted the Americas in a big way in the last 10 days of March. Let me share with you some of the changes we faced inside Check Point before I go back to talk about our technology and customers.
As I mentioned in the beginning, we managed to conduct our three CPX 360 conferences with record attendance and completed the last one during the first week of February. When we went back to the other offices, we started to see a changing environment, one that kept changing every couple of days. It started with supply chain challenges. While our manufacturing isn't in China, our supply chain does depend on some components that are made in China. At the beginning of February, people in Asia came back from the Lunar New Year vacation to find some closed factories. We started addressing that challenge, while at the same time, we began the production of our new Quantum appliance model. We began to see lockdowns and business limitation in more and more countries. In February, it was primarily Asia, and in the beginning of March, some European countries started implementing lockdown.
Until the end of February, most of our marketing conferences and international business travel was still running pretty much as usual. Since the first week of March, we had pretty much stopped, and we had to adjust our travel and events accordingly. Logistically, it was an interesting ride. All in all, we managed to keep our supply chain operating effectively, and we continue to address it. The only country we couldn't ship products to was India, where access was shut down towards the last few days of the quarter. Meanwhile, in mid-March, the rules in Israel became stricter. We had to reduce the amount of employees that are allowed to come to the office every day. Until then, our development, quality assurance, and technical services were all done exclusively from our offices. They rely on lab access and an on-site development environment.
In a short period of time, we built a new environment that would allow remote work for all these functions. Within two weeks, we moved almost the entire organization into a remote workplace. For example, our technical assistance centers in Israel, U.S., Canada, and India are now operating remotely and produce very high level of productivity, actually higher than normal. All thanks to the engagement and commitment of our employees. We managed to get to March 31st, the end of the quarter, fully remote-enabled. We had our first virtual end of quarter. We received a tremendous volume of orders, which we processed and shipped quickly. These 48 hours were some of the busiest, most challenging, and interesting in our history. Quite an experience for all of us. Getting back to our business, the coronavirus did have an impact on business in several countries.
Pretty much the entire world has been affected, as many countries were able to keep business flowing. The major countries that declined this quarter were the U.K., China, and Italy. I must say that our employees and partners in all countries, including those that suffered from the virus, have shown great level of engagement and continue to work and support our customers and partners throughout this period. Last week, we expanded the Infinity Architecture according to plan and launched some new products. Infinity is the only architecture in the industry that delivers end-to-end security with a unified architecture and prevention across the cloud, mobile endpoint, and IoT, and network. We extended the largest area of our Infinity Architecture with a complete new lineup of network security gateways.
The Quantum family of security appliances is the first to include the highest level of security prevention standard out of the box with every appliance. It provides higher levels of security by bundling our standard zero-day threat prevention technology. Our gateways actually prevent attacks and stop them immediately, while other competitors just detect the attacks and let the malware in. Our appliances have better performance and are fully scalable with our hyperscale technology, and doing it in an even more energy-efficient manner. The appliances also have the lowest subscription rate in the industry, and therefore deliver a lower TCO than other competitors. The Quantum series includes 15 models, starting at the regional branch office at around $5,000, and going all the way to the highest end data centers with performance that can scale up to 1.5 terabits with the Maestro hyperscale technology.
Network security is one part of the business. Another important area is the cloud. We continue to see increased interest in our cloud solution. All of these, combined with our strength in the America, make me very pleased with our first quarter execution. Let's take a look at the second quarter and the remainder of the year. Our shift to remote work actually enabled me to meet more partners and employees over the past few weeks. The good news is that everyone is engaged, committed, and working hard to deliver business results. Even our April results are trending well so far. In a survey we conducted, it seems that security professionals realized the increased risk from working remotely and the additional threats that they are facing as a result of the current environment.
As the situation continues, they will have to strengthen the security environment to mitigate those risks and to close many holes that are introduced now. Keep in mind that the effect of the pandemic in the U.S. was limited in the first quarter, as the big changes in the U.S. only began in the last 10 days of March. Many projects were actually accelerated last quarter in light of the pandemic. The evolving circumstances will impact all of us. It's already evident in some industries, like travel and hospitality, but the fact that most of the world is under a home lockdown is bound to create changes in the demand pattern. In the macroeconomy, the level of certainty we have as to the impacts on our future business is very low.
As a result, I can share some of my assumption into the second quarter, but won't provide formal projection. If we take our revenue model, over 75% of our business is comprised of annuity sales now. Most of it is already in. The rest depends on how the quarter evolves. Since the majority of our business comes in the last month of the quarter, it's hard to predict what will happen in the coming two months, whether business will freeze like we've never seen before, whether it will stay stable, or whether it will accelerate from current levels. On the expense side, our spend model is relatively stable, mostly depends on our headcount, and there is no significant change in our headcount or hiring policy. The range of the assumption as to the revenue model is very wide.
The probabilities to assign to each scenario are unknown and depend, by the way, in things that are way beyond our control all over the world. Therefore, I cannot provide projections or range that can be valuable for the next quarter or for the remainder of the year. I believe it will be prudent at this time to withdraw our previously issued guidance for the year. To summarize, we managed to sail through the coronavirus storm smoothly so far. Over the last decade, we built a strong base of annuity revenues, which is more predictable. Combined with our employees, partners, and our balance sheet, it provides us with more stability into the future. Customers actually assign more value to these qualities in such times. I would like to thank our customers, partners, and employees for their continued support, dedication, and innovative spirit.
We remain committed to our long-term strategy and expect to emerge from these challenges stronger than before. I'd like to thank you for joining us today, wish you again health, and wish that our freedom resumes to all of us shortly, and I would like to open the call for few questions. Thank you very much.
Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Karl Keirstead with Deutsche Bank. Please proceed.
Thank you. Good morning, Gil and Tal. Congrats on helping Check Point manage through this crisis as well as it sounds like you have. I wanted to just ask you about the decision not to provide guidance. It sounds like the Q1 actually came in relatively in line, if not slightly better than the midpoint. Gil, you mentioned that April results are actually trending relatively well so far. Perhaps you could elaborate, it doesn't sound like you're experiencing new deal pushouts that some of your software peers are seeing. What do you worry could change, looking forward, that reduces the visibility if things have actually tracked relatively well so far? Maybe you could just explain that for us. Thank you.
Thank you. I think I'm very pleased that we had the results that we had in the first quarter. Let's remember, the corona pandemic had a big impact on most of the world, only in March, and in most of the world, only in the last few days of March. Even then, we did see some deals in the last few days that were pushed because people were moved to home lockdowns and things like that. We've seen many others, by the way, that went smoothly. I must say that, I had an amazing, it's almost two months now, a month and a half, when we went through this crisis to see the commitment of everyone, including our partners, including customers who I didn't believe were customers, were under lockdown, and still insisted on doing the business.
As I said, the real changes, especially in the U.S., happened only in the last 10 days to one week of the quarter, when many of the orders were already signed, processed, and it was a matter of the channel processing it, getting it to us, so we enjoyed them. As I mentioned, we started April in a pretty good note. April is not over, but up to this second, April is trending as a nice month as expected, actually, even a good one. We're seeing an environment that's constantly changing. The regulation and the changes in everything that's happening can turn every day. Again, I don't want to give anyone ideas, but the international shipping is changing every day. Government changes in what you're allowed and what you're allowed to do are changing every single day.
Most important, it's not just the external forces, which, again, are huge, it's the entire demand pattern. If we're all sitting at home, our entire consumption model is changing. When the consumption is changing, the economy is bound to change. Whether it will happen in May or June, I don't know. Some of it will happen in May and June for sure. Whether it will happen in August or October, I also don't know. Something will change. People are changing their buying patterns. Some companies are gaining, like we see it at least here, that food and grocery is doing very well, but most of the other sectors are doing terrible, and that will impact what they do.
If I'm a clothing company, in Q1, it probably didn't affect much my big projects, my IT procurement, but in Q2 and Q3, I will be in a completely different situation when my business went down by 60%, 70%, or 80%. I can't predict that. I can tell you from, again, I wanted to give even more transparency than usual here. So far we're seeing business moving along in a pretty good pace. As I said, I really appreciate both customers, partners, and employees for their hard work. They're all trying very hard to keep some sanity, to keep business running. The macroeconomy forces some of that to change, and it will change. Where, how, if it will have significant impact or insignificant impact, that's what I don't know there, and that's the reason that it's hard to provide guidance.
If I could quantify that and say that X million of dollars in these countries or these industries, it would be easier to quantify that. At this point, we really don't know. Take our largest sectors, and I'll give more examples. Financial institutions. We had a terrific quarter with financial institutions in Q1. I can't even guess what this pandemic will have on the performance and investment and priorities of financial institutions in Q2 and Q3. Some may accelerate procurement because they need more bandwidth in supporting people online. Some might say that the environment is changing so quickly, so they have to freeze all the future plans and stop all non-essential projects.
I have no clue on that, and I must tell you that with all the calls that I made, primarily to partners, and partners is actually pretty good because they see a very wide range of customers and are very close to the procurement department. The answer is straightforward. Everybody's trying to move business, but there is a very high level of uncertainty. We have to live with the uncertainty at this point.
Got it. Okay. That's very clear and understandable. Thank you, Gil, and best of luck over the coming months.
Thank you very much.
Our next question is from Shaul Eyal with Oppenheimer. Please proceed.
Thank you. Hi, good afternoon, Gil. Shaul. Good morning there, Kip. Two quick questions on my end. Gil, you just mentioned the partners and the fact that they provide you with a good color into what's happening out there. Have you seen in the early parts, probably, the final two weeks, maybe even three weeks of March, as this thing, as COVID-19 continued to unfold or began to unfold, actually, have you seen a little bit of urgent spending from some of your customers?
The question, if we've seen some urgent spending on our customers?
Urgent spending as, yeah, for the VPN access product, for some of the high-end appliances, as companies have been moving from remote work environment. Have you seen some of those all of a sudden coming with actually some accelerated spending?
Yep. Yeah, I've seen two patterns on this positive to our side. Yes, we've seen some customers that have purchased very quickly expanded or even new VPN environments. Again, when I mentioned examples like moving from 8,000 users to 80,000 users and scaling up to 130,000 that's concurrent users every day, that did involve some spending and expansion and buying equipment. By the way, in one case, they actually took equipment that was planned for another project and used it for the VPN expansion, and hopefully they will buy more equipment for the other project. In some cases, we were really rushing equipment fast and shipping it even before we got the order so we can help the customer get on time. Another phenomenon that we saw in many customers is that they understood that something is changing in the world and things might happen.
IT managers, they seem to rush projects and they simply say, let's complete the project before the environment will change, before we will have hard time getting our budget or before we will need it in a critical manner. Some projects did accelerate in the first quarter. On the same time, by the way, we did have projects that got delayed and got canceled in the first quarter. I mentioned few countries, like Italy, U.K., China, where we did see an effect on the business, that business declined and business that should have arrived didn't arrive. Again, for different patterns, different reasons, but all related to the situation. Again, in the first quarter, we saw few factors that were more business than usual and few factors that were below.
Overall, I must tell you, we had a very good first quarter, especially in the Americas, when we're saying that we're investing in the Americas, it's very important. The first quarter, it was a quarter that we've been proud with under any circumstances, not with COVID-19 in the Americas. In the rest of the world, it was a different pattern.
Understood. Thank you for that transparency. Tal, maybe, can you provide us with the number of seven-digit transactions Check Point has had during the quarter?
Actually, we didn't disclose it. We said a few quarters ago that we don't believe it's a material metric, but just to make you feel comfortable, I will give it that it was 56 customers with transactions over $1 million compared to 47 in the year-over-year, last year Q1.
Understood. Thank you for that. Good luck. Stay healthy, everyone.
Our next question is from Gregg Moskowitz, Mizuho. Please proceed.
Thank you very much, and good afternoon, Gil and Tal. I guess my first question is, I was wondering if there was any way to estimate the positive impact to Americas revenue or billings from the increased remote access requirement, perhaps by looking at activity levels over the last 10 days of the quarter and comparing that with what you saw a year ago, or if there was any other way to parse that.
Tal, do you have any specific numbers? Overall, I don't think it has a huge effect on the quarter, because again, we also had deals that were postponed and deals that were going down. At least in one of the cases, there was a large deal. The deal was planned anyway, it was planned for another use, but they used the equipment for VPN instead of for another purpose that they wanted it. I hope that we'll get the original deal again, but again, it's unguaranteed at this point. It's planned, but it's not yet in. I think overall, the strength in the America that we saw wasn't a result of corona, it was a result of working hard with customers and partners. We're saying that we're doing it for the long time.
It's nice to see that it's bearing fruit and we're actually seeing some results.
Okay.
Yeah, I would say, I think America started the quarter strong and finished it strong. It was across the quarter. We did see strength in verticals like the financial services and the healthcare, which might have some relations to the COVID-19 and the increase of the remote access of the employees.
Okay, that's very helpful. Thank you both for that. Just as a follow-up, I did want to ask about the SD-WAN space. One of your competitors has a lot of momentum there, and another one of your competitors has recently followed suit with an acquisition. I'd love to hear more, Gil, just if you could elaborate on why you have a partnering strategy, if you will, in this space, as opposed to perhaps going after the market more directly. Also, if you can just talk about demand expectations for SD-WAN going forward, I think that'd be very helpful.
Okay. First, it's a very good subject. SD-WAN is a very interesting area. We're looking into that like everyone else. I'm following it for the last two or three years. Historically, it's been a networking area. In networking, usually the networking guys and people that are dedicated to that are doing better. It usually stayed with them. In the past, when we look at things to combine remote access or things like that with our security, to provide security to remote access was always a great business. To do the remote access or the connectivity by ourselves was never a good business for us. Again, I'm talking about going 25 years back. If you look at our VPN products, for example, they are started around 1995, I think. We have a lot of experience in that industry.
We never replaced equipment or hardware from the big networking vendors. By the way, specifically on the SD-WAN front, that was one front that there weren't clear leaders with high volume leading the market. It is still relatively fragmented. That's why we chose to take the software approach and to partner with several of them, Silver Peak, VMware and several others, and provide the security to this environment. Right now, we're actually doing quite well with them, and the fact that some of our competitors have made acquisition and provided products in that space actually helps us in some areas expand the relationship. What will happen in the long run? I wish I knew. I think it's going to be an interesting dynamics.
Okay. Thank you, Gil. Stay well, and all the best.
Our next question is from Brad Zelnick with Credit Suisse. Please proceed.
Thanks very much. Hats off to you. It's clear that your results demonstrate during these trying times. One for Tal. Gil, for those of us trying to better understand customer buying behavior during these unique times, and maybe as well a bit, it's intuitive that what you provide is not discretionary. What is the customer doing who's deferring a purchase, especially when they're faced with significant traffic demands? Are they running their existing appliances for longer? Are they rerouting traffic to the cloud? Just based on your learnings from the past, do you feel what you saw in March is a net pull forward or push out of demand?
I think it varies a lot by customers. For example, there are customers that have huge challenges in moving to remote access, therefore they shift all their attention to remote access and stop other security projects. Other customers, they just have difficulties in general, they slow down investment in IT projects. Let me tell you, in the hospitality business, we have some customers there. We support them, we work with them. Seeing their pain is heartbreaking. An industry that went from amazing years and unlimited demand to shutting down 90% to 99% of their business overnight. I'll give you even in that industry, some of which we supported them moving to work from home, and we had some projects there, not necessarily revenue generating, but activity is the main thing.
First, we need to work with the customer on the project, and then it will lead to something. A week later, half the team is fired. Three weeks later, the entire team is fired. We form a deal for the long run, how we support them and make the right concession to support them, which is the right thing to do. Two weeks later or a week later, even the procurement team is not working anymore because they are this layer. This is heartbreaking, but this is reality, unfortunately, as we see it. Again, I don't want to paint a negative picture here. Right now, our business is moving. Most customers are trying to keep business alive.
For me, it was very interesting months seeing how the world is coping with some of the biggest changes we've ever seen in our lifetime over such a short period of time, and coping it and keeping business alive. I don't want to sound negative. I'm just saying that we can't ignore the situation around us, and we can't assume that the fact that we managed to survive in this situation for, let's say, it depends where you look at, but between five to nine weeks without a change on the macro economy, it means that it's going to continue that way. In the micro level, we've seen everything. We've seen companies accelerating, we've seen companies slowing. We've seen people that are hard to get and don't sign a deal because they are not at the office.
We've seen people that are making all the efforts to sign every deal, even though they are in some of the worst countries and worst areas in the world. In the micro level, I've seen everything. On the macro level, I think assuming that the macro level will stay stable is the wrong assumption, and I hope that I'm wrong. I hope that we will see a smooth sailing moving forward, and it's definitely a scenario that can happen based on what I've seen in the last eight or nine weeks.
Thank you so much, Gil.
Thank you.
Great. If I can just follow up with one for you, and I appreciate the business is very much not [audio distortion]. Can you give us an update on how April bookings have trended relative to views on March?
As I've said, I've mentioned that we usually don't give update in the middle of the quarter, but this time I did go outside my way. April so far looks like a decent month. Levels of business are slightly higher, or higher than t he months that I'm comparing it is January this year and April of last year. That's the right comparable in terms of seasonality. Right now, again, we're not over April. We still have three work days to go, but up to this morning, April was better month than both of these months. Slightly better, and by the way, that's what we expect. Again, it's not a prediction for anything because I think what we're seeing in April is also slightly spill-over from the end of the quarter.
Again, one pattern that I can see is customers understand that the world is changing, and if they say, if I can complete a project now, I should complete it now and not wait. Customers I'm saying, at the professional level. At the professional level, we've seen, by the way, it's happening in demand on every area, in laptops, in servers. I'm saying it not from the macro, what you're seeing as analysts, I'm seeing it myself in the markets. When the pandemic started, we were saying, okay, we will need laptops. Will we have laptops? A month ago, let's buy all the laptops that we can. Now, that doesn't mean that long-term or that even short-term, we would buy more laptops. It just means that I've told my suppliers, g ive me the inventory that you can give me. I've seen that. I'll just mention an anecdote.
I met one day when I was still at the early pandemic, when we worked really, really hard at the office to adjust the office environment, and we worked very long hours, and I still hanged around and try to meet as many people as I can. I went one day, I stopped by the entrance. I saw the delivery guy delivering a big cart with computers on it. I said, impressive, and so on. He said, how is your business? Is it still going? He says, you can't believe it. I'm working now until 2:00 AM every day, e very business in the country is buying. By the way, he was speaking about businesses, is buying all the equipment that they can get because they are getting ready for something. Again, that was more than a month ago.
At a certain point, it stops, and you say, I have the equipment or the macroeconomic or the economics will change, and I can't afford it anymore. Just give you a small example from meeting the delivery guy because he's the one actually that's doing the work.
Thank you very much. Be well, everybody.
Thank you.
Thank you. I would just add just to make sure. We started the April good, but remember, majority of the booking is coming in the last month, and therefore it's a small portion of the numbers that are needed for any quarter, including Q2.
Sure.
Our next question is from Michael Turits with Raymond James. Please proceed.
Hey, guys. Hello, everybody, and hope everybody is well. Gil, to come back to the VPN question and remote access, you did obviously state both in the press release, when we talked about it since that there was some increase for that. Do you have any sense whether people are now where they need to be, in terms of capacity for VPN and remote access, or whether they still need to add, in order to get up to work from home requirements?
I think it varies a lot by industry and by country, and I don't have good data. We might, again, we're starting to learn how to move to this new world and assess the new requirements. Now, in the past, we had the pipeline of projects that were planned a year in advance, and the sales people couldn't plan for that. Now, when you move into projects and saying, my remote access is not working well, I need a solution now. In general, by the way, one thing that did happen to our business and to the rest of the world, things that used to take two months are now taking two days. Things that used to take two days or two weeks are now taking six hours.
The planning in general, we still have long-term planning, but we're moving to very local execution that's measured by day. The reason I'm saying that is because, if you're in our business, let's say months ago, you said, my workforce will go home, and they'll do whatever they can. Now you're saying, okay, how effective we are? Is performance good? Let me revisit that. Maybe it's working and I'm fine, maybe now it's time to start a new project, because if I'm going to stay that way, I'd rather optimize and invest more. This is something, by the way, even us are doing on many of these areas. When you start a new project, maybe, again, it's not a six-month project, it's maybe now a two-week project or a two-month project instead of what used to be an annual project.
Having said all of that, I don't think it's over. Again, that's why I'm saying about unpredictable environments. Maybe we will see that in three weeks, the world resumes to work and people start going to the office, maybe with some modifications, and all this talk about remote access project is going to translate into something different and shift to how we close the gap. One thing that I can predict is that by moving to remote access, companies opened huge amount of holes in their security. The corporate network is now open in ways it wasn't open before, and hackers are going to exploit it. There's no doubt about that. We already saw a situation like that last week when the, I think it was the NHS, the Chinese Institute for Pandemic Research, and the World Health Organization were all hacked in a huge way.
There will be new security threats and many new holes to close. Surveys we did conduct did show that security professionals are very much aware of that. They are concerned about that. It doesn't mean that they were able to translate it yet to a motion to create new projects or to budget. I think eventually it will come
Okay, next caller.
Our next question is from Walter Pritchard with Citi. Please proceed.
Thanks. Tal, wondering if you could give us an update. I don't think we've had a number like this in a while, but it's relevant. How much of your business, you've given us the million-dollar deals, but how much of your business comes in from larger projects that are in your pipeline for a long time versus the sort of transactional piece that you sort of have less visibility when it comes to the channel?
We did provide this color before. Like I said, when we talked about the deals, there was a question before, how many transactions are coming in with the transactions over $1 million, or customers that purchased over $1 million, and we saw a nice increase there. It's probably from those transactions you can get around. It can fluctuate between quarters, right? On the revenues, it's very different than on the booking. On the revenue side, it's not that large. We do have large transactions, but it's not going to be 20% or 30% or 40% of our revenue, because it's spread over many, many transactions. In terms of numbers of deals, we saw there's about, we said, I think, 57 transactions like this this quarter.
Remember, when you have large deals, many times it's because it's multi-years, and therefore it affects the bookings and the deferred revenues, but less affects the revenues on a specific quarter.
Okay. Tal, just another question you brought up on the Quantum Appliances. It sounds like you're deferring more revenue than you had in the past. I know there's been a probably decade-long discussion here around more deferral of appliance revenue. Could you help us understand what has changed with Quantum, and maybe if there's any sort of benchmark you can give us from a year ago or five years ago in terms of how much more of a sale you're deferring versus what you're seeing with this current generation?
Sure. We just started to sell it, so I can't tell you yet the amount, but I can give you the feel to it. It happens every time we launch a new product line, and we bundle with it a subscription package, which is a higher level than before. If you remember, I think in 2016 or 2017, we bundled with a new family. Instead of next-generation firewall, we bundled Next Generation Threat Prevention, and then we saw a shift from product revenues into the subscription. This launch, on the Quantum, we bundle instead of the NGTP, like the old family, we bundle the SandBlast, which is a higher level, hence higher dollar value is allocated into the subscription, going through the deferred revenues and then recognized.
All it is, it's a deferral of the revenues, which instead of coming at the time of the selling of the product, is being deferred over four quarters. From a business perspective, obviously, it's clear it's very, very good because your customers are using higher level of security. They now have zero-day protection, and a year after, you hope to see them using it and then renewing it, and therefore it will give another driver for the growth in the subscription. That's the logic of doing it, securing the customers, and then a year after, enjoying an additional dollars in the subscription. In order to estimate how much it is, we need to understand what the customer will choose in terms of appliance, and this is very hard to predict.
If they go down, if they go up in the level of appliance, therefore, it can end up having zero effect, or it can end up maybe in a different scenario, having an effect of a few percentage on the product, maybe $10 million to $20 million, minus in the product and plus in the subscription over four quarters. It can even do a different thing and increase the product because they will choose to go to a higher appliance, and we will enjoy both in the product and in the subscription. I said in a few quarters, we will have much more visibility when I will see which route the customers are choosing to go, and based on that, I will be able to give you more color in the next quarter.
Great. Thank you.
We have reached the end of our question and answer session. I would like to turn the call back over to Kip E. Meintzer for closing remarks.
Thank you guys all for joining us today. We hope you're all safe, and we look forward to speaking to you during the quarter. Thank you. Bye-bye.
This concludes today's conference. You may disconnect your lines at this time, and thank you for your participation.