Greetings. Welcome to Checkpoint Software Technologies First Quarter 2020 Financial Results. At this time Please note this conference is being recorded. I will now turn the conference over to your host, Kippe Meiser 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 Checkpoint'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 kipcheckpoint.com. Before we begin with management's presentation, I would like to highlight the following. During the course of this presentation, Checkpoint's representatives may be made certain forward looking statements. These forward looking statements within the meaning of Section 27A of the Securities Act of 1933 Securities And Exchange Act of 1934 include, but are not limited to, statements related to Checkpoint's expectations regarding business, financial performance and customers, the introduction of new products programs and the success of those products and programs, the environment security threats and trends in the market, our strategy and focus areas demand for our solutions, the impact of COVID-nineteen on our business on our product development, sales and marketing efforts and then 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 checkpoints current expectations and beliefs. Factors that could cause or contribute to such differences are contained in Checkpoint's earnings press release issued on April 27, 2020, which is available on our website and other factors and risks, including those discussed in Checkpoint's annual report on Form 20 F for the year ended December 31, 2019, which is on file with the Securities And Exchange Commission. Checkpoint assumes no obligation to update information concerning your 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, Keith. Good morning and good afternoon to everyone joining us on the call today. I hope you and your families stay healthy during this unprecedented time. 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, Gile will elaborate on the COVID-nineteen 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 our non GAAP EPS grew by 7 percent 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 effect. 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 $269,000,000, a 5% increase year over year. Our subscription revenues continue to be strong with 10% growth year over year, reaching $169,000,000. Our software update and maintenance revenues increased to $217,000,000, representing 1% growth year over year. On the product side, we saw an increase in remote access VPN solution, and scaling up networks were needed. On the other hand, products are continuing to transition faster to the cloud solution which are included in the subscription line.
The reduction in the product line is naturally The growth in our subscription revenues is driven by our Advanced Solutions, mainly cloud and sunblock 0 day threat prevention. Infinity Consolidation Solutions also started to flow into the revenues and show nice trends. During the quarter, we had Infinity deals variety of industries, including government, telecommunications, and industrial. We also saw growth in our cloud business. Both cloud and Infinity annual run rate increased over 100% year over year.
Last year, we finished the launch. Last week, we finished the launch of the new quantum security gateway series. Quantum includes our SandBlast network 0 day protection, bundled by default. Our all the appliances bundle the next generation threat protection and GTP. Naturally, the new package carries higher value.
According to account payroll, the fair value of software blade is separated from their client's price, deferred and recognized over the service period. As a result, we expect to see shifts from product revenue to deferred revenues that will be recognized over 12 months. Daniel effect depends on the pace of the transition and the appliance mix. And we'll have more color in the coming quarter. Besides revenues as of March 31, 2020 reached $1,349,000,000, a growth of $36,000,000 or 3% over March 31, 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're seeing strength in Financial Services And Healthcare Verticals. Non GAAP operating margin for the quarter were 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 nature of savings relating to the new environment, for example, from slightly lower travel costs and move to virtualized events. Our financial income this quarter reached $19,000,000. Financial income is expected to be slightly reduced during the remainder 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 fluctuations. GAAP net income for the first quarter of 2020 was $179,000,000 or $1.23 per diluted share. Non GAAP net income was $206,000,000 or $1.42 per diluted share, an increase of 7% from the first quarter of $2,019.02 above the midpoint of our guidance. Our cash balances as of March 31st increased to $4,000,000,000.
We are one of the strongest companies in the industry with significant cash balances and know that at all. The company has exceptional balance sheet, and we can handle a very wide range of scenarios in the future. Majority of our cash is invested in marketable securities, unrealized gains as of March 31, was $21,000,000. We invest in Europe's bowler, marketable securities that are rated at the minimum of A minus. 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 on Indeed. Operating cash flow was $359,000,000. Collection from customers continued to be strong. As a reminder, we hedge our balance sheet against currency fluctuations. The hedge affects our cash flow with minimal effects on our P and L as intended During the quarter, the dollar strengthened against the Israeli shekel resulting in a hedge cost of approximately $12,000,000 on cash flow versus cash income of $7,500,000 last year.
Our operating cash flow net of hedge effect is similar to 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 I'm 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 $2,000,000,000 and up to $325,000,000 per quarter. During the quarter, we continued our buyback program and pressure 3,000,000 shares for $325,000,000 before capacity at an average price of $110.
Now let's turn the call over to Gil for this conference.
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 family good health and a quick return to your 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 metrics despite the huge challenge that the world faced throughout the quarter. We began the year in our usual manner, conducting our 3 major Cpx-three sixty customer and partner index, We had the record level of attendance around 9000 people in our free location, but Cox, 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, is hard to believe that only 3 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. I've 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 our infrastructure in preparation for increased network demand.
Customers accelerating the completion of projects in light of the system. Expanded as well as the implementation and scaling of remote access VPN, something we've been doing for many years. Our product web pages saw a 7 fold increase in traffic in these areas. Our VPN products have saved the day for many organizations, For example, we enabled quarantine doctors that were sent home due to coronavirus exposure to remotely connect where they were able to monitor patients, something that was never done before. We helped major global cooperation, expand employee remote access, from 8000 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 these 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 1000 of our users, comparing different methods of remote access I'm glad to say that the end user satisfaction from the checkpoint 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 We also had some nice customer wins. In the America, we added 1 of the world's largest retailers and 1 of the largest the world leading food day brands. Overall, we had a very good in the U.
S. This quarter compared to other geographies. While many countries changed their business practices starting in February, it only affected the Americas in a big way in the last 10 days of March. Now let me share with you some of the changes we faced inside Checkpoint before I go back to talk about our technology and customers. As I mentioned in the beginning, we managed to conduct our 360X 360 Conferences with record attendance and completed the last one during the 1st week of February.
When we went back to the office, 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. In the beginning of February, people in Asia came back from the lunar 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. Then 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 a slowdown. Until the end of February, most of our marketing costs references and international business travel was still running pretty much as usual. But since the 1st week of March, we did pretty much stopped, and we had to adjust our travel and events accordingly.
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 Our access will shut down towards their last few days of the quarter. Meanwhile, in 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 on on-site development environment. In a short period of time, we built a new environment which would allow Remote work for all these functions. Within 2 weeks, we moved almost the entire organization into a remote workplace. For example, our technical assistant center in Israel, United States, 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 the March 31, the end of the quarter, fully remote enabled. We had our first virtual end of quarter. We will receive the 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, the decline this quarter, where the UK, China and I must say that our employees and partners in all countries, including those with passwords 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 launch some new products. Infinity is the only architecture in the industry that delivers end to end security with the unified architecture and prevention across the cloud, mobile, endpoint and IoT and networks.
We extend them the largest area of our Infinity architecture with the 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 0 day threat prevention technology, Our gateway actually prevent attacks and stop them immediately, while other competitors just detect the attacks and let them all worry. Our applied to the better performance and are fully scalable with our hyperscale technology and doing it in an even more energy efficient manner. The appliances also has the lowest subscription rate in the industry and therefore, deliver a lower TCO than our competitors.
The quantum series includes 15 models, starting as a regional branch office at around $5000 and going all the way to the highest end data center with performance that can scale up to 1.5 terabytes of 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 makes me very pleased with our first quarter execution.
Now, let's enables 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 returns. Even our April results are trending well so far. In a survey we conducted, it seems that security professional realized being risk risk from working remotely and the additional threats that we 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. And in the macro economy, 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 in the second quarter, but one provides formal projection.
And if we take our revenue model, over 75% of our business is comprised of annuity sell 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 2 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 assumptions to the revenue model is very wide. The probability is to assign switch scenario or unknown and depend, by the way, in things that are way, way beyond our control all over the world. Therefore, I cannot provide project the range that can be valuable for the next quarter or for the reminder of the year. So I believe it will be prudent that we start to withdraw our previously issued guidance for the year.
To summarize, we managed to sell through the Corona storms 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 this quality 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 which let our freedom reduce to all of us shortly. And I would like to open the call for your
Thank
Our first question is from Karl Keirstead with Deutsche Bank. Please proceed.
Thank you. Good morning, Gil and Tal. Congrats on helping Checkpoint 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 what it doesn't sound like you're experiencing new deal push outs that some of your software peers are seeing So what do you worry could change, looking forward, that reduces the visibility of things have actually tracked relatively well so far. Maybe you could just explain that for us. Thank you.
Thank you. First, I think I'm very pleased that we had the results had in the first quarter, but let's remember that Corona pandemic got had the big impact from most of the world, only like in March and in most of the world only in the last few days of March. And even then, we did see some deals in the last few days, that, that were pushed because people were moved to home lockdown and things like that. We've seen many others, by the way, that went smoothly. I must say that I couldn't be, I mean, I had an amazing, it's almost 2 months now, a month and a half when we went through this crisis to see the commitment of everyone, including our partners, including customers where I didn't believe where customers were on their lockdown and still interested on doing the business.
But as I said, it happened only in the last, the real changes, especially in the U. S, happened only in the last 10 days to a week of the quarter when many of the orders were already signed, processed, and it was a matter of the channel processing, it's getting it to us. So we enjoyed them. As I mentioned, we started April in a pretty good note and April is not over, but up to this second, April is trending at It's a nice month. It's expected, actually even a good one.
But we're seeing an environment that's constantly changing and 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. But most important, it's not just the external forces, which again, are huge. It's the entire demand pattern. If we are all sitting at home, our entire consumption model is changing.
And when the consumption is changing, the economy is bound to change, whether it will happen in May or June, I don't know. It's my some of it will happen in May, June, for sure. Whoever, it will happen in August or October. I also don't know. But something will change.
People are changing their buying pattern. 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. So 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 so far, we're seeing business moving along in a pretty good pace And as I said, I really, really appreciate both customers, partners and employees for their hard work. They're all trying very, very hard to keep some sanity to keep business running, but the macro economy 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 $6,000,000 of dollars in these countries or in this industry, it would be very it would be easier to quantify that. But at this point, we really, really don't know. I mean, take our largest sectors, and I'll give more examples. Financial institutions, We had a terrific quarter with financial institution in Q1. I can't even guess what it will what this pandemic will have on the performance and investment and priorities of financial institution in Q2 and Q3.
Some may accelerate procurement because we need more bandwidth and 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 is trying to move business, but there is a very, very high level of uncertainty. So 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
Thank you. Hi, good afternoon. Gil Tal. Good morning, Chip. Two quick questions on my end.
Gail, have you seen 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 on the final 2 weeks, maybe even 3 weeks of March as this thing as COVID nineteen continued to unfold or began to unfold action, have you seen a little bit of urgent spending from some of your customers?
Again, the question, if we've seen some urgent spending on our customers?
Urgent spending, yes, for the VPN access product for some of the high end appliances as companies have been using, to a remote remote from both work environment? Have you seen some of those all of a sudden coming with actually some accelerated spending?
Yes, I've seen 2 patterns on this positive to our side. Yes, we've seen some customers that have purchased very quickly expanded or even new VPN environments. And again, when I mentioned examples like moving from 8000 users to 80,000 users, it's scaling up to 130 1000 that's called current 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 use 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 phenomena that we saw in many customers is that they understood that something is changing in the world. And things might happen. So IT managers seem to rush projects. And they simply say, let's complete the project before the environment will change.
Before we'll have hard time getting our budget or before we will need it in a critical manner. So 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. And I mentioned few countries, like, like Italy, UK, China, where we did see an effect on the business, the business declined and business that should have arrived didn't arrive. Again, it was different pattern, different reasons, but all related to the situation.
So again, in the first quarter, we saw few factors that were more business than usual and few factors that were below. Overall, I must say I'm telling you, we had a very good first quarter, especially in the Americas when we're saying that we're investing in the America. It's very important. The first quarter It was a quarter that we've been proud with, at near any circumstances, not with Corona 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 7 digit transactions Checkpoint has had during the quarter?
So actually, we didn't disclose it. We said a few quarters ago that we don't believe it's a material metrics, but just to make you feel comfortable, I will give you that it was 56 customers with transactions over $1,000,000 compared to 47 in the year over year last year, Q1.
Our next question is from Greg Moskowitz with 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 America's revenue or billings from the increased remote access requirements, perhaps by looking at activity levels over that the last 10 days of the quarter, and comparing that with what you saw a year ago or if there was any way other way to parse that?
How do you have any specific numbers? Again, 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. And again, it's just in one of the cases, there was a large deal The deal was planned anyway. This was planned for another use, but they used the equipment for VPN instead of for another purpose that they wanted So I hope that we'll get the original deal again, but again, it's unguarantee 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. And again, 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. That's helpful. Yes.
And I would say I would tell, I think America started the quarter strong and finished strong. So it was across the quarter. We did see strength in verticals like the financial services and the health care, which might have some relations to to the Corona and the increase of the remote access of the employees.
Okay. That's very helpful. Thank you both for that. And then 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 is sort of has recently followed suit with an acquisition.
And I'd love to hear more, Gil, just kind of if you could sort of elaborate on why you of a partnering strategy, if you will, in this space, as opposed to perhaps going after the market more directly then also if you can just talk about demand expectations for SD WAN going forward, I think that would be very helpful.
Okay. 1st, it's a very good subject. And SD WAN is a very interesting area. And we are looking into that, like everyone else, I'm following for the last 2 or 4 years. Historically, it's been a networking area.
And in networking, usually the networking guide and people that are dedicated to better are doing better. And they usually stay with them. In the past when we look at things to combine remote access or things like that with our security, I mean, 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. And again, I'm talking about going 25 years back.
If you look at our VPN products, for example, they are started around 90 95, I think. So we are so we have a lot of experience in that industry. We never replaced equipment or hardware from the big networking gas vendors. And that's why this and by the way, specifically on the SD WAN front, That was one front that were there weren't clear leaders with high volume and leading the market. It was is still relatively fragmented.
That's why we chose to take the software approach and to partner with several of them. SilverPeek, VMware and several others and provide the security to this environment. Right now, we're actually doing quite well with them. And the fact some of our competitors that made acquisition and provided products in Westpac 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, Gail. Stay well and all the best.
Our next question is from Brad Zelnick with Credit Suisse. Please proceed.
Thanks very much. And hats off to you. It's clear that your results demonstrate during these trying times. 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. So 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? And just based on your learnings from the past do you feel like 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 are very, that have a huge challenges in moving to remote and therefore, they shift all their attention to remote access and stop other security projects. Other customers just have difficulties in general and the slowdown investment in IT Project. I mean, let me tell you in the technicality business. That's 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 N90 90% to 99% of their business overnight.
And so I'll give you even invite in the spirit. Some of it we supported them moving to work from home And the and we had some projects. They're not necessarily revenue generating, but activity is the main thing. First, we need to work with a customer on the project and then it will lead to something a week later, half the team is fired, 3 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. And 2 weeks later or a week later, even the procurement team is not working anymore because they have this layer.
This is heartbreaking, but this is reality, unfortunately, as we see it, So again, I don't want to paint a negative fixture here. Right now, our business is moving. Most customers are trying to keep business alive. I'm actually, I mean, this was very, for me, it was very interesting months seeing how the world is coping with one of 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 aligned. So 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, 5 to 9 weeks without a change on the macro economy means that it's going to continue that way. In the Bitcoin level, we've seen every 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 oil or to sign every deal, even though they are in some of the worst countries and worst areas in the world.
So 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 8 or 9 weeks.
Thank you so I can just follow-up one for you and I appreciate the business is very much not. Can you give us an update on how April bookings have trended relative to use on March?
So 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, I mean, the market 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 are not over April.
We still have 3 days to go. But up to this morning, April was better months than both of these months, slightly better. But and by the way, that's what we expect. We expect to have but again, it's not a prediction for anything because I think what we're seeing in April is also slightly spillover from the end of the quarter. And again, with customers, with one pattern that I can't see customers on 10, but the world is changing.
And if they say, if I can't complete a project now, I should complete it now and not wait. Customer then say, at the professional level. At the professional level, we've seen, by the way, what's happening in demand of every area in laptops, in servers, I mean, I'm saying it not from the macro what you're seeing at analysts. I'm seeing it myself in the market when the Fantemic started, we are saying, okay, we will need laptops when 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, give me the inventories that you can give And I've seen that, I mean, 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 hang around and try to meet as many people as I can. I went one day. I stopped by the entrance.
I showed the delivery guy delivering a big cart with computers on it. I said impressive and so on. It says, how are your business days? It's still going. It says, you can't believe it.
I'm working now until 2 AM every day. Every business in the country is by the way, we're speaking about businesses. Is buying all the equipment that they can get because they are getting ready for something. And that was again, that was more than a month ago. A certain point, it stops and you say, I have the equipment or the macroeconomic or the economic change and I can't afford it anymore.
So just give you a small example for meeting the delivery guy because he's the one actually that's doing the work.
Thank you very much. Be well, everybody.
I would just add thank you. I would just add just to Mr. We started the April group, but remember majority of the booking is coming in the last month. And therefore, it's a small portion of the numbers we need that are needed for any quarter, including Q2.
Our next question is from Michael Territz with Raymond James. Please proceed.
Hey, guys. I love everybody and hope everybody as well. Bill, to come back to the VPN question and remote access, you did obviously stay booked in the press release and 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 do 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 because these are now in the past, we had the pipeline of projects that were planned a year in advance and the salespeople complain 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. So things that used to take 2 months are now taking today things that used to take 2 days or 2 weeks are now taking 6 hours. And the planning in general, which we still have long term planning, but we are moving to very local execution, execution with measures by date.
And the reason I'm saying that is because I mean, if you're now a business that 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 in Performance Food. And let me reveal it. Maybe it's working and it's fine. And 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 outside wing on many of these areas. When you start a new project and maybe again, it's not a 6 month project. It's maybe now a 2 week project or a 2 month project instead of what used to be an annual project. And having said all of that, I don't think it's over. But again, that's what I'm saying about unpredictable environments.
Maybe we will receive it in 3 weeks, the world resumed to work and people started going to the office, maybe some modification. And always talk about remote access project is going to translate into something different and shift to how we close the gap, by the way, one thing that I can predict is that by moving to remote access, companies opened huge amount of holes in their security, I mean, the corporate network is now open in ways. It wasn't open before, and the, 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, was the NHS, the Chinese Institute for a pandemic research and the World Health Organization were all hacked in a huge way.
So there's a new, there will be new security threats and many new holes to close. And surveys we did conduct did show the security professionals are very much aware of that. We are concerned about that. It doesn't mean that they were able to translate it yet to 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.
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 $1,000,000 deals, but how much of your business comes in from larger projects that are in your pipeline for a long time versus is the sort of transactional piece that you sort of have less visibility when it comes to the channel?
So we we didn't provide this scanner before. At this time, when we talked about the deal, there was a question before, how many transactions are coming in with the transactions over $1,000,000 or customers that purchased over $1,000,000, and we saw a nice increase probably from those transactions you can get around. It can fluctuate between quarters, right? So on the revenues, it's very different than on the booking. On the revenue side, it's not that large.
So it's a we do have large transaction, but it's not going to be 20% or 30% or 40% of our book of our revenue. Because it's right over many, many transactions. In terms of numbers of deals you saw, there's about, we said, I think, 57 transactions like this, this quarter, Remember, when you have last year, many times because it's multi years and therefore, it affects the bookings and the deferred revenues but less effect the revenues in the specific quarter.
Okay. And then 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. Could you maybe 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 5 years ago in terms of how much more of a sale you're deferring versus what you're seeing with this current generation?
Sure. So we just started to sell it. So I can't tell you yet the amount that I can give you the feel to it. So 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. So if you remember, I think in 2006 or 2017, 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, we bundle on the quantum, we bundle instead of the NGP, like the old family, we bundle the Sunblast, which is a higher level, hence, higher dollar value is allocated into the subscription, going through the deferred revenues and then recognized. So all it is, it's a deferral of the revenues, which is instead of coming at the time of the selling of the product is being deferred over 4 quarters. So this is perspective. Obviously, it's clear. It's very, very good because your customers are using higher level of security.
They now have 0 day protection. And then year after, you have to see them using it and then renewing it. And therefore, it will give another driver the growth in the subscription. That's the logic of doing it, securing the customer 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 wants the customer will choose in terms of our clients.
And this is very hard to predict. If they go down, if they go up in the level of a plan, therefore, it can end up having 0 effects or it can end up maybe in the in a different scenario having an effect of a few percentage on the product, maybe $10,000,000 to $20,000,000 minus in the product and plus in the subscription over four quarters. And it can even do a different thing and increase the product because it will choose to go to a higher clients and we will enjoy both in the product and in the subscription. So I said in a few quarters, we will have much more visibility when I would see which route the customers are choosing to go. And based on that, I will be able to give you more color in the day, 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 Keith E Minczer 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.