All right. Welcome everyone to the 26th Annual T-Technology Conference hosted by Credit Suisse. My name is Phil Winslow, software analyst here. Very excited to have Check Point, you know, joining us for many years in a row. So thank you for your continued attendance at this conference first off. You know, it wouldn't be the same without Kevin, but very excited to have Rupal join us, you know, this year.
Thank you.
Thanks for taking the time to come down.
Thanks for having me.
Yeah. it's your first, you know, you just have like 20-something to go and you'll catch, you know, Kip.
That's right.
Yeah, unfortunately.
That's right. Kip, you want to say some stuff?
Yeah.
Yeah. The safe harbor.
Yeah.
Yeah. We'll do the lovely safe harbor. During the presentation, there may be forward-looking statements. These are in accordance with the Securities and Exchange Commission regulations of the early 1930s, or early 1900s, as it would be. As with any forward-looking statement, there's risks and uncertainties, and if you'd want an elaborate list, check out our latest press release or the 20-F filed with the SEC. As with all forward-looking statements, we only reserve a duty to update where required by law. With that, back to you, Phil.
Awesome. Okay. I thought we were going to the club here for a second with the music coming up.
I was going to start dancing.
Yeah.
Oh, yeah.
I was gonna say, I was like, I'm not sure what's happening to the music here, but the... It's like it's gonna be a party. I guess, you know, Rupal, I've been asking this question to everyone to start out with. Obviously, there's a lot of, you know, macroeconomic, geopolitical, you know, headwinds and cross, crosscurrents out there. You know, from your customer conversations, where are you seeing the most strength and, you know, resiliency, you know, in these conversations today, sort of in light of all these things versus, let's say, the beginning of the year?
Yeah, I think. I get this question a lot.
Yeah.
What I've seen is twofold. Number one, investment in cybersecurity, if you think about the technology landscape overall, it's probably the one place where we feel the most comfortable, the most assured in organizations continuing to invest in securing their enterprise. First thing I hear is that continued investment. Now, we're seeing some puts and takes. We're seeing a little bit of volatility among quarters inside of a year.
Mm-hmm.
you know, things here and there. By and large, infrastructures continue to be invested in. We continue to see investment in cybersecurity, both hardware and software. We continue to see upticks in certain growth areas of cybersecurity, and it's promising.
Awesome. Well, let's drill into that a little bit.
Yeah.
When you think about sort of how priorities have, let's say, changed...
Yeah.
you know, what are the projects that you think we've seen more sort of being at risk of being pushed, you know, versus those other projects that are saying, "Hey, look, I have to invest in Check Point now.
Yeah. Well, I think, the investments continue across the board in all areas of Check Point. The thing with our portfolio is just that. We've gone from being a player, very firmly planted in the network security business to being a full service provider across a whole host of areas, from traditional network security to cloud security and all of the product lines inside of that, to Harmony, our product line focused on, remote access, connectivity, email, things like that, as well as a management layer across all three. As I think about businesses today, they continue to be on the path that they're on. Cloud migration continues. They're looking at their hybrid cloud and their multi-cloud strategy, which is what most companies are employing, and that means more complexity in their cybersecurity infrastructure.
The places where we see considerable growth and opportunity, first network security still.
Yeah.
We see investment. We see natural refresh cycles continuing. Cloud security. A big uptick in cloud security. We see a lot of demand here and a lot of interest in partnership with those kinds of partners that are able to provide the consultancy and the service to look across the landscape of cloud security, from application security to posture management, et cetera. Of course, the threat landscape has continuously evolved during this time, and you see the emergence of more and more threats coming through devices.
Yeah.
Whether it's BYOD in the enterprise or it's consumer IoT devices. This means much more play and demand in our Harmony product line. I would say we see growth across the board, from a smaller base, much more growth in cloud security and in remote access.
Interesting. Now.
Yeah.
Kip, I'd love for you to comment on this, and Rupal, if you could follow. Product revenue growth has been particularly strong, growing north of 11% fast the past two quarters.
Yes.
Can you walk us through the puts and takes here? Like, how much is this coming from, like, price increases or, Rupal, you mentioned, you know, refresh cycles or early ordering...
Yeah
... you know, et cetera, supply chain constraints. Maybe just kind of help us unpack that.
Well, on the price increase, we haven't seen much on that.
Yeah.
We've been very clear. You know, most of it's been discounted away.
Yeah
... et cetera, et cetera. As far as the strength in the hardware, I think it's being bolstered by our offering, what we have in Maestro, what we're able to deliver to customers that nobody else, quite frankly, can deliver. I think you're just seeing continued refresh and expansion of use of our products. The network's not dead, no matter what anybody wants to tell you.
Right. It's, yeah.
Yeah. In fact, network is the core, and it is absolutely a necessary and continued component of anyone's cybersecurity strategy. It's just table stakes.
Yeah.
It's the beginning, it's not the end. You're gonna see network security, infrastructure spending and investment continue, and we're very bullish on it. It's just that it's no longer enough.
Yeah.
Having a true cybersecurity play inside your company and really, you know, when a CISO is discussing risk with the board, it's not a network security conversation.
Yeah.
It's a broad conversation across all those devices where threats can happen. That landscape is getting bigger, it's getting more complex. We expect demand across the board, and it's one of the reasons we've really taken these last few years to invest both organically and inorganically in shoring up that portfolio.
Yeah. I wanna double click on that, your point, you know, sort of the network's not going away.
Yeah
... away, so to speak, but also where workloads are though is changing too. How do you think about the sort of the, let's call it unit growth from sort of an on-prem perspective from a hardware firewall, sorry, a hardware firewall hardware perspective versus let's say the some of the cloud-based, you know, offerings, whether it be a virtual firewall if you put in Harmony. How do you see these two playing each other?
Yeah. I think that, first, when you think about network security, it's not just a data center conversation.
Yes. Exactly.
Network security, in general, is expanding. Technologies, like Kip mentioned with Maestro, give you an opportunity to orchestrate inside network security that you've never had before, and it's a true differentiator for us. I think even inside network security, what we think of as a traditional cybersecurity.
Yeah
... really isn't, because things are changing, especially then when you think about branch office and the end. Network security is becoming much more complex. Continuing to invest in innovation there is important. Having said that, there is a lot of growth in cloud security. You mentioned the virtual firewall.
Yeah.
That's just the beginning.
Yeah.
Cloud security continues to build out, and we're addressing new and new capabilities by the quarter inside of our CloudGuard portfolio. That works hand in hand with Harmony. Harmony is our portfolio that's focused on endpoints, remote access, and email security. Really, the magic happens when you pull all these together because risk happens in the seams. Risk happens when you don't have an overall view of your cybersecurity landscape. One of the things that gets us excited and is a true point of differentiation for us is this notion of the Infinity architecture, and really being able to look at that landscape in its entirety and equipping CISOs with an opportunity to look at risk across the board in one place.
Yeah. Actually, that dovetails right into my next question-
Yeah
... which is on Infinity.
Yeah.
Yeah, can you walk us through how we should think about sort of win rates, you know, with Infinity? Because, you know, as you said, it's sort of a different sale. It's a more holistic sale.
It is
... across multiple points. Are there any particular, you know, customer types, whether it be like a region or a vertical or a size, where you're seeing, you know, call it outsized success?
Yeah. Infinity has an interesting value proposition up and down the stack. At our largest install bases, the magic of Infinity is it gives you an opportunity to meet CISOs where they are. Different CISOs are at different places in the way they look at their risk portfolio, in the way they look at their greatest areas of risk, they're gonna test and try new technology at their pace. This is complicated. Infrastructures are becoming more and more complicated. What Infinity provides a large company is that opportunity to test and that opportunity to ebb and flow their demand as they need inside the portfolio through one integrated portal called the Infinity Portal. For a smaller enterprise, there's an equally exciting value proposition, but it's different.
This is about an organization that may not have its own dedicated IT department. They may not have a CISO, but they know that they need to think about security across the board because of the complexity of their operation. For them, Infinity provides them with something very different. It's one-stop shop, and it's the opportunity to test without risk and test without exorbitant costs of buying full solutions. They're able to test in limited fashion and in keeping with their own sort of appetite for the size of their cybersecurity infrastructure. There's a different value proposition up and down the stack.
Yeah.
They're equally important. We've seen Infinity resonate very well with large customers from manufacturing to financial services, to a services play, system integrators. We've also seen it play equally with some of our smaller partners who offer it to small and medium enterprises.
That makes sense. We continue to believe that there's a sizable advantage here from a, call it, a telemetry perspective, when you think about hybrid providers or people with a unified, you know, security portfolio policy such as yourselves.
Right.
You know, can you walk us through how you're leveraging this from both, like, a product standpoint but also just a go-to-market perspective?
From a product perspective, it's built in. Everything, you know, speaking to a customer today starts with Infinity. It starts with Infinity, and it ends with Infinity. Depending on where a customer is, we wanna meet them where they are in terms of their cybersecurity journey, we're gonna offer them the right solutions for them based on where they are and what their migration plan is. But it always starts with Infinity from a product perspective. From a go-to-market perspective, this has been the real transformation of the company. We have been largely a marketing and sales workforce that has focused on network security and selling firewalls and managing install bases, and we continue to do that, and that's a really important part of the infrastructure. It's no longer enough.
We have got, you know, we are on this journey of transforming our sales force, our marketing and the way we tell our story, to tell it in a much more comprehensive way so that we're not speaking to the network security team alone anymore. We're speaking to the needs and the desires of the CISO, and I say that we, you know, the CISO is the hero of our story. Everything that we do is centered around enabling that CISO to de-risk the organization for their business and for their customers.
Now, Kip, a question for you. We talked about this on the call back after Q3. It was about Harmony and email, so switching gears here a little bit. I mean, email, you know, was a standout again, you know, Q3 and Q2, you called it out with over 50% growth in that segment, so well above sort of average, reverse Harmony, broadly. You know, what is the biggest driver of strength? You know, why email? Any noticeable trends that you'd highlight?
It's the biggest risk factor for any organization. Email touches every employee, and if you're not stopping the phishing emails or the targeted emails that are malware from reaching those employees, your organization's at risk. Time and time again, we win with Avanan because we come in, and we show them what the prior solution or their current solution is missing. There's a couple PE companies that have bought a couple guys. I feel sorry for them. I'm not sure what they bought. A shrinking business maybe.
It's-
Yeah, Avanan has separated itself along with the rest of the Harmony portfolio, and I think it's just the beginning for us.
Yeah.
Yeah. You know, you mentioned Harmony Email, this is such a great example of how we're really sticking to our guns here in the notion that prevention matters. Detection and risk mitigation, yeah, that's table stakes. Really where we want every CISO to be and where we want them thinking is that it's prevention first. How do we keep the bad guys from getting to the door? Harmony Email is a great example of an acquisition that we did just over a year ago in Avanan. Their prevention-first approach to the email solution fit in so well with our prevention-first approach to the portfolio. It was just, it was wonderfully synergistic and we're reaping the rewards of it now.
We're really excited to see the growth, and we think that that growth is just the tip of the iceberg. We think it's an opportunity to lift the entire Harmony portfolio.
Yeah. Yeah. Let's stick with Harmony, but switch over to the access side. You know, the SASE front. You know, I wonder if you could talk about just win rates that, you know, that you're seeing there. Similar to my prior question, is there any sort of type of customer, whether it be, you know, a vertical size, et cetera, that you're seeing outsized strength?
Yeah. I think that, so, relatively, I would say relatively newer-.
Newer
... in the space, of course. We're learning as we go, and we've got some really great traction. I would say that the traction team seems to center, in that sort of mid-market space.
Yep.
I'd like to see more traction in the big enterprise, and we focus there. I think there's an interesting SMB play as well, especially through our partners and leveraging their access out into the SMB market. We've seen some really good success in that mid-market space, and I think our product really shines there.
Yeah. Then, Kip, I know we've talked about this. You know, the SASE market is somewhat split between those that call it own and operate, you know, their own POPs, their own, their own networks, you know, Zscaler, Netskope, Cloudflare, and those that leverage hyperscalers.
Mm-hmm
... Check Point, et cetera. Can you walk us through sort of how you view leveraging hyperscalers as sort of like, call it the optimal architecture, and how do you view sort of the competitive dynamics of these two cohorts?
I think it's the difference in when you started your company with those types of products. I think if you looked at, you know, those other companies that are dealing with POPs and their own physical infrastructure, I'm sure they wish they could go back and have the choices we've been able to make, right? We have the hyperscalers. Winner, winner. I'm sure they wish they had that chance to start their infrastructure in that same way.
Yeah.
I think it allows us to scale. It allows us to give five nines uptime. One of the biggest, you know, critical problems that people have is they don't have that same uptime with those guys. When you have the hyperscalers, you do have the five nines, and we're able to deliver a higher velocity pipe. The biggest difference is they're getting enterprise-class security from us. They're getting prevention first. When you're dealing with those other guys, you're either dealing with whatever you can find or the open source technology that they've adopted.
Yeah
to throw through there. I think it. I always like to say it's the example of FireEye.
Yeah.
You know, FireEye had a nice lead. It was an old company. It wasn't a young company when it had success. It was at the right time at the right place.
Yeah.
The guys that win are the guys that have the foundation, the firewall, the rest of the infrastructure, because that's what people want. They want something that works together, not just as a point solution.
Yeah. Now let's switch gears, Rupal, to CloudGuard. You mentioned.
Yeah
... that earlier. It's, like, obviously a favorite topic.
Mm-hmm.
You know, from our customer checks, obviously CloudGuard is continuously tracking. You mentioned it on the last multiple calls. Can you talk to sort of, and once again, sort of which areas within CloudGuard Check Point is really a portfolio?
It really is.
They have seen the most traction lately, you know, is CSPM versus cloud workload protection, et cetera.
Yeah. I think it, there's a couple things I'll mention. One is, CSPM.
Yeah.
CSPM is a really natural place to start the conversation. It doesn't end there.
Yeah.
We clearly have the bigger conversation, but I would say two things. One is, we usually start in a position from posture management. The second is a recent acquisition, we did called Spectral-
Right
is also reaping some great rewards for us. It's a technology that just it hits the sweet spot because it's really fun to demo. It's got a great sort of, I see it, I understand it, I understand the value proposition. That's a great door opener as well. I would say CSPM and Spectral provide great starting points to have the conversation, and then it becomes a much larger conversation. The thing about meeting CISOs where they are is that we start the conversation literally where they are with their infrastructure. We go in, and we'll do comprehensive infrastructure evaluations through a security workshop, where we actually see where they are. Then we have the conversation that's custom to them.
We have the conversation that's right for them. A recent deal that we were involved in last quarter, we did just that. While the client thought they wanted thing one, what they really wanted is thing one, thing two, and thing three with a roadmap to thing four. They didn't really understand that until we got deep. And we have the history, the technology, and the talent to be able to go in, and have those conversations. We employ a really large number of former CISOs.
Yeah.
who are in-house, who know how to have these conversations with our clients. Usually in CloudGuard, we start with, technology like CSPM and the Spectral acquisition to get things started.
Interesting.
Yeah.
The, let's just talk about just sort of just the cloud security landscape, because you've seen a lot of people try to move into this space from sort of call it different areas of original strength within security. Obviously, you've got, they call it the, you know, the hyperscalers. They have some cloud native offerings. You have the endpoint players like a CrowdStrike have tried to move in. Obviously, the network players, you know, expanding their offerings. The question I often get is like, sort of when you think about these different cohorts here, who has sort of the right to win, so to speak, or the right to win the customer business-
Yeah.
you know, why?
Well, the nice thing is I feel like we've got the right to win.
Yeah.
I, and I, and I believe it, and I've got, you know, 29.5 years to tell you so. So I think... Look, I, you know, and I, and I make no bones about it. In the cybersecurity game, history matters. Your legacy and what you've been able to protect on this planet really matters. So I think about, look, the Internet runs our life. Cybersecurity makes sure the Internet runs well for us and keeps us safe, and we are cybersecurity. So this is one place where I think we have absolute permission, and our legacy really matters and works really hard for us. Now, what does the future bring? Will there be hundreds, if not thousands, of small cybersecurity players that pop up with point solutions? Absolutely.
I actually think that all that innovation makes the industry itself better. I think it raises the game for all of us. The nice thing is You know, we've got the talent and the wherewithal and the capability to go invest in the places that matter, both organically and inorganically, to shape up that portfolio so it's where a CISO needs to be two years from now, four years from now. We're gonna continue to invest. We've been here for you know 29.5 Years, and I'm guessing that in 29 years, if we're still around, we'll be sitting here and having this conversation again.
That's good. It'll be the next thing.
Yeah. That's right.
The next few things.
Fun.
There's al-
I will not be here in 29 years.
He will be here.
In 29... I... Right.
If I'm here in 29 years, there's a problem.
Is there? All right. Well, let's talk about go-to-market-
Yeah.
Because obviously we spent a lot of time focused on product and competitive landscape, let's talk about go-to-market. You know, sales and marketing this year, if you look at sort of a mid-teens, you know, growth into dollars spent, I mean, that's versus, you know, 1% in 2020, a little north of 4% in 2021. How are you thinking about continued just go-to-market investment? Call it leaning in there, but it's also just productivity that you're seeing.
Yeah. I joined the company in March.
Yeah.
I joined the company from the board of directors. What we saw up until about a year ago is this, great investment in technology and shoring up this portfolio that we talk about. We turned, you know, to sort of face the other half of the organization in go-to-market and saw that they were relatively unchanged.
Yeah.
Right? Because we had really focused on the technology, not the, you know, not messaging and marketing and things like that. We were focused on the technology. Now, with this wonderful portfolio, we've got to turn our attention to the go-to-market. I came inside the company from the board in March of this year, and I've been on a steady path to transform the way we go to market and really focused in four areas.
Yeah.
The first area is growing the size and shape of our sales force. We are on track absolutely to stand by my CEO's comments, Gil's comments, that we would be growing our frontline sales force by 25% around the world, and we did. Last few weeks of the year, people are running in the door, but we are there. We have grown our sales force net 25%. That's super exciting. Now I have to activate them. Now I have to get them productive. As, you know, as we know in this game, in technology, adding go-to-market professionals, it takes time to get them fully ramped and productive and, you know, that's a journey. I'm focused now there. But tick, we've grown that sales force. Now let's enable them.
Part of how we enable them is by growing our specialist sales force. Every time a network expert walks out the door, how do I go find the cloud security expert to take their place? How do I balance my specialists so that I'm offering that support to my frontline sales force in the areas that they need it, whether it's email security, whether it's application security, whether it's XDR. Finding those specialists is sort of the next area of focus. The third is marketing. I mentioned that we need to tell a fundamentally different story in the marketplace, and we need to tell it consistently, and we need to educate our, you know, educate our valued customers on the robustness of our offering. That's the third. The last one is channels and partners.
You know, our traditional, our tried and true channel partners, they continue to perform for us, and we continue to perform for them, but that's not enough. We've got to go out there and recruit new channel partners, channel partners who understand new growth areas.
Yeah.
They're partners that we've never worked with before. Finally, there are new kinds of partners that we're gonna work with and go to market with in a bigger way, like global system integrators, like CSPs.
Yeah.
That just fundamentally the changes the way you look at, your partners in your go-to-market. Those are the four areas that I'm really focused on.
Yeah.
As we make this turn towards a portfolio company and accelerating our business growth across it.
All right. I know you just said we came off of a big focus on R&D and the pivot, call it pivot to sales and marketing. When you do think of R&D, I mean, obviously, this, as we talked about, there's security. There's always the new attack vector. There's always the new thing to protect. You know, what are the areas that you as a company are focused on right now when you think about your R&D spend? You know, where are you wanting to lean into, whether it be a new area or solidify an existing position?
Yeah. Well, gosh, we've built quite a big portfolio of offerings, and what I mean by that is many areas, from Quantum to CloudGuard to Harmony and then Horizon that cuts across. So I think that from an R&D perspective, I'm sure that Dorit, our Chief Product Officer, and I agree that fortifying that portfolio is job one. There is... That's a big landscape, right? When you say cloud security.
Yep.
So fortifying the portfolio that we have is job one. And I think we'll continue to do that in two ways. One is a continued focus on investment in organic growth. How do we build innovative products inside the shop? Then I think we will surgically continue to look at M&A. We'll look at acquisitions that carefully fill a hole, and we'll do that surgically as we have. So both are open to us, but I would say absolutely it's about solidifying the portfolio that we have.
Got it. All right. You know, last question, the last few minutes we have here. Let's say we're sitting back up on the stage in two years.
Not 29.5 years.
Not 29.5 years . Two years.
Yeah.
Two years from now.
Yeah.
What do you think you'll look back on or we'll look back on and say, "Hey, sort of this technology, this trend was," call it, "more impactful," you know, to Check Point's customers than maybe people were giving it credit for back in 2022?
Yeah. Yeah. I definitely have my answer. Kip, do you have an answer?
You both.
Yes. I think it's Infinity.
Yeah
... and our prevention and protection. I think how important prevention and protection is over just detection and remediation.
Yeah.
That's always been our hallmark since the beginning.
Yeah.
I think that's what people are gonna start to realize, that just playing Whac-A-Mole with these other vendors is just. It's not palatable, and it's not a way forward. What we've done with Infinity and delivering the level of protection and prevention is gonna be the mainstay going forward. I think it's something you're gonna see other people strive to try and attain, and most will fail.
Yeah.
Yeah. I, you know, I would even hit that even harder and say absolutely two years from now, I predict that I would be sitting here with you and saying, "Here are the 12 attacks that our prevention first approach has stopped for our client base that we're really proud of.
Yeah.
That, typical cybersecurity point solutions would not have found and did not find. I hope those haven't caused a lot of turmoil in the world, but really it's about solidifying that prevention first approach.
Awesome. All right. Well, thank you for coming down again. Appreciate the time as always, and so, and look forward to hope you have a great rest of the conference.
Thank you.
Awesome.
Thanks for having us.
Good stuff.
Thanks, Philip.
All right.