So I think overall, it’s a good market, but it’s not, we haven’t. We’ve definitely returned from the down market that we’ve been into a year ago, into a more stable, healthy market. But we’re still not at the market. I like it to be. And from the geography standpoint, our strength that we’ve seen was very strong in Europe. U.S. was good. New business grew, but a little bit more tight.
Kip Meintzer: All right. Next up is Tal Liani.
Tal Liani: Hey, can you hear me?
Kip Meintzer: Followed by Adam Tindle.
Tal Liani: I don’t know why my video doesn’t show up. I don’t know if you can see me or not, but there I am now.
Gil Shwed: Now, you’re big.
Tal Liani: Good. Thank you. Okay. Roei, I have a question. The — I look at the quarter, and then I look at what could drive double-digit growth for next year. And if I work with your model and I assume that products are flat, maintenance is like plus 2%, and subscription is up 15%, which is what we have seen this quarter. I’m getting 6%, 7% growth. I’m not getting 10%. And you talked in the past about the opportunity to grow total revenues by double-digits. No timeline, but to grow. So what are the assumptions or what needs to happen for revenues to grow double-digits? Is it about product revenue growing again double-digits or is it about subscription accelerating? What are the components that need to happen for you to grow double-digits? And again, no timeline on it. I just want to understand how growth accelerates from here.
Roei Golan: So I think we have — that’s a good question. So I think there are several factors. First of all, of course, product revenge needs to grow. I mean it doesn’t need to grow, by the way double-digits, but it needs to go at least high-single-digits. It’s something that we need to execute better. And I think we have a new product in the Quantum Force that we launched in Q1. I think that definitely can drive refresh, more refresh and can drive growth in product revenues. In terms of what else, I think that the most, the main driver for the growth should be the SASE, the Perimeter 81 acquisition that we just acquired two quarters ago. It’s still not significant to our business. We just acquired them. We talked about the integration that it takes time, but I think that’s the potential.
This together with the continued strong growth in the Harmony E-mail. And the refresh, I think that can bring us hopefully to double-digits again without any timeline, but I think that’s the potential.
Tal Liani: Great. I love your background flowers. Thank you.
Kip Meintzer: All right. Up next is Adam Tindle from Raymond James, followed by Shaul Eyal from TD Cowen.
Adam Tindle: All right. Thank you, Gil. I just wanted to start with a competitive environment question and observing that you’re posting nearly 7% billings growth here. We’ll see actual results, but that probably outpaces both Fortinet and Palo Alto this quarter based on their guidance. Your new business is growing double-digits. Just wonder if you could maybe touch on the rationale and sustainability of that trend where you’re outperforming those competitors from a growth standpoint. And secondly, as we look forward, one of those competitors on their last earnings call announced an intent to pursue a very aggressive pricing strategy. I just wonder if you could maybe touch on your thoughts and expected response for that. Thank you.
Gil Shwed: Thank you. So first, you are right. There is some pressure on the industry. I think we saw big part of it last year, our competitors seeing it, a little bit of delay. I don’t know how much of that delay is about financial issues that and how much of it is where is the market versus where is their financial results. But we’ve seen a huge pressure in the market a year ago. I think we’re getting out of it. They seems to be based on, again, the report you’re talking about a little bit behind us in that cycle. I think the fact that they are under pressure and seeing and pursuing aggressive strategies means that we will have a more competitive market. That’s evident. I do think that customers need to buy the best security, and I think if you buy second best security for free, it’s not very good.
And guys, I think it’s not. I hate to speak about other companies and bash about them, but if you open now the report, you see the superiority of the Check Point technology, not just in blocking in a higher prevention rate like we’ve seen with MyCom and almost perfect score, but with product vulnerabilities and even failing to fix these products vulnerabilities on timely manners, in exposing big parts of our infrastructure based on some of our competitors’ products. These are — and by the way, these are not new trends. This is things you can see that you can track. Some of it is published publicly, and you can see that we do commit to the best security. And I urge every customer, and I think we definitely can do a better job in educating the market of it, not compromising on security, not even for free.
So that’s I think should be our key message. Get — let’s win with the best security.
Kip Meintzer: All right. Our next person up is Shaul Eyal, followed by Gabriele Borges.
Shaul Eyal: Thank you. Hey, good afternoon, guys. Gil, any word about the CEO search? And as we think about the new business or even the renewal that you’ve had, I think you’ve mentioned several multimillion dollar transactions, but did you guys have any eight-digit related transactions this quarter?
Gil Shwed: Yes. Okay. So I think I’ll start with the CEO search. I think we talked about the intention last quarter. We since then started the process. It’s going to be a good, structured, well thought of process, and we are within the beginning of the process. It will take time. I think, like we’ve said last time, and it’s moving on. In terms of large deals, we have deal all sizes. We have some new wins that are eight-digit deal. It’s eight-digits for multiple years. So the impact on the first year is going to be, again, Roei can, he is better than me on the numbers, but I think for the first year it’s only seven digits. But we had few large new customers with eight-digit contract. Roei?
Roei Golan: Yes, I think so. We had several new logos with eight digit, I mean, one new logo, I would say with eight digits contract again multiyear and we had several. It doesn’t mean that the billing was eight digits, I remind you, because the billing can be flexible, but in terms of the bookings here, we had eight-digit deals.
Kip Meintzer: All right. Our next speaker up is Gabriele Borges followed by Jonathan Ho.
Gabriele Borges: Hi, thank you for taking the question. I would love to dig into the dynamics we’re seeing around the refresh cycle, particularly as you see customers bring their product up for refresh. Any observations on how they’re thinking about their firewall footprint and their firewall budget versus their SASE budget? And then apples-to-apples, what do you see in terms of pricing as customers think about the box upgrade cycle? Thank you.
Gil Shwed: That’s an excellent question. I think first, overall, these two markets, or all these markets will converge. And what we’ll see is kind of the mesh network where it includes the remote users, the branch officers, the data centers, the cloud, private and public cloud data centers. All of this needs to be interconnected. And I think that’s one of the great benefits the Check Point can provide in the marketplace. There are today, if you look at the market, there are today standalone vendors doing a decent job in the SASE market, some in branch offices, some in remote users, but not converged with the rest of the enterprise, with the data centers and so on. There are companies that do more of the data center security, but again, don’t have the SASE modem.
There are companies that have both, but they are not today integrated. We are working on a platform when everything is going to be integrated over the network. And in terms of budget, I expect a lot of it to come from the same budget. And by the way, the benefit is not as the mesh architecture, we call it also a hybrid architecture. It’s also that customers can use the same policies, the same high level of security, but get the most optimized deployment. And the most optimized deployment can be sometimes on-premise, can be sometimes on device, and can be sometimes in the cloud. It’s very important, by the way, when you think about it, when people deploy networking solutions, they invest ton of energy to get the fastest speeds, to get the lowest latency.
For example, in all these cases, doing things on device or on-premise delivers 100 times better results than doing it in the cloud. In some areas, shifting away to the cloud may also make sense, but that’s where it’s important that you have the hybrid structure that delivers the optimal, not just the best security, but also the optimal performance. And I think we will have both. In terms of the budgets, right now, we are seeing good traction on the SASE side, but it’s still at least in our business, still in the small, mainly small, medium customers, that’s also the right now, the product offering that we acquired, we will integrate it this year to be this kind of overall architecture and platform that works together at any size. So that is important.
On the refresh cycle of our data center, the core of our business, I see good and healthy activity, especially on the high end, on the big data centers. But I don’t see today that budgets are open up. Budgets are still relatively tight there. So while I do expect and we do see some signs for improvement in the second half of the year, and while I do think that our fourth product family will open some of that, it still hasn’t happened and budgets are still tight for these spendings.
Kip Meintzer: All right. Next up is Jonathan Ho, followed by Joshua Tilton.
Jonathan Ho: Hi, good morning. Can you maybe help us understand how your Infinity contracts that you already have in place have been growing? And specifically, what type of uplift do you see from customers that maybe have had these contracts in place for a while now? Thank you.
Gil Shwed: So first, most — I don’t want to give too specific data because it is kind of confidential. I don’t want it to fall into the or on the wrong ears. But generally speaking, we do see that Infinity customers are not just committing for longer period of time and getting more comprehensive security, but are committing to us to a much bigger budget. And again, we’ve done that comparison because; it’s a simple trick to convert a customer for simple products buying into a longer-term contracts when we actually don’t increase the value or sometimes even the opposite. So we did a very thorough analysis of our Infinity agreement customers and almost all the cases there is a significant growth in the customer, the amount of customer business that the customer does with us.
Some of it also grows over time. And I think what I’ve seen generally, Roei, you can comment. Most of these contracts, when they’re being renewed, they’re being renewed in a bigger way. Don’t know, Roei, we are completed.
Roei Golan: Yes, yes, yes. Yes, yes, it’s complete. I mean, we do see that most of the customers are engaging with us in Infinity and also when they are in unity Infinity, it’s usually with higher spending, higher annual spending. So that means they are taking more products of us if it’s e-mail or if it’s a SASE. So I think, again, I think that we see that the positive side from the Infinity agreements.
Kip Meintzer: Next up is Joshua Tilton, followed by Rob Owens.
Joshua Tilton: Hey, guys, can you hear me?
Kip Meintzer: Yes, we can.
