The answer is, yes. The more qualitative engagement we have with the customer, the more likely they are to choose us as an architectural solution with Infinity architecture. So if I’m talking about these two, I think that we have a good pipeline of technologies. A lot of innovation and turnaround in the engagement that we have. The first element, which is the market itself, and especially our large market for Firewall Gateways. And the market has went all the way to the bottom, I think, in the second quarter which was the bottom. And in the third quarter started showing signs of improvement. If that improvement is changing and if we combine it with the other two, we have reasons to be optimistic. If customers are going to keep tight on refreshing, and by the way, the fact that they don’t refresh is, we wanted to refresh our installed base and buy more, but that means that we stick to us and they’ll have a solution, and they just pay the renewal fee, doesn’t generate enough growth.
But in general, the rates that we have of renewal are very high and we have a good renewal business. So that means that customers like our products and they keep working for them. And so if that will change that would be a big change. And I hope and this is a little bit beyond our control. It’s a long answer, but I think we’ve covered many —
Gabriela Borges: Thank you for the detail.
Kip Meintzer: All right. Next up we have Adam Borg from Stifel followed by Brad Zelnick of Deutsche Bank.
Adam Borg: Awesome. Thanks guys for taking the question. And again, I’ll echo my thoughts for [indiscernible] and your families. Maybe just for Gil on Perimeter 81, obviously, great to see your entry deeper into SASE with it. And I was hoping you can talk a little bit more about kind of the near-term integration priorities from a sales and marketing in R&D perspective. And how we should think about the CapEx impact as you look to [indiscernible] I’m assuming over time? Thanks so much.
Gil Shwed: I think in terms of the integration, we built them in Check Point a module that we call Rockets that we kind of let these businesses and one end to keep their little bit of their independence, their vision, their integration of activities. On the other end, work with the Check Point both R&D and sales and marketing organization to drive things more forward and move fast and integrate. I think Quantum SASE is going to be very tightly integrated into Check Point, because it’s a network solution. And in many cases, it’s integrated with our gateways and integrated with our projects and sales force. So, it’s not necessarily different buyers within the organization, it’s similar buyers. I think that’s the synergy and that’s extremely positive.
We already see a high level of interest in the field. People are super positive and super optimistic about that. And it will take us some time to build all the bridges, but we are working very hard. I mean, the only — there is kind of two caveats, on one hand, we want to create one product suite, integrate all the Check Point security technologies into the Perimeter 81 offering, connect the Perimeter 81 management with Check Point. So we have a very strong roadmap of what we want to develop. On the other hand, it’s been growing very nicely on its own, and we don’t want to disrupt that. So — and I think by the way, with the Harmony E-mail, that’s been a similar acquisition, we built the right bridges. For the first six months kind of most of the growth was driven by their pipeline.
Six months later, we’re already reporting that huge part of our pipeline has already driven and brought to them by the Check Point salespeople and by the Check Point channels. So, I hope we will see here even faster transition because unlike email this is even more central to our technology. And in terms of CapEx, I don’t know if we have any —
Roei Golan: In terms of CapEx [indiscernible]. I mean, we expect to invest in CapEx related to Perimeter 81 few million dollars a year or something, it’s not significant in terms of —
Adam Borg: Great. Thanks so much.
Kip Meintzer: All right. Next up is Brad Zelnick from Deutsche Bank, followed by Tal Liani of BofA.
Brad Zelnick: Great. Thanks so much for taking my question and best wishes to all the good people of Israel. Gil, I don’t recall Check Point having a significant US Federal business, but we saw the DLA deal that you highlighted, which I think was a $6 million deal, which is — which is really great win. Can you remind us, is there a broader opportunity that you’re going after in US Federal? And is this also may be a reason why we don’t necessarily see all of the success that you’re having in billings, because we all know that the US Federal customer doesn’t necessarily pay multi years in advance. Thank you.
Gil Shwed: I don’t know [indiscernible] Roei can answer about the billing and so on. I think the opportunity on the US federal government is usual, even though the US federal government is a very, very — is kind of — it’s a tough customer, especially for foreign companies. And foreign not just Israelis, it’s even Canadian companies. It’s very hard to penetrate, very few are not in American. I think the fact that we have a good success there and hopefully it’s a good sign moving forward, the opportunity is huge. I mean, the opportunity in the federal market is almost untapped. We are making good progress on our government business in the US, especially the local government and again the opportunity there. It is also very big and I think we still have plenty of potential and we are doing a lot of different things.
The good news, again, we have many industries and many sectors that are still — again, we are active in all of them. We have presence in all of them, but we are — but in some cases, like US federal, we’re too small. And Roei does it have much effect on —
Roei Golan: Yes, on the federal side, it doesn’t — I mean it doesn’t have any effect on billing. I would had about the billing as well, because I will assume that we get the questions on that. So, again, on the billing side, the timing and the duration really affect the billing. I can give you as an example, is something that they — it wasn’t in — I didn’t mention it in the script, but for example, we have the large mega deals that was expected to be closed this quarter and was due to certain administrative delays was closed two days after and that’s something like that affect the billing, it’s the timing of billing, it’s a classic timing of billing. And these kinds of things affect the billing. I understand that you are covering the bidding and it’s important — important measure for you to understand the business, but we can say that.
