Check Point Software Technologies Ltd. (NASDAQ:CHKP) Q4 2022 Earnings Call Transcript

Still having said that, we’ve looked at many vendors, even in the past, almost completed the one deal to acquire an SD-WAN vendor. If we wouldn’t find the reason we didn’t complete it is, was the quality of the solution. Today, SD-WAN solutions are still complicated. I wouldn’t say niche because there are some important vendors, but not widely spread as they should be. And we haven’t found a solution that will be really the silver bullet to have the quality technology that we can embed in our gateways.

Brian Essex: Very helpful. Thank you.

Kip Meintzer: Next up is Patrick Colville from Scotiabank followed by Shaul Eyal from Cowen.

Patrick Colville : Good morning, team. Thank you team for taking my question. So Roei, from a financial perspective, I mean, how shall we model gross margins in 2023? Because we’ve seen product margins rise for the last two quarters sequentially. I mean, should we think that, that trend continues as supply chain constraints ease? And then I guess, similarly, I mean, FX has been a big determinant for the last couple of quarters and I presume will continue to be the case in calendar 2023. So how should we model the FX impact at the OpEx next year?

Roei Golan : So, I think as for your first question, so as for the gross margin, so as I mentioned, I think we expect to have additional improvement. Again, we hope to see additional improvement unless something in the environment will be changed in the supply chain. But right now, it seems like we’re going to have a modest — we expect to see a modest improvement in the gross margin. Again, to — I would say that, again, it can range between 0.25 to 0.5 point of the margin, an improvement of between 0.25 to 0.5 point to the margin. As for the FX, so again, yes, as I mentioned also in my presentation, we had the benefit of the effect of approximately $10 million this quarter. We expect to see also a benefit in 2023 as again, we hedged — one of our primary currencies in shekels.

So, we hedged the shekel for — most of the shekels for 2023, and we expect to see benefit in 2023. But again, taking all the — we took all these factors into the model. And I think it’s something that, of course, these efforts will benefit us in 2023.

Gil Shwed : And that will help us, by the way, invest more without big effect on the margins. That’s — I think we are using it for the good that’s…

Patrick Colville: Thank you, so much.

Kip Meintzer: Next up is Shaul Eyal followed by Ryan McDonald.

Shaul Eyal : Good afternoon, guys. Gil, I know Rupal is not on the call, but can you maybe talk to us about some of our initiatives over the course of the past, a little less than a year and maybe as we think about 2023, what’s in store in that respect?

Gil Shwed: And which initiative you mean that’s — in which aspects?

Shaul Eyal: All of our initiatives, sales, marketing, go-to-market that you brought up.

Gil Shwed: So, I think we are doing a lot of things in Check Point to create a lot of change and a lot of innovation in all these aspects. If you remember, and I think we’ve created the beginning of the year what we call rockets that are this kind of organizations that have more flexibility and more freedom to run fast, integrating the go-to-market element to the product element. And I think we had three rockets. One was the e-mail rocket based on acquisition we did, which actually grows very, very fast. I don’t know, we didn’t mention it much today, but the e-mail aspects, that acquisition is very successful, and it’s contributing a lot to our growth. Another one is the cloud one started the year, the cloud one. We’ve actually did quite well in fourth quarter, nice growth in the fourth quarter.