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

Gil Shwed: So first, I mean, before I jump Roei might add some more value with the numbers, but because you asked about the sales force and so on, so I think in 2022, we grew the number of sellers, the number of frontline salespeople by like mid-teen percent. In 2023, we still plan to grow it by a double-digit number. Again, I think we will adjust it according to the economy. But we’ve already started the year with many people that were in the process and in the pipeline in 2022. So, it’s not just a question what we’ll decide in the second half. We’ve already started with a strong momentum, again, — by the way, in the U.S., when you hire somebody, they join in like a month or so. So that’s a cycle that’s relatively short. In Europe, the cycle is usually six months.

So, if we have somebody that started in January, it may be somebody that we’ve started recruiting in April, and we’ve signed a contract in kind of July, August. It’s not — it’s a very long cycle. And again, our sales force is very distributed around the world, not necessarily U.S.-dominated. So, we keep the investment on that. We do want to use some of the FX trends that we have to invest in our workforce. Some of it may be in existing sales force, some of it is — again, to allow us to recruit more without any major effect. Remember, if I would say that we grow the company by 5% or 10%, the impact on the margin would have been much, much bigger if we haven’t using what we have. What else are the trends that are impacting that? By the way, there is a trend in general of providing more cloud-based solutions.

And many of our products and technologies are now delivered from the cloud or are using the cloud. The margins on this are usually lower than the margin that we have on just software or even in some cases, on just appliances. Cloud is expensive. Let’s remember that. So, our cloud expenses are high. Again, like everything we do in Check Point, I think we manage them, and we do them far more efficiently than most companies that we see. We see it on M&A that we have a very efficient operation, but I think we will keep investing in that because it makes sense and gives us an opportunity to bring many more technologies to the market and up the level of security.

Kip Meintzer : Next up is Sami Badri, our last question.

Sami Badri : Absolutely, thank you Kip. My question is on any visibility you can give us on the Harmony product portfolio? So that’s my first question. The second question is when I go back to one of your product slides on blades, you put a reference in there that the blade product is now optimized for 1,000-plus applications or other type maybe vendors or integrations. Can you describe or maybe elaborate on how hard it was for you guys to get to that point? And how many other vendors actually have comparable integrations for a very similar type of product or solution set?

Gil Shwed: Okay. I think what you meant with the blade is the SD-WAN blade. I mean, again, we have a software architecture that we call software blades, which we featured many years ago, but it’s still a big part of how our products are being built. And now we built the SD-WAN blade. And the SD-WAN blade is very robust with — we’re supporting, I think, well over 1,000 different applications, and we are optimized. I don’t exactly remember, but I think it’s two, three times even more — supporting more application and optimized for more application than our direct competitors. By the way, part of it is the investment in SD-WAN. Part of it is the fact that it is integrated. It’s not a different product. And it leverages the know-how that we have about the deep analysis of application that we already have on our network security products.