Gil Shwed: So first, thank you very much. I’m — Roei can add, once I finish. I’ll give the high level. I think what we are basing that forecast is primarily on the projection from the sales force and the pipeline that we see. And I think the engagement that we did in 2023 — if you remember in 2023, I spoke a lot about customer engagement and how much we need to go out and meet with our customers and prospects. We did extremely well on that, met we’ve doubled the amount of customers, met with 3x more prospects. And I think we want to continue with that trend. But I think what you should translate is increased pipeline, and we do have an increased pipeline. Now obviously, just to be — to understand — when you do more meetings and more customers, the pipeline doesn’t grow in the same percentage because the sales force, usually what they do is the low-hanging fruit.
And then it’s an extra effort and lower success rate with the increased engagement, but we definitely see an increased pipeline across the board. And there is a very direct correlation between the engagement with customers to the size of the pipeline. So we are basing from that. We are looking at the trends and the industry growth rates and the economy. I think with the economy, we see some positive signs, but we are not — I’m not sure it’s the challenge that the market has seen last year is over. We’ve actually seen with some of our competitors that they are being hit by the slowdown that we’ve seen a year ago. So it’s probably not over in that regard. So that balances that from being a more optimistic outlook. And yet, at the same time, let’s remember, there’s a lot of uncertainties.
If there’s one thing I’ve learned from the last, again, after 30 years of business, if there’s one thing, I learned from the last three or four years, you can always be more surprised than you’ve been before. And I think we faced it in 2020. With COVID, we faced it in 2021 and 2022, but despite COVID, the economy actually did kind of went the opposite direction and did extremely well. We faced it in 2023, or at the end of ’22. But once we exited the pandemic instead of the economy flying through the roof when everybody goes back to spending, there was a challenge. Now of course, it’s your job to explain it. And I think in retrospect, we can explain all of that. But this time, almost every one of these moves is a surprise. And even now if the situation in Israel, shows us that you can always be surprised.
I’m proud that in Check Point, we had that consistent execution even with those trends. And what I wish that we will be able to do even better. That’s what I’m — I mean saying it for a long time, and I mean it. Roei, I don’t know if there’s anything you want to add on the quantity?
Roei Golan: I think you mentioned several of things. I think, again, we are looking — we looked on the last quarter. We mentioned it’s not only last quarter, but I think the real turnaround came last quarter. It started in Q3. See more demand to our product for appliances. We see a strong demand for our Infinity, to our subscription business. And again, we feel more optimistic. Still it’s a wide range, but we believe that the guidance is good. And we hope that will be in the high end of the range.
Kip Meintzer: All right. Next up is Joseph Gallo from Jefferies, followed by Jared Poland of Susquehanna.
Joseph Gallo: Awesome. Gil, congrats on the 31 years of success, and glad you are staying involved with the company. Guys, great double-digit new business growth in 4Q. How should we think about it in calendar ’24? And how does that correlate to billings growth in calendar ’24? What is needed to drive billings growth to double digits? And can we expect that in ’24?
Roei Golan: I’ll answer that, Gil. So I think — again, first of all, Q1 was a great quarter in terms of double -digit growth in new business. In the end, it also will be transformed into billing. I remind you all that — again, I mentioned it also in our presentation, we see more flexible billing terms. I think in the market, in general, we saw our competitors are offering more flexible terms in terms of — more flexible billing terms. But in that, if we’re going to see consistent growth in our new business as we’ve seen in Q4. And we — I believe that also in the end, you’re going to see it also in the billing. I remind you also the billing duration that again, because of the high interest environment, 2023 was — the billing duration in general was lower than compared to 2022.
So it seems like it’s been stabilized. So — again, hopefully, also, we were going to see it also in the next few quarters. We’re going to see also the growth from the billing, not only in the new business. And of course, we translate into revenues.
Gil Shwed: And I want to add that I think that we should use our financial power, and the fact that we are cash-rich to actually use that in a positive way, not just to win customers and to be — but also to create more business models that are annuity-based, turn some capital investment business model into annuity one. Both because it can be — by the way, which is a win-win because it benefits the customers that are now getting more and more used to subscription kind of model. And it’s good for us because the more you create it, you get more predictable and long-lasting business. So I think — and that again can have an impact on the short-term billings when you get things forward-looking like that.
Kip Meintzer: All right. Next up is Jared Pomerantz from Susquehanna, followed by Tal Liani of BofA.
Jared Pomerantz : And congratulations to you Gil, as you begin the transition to our next role as the Executive Chairman. Maybe just one for me. You guys spent some time in the prepared remarks speaking to the Infinity platform and the strength that you’re seeing there. Maybe if you could just dive in a bit further. How much of that new business strength that you pointed to would you attribute to Infinity? And how are you thinking about the go-to-market and potential shifts there down the road?
Gil Shwed: Roei, your comment?
Roei Golan: Again, in terms of — it’s not something that we disturbed, but I can tell you that a significant part of our new business today is coming from Infinity. It’s — every quarter, the portion of the Infinity is higher. It’s growing very fast. We are talking about strong double-digit growth in new business bookings. We showed you — in the last few quarters, we are showing consistent — a strong double-digit growth in revenues. So it’s also we see consistent double-digit growth in — strong double-digit growth in new business related to Infinity. So this — so I think in the end, we expect the big portion on the new business that will be related to Infinity will grow every quarter based on the demand that we see today and the pipeline that we see today for the whole Infinity solution.
Kip Meintzer: All right. Thank you. Next up is Tal Liani.
Gil Shwed: It’s Gil. And I want to be clear. It’s still about 10% to 20% of our business and revenue. Just to be clear, it’s not — majority of the business in Infinity, and that means that there’s plenty of room for growth as we extend the platform.
Kip Meintzer: All right. Next up is Tal Liani, followed by Shaul Eyal of TD Cowen.
Tal Liani: Two questions. One is, what are the trends of new customers versus existing customers? Are you able to grow with new customers more than in the past? Can you give us kind of even last few years kind of trends or contribution of new customers? And second, when I look at your numbers, the services are flat 2% growth a year, the maintenance piece. The subscription is growing very consistently about 15% a year, a little bit of acceleration. The real change what we’re seeing is actually in the products and licenses that are going down less than before. So the question is, what are the underlying trends in products and licenses? And can you take us into kind of the numbers? Beneath the numbers, what — how could this look like the next year, the next two years and what drives it?
Gil Shwed: So I’d like to try and give you an answer. First, as we said, I mean, it’s — first, we are getting every product in Check Point with subscription base is growing very fast. Harmony E-mail is a good example. It’s sold as a subscription, and it’s growing very, very fast. So that’s a good example, but there’s few others that are like that, and most of them are growing quite nicely. On top of that, each gateway that we sell, which is a product, comes with a bunch of subscriptions. And they are also growing and there is more services like that, that are being consumed — subscription services that are being consumed with every gateway. As I mentioned, last year, we had a very tough three quarters at the beginning of the year, where actually new projects were delayed, postponed.
