Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message| ()  

Executives

Tal Payne - CFO

Kip E. Meintzer - VP, Investor Relations

Analysts

Keith Weiss - Morgan Stanley

Check Point Software Technologies (CHKP) NASDAQ OMX 29th Investor Program Conference December 4, 2012 11:45 AM ET

Keith Weiss - Morgan Stanley

So, we will get started right off. So my name is Keith Weiss. I’m part of the software research team at Morgan Stanley. Very pleased to have with us here today both Tal Payne, CFO, and Kip Meintzer, VP of Investor Relations from Check Point. I think before we’re going to get started, Kip, you want to go through the – your Safe Harbor?

Kip E. Meintzer

Yeah, just highlight the Safe Harbor. During the course of the presentation, there maybe forward-looking statements that are in accordance with the Securities and Exchange Act of 1934. If you would like a comprehensive list of those risks and uncertainties that are associated with those forward-looking statements, you should take a look at our 20-F filed for the year-end of December 31, 2011 and besides that we take no duty to update any of the statements we make during the presentation.

With that, I will toss it back.

Keith Weiss - Morgan Stanley

Excellent. So I want to start off on high level, talking about the overall sort of market – overall market opportunity, security in general network security in particular has come back as a top spending priority and the survey work that we do, pretty much the past year. So two questions. One, do you see this high priority when you talk to your customers and B, to what degree you think this high priority is getting translated into stronger spending trends in the industry?

Tal Payne

So when I talk to investors – when we talk with customers, we see more budgets allocated out of the IT spending. I met a few customers in the recent few weeks then I get the same message. So it’s correlated to what you see. Its obvious, why its happening, there is more and more effect not only general attacks on the public, but a lot of dedicated attacks that are reaching specifically to attack the specific organization, the larger you’re the more you’re under risk. The more assets you have, then there is more attacks. It can be by the way two types. It can be bad guys trying to get your assets and monetize it or it can be cyber attacks between, sometimes even government, it can be activism and so on. So, you see more and more attacks which are much more sophisticated than they used to be. And therefore you see more organizations taking it more seriously.

So one factor or one new phenomena is that there is much more increased awareness in the customers around the world. That’s something relevant. And the spending can be any type of security, so you see a lot of spending on add on security solution because today many believe there is not one solution, but different solution to build different layers to protect your network environment and there is also a trend of also protecting your inside environment because if and when security breach happens and its already entered your organization, historically you didn’t need always to check that. Now you want to check the inside, so if it succeeded to penetrate, how do you track it and then eliminate it.

Keith Weiss - Morgan Stanley

Right. Got it. So bringing them back to Check Point, in particular, an interesting dynamic that’s been going on year-to-date where you guys have seen double-digit unit growth, but declining ASPs. And evidently this stemmed from an appliance refresh that you guys did at the end of last year. Maybe you can walk us through those dynamics playing out? Why is that occurring and sort of when does the – when do those trends play out sort of normalize, if you will?

Tal Payne

Sure. So first the security market is a mature market, it’s not a new market. So the growth rates are not there, the high growth rates, it’s a mature market. The main markets which is firewall plus a few additional solutions can be around 3.5 billion 4 billion, but there is many adjacent markets that relating to its majority of this market is growing in a single-digit growth. So, in order – so typically your number of units actually will increase in a single-digit. Bear in mind, that we’re according to IDC latest report, we’re number one player in the market with 30% of the market. So that report we used to be number two and now we move to number one, which means we’re gaining market share. But it’s very hard when you’re our size to continue and increase your market share.

So typically an organization like us which is a market leader, we will benefit from adding increasing ASP, increasing solutions on that gateway, so number of unit will grow single-digit, but you will benefit from a higher budget allocated to you in the customers and therefore you increase your revenues faster than the growth of the market in general. This year it’s a new phenomenon. We launched a new product line. That product line enables customers who have for the same price levels three-time – on average three times the throughputs. The reason we want high throughput is as more and more customer adopting additional security solution on our appliance, and so it historically had firewall and VPN, now many of them adding additional solutions, they need more throughputs. So we wanted to provide a lot of throughputs for customers so they will be able over the next five years which is the cycle of a product to adopt additional security solution without having a degradation of their performance. So that was the goal behind it.

Since we launched it, which basically from the beginning of the year, you see a two phenomena, significant increasing number of units, which means we’re selling much more units. We had a double-digit growth in number of units, which is a very nice phenomenon, a new index type of size like we have. On the other hand, there is no reduction in ASP, there was a mix shift that creates an average reduction in ASP, meaning if you sold X percent on the high-end boxes and Y percent of mid size, now we’ve a reduction in the number of high-end and significant increase in the number of mid level.

Keith Weiss - Morgan Stanley

So that versus – so that would be versus a single unit being discounted more aggressively?

Tal Payne

Exactly.

Keith Weiss - Morgan Stanley

Okay.

Tal Payne

So, if you look at the high-end it’s in the same level of ASP as it used to be before. If you look in the mid end, it’s the same level of ASP as it used to be before. What happen is that you sell much more mid and less high. The total increase, with the average ASP is a result of that reducing. So the effect is, we have an average reduction ASP this year versus last year, which was the old product line. And we’ve a significant increase in number of unit which the total, the multiple of the two provided with a very low product booking growth. So that’s one phenomenon. Going into next year since we don’t launch a new product line every year, next you expect to have similar mix as you had this year, because already this year majority of the sales is the new product line and therefore you expect to see a stabilization in the ASP. So that’s going to into next year. And now for next there should be better correlation between the growth in number of unit and the growth in the product booking. If you dig even deeper into the numbers, you will see that in the U.S. product booking was double-digit as well. Europe was flat. That’s why it’s actually drag the number down, while in other region we had double-digit unit growth.

Keith Weiss - Morgan Stanley

Got it. And the disparity between the U.S. and EMEA, you would – is that macro related?

Tal Payne

I think it’s relating to budget because when you think about it, our price this is in dollars. So if customers – when we launched it, the theory behind it is as follows. If you’re living in the same macroeconomic environment you typically when you need to refresh the box, you will spend the same amount or maybe even more and you will trying to get as much as capacity as you need. Typically, that’s how it works, but if you’re in a different macroeconomic, which is weaker, then you might take the opportunity to go one level down, still get higher throughput than the old box, but not three times of throughput. So you can go one level down, spend less, use it to buy more boxes maybe, maybe that’s why units is growing, while reducing the average ASP per unit. So I think the combination of the new product line, which give you three times the throughput together with weaker macroeconomic in some locations around the world, push it slightly more.

Keith Weiss - Morgan Stanley

Got it. Now, correct me if I’m wrong, I recall when you guys rolled out that new appliance line, I think it was October of last year, you also rolled out the concept of security power units, right, of a new methodology …

Tal Payne

Sure.

Keith Weiss - Morgan Stanley

… for measuring sort of what you can run on an appliance.

Tal Payne

Yeah.

Keith Weiss - Morgan Stanley

Which was pretty interesting because it moved away from just talking about throughput and lanes you’re talking about, there are more consolidated solutions on those appliances, how well has that been taken up by the marketplace? Has that been an effective tool for you guys to better match up your product line to the customers needs?

Tal Payne

So it’s really early day because to change a concept of measurement, it must cohere from that.

Keith Weiss - Morgan Stanley

Right.

Tal Payne

But it’s what the customer needed because when you see just throughputs, throughputs can be confusing. You see some places have higher throughput, lower throughput, but when you add the functionality the correlation is not there, right because it depends how many solutions. So the way to look at it, it is to see what’s your security power in terms of how many security solutions you can put on the box. So obviously if you have a player like us, that have 7 or 8 or 10 security solution on the appliance versus a player that has three security solutions, obviously you cant compare the performance.

Keith Weiss - Morgan Stanley

Okay.

Tal Payne

For the more security you have, the less throughputs you will have naturally. So it makes the customer – the idea behind it is to make the customers be more aware of what are you going to use the box for what security solution we put on it and that makes sure and taking to account the next five years, not the next two years, so you will choose the right appliance that will support you for the future.

Keith Weiss - Morgan Stanley

Got it. So in terms of the customers that perhaps in the macro sensitive regions, that have moved towards lower throughput boxes or the same throughput boxes at lower prices. To a certain degree that offsets the purpose of that higher throughput boxes still be able to run more blades. Is that an indication of sort of enterprises willingness to adopt blades or is it a shift in the way people are purchasing blades. Perhaps people are going to move more from bundling out front and maybe more a-la-carte purchasing, over time. Do you think that opportunity still exist to get more blades on there?

Tal Payne

So remember you have – actually the maximum blades you have in the lower end because typically smaller type of organization have less administration people or security key people so they need more support in the consolidation because they cant manage all the different security solution. So the need for consolidation becomes bigger and bigger as you go down.

Keith Weiss - Morgan Stanley

Right.

Tal Payne

As you go higher and higher, the higher budgets, they have more people, they want the best of breed with the best features in each solution. And therefore they will – not all of them, but many of them will stay with separate solutions, right. So it depends which part of the market you’re looking at. Also bear in mind that even though you go one level down on average, its obviously not all the customers in there, but on average our boxes are becoming more mid size, it can be phenomenon that actually the first ones its coming to refresh, because that’s quick gestation process. So maybe next year you will start to see the high-end kicking in and after they finish the more complex certification process.

Keith Weiss - Morgan Stanley

Okay.

Tal Payne

So it’s not necessarily one level down, it can be maybe completely different audience, right. So it can be a combination of the tool. Bear in mind, that even if you go one level down, it’s still higher throughputs than the older unit, because even the mid ones three times the throughput. So it still will give them more throughput and ability to adopt more blades.

Keith Weiss - Morgan Stanley

Right. I want to go back to your original answer, when you talked about you’re seeing people add – spending lot on add ons and adding more functionality and also on sort of trying to protect the inside. One of the things that I think often time gets overlooked around Check Point is the breadth of your product portfolio. Often times you go through whole a conference calls, it sounds like you guys have just appliances and security gateways, you don’t have this much broader product portfolio. Maybe you could give us an update on some of the initiatives you guys have going on, maybe like a Managed Security Service provider business that you guys rolled out, I believe earlier in this year, some of the stuff you have going on in encryption. How are those businesses doing in? Are you benefiting from some of that trend of trying to better defend the inside?

Tal Payne

Sure. So you see the latest one was actually anti-bots. Anti-bot is the way to protect the inside. So it scans actually the communication between computers inside the organization. Think what actually happens in reality that once you penetrate you’re using that laptop or desktop that you succeeded to penetrate through infection in the USB or a link in the internet. And once you penetrate that laptop, then you don’t use it just to attack this laptop or this desktop, whatever it is. You use it to try to find more interesting desktop, you try to look for the CFO or maybe the CEO, try to get computers that have interesting information and then attack them or take the information outside of the organization. So with anti-bots that is actually scanned, the communication inside the organization and when it recognize the change in the pattern or something that the computer does that its not suppose to do, then it raise the alerts. IT guys suppose to come, got it like clean the computer, and so the problem. So it gives them a flag and that’s actually we already – we just launched it a few months ago, we sold it already to 100s of customers and 100s of the software blade, because obviously a few buy more than one. So but its still early days, and it’s still small amounts, a few millions of dollars, right? But it’s interesting and remember also we launched it as a-la-carte. So its customers are buying, and is paying for, it is not only bundled in any plan.

Keith Weiss - Morgan Stanley

Right.

Tal Payne

So it’s in a-la-carte, so that’s an interesting development, but it’s only started and it’s an existing small market, it’s a future market. So it’s a early penetration to a new market, that’s the anti-bot. DDoS is another example, denial of service attacks then becoming more and more popular. We launched a product which is OEMs and synchronize with our management console, so the customer can manage it together with our other security solutions. Again, we just launch it a quarter and half ago. So that’s a new – again, a new market that is there we think can be interesting. We launched a Managed Services, which is interesting in terms of the change of the concept because historically nobody wanted to share anything with anyone when it came to security and now you see more tendency of organizations to be more open about it, and its natural with the development because so many are being attacked now a days and you’re today alone you have your security solutions and its been breached, you need to sort it out yourself and its quite complicated. And there is a benefit in collaboration.

Keith Weiss - Morgan Stanley

Okay.

Tal Payne

So we launched like the ThreatCloud’s which provides you an online update of threats that being spotted in other locations around our install base. If you’re a member of the ThreatCloud service, so let’s say we found a problem in a or the customer had an attack he reports to us or we help them to sort the problem, we take that and we push it down to everyone that has that service. That’s really early days. Service takes much longer, but it create a lot of interest because it’s a way for the organization to protect themselves. Another interesting thing we see more willingness to collaborate in the vertical way like a group of CIOs or security experts on the certain vertical that being attacked in a certain way, willing to cooperate between each other, we facilitate it. So the customers are meeting and discussing these attacks and finding a way together to combat it. So there’s more willingness to collaborate which develop this threat prevention. And I think threat prevention, ThreatCloud, but threat prevention as a whole is a future growth engine in general to the industry.

Keith Weiss - Morgan Stanley

Right, got it. And the Managed Services, the security services piece; is that targeted at the small mid-sized businesses or is that offering for the more traditional customer base which would tend towards the …?

Tal Payne

You mean the ThreatCloud?

Keith Weiss - Morgan Stanley

The ThreatCloud, I’m assuming is for everybody.

Tal Payne

Yeah.

Keith Weiss - Morgan Stanley

The Managed Security Services piece; is that your guys attempt to go more into the SMB market?

Kip E. Meintzer

No, what I would say is it’s our way of fulfilling our partners who are providing that MSP service.

Keith Weiss - Morgan Stanley

Okay.

Tal Payne

Yeah.

Kip E. Meintzer

So it’s not facilitated directly through Check Point.

Keith Weiss - Morgan Stanley

Got it. I wanted to turn to the balance sheet a little bit. Q3, you guys called out a divergence between billings and bookings in terms of product revenues, and that’s something I’ve heard you guys talk about before. Was there something unusual occurring for that divesture or …

Tal Payne

So, let’s first explain what we discussed with you, okay.

Keith Weiss - Morgan Stanley

Okay.

Tal Payne

And we don’t provide the booking.

Kip E. Meintzer

Correct.

Tal Payne

So people calculate billing. And there’s an assumption that billing is similar to booking which is a reasonable assumption most of the time. This quarter there was a bigger deviation between the billing and the booking. I’ll explain why that is not the same number in general. Booking is when we get an order which is final and un-cancellable by the customers. Billing is when you issued in. so obviously there’s a gap between the timing of the booking and the timing of the invoice, but the gap usually is consistent with the regular growth and that’s why you won't hear us discussing it.

This quarter specifically there was a bigger gap because we got more deals that are service, which are monthly, so the commitment is for a year or for two years but the billing is monthly, like MSP type of transactions. And their growth was faster than the others, therefore you have the gap between the billing and the booking. That’s one explanation. And now there can be a customers that – and that can fluctuate between quarters that a customer provides you a contract of a service fully committed over a year, but you will prove the service throughout the year.

We don’t issue an invoice, we’re waiting until you will prove the service only then we issue an invoice and only then we start to recognize revenues. So there’s a gap between the booking and the billing. So it’s never the same number but this time it was a bigger gap. When you look at the booking them self I said it was close to the mid single digit, its still not very strong, the weakness came obviously from the product we discussed it a number of units increased significantly, average ASP went down which proved the product booking down, that’s one and weaker Europe in general.

Keith Weiss - Morgan Stanley

Got it. The other, surprise number that we got on the 3Q call, just something you guys don’t normally talk to is the headcount number. I believe you talked about headcount growth about 15% year-over-year last quarter, so a couple of questions on that. One is, what is …

Tal Payne

Why did you say it?

Keith Weiss - Morgan Stanley

Why did you say – well – actually that is a good question.

Tal Payne

First of all I’ll tell you why, we never say how much the headcount increased, right? But I started to hear people telling me that there’s a theory that we don’t increase our headcount, that’s how our margin grow. I think a few competitors decided to take the route of saying well Check Point is not investing in R&D, that’s why their margin is increasing, that’s why we will beat them. In reality it can’t be further than the truth. We actually increased our headcount as usual quite significantly. The reason you didn’t see it because the public information is a product dollars, right the R&D dollars. Now the R&D dollars really didn’t increase a lot, the reason is the dollar got stronger and most of our R&D headcount is in local currency that is not the dollar. So we enjoy the reduction in the expenses when it’s transferred into dollars. So the only reason I mentioned is, is to explain guys we’re increasing our headcount you just can’t see it because the dollar didn’t increase because of the translation into dollars.

Keith Weiss - Morgan Stanley

Got it.

Tal Payne

That’s the reason I mentioned it. Now typically Q3 is the highest growth, because we have a lot of entry level programs that are typically in Q3 because it’s when the students finish university.

Keith Weiss - Morgan Stanley

Okay.

Tal Payne

So typically it’s not reflecting the growth of the year.

Keith Weiss - Morgan Stanley

Okay.

Tal Payne

It’s reflecting the growth that is usually skewed up in Q3 because that’s the growth of all the entry level programs, stealth program, we have R&D programs, we have a order entry program, we have a few programs of entry level in Q3.

Keith Weiss - Morgan Stanley

Got it.

Tal Payne

Okay.

Keith Weiss - Morgan Stanley

Got it. So, my next question was going to be should we expect that type of headcount growth on a going forward basis, given Q3 it’s typically the highest, I am assuming we should not for that?

Tal Payne

Should expect the consistent growth in headcount, 16% is not the average growth.

Keith Weiss - Morgan Stanley

Okay.

Tal Payne

Okay, annual.

Keith Weiss - Morgan Stanley

Right. Can you give – would you give us an indication of where headcount –growth averages?

Tal Payne

Sorry, it really depends. Sometimes its 8%, sometimes its 12% right it depends on the year, it depends on the growth, it depends on the roadmap, it depends on the opportunities. The more are recruited means the more I think there is opportunities out there to develop future markets.

Keith Weiss - Morgan Stanley

Got it. The other question that came up on the call was, the seasonality and deferred revenues or the sequential change in deferred revenues was called out as being a little bit low than its been normally, is this a indication of – maybe a change in (indiscernible) rates for maintenance or is this just a broader ship in your overall seasonality?

Tal Payne

So first we talked about the booking, the booking in Europe was weaker, which obviously takes the deferred revenues compared to service. Most of the deferred revenue is in services.

Keith Weiss - Morgan Stanley

Right.

Tal Payne

So booking of service in Europe was weaker then you see lower in number. Second there’s a lot of seasonality. Our business is very seasonal. Most of the services are during Q4 and then deferred revenues go down in Q1, go down in Q2, go down in Q3 and then go up in Q4. That’s the regular seasonality and it can go 1%, 2% or more it depends on the specific quarter. And last year in Q3, also in Q4 we had a lot of long-term contracts, which obviously affects the booking of the second year although nothing happened in the tax rate. These customers actually already booked it.

Keith Weiss - Morgan Stanley

Okay.

Tal Payne

So it didn’t change the tax rate but it lowered your booking because they already came last year. So if you look at my conversation last year in Q3 I said guy, and also in Q4 I said look at the short-term, because long-term can fluctuate, which is exactly what happened. So Q3 we had less long-term booking, naturally the more you have last year the lesser would have this year because it’s usually large contracts. So it didn’t affect the run rate but it affected the booking number.

Keith Weiss - Morgan Stanley

Got it. In general, I mean that seasonality trend adds your business shifts more and more towards ratable services, both in terms of your maintenance business which continues to grow as well as blade subscription. Should we expect that seasonality to trend more towards Q4 as people – that’s where a lot of business gets done, it’s also a trend that companies typically like to co-terminate contracts. So it seems like there would be a sort of natural dynamics toward shifting services contracts towards the end of the year?

Tal Payne

Theoretically, but it’s very hard to predict because we actually see also another phenomenon that when a customer refresh the install base, many time it does a chew up of the service.

Keith Weiss - Morgan Stanley

Okay.

Tal Payne

So for example if you had that typical customer that had in Q2 services, so each year you expect to see him showing up in Q3 to renew. That’s how you calculate the renewal rates, right. But sometimes a quarter after or two quarters after you refresh some of these install base, so let’s say he showed up in Q3 a quarter after and he refreshes his install base or just expanded his install base. Sometimes they chose to realign the service contract to that quarter because they don’t want to have different quarters of service. So we had – Q3 we had a contract, so I’d expect to see him in Q2 next year, but actually in Q3 he already renewed it until Q3, so that deal became already – it actually came earlier, it came in queue. So there’s a lot of shift between quarters, it depends on when the customer purchased the product and then realign the service.

Keith Weiss - Morgan Stanley

Okay.

Tal Payne

So yes there’s much more in Q4, but it depends on the customer.

Keith Weiss - Morgan Stanley

Okay. But it’s hard to sort of project a long-term trend of where there’s going to be?

Tal Payne

Yeah, that’s one of the main reason why we don’t provide the booking, because the run rate of the service is more reflective.

Keith Weiss - Morgan Stanley

Okay, right. I want to take an opportunity to open the questions from the floor. We got one right up front.

Question-and-Answer Session

Unidentified Analyst

Hi. We had a Q3 report from one of your distributors yesterday, Datatec and I know they have some other big customers as well, but they said that their distribution business is trading very weak in this Q3. I was wondering if you could share any information, any color on that, how big a partner they are for you, any concerns that you might have on your side or what conversations you’re having with them?

Tal Payne

No. The real answer is I don’t know. It is not stuck in my mind that specific one so, but if I had the answer, I would also not be able to respond to that. So, that’s the short answer really.

Keith Weiss - Morgan Stanley

There’s another question, right there.

Unidentified Analyst

Hi. You mentioned you continued market share gains. Could you please be a little bit granular and specific as to which kind of high-end, mid-end, low-end markets, so is it more of the same or you moved down a little bit, little bit in market share from competitors that traditionally were targeting the lower end of the market?

Tal Payne

Specially the market share by IDC, A: we can’t tell right, because we don’t have the data of the other players. So I am giving you the data from IDC report, and the market share shift is not significant, its not like from 25 we began 30, its like from 29 we became 30, right. So it’s not like – it’s a big change. It basically means you sustain your first position in the market, typically we’re more mid-high than mid-low, because we're best of breed and best of breed is more like, it costs slightly more but you get better product. Typically its more interesting to mid high-end. The lower you go, the more price competition it becomes and it’s typically what you see all the players. So you’ll see Cisco, you’ll see Juniper, you’ll see us, you’ll see [Fortunate], you’ll see all the small players that you hear about, some of the big obviously Cisco is quite big, but you’ll see everyone. And that’s less of our bread and butter, more we’re mid-high. So we sell a lot to the lower end, but we sell more to the mid-high. And I think nothing there significantly changed in terms of – we’re actually doing quite nicely recently in the SMB, like in the smaller type of customer. But it’s not big enough to make a huge impact there in terms of the number or the percentage of the market. Because the percentage of the market is measured by dollars, what I was referring to is the fact that number of unit is also increases significantly, which means our footprint in terms of number of units is increasing significantly.

Unidentified Analyst

Because you mentioned that the more the blades, it’s typically associated with the lower end of the market, because higher – (indiscernible) they typically have like …

Tal Payne

So the blades is not really relating to number of units. It’s relating to how many additional services customer are putting on the solution. We started with it in mid 2009; we reported at the end of 2010 that Q4 times four like the annual run rate base on Q4 times four was close to $100 million. Then at the end of last year the end of 2011 we said it’s around $200 million. So it’s increasing rapidly. This is relating to market share in adjacent market, and less in number of units, right. So the number is increasing significantly. Recently we said that the a-la-carte blades are growing in around 50% some quarters slightly more. So it’s growing nicely. Bundled blades by the way, the ones that are attached to the book, they are linked through the – in dollar wise they’re linked to the dollar value of the product. So when the product dollars get hurts they got hurt as well. So bundled growth was more in link to the product growth. A-la-carte which the renewals from last year plus new blades that are being acquired, it’s increasing around 50%. So it’s quite a strong growth.

Keith Weiss - Morgan Stanley

Let me ask the market share question in a bit different way, a question that I often get from investors, basically it goes – it’s something along the lines, if you look at how sort of Check Point, Fortinet, Palo Alto Networks had been growing over the past three years above the overall market growth rate. There is the presumption that a lot of that growth comes from share gains from Cisco and Juniper who have been underperforming in that market. So the question I get from investors is, how sustainable is that? Can you just see – do you think that those bigger networking vendors are going to continue to bleed share and the corollary is what percentage of the types of growth that you’ve been seeing historically came from those share gains?

Tal Payne

Okay. Again, if you look at the data you’ll see that we increased share, that’s when we stuck with the big number, when your growth is lower. Small players like Fortinet gain share there. Cisco lost share, but not as much as people think according to the report. And yeah remember this is the data that the companies provide to IDC, so I don’t know what’s the reliability of the data. Ours is completely public. So, I can’t – its like there the number we’re fully a security player. But like if you look at some other companies that are playing there, that’s a small part of their business, so the numbers is subject to what they provide and based on their numbers Cisco reduced slightly, Juniper reduces more and we increased slightly, Fortinet increased maybe 2%, 3%, right. So that’s the data there. So I think there is some shift, but not as big as people think. I think sometimes the growth comes from add on, that’s why I am saying that because if you look at the jobs it doesn’t explain the growth of some companies. So I think some of it is add on just new market developing, application control is a good example. I think high-end purchase almost every security solution that is out there because they’re under attack basically. So under the new market like anti-bot or application control, if it’s good and interesting then we’ll buy it. When you go lower then they don’t buy many additional security solution because they can't manage it. They will go to platform and if they will add a solution they will try to do it in a consolidated way. So its different behavior or patterns, right. So I think they lose share but the gain is not coming mainly from that, that’s what I would have thought.

Keith Weiss - Morgan Stanley

Excellent. And that actually bring us at the end of our time, but thank you guys – both very much for joining us.

Tal Payne

You are welcome. Thank you.

Kip E. Meintzer

Thank you.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Check Point Software Technologies' Management Presents at NASDAQ OMX 29th Investor Program Conference (Transcript)
This Transcript
All Transcripts