Greetings and welcome to the Check Point Software 2024 Fourth Quarter and Full Year Financial Results Video Conference Call. I'm Kip Meintzer, Global Head of Investor Relations and joining me today are Founder and Executive Chairman Gil Shwed, Chief Executive Officer Nadav Zafrir, and our Chief Financial Officer Roei Golan. Before we begin, I'd like to remind everyone that the conference is being recorded and will be available for replay on our website at Check Point.com. During the formal presentation, all participants will be in listen-only mode, followed by a Q&A session. During the presentation, Check Point's representatives may make forward-looking statements. Forward-looking statements generally relate to future events or our future financial or operating performance. These statements involve risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. Any forward-looking statements made speak only as of the date hereof, and Check Point undertakes no obligation to update publicly any forward-looking statements. In our press release, which has been posted on our website, we present GAAP and non-GAAP results, along with a reconciliation of such results as well as reasons for our presentation of non-GAAP information. If you have any questions after the call, please feel free to contact Investor Relations by e-mail at [email protected]. And with that, I'd like to turn the call over to Roei Golan for the start of our presentation.

Thank you, Kip, and thank you everyone for joining the call. We finished 2024 on a high note with strong demand for all our main products. Our revenues reached $704 million, $9 million above the midpoint of our projections. Our non-GAAP EPS was $2.70, at the top end of our projections. Moving to the annual results, our revenues reached $2.565 billion, $50 million above the midpoint of our projections at the beginning of the year, while our non-GAAP EPS reached $9.60, a 9% growth year-over-year and $0.16 above the midpoint of our projection. Our deferred revenues grew by 5% to $2 billion. Our calculated billing grew by 11% to $959 million, while our current calculated billing grew by 9%. Our RPO grew by 12% to $2,516 billion, which was driven by strong demand for our products, mainly for our Quantum Force appliances. This quarter we achieved 8% growth in revenues with $171 million in revenues. We also continue to see strong adoption for the Infinity Platform by existing customers and also by new customers. Our earnings from Infinity Platform agreements had another strong quarter with solid double-digit growth. Our gross margin was similar to last year at 89%. Our operating expenses reached $317 million, a 12% increase compared to last year, mainly due to our continued investment in our go-to-market and the addition of Cyberint. Our operating income was $306 million with a 44% operating margin. Our financial income this quarter reached $25 million as we continued to invest in higher interest rates over time. Our non-GAAP tax rate this quarter was around 8%, mainly due to updates in our tax provision and assessments worldwide. Our non-GAAP net income grew by 2% to $303 million while our GAAP net income was $258 million, or $2.30 per diluted share, a 7% increase year-over-year. Looking into 2025, we are expecting to maintain strong profitability and growth. We finished the year with $2.8 billion in cash and marketable securities and performed strong in our buyback, purchasing shares for $1.3 billion. To summarize, we had a strong quarter with revenues and EPS above the midpoint of our projections, driven mainly by strong demand for our Quantum Force appliances. With that, I'll hand over the call to Gil.

Thank you, Roei, and glad to see everyone here. It's a pleasure to be here. Today marks my transition to my new role as Chairman. Regarding the quarter, we changed the format a bit, so I'm not going to present the regular slide that covers the deals and the quarter. Instead, Nadav is going to spend more time discussing his vision for Check Point and his view of the world. It's important for you all to start getting to know Nadav. The last quarter was quite good from a financial perspective, and you heard from Roei about the financial results, which is great to transition with such results. Most key financial metrics performed very well. Some of you expressed concerns last quarter about billings, and you can see that this quarter, without focusing on billings as an indicator, billings showed very good health with an 11% growth. We've won numerous deals that were postponed last quarter, and this quarter, it was a strong performance without any particular focus on just one or two large deals; it was a series of wins across the globe and different sectors. Our Quantum and Quantum Force product line showed strength, which we've seen improve over the last few quarters. The Infinity deals were also strong and we even saw substantial growth in the cloud business. Overall, all key metrics aligned with our expectations. I want to thank everyone involved: our customers, employees, and our leadership team for their contributions. When looking back at the last 31 years of Check Point, our business fundamentals continue to be strong. Our revenues have grown 250-fold since 1995, and our profits and share price have shown similar large increases. As I step into my new role, it's a great pleasure to redefine my responsibilities and work as a resource for Nadav and everyone at Check Point. I believe Nadav will take Check Point to new heights, and I look forward to all the successes that lie ahead. And with that, I want to turn the call over to Nadav so you can hear his thoughts about the future.

Thank you so much, Gil. It’s exciting to be here and speak to you all for the first time. I want to thank the board for selecting me, especially Gil for building an amazing company and for the great transition. I come from a varied experience in the industry and believe we can lead this industry into the future. Over the past couple of months, I’ve been meeting with customers, partners, and our own Check Point teams, and I am deeply impressed by our technology’s depth and breadth, its criticality, and above all, the passion of our people. Our unique company culture, with many team members who have been here for almost as long as Gil, serves as a solid foundation for future growth. Focusing on our organization, I want to thank Rupal Hollenbach for leading a successful 2024 and I'm committed to strengthening our go-to-market organization. We will be flattening it to create more visibility and direct impact with our customers, partners, and field operations. We know the industry is advancing toward an AI era, and this will have a significant impact on our work and strategy. We want to ensure we are close to our frontline people to understand the challenges they face. We have also added key leadership roles to ensure our focus aligns with the needs of the market. Our SaaS business had a great year; exceeding $100 million ARR, and our email security saw impressive growth. We foresee even more success in 2025. I’m excited about the upcoming Check Point User Experience conference where we will meet with thousands and present our vision and innovations, especially around AI. Thank you all for being here today, and I’m looking forward to this journey together.

Next up, we will start with Business Outlook. We are looking at $619 million to $649 million for Q1 2025, with an EPS of $2.13 to $2.23; GAAP EPS will be approximately 50% less. For fiscal year 2025, we are projecting revenues of $2.66 billion to $2.76 billion, with a non-GAAP EPS of $9.60 to $10.20, and GAAP EPS will be approximately $2 less. With that, we will open the call for Q&A.

Thanks and good morning, congrats, Gil and Nadav. Very strong finish and great start to your new tenure. Nadav, you mentioned how you have different perspectives, and I think that's particularly interesting to investors. As you assess the opportunities for Check Point, I wonder if you might just dig a little bit further into innovation and the tech stack. Comparing Check Point to larger competitors, some have focused more broadly on areas like SASE or larger endpoint platforms. Can you identify some of the top buckets you are exploring in terms of innovation opportunities, and whether you're viewing this organically or inorganically?

Thanks, Adam, and great to see you. I believe we have done a good job in recent years. Some of our acquisitions, like Perimeter 81, have been very successful. Our focus now is to merge everything into a hybrid mesh network. Customers face significant complexity and often have different point solutions, which attackers exploit. Therefore, our aim for 2025 and beyond is to establish this hybrid mesh network, leveraging our quantum firewall alongside a robust SASE product unified through the Infinity platform. While everyone is talking about artificial intelligence, I see it as a crucial dimension we’re approaching. We need to defend our added attack surfaces and simultaneously leverage AI to simplify our processes. In summary, we intend to continue building on previous acquisitions and will look for more opportunities that fit our hybrid mesh strategy.

Thanks for the question, Gil. Congrats on the increased bike rides and Nadav, congrats on the new role. If you could send sleep, I'd appreciate it. Nadav, you've made several go-to-market changes in your first quarter. Can you elaborate on what changes are needed and the timeframe for those to take root? Additionally, how might these go-to-market changes impact your guidance?

Thank you, Joseph, and congrats on your new baby. I empathize with you regarding sleep issues. It generally takes a couple of years from my experience to see significant changes. One change we want to make is to be closer to our customers, creating a direct impact on our go-to-market. We are restructuring leadership to allow for this enhanced focus. We want to have representation from the market and sales, so we'll expand to six leadership members to build on our strong foundation in the U.S. This strategy reflects a belief that the cyber industry will see the latest adoption mostly in America. Regarding your inquiry about guidance, we have factored these changes into the wider range we provided, which allows for flexibility.

Thank you. Congrats to Nadav and Gil, and congrats to Joe as well. Nadav, my question is slightly more specific on the product front. I hear your commentary about the mesh, the hybrid network. Given your initial 100 days with Check Point, where do you see areas needing improvement or depth? Additionally, while everyone acknowledges Check Point’s strength, from your perspective, what points of improvement should be made to align Check Point better with overall industry growth?

I believe our strengths lie in our reliability, uptime, and industry-leading prevention capabilities. With the hybrid mesh concept, we are focusing on consolidating and creating a comprehensive platform for networks everywhere, covering on-prem data centers, cloud security, remote workforces, SASE, SaaS, and browsers—all unified on a single platform. AI will also play an essential role in cutting through the complexity we face. Enterprise customers require holistic solutions to manage their networks effectively. Our intent is to leverage the mesh architecture to deliver intelligence and integrate with data from other vendors to enhance threat detection and response capabilities.

Thank you. You spoke about AI and your new dedicated facility. Could you share how you see AI becoming a differentiator for Check Point in the future?

When looking at the process of connecting more and more devices to our networks, we are entering an era that will redefine our industry. I categorize our approach into three buckets: the essentials that will remain unchanged, such as infrastructure enabling efficiency for customers; significant changes brought by attackers leveraging AI to enhance their capabilities; and the unknown factors we still need to anticipate. In light of these changes, we must remain agile. Our research center will focus on predicting industry developments and adapting our strategies accordingly, embracing both the opportunities and warnings presented by emerging AI technology.

Congrats, Gil, you’re the godfather of the firewall industry, and Nadav, you've been talking non-stop, so I’ll give you a break. Roei, RPO rose 12% in fiscal 24, but revenue guidance for fiscal 25 sits at 6%. This disconnect raises concerns. Can you elaborate on the strengths observed in 4Q and factors impacting the fiscal 25 guidance?

First, it's important to remember RPO is total RPO—not all will translate into revenue within the next 12 months. We had a great quarter, and billing overall grew significantly. For the guidance, I believe we can achieve closer to the high end by leveraging our momentum, though I wouldn't expect double-digit growth this year. We're starting 2025 strong, with a solid pipeline in Q1.

Nadav, I appreciate your remarks regarding go-to-market strategies. However, one area that stands out is net new customers. What strategy do you plan to pursue to attract new customers, particularly considering competitors discounting aggressively and the current market trends?

In 2024, we grew very well with new logos, and I hope we can maintain that momentum. While restructuring our go-to-market strategy, I want to highlight that we will continue to prioritize security, which is our core competency. I've established a new leadership role to oversee our SaaS growth, which achieved a notable 27% growth last year, and I intend to accelerate that growth further through effective strategies at the Infinity platform and hybrid mesh levels.

Nadav, regarding the firewall refresh cycle some competitors are discussing, how significant is this opportunity for you? And Roei, is there anything material you're factoring in from that refresh as an upside driver in your outlook?

The guidance has not taken into account the potential benefits of the refresh cycle; it would be seen as an upside if it materializes. We are observing positive momentum around our firewall sales in recent quarters, which we hope continues. Although not factored into our guidance, it presents a great opportunity for us. We have many plans to leverage the firewall refresh and capture new customers from competitors.

I agree that we will be monitoring the refresh closely. The opportunity isn't just for our firewalls and appliances; it's also a chance to introduce our hybrid mesh and Infinity platform to customers who might look for comprehensive solutions as they refresh their tech. Our focus for 2025 revolves around SASE and the firewall while ensuring we leverage our experience to deliver efficient security across various environments.

Thanks for taking my questions. Nadav, I'd love to know how SASE's increased mainstream adoption will impact your differentiation strategy in the market. Additionally, Roei, how are you sizing the Infinity business in terms of total addressable market?

In terms of differentiation, our hybrid architecture allows us to connect point-to-point or through the cloud while remaining cost-effective and enabling better security for our customers. While other solutions may suffice for niche cases, our offering caters pragmatically to enterprises with diverse needs. This approach gives us a unique stance in the market. Each enterprise has many requirements to address, making our flexibility key to our differentiation in the fast-growing SASE landscape.

Infinity currently constitutes approximately 15% of our revenues, and we anticipate this proportion to grow significantly in 2025. Our SASE business is still in its early stages but has shown strong growth throughout 2024. We expect directionally more growth in 2025 as we enhance our offerings and capabilities based on our efforts over the past year's development and product advancements.

Thanks, Kip. Kudos to both Gil and Nadav on CloudGuard’s strong performance. Can you share some metrics about what worked well, and Nadav, where do you see cloud security in terms of focus areas moving forward?

Our goal in cloud security is unifying policies across network segments, enabling a seamless experience across all environments. We aim to enhance cloud network security and our firewall capabilities while also delivering a robust software solution for web application firewalls (WAF). We will integrate these innovations into our hybrid mesh architecture.

Thank you for joining us today. That concludes the call. We look forward to connecting with you throughout the quarter. Myself, Nadav, and Roei will be visiting frequently. Take care, and thank you again.

Goodbye.