Check Point Software Technologies Ltd. (CHKP) Morgan Stanley Global Technology, Media and Telecommunications Conference Transcript November 17, 2011 12:15 PM ET Executives Tal Payne – Chief Financial Officer Kip Meintzer – VP, Investor Relations Analysts Keith Weiss – Morgan Stanley Presentation Keith Weiss – Morgan Stanley
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Tal PayneFirst, for us, if you follow what we reported in Q2 and then in Q3, for us we see quite a steady growth. We see a significant success in the Software Blade Architecture. If you remember, we launched it in mid-2009 and that’s where we introduced additional functionality on top of the regular typical firewall, VPN, anti-virus, anti-spam, URL filtering, which this introduce prevention with this Application Control, which is just related to just antibot blade and then when we look for that, the growth is very significant and we can accelerate the rate. And in Q3, drew even more than we were anticipating. We talked about it, if you remember we said the last year, the run rate was $100 million versus $67 in the previous year run rate and our expectation for this year was $150 million, which is an accelerated growth. We actually expect to do more than that, so we talked about it in Q3, which means that the Software Blade Architecture is working well for us as we built the customer base that are able to use the software blades, since they are converted from the old software to the new Software Blade Architectures, so they are becoming potential customers. And as the year goes on, which is we’re basically in the second year then we see more potential customers and therefore, an increased sales into that customer base, as a bundled packages or as a la carte packages, both of them are growing very nicely. So that’s one major growth driver that is important to us and has been very successful in the last two years. Application Control, by the way, joined just this year, since we launched this year and it’s already became a significant number -- significant in the sense that it’s not 1 million or 2 million, it’s more already third quarter, I think more than 5 already after two quarters, so it’s interesting.
While the IPS as you know majority of our annuity blade revenue are the IPS. So IPS has been successful for few quarters.Keith Weiss – Morgan Stanley Okay. Tal Payne So that’s one factor. We see a very nice mix between the appliances, which continue to be mid high-end where we see the most success and all in this group, all of them are double-digit growth, which relates to your question regarding macro economics. So Europe grew nicely as well. And some countries did better than the others. So if we look at the last few years, I will say we saw the same phenomena. Americas is doing consistently well and steadily well in all the regions. While Europe, it depends which country, which quarter. So it’s more quarter but still as a whole, which I don’t think, you should look at Europe as a whole, but in general as a whole they’re growing double-digit, which was important. If you look at the suspicious countries, then in Q2, the PIIGS did more than the average in the Europe. In Q3 they did less. For us it’s quite small portion of our bookings. It’s about 10% of the 40% of Europe. It’s about 4% of the total bookings that we have in those countries. Keith Weiss – Morgan Stanley Yeah. Tal Payne And 60% out of it is update on maintenance, which is less affected by macro economics in general. So I’d say we don’t see anything to report when it comes to the economics. And maybe to lesser effect we work on a few growth engines which allow us to continue to grow -- hopefully which allows us to continue to grow regardlessly. Maybe one more point, a very big event that happened this quarter is that we launched a complete refresh of our product line, a big event, probably the biggest event in Check Point’s history except from the firewall launch when the company was established and which refresh the whole client product line from the lowest to the highest, keeping the same prices, but allowing average three times the performance, which was again very important to us because as we introduced so many new functionality, we needed to make sure that the hardware platform allows us to continue to have a great performance. In order to do that, we needed to expand the product line and so far the reactions are great from the market. Read the rest of this transcript for free on seekingalpha.com