Thank you, Sherry. I'd like to thank all of you for joining us today to discuss Check Point's first quarter 2020 financial results. Joining me remotely today on the call are Gil Shwed, Founder and CEO; along with our CFO and COO, Tal Payne. As a reminder, this call is webcast live on our website and is recorded for replay. To access the live webcast and replay information, please visit the company's website at checkpoint.com. For your convenience, the conference call replay will be available through May 4. If you'd like to reach us after the call, please contact Investor Relations by email at kip@checkpoint.com.

Before we begin with management's presentation, I would like to highlight the following; during the course of this presentation, Check Point's representatives may make certain forward-looking statements. These forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21 of the Securities and Exchange Act of 1934, include but are not limited to, statements related to Check Point's expectations regarding business, financial performance and customers, the introduction of new products, programs and the success of those products and programs, the environment for security threats and trends in the market, our strategy and focus areas, demand for our solutions, the impact of COVID-19 on our business, including on our product development, sales and marketing efforts and then our financial condition and results of operation; the impact of COVID-19 on our customer, suppliers and business partners and the macroeconomic environment as a whole. Because these statements pertain to future events, they are subject to risks and uncertainties. Actual results could differ materially from Check Point's current expectations and beliefs. Factors that could cause or contribute to such differences are contained in Check Point's earnings press release issued on April 27, 2020, which is available on our website, and other factors and risks, including those discussed in Check Point's Annual Report on Form 20-F for the year ended December 31, 2019, which is on file with the Securities and Exchange Commission. Check Point assumes no obligation to update information concerning its expectations or beliefs, except as required by law. 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 the reasons for our presentation of non-GAAP information.

Now I'd like to turn the call over to Tal Payne, for a review of our financial results.

Tal Payne - Chief Financial Officer and Chief Operating Officer

Thank you, Kip. Good morning and good afternoon to everyone joining us on the call today. I hope you and your family stay healthy during this unprecedented times. During this period, our top priority is ensuring the health and safety of all of our employees around the globe, as we continue to serve our customers. Today, Gil will elaborate on the COVID-19 effects on different aspects of our business, steps we are taking to operate through the pandemic and provide update to our guidance. During the quarter, we sustained elevated business activity levels and delivered results towards the upper half of our guidance. Revenues for the quarter increased by 3% year-over-year to $486 million and our non-GAAP EPS grew by 7% to $1.42.

Before I proceed further into the numbers, let me remind you, that our GAAP financial results include stock-based compensation charges, amortization of acquired intangible assets and acquisition related expenses, as well as the related tax effects. Keep in mind as applicable, non-GAAP information is presented excluding these items.

Now let's take a look at the financial highlights for the quarter. Products and security subscription revenues were $269 million, a 5% increase year-over-year. Our subscription revenues continue to be strong with 10% growth year-over-year, reaching $159 million. Our software update and maintenance revenues increased to $217 million, representing 1% growth year-over-year.

On the product side, we saw an increase in remote access VPN solution and in scaling up networks where needed. On the other hand, products are continuing to transition faster to the cloud solutions, which are included in the subscription line. The reduction in the product line is naturally driving lower support level.

The growth in our subscription revenues is driven by our advanced solutions mainly Cloud and SandBlast Zero-Day threat prevention. Infinity consolidation solution also started to flow into the revenues and show a nice trend. During the quarter, we had Infinity deals in variety of industries, including government, telecommunication and industrial. We also saw growth in our Cloud business. Both Cloud and Infinity annual run rate increased over 100% year-over-year.

Last week we finished the launch of the new Quantum security gateway series. Quantum includes our SandBlast Network Zero-Day protection, bundled by default. Our old appliances bundle the next generation threat protection, NGTP. Naturally, the new package carries higher value. According to accounting rules, the fair value of Software Blades is separated from their client spread, deferred and recognized over the service period. As a result, we expect to see a shift from product revenue to deferred revenues, that will be recognized over 12 months. The annual effect depends on the pace of the transition and the appliance mix, and we will have more color in the coming quarter.

Deferred revenues as of March 31, 2020 reached $1.349 billion, a growth of $36 million or 3% over March 31st, 2019. Revenue distribution by geography for the quarter was as follows; 46% of the revenues came from Americas; 43% of revenues came from Europe, Middle East and Africa region; the remaining 11% came from Asia Pacific. This quarter, we had a strong execution in Americas and the growth came from most regions in the U.S. We are seeing strength in financial services and healthcare vertical.

Non-GAAP operating margin for the quarter was 48% compared to 50% last year. A reduction related to the increased investment in our workforce and cloud infrastructure in the year-over-year comparison. This margin is higher than planned, as a result of the higher level of revenues and the nature of savings relating to the new environment, for example from slightly lower travel costs and move to virtualized events.

Our financial income this quarter reached $90 million. Financial income is expected to be slightly reduced during the remainder of the year, as a result of reduced interest rates in the U.S. Effective non-GAAP tax rate for the quarter was 18%, in line with our expectations, remember, it can be 1%, up 1% down fluctuation. GAAP net income for the first quarter of 2020 was $179 million or $1.23 per diluted share. Non-GAAP net income was $206 million or $1.42 per diluted share, an increase of 7% from the first quarter of 2019, and $0.02 above the midpoint of our guidance.

Our cash balances as of March 31st increased to $4 billion. We are one of the strongest companies in the industry, with significant cash balances and no debt at all. The company has exceptional balance sheet, and we can handle a very wide range of scenarios in the future. Majority of our cash is invested in marketable securities, unrealized gain as of March 31st was $21 million. We invest in U.S. Dollar, marketable securities that are rated at a minimum of A-. We review the securities that the fair value was lower than the book value, and deemed it to be a temporary reduction, hence no impairment was recorded owning these.

Operating cash flow was $359 million; collection from customers continued to be strong. As a reminder, we hedge our balance sheet against currency fluctuation. The hedge affects our cash flow with minimal effect on our P&L as intended. During the quarter, the dollar strengthened against the Israeli shekel, resulting in a hedge cost of approximately $12 million on cash flow versus cash income of $7.5 million last year. Our operating cash flow, net of hedge effect is similar to last year.

On the margin, we expect to see some of our customers, who are seeing a disproportionate economic impact, are likely to be credit constrained and are working with them to adopt the payment terms to ensure continued service to help our customers. Naturally, it will have an effect on some of the second quarter cash flow. In February, we approved an expansion of our buyback program for additional $2 billion and up to $325 million per quarter. During the quarter, we continued our buyback program and purchased 3 million shares for $325 million, the full capacity, at an average price of $110.

Now let's turn the call over to Gil for his comments.

Gil Shwed - Founder and Chief Executive Officer

Thank you, Tal, and hello to everyone joining us today. This is an unusual period and I really appreciate your time and attention today. Before I even begin to discuss the business, I'd like to be all of you and your families good to health and a quick return to your freedom.

Now let me start with my review of the quarter. As you heard from Tal, we had a good first quarter. We managed to meet almost every financial metrics, despite the new challenge that the world faced throughout the quarter. We began the year in our usual manner, conducting our three major CPX 360 customer and partner events. We had a record level of attendance, around 9,000 people in our three locations, Bangkok, New Orleans and Vienna. Our messages were received with great enthusiasm we received very high praise from the participants. Looking at the picture from the events, it is a hard to believe that only three months ago, we gathered thousands of people physically, celebrating innovation in cloud together. Both the Vienna and the New Orleans Convention Center are now emergency hospitals for coronavirus patients. Just to illustrate, how quickly the world has changed.

Before I address these changes and how we dealt with them, let me provide some color on the business this quarter. As I said previously, we managed to close the quarter on a quite high note and exceeded almost every financial measure. We saw some strong signals in the traditional and emerging parts of our business. Our security appliances had a good quarter and we saw nice momentum in our cloud technologies.

Despite the lockdowns in many parts of the world, we've seen an active business environment. During the quarter, we had around 20% demand increase in our technical services, driven by customers scaling up their infrastructure, in preparation for increased network demand. Customers accelerating the completion of project, in light of the circumstances, as well as the implementation and scaling of remote access VPN, something we've been doing for many years. Our products' webpages saw a sevenfold increase in traffic in these areas, our VPN products have saved the day for many organizations. For example, we enabled quarantined doctors that were sent home due to coronavirus exposure, to remotely connect back to the hospital, where they were able to monitor patients something that was never done before.

We helped major global corporation expand employee remote access from 8,000 daily users to 80,000 users. In another case it was 130,000 users, that are now utilizing our VPN solution. We have many more examples like these across all industries; financial services, transportation, industrial, healthcare and others. Some of these expansions drove additional business. In other cases, we were able to accommodate the demand with equipment and licenses the customer already owned.

In terms of the effectiveness of remote access solution, we conducted survey amongst over 1,000 of our users, comparing different methods of remote access. I'm glad to say, that the end user satisfaction from the Check Point VPN Endpoint Security came with the highest score, validating our strategy of enabling connectivity, while providing the highest level of security.

In the cloud space, we continue to see a good momentum, almost doubling our conflicts value from that business comparing to last year. We're starting to see a nice pipeline of deals that are based on the understanding of the mission critical nature of the cloud, and the security needs that are coming with it.

We also had some nice customer wins. In the Americas, we added one of the world's largest retailer and one of the largest - the world leading food dairy brands. Overall, we had a very good quarter in the Americas. Keep in mind though, that the coronavirus had less business impact in the U.S. this quarter compared to other geographies. While many countries changed their business practices, starting in February, it only impacted Americas in a big way in the last 10 days of March.

Now, let me share with you some of the changes we see inside Check Point, before I go back to talk about our technology and customers. As I mentioned in the beginning, we managed to conduct our three CPX 360 conferences with record attendance, and completed the last one during the first week of February. When we went back to the office, we started to see a changing environment. One, that kept changing every couple of days. It started with supply chain challenges, while our manufacturing isn't in China, our supply chain does depend on some components that are made in China. At the beginning of February, people in Asia came back from the Lunar Year vacation, to find some closed factories. We started addressing that challenge, while at the same time, we began the production of our new Quantum appliance model. Then, we began to see lockdowns and business limitation in more and more countries. In February, it was primarily Asia. And in the beginning of March, some European countries started implementing lockdown. Until the end of February, most of our marketing conferences and International business travel, was still running pretty much as usual. But since the first week of March, business pretty much stopped and we had to adjust our travel and events accordingly.

Logistically, it was an interesting ride. All in all, we managed to keep our supply chain operating effectively, and we continue to address it. The only country we couldn't ship products to, was India, where access was shutdown towards the last few days of the quarter. Meanwhile, in mid-March, the rules in Israel became stricter. We had to reduce the amount of employees that are allowed to come to the office every day. Until then, our development, quality assurance and technical services were all done exclusively from our offices. They rely on lab access and an on-site development environment. In a short period of time, we built a new environment that would allow remote work for all these function. Within two weeks, we moved almost the entire organization into a remote workplace.

For example, our technical assistance centers in Israel, United States, Canada and India are now operating remotely, and produce very high level of productivity, actually higher than normal. All thanks to the engagement and commitment of our employees.

We managed to get to the March 31st, the end of the quarter, fully remote enabled. We had our first virtual end of quarter, where we received tremendous volume of orders, which we processed and shipped quickly. These 48 hours were some of the busiest, most challenging and interesting in our quite an experience for all of us.

Getting back to our business; the coronavirus did have an impact on business in several countries. Pretty much the entire world has been affected, as many countries were able to keep business flowing. The major countries, the decline this quarter were the U.K., China and Italy. I must say, that our employees and partners in all countries, including those who have suffered from the virus, have shown great level of engagement and continue to work and support our customers and partners, throughout this period.

Last week, we expanded the Infinity Architecture, according to plan, and launched some new products. Infinity is the only architecture in the industry, that delivers end-to-end security with the unified architecture and prevention across the cloud, mobile endpoint and IoT and network. We extended the largest area of our Infinity architecture, with a complete new lineup of network security gateways.

The Quantum family of security appliances is the first to include, the highest level of security prevention standards out of the box, with every appliance. It provides higher level of security by bundling our standard Zero-Day threat prevention technology, our gateways actually prevent attacks and stops them immediately, while other competitors just detect the attacks and let the malware in.

Our appliances are better performance and are fully scalable with our Hyperscale technology, and doing it in an even more energy-efficient manner. The appliances also has the lowest subscription rate in the industry and therefore, deliver a lower TCO than our competitors. The Quantum Series includes 15 models, starting its original Branch Office at around $5,000 dollar and going all the way to the highest end data center, with performance that can scale up to 1.5 terabits, the Maestro Hyperscale technology. Network security is one part of the business. Another important area is the cloud. We continue to see increased interest in our cloud solution. All of this, combined with our strength in the Americas, make me very pleased with our first quarter execution.

Now let's take a look at the second quarter in the remainder of the year. Our shift to remote work actually enabled me to meet more partners and employees over the past few weeks. The good news is that everyone is engaged, committed and working hard to deliver business results. Even though, our April results are trending well so far. In a session we conducted, it seems the security professional realized the increased risk from working remotely, and the additional threat that we are facing, as a result of the current environment. If the situation continues, we will have to strengthen the security environment, to mitigate those risks, and to close many holes that are introduced now. Keep in mind, that the effect of the pandemic in the U.S. was limited in the first quarter, as the big changes in the U.S. only began in the last 10 days of March. Many projects were actually accelerated last quarter, in light of the pandemic.

The evolving circumstances will impact all of us. It's already evident in some industries, like travel and hospitality. But the fact that most of the world is under a home lockdown, it is bound to create changes in the demand pattern and in the macro economy. The level of certainty we have, as to the impact on our future business is very low. As a result, I can share some of my assumption into the second quarter, but won't provide formal projection. And if we take our revenue model, over 75% of our business is comprised of annuity sales now. Most of it is already in. The rest depends on how the quarter evolves. Since the majority of our business comes in the last month of the quarter, it's hard to predict what will happen in the coming two months, where the business will trade like we've never seen before, whether it will stay stable or whether it will accelerate from current levels.

On the expense side, our expense model is relatively stable, mostly depends on our headcount, and there is no significant change in our headcount or hiring policies. The range of the assumption as to the revenue model is very wide. The probabilities to assign [Phonetic] which scenario are unknown, and depends by the way, in the things that are way-way beyond our control, all over the world. Therefore, I cannot provide projections or range, but can be valuable for the next quarter or for the remainder of the year. So I believe it will be prudent at this time, to withdraw our previously issued guidance for the year.

To summarize, we managed to sail through the corona storm smoothly so far. Over the last decade, we've built a strong base of annuity revenues, which is more predictable, combined with our employees, partners and our balance sheet, it provides us with more stability into the future. Customers actually assign more value to this quality in such times.

I would like to thank our customers, partners and employees for their continued support, dedication and innovative spirit. We remain committed to our long-term strategy and expect to emerge from this challenge stronger than before.

I'd like to thank you for joining us today. Wish you again health and wish that our freedom resumes to all of us shortly and I would like to open the call for your - for some questions. Thank you very much.

Question & Answers

Operator

[Operator Instructions]. Our first question is from Karl Keirstead with Deutsche Bank. Please proceed.

Karl Keirstead - Deutsche Bank - Analyst

Thank you. Good morning, Gil and Tal, congrats on helping Check Point manage through this crisis, as well as it sounds like you have. I wanted to just ask you about the decision not to provide guidance. It sounds like the Q1 actually came in relatively in line, if not slightly better than the midpoint, Gil, you mentioned that April results are actually trending relatively well so far. So perhaps you could elaborate what - it doesn't sound like you're experiencing new deal push-outs that some of your software peers are seeing. So what do you worry could change, looking forward, that reduces the visibility if things have actually tracked relatively well so far? Maybe you could just explain that for us. Thank you.

Gil Shwed - Founder and Chief Executive Officer

Thank you. First, I think I'm very pleased that we had the results that we had in the first quarter. But let's remember, the corona pandemic gut had the big impact on most of the world, only like you March, and in most of the world, only in the last few days of March. And even then, we did see some deals in the last few days, that were pushed, because people were moved to home lockdown and things like that. We've seen many others, by the way, that went smoothly. I must say that, I couldn't be - I mean I had an amazing - its almost two months now, a month and a half, when we went through this crisis, to see the commitment of everyone, including our partners, including customers, where I didn't believe where customers were under lockdown and still insisted on doing the business.

But as I said, it happened only in the last - the real changes especially in the U.S., happened only in the last 10 days to a week of the quarter, when many of the orders were already signed, processed, and it was a matter of the channel processing, it's getting it to us. So we enjoyed them. As I mentioned, we started Apri; really in a pretty good note and April is not over, but up to this second, April is trending as a nice month, is expected actually even a slight - a good one, but we are seeing an environment which constantly changing and the regulation and the changes in everything that's happening, can turn every day.

Again I don't want to give anyone ideas, but international shipping is changing every day. Government changes in what we're allowed and what we're not allowed to do our changing every single day. But most important, it's not of the external forces which again are huge, it's the entire demand pattern. If we're all sitting at home, our entire consumption model is changing, and when the consumption is changing, the economy is bound to change. Whether it will happen in May or June, I don't know, it might. Some of it will happen in May and June for sure. Whether it will happen in August or October, I also don't know. But something will change. People are changing their buying patterns. Some companies are gaining, like we see at least here, that the food and the grocery is doing very well, but most of the other sectors are doing terrible, and that will impact what we do. So, if I am a clothing company, in Q1 it probably didn't affect much, my big projects, my IT procurement; but in Q2 and Q3, I will be in a completely different situation, when my business went down by 60%, 70% or 80%.

I can't predict that, I can tell you from - again, I wanted to give even more transparency than usual here. So, so far, we're seeing we're seeing business moving along in a pretty good pace. As I said, I really, really appreciate both customers, partners and employees for their hard work. They are all trying very-very hard to keep some sanity, to keep business running. But the macroeconomic forces, some of that could change and it will change. Where, how, if it will have significant impact or insignificant impact, that's what I don't know, and that's the reason, that it's hard to provide guidance. If I could quantify that in saying that's X millions of dollars in these countries or this industry, it would have been very - it could be easier to quantify that.

But at this point, we really-really don't know. I mean, take our largest sector, and I'll give more examples. Financial institution; we had a terrific quarter with financial institution in Q1. I can't even guess what this pandemic will have on the performance and investment and priority of financial institution in Q2 and Q3/ Some may accelerate procurement, because they need more bandwidth and supporting people online. Some might say that the environment is changing so quickly, so we have to freeze all the future plans and stop all non-essential projects. I have no clue on that, and I must tell you that, with all the calls that I made primarily to partners, and partners is actually pretty good, because they see a very wide range of customers and are very close to the procurement department. The answer is straightforward, everybody is trying to move business, but there is a very-very high level of uncertainty, so we have to live with be uncertainty at this point.

Karl Keirstead - Deutsche Bank - Analyst

Got it. Okay, that's very clear and understandable. Thank you, Gil, and best of luck over the coming months.

Gil Shwed - Founder and Chief Executive Officer

Thank you very much.

Operator

Our next question is from Shaul Eyal with Oppenheimer. Please proceed.

Shaul Eyal - Oppenheimer - Analyst

Thank you. Hi, good afternoon, Gil, Tal, this morning there, Kip. Two quick questions on my end; Gil, have you seen - you just mentioned the partners and the fact that we provide you with a good color into what's happening out there. Have you seen in the early part, probably on the final two weeks, maybe even three weeks of March, as this thing as COVID-19 continued to unfold or began to unfold actually. Have you seen a little bit of urgent spending from some of your customers?

Gil Shwed - Founder and Chief Executive Officer

Again, the question is, if we've seen some urgent spending on our customers?

Shaul Eyal - Oppenheimer - Analyst

Urgent spending yeah for the VPN access products, for some of the high-end appliances, as companies have been moving to a remote work environment. Have you seen some of those all of a sudden coming with actually some accelerated spending?

Gil Shwed - Founder and Chief Executive Officer

Yeah. I have seen two partners and that's positive to us. Yes, we've seen some customers that have purchased very quickly, extended or even new VPN environments and again, when I mention examples like moving from 8,000 users to 80,000 users and scaling up to 130,000 current users every day. That did involve some spending in expansion and buying equipment. By the way, in one case, they actually took equipment that was planned for another and use it for the VPN expansion and hopefully they will buy more equipment for the other projects. In some cases, we were really rushing equipment fast and shipping it even before we got the order, so we can help the customer get on time.

Another phenomena that we saw in many customers, is that they understood that something is changing in the world, and things might happen. So IT managers, they simply rushed projects and they simply said, let's complete the project before the environment will change, before we will have hard time getting our budget or before we will need it in a critical manner. So some projects did accelerate in the first quarter. On the same time, by the way, we did have projects that got delayed and got canceled in the first quarter, and I mentioned few countries like like Italy, U.K., China where we did see an effect on the business - that business declined, and business which would have arrived, didn't arrive. Again for different patterns, different reasons, but all related to the situation.

So again in the first quarter, we saw few factors that were more business than usual and few factors that were below. Overall I must tell you, we had a very good first quarter, especially in the Americas, when we are saying, that we are investing in the Americas, its very important. The first quarter, it was a quarter that we've been proud with, under any circumstances, not with corona in the Americas. In the rest of the world, it was a different pattern.

Shaul Eyal - Oppenheimer - Analyst

Understood. Thank you for the transparency. Tal, maybe can you provide us with the number of seven digit transactions Check Point has had during the quarter?

Tal Payne - Chief Financial Officer and Chief Operating Officer

So actually, we didn't disclose it, we said a few quarters grow that we don't believe it's a material metric. But just to make you feel comfortable, I will give you that it was 56 customers with transactions over $1 million compared to 47 in the year-over-year, last year Q1.

Shaul Eyal - Oppenheimer - Analyst

Understood, thank you for that. Good luck. Stay healthy everyone.

Operator

Our next question is from Gregg Moskowitz, Mizuho. Please proceed.

Gregg Moskowitz - Mizuho - Analyst

Thank you very much and good afternoon, Gil and Tal. I guess my first question is, I was wondering if there was any way to estimate the positive impact to Americas revenue or billings from the increased remote access requirement. Perhaps by looking at activity levels over the last 10 days of the quarter and comparing that with what you saw a year ago or if there was any way - other way to parse that?

Gil Shwed - Founder and Chief Executive Officer

Tal, do you have any specific numbers? Again overall, I don't think it has a huge effect on the quarter, because again, we also did deals that were postponed and deals that were going down and again, in one of the cases, there was a large deal, the deal was planned. Anyways, it was planned for another use, but we used the equipment for VPN, instead for another that they wanted it. So I hope that we'll get the original deal again, but again, it's unguaranteed at this point. Its planned but it's not yet in.

I think overall, the strength in the Americas that we saw, wasn't a result of corona, it was a result of working hard with customers and partners. And again, we're seeing that we are doing it for the long time. It's nice to see that its bearing fruit and we are actually seeing some results.

Gregg Moskowitz - Mizuho - Analyst

Okay, that's…

Tal Payne - Chief Financial Officer and Chief Operating Officer

And I would say - I would say, I think America started the quarter strong and finished strong. So it was across the quarter. We did see strength in verticals like the financial services and healthcare, which might have some relations to corona and the increase of the remote access of the employees.

Gregg Moskowitz - Mizuho - Analyst

Okay, that's very helpful. Thank you both for that. And then just as a follow-up, I did want to ask about the SD-WAN space. One of your competitors has a lot of momentum there and another one of your competitors is - sort of has recently followed suit with an acquisition. And I'd love to hear more Gil, just kind of - if you could sort of elaborate on why you have a partnering strategy, if you will in this space, as opposed to perhaps going after the market more directly? And then also, if you can just talk about demand expectations for for SD-WAN going forward? I think that would be very helpful.

Gil Shwed - Founder and Chief Executive Officer

Okay. So first, it's a very good subject, and SD-WAN is a very interesting area and we are looking into that like everyone else. I am following it for the last two or three years. Historically, it has been the networking area. And in networking - usually the networking guys and people that are dedicated to that are doing better, and it usually stays with them. In the past, when we look at things to combine remote access or things like that, with our security. I mean, to provide security for remote access was always a great business. To do the remote access or the connectivity by ourselves was never a good business for us, and again I'm talking about going 25 years back. If you look at our VPN products, for example, they started around 1995 I think. So we have a lot of experience in that industry. We never replaced equipment or hardware from the big networking vendors, and that's why this - and by the way, specifically on the SD-WAN front, that was one front that there weren't clear leaders with high volume leading the market. It was, it is still relatively fragemented. That's why we chose to take the software approach and to partner with several of them, Silver Peak, VMware and several others and that provided security to this environment.

Right now, we are actually doing quite well with them and the fact that some of our competitors have made acquisition and provided products in that state, actually helps us in some areas, expand the relationship. What will happen in the long run it could - I wish I knew. I think it's going to be an interesting dynamic.

Gregg Moskowitz - Mizuho - Analyst

Okay, thank you Gil. Stay well and all the best.

Operator

Our next question is from Brad Zelnick with Credit Suisse. Please proceed.

Brad Zelnick - Credit Suisse - Analyst

Thanks very much and hats off to you. It's clear that your results demonstrate during these trying times. One for Gil and one for Tal. Gil, for those of us trying to better understand customer buying behavior during these unique times, and I [Technical Issues] maybe as well a bit. it's intuitive that what you provide is not discretionary. So what is the customer doing, who is deferring a purchase, especially when they are faced with significant traffic demands, are they running their existing appliances for longer? Are they rerouting traffic to the cloud? And just based on your learnings from the past, do you feel that you saw in March is a net pull forward or push out of demand?

Gil Shwed - Founder and Chief Executive Officer

I think it's very loved by customers. For example, our customers that are they are - that have a huge challenges in moving to remote access, and therefore they shift all their attention to remote access, and to stop other security project. Other customers, they just have difficulties in general, and the slowdown investments in IT projects. I mean, let me tell you in the hospitality business, that's a business, we have some customers there. We support them. We work with them. Seeing their pain is heartbreaking, an industry that went from amazing years and unlimited demand to shutting down 90% to 99% of their business overnight. And I'll give you, even in that industry, some of it we supported, they are moving to work from home, and we had some projects there. Not necessarily revenue generating, but the activity is the main thing. First, we need to work with the customer on the project, and then it will lead to something. A week later, half the team is fired. Three weeks later, the entire team is fired. We form a deal for the long run, how we support them and make the right concession to support them, which is the right thing to do. And two weeks later or a week later, even the procurement team is not working anymore, because they have been laid. This is heartbreaking, but this is reality unfortunately, as we see it.

So again I don't want to paint a negative picture here. Right now, our business is moving. Most customers are trying to keep business alive. I'm actually - I mean this was very - for me it was a very interesting month seeing how the world is coping with one of - some of the biggest changes we've ever seen in our lifestyle over such a short period of time and coping it and keeping business alive. So I don't want to sound negative. I'm just saying that, we can't ignore the situation around us, and we can't assume that the fact that we managed to survive in this situation for, let's say, it depends where you look at, between five to nine weeks, without a change of the macroeconomy, means that its going to continue that way.

In the bigger level, we've seen everything. We've seen companies accelerating. We have seen companies slowing. We have seen people that are hard to get and don't sign a deal, because they are not at the office. We've seen people that are making all the efforts to sign every deal, even though, they are in some of the worst countries and worst areas in the world. So in the micro-level, i have seen everything. On the macro level, I think, assuming that the macro level will stay stable is the wrong assumption, and I hope that I am wrong. I hope that we will see a smooth sailing moving forward, and it definitely a scenario that can happen based on what I've seen in the last eight or nine weeks.

Brad Zelnick - Credit Suisse - Analyst

Thank you so much, Gil.

Gil Shwed - Founder and Chief Executive Officer

Thank you.

Brad Zelnick - Credit Suisse - Analyst

If I can just follow-up, one for you, and I appreciate the business is very much [Technical Issues]. Can you give us an update on how April bookings have trended relative to March?

Gil Shwed - Founder and Chief Executive Officer

So I've said we don't - I've mentioned that, we usually don't give update in the middle of the quarter. But this time I did go outside my way. April so far looks like a decent month. Levels of business are slightly higher, or higher than - I mean would the months that I'm comparing with, is January this year and April of last year, that's the right comparable in terms of seasonality. Right now, again, we are not over April, we still have three work days to go. But up to this morning. April was better months than both of the months, slightly better. And by the way, that's what we expect. We expect to have - but again, it's not a prediction for anything, because I think what we're foreseeing in April is also slightly spillover from the end of the quarter. And again, with customers - one pattern that I can see customers understand that the world is changing, and if they say, if I can complete a project now, I should complete it now and not wait.

That's what I am seeing at the professional level. At the professional level, we've seen by the way, it happening in demand on every area, in laptops in servers, I mean, I'm saying it from the macro, what you're seeing as analysts. I am seeing it myself in the market. When the pandemic started, we were saying, okay, we will need laptops. When we had laptops months ago, let's buy all the laptops that we can. Now that doesn't mean that long term or even short-term we would buy laptops, it just means that I told my supplier, give me the inventories that you can give me. And I feel that, I mean I have just mentioned an anecdote. I met one day when I was still at the early pandemic, when we worked really-really hard at the office to adjust the office environment. And we worked very long hours, and I still hanged around and tried to meet as many people as I can. I went one day. I stopped by the entrance. I showed the delivery guy delivering a big cart with computers on it. I said impressive and so on, he says, how is your business? Is it still going? He says, you can't believe it, I am working now until 12 AM every day, every business in the country is buying - by the way, he was speaking about businesses, is buying all the equipment that they can get, because they are getting ready for something. And that was - again that was more than a month ago.

At a certain point it stopped, and you say, I have the equipment or the macroeconomic or the economic constraints, and I can't afford it anymore. So I just gave you a small example from meeting the delivery guy, because he is the one actually that is doing the work.

Brad Zelnick - Credit Suisse - Analyst

Thank you very much. Be well everybody.

Tal Payne - Chief Financial Officer and Chief Operating Officer

I will just add just to make sure, we started April growth, but remember majority of the booking is coming in the last month, and therefore it's a small portion of the numbers, believe me, that are needed for any quarter including Q2.

Operator

Our next question is from Michael Turits with Raymond James. Please proceed.

Michael Turits - Raymond James - Analyst

Hey guys. Hello everybody and hope everybody is well. Gil, to come back to the VPN question and remote access, you did obviously state both in the press release and have talked about it since that, there was some increase for that. Do you have any sense whether people are now where they need to be in terms of capacity for VPN and remote access? However, they still need to add, in order to get up to work from home requirements?

Gil Shwed - Founder and Chief Executive Officer

I think it varies a lot by industry and by country and I don't have good data. We might - again we're starting to learn how to move to this new world and assess the new requirements, because these are - now in the past, we had a pipeline of projects that were planned a year in advance and the salespeople couldn't plan for that. Now when you move into projects and think, my remote access is not working well, I need a solution now. In general by the way, one thing that did happen to our business and to the rest of the world, things that used to take two months are now taking - today things that used to take two days or two weeks are now taking six hours. And the planning in general, we still have long-term planning, but we're moving to very local execution, execution that's measured by date. The reason I'm saying that is because, I mean if you were now a business let's say months ago, you said my workforce will go home and they will do whatever they can. Now you're saying, okay, how effective we are, is performance good, and let me revisit that. Maybe it's working and I'm fine and maybe now it's time to start a new project, because if I'm going to stay that way, I'd rather optimize and invest more, which is something by the way, even us are doing them on many of these areas.

When you start a new project and maybe again, it's not a six month projects, it's maybe now a two week projects or a two month project instead of what used to be an annual project. Having said all of that, and I don't think it's over, but again that's what I'm saying about unpredictable environment. Maybe we will see that in three weeks the world will resume to work, and people start going to the office, maybe with some modifications. And all this talk about remote access project is going to translate into something different and shift to how we close the gap. By the way, one thing that I can predict, is that by moving to remote access, companies opened a huge amount of holes in their security. I mean the corporate network is now open in ways it wasn't open before, and hackers are going to exploit it. There is no doubt about that. We already saw a situation like that last week when the - I think was the NHS, the Chinese Institute for Pandemic Research and the World Health Organization, were all hacked in a huge way. So there is a new - there will be new security threat and many new holes to close. Surveys, which we did conduct did show the security professionals are very much aware of that. They're concerned about that. It doesn't mean that they were able to translate it yet to a motion, to create new projects or to budget, I think eventually it will come.

Kip E. Meintzer - Global Head of Investor Relations

Okay. Next caller?

Operator

Our next question is from Walter Pritchard with Citi. Please proceed.

Walter Pritchard - Citigroup - Analyst

Thanks. Tal, wondering if you could give us an update? I don't think we've had a number like this in a while, but it's relevant. How much of your business - you've given us the $1 million deals, but how much of your business comes in from larger projects in your pipeline for a long time versus the sort of transactional piece that you sort of have less visibility, when it comes to the channel?

Tal Payne - Chief Financial Officer and Chief Operating Officer

So we didn't provide this color before. I can say, when we talked about the deals, there was a question before, how many transactions are coming in with the transactions over $1 million or customers that purchased over $1 million and then we saw a nice increase there. It's probably from those transactions you can get around - it can fluctuate between quarters, right? So on the revenues, it's very different than on the booking. On the revenue side, it's not that large, so it's - we do have large transactions, but it's not going to be 20% or 30% or 40% of our book - of our revenue, because it's spread over many-many transactions. There is a numbers of deals we saw, there's about - we said I think 67 transactions like this, this quarter. Remember, when you have large deals, many times, because it's multiyears and therefore it affects the bookings and the deferred revenues. but less affects revenues in a specific order.

Walter Pritchard - Citigroup - Analyst

Okay. And then Tal, just another question you brought up on the Quantum appliances. It sounds like you're deferring more revenue than you had in the past. Could you maybe - I know it has been a probably decade long discussion here around more deferral of appliance revenue. Could you help us understand what has changed with Quantum and maybe if there's any sort of benchmark you can give us from a year ago or five years ago in terms of how much more of a sale you're deferring, versus what you're seeing with this current generation?

Tal Payne - Chief Financial Officer and Chief Operating Officer

Sure. So we just started to sell it. So I can't tell you yet the amount, but I can give you the feel to it. So it happens every time we launch a new product line and we bundle with it, a subscription package which is a higher level than before. If you remember I think 2016 or 2017, we bundled with a new family - instead of next generation firewall, we bundled next generation threat prevention and then we saw a shift from product revenues into the subscription. This launch, we bundle on the Quantum, we bundle instead of NGTP, like the old family, we bundle with the Sandblast, which is a higher level. Hence higher dollar value is allocated into the subscription going through the deferred revenues and then recognized.

So it is - its a deferral of the revenues, which instead of coming at the time of the selling of the product, is being deferred over four quarters. So from a business perspective, obviously it's still very-very good, because your customers are using higher level of security, they now have Zero-Day protection and then a year after, you also see them using it and then renewing it and therefore it will give another driver for the growth in the subscription. That's the logic of doing it. Securing the customers, and then a year after enjoying an additional dollars in the subscription.

In order to estimate how much it is, we need to understand where the customer is - what the customer will use in terms of appliance. This is very hard to predict. If they go down, if they go up in the level of appliance, therefore it can end up having zero effect, or we can end up maybe in a different scenario, having an effect of a few percentage on the product, maybe $10 million to $20 million, minus in the product and plus in the subscription over four quarters. And it can even do a difference, increase the product because they will choose to go to a higher appliance and we will enjoy both in the product and in the subscription. So I said in a few quarters, we will have much more visibility when I will see which route the customers are choosing to go and based on that I will be able to give you more color in the next quarter.

Walter Pritchard - Citigroup - Analyst

Great. Thank you.

Operator

We have reached the end of our question-and-answer session. I would like to turn the call back over to Kip E. Meintzer for closing remarks.

Kip E. Meintzer - Global Head of Investor Relations

Thank you guys all for joining us today. We hope you're all safe and we look forward to speaking to you during the quarter. Thank you. Bye, bye.

Operator

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CHECK POINT SOFTWARE TECHNOLOGIES LTD

Q1 2020

Earnings Transcript

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