Kip Meintzer - Head of Global IR Gil Shwed - Founder, Chairman & CEO Tal Payne - CFO

Michael Turits - Raymond James Walter Pritchard - Citi Shaul Eyal - Oppenheimer & Co. Gregg Moscowitz - Cowen & Co. Sterling Auty - JPMorgan Robert Breza - Sterne Agee Daniel Ives - FBR Rob Owens - Pacific Crest Phil Winslow - Credit Suisse Karl Keirstead - Deutsche Bank Matthew McMinn - Goldman Sachs Matt Hedberg - RBC Capital Markets Gray Powell - Wells Fargo Brent Thill - UBS Melissa Gorham - Morgan Stanley Scott Zeller - Needham & Company

Greetings, and welcome to the Check Point Software Technologies Limited Second Quarter 2014 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Kip E. Meintzer, Head of Global Investor Relations for Check Point Software Technologies. Thank you, Mr. Meintzer. You may begin. Kip E. Meintzer: Thank you, Melissa. Hi, everybody. I'd like to thank all of you for joining us today to discuss Check Point's financial results for the second quarter of 2014. Joining me on the call today is Gil Shwed, Founder, Chairman and CEO along with our Chief Financial Officer, Tal Payne. As a reminder, this call is being webcast live on our website and being 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 August 1. If you'd like to reach us after the call, please contact Investor Relations by e-mailing me at kip@checkpoint.com or by phone, +1-650-628-2040+1-650-628-2040. Before we begin with management's presentation, I'd like to highlight the following items. During the course of this call, Check Point representatives will make certain forward-looking statements. These forward-looking statements may include our expectations regarding the introduction of new products and programs, and the success of those products and programs, and our expectations regarding our business and financial outlook, including our guidance for Q3 2014. Other statements, which may be made in response to questions, which refer to our beliefs, plans, expectations, or intentions, are also forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. Because these statements pertain to future events that are subject to various risks and uncertainties, and actual results could differ materially from Check Point's current expectations and beliefs. Factors that could cause or contribute to such differences include, but are not limited to, the risks discussed in Check Point's latest annual report on Form 20-F, which is on file with the SEC and is also available on our website at checkpoint.com. As a reminder, Check Point assumes no obligation to update its forward-looking statements, 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 the reconciliation of such results, as well as the reasons for our presentation of non-GAAP information. Now, I would like to turn the call over to Check Point's Chief Financial Officer, Tal Payne, for a review of the financial results.

Thank you, Kip. Good morning and good afternoon to everyone joining us on the call today. I’m very pleased to begin the review of this great quarter. Revenues for the second quarter increased by 7% year-over-year, while non-GAAP EPS grew 8% to $0.89, coming in at the top of our guidance. Before I proceed further into the numbers, let me remind you that our second quarter of 2014 GAAP financial results include stock-based compensation charges, amortization of acquired intangible assets, and the related tax effects. Keep in mind that non-GAAP information is presented excluding these items. Now let’s take a look at the financial highlights for the quarter. In the second quarter of 2014, our revenues reached $363 million, compared to $340 million in the second quarter of 2013, representing an increase of 7%. Revenues were on the upper half of our guidance. Total revenues from product and software blades grew 10% year-over-year. This growth was driven primarily by the continued success of our software blades, which grew over 20% and represent 18% of our total revenues. The main drivers were Application Control, Anti-Bot and URL Filtering blades. We also had continued success in our datacenter and the super high-end appliances which contributed to the overall growth. Our software updates and maintenance revenues reached $175 million, representing 4% growth year-over-year. As you recall, last quarter we provided additional color by splitting the revenues from software updates, maintenance and subscription into two lines; revenues from software blades subscription and revenues from software updates and maintenance. This quarter, we also classified the software blades subscription that were part of product revenues into subscription revenue line. Comparable data for prior period was adjusted accordingly. Deferred revenues, as of June 30, 2014, were very strong at $660 million, an increase of $80 million, or 14% over June 30, 2013 and similar to the end of March 31, 2014. Revenue distribution by geography for the quarter was as follows; Americas contributed 49% of revenues; Europe contributed 35%; and Asia Pacific/Japan, Middle East and Africa region contributed the remaining 16%. From a deal size perspective, this quarter, we saw an increasing number of large deals. Transactions greater than $50,000 accounted for 72% of total order value, compared to 68% in the same period a year ago. Number of customers with transactions over $1 million increased by 35% to 54 customers this quarter compared to 40 in the same period last year. Our non-GAAP operating margin this quarter continued to be strong at 57%. Our effective non-GAAP tax rate for the second quarter was 20%, same as the second quarter last year. GAAP net income for the second quarter of 2014 increased to $160 million from $151 million in the second quarter of last year. GAAP EPS increased to $0.83 from $0.76 per diluted share in the same period last year, representing 9% growth year-over-year. Non-GAAP net income for the quarter was $172 million or $0.89 per diluted share, up from $165 million or $0.83 per diluted share in the same period last year. Non-GAAP earnings per share came in at the high end of our guidance, representing 8% growth year-over-year. Our cash balances were $3,643 million at the end of the quarter. Our cash from operations this quarter was $168 million, compared to $205 million in the second quarter of 2013. The decrease relates mainly to stronger collection in Q1 this year versus last year and the increase in tax payments in Israel. Collection continues to be strong, and our DSO was 61 days, lower than the previous quarter. Cash flow from operations for the six-month period ending June 2014, net of the tax effect, net of taxes, were $523 million, compared to $500 million last year, representing an increase of approximately 5%. We continued implementing our expanded share buyback program during the quarter and repurchased approximately 3 million shares for the total cost of $194 million. Now, let’s turn the call over to Gil for his thoughts on the second quarter.

Thank you, Tal. I would also like to thank everyone for joining us on the call today. We had a fantastic second quarter. We delivered 10% growth in product and blades revenue and achieved revenues and EPS at the high-end of our projections. Software blades continued to lead the charge with over 20% growth this quarter, underscoring the 10% overall products and blades growth. Datacenter appliances and super high-end contributed to the overall strength this quarter. In terms of new technology, we continued to strengthen our threat prevention offerings with another important layer of security, the ThreatCloud IntelliStore. The IntelliStore is a unique cyber security network which allows each customer to pick the most relevant security intelligent sources and automatically receive the latest security threat information, which is being translated into real-time prevention. We believe that no other solution in the marketplace provides these capabilities. And as the importance of cyber intelligence increases, this solution can be a critical factor in fighting the most sophisticated attacks. We believe our platforms deliver the most comprehensive and most integrated threat prevention solution in our industry, which includes our IPS solution, Network Anti-Virus, Web and Application Security, unique Anti-bot and the Threat Emulation software blades. If you try to replicate these technologies, you would require between three to 10 point solution. Our integrated approach not only simplifies the deployment and decreases costs, but it also elevates the level of security by delivering full coverage of network traffic in a single management platform. While we believe that we are only in the early stages of market penetration with these threat prevention technologies, today we already generate more than $250 million in revenues on an annual basis. Geographically, we continued to do very well in most regions. The U.S. continued to be the standout, Europe posted very nice product growth, Latin America had some major wins and most regions in Asia grew nicely. During the quarter, we saw an uptick in large deals. Business from new customers increased by 20% and new business wins ranged from small business to very large multi-year strategic contracts. Talking about major wins, let me give some examples of strategic contracts that we’ve won this quarter. One is a multi-year contract with one of the world’s largest financial institution which is consolidating their security infrastructure using our software blades. This is one of the largest contract we’ve ever seen. Another one is a university that had a very large deal replacing the competition with several of our largest appliance solutions. Another example is an hospitality chain that’s standardizing Check Point in hundreds of locations worldwide. This brings me to the financial outlook. You know my regular caveat, it is always hard to predict the future. There are many factors that can point to better results and there are many reasons to be cautious. For the third quarter, we expect revenues in the range of $355 million to $375 million and non-GAAP earnings per share in the range of $0.88 to $0.92 per share. GAAP EPS is expected to be approximately $0.07 less. With that, I’d like to thank you once again for joining us on the call today, and open the call for your insightful questions.

(Operator instructions) Our first question comes from the line of Michael Turits with Raymond James. Please proceed with your question. Michael Turits - Raymond James: Michael Turits. How are you? Just two things, one on Europe, it sounds like you did well in Europe, but the revenue growth still seems a little light, so shall I assume that orders were stronger and picked back up after last quarter?

Obviously, revenues is not always in link. You have other accounting revenue recognition, but you’re right, booking in Europe was strong both in products and in services. Michael Turits - Raymond James: Anything that you can think of to describe what helped things pick up, was it on the demand side, did you find execution issues or how should we look at the pick up?

I think it’s overall. I mean I think we have improvement in execution, but I think we had also many wins, a lot of product uptick, I mean Europe was the strongest this quarter in terms of product growth, much faster than any other region that we’ve seen for a long time in terms of the uptick there and I think some of it is maybe also the seasonality in that regard. Michael Turits - Raymond James: Okay. And I guess one more, just on cash flow, it was a little bit weaker than some estimates. You did mention cash tax payments which we knew were increasing, is there any change in that outlook for the full year, I mean the amount of cash taxes that’s repaying or is that what you had previously guided to?

It’s actually what I previously guided. If you remember, I said that in Israel the tax rates moved from 12% - from 12.5% to 16%, it’s almost like a 40% or a 35% increase and you see it in the cash flow effect and also the collection in Q1 was very strong on the expense of the Q2 collection. So, we executed very well in Q1 which made Q2 slightly look weaker.

Thank you. Our next question comes from the line of Walter Pritchard with Citigroup. Please proceed with your question. Walter Pritchard - Citi: Hi, thanks. I see you’re seeing an uptick in sales and marketing spend. If I look year-over-year, it’s growing faster than your other expenses. We’ve noticed more hiring and so forth, I’m wondering if you could talk about what sort of benefits you’ve seen thus far from the increased sales hiring and how you expect that to roll through or impact your revenue in future quarters? And then, just had one follow-up question.

I think in terms of dollars, there are several things that affected. But first in the second quarter we had several of our largest customer and partner conference, the Check Point Experience Conferences, they were a big hit this quarter with record attendance in both conferences, one in Europe and one in the U.S. and they both had a very, very large growth in terms of number of participants and that links directly to the dollar value, that’s one effect. And the effect of the dollar has also had some effects on that because some -- big part of our expenses are in the international markets in Europe and Asia and the weakness of the dollar is impacting that and of course we’ve also kept adding more headcount which, we think, is helping us and will help more in the future. Walter Pritchard - Citi: Got it. And then just one last one on, Tal, you didn’t mention the IPS blade in your list of blades that were driving your performance there. Is that one now reached a sort of point of saturation because I heard you mention App Control, URL and Threat Emulation as blades driving growth?

Sure. So, IPS is growing as well, but I had to pick the top three and this quarter it wasn’t one of the top three.

It’s still the largest blade, but it’s not growing as fast as the others.

Thank you. Our next question comes from the line of Shaul Eyal with Oppenheimer & Co. Please proceed with your question. Shaul Eyal - Oppenheimer & Co.: Thank you. Hi, good afternoon, guys. Gil, on the heels of your third quarter guidance, fair to say that annual guidance is being reiterated at this stage?

We didn’t say, but so far, we don’t change it yet. I mean we did, I think, okay the last two quarters or actually this quarter is even much better than okay and I think everything is progressing in line here. Shaul Eyal - Oppenheimer & Co.: And on the headcount, probably on the heels of the prior question, where is it geographically that you guys are putting emphasis, is it APAC, is it EMEA? And also, what’s the status in Japan? I recall last quarter was a little sluggish, what’s the current status there?

I think we are investing in all the regions, I mean we have open headcounts in the U.S., in Europe, in Asia. We keep investing in our development organization and other organizations that are in Israel. So, there’s nothing too specific about that. And this quarter, the headcount grew slightly. And Japan, specifically, I think had some nice growth this quarter, specifically if we talk about that.

Thank you. Our next question comes from the line of Gregg Moscowitz with Cowen & Co. Please proceed with your question. Gregg Moscowitz - Cowen & Co.: Hi, thank you very much and good afternoon everyone. Gil, how is the service provider business for you in Q2 and specifically how do the 61000 Appliance do, just solving some of the recent engineering improvements that were made around throughput?

I don’t have the data in front of me, but as much as I recall, the service provider behaved quite well in the second quarter. Gregg Moscowitz - Cowen & Co.: Okay. And then I wanted to follow up on Asia as well. I know, Michael asked about Europe, Asia did also struggle in the first quarter, and I’m wondering if you had some more insight into which territories performed well this quarter as well as which ones remained challenging?

Europe, I think, most of everything behaved pretty well I think. North Europe did very well. The Nordics were quite good. I think we saw an uptick in Southern Europe. And I think that the star was actually the Central European countries.

Yes, I think Central was very good.

The best parts. So, I think overall it did very, very well.

In most regions they did very well and also in Asia, in most countries, they had a good quarter. Gregg Moscowitz - Cowen & Co.: Okay. Thank you. And if I can just ask one last quick one. I’m curious if you’ve seen any significant deal sizes or customer commitments for Threat Emulation yet. Thank you.

The Threat Emulation is still in the early stages. We did have a -- a very nice number of customers have actually signed up. We have an even bigger pipeline of customers who are in evaluation. Nothing that’s very sizeable in terms of deal sizes.

Thank you. Our next question comes from the line of Sterling Auty with JPMorgan. Please proceed with your question. Sterling Auty - JPMorgan: Yeah, thanks, guys. Gil, you mentioned a couple of the very sizeable wins and what they are used for, kind of curious what the competitive landscape was like in those very large deals and what the deciding factor that swayed them in your direction were?

I think each one was slightly different. Each one was competitive like most of our business. And I don’t know specifically - I think one thing that was very important for all of them and that’s what’s we’re hearing all the types of customers on our management platform, and they simply say, you cannot manage large environments with any other solution. I mean to spell it out, and I had last week many meetings with customers when we interviewed them, they tried to say that our interviews about what they think about our strengths and so on. And they all said out loud that our management is superior to any other solution and no other solutions scale to large sizes of management. I think another factor that was part in most of the deals is the consolidation of the infrastructure and using our software blades and using stronger platforms. So, I think these are the common things to most deals. Sterling Auty - JPMorgan: You mentioned in the press release and in your prepared remarks some of the real-time monitoring capability that’s coming. Is that integrated in part of provider 1 or is this an add-on module?

We have the SmartEvent. I don’t - if we’re talking about SmartEvent, which is the event analysis part, that’s integrated to our management platform, that’s another management blade, so it’s an add-on blade for the management and it’s actually bundled and integrated in some of the new SmartOne appliances that we’ve also launched this quarter, I didn’t mention them here, but we’ve also launched them this quarter. This quarter what we’ve also released is the next-generation of the SmartEvent analysis and that actually will be part of our next-generation management that will be released next year. The Event analysis part of that that links to the existing products is already shipping now. Sterling Auty - JPMorgan: And last question, we’re several quarters into your latest investment phase and trying to be more successful in the SMB space, can you give us some color and update on how that’s going?

I think we’d continue to see nice unit growth in the SMB market. Overall, I think we’ve more than doubled our SMB units in the last year or year and a half since - at least actually it’s four or five quarters since we launched the product a year ago, I think it was Q2 a year ago, so it’s exactly one year. And I think we’ve more than doubled our unit numbers. We’ve also seen very nice uptick in revenues overall. So that trend continues. It’s still not huge numbers if we look at the dollar contribution.

Thank you. Our next question comes from the line of Robert Breza with Sterne Agee. Please proceed with your question. Robert Breza - Sterne Agee: Hi, thanks for taking my questions. Gil, maybe, as you look at the landscape between SMB, service providers et cetera that you talked about in the call already, I was wondering if you could just address the upgrade cycle that maybe you are seeing with some of these larger customers, are they looking to add more functionality, more capacity, what’s kind of really driving some of the firewall upgrades? Thanks.

I think in terms of -- when I look at customers, they absolutely when they do upgrade, they are looking into adding additional blades. The IPS blades, for example, is almost standout in many implementations. The new blades are definitely something that they are looking at. I think they all see the value of consolidation of new security functionality. But keep in mind, when you speak about deals, it varies by deal size, for example, the very large customer for us and for them the upgrade cycle is a huge potential. On the other hand, it’s not very fast because upgrading an environment with 500 Gateways takes a long time. So in several cases, it may even slow us down rather than accelerate growth. If you look at other size deals or new types of deployments, then I think our multiple blade and our architecture accelerate the growth and provides a lot of value to these kinds of deals.

Thank you. Our next question comes from the line of Daniel Ives with FBR. Please proceed with your question. Daniel Ives - FBR: Yeah, thanks. Sort of a follow up to Rob’s question. Gil, do you believe in terms of just the firewall refresh, there is just a mass of refresh going on as a cycle within the enterprises, I mean you obviously have a good gauge in terms of historical I mean what’s your sort of view of that just across the enterprise?

I think it’s an ongoing process and I think it’s different from other technologies. Most of the technologies are being upgraded every [three] [ph] years, most technologies are not being used for 20 years. In security, it’s very, very clear that upgrade is important because you get a lot more security and security is the thing that determines the needs. It’s not what you like to have is what the risks outside and what the threats outside. So the threat landscape is evolving and it’s definite that customer needs more security. Still I think we have good products. So many customers they have a product, let’s say, five years old and seven years old and sometimes even longer than that and they work and they do the job. So sometimes there is the explanation to the customer of why is it important to run a new version of software and new type of appliances that they can accommodate well. But overall we are always in the cycle of an upgrade, that’s the situation.

Thank you. Our next question comes from the line of Rob Owens with Pacific Crest. Please proceed with your question. Rob Owens - Pacific Crest: Great. Thank you. Can you talk a little bit more about your ThreatCloud IntelliStore and how you guys are going to monetize this longer-term? Is this market change in terms of reselling I guess the other people's products or intelligence into your install base and taking a portion of that?

I think first it’s a very early stage market. I mean we invest a lot of resources trying to find out what’s the hottest range and what’s the future in terms of preventing threats and fighting them, most sophisticated cyber attacks. And I think we’ve built over the last couple of years a great, the entire infrastructure, ThreatCloud driving threat information, driving real-time prevention and I think that’s very, very unique in terms of our ThreatCloud. There are several infrastructures that provide the threat information, most of them are not real time, most of them are not being translated into immediate blocking off attack. And we’ve invested a lot over the last few years. What we found out at the beginning of this year and late last year is that a new hot sector of companies, the companies that provide more in-depth intelligence and more specific intelligence. I would say between a dozen to two dozen companies today in the world that specialize in that. And what we found out is these technologies are really - are not technologies, this intelligence is really very fragmented, I mean there are some that specialize in certain industries. There are some, for example, the financial industry is very big on that. There are some that specializes on geography. That attacks that happen on certain nations or certain countries are different than the attacks elsewhere. And I think our choice in that was instead of trying to say that it’s one-size-fits-all is to facilitate that and open that marketplace and allow every vendor to offer their intelligence through Check Point and allow every customer to get that. Now, that has two big, I think, revolutions in the marketplace. One revolution is that it translates it automatically into prevention, sounds trivial but it’s absolutely not. If your company would buy today a subscription into some security, cyber security intelligence source, you’ll get every week dozens of pages, something more of that, it would be interesting analysis and then there will be hundreds of signatures of IP addresses of things you should block. And I think that’s what we got from our customers, they told us we get all that information every week, we don’t know what to do with it. We know it’s important, we know we want to block it, but how do we do that and that’s why we started the integration with these intelligence services, they are integrated into our management and into our gateways and we can focus all that information. In terms of - so that’s one revolution. The second revolution is that before that, recall it was so sophisticated. All of these vendors were trying to approach small number of customers, very large customers and basically and that enabled only a very small market but every company had very small dozens of customers, sometimes not even that. And I think what we’re opening the door here is for every intelligence vendor to offer their services and their information to hundreds and thousands and in the future tens of thousands of customers which we have and can easily meet. So, we’ve got the two revolution. In terms of monetizing that, we are using a model when we share the revenues between us and the information provider, the customers can determine what they would like to subscribe to, the providers themselves are deciding on the pricing and how much they like to charge. So far I think we’re just starting this quarter to enable it to the general public and to the general customer install base with the latest R77 release that we’ve released - which we are releasing but the enthusiasm on that is pretty high. And it’s going to take a lot of time based on what the new technology and based on the fact that also it needed the new software blades. Rob Owens - Pacific Crest: Appreciate the color. And then, around the big deals, are most of these rip and replace types of opportunities? Are you seeing any increased firewall use cases with incremental segmentation and networks are moving into virtual or anything of that nature? Thanks.

I think we’re seeing everything. I mean we’re seeing more deployments of security technologies. I think we’re seeing deploying firewalls in different applications that we didn’t see before. And we’re seeing upgrades of our infrastructure and we’re seeing replacement, competitive replacements, few -- actually I think out of the three deals I mentioned, at least two, I’m not sure about the third one is replacement of competitive product.

Thank you. Our next question comes from the line of Philip Winslow with Credit Suisse. Please proceed with your question. Phil Winslow - Credit Suisse: Hi guys. Thanks guys and congrats on a great quarter. Most of my questions have been asked, but just wanted to dive into the verticals and just sort of what you're seeing by industry vertical if anything is standing out in particular? Obviously, there have been a lot of notable security breaches in certain sectors. Curious if that’s driving your growth in any of those or just sort of general demand across the board?

I think the financial industry continues to be strong. I think I'm seeing an uptick in some large sectors in retail. I think I did mention hospitality, which is a less often mentioned sector, but it’s an important one but I think we've also seen many, many successes in other sectors. So, the answer is yes. We're seeing uptick in different industries.

Thank you. Our next question comes from the line of Karl Keirstead with Deutsche Bank. Please proceed with your question. Karl Keirstead - Deutsche Bank: Thanks. Gil, on the competitive replacement front, last night Juniper reported a 50% decline in legacy NetScreen product revenues. I'm just curious if you're seeing any kind of uptick in displacements of Juniper and if that’s driving your U.S. performance at all? Thanks.

We are seeing displacements of Juniper. I don’t know if it necessarily drives the U.S. performance. I think it happens all over the world and I met with some customers last week in Europe and they were talking about that as well. So I don’t think it’s a geographical specific. And I think when we outlined few deals right now and against who did we displace and who did we win against. I think it was very consistent with the market share of the established vendors there. I mean Cisco was number one in terms of who replaced, Juniper was number two and then there are all the others that obviously have smaller install bases than Cisco and Juniper.

Thank you. Our next question comes from the line of Matthew McMinn with Goldman Sachs. Please proceed with your question. Matthew McMinn - Goldman Sachs: Hey, guys. Thanks for taking the question. Question on uses of cash, can you help us think through how you prioritize uses of cash between reinvestment in the core business, inorganic M&A opportunities and then incremental shareholder returns and more in light of the $3.6 billion in cash and equivalents on the balance sheet? And then, just secondly on deferred revenues, maybe a little more color you can provide on the increase in long-term deferreds relative to short-term? Thanks.

I think we are looking at the best ways to roll. And obviously with all the cash position, we have the financing to do that. I think we keep looking on attractive acquisition, it’s really hard to find them. And there’s not too many businesses that can integrate into our platform that will be applicable to all the sizes. There are a lot of interesting ideas in terms of start-ups and new innovation, but again it’s unclear how many of them are applicable to the entire install base. And in some cases, I think we are attractive. In some cases, the fact that our market is pretty hot means that the valuations are unreasonable for the future of our deal represented by one company, but we are pretty active in terms of looking for the right acquisition opportunity. Obviously, we’re continuing with our buyback program based on the feedback from our shareholders and I don’t know if that’s a priority today because we have the resources to do all these things.

And as for the deferred revenue question and obviously you can see the growth was very nice with 14% growth, short-term increased by 11% and long term increased more, remember long term is smaller dollar, so the percentage will be significantly more. This quarter, as we discussed, we had quite a lot of large deals and some of them are multi-years. Multi-years mean that if we invoice them, then it will be presented as part of the long-term deferred revenues.

Thank you. Our next question comes from the line of Matt Hedberg with RBC Capital Markets. Please proceed with your question. Matt Hedberg - RBC Capital Markets: Yes. Good morning guys. Thanks for taking my questions. You talked a lot about Application Control being an important component of growth this quarter, is there a way to think about the penetration of that blade into your install base versus say IPS?

Most of them are still significantly lower than 50%, right. So, in terms of potential, there is still much potential, if you take the majority of the customers and you see how much was the penetration, I mean my guess at this point in time will be I don’t remember, I don't have the data in front of me, I think it's somewhere around maybe 20%, 25% for the large blades like the Application Control versus IPS. Matt Hedberg - RBC Capital Markets: That’s great. And then maybe a quick one on Threat Emulation, it has come up a couple of times on this call. I’m wondering is there a way to think about the size of that market and maybe differently, is that taking share from the traditional firewall budget or is this net new spend that you are seeing from guys? Thanks.

In the Threat Emulation, it’s hard to say what the market size is today. I think there is one company that has significant revenues in that. I think it’s part of the overall threat prevention market. And I think overall all these technologies are part of building the same infrastructure and fighting cyber threat. The market for threat prevention in general is starting to be quite sizeable because I think I’m not very - I think that we are the number one vendor in terms of size given that our annuity bookings in that market alone, excluding appliances, excluding the platform, just the annuity software blade is approximately $0.25 billion. So I think sometimes people may have a perception issue but people don’t consider us as that. But I think we are quite big in that space. And I think overall the challenge is to build the full architecture, the full solution rather than specialize in one technology or the other because in order to perfect your enterprise, you need a multi-layer solution with multiple technologies, not just one.

Thank you. Our next question comes from the line of Gray Powell with Wells Fargo. Please proceed with your question. Gray Powell - Wells Fargo: Hi. Thanks for taking the questions. So we continue to hear a lot of discussion among resellers and other contacts just around the consolidation theme in network security, with Check Point, how does that play out? Are you seeing customers buy more expensive appliances with higher throughput? And then, signing up for more blades being offset by lower units? Or is it a combination of both unit and blade subscription growth?

I think there are very different cases that do different things, but the short answer is we are seeing a very, very nice increase with higher level appliances with more blades. That's by far the biggest growth we have in the marketplace. I can say we’re also seeing a lot of growth in small appliances with multiple blades, which is again a great thing because you want to bring that technology not just to the datacenter, you want to bring these technologies to almost every branch office. Gray Powell - Wells Fargo: And then another topic, if I may. We’re just seeing signs that companies are increasingly look to integrate next-generation endpoint solutions with network security, how does Check Point think about that trend longer term? Do you see a need to augment your capabilities here or should we expect you to just partner with other companies on the endpoint side?

I think first we pioneered some of these ideas in the last decade, and we’ve built a very strong foundation of integration between the network and the endpoint. And to that point, I would say these ideas look great, not many people are doing much about it and we have unfortunately we are doing a lot in the space, we are more than happy to cooperate and we are cooperating with several companies in that space. We have our own offering, which is I think is the leading in that marketplace, but I think still customers look at that and decide whether the anti-virus on the endpoint that will speak to the network security and the anti-virus on the endpoint is one of them gets more technologies, but very few companies are actually upgrading the anti-virus to a different technology. It’s much as there are many interesting technologies. We implemented on the endpoint, the anti-virus is still the leading solution. So, I think this market suffers from a lack of acceptance by customers.

Thank you. Our next question comes from the line of Brent Thill with UBS. Please proceed with your question. Brent Thill - UBS: Gil, just a follow-up on that question, the endpoint vendors have effectively declared EV dead and when you look forward, do you believe that there is a bigger revenue opportunity? Many of your major competitors are making some pretty big claims that this market is going to open. Is your view that, as you mentioned, it hasn't opened, but over the next year, do you see an opportunity that you think could be bigger? And I'm curious if you could actually help us size the endpoint opportunity today for you. Is there a sense of what revenue you can allocate to your endpoint today or is it too hard to look at in that split? Thanks.

Unfortunately, I don’t see that new vendors are going to displace the existing anti-virus vendors. And fortunately for us because I think we have a lot of interesting technology, maybe fortunate for the anti-virus vendors. I think they are doing a pretty good job defending their endpoint position and there is many reasons to why they do that. I think we are seeing - I think I see a lot of potential in the new markets like mobility, like data security which are still untapped and I think this market can generate nice potential, I’m saying that because they are related to the endpoint, just maybe the new generation of endpoints are going to be more important in fact than the previous generation of endpoints. Brent Thill - UBS: And one quick follow-up for Tal, just on the buyback, can you just bring us up to speed in terms of what still remains on the existing plan?

I think around $650 million, we have enough for now. I mean we started this two quarters ago and I think it was this quarter $194 million and the previous quarter maybe $175 million, so we still have enough.

Thank you. Our next question comes from the line of Keith Weiss with Morgan Stanley. Please proceed with your question. Melissa Gorham - Morgan Stanley: Hi. This is Melissa Gorham calling in for Keith. Thanks for taking my question. A question for Gil, just quickly, if you can maybe provide an update on the traction you potentially are seeing with some of your virtualized appliances, particularly around the partnership with VMware I think you announced in the spring and then - and kind of a high level, as a datacenter becomes increasingly more software defined, how does this open up opportunities for you all?

I think that creates a lot of opportunities. I think we’ve strengthened our cooperation with VMware and I think we are doing much better now and developing newer solution, I think we’ve pioneered that market and I think we have a lot of advantages in that market given that our focus is in developing software that can run on any platform. So we are doing a lot in that. In terms of customer adoption, it’s still low. I mean I don’t see that customers are in big adoption of virtualized security or firewalls or other types of security in virtualized environment. But maybe in the future, we keep investing on that. Melissa Gorham - Morgan Stanley: Okay. Thanks and then just a quick one for Tal. Could you disclose any significant FX impacts this quarter either to the topline or OpEx?

Obviously, top line is hard to mention because we’re selling in dollars except for one location in [Japan] [ph] but in expenses, it was an increase of expenses of approximately $2 million which means approximately $0.01 to the EPS.

Thank you. Our next question comes from the line of Scott Zeller with Needham & Company. Please proceed with your question. Scott Zeller - Needham & Company: Hi, thank you. Any thoughts on the public sector and federal for the third quarter in terms of spending?

Nothing much. I think we’ve seen some successes in government accounts. Public sectors, we’ve seen some successes in education and so on and I think in the third quarter it maybe a little bit more challenging for that because it is sometimes the holiday season especially in some of these sectors, but I think overall it’s doing fine.

Thank you. There are no further questions at this time. I’d like to turn the floor back over to Mr. Meintzer for any closing comments.

All right. We thank you all for participating today with us. And we look forward to talking to you throughout the quarter, and we’ll see you in October, obviously on another call. Thank you and we look forward to it.