Greetings, and welcome to the Check Point Software Technologies Fourth Quarter 2016 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kip E. Meintzer, Head of Global Investor Relations for Check Point Software Technologies. Thank you, Mr. Meintzer, you may begin.

Thank you and I'd like to thank all of you for joining us today to discuss Check Point's 2016 fourth quarter and full-year financial results. Joining me 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 January 26. If you'd like to reach us after the call, please contact Investor Relations by e-mail at kip@checkpoint.com or phone at +1 (650) 628-2040. Before we begin with management's presentation, I'd like to highlight the following. During the course of the 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 21E of The Securities and Exchange Act of 1934 include are but 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 for 2017, demand for our solutions, and our business and financial outlook including our guidance for Q1 2017 and the full-year of 2017. Because these statements pertain to future events that are subject to various 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 release issued on January 19, 2017, which is available on our website and other Risk Factors and risks including those discussed in Check Point's Annual Report on Form 20-F for the year ended December 31, 2015, which is on file with the Securities and Exchange Commission. Check Point assumes no obligation to update information concerning its expectations and 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 the reconciliation of such results as well as the reasons for our presentation of non-GAAP information. Now it's my pleasure to turn the call over to 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 the fourth quarter and the full-year. Revenues for the quarter increased by 6% year-over-year to $487 million at the upper end of our guidance and our non-GAAP EPS grew 21% to $1.46 exceeding our guidance. Before I proceed further into the numbers, let me remind you that our GAAP financial results includes stock-based compensation charges, amortization of acquired intangible assets, and acquisition-related expenses and the related tax effects. Keep in mind that as applicable, non-GAAP information is presented excluding these items. Now let's take a look at the financial highlights for the quarter. Product in Software Blade revenues increased this quarter by 10% over the same quarter last year, reaching $288 million. We continue to see double-digit growth in our core appliances with strong transition to our new product family launched earlier this year. This quarter over 85% of our appliances business comes from the new family. The growth is coming from the small, mid, and enterprise-level security gateway. We see continued success in our Software Blade subscription with accelerated growth of 26% year-over-year. We see more customers choose the next generation threat prevention and threat extraction packages which include our advance threat protection solution. Our software updates and maintenance revenue reached $199 million representing 2% growth year-over-year. We continue to see higher discount rates versus last year but the trend has slowed down which is a good sign. Deferred revenues as of December 31, 2016, reached $1.066 billion a very strong growth of $160 million or 18% over December 31, 2015. You can see the strong growth both in the short-term and the total deferred revenues. The healthy growth came from both software subscription and the support business which had a great quarter. Revenue growth during the quarter came from across all regions. Revenue distribution by geography for the quarter was as follows: 47% of revenues came from the Americas, 38% of revenues came from Europe, the remaining 15% came from Asia Pacific, Japan, Middle East, and Africa region. From a deal side perspective, the number of customers with transactions over $1 million increased by 15% to 99 customers this quarter compared to 86 customers in the same period last year. Transactions greater than $50,000 were 76% of total order value compared to 72% in the fourth quarter of 2015. Operating margin for the quarter were strong 55% and aligned with our enhanced recruiting since last year. We can see the fruits of the investment in our results both in the core business as well as our focus area as in the advanced threat prevention and mobility. Effective tax rate this quarter was 11%. This quarter we had tax benefits relating to R&D tax credits, tax settlements, and lapse of statute of limitation on certain provisions in an aggregate amount of $21 million. GAAP net income for the fourth quarter of 2016 was $222 million or $1.31 per diluted share, an increase of 21% from the fourth quarter of 2015. Non-GAAP net income for the quarter was $247 million or $1.46 per diluted share. Excluding the tax benefit I described before results were great as well, our non-GAAP income for the quarter was $226 million or $1.33 per diluted share representing an increase of 11% year-over-year. Our cash balances reached $3.669 billion at the end of the quarter. Our cash from operations for the quarter was $183 million. Collections were very strong with DSO similar to last year. Income tax payments this quarter and for the year increased mainly as a result of the tax settlement for prior year as well as increase in advance tax payments for the current year. Net of the income tax payments our cash flow from operations for the fourth quarter increased by 4%. We continue to implement our share buyback program during the quarter we replaced approximately 3 million shares for a total cost of $248 million. Now let's take a look at the full-year of 2016. Revenues for the year were $1.7 billion, an increase of 7% from last year. Total revenues of products in Software Blades grew by 10% while our software updates and maintenance revenue grew by 3% year-over-year. Effective tax rate for the year was 18%. Next year we forecast our effective tax rate to reduce to around 17% annually, mainly as a result of expected tax rate reduction in Israel for high-tech companies. The reduction is subject to a reduction of tax regulation which is expected in March this year. We took this expected decrease into account in our guidance that Gil will provide later on. GAAP net income for the year was $725 million or $4.18 per diluted share, up from $686 million or $3.74 per diluted share in the same period a year ago. GAAP earnings per share grew by 12%. Non-GAAP net income for the year was $818 million or $4.72 per diluted share, up from $766 million or $4.70 per diluted share. Non-GAAP earnings per share grew by 13% and exceeded our guidance. Excluding the tax benefits, the non-GAAP net income for the year was strong at $797 million or $4.60 per diluted share representing an increase of 10% year-over-year. For the year, cash flow from operation reached $923 million compared to $917 million last year. Net of acquisition related payments accrued during 2015 and the income tax payment that I described before cash flow from operation in 2016 increased by 3%. During 2016 the company repurchased approximately 12 million shares at a total cost of $988 million. Now let's turn the call over to Gil for his comments on the year and the quarter.

Thank you, Tal, and good morning/good afternoon to all of you joining us on the call today. Q4 was a terrific finish to 2016. We've seen the investment we've made in our organization over the past couple of years bearing fruit. We've seen strength in business across all geographies The United States, The rest of the Americas, Europe, Asia and Middle East, and Africa. We've seen healthy growth in the number of new customers that have joined us this quarter. We enjoyed triple digit growth in our focus areas for the year, advanced threat prevention and mobility and now advanced threat prevention solutions have become a significant part of our business. Our security gateways which are the foundation of cyber security have produced double-digit growth for three quarters in a row now. Keep in mind with not all of the above trends are reflected directly in our revenues line. As many of the growth components mentioned above reside in the balance sheet where you will also find impressive double-digit growth in our deferred revenues. We have seen a nice business trend over the last two quarters. I believe we are beginning to see market share gains for increased new customer addition in competitive ways. Overall, it's a great way to begin 2017 after closing out 2016 with such a nice result. We just started off the year last week with our first sale kickoff conference for our America sales force and partners. The conference had record level of attendance with approximately with 1,700 attendees; the big four were strategies for 2017 was highly positive across the board. One of the key areas we discussed in the event was the future of cyber security and the realization that the future is already here. Predictions we've made over the past few years have all become real connected devices are integral part of our daily lives and are constantly under attack. It's hard to imagine our lives and business without mobile devices and in 2016; we clearly saw the mobile attacks aren't just starting from the future. They occur daily. Products like Hooligan that we first published in November reached over a million Google accounts and began with an Android malware and captured the main headlines of the Wall Street Journal in several geographies. Malware like DressCodes that we discovered in August demonstrated that mobile devices are used to penetrate corporate network and file service. During some period we have even seen mobile attacks approaching 20% of the overall volume of cyber attack globally. Expanded utilization of the cloud computing is also a trend which continues. Sometimes enterprise assume that the cloud is secured and don't realize that the cloud is just like traditional network, when you connect the new network or service to the cloud, you need to apply the right security measures just like you do with your own private environment. We continue to see malware becoming more and more sophisticated and just this summer we saw the National Security Agency toolkit are readily available to any hacker group on the planet. So clearly we see many of the trends that we have spoken about are already here. Yes pretty much everyone agrees that cyber security is becoming more and more critical, we can see that the very small percentage of customers are utilizing the latest technologies to block the advanced malware, protect mobile infrastructure and defend for Cloud deployments. According to our statistics between 1% to 5% of enterprises utilize these technologies. This is quite alarming, yet it highlights the growth potential ahead for our industry. Taking these medium trend into consideration, we will focus in 2017 on the future of cyber security cloud, mobile and threat prevention. We believe we have the best platform to secure every business environment in the highest level of threat prevention. Our industry leading solutions delivers an integrated architecture with a single console for security management and surprisingly the only solution that blocks malware on the first pass before it enters the network. For the industry refers to a first time prevent mode is quite unique to Check Point. With that in mind, we will keep working in 2017 to increase our market share by expanding our footprint by adding new customers and expanding our installed base. And now that brings me to our financial outlook. You know my regular caveat, there are restructure, there are changes and of course some upside opportunities that are not always reflected in what we can predict. But taking this into consideration for 2017 we expect revenues in the range of $1.850 billion to $1.900 billion. Non-GAAP EPS is expected to be in the range of $5.05 to $5.25. GAAP EPS for the year is expected to be approximately $0.70 less. For the first quarter, we expect revenues in the range of $420 million to $440 million and non-GAAP EPS in the range of $1.15 to $1.20. GAAP EPS is expected to be approximately $0.17 less. With that, I would like to thank you for participating in the call today and looking forward to hear your insightful questions.

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions]. Our first question comes from the line of Gregg Moskowitz with Cowen and Company. Please proceed with your question.

Okay, thank you very much. Congratulations on a phenomenal Q4. Gil last quarter you talked about some sales momentum following investment in sales and marketing that you had made, previously and you have emphasized that even a bit more today in your press release but those investments actually date back to the beginning of 2015 and so I'm curious as to a) why you think it took this long before seeing the sales productivity those high as really kick in and then b) more importantly whether or not do you think that those productivity gains are sustainable?

Well the answer is first [indiscernible] for about a year until we got some of the benefits of the expanded sales force and we are actually even more aggressive now on implementing sales discipline, sales methods that will continue the trend. So again I hide to be -- to try and take this positive momentum and project too much into the future. Last quarter I said one quarter trend is not enough, now we are seeing two quarter trend and the trend in the fourth quarter was even stronger. So I'm little bit more optimistic about the expected highest productivity and expected results we can see from our sales force.

Okay. Perfect. And you mentioned that all GOs were strong this quarter but Europe looked like it was extremely strong and curious if there were any territories that you would single out as being better than you would have expected?

I think this quarter again we are differentiating what I'm saying all regions were strong, I'm looking at internal sales trends that are not always showing already in the revenue recognition and Europe was strong this quarter, so no doubt about that but the other geographies were also quite strong in the fourth quarter.

Perfect. And just one quick one for Tal, suppose if there was anything to pick at with respect to these numbers and it's hard to find much but it would be that cash flow from operations was down this quarter and only flattish for all of 2016, I would think that Q1 just based on the balance sheet, is shaping up to be a very good collections quarter for you but can you give us some sense of expectation for 2017 cash flow and how that might compare to 2016?

Just to make sure that it's clear the cash flow was actually very good. I took out the increasing tax payments just so you'd be able to see the actual numbers, excluding the tax payments it's moved up 4% Q4 versus Q4 and 3% annually. Collections continue to be strong and so it's actually nothing new there. The tax payments specifically relate to advanced tax payment, the percentage sometimes change and then you pay one lump amount. This year we paid that higher advance payments but you will see less lump amounts relating to the current year. And we had the tax settlement that are related to which is included in the cash flow but excluding that it was in line and Q1 should be a strong quarter because it's collecting Q4 deferred revenues. So you are right, Q1 should be strong.

Thank you. Our next question comes from the line of Walter Pritchard with Citi. Please proceed with your question.

Hi thank you. Tal I'm wondering if you could help us understand what impact was product deferral in the fourth quarter, I think you have given expectation into end of the quarter, if you could update us on that and then if you could help us understand as we look at next year, you obviously give some of that back as it comes through the deferred revenue into revenue. But could you help us understand sort of the impact in 2017 of the dynamics you saw in 2016 with more product deferrals?

So remember that the transition has started mid this year and we are at this point of time, I said about 85% slightly higher, so we still have transition in 2017. So there will be some effect of the next year as well. We included it in our guidance, so you can see net-net in our guidance we assume somewhere between 6% to 9% growth next year. So it's relating to the transition as well.

And then on the fourth quarter, what was the impact in the fourth quarter, I think you just said it would be somewhere in the $14 million, $15 million range?

So it actually was around, you're talking about the growth of the product. The growth was above -- around $13 million. I just want to remind that it's very hard to calculate that number, so it's a theoretical number because of the mix between the products and the VSOE but in general it probably was around $13 million.

Thank you. Our next question comes from the line of John DiFucci with Jefferies. Please proceed with your question.

Thank you. My congrats to on the really strong quarter. Tal, every revenue line item was strong and including maintenance but as you mentioned you continue to see some higher discount rates. I just wanted to understand that a little bit better just to make sure we understand that's a ratable revenue line item. So we're seeing some effects from previous quarters as far as bookings. But how much of that in this quarter, how much discounting are you doing and why, is it primarily still because of foreign exchange where in Europe for instance dollar based goods are more expensive to someone in the local currencies or is it more to do with competitive issues.

I think it's the same reason we talked before. I mentioned that the rates of the increase is actually slowed down which is a nice sign. But in generally you're right remember even in Q4 the dollar continues to get strong against the main currencies, for example, the Euro and there is a link between that in the increase in the discount also against the pound, so many of the main currencies the dollars still got stronger against them. So it puts more pressure and the pressure might be reflecting as well as at the discount rate. It can be some competition in general, it can be our focus on products which are doing very, very well and it's pretty much the same reasons that we've seen the in the last two quarters.

And so I would expect we'll continue to see that as rates fluctuate in either direction?

Yes, I think, I remind you that I explained that it takes like four quarters to see the full effect in the P&L. So the fact that it's stabilizing the P&L is very nice phenomenal.

Great. Okay and if I could Gil a follow-up, Gil you mentioned cloud and how your team is focused on that and customers have to really look at it as just another network. Can you talk to us a little bit about how customers are looking at it today those that are moving to the cloud and how they are thinking about using Check Point products. Are you primarily being used in for north-south traffic or are customers when they move work to the cloud are they also using your products for east-west traffic which I know is it's used less often even on the data center but what are they -- are they just, are the cloud products for east-west traffic sort to good enough and they're more focused on using, what they're used to your products for north-south?

Okay. So first it depends to what cloud you're referring to. There is the private cloud which is in the company premises, here the network is segmented in a virtual way not -- not in a physical way and that's more the east-west traffic. We have products for that with this family knows how to work in this environment with VMware, with NSX, with Cisco ACI, and again we bring the sales umbrellas security management, security capabilities, threat prevention into the private cloud environment. The cloud environment today is doing quite well and is growing but that's still the list of the problem the company has. The bigger problem that company have or the bigger risk is with public cloud. When we put there workloads on the Microsoft Azure and Amazon AWS and wherever the issues even worth because the product, because their servers, the network I'm not behind the coated firewalls so it's not just the issue of segmentation of the internal network but basically we're putting a naked server on the public internet with a very basic if it all sometimes no security capabilities that's all and that does remind me what happened 20 some years ago, when people were connecting to the Internet without security and then they starting to get surprised with they're infected and that they're tax come through. And now the cloud environment is not exactly like the physical environment but there is a lot of similarities. And the main notion that I want to covey and we are trying to explain to customers that Microsoft or Amazon gives us a great service on the cloud but that service doesn't include the segmenting your network or protecting you from advanced threat and where is the security with every customer needs to take care of, just like when we are buying a server from a HP or Dell or any other then though we don't assume that's we're getting the security fully built in and that's a great opportunity for us because we are the only vendor that has this full platform with where the customer can use the same security policies, the same security management tools and the same high level of security that were having the inside the enterprise for the traditional network, for the data center or the private cloud and for the public cloud outside the company its premises.

Thank you. Our next question comes from the line of Shaul Eyal with Oppenheimer. Please proceed with your question.

Thank you. Hi, good afternoon and also congratulations on my end and Tal, I think that last quarter you've indicated that the refreshed appliance is accounted for over 70% of the new products as if I'm not mistaken I might have missed this number if you've mentioned it earlier but how did it -- how did it do this quarter and how did the high-end appliances that's all in all perform this quarter and I have a follow-up.

So, related to this that this quarter it was over 85% so, it's continued. And regarding the mix so, depends which quarter, this quarter there was a large increase both in small, in mid and in enterprise size so it's every quarter it's something else that drives us.

Fair enough. And I think on the SandBlast did the strong performance we have been in the recent quarters persisted and can you talk to us also about the better performing Blade this quarter and was usually you do provide some color about probably there is top four five performing Blades.

So, yes SandBlast has a great quarter and they generally speaking the growth rate of all our advanced security capabilities has come up with the quarter so, that's a very good sign that we're keeping the growth rate and actually even increasing it, at a pretty high pace right now. We are now I don't know it was too much to talk about individual Blade because most of our sales today are in packages and the packages -- clearly the package for example for what -- for SandBlast which is the highest end package is increasing share. The next generation threat prevention is also increasing share and then next generation firewall which is now the basic package is in all the other installation but it's now pretty much the standard on all new installation.

Thank you. Our next question comes from the line of Karl Keirstead with Deutsche Bank. Please proceed with your question.

Thank you. It seems that in your explanation of the pretty solid results here you're focusing on the transition to Check Points new appliances as well as the increase in sales capacity that you made that's now bearing fruit so those are relatively Check Points specific issues and maybe I just wanted ask Gil, Gil do you also think that the strong 4Q might have stemmed from overall security budgets feeling better the kind of broader uptick that might lift some of your peers as well. Thank you.

I definitely hope so. I mean, I think, again, we hear all over the security is a high priority. Again, as I said, I think that customers need a little bit of the market, not the customers need a little more education about what it means because we see the more sophisticated security technologies are used today by very small fraction of customers. I definitely hope that we are seeing some of these trends coming to fruition and that will impact as may be impact other companies in our marketplace.

Okay, thanks for that and then maybe one follow-up for Tal. Tal as you put together your 2017 guidance especially on the earnings side I'm just curious what assumptions you are making around continued sales capacity build-outs obviously the sales adds you made in 2015 started bearing fruit in 2016 so, it's clearly a driver. So I'm wondering whether Check Point plans to accelerate again the sales capacity or will it be sort of more normal as you had in the last several quarters. Thank you.

I think for now the plan is to make it in line. The fact that you see next year is the fact of the accelerated growth that we had this year. So I think if you look at our guidance you will see that I said tax rates we reduce next year to 17%, operating margin probably move slightly down and that will bring you to the guidance of the EPS.

Thank you. Our next question comes from the line of Michael Turits with Raymond James. Please proceed with your question.

Hey guys coming back to the maintenance issue, the maintenance was up sequentially you had actually thought that would be down sequentially even for a couple of quarters getting discounting. So just to come back I want to just clarify that at this point is that your expectation is that the maintenance does continue to grow sequentially and is that primarily reflective of that greater discipline and lower discounting.

I think in general the fact that the discount increased year-over-year naturally translating to the deceleration in the growth rate. The thing that it's hard to predict is how much but this quarter was very strong also an update maintenance and I said there was a slowdown in the discount which enabled it to stay actually in the same rate which I hopefully take.

Right. So again just in from the on the sequential basis the quarter-to-quarter basis that have been somewhat of a concern that you have sequential declines as your expectation at least in this point now you're sustainably on maintenance growing quarter-to-quarter?

We give the guidance for the total revenues and not line by line. So we take a few scenarios into accounting our guidelines.

Okay. And if I have one more follow-up here. You're getting the greater attach on certain on some of your Blades sounds like on most of them, how is that related to ASPs and the size of the appliances that you're selling both on the capacity sizing on a dollar basis but is that greater demand for Blades driving demand and sales of larger boxes.

We actually see a very strong increase in the unbundled Blade as well. So the fact that when we sell an appliance you have the bundle, and as we all know this year the bundle is larger than the on the old appliances. But even if we eliminate that one and we look at the growth in the unbundled Blade when customers are just purchasing the packages of the Blades detach from the appliance we see a very, very strong increase of customers adding and moving up in the package level from next generation firewall to next generation threat extraction and threat prevention. So there is a higher ASP per package as we move up.

Thank you. Our next question comes from the line of Gabriela Borges with Goldman Sachs. Please proceed with your question.

Great, good afternoon. Thanks for taking the questions. May be just a little bit more qualitative commentary if you could on the double-digit growth that you're seeing in the core appliance business line may be you could just help us directionally on how that's trended over the last year or so. And may be as well historically how it compares to what you might have seen in the 2014 and 2015 or 2016 timeframe? Thank you.

So we don't provide this quarterly but I think when we want, we discuss it specifically this year, typically we give the total product booking. We don't relate to the growth of the units and separately just because it can be a mix shift that can change it. The reason we talked about this year is exactly because there was a year that we launched a new product line and when you look at when we launched it like four years ago in 2011, we experienced a significant increase in number of units but the ASP reduced significantly. So the total result was a net zero some gain basically. At this time, we launched it in I think in a smarter way -- we launched it with a price level that fitted the increase as well in the capacities of the appliances and the result we succeeded to enjoy both an increase in the number of units and increase in the dollar value. So it was a quite successful transition for customers and for us.

That's very helpful and thank you. And as a follow-up if I could may be on the opportunity that you see had in the advanced fraud protection space, could you may be just describe a little bit on how customers are allocating budgets towards advanced fraud protection for 2017 and whether you still primarily see it as a Greenfield opportunity or whether that's a little bit of displacement as well. Thank you.

First we have some nice displacements of vendors that have been in this industry for a few years but mostly it's a Greenfield opportunity. As I mentioned today about 4% of customers actually use advanced threat prevention capabilities, a little bit more by the way buy, I mean for our customers that are buying it and are not using it yet. And that's from my perspective, it's still a Greenfield and again even these percentages that are in the single-digit are not necessarily coverage of the entire enterprise. This is customers that have purchased these kind of technology still doesn't mean that they are using it everywhere on the network on a network gateway that they have. So the opportunity there is quite large and I think that for the first time, we are seeing that this is getting to a critical mass. This is already a volume that's a nice business volume for us; we see hundreds and sometimes even over a thousand customers which we are riding every quarter. I think the approach that we have first time for event that's fully integrated into security infrastructure is relatively unique in the marketplace and I definitely hoping that's the trend that we are seeing that more and more customers will use it.

Thank you. Our next question comes from the line of Sterling Auty with JPMorgan. Please proceed with your question.

Yes, thanks, hi guys. I'm wondering looking at the trends in gross margins through 2016, I'm wondering how much of that trend was because of the move into the new appliance platform, is there the potential to see gross margins actually start to improve in 2017 as you may be get a little bit of volume and scale on the new generation of appliances?

Actually the gross margins remain pretty much the same if you are looking at the product, you can see somewhere between like 82% and the same with subscription, same with Software Blades, the mix between products in Software Blade and support is the one that can create some change in mix. But even if you look at this quarter, you see 88.2% gross margins for the total versus 88.3%. So pretty much the same and I think hopefully it is pretty consistent.

I'll be -- I'll just be very blunt. I think my focus is not on improving a few basis points on the gross margin. The focus should be on delivering the best value to the customers and winning new customers and new gateway. So I think we are pretty efficient on managing the margins but that's not the focus, the success for Check Point will come, I mean it's let us put it this way. There aren't too many points we can squeeze out of our P&L right now. What we can do is actually grow more and that should be our focus and that's what we are driving the sales force to do is growing the deals we're working on especially approaching new customers and I think in the last quarter, I mean I think you've heard from me on this call, I'm very, very positive about the way we started executing on that.

Okay, I think that's very fair. One follow-up may be to a earlier question if I look at the benefits at the lower tax rate drops to the bottom-line it doesn't look -- it doesn't feel like all of it is actually showing up in the EPS guide which would seem to suggest may be some investment in the OpEx lines to may be support growth as you said. Where should we think about that growth coming in terms of sales and marketing versus R&D and maybe by geography?

So, you are right that's what I was relating before you're absolutely right. I think the reduction in the tax enabled also to continue to invest, I said that the growth should be pretty much in line for next year. The reason you see a some operating margin reduction as a result of the investment of 2016 that is fully translated on in 2017. I think the growth is expected across the board but mainly in sales and marketing and in R&D.

Thank you. Our next question comes from the line of Andrew Nowinski with Piper Jaffray. Please proceed with your question.

All right thanks. You talked about increase in new customer wins, can you give us any color on which vendors you put most frequently in those new customer wins.

I mean the usual first six are our competitors but they don't want to get into this, the main dropping and [indiscernible] of one another. We -- you know the players in our industry and I think we've competitive wins against all of them.

All right, fair enough. And then your CapEx has remained relatively consistent each quarter I guess you expecting large project in 2017 that could drive up CapEx from the current level?

Actually if you recall the only thing is the building that we're investing and suppose to finish in 2017 right so, last year you saw an increase in the CapEx most of it is related -- most of the increase relating to the building and for next year it's probably going to be -- the building is remaining above probably $25 million which is completely in line with our original forecast that's the last year. So in total I'll say you should expect the increase in the CapEx is relating to the building.

Okay, just one last question I guess. You had the highest selling growth you've had in five years here I guess would you characterize that as an inflexion point you're doing [indiscernible] or were there just some large deals in the quarter that may boost that growth rate. Thanks.

We're definitely hoping that's an inflexion point. Again I'm always cautious about trying to project from the past to the future. The trends that I'm seeing are definitely positive.

I would just say that even when you look at the short-term, I would say that long-term can fluctuate right. But if you look at the short-term you can see what's very strong. So short-term typically is not relating to one large deal it's more the run rate so it's a good sign on that line as well.

Thank you. Our next question comes from the line of Tal Liani with Bank of America. Please proceed with your question.

Hi guys. Two quick questions, number one is just sounds last every quarter, last quarter you said roughly $20 million in billings and it grew triple digit how was the adoption this quarter and if you can give us a little bit more color. Second question is more of kind of outlook for 2017 on the sending your plan, last year you invested heavily in sales and marketing and go to market and you also had new product, what are the focus areas for 2017 are there any special verticals you're going out there, you are increasing kind of focus on or products or anything else. Thanks.

So first of all Tal, we've seen tremendous success in Q4, the billing was much higher triple digit growth I mean everything continued in the same trend or slightly even better. For 2017 we are -- the focus area technologically are cloud mobile and threat prevention and advance threat prevention and that's a big focus for us. The cloud by the way is something that's new. Last year, we focused right, and we have cloud solution, we built infrastructure for that, we build and filled enablement activities but next year we are putting a much more emphasis on the cloud and we are adding into the mobile and threat prevention that's where the focus and success of last year. In terms of vertical we're actually seeing success in many different verticals including local government, healthcare. We're actually seeing a lot of these opportunities from these verticals finance of course remain our largest vertical and it continues to be that way.

And Gil when you say Cloud do you mean more selling through Cloud carriers, Cloud providers or more selling to enterprises helping them more with their hybrid cloud environment?

It's mainly selling to enterprises, a lot of these sales and marketing activities are done in conjunction with the Cloud providers. We have nice cooperation with the large cloud providers.

Thank you. Our next question comes from the line of Fatima Boolani with UBS. Please proceed with your questions.

Good morning. Specific one for Brent. Thank you so much for taking the questions. May be a first one for Gil, Gil in your prepared remarks, you did make a specific mention around the nice increase that you did see in new customer wins. I'm wondering if you can talk about any pattern or behaviors that kind of stood out from your new customer acquisitions in the way they buy or make purchasing decisions or what they are buying and then a follow-up for Tal if I may.

I don't have any insights, too much insight on that, I think we've seen the regular patterns I think some of it relates to the better perception of the Check Point has in the marketplace and the increased brand awareness that we have and some of it is related clearly to our focus is sending people to speak to new customers, what we do best we see tremendous results actually by the way did some brand awareness campaign and brand awareness surveys and we have seen with our brand awareness has went up quite nicely and actually our brand values and it's actually quite strong especially with non-Check Point customers or even with non-Check Point customers.

That's helpful and a question for Tal, just with respect to the operating income and operating margin line, can you help us quantify the impact from currency devaluation with the Pound being down as much it wasn't just trying to understand how much that would have contributed to your operating margin results?

Well you remember the dollar price listed in dollars. So when you look at expenses, it was pretty minor. Year-over-year all the currencies the changes in dollar didn't make a big change, very minor that we had from the beginning of the year. When we look at the revenues, it's hard to calculate because while we price in dollars, we saw significant increase in the discounts and that's why I was relating to it. So UK is one of the big countries for us and if the customers lost the pound value or Europe in general as you see from our numbers it's over 40% of our business so as the Euro is getting to par value with the dollar, that's a big effect on our customers. So this result actually shine when you take into account the fact that the currency lost quite a lot of percentage even just in Q4. So but we don't calculate it because I mean I can calculate it for you, you're probably going to come to an effect of more than $100 million in general that's why I don't provide it because it's an over number we are trying to deal with FX and not to make it reasonable.

The negative impact of $100 million.

Of course, of course the negative impact yes. So it's actually we did great results even though the currency and the revenues is putting a lot of pressures on our customers.

That makes sense. A quick one for Gil, if I can sneak one in. R80 has been GA now for a year, can you help us understand what proportion of the base has kind of moved up to R80 and to what extent you think that has helped with the quick adoption of the new product family and that's it from me. Thank you.

So R80 the security management portion has been in markets for about a year and I think the acceptance is nice and we are getting a lot of very good feedback. We filled R80 the gateway side which is and that's still not out and expected to be out soon. So that can drive even more adoption or really unveil all the sanctions that we have in diversion, so it comes not just to the management side but to the gateway side as well.

Thank you. Our next question comes from the line of Keith Bachman with BMO Capital Markets. Please proceed with your question.

Hi many thanks. I wanted to ask you about your outlook for the market and FY 2017 in a couple of different dimensions. Number one some of your competitors have talked about perhaps some excess capacity being out there from the buying patterns associated with calendar 2015, 2016. Just wanted to hear if you think at this juncture as we look at calendar year 2017 is there excess capacity and then b) if you could talk a little bit about your wins and how that's embedded in your outlook, why are you winning and what's causing those. And then the final part of that is discounting, you mentioned the pace has been abating, is I'm curious if that -- if your outlook is strong for 2017, why is there any outside of FX. In other words is the competition using in your view discounting to try to win deals or is it are they in fact responding to FX as well. So a lot of the three questions there as it relates to your calendar year outlook for the industry. Thanks.

I think it's very hypothetic. Clearly in our industry there is a lot of companies not just the big ones, it's thousands of site-ups that employ many people and there is a lot of selling capacity in the marketplace. As it relates to Check Point, I don't think that we have excess capacity, I wish we could have even more people and utilize them in the right way and again I think the key for us is not the number of people but the methodology and the process and how we work. Let's say I think once we get say all of it and once we get improvement on that, I won't be shying from adding even more people because I think that we have -- we have a tremendous opportunity still out there in the marketplace. Discounting, we are in a competitive market, discounting is used. I don't think that's the main issue but prevents anyone from achieving better results but clearly there is a competitive market and people are using also discounting as sales tactics.

Okay. If you could just talk a little bit about your wins and you mentioned you thought you gained incremental market share this quarter, if you could talk a little bit about wins, why are you winning those shares I assume is discounting helping those wins or what's the technology advantage that you think is driving those incremental opportunities for you. Many thanks.

Discounting is something necessary to win but it's definitely not the reason we are winning. The reason we are winning is clearly the technology is the first the fact that we can do security consolidation, it's the security management and again it's not just management because it is easier, the technical aspects of it, it's the operational efficiency that the company has seen that. With Check Point, you can get and you get external data from companies like NSS on average that would tell you that you would need 50% less staff to manage a Check Point security environment, when a competitor security environment and when you add to get the consolidation of multiple security features it is even better. The quality of product, the quality of security is also coming up quite strongly by customers. I think that's the main tool I mean from all our surveys and we check that and we do even quantity of surveys with customers on that. These are the operational efficiency and level of security are the two primary factors that's coming from customers to why to choose Check Point.

Thank you. Our next question comes from the line of Philip Winslow with Wells Fargo. Please proceed with your question.

Hi thanks and congrats on a great quarter and outlook. I just actually wanted to rewind the clock back to 2012 and you guys have talked about sort of on average maybe five year sort of refresh cycles for hardware and if I think back to 2012 that was when you guys talk about the trading down effect. But it's very strong year from a unit perspective. So as you think about 2017 and sort of potential refreshing that big uptick that you have in units, how are you kind of contemplating that in your guidance what affect do you, do you think you see from sort of potential refresh of that increasing units in 2012.

Yes, I was so remember that the price in the budget the customer had back then. The units increased when we take the entire four quarters you see that it was a very strong double-digit in the beginning and then it started to move down and they actually moved up. So the full year actually ended up a normal year where we finished the year of the transition. I will tell part of the guidance that we provide that's why you have the range and there is two things that affects one is the number of units and second the ASP. The higher the unit, the lower the -- the higher the ASP uses the lower the quantity. So it's really hard to predict the mix of the units and it's whole part of the range of the guidance that we provided.

Thank you. Our next question comes from the line of Shebly Seyrafi with FBN Securities. Please proceed with your question.

Yes, thank you very much so I just want to reconcile your security gateway business you say with that double-digit I assume year-to-year. With your quantitative license growth which was only 2% year-to-year can you just talk about the puts and takes in that product and licenses outlined.

Sure, that's relating to the transition that we had between the old appliances and the new appliances. The new appliances include a bigger Software Blade package so while total ASP per unit increased significantly and that's what I was relating in double-digit, some of the dollar values been deferred and going to be deferred revenues and is recognized over four quarter and that's what Gil and me was relating to that you can see a lot of it going to the deferred revenue where you see the 18% growth.

Okay and separately according to my geographic segmentation I'm getting that your with rounded estimates because you only provide rounded percentage of your revenues that your Americas segment grew 4% year-to-year Q4 versus 89% the prior two quarters. I'm just wondering looks like you did very well in Europe whether you are seeing a slowdown in the Americas.

So no, the answer is definitely we're seeing revenues; revenues can be effective by a few accounts rules. The main things so you see some quarters can be higher and some quarters in lower, you actually see the APAC was very strong then Europe then the U.S. you are right in the revenues but what Gil related to which is the business Americas was actually very strong.

Very strong, yes.

Thank you. There are no further questions at this time. I would like to turn the call back over to Mr. Meintzer for closing remarks.

Thank you, everybody, for joining us today and we look forward to seeing you during the quarter out on the conference circuit and during visits we do and looking forward to having a good year with everybody. Thank you, and have a great day. Bye-bye.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time, Thank you for your participation and have a wonderful day.