Kip E. Meintzer - Check Point Software Technologies Ltd. Tal Payne - Check Point Software Technologies Ltd. Gil Shwed - Check Point Software Technologies Ltd.

Anne M. Meisner - Susquehanna Financial Group LLLP Philip Winslow - Wells Fargo Securities LLC Sterling Auty - JPMorgan Securities LLC Andrew James Nowinski - Piper Jaffray & Co. John DiFucci - Jefferies LLC Brad Alan Zelnick - Credit Suisse Securities (USA) LLC (Broker) Gregg Moskowitz - Cowen and Company, LLC Ken Talanian - Evercore ISI Walter H. Pritchard - Citigroup Global Markets, Inc. Jonathan F. Ho - William Blair & Company, L.L.C. Shaul Eyal - Oppenheimer & Co., Inc. Karl E. Keirstead - Deutsche Bank Securities, Inc. Fatima Boolani - UBS Securities LLC Keith Frances Bachman - BMO Capital Markets (United States) Keith Eric Weiss - Morgan Stanley & Co. LLC Rob Owens - KeyBanc Capital Markets, Inc. Saket Kalia - Barclays Capital, Inc. Michael Turits - Raymond James & Associates, Inc.

Greetings and welcome to the Check Point Software Technologies Q3 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. An interactive question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I'd now like to turn the conference over to your host, Kip E. Meintzer, Head of Global Investor Relations for Check Point Software. Thank you, you may begin. Kip E. Meintzer - Check Point Software Technologies Ltd.: Thank you, Matt. I'd like to thank all of you joining us on Halloween to discuss Check Point's 2017 third quarter 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 November 6. If you'd like to reach us after the call, please contact Investor Relations by email at kip@checkpoint.com or by 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 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 Exchange Act of 1934, include or but not limited to statements related to Check Point's expectations regarding our business and financial performance; the introduction of new products, programs and the success of those products and programs; the environment for security threats and trends in the market; demand for our products and services; our expectations regarding taxes; and our business and financial outlook including our guidance for Q4 2017. Because these statements pertain to future events, they 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 press release issued on October 31, 2017, which is available on our website; and other factors and risks including those discussed in Check Point's most recent Annual Report on Form 20-F, 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 the financial results. Tal Payne - Check Point Software Technologies Ltd.: Thank you, Kip, and thanks, everyone, for joining us today. I'm pleased to begin the review of the third quarter. Revenues for the third quarter increased by 6% to $455 million at the high end of our guidance and our non-GAAP EPS grew by 15% to $1.30, exceeding the top of our guidance. Before I proceed for further into the numbers, let me remind you that our GAAP financial results include stock-based compensation expenses, 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 and software blades revenues increased this quarter by 6% over the same quarter last year, reaching $249 million. Our software blades subscription revenues continue to be strong with 22% growth year-over-year, reaching $120 million. Revenues from subscription now represent 26% of our revenues. The acceleration we experienced in the last year was a result of the richer software blades package bundled into our new product line mid last year, reached its anniversary and started, as expected, to converge to normalized growth rates. Our software update and maintenance revenues were strong and reached $206 million, representing 7% growth year-over-year. Deferred revenues as of September 30, 2017, were $1.36 billion, representing a growth of $148 million or 17% over September 30, 2016. Revenue distribution by geography for the quarter was as follows. 45% of revenues came from Americas. 37% of revenues came from Europe and the remaining 18% came from Asia Pacific, Japan, Middle East and Africa region. Revenue growth came from across all of our regions, with U.S. being softer than the other regions. From a deal-size perspective, the number of customers with aggregated transaction valued over $1 million were 60 customers this quarter compared to 65 in the same period last year. The decrease came from the Americas, while Europe showed a nice increase. Transactions greater than $50,000 were 74% of total order value similar to the third quarter of 2016. Operating margins for the quarter increased to 55% from 54% last year. Our income tax rate for the quarter was 18%, similar to the previous quarter. GAAP net income for the third quarter of 2017 was $193 million or $1.16 per diluted share, an increase of 18% from the third quarter of 2016. Non-GAAP net income for the quarter was $250 million or $1.30 per diluted share, an increase of 15% from third quarter of 2016 and higher than the top end of our guidance. Our cash balances reached $3.865 billion at the end of the quarter. Our cash from operations for the quarter was very strong and increased by 21% to $260 million. The increase related mainly to strong collections from customers, as well as a reduction in the tax advances paid to the authorities in Israel. The tax advances reductions relate to the change in tax rates in Israel from 16% to 12% for the technology companies based on the new regulations that were adopted earlier this year. We continue to implement our share buyback program during the quarter and repurchased approximately 2.3 million shares for a total cost of $250 million. During the quarter, we have announced an extension of our buyback plan to repurchase up to $250 million a quarter, up to an aggregated amount of $1 billion. Now let's turn the call over to Gil for his comments. Gil Shwed - Check Point Software Technologies Ltd.: Thank you, Tal. As you heard from Tal, our results for the third quarter were good, with nice revenue growth of 6% and non-GAAP EPS growth of 15%. We were able to absorb some of the effects of Yom Kippur end of quarter and revenues were higher than expected, and of course, if you look at our financial measures like operating margin, earnings per share and even cash flow, you can see we posted very good results. In the past year, we've seen the continuous evolvement of the threat landscape. The risks that every organization faces have been demonstrated for almost every possible angle. We've seen large-scale attacks. We've seen attacks that originate from IoT devices. Our researchers have revealed some mega attacks on mobile infrastructure. Cloud environments have been breached, exposing massive amounts of data. Just like we anticipated, attackers used exploits found by the hacker community as well as exploits and exploitation tools that were developed by state-sponsored organizations. And these attack didn't leave anyone behind from businesses to hospitals to national infrastructure, everyone has been impacted. The purpose of this prologue is not to scare you, but to demonstrate the need for the highest grade of security in every organization. This is where the Check Point Technologies shines. Check Point has demonstrated year-after-year that our security technology remains unmatched. The past few quarters have continued to demonstrate this leadership. Last quarter, we launched the Infinity architecture, the first and only architecture that provides comprehensive security for the enterprise. But more importantly, Check Point Infinity also demonstrates how the various security components communicate with each other, share real-time threat intelligence and are able to protect against the most sophisticated attacks. The superiority of the security technology we have is acknowledged by independent third-party evaluators. Check Point remains the only vendor with 15 consecutive NSS recommended rating. Not one of our competitors has achieved this feat, and some of the more vocal competitors have consistently failed to achieve the recommended rating. But most important is our ability to stop the attack from making it into the organization. Most of the security competitors allows malicious code to enter the organization and detects or blocks it after the malware has already caused the damage. Our SandBlast technology is the one which consistently provides what we call first-time prevent, the ability to block attacks from entering the organization. SandBlast Threat Extraction that cleans files in real-time is the key element in the arsenal of our security technologies. Our technologies like CPU level threat prevention, Flash 4 (10:07) that addresses vulnerabilities in Flash 5 and many more are all unique to Check Point. Remember, not all security products are created equal and I believe that our security technology remains way ahead of the market. Let me give you a simple case study of a customer win this quarter. A financial institution in the America, which was actually one of the few customers that did buy Advanced Threat Prevention solution. Unfortunately, for them, it wasn't from us. They implemented the solution, and despite the promises of stopping threats, their HR department was infected with ransomware. When we were called to the site, we found that this ransomware was just the tip of the iceberg and found more undetected breaches. The customer was so angry with the unfulfilled promises and breaches, they decided to make the switch to Check Point. Remember that the number of customers using advanced security technologies is still in the single digits, and therefore, I'm very optimistic on the longevity and the potential we have to consolidate the marketplace. Our strategy remains to be focused on security and delivering through great management capabilities and a consolidated architecture with an able organization to achieve elevated level of security that lower TCOs. While I remain very positive about the market potential and our leadership position to address the security needs of customers, I'll be a little bit more cautious on our near-term execution. In the third quarter, we achieved good results in Europe, not a trivial task for a summer quarter. In the United States, we did experience some execution challenges. We started the year expanding our sales force in the U.S. to provide broader coverage and more segmentation by customer. We're executing well on this plan, but the changes we implemented resulted with many new people in key positions. As we build projection into the fourth quarter, we took into consideration my normal caveats about the fact that it is hard to predict the future and that there are multiple factors that can result in better or worse results. We also included the effect of the changes that we made in the U.S. sales force this year, and the time it will take to reach its full potential. With all the new people in key position in the U.S., our execution risk becomes higher and it is hard to predict whether we will be able to repeat the terrific fourth quarter that we had last year. Also keep in mind that in the third quarter we were able to absorb some of the Yom Kippur end of quarter effect and these numbers that were partly moved from the third quarter to the fourth quarter were actually achieved in the third quarter. So we will reuse some of that, so we shifted revenues from the Q4 projection. As a result of this factor, we expect revenues in the range of $485 million to $525 million. Non-GAAP EPS is expected to be in the range of $1.45 to $1.55 per share. GAAP EPS is expected to be approximately $0.15 less. With that, I'd like to thank you once again for joining us on the call today. Wish us a strong fourth quarter and open the call for your insightful questions.

Thank you. At this time we will be conducting a question-and-answer session. Our first question is from Anne Meisner from Susquehanna. Please go ahead. Anne M. Meisner - Susquehanna Financial Group LLLP: Yes. Hello. Thank you for taking my question. Tal, I was wondering if you could sort of quantify maybe the impact you saw to deferred revenue at the end of the quarter due to perhaps some of the renewals getting pushed into Q4. I assume there may have been a Yom Kippur impact to the renewals at the end of the quarter. Maybe you can kind of talk about what you saw there and maybe did some of it sort of shift into Q4? Or was it just sort of a weaker deferred revenue quarter? Tal Payne - Check Point Software Technologies Ltd.: Sure. So as Gil said, we saw that our numbers came up higher than expected in the revenues. We were $6 million above the adjusted number after Yom Kippur estimate that we provided. So we were able to mitigate some of it, but not all of it. You can see it also in the deferred revenues. As to a specific number, it is very hard to calculate what would have been the number without Yom Kippur So when I calculate this part of the forecast, it's easy to say – and if you remember we went through the numbers, and I said a lot of the booking comes in the last few days, and this time Yom Kippur was in the last two days of the quarter. So when I calculated theoretically, I gave you the number in the previous quarter. And if you recall we said that just the effect of the product would be $30 million, but we took into account only $15 million in our guidance and it ended up to be lower. When it comes on the renewals, it's much tougher. We had good renewal rates. We see stable installed base, we see stable renewal rates. So we didn't see a material effect there, but it might have affected the large transactions. As you can see clearly, even from the numbers I just reviewed with you, that we had less number of large deals and a lot of the large deals are relating to update and maintenance and to long-term contracts. Anne M. Meisner - Susquehanna Financial Group LLLP: So there weren't specific deals booked sort of on the last day of the quarter that just weren't processed and, therefore, weren't recognized, on the renewals? Tal Payne - Check Point Software Technologies Ltd.: No. We actually – what came, we were able to process in the deferred revenues. Anne M. Meisner - Susquehanna Financial Group LLLP: Got it. Okay. Great. And then Gil, a quick question for you on the Infinity architecture and the new R80.10 version of the management platform. Now it's been in the market for a couple of quarters. I'm just wondering, if you could give us any sense of what you're seeing in terms of any additional blade pull-through that, that's sort of driving that's maybe beyond what the new appliances themselves has been responsible for. So in other words, is the – sort of the architecture and the management capability motivating customers to adopt more of these sort of comprehensive blade packages, such as the NGTX bundle? Gil Shwed - Check Point Software Technologies Ltd.: We are seeing very good acceptance of R80.10. I think we're seeing a lot of good feedback from customers. We are seeing more customers that are taking more and more security capabilities and signing up for the NGTX or the SandBlast package. So I think this is going well. We are discussing with several large customers the ability to deploy the full Infinity architecture. There are some new kinds of deployments that we haven't done before. So maybe it's too early to discuss them but we are – but we have some opportunities around that. So, overall, I think I'm pretty happy with what we've done. Remember, at the tip of the iceberg, from announcing an architecture and us being confident about what we do until the last salesperson and every customer knows about it and internalize it, it's a long process that takes way more than one or two quarters, probably a year or two, but I think we are definitely on the right direction. And as we head into 2018, I think it's one of the most important elements in what we want to convey to customers and partners. Anne M. Meisner - Susquehanna Financial Group LLLP: Okay. Perfect. Thank you very much.

Our next question is from Phil Winslow from Wells Fargo. Please go ahead. Philip Winslow - Wells Fargo Securities LLC: (17:48) taking my question. Tal, you mentioned on the call just a normalization in terms of just the growth rate in software blade revenue this quarter, and as you mentioned as a result of just the richer mix that you saw blade packages mid last year from the new product lines. Wondering if you could give us just some more color on this – in terms of how you kind of expect this to play out in kind of over the next four quarters as you do sort of the full anniversary, make it apples-to-apples? Is it sort of – did you start see churn go up? Or was it just simply a normalization, call it, of attach rates? Tal Payne - Check Point Software Technologies Ltd.: So actually, the attach rates are pretty good and the renewal rates are strong and even stronger than historically. So the actual utilization is getting better. When you talk about the accounting, and if you recall in the mid of last year when we bundled the NGTP package into the new appliances and a bigger portion went into the subscription, we saw strong acceleration. And when I took out the numbers, if you recall, I told you the numbers are around – depends which quarter, 17%, 18%, 19%. So this quarter you saw it move towards the 22%, and then obviously in the next few quarters, it's going to go back to the normalized rate. It's still very strong. It's still very fast but it's not getting the acceleration as a result of the push for the new product. Philip Winslow - Wells Fargo Securities LLC: Got it. All right. Thanks, guys.

Our next question is from Sterling Auty from JPMorgan. Please go ahead. Sterling Auty - JPMorgan Securities LLC: Yes, thanks, guys. Let's start with the U.S. weakness that you saw. And specifically can you give us a little bit more detail in terms of some of the changes; in particular I'm curious about some of the talk we're hearing through the channel around, say, sales leadership changes? Gil Shwed - Check Point Software Technologies Ltd.: I think we've implemented a lot more segmentation for different customer segments and a lot more people to focus on the different segments, more support for the channel. I think it's very important for us to work with our channel partners. And I think our focus in every – almost every possible area that this resulted in a lot of new people in all the levels, the management level, in the – I mean, in the sales rep level and so on. And for some of these people or many of them, it takes time to ramp up to the level of productivity and to the level of results that we would expect. It takes a little bit longer than I would like it to happen, but I think we are building the right structure and the right sales force and I think we want to make the right changes to capture the market opportunity. And I think we're making good progress in that to make it happen. Sterling Auty - JPMorgan Securities LLC: I think most people think that sales changes take three quarters at a minimum to complete. So can you give us a sense of when you feel that you completed those changes so we can think about where that clock starts ticking? Gil Shwed - Check Point Software Technologies Ltd.: I don't think that the changes are ever over, but I think that most of the changes that happened to us happened around the second and third quarter. It's an ongoing process, but the second and third quarter. So we can calculate what it's like three quarters from that standpoint. Sterling Auty - JPMorgan Securities LLC: Okay. And one last question, Tal. Looking at the EPS guidance for the fourth quarter, it's still good relative to what we're expecting despite maybe lighter than expected revenue outlook. Where is the additional leverage coming in? Do you expect it to be in sales and marketing like it was in the third quarter? Tal Payne - Check Point Software Technologies Ltd.: So I think it's a combination, but it's mainly in the taxes. So if you look at the margin, the margin this quarter was better than expected. It was 55% versus the 54% that was the year before. And probably it will be in the similar range also in Q4, but the tax is expected to be slightly lower. Q4 is typically a quarter that the taxes can vary as a result of end of year lapse of some laws in different countries. Sterling Auty - JPMorgan Securities LLC: Fair enough. Thank you, guys.

Our next question is from Andrew Nowinski from Piper Jaffray. Please go ahead. Andrew James Nowinski - Piper Jaffray & Co.: All right. Thanks for taking the question. So I just had – me starting with billings. If we add back, call it, $15 million, $20 million of revenue for the Yom Kippur impact, it looks like billing growth rate would have been just 4% to 5%, which is below the industry – overall industry growth rate. So can you help us understand why – sort of decelerating, why we should not assume that this is from increasing competitive pressure? Gil Shwed - Check Point Software Technologies Ltd.: I'll let Tal analyze more on the numbers, but from – I think, I don't feel an increased competitive pressure. I think we are in a very competitive environment and there's no doubt about that. And I think as I've said before, I would attribute some of our challenge – most of our challenges to our own execution and the long-term changes that we are making that I think are very, very important. I think you also have to keep in mind that if you look at some of the competitive data, and again, that's not what I attribute our changes, you do see a much lower growth rate on the product side with our key competitors. But again, I attribute to what we have to our own execution, especially in the U.S. Andrew James Nowinski - Piper Jaffray & Co.: Understood. And then I just want to ask a question on operations as well. That looks like it also continues to increase, and is that just a result or a function of your bundling strategy, or actually are more customers signing longer term deals? Tal Payne - Check Point Software Technologies Ltd.: I'm not sure I heard your question. Can you repeat it please? Andrew James Nowinski - Piper Jaffray & Co.: Yeah. Sure. Sorry. So I was wondering on duration. It looks like duration continues to increase. I'm wondering is that just a result of your bundling strategy or are more customers signing longer term deals? Tal Payne - Check Point Software Technologies Ltd.: There's no material change there. So I will say the long term can fluctuate depends on large deals that are coming in. You're right, the subscription – a certain portion of the subscription coming with two and three years of contract, but the proportion didn't change or the duration – the average duration didn't change significantly in the previous quarter. Andrew James Nowinski - Piper Jaffray & Co.: All right, thanks, Tal.

Our next question is from Michael Turits from Raymond James. Please go ahead. I'm sorry, Michael, your line is live. And we're going to the next question... Gil Shwed - Check Point Software Technologies Ltd.: Next caller.

we're going to the next question from John DiFucci from Jefferies. Please go ahead. John DiFucci - Jefferies LLC: Thank you. Gil and Tal, we understand the uncertainty out there but – and there was a little upside this quarter but the guide seems like it was more than just that upside and you do mention the U.S. execution issues but there've been some soft guidance from some of your peers, namely Fortinet. I guess what effect does the demand environment have on your guidance? And with the benefit of hindsight here, do you think that third quarter, sort of year-over-year impact, may have had more to do with the demand environment than you would've anticipated rather than the Yom Kippur holiday? Gil Shwed - Check Point Software Technologies Ltd.: I think the major effect that we have is again is our execution. It's not anything else. Again, the Yom Kippur is factored, we gave I think the outcome of that and we are over it. And when we look at the projection for Q4, the market opportunity is there. I have no doubt about that. I think that there are some – on one hand, cyber security is very high profile. Everybody talks about it. Everybody looks at it at a very high level in the organization. On the other hand, organizations are not – it's still small part of the organization IT budget On most organizations, there's no big increases to the overall IT budget including security. So security does compete for the budget. And I think for that matter, things don't change. I think the fact that we are coming up with more evolutionary ideas, with Infinity consolidating multiple technologies and so on is a major factor that can make us win. On the other hand, it will take us much more time because instead of completing in silos and selling individual product, we are introducing to the organization the concept of buying a more consolidated architecture. That takes much, much longer because, in most cases, it's not the same buyer. It's different buyers within the IT organization and we have to convince them to work together and not just to do project-by-project. I think it's the right strategy long-term, not – by the way, not just financially and not because of the TCO effect and so on, but mainly because it delivers a higher level of security. And that's the only way companies can get the security level that they deserve. So I mean, beyond the financial implication, I think my focus is in delivering the best security and I think that's what we're working on. John DiFucci - Jefferies LLC: So do you think – and that all makes sense. It makes total sense. But do you think that given the new Infinity platform, do you think that – it doesn't seem like it would, but could that be causing a pause in customers' decisions? Gil Shwed - Check Point Software Technologies Ltd.: No, I don't think it has a major – again, I think there's a lot of things which we are doing. When I analyze the major effects, I said it's our execution. We need to go and meet more customers and win more of them and there's plenty of more things we can do that depends on our own execution. Some of them we are doing quite well. Some of them we should do better. Some of them depends on and again, I think a lot of it is the amount of new people that we have and so on. Again, there are many, many other factors, but the major factor still lies with our own execution. John DiFucci - Jefferies LLC: Thank you, Gil.

Our next question is from Brad Zelnick with Credit Suisse. Please go ahead. Brad Alan Zelnick - Credit Suisse Securities (USA) LLC (Broker): Thanks very much guys. Gil, we hear a lot of great things about your technology from partners we speak with, but more recently we also hear of aggressive pricing from competitors. Can you speak to what's changing in the channel and what you're seeing in terms of pricing and other competitive dynamics? Gil Shwed - Check Point Software Technologies Ltd.: I think we are in a competitive environment for many years now, so it's not new. We have competitors that made the price very main or one of – not the main, but one of very main factors. I think we also know how to compete on that. I think what we need to do better is actually compete less on price and then – and show more the value of security. And I think the example of it I gave of this financial institution, which is actually, by the way, a very – one of the more advanced customers that wanted to implement and wanted to invest and it is very, very important for customers to understand that they need the best security and not all security products are equal and you shouldn't compromise on security. And I think we need to differentiate much more in that than on the price. Brad Alan Zelnick - Credit Suisse Securities (USA) LLC (Broker): Thank, Gil. And also one of your competitors mentioned specific weakness in the service provider market on its last two earnings call. What particularly are you seeing there? And specifically, are they taking more vSEC? And more generally, are you seeing a trend in customers looking to substitute virtual for physical security? Gil Shwed - Check Point Software Technologies Ltd.: Actually, our cloud security portion of the business did quite well in the third quarter. So we did see very nice growth rates there, much higher than any other segment that we have on the business. It's still small numbers so I didn't mention that as a major factor in any direction, but it has shown a good catch-up. Service provider, I don't think that I have one answer. In some areas of the world, we had very good results in service providers. In some cases, we signed some very nice strategic deals with service providers. In other areas, I think it's still in progress. In the U.S., for example, we have a completely new service provider team, and again, it's one of these things in execution that I can say. If we execute right in the future, we will see the good results of it. Brad Alan Zelnick - Credit Suisse Securities (USA) LLC (Broker): Thanks Gil and my last.... Sorry? Kip E. Meintzer - Check Point Software Technologies Ltd.: Hello? Brad Alan Zelnick - Credit Suisse Securities (USA) LLC (Broker): Yeah. Just one quick one for Tal. Tal, can you help us on Q4 deferred revenue trends in light of the execution issues we've talked about this evening? How should we be thinking about Q4 deferred revenue relative to typical seasonality? Tal Payne - Check Point Software Technologies Ltd.: As you know, we don't guide on deferred revenue, deferred – but the general trend that you see typically is that deferred revenues increasing in Q4 and then typically moving down in Q1, Q2 and Q3. So that's the typical trend. So I would assume the regular typical trend. Brad Alan Zelnick - Credit Suisse Securities (USA) LLC (Broker): Excellent. Thank you so much.

Our next question is from Gregg Moskowitz from Cowen and Company. Please go ahead. Gregg Moskowitz - Cowen and Company, LLC: Okay. Thank you. Just getting back to the U.S. softness. It looks like it was more skewed to large enterprise, but I'm curious if there were any verticals that were particularly weak this quarter? Tal Payne - Check Point Software Technologies Ltd.: No, not really. I think the main thing – you're right, you saw the number of large deals, they are moving down from 65 to 60 and the reduction came from the U.S. Actually Europe had a nice increase. So yes, it's mainly the large deals. Q3s typically don't carry large deals. Q3 last year was quite the nice deals in the U.S. with large deals. So you're right in that regard. Gregg Moskowitz - Cowen and Company, LLC: And, Tal, what sort of tax rate are you expecting for Q4? Tal Payne - Check Point Software Technologies Ltd.: Again, Q4 can fluctuate easily because it's a quarter that many provisions are being reviewed or released or increased and so on. The assumption that we took here is approximately 14%, 15%, something like that. Gregg Moskowitz - Cowen and Company, LLC: Okay, thank you.

Our next question is from Ken Talanian from Evercore ISI. Please go ahead. Ken Talanian - Evercore ISI: Hi, guys. Thanks for taking the question. So, one, I was thinking, could you describe how we should think about product revenue ramping into 4Q? And then, along with that, should we think about product revenue on a year-over-year basis declining going forward, flattish, any help there would be great? Gil Shwed - Check Point Software Technologies Ltd.: I think, long term, we're going to have a mixed result. Why mixed result? Because I think that we do need to win many more customers and sell more products. So on the other hand, we are shifting more and more revenues and more and more deals to be annuity deals. And I think the overall annuity business that we have in Check Point is now pretty high, well over 70%, which is a very good phenomena actually. I mean, we were able, in the last few years, to dramatically transition the business model. We have now a very sizable amount of business not just from support and maintenance but from annuity software blades and annuity security services that are coming – that are part of the product and part of what we sell. So this is the good part. In the short-term, there can be quarters that we will see some products going down again because of the shift to subscription. But longer term, I'd like to see both numbers grow. Tal Payne - Check Point Software Technologies Ltd.: And my recommendation will be like I do recommend for the last two, three years because there is a clear shift from products for subscription and vice versa, it's bundled in their appliance. When we launch a new appliance and the split is changing and so on. My recommendation is always to look at both of them together and to look at the total growth. Ken Talanian - Evercore ISI: Okay. I guess maybe another way of asking it, could we – is the amount of formerly product revenue that's shifting over to ratable accelerating or is it relatively the same as it's been over the past, call it, six quarters or so? Gil Shwed - Check Point Software Technologies Ltd.: It's accelerating. Accelerating I think in a small pace, I think in a controlled manner. We are not making huge revolutions here but step-by-step that we are moving more and more revenue into the subscription line. Tal Payne - Check Point Software Technologies Ltd.: But you can see it in the numbers. This quarter, subscription is already 26% of our total revenue. So the entire business model, and again, between quarters, it can fluctuate, but the entire business model is moving more and more to annualized fees, be it the subscription or the update and maintenance. The total is already a significant portion of our revenues. Ken Talanian - Evercore ISI: Great. Thank you very much.

Our next question is from Walter Pritchard from Citi. Please go ahead. Walter H. Pritchard - Citigroup Global Markets, Inc.: Hi. I'm wondering just on the changes in the U.S., do you anticipate making similar changes in your other geographies as you roll through the next few quarters? Gil Shwed - Check Point Software Technologies Ltd.: I think it's early to say. We are not – I think we are making changes all over and we've made changes all over. I think we haven't formalized the next year plan. So, I mean, I think it's early to say what changes we'll make in 2018. Walter H. Pritchard - Citigroup Global Markets, Inc.: And then, Tal, just a question on renewal rates on blades. I know a year ago or a little bit more you started bundling a number of new blades, and I know sometimes the renewal rates on those start out low. And I'm wondering if you could update us on the blade renewal rates there, kind of overall and then specifically on these newer blades that you started bundling? Tal Payne - Check Point Software Technologies Ltd.: So actually, if you remember, we bundled the NGTP versus the original package that was bundled, which was called NGFW. So we moved up one level, and the renewal rates remained the same and I think they even slightly increased. So the trends are nice. And also the second year renewal rates are stable and, in some quarters, they've been increasing. So in general, it's a nice phenomenon. Walter H. Pritchard - Citigroup Global Markets, Inc.: Okay. Thank you very much.

Our next question is from Jonathan Ho from William Blair. Please go ahead. Jonathan F. Ho - William Blair & Company, L.L.C.: Good afternoon. Just relative to the changes that you referenced, are there any longer-term changes that you're making from a restructuring perspective? Tal Payne - Check Point Software Technologies Ltd.: What do you mean when you say restructuring? Jonathan F. Ho - William Blair & Company, L.L.C.: Just in terms of the sales force, some of the broader changes that you referenced. I think there was a remark on the prepared side that there may be some longer-term potential changes? Gil Shwed - Check Point Software Technologies Ltd.: No. I think what I meant – all the changes that we are making are meant to generate long-term impact and sometimes it takes time until these changes happen. Jonathan F. Ho - William Blair & Company, L.L.C.: Got it. Thank you. And then just with regards to ASC 606, can you talk about any potential impacts you're looking at relative to those changes? Tal Payne - Check Point Software Technologies Ltd.: I'm not sure. Can you repeat the question? Jonathan F. Ho - William Blair & Company, L.L.C.: With regard to ASC 606, the change in accounting principle around revenue recognition? Tal Payne - Check Point Software Technologies Ltd.: We don't expect any material change if you're relating to the change in the accounting principle. Jonathan F. Ho - William Blair & Company, L.L.C.: Great. Thank you. Tal Payne - Check Point Software Technologies Ltd.: Sure.

Our next question is from Shaul Eyal from Oppenheimer. Please go ahead. Shaul Eyal - Oppenheimer & Co., Inc.: Thank you. Hi. Good afternoon, guys. So, Gil, whereas the U.S. showed some softness, Europe bounced back a little bit. In the European case, was it solid execution or external drivers, maybe Europe getting more aggressively for the GDPR adoption comes next May? What was driving Europe? Gil Shwed - Check Point Software Technologies Ltd.: It's not GDPR yet. I think it's good execution and I think it varies a lot. Let's remember Europe is not one uniform entity. We had countries in the Europe with amazing results that we should – I mean, we're making it a model inside of the company and we have countries that didn't have such good results in Europe. Overall, the European numbers was very good. Shaul Eyal - Oppenheimer & Co., Inc.: Thank you.

Our next question is from Karl Keirstead from Deutsche Bank. Please go ahead. Karl E. Keirstead - Deutsche Bank Securities, Inc.: Thanks. One for Tal and one for Gil. Hey, Tal, the support revenue growth accelerated this past quarter to 7%. We haven't seen that in a couple of years. Could you talk through that and how sustainable that is? And then for Gil. Gil, on the 2Q call, you mentioned longer sales cycles in large enterprise deals and you especially called out the financial services vertical. When you look back, do you now attribute that issue to the same sales execution issues you were citing on this call? Thank you. Tal Payne - Check Point Software Technologies Ltd.: Okay. So I'll start first. When we talk about the update and maintenance, yes, we've seen it for the last two quarters, the update and maintenance moved up 7%. It can be – the average should be around 5%. That's the more relevant number, longer term at this point of time. And I will say the main reason is, is if you recall last year, we had an effect of increase in the discount rates that we saw and we talked about it and we said we're working on it and we're changing some processes in order to stabilize it. And the good news is that we were quite successful. We succeeded to stabilize the discount and even in certain areas reduce it. And as a result of that, we saw a nice uplift. The renewal rates as a renewal rate remained the same. So they're good there and we see stabilization there. So a lot of it's relating to pricing and some of it's relating, like every quarter with customers moving in a certain – between different levels of support so that can create a shift between 2%, 5%, 7% and so on. So all in all, it was a great execution in the support. And remember it takes time to recognize revenues. Booking and revenues are very different timing when it comes to update and maintenance. So you saw it in the strength of the booking in the previous quarters and it translates – it takes time to translate into P&L. Karl E. Keirstead - Deutsche Bank Securities, Inc.: Got it. Gil Shwed - Check Point Software Technologies Ltd.: And just as an answer, if we have a longer sales cycle, it really varies. We have some sales cycles that are getting longer. We have a lot of deals that are being closed. I don't think there is a uniform answer to that. There are still some very large transactions that are open for a long time and I hope that we will win them and have a terrific upside to results. Karl E. Keirstead - Deutsche Bank Securities, Inc.: Okay. Thank you both.

Our next question is from Fatima Boolani from UBS. Please go ahead. Fatima Boolani - UBS Securities LLC: Thanks for taking the questions. One for Tal and for Gil. Tal, I noticed the sales and marketing line was down about 7% sequentially and not much higher than historical sequential trends. So can you help us think about how your hiring trends are and how we should see this line item trend for the rest of the year? And then a follow-up for Gil, if I may? Tal Payne - Check Point Software Technologies Ltd.: Sure. So I'll say, first recall that the Q3 is typically lower than Q2 as a result of the fact that the main company events, CPX and so on, are in Q2. So you typically have a jump between Q2 and Q3. When it comes to recruiting in a high level, we are in line with the plan. And when we talk about why the job was larger, so obviously, when the levels of booking is lower, then some provision, for example, commission and compensations are lower than the full 100% meeting their plan. Fatima Boolani - UBS Securities LLC: That makes sense. And, Gil, a high-level sort of product question for you. Can you remind us how you're angling towards the endpoint security opportunity? I understand you have a number of products that catering to that particular area, but can you remind us what traction you're seeing with your endpoint products and when you expect that to scale and be a very meaningful contributor to the business? That's it from me. Thank you. Gil Shwed - Check Point Software Technologies Ltd.: So we do have some very cool and very good endpoint technology. The SandBlast Agent for the PC, for the endpoint is a very, very cool product. I mean on one hand, it's a very important part of being of having an overall security strategy and overall security solution and part of the Infinity architecture. On the other hand, I don't anticipate us becoming a huge vendor in the endpoint industry. I mean I don't want to get into a head-to-head competition with the antivirus vendors. It's a well-established industry and I'm not looking into taking share from them. If we're talking about advanced endpoint security, which are newer markets that are forming right now and so on, I think we're doing quite well there and we have a lot of wins that show the value of our SandBlast Agent, even let's take the anti-ransomware components that we have there. It's the best anti-ransomware technology in the marketplace. We've launched, by the way, a consumer version of that, the ZoneAlarm Anti-Ransomware in Q3, and you can see that it won the PC Magazine editor review. By the way, I recommend each and every one of you to install it on your personal computer. It's a very, very important technology when ransomware is becoming such a big threat on our environment, but that's just demonstrates the strength of that technology. So yes, I think we have more and more technologies in the endpoint space, and I'm not making a big strategy into making that a huge revenue contributor but more of rounding up the full Infinity architecture and providing a complete solution. Fatima Boolani - UBS Securities LLC: Thank you.

Our next question is from Keith Bachman from BMO Capital Markets. Please go ahead. Keith Frances Bachman - BMO Capital Markets (United States): Hi. Thank you. I also wanted to ask two questions if I could. The first is going back to the billings commentary or question this quarter. If we do try to normalize for Yom Kippur, let's assume it's in that 3% to 5% range, and you've mentioned that execution issues negatively impacted your ability to close transactions. How would you like us to think about what a durable billings growth rate is as we look out over the next couple of quarters or even reflect on the current quarter? That's my first question. Tal Payne - Check Point Software Technologies Ltd.: We don't report or guide to billings because we know there can be significant fluctuations in billings time specifically when you talk about update and maintenance, contract and subscription, contracts that can easily come one quarter earlier or one quarter later and the duration can change significantly. Bear in mind, our customers are not so SMB, many of them are very large enterprises, and a few deals can change the booking in a few tens of millions. So that's why we don't relate to a booking and we don't guide to booking. When you look about in a long-term perspective, then bookings should be in line with revenues. There should be a gap in the the reporting of the revenues. But when you look over here, then it should be in line with the growth that we guide for the P&L. Keith Frances Bachman - BMO Capital Markets (United States): Okay. Well let me try in a different way. It doesn't sound like – I think investors, broadly speaking, have concerns about the durable growth rate of the perimeter defense area, but it doesn't sound like from this quarter, you're calling out or trying to call out demand-related issues. You're still attributing it to weakness on the execution side. Is that a fair way to think about it? Tal Payne - Check Point Software Technologies Ltd.: Yes. So I will say that it did related to the fact that we take ownership on our results, meaning when we execute less than we plan and we guide for the next quarter, then our focus is always to find what we doing, what we can do to make it better. We know with these changes in there, especially in the U.S., in the management and with a lot of new people and it takes time to ramp them up. It does not exclude the fact that maybe there is a change in the market, but that's the easy way out. So we typically don't use that way. Having said that, I do see what you see with the reporting of other competitors in the area, and we do see that the product growth for basically all players moved from a strong double-digit last year to a single-digit this year, that's a fact. And does it mean that 2016 was a big refresh year and maybe this year there might be less refresh, maybe. But our focus is to focus on our opportunities and we know there's quite a lot of opportunities out there, and that's why we focus on that. It doesn't exclude it from the fact that maybe the markets are changing as well. Keith Frances Bachman - BMO Capital Markets (United States): Okay. Gil Shwed - Check Point Software Technologies Ltd.: I would also add one more thing here. When we look at the macro estimates for our markets right now, and again predicting the future is always hard, the macro estimates for our markets are still quite positive. And the main thing we're trying to achieve now is not to capture just the gateway or perimeter security opportunity but to build the full Infinity architecture, to build the full architecture for advanced threats, fighting advanced threats at all the levels in the enterprise. And I think a lot of the future success not just of us, of our industry, will depend on the fact that companies will realize that they do need and they can fight the advanced malware. Keith Frances Bachman - BMO Capital Markets (United States): Okay. But let me just sneak in my follow-up then is, we've noted a lot of marketing materials surrounding your cloud initiatives including virtual firewalls. Could you give us an update on the activities' success and maybe even dimensions around your cloud initiatives, particularly around the virtual side? That's it for me. Thank you. Gil Shwed - Check Point Software Technologies Ltd.: So I think the cloud initiatives and the virtual gateways that we sell into the cloud did very, very well in the third quarter. It's one of the areas that enjoyed really, really high growth. I don't remember exactly the number but I think I won't be surprised if it's three-digit growth in the third quarter. So this is actually very good. It's still very small. It still covers only a small part of the cloud opportunity for security, and I think cloud still remains an important part of what we can do and expand and become creative and innovative in new technologies for the future.

Our next question is from Keith Weiss from Morgan Stanley. Please go ahead. Keith Eric Weiss - Morgan Stanley & Co. LLC: Thank you for taking the question. I wanted to dig into Fatima's question on around expenses a little bit more. And kind of put together the two narratives of like execution issues in the U.S. was caused because there's a lot of new people. But if you look at sales and marketing expenses, they're only growing like 2% year-on-year. So how you should we think about – sort of like what's the investment philosophy around sales and marketing right now, are we still investing in that business, where are all those new people coming from, and how should we think about how that's going to change into 2018? Tal Payne - Check Point Software Technologies Ltd.: So we are talking about two different dimensions. When you look at the P&L, there's the dollar effect, and I just answered the previous question that explains that obviously if you have a plan for a certain level of booking and the booking is lower, then you have lower provision for commission, and therefore, you see only that 2% in the P&L but it's not a reflection of the head count growth. That's two different items. The growth in the head count... Keith Eric Weiss - Morgan Stanley & Co. LLC: So was head count growth materially different, like was – head count growth was higher? Tal Payne - Check Point Software Technologies Ltd.: The head count increased, definitely. Yes. And as we said, some of them are new people, some of them are new people that are add-on. Some of the them are new people that are replacements, but the head count increased and the salaries increased. What you see is some reduction in the commission as a result of not meeting the booking targets. Keith Eric Weiss - Morgan Stanley & Co. LLC: So if you met the bookings target, what would – will we be growing sales and marketing expense in line with kind of what we've seen historically, like, 17% last year or the year before? Tal Payne - Check Point Software Technologies Ltd.: Probably. There are other items there but not – no, I will say we would've grown in line with what we expect, yeah. Gil Shwed - Check Point Software Technologies Ltd.: Not 17% this year. Tal Payne - Check Point Software Technologies Ltd.: I was talking about the percentage of the revenues. Gil Shwed - Check Point Software Technologies Ltd.: Okay. Tal Payne - Check Point Software Technologies Ltd.: 17% that you related to, what is it based on? Keith Eric Weiss - Morgan Stanley & Co. LLC: Sales and marketing expense on a non-GAAP basis was up 17% in FY 2016 and FY 2017, and over the past two quarters, that slowed down to 16%, 7%, now 2% (51:02). So it seems like... Gil Shwed - Check Point Software Technologies Ltd.: No, no, we didn't lower the investment on that, quite the contrary. Keith Eric Weiss - Morgan Stanley & Co. LLC: So all these, like, slowed down and what we see on the P&L comes from the lack of commission expenses? Gil Shwed - Check Point Software Technologies Ltd.: I don't know if all of that. Tal Payne - Check Point Software Technologies Ltd.: Lower provision for commission, that's correct. Not all, majority of it. Keith Eric Weiss - Morgan Stanley & Co. LLC: Got it. Excellent. Thank you, guys. Tal Payne - Check Point Software Technologies Ltd.: Sure.

Our next question is from Rob Owens from KeyBanc Capital Markets. Please go ahead. Rob Owens - KeyBanc Capital Markets, Inc.: Yes. Thank you. And most of my questions have been answered at this point. Just curious within the federal vertical and what you guys see. I think you still have some deals with civilian agencies. I'm curious given it was the third quarter in U.S. Government year-end, what you may have saw there? Thanks. Gil Shwed - Check Point Software Technologies Ltd.: I think federal government is one of those areas that I think we have tons of potential. It's one of the areas that we've been rebuilding and that's exactly one of the areas that we've been investing on, and it's still too early to say about meaningful results. And I think there's still a high level of potential there. Rob Owens - KeyBanc Capital Markets, Inc.: Great.

Our next question comes from Saket Kalia from Barclays. Please go ahead. Saket Kalia - Barclays Capital, Inc.: Hey, guys. Thanks for taking my question here. Just one for me. Most of mine have been answered as well. Tal, I don't want to beat the dead horse on the holiday impact, but I think it might be worth understanding from a billings perspective. When you originally said that we expected the revenue impact from the holiday could be about $30 million this quarter, mostly on product, what should we have expected the associated billings impact to be? I would assume it would be more than $30 million, but do you think about a multiplier on that product impact? Tal Payne - Check Point Software Technologies Ltd.: No. You're right. When we talked about the product, that's the number we related to because that's the one that had a direct effect on the P&L. And I also commented that the effect on the subscription or on the deferred revenue can be significantly higher because of the fact that a lot of the update and maintenance booking, which comes on the last few days, even significantly more number – significantly higher number. So you're absolutely right. But the request to say how much did it actually affect is something that I cannot calculate. I know the booking was lower, but I cannot calculate how much was the booking lower because of the fact that it was Yom Kippur and some – how much of it was the result of the weakness that we saw in the U.S. That's something that when you have the actuals, you can't actually split, so I don't want to make excuses and allocate it to the Yom Kippur one. Saket Kalia - Barclays Capital, Inc.: Of course. Thanks very much. That's helpful. Tal Payne - Check Point Software Technologies Ltd.: Sure.

Our next question is from Michael Turits from Raymond James. Please go ahead. Michael Turits - Raymond James & Associates, Inc.: Hey, guys. Thanks and sorry to have missed earlier. Two questions. One on the demand side and one on the execution side. On the demand side, do you think you actually saw a trend in this quarter where customers were shifting their buying patterns away from networks and security and gateways and towards other products and, to that, other segments within security? And what were they ended at that caused a pause or an impact? Gil Shwed - Check Point Software Technologies Ltd.: No. That's a simple answer. I haven't seen that happening. I mean, again, we have an industry with many technologies and with many trends. But I think we are well positioned in what we're doing in building an architecture and selling both the perimeter security and also the overall security, and I haven't seen customers shifting from these projects to other projects. Quite the contrary. Michael Turits - Raymond James & Associates, Inc.: Okay. And then secondly, on the restructuring, well, let's call it, on the sales side, I just want to make sure I understand, are you changing what you're doing? Or are you simply allowing it to catch up? And are you making any significant changes in sales management, since I think changes were made there also. Gil Shwed - Check Point Software Technologies Ltd.: I think we've made a lot of changes. I think again, when you make changes it's never done, there's always people that are – that fit into the new position and always people that don't. But I think we've made most of the changes. We will make more changes in 2018, but I think for this year we build the infrastructure. It just takes us time to see the results from the people and the positions and the areas that we've introduced and implemented. Michael Turits - Raymond James & Associates, Inc.: Okay. But the direction is the same. No major change of course, right? Gil Shwed - Check Point Software Technologies Ltd.: No. The direction is the same, yes. Michael Turits - Raymond James & Associates, Inc.: Thanks, Gil. Thanks, Tal. Tal Payne - Check Point Software Technologies Ltd.: Sure.

Thank you. This concludes the question-and-answer session. I'd like to turn the floor back over to Mr. Meintzer for any closing comments. Kip E. Meintzer - Check Point Software Technologies Ltd.: Thank you, guys, for joining us today. If you have any follow-ups or would like to contact us, reach out by e-mail or through the phone. Look forward to seeing you guys throughout the quarter. Have a great Halloween and enjoy your kids tonight. Take care. Bye-bye. Gil Shwed - Check Point Software Technologies Ltd.: Thank you very much.

This concludes today's teleconference. Thank you for your participation. You may disconnect your lines at this time.