Greetings. Allow me to introduce myself. My name is Kip Meintzer, Global Head of Investor Relations for Check Point Software. I'd like to welcome you to our Third Quarter 2020 Financial Results Video Conference Call. [Operator Instructions] Joining me remotely today on the call are Gil Shwed, Founder and CEO along with our CFO and COO, Tal Payne. As a reminder, this video conference is live on our website and is recorded for replay. Before we begin with management's presentation, I'd like to highlight the following. During the course of this 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, but are not limited to statements related to Check Point's expectations regarding business, financial performance and customers. The introduction of new products programs and the success of those products and programs; the environment for security threats and trends in the market. Our strategy focus areas in demand for our solutions, the impact of COVID-19 on our business, including on our product development and sales and marketing efforts and our financial condition and results of operation; the impact of COVID-19 on our customers, suppliers and business partners and the macro economic environment as a whole. Our business and financial outlook, including our guidance for Q4, 2020. Because these statements pertain to future events, they're subject to risks and uncertainties. Actual results could differ materially from checkpoints current expectations and belief. Factors that could cause or contribute to such differences are contained in Check Point's earnings release issued on October 22, 2020, which is available on our website and other factors and risks including those districts and Check Point's annual report on Form 20-F for the year ended December 31 2019, which is on file with the Securities Exchange Commission. Check Point assumes no obligation to update information concerning its expectations or beliefs. Expect as required by law. In our press release, which has been posted on the website, we present GAAP and non-GAAP results along with the reconciliation of such results, as well as reasons for our presentations of non-GAAP information. Now, I'd like to turn the call over to Tal Payne for a review of our financial results.

Thank you, Keith. Good morning and good afternoon to everyone joining us on the call today. I hope you all keep safe in these times. We are pleased with our third quarter performance and our financial results which were ahead of earlier expectations. Revenues for the quarter increased by 4% year-over-year to $509 million and our non-GAAP EPS grew by 14% to $1.64. Before I proceed further into the numbers, let me remind you that our GAAP financial results include stock-based compensation charges and amortization of acquired intangible assets and acquisition related expenses, as well as the related tax effect. 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 Security subscription revenues were $289 million, a 6% increase year-over-year. Our subscription revenues continue to be strong with 10% growth year-over-year, reaching $169 million. Software Update and Maintenance revenues increase to $220 million. During the quarter, we have seen a healthy growth in our network security products, mainly small, mid and datacenter appliances. We have seen strength in our strategic areas; our cloud solution continues to have strong results and high double-digit growth. Infinity continues to gain momentum as we see deals closing in many new countries. We were also encouraged to see growth in new customer deals, especially in this environment. We had strong results in a few verticals; government, telecommunication, technology and healthcare verticals, with significant increase in transactions over $1 million. Last quarter, we launched the vast majority of our quantum appliances. We have seen a healthy transition of over 80% by the end of this quarter. Deferred revenues reached $1,302 million, a growth of $60 million, or 5% over last year. We were pleased with sales execution in these times as we continue to see growth across all geographies. Revenue distribution by geography for the quarter was as follows: 46% of revenues came from America, 42% of revenues came from Europe; Middle East and Africa and the remaining 12% came from Asia Pacific. We delivered strong non-GAAP operating margin of 52%. This margin is significantly higher than last year in our original plan as a result of the higher level of revenues and the operating expenses declined. The operating expense reductions similar to the previous quarter relates mainly to employees move to work from home and the lower travel and entertainment. Bear in mind Q3 typically has lower level of expenses relating to vacation provision seasonality, and co-op that is utilized heavily in Q4 versus Q3. Those expenses are expected to return gradually as more countries go back to some normalized business practices, like travel face-to-face meetings, entertainment and partial return to office work. As a reminder, interest rates in the US sharply dropped last quarter. And as a result, the yields of our marketable securities are expected to reduce consistently throughout the years as the portfolio is being reinvested, repaid or sold. Our financial income this quarter reduced to $14 million in line with our guidance in the previous quarter, and expected to continue to drop $1 million or $2 million as we discussed before. Naturally, this reduction is also reflected in the cash flow. Our US dollar, as to the US dollar, it's weakened against most currencies around the world. This quarter as an example 3% against this Israeli Shekel, 7% against the Euro and the Pound. Remember that 50% of our expenses are in non-US dollar currencies mainly compensation related. Hence this weakening of the dollar is driving our expenses out. Effective non-GAAP tax rate for the quarter was 17% and in line with our expectation. Remember that the fourth quarter, we forecast the tax rate will be around zero as the lapse of statute of limitation expect to occur by year end as we've seen in the last two, three years. GAAP net income was $201 million, or $1.42 per diluted share. Non-GAAP net income was $231 million or $1.64 per diluted share, an increase of 14% from the third quarter of 2019. The growth is related to the higher level of income on the one hand, and the continued reduction of our diluted outstanding share. As the share price increase during the last few months, more options are taking into account in the diluted outstanding shares calculation. In Q4, we expect the diluted outstanding number to be around 140 million shares. As to our cash flow, cash balances for September 30 were $3,900 million. Operating cash flow this quarter reached $248 million similar to last year, collection from customers continues to be very strong. During the quarter, we completed the acquisition of Odo Security, a new cloud-based technology that delivers secure remote access to enterprises. Part of the consideration is included in operating cash flow according to accounting rules. Excluding this payment the operating cash flow increased by 4% this quarter. In February, we approved the expansion of buyback program for additional $2 billion and up to $325 million during the quarter. During the quarter, we purchased 2.7 million shares at an average price of $122. This quarter, our aggregated buyback since the beginning of the buyback program in 2004 cross the $10 billion bar. And now let's turn the call over to Gil for his comments.

Thank you, Tal, and hello to everyone joining us today. First, I'm glad to see you all in this new format I really like. And hope that you and your families are all safe and healthy in this new normal. At Check Point, we are closing the third quarter in a virtual manner. Based on my recent discussion with our employees around the world, it seems that people generally are adapting well to this new mode of operation and business continues with few disruptions. You can definitely see it in the first quarter results, which were better than expected in almost every measure. Revenues are ahead of expectation and EPS was much higher than plan. And the first is a result of foreign business activity and the second is driven by the reduction of physical activities. On the business front, we continue to see many healthy indicators during the quarter. In the core business, we saw a growth of about 10% in network security gateways. Keep in mind that this figure includes subscriptions that are sold as part of the product and now [Indiscernible]. This trend is quite positive, especially given the fact that customers today are a little bit more reluctant to perform physical upgrades on their data centers, which brings me to the other growth areas in our market, cloud and emerging technologies. Cloud sales continue to perform well; we added many customers and expanded our footprint within existing customers resulting in a strong double-digit growth every quarter this year. This is coming from both our native cloud security solution and our virtual gateways in the cloud, the entire CloudGuard family, the CloudGuard native, which include the workloads, posture management and the CloudGuard SaaS for the virtual gateways. The same is also true to our other emerging segments. Our Beyond the Perimeter or BTP business which provides Advanced Threat Prevention for the endpoint computer and mobile devices also grew quite fast. Both categories are important in the delivery of our full vision of providing the highest level of security prevention, utilizing our consolidated infinity architecture. Sales of Infinity Total Protection, our solution for a full and consolidated Enterprise Security also had the great results and almost doubled compared to last year. Infinity sales are still in their infancy. But I'm happy to say that I hear more and more feedback from our channel partners that Infinity is becoming an important door opener and a differentiator for Check Point. Last but not least, we continue to focus on new customer acquisition and this quarter, we generated significant growth in this area, another good indicator but with a future of, what we plan to your future potential for growth. Overall, I believe that we have the right approach for the future of cyber security, real time threat prevention, protection and consolidation using one architecture. It addresses the complexity and the economics of cyber while providing much higher level of security. Our Infinity architecture is powered by threat cloud which identifies new threats and performs immediate prevention across all attack vectors, and to all customers and solutions. Our research team continues to generate amazing findings about the state of cyber security. We continue to fight against cyber threats by building our security architecture to protect the world from a potential cyber pandemic. We uncovered several vulnerabilities that could have led to such a pandemic. Earlier this quarter, we talked about the secret vulnerability in Microsoft DNS and Active Directory servers. Just this week, the NSA is put SigRed in the list of top vulnerability targeted by Chinese hackers. Later in the quarter, we published our vulnerabilities, our vulnerabilities that could have been devastating such as basic stock vulnerabilities that allowed picture on social networks to take over billions of mobile devices in a less over 400 vulnerabilities - more of Qualcomm mobile chipsets with power huge number of Android devices. We see more and more mobile Malware, which is a market that remains largely untapped. There are many trends in the attack landscape, one of which is the increased amount of ransomware attack we see. Over the past months, we've seen more than 50% increase in what's called double extortion ransomware, where the attackers demand the payment to get your encrypted file. But if you don't pay, they will publish the file. The attackers have also tuned their business model and are targeting multiple size businesses from industrials to hospitals, and are seeing a quite a lot of success these days. We continue to invest in the future of cyber addressing some of today's most important needs. Last month, we acquired Odo Security, a small startup, which has built an amazing platform for secure remote access. The new platform provides the good basis for what's called Secure Access Service or SASE. The solution will be the basis of our future remote access solution, which will provide easy and secure access portal for all types of assets, cloud, web, and datacenter application, remote desktop and others. I'm really excited about this acquisition and its potential in our marketplace. In the coming days, we will release our latest major software version for the year, R81, R81 provides many new capabilities. Let me just go through the top three of these capabilities. First is a higher level of security with automatic AI technology that is designed to provide real time prevention against zero-day attack, what we call it autonomous Threat Prevention in our gateways. Second is automatic hardware and core allocation on the gateway to optimize its operation and provide higher level of performance and security. And third is very quick response to changing security needs with super-fast policy installation down to as little as 10 seconds per minutes, quick upgrades and many other features that continue to underscore the leadership of our management console. When we look into the future, I believe that we're working on the key initiatives to provide the world with a safer cyber environment. And environment that is needed now more than ever. 2020 was and is very unique here. We've all learned the criticality of the internet and cyber infrastructure. Imagine going through the COVID-19 crisis without the internet or with the internet which is not performing well. The crisis is far from over. We're experiencing a strong second wave of Corona in Europe with few restrictions and lockdowns; the US is still on the first wave and now has the risk of facing more in the rest with the coming elections. And the corona pandemic has accelerated many of the aspects of the digital transformation making cyber security even more important. So I remain very positive on the future of our market. However, with the current world trends, the level of visibility and predictability for the short term remains low. Having said that, we decided this quarter to provide guidance with a wider than normal range, while reminding you with the level of uncertainty remains high just as they've outlined for you. So for the fourth quarter, we are expecting revenues to be in the range of $525 million to $575 million. Non-GAAP EPS is expected to be quite healthy in the range of say $1.98 to $2.17 or $2.18.

It's actually, sorry; it's actually $2 to $2.18.

Okay. $2 to $2.18. GAAP EPS is expected to be approximately $0.22 lower. Even though we pulled our annual guidance at the beginning of the crisis, our results so far have been quite consistent with the guidance we've provided at the beginning of the year. So there's no change to make changes to the annual projection. And now I would like to turn the call over to Kip for your thoughtful question. And once again, I will repeat the guidance in case you missed it. Revenues are expected to be in the range of $525 million to $575 million and EPS is expected to be between $2 and $2.18.

[Operator Instructions]

Thank you, Gil. Before we begin with the Q&A session, due to time constraints and consideration of the other participants, please limit yourself to one question and one question only. If you run into difficulty, please type your question in the chat and we'll reach you; we'll address that question later. Now for the first question of the day, it comes from Jonathan Ho, followed by Saket Kalia from Barclays.

Hi, good morning, and congratulations on a strong quarter. And this is a strong product revenue quarter, can you give us a little bit more color regarding the cross-sell opportunity with Infinity total protect and perhaps what elements of the platform partners are most excited about?

I think the opportunities almost unlimited. Because again, today, most of our customers are using our network security solutions and are not have not upgraded to the portfolio. And I think when you look at it, when a customer looks at it, and trying to really get a hold on their security opportunities is really pretty big out here. And I think with Infinity, it's a real good door opener and not just to come and say, I have these 12 products and somebody else says seven products and let's talk about the product, but really outline the full spectrum of solution which neither than speak about architecture. Now again, we're seeing an increasing number of people with buy into it, by the whole architecture. But we're seeing even more people that are saying, well, what's really interesting; I may not be ready now to change all my security infrastructure. But the fact that you have this vision architecture allows me to buy more cloud, allows me to buy more Beyond the Perimeter and point mobile, more IoT. There are a lot of other elements. This quarter, we launched Infinity Stock for a security operation center. And I think that's a great way to elevate our way through the organization and to expand the solutions to new and existing customers by the way.

Next question is Saket Kalia followed by Philip Winslow.

Okay, great. Hey, thanks. Thanks for taking my question here. And thanks for holding the call in this format again, guys. Tal, maybe for you maybe a little bit out of left field. But I remember this happened a couple years ago, where Yom Kippur actually fell at the very end of the quarter, and had a material impact on billings. I believe it was also at the end of the quarter of this year. So the question is can you talk about whether that had any impact to this time? And how, if at all, that could be impacting your Q4 bookings expectation?

Oh, so I'll say we, if you remember, the previous one I think it was Yom Kippur few years ago, we just warned you that it might have an effect. But the good news was that it didn't, if I recall. So that's because we dealt with it internally, with our backup teams also all over the world, mainly in the US for the order entry. I will say, right now, we don't expect any holidays to land in the next few years in the last day, exactly on the end of the quarter. So I don't anticipate any effects there.

That would be clear. This quarter Yom Kippur of the quarter but we still have two business days. And these two business days were enough to get the right business in order. I think last time it was really the Yom Kippur that fell on the same day, which is a revolt --we don't - we're not familiar with Yom Kippur. It's like a complete closure on the country. And when people actually don't work, we had a stronger lock down in the country this time, but at least we could have worked from home.

Our next question is from Philip Winslow, followed by Gray Powell.

Hey, thanks for taking my question. And congrats on another good quarter. A question to Gil, I mean, Gil, earlier this year, it seemed like businesses were very focused on sort of call triage and capacity, whether it be VPN or just call it bandwidth throughput but what we're now transitioning into more called strategic decisions made by customers about their security architecture. Are you starting to see that and where are you starting to see that you in your revenue and in your pipeline?

So first, I say that the market is behaving relatively as expected. We see it in our results. I see it again, I'm not an expert on the entire market but I think I see in generally the IT market is suffering a small number of interruptions from the world crisis around us. And I think in terms of cyber security, people are really speaking about the day after and what they need to do. I'm not sure that we move that way. I mean, they - so I mean, on one hand, we see customers that are saying, yes, we've opened up so many things, the tech landscape and our enterprise and opening it to our vendors, to our employees, and so on, is really increased the surface that can be attacked. And but I haven't seen yet that people have taken the step to really secure it. Now, I think it's very clear to our industry that we need to do that. That's the discussion around seesaws. That the discussion in forums, I haven't seen it materialized yet. And so I think, again, if we look at the opportunity, though, for the lead, not even opportunity we are trying, the need is huge, because we really, really opened up and put business priority, what we call business is security for lunch. And now we need to bring security back, by the way, while keeping things connected while keeping them open. I'm not talking about closing thing; I'm talking about securing them. And I think it's happening slowly, there is a growing discussion, not to be overly enthusiastic about [Indiscernible] member, but some companies are also facing budget challenges and the economy. The economy might hit broader set of customers than when we've seen so far, but a big long term, clearly, we need more security everywhere, things that we felt we never be open are now all connected to the internet and are now all open to external entities.

And maybe I would just add that, again, not just looking at what happened in Q3, we sell quite a few nice Infinity transactions. And when you look at the uplift in the ACV, it was nice to see it's not 10%, 20%, 30%, 40%. It's more; it's growing nicely. And it's a healthy growth. It's not just a conversion of ACV with ACV, which is similar which we show there's a great opportunity in Infinity. The more we'll get there, the better it will do for our customers and ourselves. And the second cloud, I think I'm not sure but I think the largest cloud deal when it comes to a native cloud happened this quarter. So there was nice to see customers adopting solutions and bought a million-dollar solutions, right. So that's nice to see also that move.

Our next question is from Gray Powell of BTIG followed by Sterling Auty of JPMorgan.

All right, great. Thanks for taking the question. So yes, can you give us a sense as to how much the Maestro is helping growth on the product revenue side? And then do you see that as a big differentiator versus peers going forward?

And we do see it's a huge differentiator. I don't have the numbers in front of me. So I can't quantify that. But we do see more and more deals. But Maestro is becoming the game changer. And we won a many, many banner deals this year, by the way, it's not just the super high end, I think one of the nice things about Maestro is before we had scalable platforms that allowed customers with millions of dollars of budget to get super high performance and sophisticated systems. Now it's available to everyone. Now, customers that are in the mid-range of the market can build a scalable architecture; can add the capacity if they need to, can get the resiliency that it provides because Maestro provides both the performance and the resiliency. And one nice deal about that I know it was very limited, it was very large, but it was a sizable was a very fast highway that, I mean, the highway is now secured. They're both secure and fast security. So that's a nice customer to see.

Our next question is coming from Sterling Auty of JPMorgan followed by Joel P. Fishbein of Truist Securities.

Hey, guys, so Gray's question kind of broke up for me. So hopefully this isn't the same one. But Tal, in your prepared remarks you talked about some really nice new company or new customer additions. And I'm curious what was either the product or the use case that you saw most common in those new customers coming on board.

So, I'd say Gil can add, but first it came from - for many different countries. So that was nice. And you saw large deals that were nice as well because typically new customers can be smaller. We saw a few customers which are large, it was actually I will call it small but record quarter when it comes to new customers so that was nice to see. The differentiator and every deal can be different bulk I can say it's very repetitive, the Infinity vision. The Maestro is a big differentiator, the holisticness of the approach the fact that we have Infinity when you think of the full, broad spectrum of solution that we can provide to the customers. And the quality, the best security out there when it comes to catch rate and securing you in this environment.

Our next question is coming from Joel Fishbein of Truist Securities followed by Walter Pritchard at Citi.

Hi, guys, just a quick one from me, if Tal, if things stay the same as they are currently, do you think that you can continue to grow in 2021 the same way at the same growth rate you're growing currently?

Oh, you're asking for 2021 guidance. I think we just moved from no guidance to a guidance with the quite a wide range to say we are moving forward, we want to give you more visibility. But having said that, remember Q4 is massive in terms of understanding when the markets are going for next year. Q4 is a big quarter. Remember, it's a quarter also that is much more affected by product because the product number in Q4 is sometimes 30% higher, right? So it's a big quarter, we need to see first Q4 and look before we even start talking about 2021.

Our next question is from Walter Pritchard, followed by Ben Boland of Cleveland Research.

Thanks. Gil wondering just on the quantum appliances; you launched those I think you're 80% volume this quarter is what you mentioned exiting the quarter. Can you compare how the impact of this quantum appliance rollout has differed from prior ones? And how are you looking at that refresh opportunity in the coming quarters as drivers of demand? I guess given Q4 guide but that and beyond?

I think firstly, usually I mean when we had successful - we had some places when customers weren't leaning forward, the new appliances and really took a while when we had successful transition, it usually was like 50%, 60% transition over I would say two quarters now we're at 80%. So obviously between the different regions is going actually better than previous time, which makes sense. And I don't know if it has a big impact on the - on Q4 or will have a big impact on Q4. On the other hand, it says, you said we've seen healthy growth in the appliance sales, which I'm happy about. It's not a mind-boggling growth. But it's healthy growth, which is unique even in the marketplace that we are today. And remember that is impacted too by the fact that people today are minimizing the physical changes to the infrastructure. So I mean, on one hand customers are trying to keep business as usual. On the other end, they try to avoid doing too many physical upgrades. So I think all-in-all, it means a good sign. Whether it will continue for a few more quarters or whether it was like a nice few percent of upside this quarter, it's very hard to say. Anyway it's good.

Our next question is from Ben Bollin of Cleveland Research followed by Brad Zelnick of Credit Suisse.

Good afternoon, thank you for taking the question. Could you talk a little bit about what you're seeing from your customers in terms of how the work from home mix is settling out? Or what you're expecting? And could you talk through how you think that's influencing adoption of things like quantum in the cloud portfolio? Hopefully you could touch on CloudGuard, Dome9, Infinity and Odo. But that's it. Thanks.

I think that varies a lot around the world when we ask people around the world, this vary by countries. Asia with a high level of openness, some countries are really open for business, some countries are open but few people come to the office. Europe is mixed, but unfortunately the trend varies quite negative right now; it was opening up fast and now there are more and more restrictions and lockdowns in Europe, which is very unfortunate and USA I think you know better than me the situation. Overall, by the way, when I look at Check Point, and they have very accurate statistics in there, it's about worldwide it's about a 16%, 17% of the employees actually arrive to the office and 80% or so remain working from home and it varies by job geo. In US, it's a 90 some percent working from home; in Europe and Asia it's 20%, 30% of employees arrive to the office and again, varies by countries. And how does it impact our business? I think first, it's bound to by; it's bound to make people think more about the remote access solution about securing that. And remember, it's really, I mean, on one hand, we shifted very quickly to work from home. On the other hand, we've thousands and thousands of connections, we've opening up the core of every trading floor in every factory to remote working, and we've also opened up a huge opportunity for hacking. We've even tested in some people working from home or working from their person on a home computer, what they share with the kids sometimes varies like 40% of computers that are not secured or not, they have insufficient level of security. So the need to secure that is huge. And by the way, some of the things we're seeing like ransomware and other you see the tip of the iceberg of actually hackers exploiting them; I think we haven't seen the full effect on that. But customers will have to invest in that. On the same time, the whole digital transformation, the fact that we learned that we need to move more workloads to the cloud, that we are so dependent on e-commerce, that everything is now online and fewer things are face-to-face, it has a very big impact. And I think, again, I think we will see the impacts starting now because the now the good thing is that the internet is working. And I mean, I must say that I'm very proud to be part of the internet industry. Because they I think when you expect the level of change that we went this year and the internet kept working and kept working fast. It's quite amazing. It shows by the way that we have capacity. So let's say which is good. But in terms of security, we will have to invest in more security.

Our next question is coming from Brad Zelnick, followed by Rob Bowens of Piper Sandler.

Great, thank you so much. And it's really nice to see everybody. It's also great to see the stable trends in the business. Gil as we think about your R81 release, which I know a lot of customers have been anticipating, can you just remind us what impact does a new release of the OS have on the business and on the financials of a company, especially one like this with a lot of great functionality? Like, should we think of this as helping win rates competitively, or even inspiring some existing customers to come to the table and refresh an existing appliance? Thanks.

I think overall, it's helping the business because customer looks for innovation, customer look for these features, and so on. However, I don't think it's quantifiable in this --- in the short term, because in the short term, and on one hand, it maybe it helps closing deals, but also where everybody's busy with the upgrades, and the upgrade takes a lot of cycles. So that's something that we do have to worry about. But the sales engineers need to work more closely with existing customers and existing customers get the new version through the subscription, or through the support contract, which may have. So it's not a generating additional sales but overall, I think it's positive again, I don't anticipate material impact or any impact on the business in the short term. And we need to manage our business correctly, so we actually don't slow down new deals when we're busy with upgrading customer infrastructures.

Our next question is from Rob Owens of Piper Sandler followed by Fatima Boolani of UBS Equities.

Great, thank you very much. I'll give you the easy one before Fatima comes with the hard one. Gil, you mentioned a 10% increase in network security gateways just looking for some color there in terms of, a, how that's trended? And then are this capacity based upgrades or is it an aging installed base is being replaced at this point?

I think it's all over and I wish I could have given you saying, that's great trend and everything is moving. We saw a little bit here a little bit there. We saw some volume increasing number of gateways. We've saw some different models being stalled. Overall, it was very good. I mean, overall, like it might save it for a long time, we haven't seen growth in network security, and seeing an almost 10% and again, 10% is kind of the growth in our internal measures that summarizes a lot of different aspects. Some models, it's a higher growth in volume; some model is higher growth in dollars and so on. So overall, it's positive. I mean based on so far, what I analyzed, I didn't find one trend, which would say, here is something that takes off and drives the entire business with it. So I don't know, Tal, if you have more color about the analytics of it.

Yes, I will say actually, it's both. So we see some that need more capacity as people move the work more remotely, you need the higher capacity on the gateway coming in and out of the organization. And second, you have some that have in appliance over a certain number of years and they use this opportunity to refresh it. So I think it's both. And I think Maestro is definitely a driver here because I do see the when we analyze the wins that they say it is a differentiator, it's a nicest differentiate in the ability to scale, start small, and then as you need to increase capacity, if you already bought the switch to Maestro, you can add on capacity without having to throw an old one. And it's a big advantage especially when you think in an environment where it is part of the discussion. Many as you know, many companies right now are suffering under the COVID. So if you can bring value to the customers be through Infinity or Maestro infrastructure that enables to increase capacity in the future without having to throw the old box, it becomes a differentiator.

Our next question is with Fatima Boolani from UBS Equities followed by Shaul Eyal at Oppenheimer.

Thanks, Kip. Good morning. Good afternoon, Check Point team thanks for taking the questions. Tal, the question is for you, you still have about 40%, a little over 40% of your revenue derived from updates and maintenance and very traditionally flavored support revenue. And as I think about some of the dynamics around the adoption of the cloud portfolio and the Infinity portfolio, how should we expect the trajectory of your maintenance and support revenue to trend as physical form factors become maybe more challenging to go to market with?

So okay, I'll try to, let's talk first long term was the direction, so the direction is pretty much when we talked for the last few years, we said, subscription, everything that we come in with every new product, new capabilities, majority of them come in through a subscription model. So you have the cloud, its subscription, you had all the blades that we launched throughout the years, probably since 2009, 2010. All of them are subscription. And that's where you see the major growth engines are coming through the subscription line. So Cloud is a great example. Majority of it is sitting on the cloud, when you talk about Infinity, the Infinity; it's a deal of an x dollar per year per employee or per user. But accounting wise, you split it between the product, support and subscription. So theoretically, it feeds also the support line. But because of the majority of Check Point product nowadays is subscription, then also an Infinity majority of the dollars have been sucked into the subscription line. Same with bundled appliances, all of them are bundled; it used to be bundled with NGTP. Now it's bundled with SandBlast, more percentage of the product is being taken away to defer revenues and will be recognized over the subscription. So it says the general direction is what you've seen in the last two, three years. Subscription, hopefully we continue to see growth and the healthy growth. A product depends right now we see a plus, so it's nice to see that especially under the pressures of the subscription for, they should've been taking out support. It's not - it's very hard to grow unless your install base growing. So we say support is tougher, especially since when you also - when you get into discounted environment, that's usually the line, they get the most requests for discount. So I would say support, I don't expect to see significant growth. And if you remember I even talked about in the beginning of the year, and I said zero is a reasonable assumption for the support line.

Our next question is from Shaul Eyal of Oppenheimer followed by Brian Essex at Goldman Sachs.

Thank you. Good afternoon, everybody. Gil, you might have addressed that indirectly. I want to try and ask it kind of slightly more straightforward. So you've indicated COVID-19 numbers are rising. We are seeing we're hearing that Europe, for example, is going into some regional anecdotal lockdown, US still open for the most part, hypothetically speaking do you think we might be seeing a near term incremental spending wave similar to the one we had seen back in the April, May timeframe? Do you think seesaws are mostly done right now with their initial spending wave of work from home, work from anywhere or do you think actually we could be seeing a little bit of a tailwind over the course of the next few weeks, even months?

I think it will be guess but I think that most companies are okay with changing the infrastructure. We move to work from home, we know that we can do it, the next wave here is going to be about securing this work from home. And that's a longer-term need, because it's not about like we needed to do in March, which was in two weeks, the entire world doesn't have to change the way it works. So I'm not anticipating a huge push in security in the near term based on COVID. And again, I hope it will be over COVID. I hope it actually the push what we will see with corona will go away, and then we will see the business rising up from a crisis and people do incremental spending. But for the time being, I hope that it will remain in this stable environment because as I said, the good news that we haven't suffered too much from the corona crisis economically, we suffered it for other means but not economically. And the less than good new - the better news is that it can be over and people will need more security, the risk factor is that the fact that the economy hasn't hurt us doesn't mean it won't hurt us in the future. And I mean us is not just Check Point, follow these extra days, it's not that everyone related to us, there's nothing that I see particular to Check Point.

And maybe I'll say the way I look at it, even if I look as a CFO, right. So from a company that, thank you didn't suffer, right, this is a privilege to be part of that area. But I can say, when you started with the COVID, you move very, very fast, and you approve things just to make sure everybody's running in operation. And we also we talked about it, I talked to you about it in the previous quarter, we saw some increased; it's not material, now a number but some increase in the mobile access capabilities in the VPN, and so on. So that was a few millions of dollars. I think as now as Gil said, it stabilized that area. So actually, this quarter, the growth is not relating to VPN and mobile access in this area. So it's good. It's a regular growth in a way. But you see more and more companies starting to suffer. And our customers we might not suffer but our customers, and our customers around the world are suffering depend on their size. And that can change their pattern of acquisitions, and the upgrades. So I said that's where the question should come from, not our situation. But actually your ability to look at what's happening out there to the large market, to the enterprises in all verticals and to see what does it mean, because when they suffer, naturally, they come to everybody else to help them, right? So it's part of the same dilemma.

Our next question is from Brian Essex of Goldman Sachs followed by Gregg Moskowitz of Mizuho.

Great. Thank you. And thank you very much for taking my call. It's a question. It's a very good to see you all. So maybe a question for Gil or Tal whoever wants to pick this one up? Cloud and emerging technology, how do you think about disclosure for the emerging growth businesses versus maybe what we would call the core businesses? How big is cloud and emerging technology? Is there a point where it would hit the threshold where we might get better disclosure in terms of faster growth businesses, recurring revenue to get a better sense of that subscription sense, subscription portion of your business and how it's growing?

Gil, if you want, I can start and then you can add. I will say the following, remember, that I understand the need to split. But in reality, majority of the deals you can't split, it's an account in splits. In reality, when a customer buys Infinity, he buys everything. So we split it between the lines because of the accounting, but the customer bought the full package the same when they buy SandBlast it has, they need threat simulation, but it has in it also five or six other blades. So the split is a bit artificial. Having said that, I can tell you that the good news that this quarter cloud is in the subscription, and in this quarter, it's around the 10%. So it passed the 10% from the subscription line. So that was nice to see that just to give you a bit of color.

I think overall, I would say that depends what you count as cloud, the things it's like two or three layers of clouds that you count. One is securing the cloud, securing the customer cloud infrastructure. Second is delivering security from the cloud. And again, when you look at our industry, you see some companies with, companies that are called the cloud. Some of them are using cloud to provide the same security we provide. Some are securing the cloud infrastructure of their customers. And also almost on every product today we have some cloud components. So if I - so I'm trying to quantify it internally for me. And I think that today, the overall cloud business that we have combining all elements is approaching 10% of total business not just of the subscriptions. And again, some of it, you can say, this is actually cloud sales. Some of it you can say, this is cloud aided. And in terms of which product is it in, it's in every product I just mentioned in R81. We have we say, what we call autonomous safety threat prevention, and that's driven by cloud. Now, again, it doesn't make all our gateway sales cloud sale. I mean just to be clear, but it's now getting mixed on almost every product that we have.

Our next caller is Gregg Moskowitz with Mizuho followed by Keith Bachman, BMO.

All right. Thank you. So I had a follow up actually, for Gil on cloud. And you now have a lot of products or offerings under that CloudGuard umbrella. I think Tal mentioned that this may have been your largest ever cloud deal that was signed into Q3. So it'd be very helpful to get a little context, perhaps in terms of what customers are significantly buying and maybe looking at that large cloud deals this quarter for instance. If you could give us a sense of how that customer is deploying Check Point in the cloud that will be helpful.

And for the large number of subcomponents and technologies in this cloud families, but there's two that I mentioned in my script, and they're the bigger one. One is that what we call cloud native, managing cloud native. And I think big part of is what we call the cloud posture management. It's managing the native security of the cloud. And that's one big piece. Another one is virtual gateways on the cloud is taking a gateway like we used to have physically and putting them in the cloud what we called CloudGuard SaaS infrastructure as a service. And that's another big portion. These two portions are, by the way, very similar in size today. And so they are pretty big. And these are the two leading ones right now. On top of each there is a whole long list of technologies that are emerging, like cloud workloads, securing server less functions and containers, and delivering security through the cloud. And there's a lot of average features between that were introduced to the market that are gaining shared, but I mean, I'm just if I frame it, these are the key elements. And I'm glad to see by the way that both are growing, so it's not - customers are moving gateways to the cloud on one end, which is great; customers are also securing the native cloud with our cloud posture management.

Our next question is from Keith Bachman at BMO followed by Adam Tyndall of Raymond James.

Hi, thank you. I'm going to direct this to Tal, if I could. Tal, I wanted to see if you could describe the trends on two different areas. One is, if you could think about the percent of bookings that are driven by new customers versus existing? And how do you think that's been shaped over the last couple quarters versus how you see it unfolding over the next year? So is it 80:20 existing versus new 90:10? If you could just give us a little perspective on that. And the second part of the question is similar, if you could give us a little sense about what the net retention rate is on your existing customers, recent trends versus how you see that unfolding, attrition rate, obviously, driven by mix up and perhaps some attrition. But if you could just give us some thoughts on those two vectors, that would be great. Thank you.

Sure. So I can't give you much because we don't provide that. But what I can tell you both numbers are quite steady. With new customers being the first - so retention, its touchwood was never a big issue here in the sense that we have good customers, they like us. And the renewal rates are very similar for many, many years. So that's regarding the retention; of course, they're moving from one package to another. So maybe someone started with a support in a certain level and moved up to premium or, and then you see them jumping from one package and moving to the other. When you talk as a customer, we retain majority of our customers. When you talk about and the challenge there is usually how do you upsell in the sense moving them to a higher level of support that maybe match their size and trying to keep pricing on the same place and that's actually tougher in a competitive environment, so that's one. When you talk about new customers, so for us, this is the biggest opportunity, it's a huge opportunity because when you think about it, see we have a $2 billion revenues, but the majority of it is by far is coming from existing customer, and which means maybe 75% or 80% of the market is out there for us to go and compete on. So that's why we have such a big focus on new customers. It remained similar for a long time and for the last I think quarter or two quarter we see a nice increase and investing quite a lot in this initiative. It's not easy to move that and we talked about it in many calls, what do we do in order to enhance activity in that area. And we intend to continue and invest a lot of that in order to increase those numbers.

Okay, so in COVID, it has moved up a little bit and particularly as your portfolios expanded perhaps, is that helping to move a little - the needle a little bit on new customer acquisitions?

It's a bit early to celebrate in the sense that it's one or two quarters, we need to see a phenomena continuing for a year or two in order to say, yes, we are on the train there. But we have a lot of focus there. And I will say in terms of Infinity, I can give you an example, when you ask about the percentage of new versus existing, in Infinity, you see that a significant portion is coming from new customers. So that's a good tool to maybe to engage with new customers. So I think the more we will do Infinity, the more we will see success there as well.

I'll jump and say that salespeople are generally saying that in the corona time customers are actually not happy to move to through them; they like to stick to their existing vendors. Still having said that we have - we've seen some good trend and new customers this quarter. And I'd like to hope that we will be able to continue with the trend.

Our last question of the day is going to come from Adam Tyndall from Raymond James. Adam?

Perfect. Thanks, Kip. Tal, I just want to start thank you for the Q4 guidance. I think you mentioned in an earlier question that Q4 was massive and understanding trends for 2021. When I look at that Q4 guidance not to get too granular, but it looks like revenue is going to be up around 8% sequentially at the midpoint, it's normally up 12% to 14% in Q4. So guess the question would be why are you indicating below seasonal trends from the past few quarters? And if Gil wants to add any qualitative commentary, is this like a digestion period after strong trends or something like that? Thank you.

I think now you're looking for an exact math. And remember, we coming from two quarters that we didn't want to provide guidance. So it was like a step, a leap of faith for you guys to say, we're giving you the ballpark of the range. It's a risky time. And we wanted to make sure you understand that it's a risky time. Q4 is big, a bigger portion of products. So if it was only supported subscription is much easier, because you have higher visibility there. But when you talk about Q4, two items, also in the support line, you have some things that have to do with the installation and the consultation that coming in the support line, which is no visibility as usual. But the product portion is quite significant. So it's reflects the risk that is a part of this Q4 guidance. That's what it means. And if you look, by the way, the total year, you will see we pretty much I would say in line, if you remember the original guidance that we had before COVID came in and hit all of us then it's pretty much in line with the midpoint slightly higher than the midpoint of what we gave in the beginning of the year and the EPS is way above the high end of the range that we gave in the beginning of the year. So that's the logic behind it. I hope that helps.

Thank you, guys, for joining us today. We appreciate your participation. Again, we'll see you throughout the quarter. And if you have any questions, please reach out to us after the call and we'll try to get back to you as soon as possible. Thank you, guys, and have a great day. Bye-bye now.

Thank you.

Thank you.