John McAdam - President & Chief Executive Officer Andy Reinland - Senior Vice President & Chief Financial Officer Mark Anderson - Senior Vice President of Worldwide Sales Karl Triebes - Senior Vice President of Product Development and Chief Technical Officer John Eldridge - Director of Investor Relations

Brian White - Ticonderoga Ittai Kidron - Oppenheimer & Co Jason Ader - William Blair Samuel Wilson - JMP Securities Troy Jensen - Piper Jaffray Brian Marshall - Broadpoint AmTech Mark Sue - RBC Capital Erik Suppiger - Signal Hill Jeff Kvaal - Barclays Capital Ryan Hutchinson - Lazard Capital Markets Min Park - Goldman Sachs Brian Modoff - Deutsche Bank Jeff Luber - Wells Fargo Securities

Good afternoon and welcome to the F5 first quarter financial results conference call. At this time, all parties will be on listen-only until the question-and-answer portion. Also today's call is being recorded. (Operator Instructions) I’d now like to turn the call over to Mr. John Eldridge, Director of Investor Relations. Thank you, sir. You may begin.

Thank you Brian and welcome all of you to our conference call for the first quarter of fiscal 2010. Speakers on today's call are John McAdam, President and CEO and Andy Reinland, Senior VP and Chief Financial Officer. Other members of our executive team are also with us to answer questions following our prepared comments. If you have questions following today's call, please direct them to me at 206-272-6571. If you haven't seen a copy of today's press release, it’s available on our website www.f5.com. In addition, you can access an archived version of today's live webcast in the events calendar page of our website through April 21. From 4:30 pm today until midnight Pacific Time January 21, you can also listen to a telephone replay at 800-217-1705, 402-220-3900. During today's call, our discussion will contain forward-looking statements, which include words such as believe, anticipate, expect and target. These forward-looking statements involve risks and uncertainties that may cause our actual results to differ materially from those expressed or implied by those statements. Factors that may affect our results are summarized in our quarterly release described in detail on our SEC filings. Please note that F5 Networks has no duty to update any information presented in this call. With that, I'll turn the call over to Andy Reinland.

Thank you, John. Q1 of fiscal 2010 was a quarter of solid growth for F5. Revenue of $191.2 million was up 9% sequentially from $175.1 million in the prior quarter and above our guided range of $182 to $187 million. GAAP EPS of $0.36 per diluted share was above our guided range of $0.31 to $0.33. Excluding stock-based compensation expense, non-GAAP EPS of $0.52 per diluted share was also above our guidance of $0.47 to $0.49. Product revenue of $119.2 million grew 9% sequentially and represented 62% of total revenue. Service revenue of $71.9 million also grew 9% sequentially and accounted for 38%. Book-to-bill for the quarter was greater than one. On a regional basis, the Americas represented 58% of total revenue. AMEA accounted for 24%, APAC, 11% and Japan, 6%. Revenue from our core application delivery networking business was $178.7 million or 93% of total revenue. Revenue of $5.7 million from our ARX file virtualization products was up from $5.4 million in the prior quarter and accounted for 3% of total revenue. FirePass revenue of $6.8 million declined slightly from Q4 and represented 4% of total revenue. During Q1, the financial vertical was 31% of revenue driven in part by shipping a significant portion of the large financial deal, one in Q4. Telco accounted for 21%; all government was 12%, including 7% for US Federal. At 12% of revenue, the technology vertical is lower than normal. It is worth noting that technology bookings were, in fact, up from the prior quarter and exceeded our internal forecast. The decrease in the number reported is a reflection of a mix shift in our backlog. As we shift out a significant portion of our large financial deal from beginning backlog, we saw a sizable increase in technology orders reflected in our ending backlog. As I already mentioned, book-to-bill for Q1 was greater than one, resulting in backlog increasing over the prior quarter. During Q1, we had two greater than 10% distributors, tech data which accounted for 12.5% of revenue and Avnet which represented 11.6%. Moving down the income statement, GAAP gross margin in Q1 was 79.5%. Excluding approximately $1.6 million of stock based compensation expense, non-GAAP gross margin was 80.4%. GAAP operating expenses of $108.3 million were within our target range of $105 million to $109 million. Excluding $15.5 million of stock-based compensation expense, non-GAAP operating expenses were $92.8 million. GAAP operating margin was 22.9%. Non-GAAP operating margin, which exclude stock based compensation expense was 31.8%. Our GAAP effective tax rate was 35.5%. Excluding stock based compensation, our non-GAAP effective tax rate was 33.7%. On the balance sheet, we ended the quarter with $647 million in cash and investments. Cash flow from operations was $74 million. During the quarter, we repurchased approximately 309,000 shares of our common stock at an average price of $48.47 per share for a total of approximately $15 million. DSO ended the period at 51 days. Inventories the quarter end were $14.8 million. Deferred revenue increased 15% sequentially to $211.4 million. Capital expenditures for the quarter were $3.6 million and depreciation and amortization expense was $6 million. We ended the quarter with approximately 1740 employees, an increase of 95 from the prior quarter. Moving on to the Q2 outlook, informing our view on revenue guidance, we recognize that Q2 is typically our seasonally softest quarter. However, we also see continued strength in our key drivers and a solid pipeline of business. These factors give us confidence that we will continue to see sequential revenue growth through the remainder of fiscal 2010. With this in mind, we're targeting Q2 revenue in the range of $195 million to $200 million. This guidance assumes book-to-bill for the quarter will be equal to one. We expect GAAP gross margin in the 79% to 80% range including approximately $1.5 million of stock based compensation expense. We anticipate GAAP operating expenses in the range of $110 million to $114 million. This includes approximately $15.5 million of stock based compensation expense. Our GAAP EPS target is $0.36 to $0.38 per diluted share. Excluding stock compensation, our non-GAAP EPS target is $0.52 to $0.54 per diluted share. We are forecasting an effective tax rate of 37%, excluding stock based compensation we expect a non-GAAP effective tax rate of 33%. We plan to increase our headcount by 60 to 80 employees in the current quarter. We estimate our DSO will be in the low 50s. We expect inventory levels within a range of $15 million to $17 million and we believe our cash flow from operations will be in excess of $55 million. This reflects the impact of two large tax payments we make during Q2 per our normal tax payment schedule. With that, I will turn the call over to John McAdam.

Thanks, Andy and good afternoon everyone. I was very pleased with our performance in our first quarter of fiscal year 2010. The sales and revenue momentum that we experienced in the second half of fiscal 2009 continued into Q1. All our major regions except for Japan met or exceeded our internal forecast. Japan sales were slightly below our internal expectations, but we do expect to see both sequential and year-over-year growth in Japan in this current quarter. Business in both the Americas and Asia Pacific were solid in Q1 and the start of the quarter was the AMEA region where we saw strong revenue and sales booking growth driven by several large deals above $1 million in value. Once again, our services business produced stellar results with solid sequential growth and a significant increase in deferred revenue. From a product perspective, our ADC business continued to be the main driver of our overall growth. With the product refresh that we completed over the last 12 months and the major software upgrade of TMOS Version 10.0, we believe that our competitive position is the strongest it has ever been and we intend to continue not momentum and technology leadership during fiscal 2010 with a significant array of new product introductions. Our ARX business was up slightly on a sequential basis. However, we believe we can improve on that performance given the extraordinary ROI that ARX delivers to our customers. We issued a press release a few weeks ago highlighting a couple of senior management hires for the ARX team and we have also increased our headcount in the ARX sales marketing services and product development. The new ARX 2000 system is now shipping and we expect it 2000 to become the most popular ARX product. As I mentioned earlier, we'll be introducing a wide range of new products and software functionality during fiscal 2010. We have started shipping TMOS Version 10.1 known internally as our Equinox release, which brings a wide range of new functionality and performance to the ADC line of products. : Three important areas of new functionality include an access policy management module, a major increase in the performance of our WAN optimization module and a new edge gateway solution. The big IP access policy manager, APM, is fully integrated into TMOS and interoperates with the other big IP modules. APM drives identity and access services into the network. APM allows customers to consolidate network infrastructure, scale web access management and provide better security for applications. It gives customers a perk to use application layer information and network traffic to drive dynamic control policies through our visual policy editor while performing at network speeds. With the TMOS Version 10.1 WAN optimization module, we now deliver the highest performing one optimization control in the market to data center republications with performance above 10 gigabits per second. As well as improving application time by 8 to 10 times, this new module also includes unique policy based SSL encryption. The BIG-IP Version 10.1 edge gateway unifies and optimizes access to the data center. It combines next generation SSL VPN remote access, acceleration, security and higher availability functions on our TMOS platform. It also includes a BIG-IP edge remote access client to provide optimized access for mobile users and remote offices. Our edge gateway of our broader application for the controller division and is the first step in converging security with acceleration on our TMOS platform. TMOS, BIG-IP edge gateway to provide up to ten times the performance of competitive solutions at half the price. Significantly increasing our technology leadership, from a platform perspective, you should also expect to see several new products being introduced in fiscal 2010, including, at polar range of systems and the turbo appliances with a fab to after Annual Investors Conference last November. At the conference call talked in some detail about the improved data center scalability and manageability to be provided by our unique virtual plus the multiprocessing architecture, VCMP, you should also expect to see significant announcements regarding virtualization of our product during the year, staffing in a relatively short time. As far as the outlook is concerned, I feel optimistic about our business prospects for the remainder of fiscal 2010. Obviously, we remain cautious given the experiences of the first half of fiscal 2009 where we saw pauses in spending by our customers. Having said that; we feel very positive about our market opportunities and our competitive leadership, and we indicated that we now expected a lot of sequential revenue growth in each quarter of fiscal 2010. Our pipeline for future business is very strong. Market drivers for our business continue to increase at significant rates including the accelerating growth and storage requirement, data center consolidation projects and the significant growth in mobile data and mobile applications. The F5 Solutions occupies strategic control points across global data centers and we're extremely well positioned to take advantage of these market drivers. In conclusion, I would like to thank the entire F5 team, our partners and the customers for their support last quarter and will now hand the call over for Q-and-A.

(Operator Instructions) Your first question comes from Brian White - Ticonderoga. Brian White - Ticonderoga: Wondering if you could talk a little bit about the $35 million deal you announced on the last call. I think half of that was going to be products in what percent of that product was actually recognized in the quarter?

In the current quarter for Q1, you're correct, about half of it was product. We shipped about two-thirds of that roughly in the current quarter, so that became revenue in the current quarter, but I do want to highlight our book-to-bill still was greater than one for the quarter. So, our backlog did sequentially go up. Brian White - Ticonderoga: As we look forward, obviously it has been a phenomenal quarter based on that recognition of revenue, as we look forward, what areas in terms of verticals are you seeing the most activity right now?

The issue here as we need to talk about the backlog business we have as well. If you look at Q2 in particular, you’re going to see telecom being pretty strong, technology being pretty strong and finance be strong. Interestingly enough, if you look at the bookings that we did last quarter, not just the revenue, it was pretty much normal in the 20% range for the three big vessels.

Your next question comes from Ittai Kidron - Oppenheimer & Co. Ittai Kidron - Oppenheimer & Co: Andy wanted to drill again into this large deal we mentioned you’ve recognized significant portion of that large deal in the quarter. Can you tell us if you break it down, if you look at your core business is it fair to say that you recognized more than you expected of that deal and how did your core business outside of that large deal really performed? With regards to the remaining one-third of product that you haven't shipped, is all of that coming in the March quarter?

Obviously, shipments in the labs project were very customer driven so, we follow the customers. We had no major expectations. Obviously, we did say we expected to ship throughout the fiscal year so, no major expectations. In terms of the rest of the business, it was obviously very solid given the book-to-bill issue going up. Ittai Kidron - Oppenheimer & Co: Yes, but John, I'm trying to drill in a little bit deeper as to where was the upside relative to your own expectations. Was it from the deal? Or was it from the rest of your business?

It was from the rest of the business. No question. I mean we knew about the deal, going into the quarter. So, our technology business was very strong and Andy mentioned yes, apart from Japan as I mentioned, it was across geographies and across the vertical. Ittai Kidron - Oppenheimer & Co: Is the remaining product revenue on that transaction coming in this March quarter and from this point going forward, it’s going to be just service…?

We would expect to ship in this quarter but again, we'll do it by customer direction.

Your next question comes from Jason Ader - William Blair. Jason Ader - William Blair: I wanted to ask you about ARX. Can you give us a sense of, over the last year or so, maybe how you position the product and how you've learned from maybe some of the challenges you've had and what's really the plan going forward in terms of trying to boost the revenues to get to the double digit type…?

I mean doing it in terms of over the years, of course there was a little beginning of fiscal 2009, and it included more things because of the economy. Specifically, the ARX obvious to, is that we need to get more focused and more specialization. To be Frank, the channel isn't quite there. That's why we've been investing in specialists. I mentioned that we did a press release in two very senior hires with a lot of story expertise both in sales and marketing. They're up and running and joined the company and already up and running and have been involved in the strategy going forward. We've also hired across the board actually in functions in terms of specialists and you know, we think that's going to bear fruit. We're absolutely convinced about the solution. We're convinced about the ROI and the market and really, we're convinced this is not a sales and marketing execution. We're very focused on being successful on it. Jason Ader - William Blair: Since you bought the assets though, aren't there a lot of other kind of newer technologies that have come out that may mute the impact of what Acopia was designed to do in file virtualization? It seems like if you look at some of the players in the storage market that come out with cluster file systems, which provide the non-scalability, if you look at like a net series, it allows you to virtualizes third party arise. It just seems like in the last couple of years since the Acopia acquisition, there have been some competitive offerings that have come out that seem like there are alternatives, at least, to going with file virtualization. How do you guy position against things like that?

I mean, a quick answer is not at all. We did the North American quarterly business earlier this week and it’s interesting. We had some people actually making the quarter in the ARX only. When you look at the competitive aspects, it was almost nil. It was almost zero. Brocade had a product in end-of-life that we don't see much. It’s only heterogeneous solution out there. In terms of the clustered file storage issue, we see the opportunity as partners were still partnering with the data, the main site of the EMC partnership. That's the one going. So no, we don't see that. I mean if we see that, we would call it out, but we're convinced it needs more specialized focus on their end. Jason Ader - William Blair: So, the pitch is basically heterogeneous.

Yes, on the massive ROI.

Your next question comes from Samuel Wilson - JMP Securities. Samuel Wilson - JMP Securities: Just a quick question, this is kind of qualitative, but I want to get a sense for average deal size that you're seeing in December quarter versus six months ago and versus like a couple of years ago. I'm kind of looking for a question of are customers back to normal in terms of the size of the deals in the purchasing they're doing right now in the December quarter?

Yes. Actually Sam, what we've seen over really the last three or four quarters and we believe this is mix driven. So VIPRION, 8900, 6900, what we're measuring now is our average order size trend up pretty nicely. As far as two years ago, comparing it, to be honest with you, I actually don't have that data because we used to give average deal size which just got to be too difficult to ascertain. We switched to this average order size. We've really been tracking that over the last year to year and a half, but we have been seeing it trend up. I think mark might have some color on that.

I think what we're also seeing is certainly in the second half of 2009. We saw customers really buying based on urgent necessity, but minimizing the expense because they were certainly top line concerned. I think in the last six months, we've seen that open up quite a bit. So we're seeing people buy bigger configurations, we're seeing people buy more boxes, more data center consolidation. Just more projects that I talked about at the analyst conference back in November.

Your next question comes from Troy Jensen - Piper Jaffray. Troy Jensen - Piper Jaffray: A couple of quick questions here, I’m curious if John maybe could talk about your traction with the VM partnership and then is there any way to quantify maybe like a percentage of unit shipments that are front ending virtualized servers.

Yes, the traction is being extremely well and in fact we actually track that now within www.salesforce.com, we actually measured it. We wouldn't give out any numbers on this Troy, but it’s increasing rapidly. So the number of virtualization deals that we're seeing that we're working across the board obviously VM is the most common one, gone up very significantly over the last nine months. Troy Jensen - Piper Jaffray: John, you've given over the last couple of quarters, the percentage of systems that are running for Version 4.0 operating system? I was wondering if you could update us.

Julian's just telling me it’s approximately 15% still. Troy Jensen - Piper Jaffray: 15%, I thought it was 9% at your Analyst Day or am I mistaken here?

I mean, we'll check that Troy, but we think it’s 15%, but we'll check it.

Your next question comes from Brian Marshall - Broadpoint AmTech. Brian Marshall - Broadpoint AmTech: Question with regards to the ramp in the OpEx, it looks like on a pro forma basis, we increased a little over $8 million. Going forward, I was wondering with regards to the leverage in the model, I mean seems like you're going to be increasing your rates of hiring going forward. So, just wonders if terms of sustainability of that ramp in the future, looks like over the past couple of years, you've averaged a couple million dollars incremental add on the quarterly base. I wondering, if that, do you expect that to up tick a little bit in the next couple of quarters?

As we've said, we definitely invest behind revenue. So, that's the mode that we make decisions in relative to our spanned headcount, other investments. The last couple of quarters, we've been at this above 31% operating margin level. I think if you layout the numbers that we gave you, relative to our revenue, span, and gross margin, you'll see that for the coming quarter, we think we'll stay in that relevant range right there, about 31%. I would want to highlight that do think that's a sustainable model. We're top line driven. We want to grow our revenue. We're going to invest to do that, but we do believe overall our margin structure, we can sustain it. We'll update you quarter-by-quarter, tell you what we plan to hire and then as we always say, we'll watch our revenue very closely. We track it. We get revenue daily. We track it weekly. We assess how we're doing against expectations, histories, seasonality, and we make our investment decisions accordingly. Brian Marshall - Broadpoint AmTech: Then final question with regards to the Telco service provider vertical, it looks like this has been kind of low 20s in terms of mix of total revenue. Would you expect that to up tick here in the next couple of quarters as service providers’ start coming back to the wealth so to speak?

Absolutely, as I'm sure you know, a lot of Telco’s will shutdown their network additions in the December timeframe. So we really expect to see some traction. We have some good sized projects that we're getting traction on this quarter and for the rest of 2010.

Yes and as we've said, it is based on mobile data applications. We just don't see that slowing up in the short term. Because remember, very much at the layer seven user added value end of that. That's just staffing.

All of the browsers on Blackberries, on iPhones are driving network traffic through the roof. Brian Marshall - Broadpoint AmTech: Safe to say this is probably your fastest growing vertical for the calendar year 2010?

Probably, but there's also some other stuff going on in the technology area as well and federal, we're feeling very good about federal business. I mean it was down sequentially U.S. federal, which you would expect last quarter. However, it was the best Q1 federal that we've ever had. So we know we have a lot of projects, when we look at the year, we think, we feel good of it.

Your next question comes from Mark Sue - RBC Capital. Mark Sue - RBC Capital: Hi, Mark Sue, RBC Capital, John, is there any notion of cash expense from the lack of spending last year and are we resuming a lot of these projects? Is there a time ticket to a lot of these projects that you're seeing now and your thoughts of maybe relative strength, the first half versus the second half of this year and I ask because typically, you say the goal is to grow revenue sequentially each quarter. Now, you're saying you absolutely positively will grow revenues in the quarter.

I think the word that John always talking about is believed, we believe. In terms of the catch ups, I mean I guess there must have been some catch-up because I use the phrase plush in the first half and I pick that word specifically because it was only a cause. We didn't see a massive amount of budget plush as such. We didn't see much of that. That the guidance Andy talks about for this current quarter which is normally a soft quarter for us historically. That guidance is based on book-to-bill equal to one. So, clearly, we feel pretty bullish about that and as I said in my bet, the market drivers look good for us data sense a consolidation, virtualization, cloud computing and mobile data all feel good. So, I don't think it has been a massive catch-up and then there's going to be a delay. It doesn't look like that, but, I always throw in that cautious thing given the events of a year ago. Mark Sue - RBC Capital: Is there any part on the length of visibility, just kind of how that's changed from a year ago? Can you kind of see pretty clearly six months out at this point?

That would be two strong we feel good about our visibility in the quarterly basis. We feel reasonable about it on a six monthly basis. I also mentioned our pipeline is very solid. All of the pipeline metrics are looking very good.

Your next question comes from Erik Suppiger - Signal Hill Erik Suppiger - Signal Hill: Signal hill. First off for the March quarter, do you always forecast based on a book-to-bill equal to one?

Historically, that's been our about the methodology that we have applied to coming up with guidance. Erik Suppiger - Signal Hill: It seems like you've had book-to-bill at less than one in some versus that...

Well, actually, if you go back, I know at least the last three and probably four years, our book-to-bill in March has ended up being less than one, but we still guide based on equal to one. Typically, we're not making a statement that forever we're going to do that, but I think if we got more the sulfur and drive it, I would probably get some indication. Erik Suppiger - Signal Hill: Sounds like you had some pretty strong backlog right now. Are your lead times extended at all?

Yes, with the increase in demand we've seen out there generally for our business is we've gone out and dealt with the supply chain. We've seen some issues but our manufacturing team has been all over it and managed us through it well. So, the uncertain products, we've seen some extensions, but I think we're managing it pretty well. Erik Suppiger - Signal Hill: I would presume is being reluctant to add much more backlog though in light of extending lead times any further?

Yes, I think that's a fair assessment given the size of our business and the size of our backlog today. Erik Suppiger - Signal Hill: Lastly, the remote access product, it sounds like you’re just introducing the blades to support that. Is that something that is going to be contributing to revenues in the March quarter or where is that from a revenue perspective right now?

This is Karl. That APM module is actually available across our entire hardware line up. Its not just available on the PB 200 play. So, it just like any of our other modules that were release it’s typically we make them available across our newer platforms. So, everything from 1600 all the way up to PB 200 customers should be able to license that module.

Eric, this is Dan. One of the things with the latest Version 10.1 in the software, there is in of a lot of John mention like 118 different features including APM spoke about edge gateway as well and a myriad of other things. We actually embarked on the launch process for that toward the end of November and now we'll actually continue out into this quarter as well. So, you'll see more things, but we do expect that to contribute to revenue this quarter. Erik Suppiger - Signal Hill: Is the secure access piece getting much adoption?

Early days now, but yes, I'm looking forward to good things from that. The reaction from a presales systems engineering force when they were trained on it was pretty positive. We've used that as a very good litmus test.

Your next question comes from Jeff Kvaal - Barclays Capital. Jeff Kvaal - Barclays Capital: Andy, a couple of questions for you, one is in recent quarters, you've talked about the closed rate assumptions that you've used in setting your guidance. Is that something you can share with us this time?

Yes, definitely we've talked directionally about that. About the level of conservatism and I think, if you compare it to prior to the economy kind of dipping down a year plus ago, we're not back to those levels yet, but I think with the increased visibility that we feel we have now, the confidence in our business, we probably have brought that up a little bit compared to last quarter. Also, the close levels of this quarter actually were assuming less than last quarter. So, we're assuming more conservatism. However, I do want to give you the wrong impression here. In reality, Q1 close levels, the close levels in this quarter of Q2 do tend to be slightly behind anyway. So, we're almost back to normal one quarter versus the other comparison. So more conservative in last quarter, but we should expect to do that anyway. Jeff Kvaal - Barclays Capital: So, it’s fair to say that if you're now feeling comfortable enough to inject less conservatism in those assumptions than you might have for the past four or five quarters.

That's correct. Jeff Kvaal - Barclays Capital: The corollary, I guess, to you talking about book-to-bill, equal to one in March are then while March obviously isn't going to be as weak this year as you had prepared us for in the past, it does seem as though there's some likelihood, that it may still be the weakest quarter of the fiscal year. Is that a fair assumption?

I wouldn't categorize it this way. Certainly, at the beginning, when we talked to the conference in November, Andy mentioned that we expect to grow sequentially, but possibly not in the March quarter. Clearly, we're more optimistic now than that. I think from a March perspective, this is what looking like a pretty solid quarter.

Your next question comes from Ryan Hutchinson - Lazard Capital Markets Ryan Hutchinson - Lazard Capital Markets: I want to try and look at another way everyone's asking sort of the same question. The book-to-bill is greater than one. The pipeline is there. The close rates are better or a little bit more conservative given the seasonality, but I think what's on everyone's mind is the fact that this large deal which everyone, certainly myself, thought would be more linear in fashion was indeed a little more front end loaded. At the same time, you're giving pretty aggressive guidance in the March quarter. John, I know you've quantified it in a number of different ways, but maybe dig down a bit deeper in terms of more large deals that you have and the more tricks in your bag. Just more color around the guidance you provided.

Yes, I think it’s pretty straightforward actually. The last deal that we got as we said it was right at the end of the quarter and went into backlog moving into the quarter we just finished. We're moving into this quarter with more backlogs. So that the big deal from that perspective in terms again it becomes irrelevant almost, because it’s all about our bookings rate and our bookings rate was very, very solid last quarter. Then we also mentioned our pipeline in general is very strong right now. So, the backlog of book-to-orders is bigger and the pipeline is bigger. Ryan Hutchinson - Lazard Capital Markets: I'm assuming there are probably some additional large deals on top of that we haven't uncovered yet in the field.

With a backlog going up, we obviously won a number of big deals. We talked to the technology, they escalate tend to be bigger deals, but it’s not something we talk about publicly. Ryan Hutchinson - Lazard Capital Markets: Finally, just a clarification should the sales and marketing line dip down or be flattish on a sequential basis in absolute dollar terms?

I think in absolute dollar terms, you'll see it go up with sales and marketing.

Your next question comes from Min Park - Goldman Sachs. Min Park - Goldman Sachs: Just a couple of quick questions, I just wanted to first see if you can give us your thoughts on the competition more broadly and if you can comment on any changes in your win rates this quarter versus prior periods?

We're not seeing. I mean, I mentioned in my introduction that I think this is the strongest competitive position we've been in. So that's a pretty clear indication of what we view. We haven't seen much change. We don't see much of Cisco in the field. We see Citrix obviously and then we have some other smaller players, but there's really no significant change. Obviously, we won't see this. We did gain share last quarter and we'll see what happens next quarter given this result. So one more thing, obviously the gross margins have been very solid which is probably the best indicator of competition. Min Park - Goldman Sachs: Then have you seen any changes in the pace of your new customer ads and also Andy, if you can give us a breakdown of revenue between current customers and new customers?

Actually, the way it broke down was we were at about 69% from existing customers. This quarter, which is actually up a little bit, we still think that's indicative of the economy. Also the large deal we've been talking about came from an existing customer and that impacted it. We still feel good about our new customer additions. We'll watch it very closely as we evaluate our growth opportunities there and we feel good.

This is John Eldridge. We'll take two more callers and then we're going to wrap it up, okay.

Your next question comes from Brian Modoff - Deutsche Bank. Brian Modoff - Deutsche Bank: A couple of questions, John on ARX, you put a lot of resources in. You're hiring a lot of resources and people lot of EMS. You’re hiring a lot of people into that. When does that become more significant as say a 10% piece of business? Then your AMEA business, it seemed to perk up in the quarter. What are you seeing? Anything you can bribe in terms of color over how Europe is doing overall?

With ARX, we have a goal this fiscal to on a quarterly basis, get to double digits in revenue. We're pretty convinced once that starts that we'll start to see the momentum. The momentum builds momentum. That's a short term goal. We haven't given anymore after that, for example, we're not seeing when we would expect it to be 10%. We do think by the way the drivers in other side of our business are very strong. So from a percentage point of view, I'm not so concerned about that. It’s more about getting absolute dollars up in ARX. Then I mentioned AMEA was the star of the quarter. They had a very solid quarter both in terms of revenue growth and sales bookings growth as well, so which bodes well of course for this quarter. The main reason, we have had a change of management in AMEA over a year ago. It’s clearly having an effect overall. They're winning really big deals. I mentioned several deals above $1 million. Our staffing looks like the profile here in the United States, and allows the perspective. So that's the trend we want to see in all geographies. Brian Modoff - Deutsche Bank: Finally, on Japan, do you talking about Japan being better this quarter. Is that because you got a new brand blade into customers over there that’s starting to shift this quarter?

Precisely more related to seasonality and we're coming towards the financial year end in Japan. So we’d expect to see that and that's what the forecast is indicating.

Your final question comes from Jeff Luber - Wells Fargo Securities. Jeff Luber - Wells Fargo Securities: Couple of questions, first, can you discuss TMOS Version 10.0 penetration rates and to what extent product strength is being driven by hardware upgrades fueled by the adoption of the operating system?

We don't give out specific data on the actual penetration rates. Most of the stuff we're shipping though unless the customer requests it is no V 10.0. The real issue is when we bring V 10.0, we add new functionality and like V 10.1 we talked about with the extra module, that's the real interest because that drives incremental revenue, but from a penetration point of view, it is pretty significant now in terms of the number of shipments. I don't think we have the actual percentages, but it is key operating system revision that goes out after the customers. Jeff Luber - Wells Fargo Securities: Then from a vertical basis, it look like sales in the financial vertical were up more than $30 million sequentially suggesting an up tick in business from financial customers outside of the large deal. Can you discuss what you're seeing in the vertical and whether or not there are other large deals that are contributing to the strength and how we should think about the financial vertical over the remainder of the year?

We consolidation is definitely a big opportunity. Business consolidation that then drives data center IT consolidation that drives data center consolidation. That's going to be I think a continue opportunity for us. I did see, by the way, that from a bookings perspective, the verticals were pretty much inline. So, yes, it was strong. I think it was above the 20% mark. That's pretty much in the norm for a good, strong financial, but yes, financial technology and obviously service provider are still they're the key ones that we would expect to see in the 20% plus range maybe slightly below 20, but usually above 20%. Jeff Luber - Wells Fargo Securities: Then finally on ARX, some of the large Wall Street banks were early adopters of the product, now that you're seeing some of the financial customers come back and put money to work, are you seeing renewed interest in ARX amongst these customers and how is that impacting the outlook for this product going forward?

Yes, I mean we have been seeing multiple shipments in some of the sales that we've actually done either before or around acquisitions so we have seen some of that. Our main focus is getting new customers and driving across the verticals and that's been slow, but with the focus I think we're putting in from an investment, we want to see that increasing. Jeff Luber - Wells Fargo Securities: Right now, ARX majority is not from a financial vertical, is that correct?

I think it depends on the quarter there's been quarters where the financial vertical with ARX has been pretty solid actually.

Thank you all very much for joining us. We look forward to seeing many of you during the coming quarter.

Thank you. That thus does conclude the call for today. You may disconnect your phone lines at this time.