John McAdam - President and CEO Andy Reinland - EVP and CFO Karl Triebes - EVP, Product Development and CTO Dan Matte - EVP, Marketing and Business Development Manny Rivelo - EVP, Security and Strategic Solutions John Eldridge - Director, IR

Paul Silverstein - Credit Suisse Jeff Kvaal - Barclays Bill Choi - Janney Capital Markets Brian Modoff - Deutsche Bank Subu Subrahmanyan - The Juda Group Erik Suppiger - JMP Securities Catharine Trebnick - Northland Securities Eric Ghernati - Bank of America/Merrill Lynch Ittai Kidron - Oppenheimer Amitabh Passi - UBS Ryan Hutchinson - Lazard

Good afternoon and welcome to the F5 Networks Fourth Quarter and Fiscal 2012 Financial Results Conference Call. At this time, all parties will be able to listen only until the question-and-answer portion. Also today's conference is being recorded. If you have any objections, please disconnect at this time. I'd now like to turn the call over to Mr. John Eldridge, Director of Investor Relations. Sir, you may begin.

Thank you, Victor. Welcome to all of you to our conference call for the fourth quarter and fiscal year 2012. John McAdam, President and CEO; and Andy Reinland, the Executive VP and Chief Financial Officer will be speakers on today's call. Other members of our executive team are also on hand to answer questions following John and Andy's prepared comments. If you have any follow-up questions after the call, please direct them to me at 206-272-6571. If you don't have a copy of today's press release, it's available on our website at f5.com. In addition you can access an archived version of today's live webcast from the Events Calendar page of our website through January 23. From 4:30 PM today until 5 PM Pacific Time on October 25, you can also listen to a telephone replay at 888-568-0394 or 203-369-3916. 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 these statements. Factors that may affect our results are summarized in our quarterly release and described in detail on our SEC filings. Please note that F5 has no duty to update any information presented in this call. Before we begin the call, I want to remind you that we are holding our 2012 analyst/investor meeting in New York on November 15. If you are planning to attend the meeting and have not registered, we invite you to register online through the link on our IR Events Calendar entry on November 15. I hope you can join us in New York for that event. Now, I'll turn the call over to Andy Reinland.

Thank you, John. F5's fiscal 2012 was a year of solid execution in a difficult macroeconomic environment. We were able to achieve 20% revenue growth, maintain world-class operating margins and delivered record earnings and cash flow while developing products and services that set the stage for several years of continued revenue growth. Following discussion of results for the fourth quarter and for fiscal year 2012, we will provide guidance for Q1 2013 and outline our general planning assumptions and expectations for the year. As a reminder, all non-GAAP numbers excludes stock-based compensation expense and amortization of purchased intangible assets. A reconciliation of GAAP to non-GAAP results is included with our press release. For the fourth quarter of 2012, revenue of 362.6 million was within our guided range of 360 million to 370 million, up 3% from the prior quarter and 15% from the fourth quarter a year ago. Book to bill for the quarter was equal to one. Q4 product revenue of 209.7 million, up 6% from the fourth quarter of last year, represented 58% of revenue. Service revenue of 152.8 million increased 30% year-over-year and accounted for 42% of revenue. Q4 revenue from our core application delivery networking business was 356.8 million and revenue from our ARX file virtualization business was 5.8 million. On a regional basis, the Americas grew 8% year-over-year and represented 56% of revenue. EMEA representing 22% of overall revenue grew 29%. APAC at 15% of revenue grew 31% and Japan 7% of revenue grew 13% from a year ago. By vertical, telco represented 19% of sales during the quarter, technology 17% and financial 20%. Total government was 17% of sales, including 10% from US Federal. During Q4 we had two greater than 10% distributors; Avnet Technologies which accounted for 16.8% of total revenue and Ingram Micro which represented 12.8%. Continuing down the income statement, GAAP gross margin in Q4 was 82.7%, non-GAAP gross margin was 84%. Operating expenses of 188 million were at the low end of our 188 million to 195 million guided range. And non-GAAP operating expenses were 164.6 million. GAAP operating margin was 30.8%. Our non-GAAP operating margin was 38.6%. Other income for the quarter was 900,000. The Company's GAAP and non-GAAP net income for the quarter reflect the higher than expected effective tax rate. This resulted from a higher than expected impact of foreign permanent tax differences and a higher blended effective state tax rate which increased our GAAP effective tax rate for the fourth quarter to 39.9%, above our expectation of 35.5%. Our non-GAAP effective tax rate was 37% above our 34% expectation. These higher than anticipated tax rates had an impact of approximately $0.06 to GAAP EPS and $0.05 to non-GAAP EPS. Reflecting the higher tax rate for the quarter, GAAP net income for Q4 was 67.7 million or $0.85 per diluted share below our guided range of $0.90 to $0.93. Non-GAAP net income was 88.7 million or $1.12 per diluted share, also below our guided range of $1.16 to $1.19. Revenue for all fiscal 2012 was 1.38 billion, up 20% from fiscal 2011. GAAP net income for fiscal 2012 was 275.2 million or $3.45 per diluted share. Non-GAAP net income was 348.6 million or $4.37 per diluted share. Turning to the balance sheet, in Q4 we generated 148.6 million in cash flow from operations which contributed to cash and investments totaling 1.19 billion at year end. For all of fiscal 2012, cash flow from operations totaled $495 million. DSO was 46 days. Inventory at the end of the quarter was 17.4 million. Deferred revenue increased 30% year-over-year to 447.3 million. Capital expenditures for the fourth quarter were 11.3 million. During the quarter, we added 125 employees ending the year with approximately 3,030 full-time employees. For the fiscal year, we added 540 employees, an increase of 22%. In Q4 we repurchased approximately 514,000 shares of our common stock at an average price of $97.29 per share for a total of 50 million. Approximately 180 million remains authorized under the current share repurchase program. Moving on to our guidance for Q1 and our fiscal year '13 outlook. We are weighing a number of factors as we determine guidance for Q1 and assess our growth prospects for fiscal year '13. As we have referenced several times over the year, we do anticipate typical fiscal Q1 seasonality. We also recognize that our short-term visibility continues to be limited by the macroeconomic uncertainty which caused many of our customers to slow or reduce spending in the second half of fiscal 2012, particularly in the case of larger million dollar plus type opportunities. At the same time we are anticipating a very positive reception to the new products and platforms that we will be introducing in fiscal 2013. Throughout the year, we are rolling out a powerful lineup of new hardware platforms, software products and significant performance increases to our virtual products that will drive new and increased growth for F5. We also see momentum building in customer engagements for our diameter signaling products from the Traffix acquisition and believe this will drive material revenue in fiscal year '13. Lastly, we see a very real market share opportunity with the recent announcement from Cisco to cease development of its ACE product line and we are being very aggressive in our efforts to capture this opportunity. In consideration of these factors, for the first quarter of fiscal 2013, we are targeting revenue in the range of 363 million to 370 million. We are forecasting GAAP gross margins to remain in the 83% range, including approximately 3 million of stock-based compensation expense and 1 million in amortization of purchased intangible assets. We estimate GAAP operating expense of 193.5 million to 198.5 million, including approximately 25.5 million of stock-based compensation expense. We anticipate a GAAP effective tax rate of 37% for the quarter and a non-GAAP effective tax rate of 34.5%. Our Q1 GAAP earnings target is $0.86 to $0.88 per share. Our non-GAAP earnings target is $1.14 to $1.16 per share. We expect DSO in the mid-to-high 40-day range. We anticipate inventories in the range of 17 million to 19 million. We plan to increase our headcount by approximately 100 employees during the quarter, and we believe we will generate cash flow from operations in excess of 145 million. For fiscal 2013, our general planning assumptions and expectations are as follows. We expect to see sequential revenue growth throughout the year with more robust product growth in the back half of the year, as demand builds related to our forthcoming product refresh and new security and service provider software modules. We anticipate GAAP gross margins consistent with our Q1 guidance of 83%. We are targeting non-GAAP operating margins for the year to be at or around 38% with some seasonal fluctuation as margins will be a bit lower in the first half and stronger in the second half. We expect stock-based compensation expense to approximate Q1 levels until our next annual grant in August. Capital expenditures are expected to be 6 million to 12 million per quarter with some quarter-to-quarter variability related to investments. And consistent with Q1, we expect our effective tax rates to average approximately 37% on a GAAP basis and 34.5% on a non-GAAP basis throughout the year. These tax assumptions do not assume a reinstatement of the R&D tax credit. As John mentioned, we will be holding our analyst/investor meeting at the Roosevelt Hotel in New York on November 15. We look forward to seeing you there. And with that, I will turn the call over to John McAdam.

Thanks, Andy, and good afternoon everyone. I'll take a few minutes to discuss F5's performance in fiscal 2012, talk in more detail about our Q4 results and then comment on our outlook and the exciting opportunities we see going into fiscal 2013. I was very pleased with the F5 team's performance in fiscal 2012. In spite of a difficult macroeconomic environment, especially in the second half of the year, we achieved year-over-year revenue growth of 20% with world-class non-GAAP operating margins above 38%. We accomplished this while investing significantly in additional headcount, increasing our total net headcount by 540 employees, ending the year with a total of 3,030 employees. We exited fiscal 2012 with a stable balance sheet with almost $1.2 billion in cash and investments and no debt, having purchased 185 million of our common stock during the year. Sales of our VIPRION chassis-based products were particularly strong with year-over-year growth of 107%, driven by strong adoption of the mid-range VIPRION 2400 system, as well as sales of the high-end VIPRION systems into the service provider markets. In addition our overall software sales increased by 38%, driven by a significant increase in software module attach rates and strong growth in sales of the software only versions of our product portfolio. The growth in our software attach rate clearly benefits our business model and is also critical to our market expansion strategy. We have made tremendous progress in expanding our opportunities into key markets, including security, service provider and cloud-based architectures. In security we now have the most comprehensive integrated solution in the industry that includes our application firewall, ASM and a remote access solution, APM. Software revenue from our security modules was approximately $55 million last year, up 90% from the previous year. This is software only revenue and doesn't include the service revenue, the associated BIG-IP of VIPRION hardware, incremental ADC revenue or any of the revenue from the datacenter firewall solution. In the service provider market, our ability to deliver intelligent policy enforcement, at world class performance levels continues to be a key capability for managing the challenge of ever expanding increase in mobile data. Our high-end VIPRION platform combined with the application fluency of TMOS and the flexibility of features like iRules gives service providers a unique opportunity to build value-added services. We also made good progress with sales of carrier grade NAT, firewall, IPv6 and traffic steering solutions. I'm also very pleased with the progress we are making with the acquisition of Traffix Systems that was completed mid fiscal 2012. The Traffix team is world class and we are proud to have them as part of the F5 family. As I mentioned last quarter, we believe the opportunity with the Traffix Diameter-based solutions will prove to be both significant and strategic to our overall service provider business. The Traffix pipeline has been growing nicely as service provider roll out their LTE architects and adopt Diameter as a standard signaling protocol. I'll talk more about this when I discuss our fiscal 2013 opportunities. Our services business delivered strong performance consistently throughout fiscal 2012 and continued to be a significant profit and revenue growth contributor, while maintaining customer satisfaction at world-class levels. The attach rate of service to product sales continues to improve and we want to again experience excellent renewal rates. We also continue to grow our consulting business which increases customer satisfaction and drives additional product revenues. As far as Q4 is concerned, I'm very pleased with our results. We delivered 15% year-over-year growth in spite of a cautious spending environment. From a geographic perspective, both EMEA and our Asia-Pacific regions had solid sales bookings growth. In North America we saw reasonable sales growth for orders up to $1 million in size, but a drop-off in sales orders above $1 million, as customers postponed large purchases or reduced to size of the purchase order. Overall, our Q4 financial performance was very strong. Quarterly cash – free cash flow was over $137 million, a record for the Company and the non-GAAP operating margins remained solid at 38.6%. Our services business completed the year with another strong quarter and a very healthy deferred revenue balance moving into fiscal 2013. As far as the outlook is concerned, it's appropriate to be cautious given the very conservative spending environment we saw in the second half of fiscal 2012. Having said that, we believe we have a number of exciting opportunities coming in fiscal 2013 to drive revenue growth and we plan to continue to invest in our business to take advantage of those opportunities. We increased our sales force in 2012 by approximately 20% and we expect to see the benefits of this investment throughout the year. We have a clear and growing leadership position in the ADC market. Our goal is to continue expanding our addressable markets and further increase our market share by developing a broad array of integrated solutions running on industry-leading platforms. During the next two quarters, we will be delivering our largest appliance refresh in four years. Our next release of TMOS includes a number of new security and service provider offerings as well as products to enable cloud architectures. For example, we will be releasing the industry's first application delivery firewall, ADF, that integrates Level 3 to Level 7 security including [the] [ph] loss prevention and unique application fluency to prevent sophisticated application attacks. ADF provides performance metrics clearly superior to those offered by our competitors. We will also be delivering the industry's broadest range of hypervisor support of world-class performance levels. For the service provider market, we will be delivering additional carrier grade NAT functionality and a new software module, as well as a policy enforcement module with DPI classification technology. Additionally we expect to release a new eight-slot version of our VIPRION that will leverage the PB 300 blades released last quarter and effectively double the unmatched performance of VIPRION 4480, our current high-end platform. As I mentioned earlier, we also expect to benefit from the rollout of LTE infrastructures with our Traffix Systems signaling delivery controller and diameter solutions. The pipeline for these products is building steadily and we're seeing a fairly large uptake in RFP and proof-of-concept request. F5 has the opportunity to be a leader in this area which will not only provide growth opportunities over the next three years, but should also significantly enhance our position as a strategic supplier to global service providers. We will review our product roadmap deliverables as well as our market initiatives in more detail at the analyst and investor meeting in November. Andy provided a projected revenue range as well as some of the high-level expectations for fiscal 2013. As I mentioned several times over the last couple of years, we expect to see some seasonality in our business during Q1. The first quarter seasonality, which is normal in the technology market and in line with our peers, is reflected in our guidance. Acceleration of product revenue growth is the major financial goal for fiscal 2013. I remain very optimistic of the future of F5 as we enter fiscal 2013. We enjoy a very strong competitive position and I believe our fiscal 2013 product deliverables are the most comprehensive we have seen in several years. I'd like to take this opportunity to thank the entire F5 team and partners for the tremendous efforts last year and I look forward to the continued support in fiscal 2013. And with that, we'll now hand the call over for Q&A.

(Operator Instructions). Our first question comes from Paul Silverstein with Credit Suisse. Your line is open. Paul Silverstein - Credit Suisse: Yeah, I'm looking at the numbers. It looks like you had a huge US Federal, up over 70%, but you’re down in financials vertical over 10% and telecom was also down over 10% sequentially. I'm trying to tie this together with the geographic comments. It looks like you had a good quarter everywhere, but in the Americas based on the numbers. Is this a function specifically of financials, large deals, in your commentary weakening? And how much of this – I know the numbers are still small with respect to virtual additions, but in your commentary you noted that there was a big spike off albeit off a small base, but is that starting to have an impact on the revenues?

Yeah, first of all, I don't think the virtualizations are having any significant impact whatsoever. The numbers of all are great in terms of percentage growth. They're obviously pretty small in total. So I don't think that's an issue. Now we spent a lot of time on this after the quarter and frankly during the quarter, but we're pretty convinced when we look at the spending part of the large Fortune 500 companies generally, obviously finances or the whole chunk of them was in the Fortune 500, but generally there is definitely a cautious spending environment. And as I said when I was doing my introduction, the spending part is actually pretty reasonable if you compare 200k to 500k, 500k to a $1 million year-over-year. However, and this is mainly in North America because this is where most of our large bills tend to come from, when you get to the $1 million plus bill, we definitely seen a – saw a slowing there, and I should say, in the quarter and generally in the second half. Paul Silverstein - Credit Suisse: John, was that specific to any of those big deals or most of those concentrated in the financial vertical or was it really spread more broadly across your base? And I also got a question about the linearity of the quarter, if you could give us any insight on that?

Okay. No, they weren't really concentrated that much in financials, there are examples of that, but not so much. Service provider definitely was lower, I mean at 19%. That's really towards the low end where we saw some slowness there, but not specifically in financials.

And then to linearity, Paul, really what we saw is what we've seen over the last two quarters where a little above 50%, we normally follow the 50 first two months, 50 third month. The last three quarters have been a couple of points higher than that, but consistent over the last three quarters. Paul Silverstein - Credit Suisse: Thank you.

Our next question comes from Jeff Kvaal with Barclays. Your line is open. Jeff Kvaal - Barclays: Yes, gentlemen, thanks very much. I have a couple of questions. I think number one, the verticals that you were discussing were both lumpy up and lumpy down, depending on the vertical. How sustainable do you think the federal strength is into the fourth quarter? And then similarly should we be expecting the telco vertical to be recovering? And then Andy, for you in particular, I think in the past you've talked about the March quarter being a possible exception to the sequential growth for the year. Can we confirm that you are not making that exception this year?

In terms of the verticals, first of all, I guess this is pretty obvious, but the US Federal we definitely expect to be down sequentially from the year-end, which is extremely normal. But we feel very good about the team and the job they did and the relative year-over-year performance that we would expect to see throughout the year. So that's one thing. The second question was…

Was based on the sequential revenue growth…? Jeff Kvaal - Barclays Capital: Yes, but John before you leave the verticals, how about telco?

Yeah, we're actually assuming a relatively slow telco for the first – for next quarter. That could possibly bleed into the March quarter as well, but we're not talking about that yet, but definitely if we look forward to the gains that we've given, we aren’t expecting a strong service provider in Q1.

And then to the sequential revenue growth, you're absolutely right. If we look back over time in particular going back three, four, five years, March probably has been our most difficult quarter just based on seasonality and that's led by North America. What we've highlighted over the last couple of years is that we've really seen as we've grown to $1 billion and beyond that we've seen definite seasonality in our December quarter which is our Q1. And so as we look at the layout over the year, and we highlighted and you see it in our guidance our view on Q1 and we think off of that comparison we can grow in March now. But we're also highlighting that we think from a product basis, it will be stronger in the second half of the year versus the first half.

Yeah, the other point about that is that – the really big deal for us I think is going to be the release of [SOL] [ph] with the functionality we talked about as well as the product refresh. We are absolutely – and we'll talk more about this in the Analyst Day that's coming up, but we are clearly pushing very hard to get them available by the end of this calendar year. So if we achieve that, then I would expect to see some reasonably quick growth coming from that refresh which would obviously hit the March quarter. Jeff Kvaal - Barclays Capital: Thank you.

Our next question comes from Bill Choi with Janney Capital Markets. Your line is open. Bill Choi - Janney Capital Markets: Thanks. A couple of questions on the products. First, what was ARX contribution in the quarter? And also when I think about big deals, I immediately think VIPRION 4400, but your commentary seems to indicate strength also on the 4400. So can you talk about what the larger products in your portfolio are doing and are they still getting a digital module attach rate, more the chassis deployment issues? Thanks.

Yeah, just on the last part there – remember that was a year-over-year number in terms of VIPRION sales. However, they've been pretty solid quarterly right throughout the year. And one of the characteristics we've definitely seen is our higher rate of module attach rate which obviously drives the size of the system sale as well. The 2400 has just been strong from announcement, but the products above that, the VIPRION products above that have also been strong again with the attach rate. Service provider obviously was a bit weaker last quarter but that is definitely the main area that we sell the high-end VIPRION and I think that's going to continue.

And then to the ARX question, its contribution to revenue was 5.8 million for the quarter.

Our next question comes from Brian Modoff with Deutsche Bank. Your line is open. Brian Modoff - Deutsche Bank: Yeah, guys, a question around the product side. If you look at your guidance at the high end of the range of 370, assuming 30% year-on-year services growth which is what you've been doing here recently, implies about 5% product growth year-on-year. Can you talk about that and also how you see product sales doing through the year? You talked earlier about seeing product growth and if you can quantify that a little bit in terms of what you're thinking, are you talking about, something closer to your traditional kind of 50% to 20% range or something below that?

Yeah, but I'm not going to quantify it, Brian, but just to give you an answer. So first of all, remember we're talking about the refresh coming towards the end of the calendar year, that's the target. That clearly won't have a major impact on the first quarter. So that's one thing. Secondly, don't forget the seasonality issue. We don't want to be the only company out there that doesn't have seasonality. I wish we were, but we're not - we have seasonality in Q1, so that's taken into account. I feel personally very strongly that the product refresh that the DPI functionality that what we're doing with the ADF, the application delivery firewall, is going to drive product revenue. But given this environment we're in, we're not going to throw numbers out there. We're going to play a quarter a time at the moment. Brian Modoff - Deutsche Bank: Okay. Can you talk a little bit about VIPRION then, just give us an idea what that did in the quarter? Was it down sequentially along with telco and the [telco piece] [ph]?

We don't break out the mix when we talk about the results. I think we would say as we look at our high end generally over our low end, we saw it pretty consistent.

I mean the very fact that we talked about the VIPRION products over the year have been over 100% growth, the very fact we talked about the VIPRION 2400 being hot, that means there are some issues there that we need to fix at the appliance range, from a competitor perspective. And that's what the whole appliance refresh is all about. So we feel really good about our VIPRION trends and the way they're going to continue. Brian Modoff - Deutsche Bank: Thank you.

Our next question comes from Subu Subrahmanyan with The Juda Group. Your line is open. Subu Subrahmanyan - The Juda Group: Thank you. Could you talk a little bit about the opportunity with Cisco discontinuing their ACE development, how you are factoring that into your thought process in the first quarter and through the year? And John you mentioned some security module sales numbers. Could you (inaudible) what those numbers were?

Okay. On the issue with Cisco in terms of their (inaudible) in the market, I think it will be very significant for us. And by the way I'm not alone in the room here, everybody feels that. We did a North America quarterly business review on Monday where we get to see the key management there and they're very excited about it. Let me pass it over to Dan. He can maybe give you some more details about – we are in a prime position here because a lot of these accounts tend to be larger accounts, they want to have a company that's very focused in this market with a great balance sheet and all that good stuff and that's really us. So I think you're going to hear us talking very, very favorably of that opportunity during the year.

Subu, this is Dan. So we're pursuing that very aggressively out in the field all around me, going to all regions. We've already seen a number of face-to-face meetings take place. We've had just lots of interest around it. Cisco is doing roughly 200 million of run rate per year in ACE sales and plus they have a pretty significant installed base over the years starting with LocalDirector and all the products that they've had over time. So we've got some great incentives for customers and partners. So we have our channel involved in this as well. And then also I think in the short term, it's important to know that the activities that Cisco has going together are purely of a reference in nature, so there's always challenges with the sales force alignment and compensation and how incented will those people be. So our challenge with Cisco over time has been getting invited to the party and if we do get invited, we do very, very well. And clearly there were people that were at the party and are asking us to participate. So we're as John said, very bullish on it.

Let me add one more other thing about this I think it's exciting for us as an opportunity, this isn't just about replacing that base, it's not just about that. This is about giving us a very significant opportunity to get into more Fortune 500 accounts and sell much more than the current base we've got because what we'll be replacing here is mostly load balancing type applications. We will then work with our other value-added stuff that we've got in TMOS; security, optimization in the software module. So I think it's a much bigger opportunity than just replacing that base. And as I say, I think you'll hear us talk into that in quarterly calls for this year. Subu Subrahmanyan - The Juda Group: Thanks.

Our next question comes from Erik Suppiger with JMP Securities. Your line is open. Erik Suppiger - JMP Securities: Just on the Cisco front, what is assumed in your outlook as you – in your guidance for the December quarter, are you assuming that you're closing much Cisco business or what kind of sales cycle is there associated with that?

Yeah, we do have opportunities in the pipeline already because of this opportunity. Some of these opportunities are close to commit range, but I wouldn't say it's markedly incremental in terms of what we are assuming for the guidance. As part of our normal way, we look at what's in the pipeline? What's the fact of the pipeline? And then there are some deals that are related to Cisco or not, are they all in that, I'm sure we'll know, because it's just happened, it's just happened. So I wouldn't think about it too much in relation to our guidance. It's not been that significant. Erik Suppiger - JMP Securities: And how are you responding to Cisco with partnering with Citrix once they develop some integration with Cisco at their service products, how do you envision that you'll be able to address that?

Well, I don't think the integration of the products are doing, I think that's more in that definite space. We're going to use a tried and tested technique here in terms of competing with both Cisco and Citrix with win rates in their high 80s, low 90s which is better product, more focused, great customer satisfaction, best performance, most functionality, I feel pretty good about that.

Strong partnerships.

Strong partnerships. Erik Suppiger - JMP Securities: Okay. Just a quick question then. Andrew, what did you say the gross margin guidance was for the – non-GAAP guidance was for fiscal '13?

Well, we said that GAAP was 83%. We didn't give non-GAAP but I think it will be consistent with, probably close to 84%. Erik Suppiger - JMP Securities: Thank you.

Our next question comes from Catharine Trebnick with Northland Securities. Your line is open. Catharine Trebnick - Northland Securities: Thank you for taking my question. Could you say how many of the VIPRIONs that are installed have an attachment rate to virtualization? Is there any way we can tie some of that virtualization growth to your growth going forward?

This is Karl, Catharine. With the VIPRIONs, what's very popular is attaching vCMP which is virtualization for those platforms and that's been very popular. We have some very big customers, especially like in commerce and other areas, they are leveraging vCMP. So that's definitely – then of a really high trajectory with the platforms.

The other module that has been very significant with VIPRION has been ASM and APM security modules. Catharine Trebnick - Northland Securities: Got it. And then one quick thing on Traffix and the release, are you planning to release this next version on TMOS in Q4? Did I miss that earlier in the call or you didn't say?

We didn't say but our plan is to release at the end of this quarter and then it will start rolling out in the field going into next quarter. Catharine Trebnick - Northland Securities: And have you had any betas yet for the new DPI technology?

Yeah, we've been in beta for some time with all major features that are coming out…

Yeah, whenever we come out with our significant release like this, beta is obviously one of the critical parts. So that's been going on for quite a while. Catharine Trebnick - Northland Securities: All right. Thank you, gentlemen.

Our next question comes from Tal Liani with Bank of America/Merrill Lynch. Your line is open. Eric Ghernati - Bank of America/Merrill Lynch: Hi, this is Eric Ghernati for Tal. Sorry, this question has been asked a couple of times in different ways but I kind of want to clarify it a little bit. So assuming the refresh cycle, there's no refresh in the March quarter, do you – is there a reason to think that your product revenue would increase on a sequential basis or reverse the sequentially downtrend in Q1?

Well, first of all, I think I heard you saying we won’t expect a refresh of the products in the March quarter? Eric Ghernati - Bank of America/Merrill Lynch: That's right, and I know late in the calendar year going into the March quarter?

Yeah. So in other words, if we complete a goal of having these products available at the end of this calendar year, we would absolutely expect that refresh to have an impact in the March quarter, absolutely. Eric Ghernati - Bank of America/Merrill Lynch: Okay, that's helpful. The other question that I had for you is with respect to – if that's the case, then given that the seasonality that's across some of our verticals like government and telcos and financials, all of which are typically down on a sequential basis, where do you think the impacts would be most pronounced? Is it technology and others or…?

Yeah, I think it will be pretty broad based. I mean as we come out with this - the previous question was around DPI, obviously that's focused on the telco. I think with the new hardware platforms we're coming out with, that's going to give us great opportunity in more entry level, which will be more international geographies. I think it will be very broad based. Eric Ghernati - Bank of America/Merrill Lynch: So you think this could be even benefit telco in the seasonally slow Q1 – sorry, Q2?

Well, the one area that I see – we'll see on that. We have a fairly conservative view of telco for the December quarter and frankly we'll need to take a view as we move into January and we'll give you updates on that as to where we think that's going to be. Eric Ghernati - Bank of America/Merrill Lynch: Okay. One last question for me, the disclosure around the security software revenue, 55 million up 98% year-over-year, clearly a lot of that is incremental to your business. I'm sure you're going to hesitate put a firm number around it, but how should we think about the growth outlook for this particular piece of the business going into 2013?

Again, we wouldn't give you a specific. We will talk about it in more detail about security in November. We will do that. We thought it'd be a good idea actually to put some information on it and we're talking about ASM and APM security modules specifically and they obviously had a 90% growth. So we're not going to give you a specific, however do we think it’s going to be a good growth driver? Absolutely. We don't see that momentum – we think that momentum will continue. Eric Ghernati - Bank of America/Merrill Lynch: Can this – sorry, can the incremental – do you think the incremental sales from this product or revenue can get you close to your 2010 growth target that you already have?

Yeah, well, we're not commenting on that as we move into this year given the cautious environment we've been seeing. So we're going to do that quarter at a time. Eric Ghernati - Bank of America/Merrill Lynch: Thank you.

Our next question comes from Ittai Kidron with Oppenheimer. Your line is open. Ittai Kidron - Oppenheimer: Thank you. Guys, I wanted to talk about two things. First of all the security for the first time I think you've quantified $55 million and Andy correct me if I'm wrong, this is just ASM, APM just the module, not any service revenue attached to that. Am I correct?

Yes, exactly. Not only not service revenue but as John – yes, service revenue as John highlighted, but also nothing for our new application firewall, nothing on the hardware that's been driven. Those are just module sales. Ittai Kidron - Oppenheimer: Very good. And is the margin on this business in the upper 90s, is that the right way to think about this?

For the modules? Ittai Kidron - Oppenheimer: Yes.

It's pure software, so it's software margins. Ittai Kidron - Oppenheimer: Software margins, okay. And regarding your telco business, it's been down now for three quarters in a row if I'm not mistaken and it sounds like from your commentary – I'm sorry, just two quarters in a row but quite substantially in each of those two quarters and it sounds like you're preparing for another down quarter in the December quarter. I'm having a hard time understanding why would that be the case, why is that business deteriorating so fast?

I don't think there's any sinister or any trend there. It's pure project oriented where we see the project, we see the rollout, the dates and that unfortunately gives you some lumpiness and I think you're going to see that next year as well. Ittai Kidron - Oppenheimer: Well, could it be then that your win rates within this vertical is deteriorating, how do you gauge your presence there?

Definitely not, that's not the case. Because of most of the telco deals that we're talking about, they have a significant effect in the quarter because most of them are VIPRIONs, we don't have any competition with VIPRIONs when we're doing this. Ittai Kidron - Oppenheimer: Okay. And regarding the transition into the March quarter of 2013, so clearly by the end of this calendar year, I would assume, or around your Investor Day, you're going to announce many of these new products that you're talking about through the call and I'm trying to get an understanding whether you think there is the possibility that that creates a pause in demand from you customers? Number one. And number two – and maybe that's one of the reasons your large deal flow has somewhat slowed or being delayed or not closing as quickly. And second – John, when you talk to customers, how much of a concern is there from the elections and the potential fiscal cliff in February? Could it be that this delay in business could last through actually the March timeframe? Why isn't that more of a logical assumption?

Well, that's an economy question and frankly will depend on the economy. I don't think it's impossible, but we'll see. I do think by the way that a lot of uncertainty when we talk about macro, we are including the election and other, but certainly when we talk to customers, we are hearing a degree of entrenchment, there's no question about that. When that was in a really bad scenario in 2009 we only saw that for a couple of quarters and then of course we saw pretty massive suppressed demand. But I really think that the tailwinds we've got going for us puts us in a really good relative position. In terms of are people waiting for the product, we have no significant anecdotal information on that at all. I mentioned (inaudible) we met with our sales force, we didn't hear that. I'm not saying it's impossible, there are probably some examples, but I don't think that's going to be a material effect on the actual quarter. Ittai Kidron - Oppenheimer: Very good. Good luck, guys.

Our next question comes from Amitabh Passi with UBS. Your line is open. Amitabh Passi - UBS: Thank you. I just had a couple of questions. The first one, I think you characterized your expectations of revenues from Traffix being material in the next fiscal year. I was just wondering if you could help us just maybe bracket how you define materiality. Would it be at least 10% of your sales? And then I had a follow-up.

Yeah, we don't break it out like that. But material test mean it's going to have an impact on the top line numbers that allows us to increase investment and increase marketing efforts to expand that footprint. We're really looking at it now as an opportunity to grab footprint in that space and it's about getting out there and winning those fields. So that's our approach.

We also think by virtue of having that diameter footprint in data center, it really helps enable us with our DPI solution because that requires a tie-in directly to the diameter interface. And our upcoming release were a full diameter proxy which is built right into BIG-IP. So what it means now is we occupy this footprint, where we can do traffic steering, apply our intelligence to the traffic that's going through the carrier data centers, but also being able to communicate with other parts of it to our diameter routing. Amitabh Passi - UBS: Got it. And then just as a follow-up, John, I think a lot of people asked you about Cisco ACE. I wanted to ask you a slightly different question. You've been integrating security in your appliances, we're now seeing some of the security vendors, whether that be Juniper or Citrix trying to move towards integrating – at Palo Alto are trying to move towards integrating load balancing functionality. I'm just curious, how do you kind of – what do you make of some of these gyrations in the marketplace? Are you seeing any impact yet or do you think it will be a while before any of the security vendors have any success integrating load balancers?

Yeah, I think that's going to be a long time. And frankly and this is what the load balancer can be so generic in meaning, what we have, remember, is a session-based full proxy that basically just doesn't do packet load balancing and so we can do it at incredible speeds and we have the applications fluency associated with that, so we don't see that. One of the things I said when I did my introduction was I mentioned application delivery firewall is going to have performance above the competitors. We are talking about very significant performance and I think that and the functionality of an application fluency in areas like that, but in fact (price) [ph] performance is going to be a major advantage for us.

Amit, this is Manny. Let me just add something to it. And John highlighted here we have this whole proxy capability into our devices. When we orchestrated our technology whether it be hardware or software, it has a layer seven-full proxy which allows us to move through the protocol stack and add additional services in one pass-through router device of a session layer. That is significantly different than taking a traditional firewall and trying to apply layer seven intelligence to it. Putting a load balancer inside a firewall is a complicated issue. You always have to have the right platform from the foundation and what we've done is, we've built the right platform starting with some availability services and we've put security services in it, so we think we have a leadership position. The data will prove that out when we announce it later this year. And I think we're seeing some performance characteristics that are just – order to magnitude greater than anything in the market. Amitabh Passi - UBS: Thank you, guys. Appreciate it.

Hey, Victor.

Yes, sir.

We're going to take one more question and then we'll terminate the call.

Absolutely sir. Our next question comes from Ryan Hutchinson with Lazard. Your line is open. Ryan Hutchinson - Lazard: Great, thanks. A clarification and then maybe a question for Karl. The clarification maybe just some color around the fourth quarter contribution from security. I obviously appreciate the insight, helps us look at the core business as well. And then the question is more on SDN, given there's been a lot of investor debate, there's obviously a potential for an architectural shift here to occur whereby you could write applications to a controller who's going to serve the same function that some of the physical appliances are playing in the network. Some argue that it could even go as far as load balancers, firewalls as we look out over five years. So one, Karl, I'd like to get your insight into, if you think that's even remotely possible? And two, if it is, how do you guys participate? Thanks.

That's a big question. We're going to spend a lot of time on this at the Investor Day. We're absolutely – we have SDN in the roadmap and we're doing a number of things with our partners to support that, but we'll get into a lot more detail in a couple weeks here on exactly what we're going to do.

On the security, Ryan, obviously we don't talk security numbers in the quarter; we're going to talk a lot about it in November. We mentioned the growth rate on the modules of ASM and APM, for example, and how significant that was and we expect that to continue. Still we didn't talk about the data center firewalls and we won projects in that as well, so I can't give you numbers here but it's pretty damn significant on a quarterly basis.

Ryan, this is Manny. Let me just add one additional comment on SDN just so that you're aware and like Karl said, won't go in great detail but the one great thing about our platform is our platform has already a separation of data plane and control plane. Consequently it's very well suited to play in the SDN environment. And what you'll see is as we enhance to support the SDN protocols whether it'd be VXLAN, NVGRE, and our and our open (flow) we’ll stick in those SDN installations, if you will, and be able to provide services. So customers who are used to traditional F5 services will be able to carry those services forward in a hybrid environment and we’ll go through it in a lot of detail. Ryan Hutchinson - Lazard: All right. Thanks.

Okay. Thank you all for joining us today and we hope to see you in New York at the Roosevelt Hotel on November 15. Thank you.

This concludes today's conference. Thank you for your participation. You may now disconnect.