Ladies and gentlemen, thank you for standing by. Welcome to Allot's Fourth Quarter 2017 Results Conference Call. All participants are at present in listen-only mode. Following management's formal presentation, instructions will be given for the question-and-answer session. As a reminder, this conference is being recorded. You should have all received by now the company's press release. If you have not received it, please contact Allot's Investor Relations team at GK Investor and Public Relations at 1-646-688-3559 or view it in the company's Web site at www.allot.com. I would now like to hand over the call to Mr. Gabriela Toren of GK Investor Relations. Mr. Toren, would you like to begin?

Thank you, Operator. Welcome to Allot's fourth quarter and full year 2017 conference call. I would like to welcome all of you to the conference call and thank Allot's management for hosting this call. With us on the call today are Mr. Erez Antebi, President and CEO, and Mr. Alberto Sessa, CFO. Erez will summarize the key highlights followed by Alberto who will review Allot's financial performance for the quarter. We will then open the call for the question-and-answer session. Before we start, I'd like to point out that this conference call may contain projections or other forward-looking statements of the future events or the future performance of the company. These statements are only predictions and Allot cannot guarantee that they will in fact occur. Allot does not assume any obligation to update that information. Actual events or results may differ materially from those projected including as a result of changing market trends, reduced demand and the competitive nature of the securities systems industry as well as other risks identified in the documents filed by the company with the Securities and Exchange Commission. And with that, I would like now to handover the call to Erez. Erez, go ahead please.

Thank you, Gabriela. I'd like to welcome all of you to our conference call, and thank you for joining us today. In the fourth quarter of 2017, we again saw our revenues grow compared to the preceding quarter, and for the fourth quarter in a row, our book-to-bill ratio was larger than one. 2017 was a transition year for Allot. During the year, we made quite a few changes at the company. We refocused the company and are rapidly transitioning to become a security focused company. We made significant changes to the management team. We restructured the sales and customer success division into customer facing units or CFUs. We modified and approved many of our internal processes. We restructured some of our operations and shutdown some offices. And, we replaced Allot's custom hardware with standard commercial off-the-shelf or COTS hardware in many of our product lines. This is part of our transition to become a more software centric company. While we continue to improve on our execution and operations, the results of what we did are starting to be seen. We grew revenues quarter over quarter. We met our revenue targets for the full year 2017. We grew our backlog and we grew our revenues from security by over 40%. I am convinced that the changes made during 2017 build a solid base for Allot to return to growth and profitability. I would like to take a step back and examine the relevant security market as we see it. Think of the mass market of people, consumers, and small businesses constantly accessing the internet. We access the internet all the time. We access the internet over a wide range of devices, be it our mobile phones, computers, or tablets. We have an ever growing number of IoT devices in our…

Thank you, Erez. Before I begin reviewing the financial results for this quarter, I would like to inform everyone that in this call, unless otherwise noted, I will refer entirely to the non-GAAP financial measures when discussing operational results, which is what we use internally to judge the performance of our business. Non-GAAP financial measures differ in certain respects from the Generally Accepted Accounting Principles and excludes share-based compensation expenses, revenue adjustments due to acquisitions, restructuring expenses, expenses related to M&A activities, amortization of certain intangible assets and change in tax-related items. Now, with regard to the financial results, revenue for the fourth quarter 2017 were $23.2 million growing sequentially by 11% compared to $20.9 million in the prior quarter. Revenue for 2017 were slightly over $82 million compared to $90.5 million in 2016. I would like to give some details regarding the revenue breakdown and diversification. Security revenues that are defined as revenue-related to our Allot secure platform were $24.2 million in 2017 compared to $17 million in 2016, a growth of more than 42%. As revenue recognition creates a lumpy curve during our revenue breakdown, we will be reporting on the Allot Secure revenue on a yearly base only. The geographic breakdown of revenue for the fourth quarter of 2017 was as follows: Americas, with $3.1 million or 13% of revenues, EMEA with $15.16 million or 67% of revenues and Asia-Pacific with $4.5 million or 20% of revenues. Product revenues for the quarter accounted for 57% while service and maintenance and professional service revenues were 43%. This is compared to 65% and 35% split in the previous quarter. GSP revenues were 80% in the fourth quarter compared to 84% as reported in the prior quarter. It is important to note that revenue breakdown whether geographically or by product…

Thank you. Ladies and gentlemen, at this time, we will begin the question-and-answer session. [Operator Instructions] First question is from George Iwanyc of Oppenheimer and Co. Please go ahead.

Thank you for taking my question. Looking at full-year 2018, can you give me a sense of the visibility you have into the second year with the increased growth that you expect then?

Yes. First of all, our growth in 2018 is based on two main things. First of all, the backlog; we mentioned we are stuck in the year with a backlog of approximately $55 [ph] million. Generally, we are able to recognize our backlog over, I mean, 80% of our backlog over a period of one year. And on top of that the second reason is the way that we are looking at our pipeline. We do believe that our pipeline, first of all, is healthy and it comprise of quite a lot of opportunities, with different sales cycle. But based on those two elements, backlog and the pipeline, we do believe that can achieve our goal in terms of growth in 2018.

Okay. And with all the changes that you had with the sales force, can you give me a sense of productivity levels that you are getting from the new additions and with the new alignment of all the teams?

I'm not sure I have a fixed parameter for you off the top of my head, but I think you can understand that if books-to-bill in 2016 was under one for all the quarters, while we build backlogs throughout 2017, then you can understand that our bookings went up significantly. And since we didn't change the headcount itself by much, I would say the productivity in terms of booking per headcount definitely went up.

Okay. And the new R&D, I know that you are looking at adding; is that included in the $70 to $71 million OpEx number for the year, or would that be additional headcount additions given the timing?

I'm sorry; I didn't get the new -- I didn't get the start of the question, the new what?

The new R&D center that you are investing in, is that fully included in the OpEx guidance for the year?

Yes. I mean, as I mentioned before, the main reason -- one of the main reason for the increasing OpEx in 2018 is additional investments in R&D. So yes, the answer is yes, it is included.

Okay, thank you.

[Operator Instructions] The next question is from Alex Henderson of Needham & Company. Please go ahead.

Hi, good morning. This is Dan Park on for Alex. Congrats on the great quarter. So, I just wanted to clarify a few things; first of all, just wondering what the headcount was post-quarter?

Yes, the headcount at the end of the quarter was 477, simply.

And also -- sorry if I missed this, but if you can just tell what your service provider versus enterprise breakdown was for the quarter as well?

Yes. Service provider was 8% in the last quarter compared to enterprise, which was strange [ph].

Okay. Also, in regards to some of the OpEx investments that you are going to be making in 2018, is the right way to think about it -- it should be more back-half weighted versus front-half?

It will be somewhat more back-half weighted. I think yes, the answer is yes, but by some measure.

Okay, great. Thanks for taking my questions.

The next question is from Marc Silk of Silk Investment Advisors. Please go ahead.

Thanks for taking my question. The first question is obviously in the U.S., they are taking us -- eliminating net neutrality; I know you are doing a company shift, but can you comment on that if that becomes a reality, what that could mean for Allot going forward?

Okay. I think at this point, the decision was already made, and basically in terms of regulation, neutrality, my understanding is behind us in the U.S. I think that right now we are talking to the major operators, the Tier 1 operators in the U.S. They are still not looking at doing any dramatic change in terms of the services that they provide their customers. So, I think right now they're still spreading lightly. There was very, very significant discussion in the U.S. on what could potentially be bad about reversal net neutrality, and I think that from what I see, the Tier 1 operators are still hesitant to go ahead and show that they are making any differential treatment either to different sources or customers, or applications, or whatnot. That may change in the future. And if it does change, it could present a nice opportunity for Allot. We're not in anyway shying away from the Visibility and Control segment; it's still a majority of our revenues. We plan to go ahead and continue to invest in that, and to the extent that the market allows for, we would like to try and grow that piece of our revenue as well. So, yes, if the U.S. operators decide that they do want to take advantage of reversal of net neutrality and start doing things differently, and it will be placed for our technology, we will be more than happy to provide that. Having said that, our focus on -- our focus growth is really on the security, like I said before.

That's a great answer. Also, since the U.S. has changed their tax for corporations, have you seen any maybe different interest from customers, maybe increasing their spent?

I think the sales cycles was large operators, typically take you know, from a one to two years. So, I think that we haven't seen anything into that -- reacted that fast to the change of the tax. So, it may come, I hope it will, but at this point I can't tell you that I have seen this.

Okay. My last question on Netonomy, were there revenues involved to this, or this is just to enhance your offering, number one; and number two is, were you have another price you paid, do you have to file that eventually?

I understand that we do not have to file that. And there were no significant revenues involved.

Okay. Thank you, and good luck going forward.

Thank you.

Thank you.

[Operator Instructions] There are no further questions at this time. Mr. Antebi, would you like to make your concluding statement?

On behalf of the management of Allot, I want to thank you for your interest and long-term support of our business. And I look forward to talking to you next quarter. Thank you very much. Bye-bye.

Thank you. This concludes the Allot's fourth quarter 2017 results conference call. Thank you for your participation. You may go ahead, and disconnect.