Greetings and welcome to the Check Point Software Technologies 2014 Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. I would now like to turn the conference over to Mr. Kip Meintzer, Head of Global Investor Relations for Check Point Software. Thank you, Mr. Meintzer. You may begin.

Thank you, Manny. Good day to all of you. I would like to thank you all for joining us today to discuss Check Point’s financial results for the third quarter of 2014. Joining me today on the call are Gil Shwed, Founder, Chairman and CEO, along with our Chief Financial Officer, Tal Payne. As a reminder, this call is being webcast live on our website and is being recorded for replay. To access the live webcast and replay information, please visit the company’s website at checkpoint.com. For your convenience, the conference call replay will be available through November 1. And if you would like to reach us after the call, please contact Investor Relations by e-mailing kip@checkpoint.com or dialing us at +1650-628-2040. Before we begin with management’s presentation, I’d like to highlight the following items. During the course of this call, Check Point’s representatives will make certain forward-looking statements. These forward-looking statements may include our expectations regarding the introduction of new products and programs and the success of those products and programs, our expectations regarding capital expenditures in future periods and our expectations regarding our business and financial outlook, including our guidance for Q4 2014 and the full year of 2014. Other statements, which may be made in response to questions which refer to our beliefs, plans, expectations or intentions are also forward-looking statements within the meaning of Section 27A of the Securities and Exchange Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. Because these statements pertain to future events, they are subject to various risks and uncertainties and actual results could differ materially from Check Point’s current expectations and beliefs. Factors that could cause or contribution to such differences include, but are not limit to the risks discussed in Check Point’s latest Annual Report on Form 20-F, which is on file with the SEC and is available on our website at checkpoint.com. As a reminder, Check Point assumes no obligation to update its forward-looking statements except as required by law. In our press release which has been posted to our website, we present GAAP and non-GAAP results along with reconciliation of such results as well as the reasons for our presentation of non-GAAP information. Now, it’s my pleasure to turn you over to Check Point’s Chief Financial Officer, Tal Payne for a review of the financial results.

Thank you, Kip. Good morning and good afternoon to everyone joining us on the call today. I am very pleased to begin the review of this great quarter. Our revenues for the third quarter increased by 8% year-over-year reaching $370 million and coming in at the top part of the guidance. Non-GAAP EPS grew 9% to $0.93 and exceeded the top end of our guidance. Before I proceed further into the numbers, let me remind you that our third quarter GAAP financial results includes stock-based compensation charges, amortization of acquired intangible assets and the related tax effects. Keep in mind that non-GAAP information is presented excluding those items. Now, let’s take a look at the financial highlights for the quarter. In the third quarter of 2014, our revenues reached $370 million compared to $344 million in the third quarter last year, representing an increase of 8%. Total revenues from product and software blades grew by 11% year-over-year. This growth was driven by continued success of our software blades, which grew over 22% and now represent 18% of our total revenues. The main drivers were the threat prevention blades, including the Anti-Bot and Threat Emulations, and the Application Control blades. We also had success with our large appliances, datacenter and super high-end appliances, which contributed to the overall product growth. Our software update maintenance revenues reached $177 million, representing 4% growth year-over-year. Deferred revenues as of September 30, 2014 were very strong at $660 million, an increase of $93 million or 16% over September 30, 2013 and similar to the end of June 2014. Revenue distribution by geography for the quarter was as follows: Americans contributed 50% of revenues, Europe contributed 34% and Asia-Pacific, Japan, Middle East and Africa region contributed the remaining 16%. From a deal size perspective, this quarter…

Thank you, Tal and good morning to all of you joining us on the call today. This was a great quarter and we have a lot to be excited about. We delivered 11% growth in combined product and blades revenues and achieved total revenues at the high end of our projection and EPS that exceeded our projections. The quarter was characterized by better than expected business seasonalities, especially in the North American market, where we continued to see strength throughout all of the summer months. We have continued to win deals in many segments of the markets. Financial customers continue to be the strongest sector, but we also had major wins in retail, government and technology. Software blades continue to drive growth this quarter with 22% growth, while datacenter and the super high-end appliances contributed to the overall strength of the quarter. We have expanded our most successful product family, the datacenter family. And this family of appliances has been showing great strength and great growth over the past few quarters and we are now making it even stronger with top models. The 13800 and the 21800 appliances deliver high performance and accessibility needed by demanding datacenter environment. In this quarter, the first quarter of sales we already saw great acceptance of the new models. During the quarter, we received recognition by Gartner for leadership in mobile data protection and UTM for our completeness of vision and ability to execute. In addition, Gartner ranked us number one in firewall market share in the second quarter continuing the trend of late. Our threat prevention continued to outperform other technologies in the marketplace. For example, if you look at our Threat Emulation technology, that technology takes unknown files being sent to the network, watches their behavior in a sandbox environment and determines…

Thank you. We will now be conducting a question-and-answer session. (Operator Instructions) Our first question is from Walter Pritchard of Citi. Please go ahead.

Hi. Thanks. Two questions, first for Tal, you had strength in the high-end appliance business here for probably, I don’t know 18 months or so, can you talk about what percentage of your product revenue the high-end appliance?

The question is percentage of revenue, product revenue, at the high end of the market, what does that percentage look like?

I don't think we disclosed this. I assume you asked from our revenues. I don’t think we ever disclose that, but I think I will say it’s probably a significant portion, less than 50%, but a significant portion.

Great. And then, Gil, on your end for these data breaches we are seeing, lots of activity and security spend around that, can you talk about how you monetize that, I know you have got a couple of the blades Threat Emulation, Anti-Bot,are you obviously selling more hardware and appliances as...?

Sorry, you are cutting off.

So the question is how are we monetizing the Anti-Bot, the Threat Emulation and are we selling appliances, are we selling software, are we selling blades, how are we doing that?

Yes, what I am trying to understand is are you seeing it in the product revenue actually, understanding that the blades come through with that, but are you actually seeing people buy more hardware capacity to deal with those issues?

I think that people do buy more hardware capacity to run the additional blades that we have. It’s hard to account for that, because when we look at that, we look at the overall system. We do account for the specific blades and the results of the Anti-Bot and the advanced threat prevent, especially the Anti-Bot with few of the advanced threat prevention blade is pretty good where it’s doubled year-over-year. And so I think we are doing quite well with that and I think a lot of untapped potential still with these blades. I think finally the Anti-Bot blade is catching up and getting to high volumes. The other blades are still at the beginning.

Great. Thanks for taking the questions. Sorry for bad connection.

Thank you. The next question is from Shaul Eyal of Oppenheimer. Please go ahead.

Thank you. Hi. Good afternoon, guys. Congrats, solid quarter. Tal, any major impact, foreign exchange this quarter actually with the accelerating dollar versus the Israel shekel?

Not this quarter because remember first we hedge our P&L so for the end of the year we are still hedged. Hopefully for next year it’s continues to go that way and therefore it will be in our benefit.

Got it, got it. Okay. Fair enough. Can you guys talk about the Threat Emulation Blade, the APT solution, that’s a high profile sector right now, how big is that relative to the overall blade business, how big could it potentially become down the road?

I think we have a great blade with that and I have described in my script a little bit of the results that we are seeing. I think we are seeing terrific results with that blade. We have some of the most advanced technologies in terms of analyzing. We published earlier this year what we called the Missing 300, which shows that we take even known malware, make slight modification to it, make slight mutations to it but still keep it as the same kind of malware, and what we are able to detect close to 100% of that modified malware, while our supposedly threat emulation solution missed the majority of that, which hints to some problems in their real – behavioral ability. I talked today about the timing. I think in many cases we are 10 times faster in identifying that threat and 10 times faster here means in other products it means that hours where the network is exposed to targeted attack. In our case, it’s zero because we don’t pack the file until we actually analyze it. So I think we have a lot to offer on that front. We have customers from all different sectors – large and small. And when we are actually analyzing the results, we are seeing that we detect this kind of zero-day or zero-minute even, zero-second malware, they are all getting it. So I mean it's not something that doesn’t occur, it’s something that occur on multiple times a week. I think we are still at the beginning in terms of getting that blade to many customers and monetizing it but the potential looks very promising and I think we will work very, very hard to show its benefits to customers.

Got it. And how would you rank it in terms of the overall blades, I know usually you talk about improving prevention probably being number one and application control I believe being second, is that already third, fourth rank?

I think it’s still not third but hopefully it will make this place next year.

I think Anti-Bot together with threat emulation is between fourth and fifth place...

Yes.

I would say. So it’s moving up nicely.

Got it. Thank you very much.

You have application control and IPS which our very, very big effects.

Got it. Thank you.

Thank you. The next question is from Michael Turits of Raymond James. Please go ahead.

Hi, guys. A couple questions, first of all, it seems that you had some particular strength in the increase in long-term deferreds, were there larger contracts signed. And my other question is it seems as if there was a slight increase in the revenue growth rate in Europe, I was wondering if you can comment from a bookings perspective how the deals did?

So I'll say – the first question deferred revenue, yes obviously, the long-term deferred revenues increased with a few nice large deals. I mean every quarter we have long-term contracts. This quarter we had slightly more so that’s good news. And it came from different verticals, right. Like you said, financial vertical was very strong as usual so some of it’s relating to that. To the question about booking, if I understood your question. Europe booking was good in Europe. It was much stronger in America. America led the growth. As you know it’s pretty consistent with the last probably year, year and a half. America has a very, very nice growth for us and we see it across all the regions around the U.S.

If I could squeeze one more and Tal the tax rate came in lower than expected this quarter, anything you can help us out with in terms of expected tax rate for next quarter and into ‘15?

It remains the same and so it should be like 20%, 21% talking about the non-GAAP. GAAP obviously can change depending on deferred taxes, but in general non-GAAP should be around 20%, 21%.

Great. Thanks very much.

Thank you. The next question is from Philip Winslow of Credit Suisse. Please go ahead.

Hi. Thanks guys and congrats on a great quarter. You obviously touched on the increased attach rate of new blades to the sales, I am wondering if you could comment on just the trends that you are seeing in the renewal rates for the blades. And then I just have one quick follow-up question on that?

Yes I would say we have seen – the software – the bundled software blade remains the same, around 35%, 40% renewal rate. The unbundled renewal rate continued to increase and right now it’s slightly higher than 70%, which is exactly what we are trying to do to increase the renewals in the blades. It’s part of the reason why we see such a nice growth in our continued software blade growth.

Got it. And then as you guys contemplated your Q4 guidance, obviously there has been a lot of noise out there on the macro side with EMEA, Latin America and some other regions, just wanted to get a sense for sort of what you baked into your Q4 guidance in terms of your conversion rates versus historical levels and anything by geography, etcetera?

I think we do the same thing which we do. We were looking at our sales pipeline. We are looking at the strength of the previous quarter. And I think based on that we based our guess, because let’s remember, projection at the end of the day as much as we do it in a very analytical, very methodological way, it still in many cases a guess. And I think we feel pretty good about the fourth quarter right now. We had – the last two quarters were terrific. I think we were ahead of our plans in most regions and there is no reason to believe that will stop in the fourth quarter.

Great. Thanks, guys. Congrats again.

Thank you. The next question is from Matthew Niknam of Goldman Sachs. Please go ahead.

Hey, guys. Thanks for taking the question. Congrats on the quarter. Just one on uses of cash and capital allocation, I guess with $3.7 billion in cash and equivalents on the balance sheet continued cash flow generation. Can you give us your latest thoughts on how you prioritize uses of cash? And then I just had one on margins as well, they were stable year-on-year this quarter despite comments indicating higher sales and marketing expense. So, just want to understand why sales and marketing was down sequentially and how we should think about that into 4Q? Thanks.

I will just answer, Gil will expand regarding more the business side, just financially in Q3 typically sales and marketing is lower than Q2 as a result of the fact that Q2 is when we have the majority of our events, like CheckPoint Experience and our sales kick-off. So, it’s a regular effect to seasonality. So, that’s to your second question. And the first question was relating to?

It was uses of cash just with the $4 billion, how do you prioritize uses of cash?

So, as you can see we continue with the buyback program of buying approximately up to $200 million. So, we don’t accumulate really cash anymore. We distribute pretty close to our operating cash flow as you can see this quarter and in the previous quarter as well. The rest of the cash as of now we would like to continue and dedicate it for potential future M&As and acquisitions.

And has anything changed on that front in terms of what you are seeing out there on M&A opportunities?

If I look at the way I feel about it, I feel that we are seeing a little bit more interesting acquisition opportunities. I think may be the investment that have been made in that sector in the last two or three years are bearing some fruit and there are some more interesting companies. It doesn’t mean that anything will materialize or that anything big is expected on that, but my feeling is from looking at the last few months is that there is more interesting companies that are target for M&A these days.

Okay, that’s very helpful. Thank you.

Thank you. The next question is from Robert Breza of Sterne Agee. Please go ahead.

Hi. I had the phone on mute there for a second. Good morning. Congratulations again on the quarter. Gil, I was wondering if you could talk to the pricing environment and maybe to the competition a little bit, especially as the geographies in Europe rebound here, it seems like just interested to get your perspective here on what you are seeing competitively and more specifically from a pricing point of view?

I think we have always been in the competitive environment. And I think we have a lot to offer in that environment and many customers are realizing that. Having said that, I think we have a very tough competition on different fronts. Some are maybe over hyping solutions, some are competing very well on the price and they are discounting a lot and are very aggressive on that. I think overall we are doing quite well. I mean, our pricing remains relatively stable in light of very tough competitors like that. I think more and more customers do realize the benefits of our platform, the broad range of security technologies that we have in it, the big, big strength of our management, security management solution. I think you will find every customer and every partner or reseller saying that our management is superior to any solution in the marketplace. And then I think we will keep our efforts to show that and to do better in this quarter and next quarter. I think so far we have been doing quite well and the last few quarters have shown very good results from that perspective.

And maybe just one quick follow-up, some of the headlines coming out on the new services here show that your guidance – could you just repeat the guidance? I think you said $395 million to $430 million, is that correct on the revenue?

The revenues for the fourth quarter is $395 million to $430 million and the EPS guidance expectation is between $0.99 and $1.09.

Perfect. Just wanted to clarify. Thank you very much.

Thank you. The next question is from Gregg Moskowitz of Cowen & Company. Please go ahead. Gregg Moskowitz - Cowen & Company: Thank you very much. Gil, your – overall your large deal activity increased again and I think last quarter you noted a significant uptick in larger deals from new customers. How was the third quarter in that regard, particularly with new customers?

I think it went quite well. We had – again let’s remember, third quarter is not the large quarter deal, that’s usually the fourth quarter and sometimes the second quarter. The seasonality is such that people start the year, finish the big deals in the second quarter, and then they go into summer vacation and close the large deals in the fourth quarter. Having said that, we still had very nice number of large deals in the third quarter. We had few deals that were very, very large, not just seven-digit deals, but even a deal that’s larger than that in an interesting sector. So, I think overall – and we had wide distribution. So, it’s not that there was one large deal that – or two or three large deals that kind of skewed the quarter, it was very diversified. So, overall, I think the trends that we have seen before has continued and that’s very positive especially to a Q3. Gregg Moskowitz - Cowen & Company: Okay, terrific. And then I wanted to just circle back if I could on Threat Emulation. We continue to get really strong technical feedback on that blade from the channel and based on your remarks, it sounds like it’s beginning to contribute, but it has been GA for over a year and it sounds like the contribution to bookings is probably still very low. So, is there something that potentially is holding it back or are you guys spending enough on marketing? Are the sales incentives sufficient? I am just kind of curious to get your thoughts on this and what can really potentially kind of energize that blade? Thank you.

I think what we have seen in the past that it takes us some time to get blades ramped up to speed. I think it’s been before with the Anti-Bot blade. It’s taking us little bit of time now with the Threat Emulation. I think first I do think that we can do better in sales and marketing and I think we can be more aggressive on that and we are planning to be more aggressive on that. I think the second factor is mainly that we have a very large installed base that’s, for example, to move to the latest release and usually the latest blades and the latest technology requires the latest release of software, it takes a long time. And I think that’s one of the things that’s holding us back in large environment. These are – I mean, the customers already own Check Point, they already love Check Point. They are willing to experiment with it, they are willing to utilize it, but unfortunately in many cases, it takes them months and sometimes even multiple years to upgrade the version, because they have a very large Check Point estate. That’s something that maybe holding us back a little bit and I think we are also trying to deal with that a little.

Which I think by the way it means that many times, the opportunity opens like a year or a year and a half later and then it can take off nicely like we have seen in a few blades in the past. Gregg Moskowitz - Cowen & Company: Okay, perfect. Thank you.

Thank you. The next question is from Sterling Auty of JPMorgan. Please go ahead.

Yes, thanks. Hi, guys. So, in terms of your APT solution, when you think about the blade, how is the blade in terms of adoption as a single blade versus as part of a bundle? And maybe expand that wider, as you look at the blades revenue, how much of that revenue is coming through bundled blades versus standalone?

You are talking about the Threat Emulation or in general about blades?

Start with Threat Emulation, but then expand the same question to the broader blade.

So, Threat Emulation today is almost a completely standalone blade and add-on blade. So, all its sales and successes are on a standalone basis. The other blades are offered in many cases in packages. We have the next generation firewall package and we have the next generation threat prevention package. Some packages are bundled with new appliances and some are not. The majority of the blade revenue today is not coming from the ones that are bundled with new appliances. It’s coming from renewals, so it’s coming from customers that have a complete – or completely unbundled, so it's coming from customers that have the complete choice and they choose to implement this blade. And that’s the good news because when you bundle things together you can see great results, but it doesn’t always hint of what is the real customer demand was for that. So the vast majority of our blade revenues today is coming from the packages that are purchased on a standalone or that are being renewed. And that’s the good news. Again, it took us a few years to get to that stage, but today we are there and that’s a very good sign.

Okay. And then, Tal the gross margins, I think 88% I was looking at that quick. I think this might be the lowest since the fourth quarter of 2011, what impacted it especially on the product side and what should we think about gross margins, is this a bottom and it gets a little bit better or it stays at this level?

No. I think you should look at it like I always say it can go 1%, 2% up or 1%, 2% down. It depends on the mix. This quarter we had the slightly higher mix of third party equipment which carries slightly lower margin in the gross profits.

And then I would also to like to reiterate the point that I think we have pretty healthy margins and our focus would – is how to provide better solutions to win more customers, to grow the revenues, to grow the bottom line. It’s not focusing on managing the margins. Not the gross margin and not the operating margin. It’s how we grow the business in a healthy way in which the ways you should look at it up to now and moving forward.

Okay. Tal, can you just remind us which of the products have the third party hardware and so we can – when you talk about success at different parts of the product lines we can understand what that mix is…?

Sure. Sure. We have like IBM, HP, Fujitsu, Crossbeam and so on.

BlueCoat.

BlueCoat nowadays. Yes.

Right. But in other words is that focused like in the 21,000 series or is it across the product line you are saying?

That’s the 21,000 with our appliance and I think we are in many cases integrating for the customers our types of solutions just like Tal mentioned with IBM, HP, BlueCoat and Fujitsu and even sometimes a few others. That’s the small part of our business. The vast majority of our business is Check Point appliances and that has slightly higher margins.

I got you. So no longer a meet in the channel like it used to be where the software would be floated up and you are actually taking some of that hardware revenue through your income statement at this point even though it’s small?

That’s ages ago actually.

No. That’s happened a long time ago and we are almost all of our sales are now the – in the software – the standalone software portion of our revenues is I don’t know it’s stable, it’s becoming smaller and smaller as a percentage, let’s put it that way. It’s not shrinking dollar wise, but it’s shrinking as a percentage of the revenues. And most of our revenues today are integrated system using our own appliances the 2000 series, 4000 series, 12000, 13000, 21000, 61000 I mean all the different appliance series that we have that’s our own appliances.

Alright. Thank you.

Thank you. The next question is from Matt Hedberg of RBC Capital Markets. Please go ahead.

Yes. Thanks for taking my question. Gil, I wanted to get your perspective on the identity and access management market, as apps move increasingly in and out of a network and through a hybrid cloud architecture how do you think about that market progressing?

I think it's a very interesting market and I think it’s a market that for many years has the potential and the cloud is definitely creating more potential. The big challenge in this market, but it’s usually a very customizable solution because every company has a very different mix of vendors, of solutions, of identity, method. And that’s why it usually becomes a niche market for large scale customers that are willing to do a lot of customization when we are usually excelling in markets that are more broad-based solutions, large customers, small customers, midsized customers and have less customization, almost no customization to the product. So I think that’s maybe one of the reasons we are not a big participant in that market, but I think it’s still a very interesting one.

That’s great. That’s very helpful. And then maybe just kind of broadening out a little bit more, a lot of your competitors are talking about the end point market more broadly there. I am just kind of curious to get an update on sort of how you think about just a more broad end point strategy?

First, I think there is a lot of talk about end point, but there is very little, I think, things going on with that. I mean the traditional anti-virus vendors are still controlling the end point. And there is some, again I don’t want to get into that discussion now, it’s too long of a discussion, but there as some good reasons for that. And there as some very interesting technologies that can be brought to the markets, but customers are not very excited to install things on tens of thousands of end points. The real story is very different. The real story is very different. You can use some end point technology to detect more threats, to block more threats, but realistically the proliferation and the move to more Internet – the move to more advanced threats and move to the Internet of things actually requires stronger perimeter solutions, because today you will have so many devices on the network and you can absolutely not put the latest end point software, whatever it is on every device like that. Remember, it’s not just the PCs that are on your network, it’s not just updating old servers, which is also very important. It’s about every printer and every temperature-control device on your network and many, many devices that we don’t – if you are talking about home networks, but also in office environments, set-top boxes, cable boxes, all these things are now IP connected. And the threats will go to any device that they can go to. And these devices cannot be protected on the end point. These devices must be protected by the perimeter solution. So I think the real truth is to protect against the most advanced solution it makes the perimeter solution even more important than it was 10 years or 20 years ago. Having said that there are – there is still a lot of potential only inside the network. You can use the end point agent for better detection, and I think that’s something we are doing and something that we are doing more cooperation between the end points and the network. There is definitely the need for a mobile security solution because when you are mobile you are not always behind the perimeter, but in the big sense of the network the perimeter is becoming stronger and I don’t know if stronger, more and more important; also stronger because we are seeing all the new technologies. But it’s also more important.

That’s great and very helpful. Thanks and congrats on the quarter.

Thank you. The next question is from Grey Powell of Wells Fargo. Please go ahead.

Great. Thanks a lot. Maybe just a couple questions, so obviously Check Point is one of the companies driving the consolidation of standalone appliances into a feature on next-generation firewall. At a high level, what do you think happens to these standalone markets, like IPS and secure web gateways as they become features on one appliance and how does this impact the overall growth of network security?

I think overall there is the consolidation, I think there is still room for some of that and some of them have big installed bases that are not – that are continuing and not disappearing overnight. But overall I think the trend that we are seeing is a trend of consolidation more and more functionalities by themselves into the gateway or the modern firewall, the things that we are producing. And I think we have seen that with IPS, it’s an example, it was a very promising standalone industry 5 years and 10 years ago, and today the majority of industry is inside the gateway. Again, I don’t want to spoil or say bad things that might hurt companies that may not even be our competitor, but I think overall customers like the consolidation and the consolidating is happening. In some cases it’s happening faster; in some cases it’s happening slower, in some cases we will see entire industries go inside the main gateways. In some cases they say industry may survive and be still healthy industry, but smaller than the consolidated one. And I think that does help a little bit to the growth rate on the overall network security market, or in the growth rate of the gateways, not the growth rate of the overall industries because there are a lot of cost benefits for consolidation.

Got it. That’s very helpful. And then maybe one more, if I may, I mean clearly there has been a lot of breach headlines both in retail and financial services recently. Are you seeing a permanent shift in the way companies allocate security budgets and how sustainable do you think this improved spending environment is?

I think we are definitely seeing a change. I would say – I would characterize is that we are seeing the biggest change that I have ever seen in my career in terms of budget shifting as a result of what’s operating in our world. Still that change is much slower and much smaller than you would expect when you read the headlines. When you read all the companies talking about the critical need of cyber security in the companies, the government, everybody speaks about that. When you watch the TV every night and see that and you compare it to the change of budgets, they do not correlate. Having said that, we have still seen changes, we have seen changes. It’s a year ago there was the big – in Q4 last year, there was the big incident in Target that showed the retail industry how it can be a target for attacks. Over the last two or three quarters we have seen major wins in the retail industry and very large wins. So, that means that priorities are changing and budgets are shifting. The financial industry has been the large consumer of security technologies, but when we analyze our data it shows that it became even bigger one and is growing faster than our industries in terms of consuming our solutions. So, there is clearly a focus on that in companies and there is clearly a change. I would say...

More moderate...

More moderate when you see in the news and stronger than I have seen before.

Okay. That’s really helpful. Thank you very much.

Thank you. The next question is from Daniel Ives of FBR. Please go ahead.

Yes, thanks. Just one question in terms of budgets and obviously you have been in security for multiple decades. Does it feel like even when you said the shift is slower, are you seeing a lot of deals in the pipeline that maybe you thought were 400,000, 500,000 deals that are now million plus? Are you just seeing just the math of the elevation of the size of the deals in the pipeline just given what’s going on in budgets, secular to us from a product perspective?

I think we do see larger deals. You can see just by the increase in customers that’s buying transactions that are higher than $1 million. You have seen – again Q3 like Gil said is not the quarter for big deals, even that increased 10% and their size also increased. You can see transactions bigger than $50,000 increased at another 3% this quarter. So, yes, the sizes of the transactions are increasing. I think it’s also we see nice refreshing cycles of large networks. Gil talked about a few nice transactions we had in the retail. We have very nice transactions in the financial industry as expected and we see larger and larger transactions definitely.

Got it. And then just of the $60 million on the new facility, how much of that is for Kip’s office? Thanks.

What?

How much – I don’t have a permanent office in Israel. I am a floater here.

Okay. Okay, I was just wondering, the numbers seemed high. I just wonder if you had an impact there with your new office. Okay, thanks.

We actually have a beautiful tent outside and...

Yes. I spent time in the tent. Next caller, Manny.

Thank you. The next question is from Karl Keirstead of Deutsche Bank. Please go ahead.

Yes. Hi, thanks. I wanted to return to the fourth quarter guidance, the high end at $430 million implies 11% growth. That’s a pretty good acceleration and that would be your highest growth rate since Q1 ‘12. So, Gil, I know you mentioned that you feel pretty good, but this high end of the guidance seems to signal a real confidence shift in the business. And I wanted to ask you if that’s the correct interpretation and if that confidence extends into 2015? And then the other part of my question on 4Q guidance, just the EPS range, $0.99 to $1.09, a $0.10 range. I know you like to keep it wide for the fourth quarter, but it seems relatively wide and I am wondering if there is any key variables that are causing you to want to keep the EPS range relatively wide? Thanks a lot.

I think, first if we look at the midpoint of the range, which is in both of them are slightly higher than the analysts’ expectation at this moment. You can see it’s around like 7%. And I think it’s on the higher part of the range that we provided in the beginning of the year we talked between 4% growth to 8% growth, our midpoint is 7%. So, you see we feel better than when we provided the guidance in the beginning of the year. When you look at the low point and the high point is more recorded like safety margin. So yes, if everything would be great, then we can be in the higher end and if there will be lower result, then we can be in the lower end. So, I would give more weight to the midpoint and to the fact that the range is wider because of the fact that this is Q4 and this is large numbers.

Okay, got it. That’s helpful. Thanks a lot.

Thank you. The next question is from Brent Thill of UBS. Please go ahead.

Thanks. Tal, just back to your comment about America’s growth that was one of the best growth quarters you have had in a while, but if you go to Asia and Europe, it’s been a lot more inconsistent. And I am just clear – just trying to understand with the rising tide that seems to be lifting all boats in security, why do you think the other theaters are not doing as well? I understand the macro environment, but I think we are seeing other vendors doing well in those theaters. What do you think is holding you up in those territories?

First, I think we are doing well in both (indiscernible) as well. I think it’s less consistent or less stable than the U.S. One reason is by the way the fact that these are much less uniform market. The U.S. itself is a much uniform market and it’s not one single market, of course, the U.S. is huge and there is many variations, but the U.S. as an economy behaves in the same way. When you look at Asia or even at Europe, these are dozens of different economies with different behavior. And in terms of our execution, it’s completely different execution. I mean, winning in Japan and winning in India is completely different. The way to manage the team, the way to the stage of the market is completely different in each one of that. And that’s the same case is true even within Europe I mean one country in Europe can show great results while the other economy is in recession. And this year we are actually seeing the European more stable than before, but in previous years, we have seen parts of Europe almost in bankruptcy, while other parts are doing very well. And I think I am taking that analogy and I am saying that in our micro environment managing two different countries in Europe is two different management challenges that vary a lot. So, I am just saying that looking at Europe and Asia as one region is the big issue. And they don’t – and let’s put it that way, when we got something right in the U.S., it’s going on for many, many years. If we got something right in one country in Asia, the next challenge is to get something right in a different country.

Okay, that’s helpful. And Gil, I just want to go back to your comment about your eyes opening a little wider around the potential for M&A and you have been very disciplined over the last several years and you probably have done a lot less than we all thought you would do. What’s the trigger now for you to reengage at this point considering where some of the multiples of some of these private companies have gone versus ways back?

I think not a lot has changed. What I mentioned is more that what I have seen is that some – maybe it’s the big amount of investments that’s happening in that industry. Maybe it’s a little bit the fact that you look at the hottest subject in cyber to-date, they are now becoming 2, 3, 4 years old subject and that means that there has been a room for new entrepreneurs to create companies, to create technology and that technology is starting to mature from the standpoint maybe tiny companies with no revenues, but still they are answering a real problem, they have a real technology, they have innovative technology. So, from my feeling I saw in the last few months more companies like that, that I have seen before. And I think the main reason is the type and the investment in that. And if you look at all the hottest, latest cyber threat technology investments, most of these companies probably started in the last between a year or two, three, four years and that’s usually a good time to see the technology starts to come out to the marketplace.

Manny, next question.

The next question is from Jonathan Ho of William Blair. Please go ahead.

Good morning. The product revenue looked really strong this quarter. Can you give us a sense of how unit volumes actually grew relative to that product growth?

We don’t provide it, but I can tell you it grew very nicely. Main growth came from large appliances. If you remember, we have small, medium, large, high and super high. We had increased in large appliances, we had increased in super high-end and also in the...

Overall, the enterprise appliances grew quite nicely and that’s provided most of the growth this quarter.

Got it. And then Cisco has recently come out with a few announcements around potentially refreshing their products with Sourcefire. Any thoughts in terms of how this could impact the market or changes to the competitive landscape?

It’s very hard to predict that. I think I am glad that Cisco is also seeing the renewed potential in the security space, that’s maybe an indicator of the overall interest and the overall strength of the market itself. Cisco has always been a strong company in the marketplace, but I think in the last decade, they weren’t – maybe more than the last decade, they weren’t the leading vendor in terms of the advanced technology. And to be honest, I don’t see that changing that quickly even though again we always have to watch out for that.

Got it. Thank you.

Thank you. The next question is from Tal Liani of Merrill Lynch. Please go ahead.

Hi, guys. Great quarter. Thanks for taking my question. This is actually Mike Feldman on behalf of Tal Liani. I have a quick question on virtual appliances, what trends are you seeing on the virtual appliance front? And if you could talk about the demand as well as the sales contribution, that would be helpful? And then may be just your strategy going forward in terms of new offerings? Thanks.

I think we are seeing it’s a very interesting subject and a hot subject to talk about virtual appliances, appliances in the cloud, securing the cloud environment and we are seeing more of that. We have recently strengthened our relationship with VMware and came up with a few interesting announcements with them. Sun came out in the VMware Show in Barcelona two weeks ago and there will be more in the near future. Revenue wise, it doesn’t generate a lot, it’s still relatively small.

Thanks.

Thank you. We have no further questions at this time. I would like to turn the floor back over to Mr. Meintzer for any closing remarks.

Thank you, Manny. I just wanted to add one clarification on the guidance, so we make sure everybody got it. For the fourth quarter, we expect revenues in the range of $395 million to $430 million and non-GAAP earnings per share in the range of $0.99 to $1.09 and GAAP EPS is expected to be $0.09 less. With that, I would like to thank you all for joining us on the call today and we look forward to seeing you throughout the quarter. Take care and have a great day. Bye-bye.