Greetings and welcome to the Check Point Software Second Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kip E. Meintzer, Head of Global Investor Relations. Thank you. You may begin.

Thank you. I'd like to thank all of you for joining us today to discuss Check Point's second quarter 2018 financial results. Joining me today on the call are Gil Shwed, Founder and CEO; along with our CFO and COO, Tal Payne. As a reminder, this call is webcast live on our website and is 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 August 2. If you'd like to reach us after the call, please contact Investor Relations by email at kip@checkpoint.com. Before we begin management's presentation, I'd like to highlight the following. During the course of the presentation, Check Point's representatives may make certain forward-looking statements. These forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 include, but are not limited to, statements related to Check Point's expectations regarding business, financial performance and customers; the introduction of new products and programs and the success of those products and programs; the success of our sales and marketing efforts, the environment for security threats and trends in the market; our strategies and focus areas, demand for our solutions and our business and financial outlook including our guidance for Q3 2018. Because these statements pertain to future events, they are subject to various risks and uncertainties. Actual results could differ materially from Check Point's current expectations and beliefs. Factors that could cause or contribute to such differences are contained in Check Point's earnings release press issued on July 25, 2018, which is available on our website; and other factors and risks including those discussed in Check Point's Annual Report on Form 20-F for the year ended December 31, 2017, which is on file with the Securities and Exchange Commission. Check Point assumes no obligation to update information concerning its expectations or beliefs, except as required by law. In our press release, which has been posted on our website, we present GAAP and non-GAAP results, along with a reconciliation of such results, as well as the reasons for our presentation of non-GAAP information. Now, I'd like to turn the call over to 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'm pleased to begin the review of the second quarter. Revenues for the second quarter increased by 2% to $468 million, towards the high-end of our guidance, and our non-GAAP EPS grew by 8% to $1.37, exceeding the top of our guidance. Before I proceed further into the numbers, let me remind you that our GAAP financial results include stock-based compensation charges, amortization of acquired intangible assets and acquisition-related expenses as well as the related tax effects. Keep in mind, as applicable, non-GAAP information is presented excluding these items. Now let's take a look at the financial highlights for the quarter. Products and security subscription revenues were $258 million. Our security subscription revenues continued to be strong, which represent growth year-over-year, reaching $132 million. Our software updates and maintenance revenues increased to $210 million, representing 4% growth year-over-year. Deferred revenues as of June 30, 2018 reached $1.158 billion, a growth of $94 million or 9% over June 30, 2017. Revenue distribution by geography for the quarter was as follows: 48% of revenues came from Americas; 36% of revenues came from Europe; and the remaining 16% came from Asia Pacific, Japan, Middle East and Africa region. From a deal size perspective, this quarter we had 58 customers with transactions over $1 million. This quarter, the total value of these transactions increased by over $50 million and included some large multi-year contracts that were not fully invoiced and hence are not part of the deferred revenue. Transactions greater than $50,000 were 76% of total order volume. Non-GAAP operating margin for the quarter was 53%, similar to the previous quarter. We continued to invest in our sales force and marketing efforts. This investment increased our head count…

Thank you. Our first question today is coming from Fatima Boolani of UBS. Please go ahead.

Hi. Good morning. Thank you for taking the question. Maybe a question for Tal, as you think about investments and the pace of investments for the rest of the year. Maybe just around sales productivity trends that you've seen as you lap some of the heavy hiring from the middle of last year and sort of your expectations for hiring for the remainder of the year?

So, we continue to – we're meeting our plan of head count recruiting. We still have growth to do as part of our plan, as we discussed before, so we are in line. In terms of sales metrics, we measure them regularly. You know us; we have metrics and measurements for everything. We measure the booking, the pipeline, different stages in the pipeline. We see the pipeline is growing. So, all-in-all, I would say we see good indication in terms of improvement there, and still a way to go. That's why we continue to invest in that area.

Thanks, Tal. And just a very quick one for Gil on the pricing strategy around Infinity. I wanted to understand with one full quarter in – almost two full quarters in, what the customer response has been around the per-user model and how that's making its way through the channel partner community, because it's just a fundamentally different way of selling your portfolio? And that's it for me. Thank you.

The early feedback is quite positive. We haven't seen any objections and I think the pricing is catching up. I think it's too early to say if it's really a success or not because there's only a small number of deals and it's too early to say. But overall, it's received quite well.

Next question.

Our next question is coming from Brad Zelnick of Credit Suisse. Please go ahead. Brad Alan Zelnick - Credit Suisse Securities (USA) LLC: Thanks very much. Nice to see things begin to stabilize. I've got two questions, first for Tal. On the margin, I think this is the first time I can remember in a long time you seeing operating income decline year-on-year, which I appreciate the investments that you're making in sales and marketing and the time that that will then take to yield returns. But you also mentioned in your remarks that in the quarter, it included some large multi-year deals that were not invoiced, which I think is a new way of going to market for you. Can you just talk a little bit about that and the extent to which you pay commissions upfront or defer those commissions over time?

So, actually, again, it depends on the type of transaction, but in general, we pay for the first year, as a general comment, with some bonus for the extra years. You're right in the sense that if we sell Infinity, as an example, on subscription, it can carry with it larger deals, which is a nice thing and also longer in terms of the period. That's why you see a significant increase, which we usually don't disclose. We just thought it will be an interesting data point for you to understand that sometimes what you see in the balance sheet, you don't see what's happening behind the scene relating to what Gil said about internal metrics. So when you have this type of transaction, invoicing can happen quarterly or monthly or annually, while the contract and the commitment is for two or three or four years. That's why I gave this color. Another thing that I can say, we did talk about investing ahead of the growth, which is the investment in the head count and in the marketing, which is expected to see some reduction in the margin. I have to say the margin is higher than we expected and planned. So you can see, at the end, our operating profit and EPS are higher. We did have a small negative effect from the currency, probably about $0.01 as a result of the currency effects on the P&L. Brad Alan Zelnick - Credit Suisse Securities (USA) LLC: Very helpful color. And for Gil, Gil, more than ever I think we're hearing every software company talk about security as a priority. Microsoft in recent weeks announced Azure Firewall, Amazon has GuardDuty. To what extent, are you seeing customers comfortable with some of the native controls that are available in various clouds and other software platforms relative to coming to a company like Check Point for specialized protection? Thank you.

In the general marketplace, I think customers have definitely adopted a security company to secure their businesses. In the cloud, there's definitely some room for the native controls. And in the cloud, as we can see, the world is not protected. We've seen some of the biggest information leakage over the last years, almost all of them were results of breaches to cloud infrastructures. And in general, our job, both Check Point and few other companies in our industry is to add a level of security on top of what every native product is doing in the marketplace. And I don't know, fortunately or unfortunately, no matter how you look at that, we have plenty of work to do. The world that we are living in is more vulnerable today than ever. Brad Alan Zelnick - Credit Suisse Securities (USA) LLC: Thanks.

Thank you. Our next question is coming from Shaul Eyal of Oppenheimer. Please go ahead. Shaul Eyal - Oppenheimer & Co., Inc.: Thank you. Good afternoon, guys. Congrats on my end as well. Two quick questions. Gil, with respect to sales and marketing and hiring, part of those investments, have you been taking any different actions with respect to channel relations, investing more in that respect?

So the answer is yes. And again, it's very whoever you're talking about the channel. We did invest a little bit in analyzing the status of the channel and how are we doing and what we should improve. It varies by different regions. There are regions of the world when we are doing very well and we continue in the same pace. In the U.S. specifically, we need to improve the work that we're doing with the channel and we had some changes also in the management of the channel in the U.S. just at the end of the quarter, so it will still take time until we do that. There's definitely much more potential in the U.S. to do more with our channel partners and to get more value from these relationships that we have for so many years. Shaul Eyal - Oppenheimer & Co., Inc.: Understood. And maybe on the decision to double the buyback, so I think most of us here know Check Point's strategy with respect to acquisitions and dividends. And I think looking at the way you have been increasing your buybacks over the years, this one stands out a little bit, like doubling it. And I know maybe it has some sort of an indefinite timeframe, but talk to us about the decision to double the buyback.

I think it's based on feedback that we received from shareholders. I mean, Tal and Kip and our IR team is doing a lot of work to really get quantitative data to survey investors about risk preferences. I think we do see that there is a potential to increase the buyback. We've also analyzed the economical effect on that and we see that they were positive. So I think overall it's a good decision. I think we have the resources. I think we have the upside potential, so hopefully which will have the positive effect moving forward. It doesn't impact our ability or our motivation to execute some acquisitions, and I hope that we will find the right companies and we will execute some of these acquisitions, even though in the amount of the universe that we are and in the innovation that we have internally in Check Point, it's not easy to find the right acquisition. And right now, by the way, I'm seeing plenty of innovation coming from within Check Point to the marketplace. Shaul Eyal - Oppenheimer & Co., Inc.: Thank you.

Thank you. Our next question is coming from Andrew Nowinski of Piper Jaffray. Please go ahead. Andrew James Nowinski - Piper Jaffray & Co.: Great. Thanks for taking the questions. So I know you talked about this last quarter that Infinity was delaying some product refreshes, but I was hoping to get more color on it again. So if we look at your product and subscription revenue, it only grew about 0.6%, And I realize the comps are tough, but they did get a little easier in Q2, yet your growth further decelerates. I'm wondering if you'd just give any updates on the product and subscription growth deceleration and the impact from Infinity.

So remember that what you see in revenues is usually the effect of the booking of the last two quarters because it takes time to translate into the P&L. So we discussed it in length. That's the reason why we lowered the guidance in the previous quarter. This quarter, we actually had a strong booking when it came to the subscription and those items, but it takes time to translate. Product is lagging behind. Andrew James Nowinski - Piper Jaffray & Co.: Okay. And then on the Americas, I know you said that the volume improved this quarter, but it looks like growth in Americas was essentially still flat. I guess, how long do you think it'll take to get growth back in the Americas to accelerate again?

So, first, I did mention that in terms of our internal metrics, we actually had a pretty decent volume of total business in the U.S. last quarter. And I think as Tal just said, what you see now is a reflection of what we had in previous quarters, not just in this quarter, especially because we've increased subscription that actually will be reflected only in this quarter, in future quarters. Now, I don't want to be – so if I take the trend that we've seen in the second quarter, I should be very optimistic, but I don't think that one quarter is a good indication of a full turnaround. So I'll be watching closely what will happen in the third quarter and in the fourth quarter and hopefully we will have things in the U.S. stabilize and get to continue the trends that we've started seeing. But Q1 and Q2 were not similar at all in terms of the behavior of our results in the U.S. Andrew James Nowinski - Piper Jaffray & Co.: Thanks, Gil. Thanks, Tal.

Thank you. Our next question is coming from Michael Turits of Raymond James. Please go ahead. Michael Turits - Raymond James & Associates, Inc.: Hey, guys. Michael Turits. Thanks a lot. First, can you comment on discounting both in general, on maintenance in particular, and on whether or not there was any discounting required in those multi-year deals?

Actually, multi-years is not necessarily the hardest deals, right? The discounts are affected by competition on a specific account. So when you compete on a new customer, for example, then you see a larger discount. If you have competition in that account, you see larger ones. So the trend didn't change. When it's competitive, you see much more pressure. Some players are leading with price, probably related to differentiation in product. Our differentiation is the quality of the product. Some player's differentiation is pricing. So when it comes to pricing, they need to factor discounts. So, nothing new there. I can tell you from looking at the last few quarters, I will say as a generic comment continued pressure on the discounts on the product and some stabilization in the subscription and the support discounts. Michael Turits - Raymond James & Associates, Inc.: And then speaking of product, this was a slight beat to expectations or consensus on license, but still down. Is there some point where you feel that we could be stabilizing that decline and moving back towards positive growth in product?

I think the answer is yes. But I will just put a caveat. Remember, there's a few things that are moving. So if we penetrate to more new customers and expand the store base in existing customers, naturally we should move to the positive. But remember, if customer is moving to subscription models, management models, vSEC, cloud, all of these solutions, that all of them are sold as a subscription from Check Point and therefore it will be part of the subscription. Michael Turits - Raymond James & Associates, Inc.: Okay. Thanks, Tal. Thanks, Gil.

Thank you. Our next question is coming from John DiFucci of Jefferies. Please go ahead.

Thank you. First question, I think it's Tal, but maybe Gil. These are solid results, especially given what you'd been posting last few quarters. And as Gil said, the strength was especially or the solidness was from subscription. Realize it's still early, but I'm just wondering how much Infinity Total Protection head-on had with that because that's truly a subscription. Or was it simply improved results for more traditional subscriptions that you're selling? I realize it's early for ITP.

Right now, this quarter, most of the results are affected by the more traditional subscription, but not all of them are traditional. Again, the SandBlast, we had some very nice mobility installations in the quarter, tens of thousands of mobile clients for one large customer. So, I mean, we had some nice changes and nice successes in deployments and in the sales during the quarter, and I think we continue to see that part of the business strength. I mean, we definitely need to do more on other aspects of the business and we will.

I will just add one thing.

Okay.

I'll say remember that many times when you discuss with a customer you can talk about Infinity and then he ends up buying the 3 items out of the 10 that can be included. So it's a great way to discuss with a customer the potential, the roadmap and what we have to offer, and a deal like that can end up with subscription of SandBlast and not necessarily a full Infinity.

Got it. Okay. Great. And if I could, somebody mentioned in an earlier question that the results are certainly improved and you really haven't – at least I don't know of any – product cycle benefit you're seeing in the quarter and it's still a difficult comp. So, I guess, because you called it out, Tal, the deferred revenue, every metric was better than we were looking for except for long-term deferred. I mean, you called out that, hey, listen, we did some long-term – some multi-year deals that are not on the balance sheet, but I would expect that that would probably be like that every quarter. You certainly called it out, so it was somewhat of an anomaly this quarter. And, I guess, the next question is why would that happen, is that's not normal.

Remember, I always say that booking and that's why it's not one of the metrics that we share with you typically. I always say that booking can fluctuate between quarters and can move between quarters that's why we don't provide it and we look at the consistency of the deferred revenues. Having said that, you're right. This quarter was significantly high booked but uninvoiced amount and that's why I just gave you a feel to it.

Okay. Fair enough. Thank you very much.

Thank you. Our next question is coming from Gregg Moskowitz of Cowen and Company. Please go ahead.

Okay. Thank you very much. Gil, you referenced the improved global sales force execution, but have you noticed any change in the network security spending environment over the past few months?

Haven't seen a big change in the network security and the spending environment that much. I think it's still a relatively positive environment that we're in. I think we are shooting now very high on the more overall cybersecurity and I have more and more meetings with CEOs, CIOs, CISOs promoting that vision of looking at the bigger picture and not just updating and upgrading their old network security infrastructure. Again, that vision will take time to grow, to come to fruition, but I think that's the future. Not just the future for Check Point as a vendor, but if customers in our world wants to keep our sales guarded from the threat out there, all the generation of threats, we must take a different approach. Just the approach of making slightly-stronger security to the existing mechanism that we have is not enough. We need to make the leap forward and get an overall consolidated architecture and that's what I'm trying to promote these days.

Okay. That's helpful, Gil. And then just in terms of Infinity, I realize it's early, but do you see this as being – as it unfolds, as being primarily geared towards new customers or winning net new business, or very much towards existing customers as well? Thanks.

I think the answer is both. We have some new customers the threat model is attractive for them and we want some of those deals and the existing customers definitely can see the benefit of more security, more consolidation and the new business model, which makes it an easier thing to procure and then to live with. So I think when I look at the pipeline, we have both opportunities. And by the way, it's definitely a very good door opener for discussion. I think Tal mentioned that not every time we offer Infinity we will win the deal, especially the bigger the customer the more difficult for them to consolidate, but it's definitely changing the whole nature of the discussion and getting us to places that we haven't been before.

Okay. Great. Thank you.

Thank you. Our next question is coming from Saket Kalia of Barclays. Please go ahead.

Hey, guys. Thanks for taking my questions here. Tal, maybe for you. I think you touched on this before, but I just wanted to ask the question directly. Can you just talk about how billings terms on Infinity deals differ, if at all, versus traditional Check Point billings terms? Now, I mean, clearly, Check Point does – the vast majority of deals are one year, unlike a lot of your competitors. So I imagine that there won't be much of a difference. But for the larger deals that are two or three years in duration, for example, what's been the trend in some of the early Infinity deals in terms of opting for 100% paid upfront annual in advance, quarterly payments, what are you sort of seeing in terms of changing billings terms of Infinity, if at all?

So I'll say from thinking, we had only a few deals and a few colors even on those, but I would say the default theoretically is annually. Some choose to pay it in advance, but majority will pay the annual amount. So it by definition says if you sign the contract of $1 million for four years, $250,000 a year, then you'll have seen the deferred, only the invoiced amount, which, in most cases, will be the $250,000 in my example. So it will be the annual amount. If you will decide to pay it in advance, naturally, you will see the full amount. And in the revenues, it will take you over four years to see it.

Got it. That's helpful. Maybe for my follow-up, assuming that the multi-year contracts that you signed that were not yet invoiced in Q2, assuming that those are traditional Check Point and sort of paid upfront, can you just give us a sense for kind of what the aggregate dollar amount is that's maybe moved from Q2 into Q3, just to maybe have a sense for how the billing seasonality might change at all?

I'm not even sure I understood.

I think, first, they are not – I think they are not billed yet because they will not necessarily be paid upfront but will be paid annually even though the customer has committed to multiple years, more than one year. So that would be the main reason there is that we are saying that the deal – we received the deal, it's a commitment, it's a multiyear commitment, but it's not invoiced because the payment is annual.

Got it. Very helpful. Thanks, guys.

Thank you. Our next question is coming from Anne Meisner of Susquehanna Financial Group. Please go ahead.

Hi. Thanks for taking my question and nice quarter. Tal, just to follow up on the multi-year deals not fully invoiced. Not to beat a dead horse here, but I had a slightly different question. Are you going to be providing any metrics around your off-balance sheet backlog? I'm not sure how it works for Check Point since you're not a domestic filer, but the other companies are actually providing that as part of the performance obligation disclosure that's related to 606 and that's typically in their 10-Q. So I'm just wondering if you would expect to share any of those specific metrics on your remaining performance obligation.

Sure. Whatever we need to disclose will be disclosed as part of the 20-F definitely.

Okay. So it would be in an annual filing and not in a quarterly. Obviously, you don't do quarterly. But okay. That's fair. So a quick follow-up for Gil. Gil, I know you've talked about focusing more on new business and selling higher up in the organization as you make the go-to-market changes. Is there any additional detail you can share on specifically how you're structuring the sales compensation plans? And particularly as it relates to new business versus renewal business for purposes of quota retirement, just be curious to know if there's any change in the strategy there.

First, we are working very hard with the sales force mainly to change the behavior. And I think the change in behavior is not driven by compensation. It's driven by training, by focus, by many, many other things. The salespeople do get a nice portion of their compensation. It's a bonus, but it's driven by meeting the objectives and not just by the booking amount. So, actually, now we're in the middle of the year, and half of the – I mean, the portion, the top of the annual bonus will be paid based on meeting these criteria of meeting with new customers, winning new customers, getting to a higher level in the organization, and so on. So, the sales plan which we have right now is not 100% commission. It involves both commission and MBOs.

Perfect. Thank you.

Thank you. Our next question is coming from Philip Winslow of Wells Fargo. Please go ahead.

Hey, guys. Thanks for taking my question. Actually, a couple questions here. First, Gil, wondered if you could just talk about the competitive environment with the traditional firewall players here and just sort of what your win rates look like and pricing. And then also, one of the questions I get from a lot of investors is the potential competition with secure web gateway vendors, whether they be traditional appliance vendors or those in the cloud, how do you think about sort of your positioning versus the secure web gateway players, especially when you think about appliance-based versus in the cloud? Thanks.

I think we're doing okay in terms of the competition in our traditional market. We had few displacements of our traditional competitors, like Palo Alto and so on, and it's good to see that that customers realize the difference in security and the difference between hype and the reality, and the differences are huge by the way. I mean, we have the only product that actually prevents attacks from getting into the network when most of our competitors would allow a Gen V malware to get inside the network and only later will give you an alert that something went wrong. It's ridiculous to see that some of our competitors' product actually under load will let connections come in – malicious connection come in and won't block them, when our product will stay protected no matter what load there is on the product. So there are a lot of differences. That's more towards the regular competitors that we have in the marketplace. Secure web gateways, I don't see that right now it's the competitors. I mean, theoretically, I can speak about the differences, what we are doing, what they are doing, where is the overlap, but in terms of the recompetition, it's not that I can say that we won over them or they won over us. It's right now two complementary solutions.

Got it. Thanks, guys.

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

Yeah, thanks. Hi, guys. Just wondering if you could give some commentary to the performance in Asia Pacific. What did you see that was kind of market-related versus execution?

So I think in all areas in terms of our internal metrics, we had good results, we had positive results this quarter. Asia Pacific was a little bit behind and the other countries there performed well, but there are a few countries that we did see some slowdown and we're working on that. It's been for a few years a nice growth engine. Right now, last quarter wasn't as good, and I think we'll work on that.

Do you think that it will require some additional head count changes or are the people in place and it's more just about training and programs?

First, I don't think it's fair to give my commentary on internal performance of our people in a public call. But I think if I'll answer in more generic way, the process of management is a constant process of first coming up with the right program, educating, improving the execution in the existing people and if things don't work out, also replacing some of the existing people. So I'm saying that's all, I don't want any person, again, inside Check Point or outside Check Point think that I have any specific comment on them. That's the general process of management and we do it all over the world, in the U.S., in Europe, in Asia, everywhere in the world and I think we do have a lot to do because I think we can unlock a lot of potential in the execution of our sales force. I think we have great people, but I think we have much, much higher potential than what we are getting to right now.

Understood. Thank you.

Thank you. Our next question is coming from Walter Pritchard of Citi. Please go ahead.

Hi. A question for Gil. Just as it relates to investing for growth, can you help us understand, are you looking to invest to grow at the market rate or are you looking to invest – we're trying to understand sort of the – maybe the optimal rate to grow in terms of level of investment that Check Point's looking to put in the business. And then I just had a follow-up question for Tal on cash flow.

I think, right now, we still have a lot of work to do in order to grow in the right pace that we should be growing. I don't think that the key to that is hiring, even though we do have a nice number of opening in our sales force, so it's not that we are exhausted our head count and we're now thinking about the next stage for investment. We still have enough people that we can hire. And I think in sales it's actually quite simple. Whenever we see that what we have is working and working well, we shouldn't have any problem to invest more and hire more people. I mean, our people are profitable. They generate nice amount of business. And if productivity is becoming good, we shouldn't have any issue in terms of our resources as a company or a business model to invest even more.

Great. And then, Tal, for you on the cash flow, it seems like you were pointing out that there was about a swing of $25 million year-over-year as it related to hedging. Does that encompass all the FX-related impacts on cash flow? And can you help us understand what the impacts on cash flow, if FX rates stays at these levels, what the FX impact on cash flow may be for the rest of the year?

That's actually the only thing that you can't predict because let me remind you of the goal. The goal is that if you have an asset minus liabilities in local currencies, in our case, we have more liabilities in local currencies versus assets because all of our assets, including accounts receivable, is in dollars. So what you do, if we don't hedge then the fluctuation in the currencies will hit the P&L. So the way to prevent a hit in the P&L, if we wouldn't have hedged this quarter, we'd have got a hit and the other quarters we'll get income. So what you do is you hedge the balance sheet exposure. That means the effect in the P&L will be zero because the hedge will cover the evaluation of the liabilities in the balance sheet. The goal is to have that effect be zeroed. The only place you will see the effect is in the cash flow. The size of the effect depends on what happen to those currencies during the quarter because we don't know. That's exactly why we hedge. So I can tell you, you're absolutely right. This quarter, the effect was an expense or a payment in our cash flow of $14 million versus an income of $11 million that we had in Q2 last year, net $25 million. That's why I said the effect is actually the cash flow was positive and increasing 5%. How much will it be next quarter? I really don't know. That's why I'll have the hedge.

I guess, just to be clear there, though, if FX rates stay the same as they are today, does that continue to be an FX or a cash-flow headwind for the rest of the year? Thanks.

No. Not at all. Not at all. Because you roll them every month, right? So if the rates will stay stable, it should have a zero effect.

Thank you.

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

Thanks. Gil, I haven't heard you mention the R80 architecture in a while. If I have my facts straight, I think R80 Release 2 just went GA. And I'm just curious whether you think that has the potential to be any kind of an upgrade catalyst for Check Point in the second half or in 2019. And then, for Tal, Tal if I take the midpoint of your 3Q revenue guide and your full year revenue guide, it implies that in 4Q, growth goes from, call it, plus 2% to negative 1% and I just wanted to ask whether you'd call out anything. Or is this just you being a little conservative given the variables that Gil talked about in terms of the sales turnaround? Thank you.

So first, R80 in general is in the marketplace and it's the default version and many people are using it, even though we do have some customers that are still on R77.30, which is also a great release, very stable and, again, giving more security than any other product in the marketplace. R80.20, the second or maybe actually third version of R80 is not yet out. It's expected hopefully this quarter to be out. It will give a lot of benefits and will give a lot of boost to our performance as well as to several other security capabilities. I think people expect it. It's in early access with many customers and the management part of it is, I think, in the more production-grade, the gateway side of it again expected this quarter and we are working hard to release it shortly again this quarter.

And to your question regarding the guidance, I mean, Gil alluded to that. We don't change the guidance during the year unless there's something material. So we keep the guidance and understand that the numbers, if you take out Q3, then the planned number is Q4, but we have to see Q3 in order to know what will happen in Q4. So it's more like the math of taking out Q2 and Q3 and seeing what Q4 will do. So it's not that I see anything different, it's just that the numbers are the guidance that we provided. We need to wait and see what happens in Q3 and then see and give you a guidance for Q4 specifically.

Yeah. Got it. Thank you, both.

Thank you. Our next question is coming from Ken Talanian of Evercore ISI. Please go ahead.

Hi. Thanks for taking the question. I was wondering if you could give us a sense for the trends on your Software Blade net retention rate.

It's actually quite good, so we don't provide it, I explained many times why, but I can just say that it's very good. It's stable, in some areas increasing, but in general, stable and doing well, including the new blade that's our – the SandBlast Blade for advanced threat protection.

And as we look forward, what should we think of as the primary drivers to potentially expand that net retention rate?

I have to say it's been that way very stable for the last probably two years. We started very low and it improved and reached to those levels that we have now. And hopefully over time, as people will adopt more Infinity, Infinity can be a driver in the sense that if people purchase Infinity, that means they are interested in moving from Gen II, III to Gen IV and V in protection, that means higher adoption and utilization, if people are adopting and utilizing these capabilities then renewals should increase.

Got it. Thanks very much.

Sure.

Thank you. Our next question is coming from Gabriela Borges of Goldman Sachs. Please go ahead. Gabriela Borges - Goldman Sachs & Co. LLC: Great. Thank you for taking my question. Either for Gil or for Tal on Infinity Total Protection, I'm hoping you can frame for us a way to think about the upside that you're able to extract as customers move from the traditional model to Infinity Total Protection. Maybe based on the early deals that you've closed or the way you've thought about the price-points, how much larger could the deals be under Infinity Total Protection when you look over a three or five-year period versus the traditional model? Thanks.

When we look at the total, it can be significantly higher, like hundreds of percentage, of course. But when we try to look at it in terms of the size annually then also that can grow significantly, meaning annual comparison. Depends on where the customer was before he moved to Infinity. So an example, a new customer obviously saw growth, so that's nice. Existing customers, if it's an existing customer that was maybe only on Gen II and is now taking Infinity and moving to Gen V, it can be very significant, very high tens of percentage increases, right? If he already had SandBlast and he now just adopted the mobile and the cloud then it can be a lower increase, so it depends where he was as a starting point.

The potential is very, very high and I think it depends on the type of customers and the amount of consolidation that we do and the real big economic – again, the benefit for the customer is not the economics. The benefit for the customer is the level of security and the fact that they can jump 10 years forward in terms of our security architecture. Economically, it really varies how much we can consolidate from other products. What we've seen in the past is that customers have consolidated four or five vendors into our one solution when they move to the Infinity Total Protection. Gabriela Borges - Goldman Sachs & Co. LLC: That's helpful. Thank you. And a follow-up, if I may. Gil, you mentioned during the prepared remarks some of the indicators that you look to as forward indicators, double-digit increases in meetings, conferences, web traffic. Just curious how do those indicators compare to maybe a year ago or a quarter ago?

So I think they are double-digit growth compared to a year ago and also actually compared to last quarter in both cases. I think we're investing much more in sales and marketing. Again, some of it you see in the dollar spend, but most of it is not the dollar spend. It's the focus, the execution, it's what we do and it's really, really nice to see, in some cases – I mean, the growth here is really nice. In some cases, it's 30% increase; in some cases, it's 60% and even 80% increase. More engagements, more activities and even more leads that we are getting from the different marketing activities. Gabriela Borges - Goldman Sachs & Co. LLC: Thank you.

Thank you. Our next question is coming from Jonathan Ho of William Blair. Please go ahead. Jonathan F. Ho - William Blair & Co. LLC: Good morning. I just wanted to maybe dig a little bit more into your endpoint solution. You talked about some recent success there and I just wanted to get a sense for how meaningful of a contributor that is to revenue and whether you're going to be making additional investments in endpoint.

So I think first, I mean, what we've been surprised and even overwhelmed by the success of our endpoint product over the last year, I don't know particularly in the last quarter, but over the last year, we've seen great success there. The last quarter, we received some really nice reviews and analyst reports all around the success of our endpoint, which by the way shows the innovation and the creativity and the power of our architecture because there are so many next-generation endpoint companies and yet our development team was able to produce products that are beating many of these products in the marketplace. And, again, you see it from the reviews we just received in the last quarter. Having said all of that, my main focus is not in turning the endpoint into us becoming a big endpoint vendor in the marketplace. There are good, established vendors in that marketplace. It's very hard to displace them and there are also many startups with innovation around that place. I think the role that we should play is within the Infinity Architecture. When a customer wants to consolidate their whole solution, when they want to get a holistic approach to security, we can supply them with all the relevant components. And, again, looking at the success that we have and the reviews that we're getting for the product, it seems that we do have the best-of-breed next-generation endpoint solution in our portfolio. Jonathan F. Ho - William Blair & Co. LLC: Got it. And then relative to the sales execution challenges that you mentioned, can you talk about maybe which improvements have had the most impact on the business and maybe where we are in terms of those impacts being shown through.

I think it's too early to say. As I said, we've seen very good indicators in the last quarter and we're very happy with the total business volume in the U.S. And almost all the parameters in Europe, that's been very positive. I can't say which initiative; we're doing several initiatives. Most of the initiatives that we've started around new customers, around C level and so on will still need to bear fruit in the future. So what we're seeing now is the sales force executing and motivated and working on what they should be working. Jonathan F. Ho - William Blair & Co. LLC: Thank you.

Thank you. We're showing time for one additional question for today. Our last question will be coming from Keith Weiss of Morgan Stanley. Please go ahead. Keith Eric Weiss - Morgan Stanley & Co. LLC: Hey, guys. Thank you for taking my question. Gil, on the competitive environment for the Infinity Architecture, two kind of questions on that. One, other vendors are talking to us about sort of a broader, a more holistic approach to security and consolidating a lot of functionality, whether it be Symantec or Palo Alto Networks. Are you seeing them in any of these discussions or any of these competitive situations around a more holistic approach to security? Number one. And number two, it might be early days, but have you guys seen any examples or are there any instances where you actually are displacing some of the legacy vendors, like a legacy endpoint vendor when you're deploying Infinity?

So, I mean, first, I think our approach and the Infinity Architecture is by far a broader and a more holistic approach to security. I don't think that you can take any of the vendors that you mentioned solution and get full security for an entire enterprise and definitely not to environments like mobile and others. That's very, very linked to what we are doing. I think if you look at the security benefits, again, being the only vendor that does first-time prevention on every connection, by default making it prevention and not detection later on after the attack has happened. And, guys, I mean, we may underestimate the level of threat that we have, but believe me when you take a room full of people, at least one of the mobile phones in the room is infected with malware and that malware could proliferate to the entire network, so we're talking about mobility as an example. Are we seeing other vendors pitching on that vision? Not as much. I think we are probably approaching different customers because while we do compete with some of the vendors that you mentioned, the competition on the overall architecture is not something that we see often in these accounts. And, I mean, the good news is that we did have some displacement over the last quarter, displacements of Palo Alto and also of Symantec, even though again I won't look at Symantec as my direct competitor. I'd like to – I think, in general, we are more complementary and more partners of ours than competitors. Keith Eric Weiss - Morgan Stanley & Co. LLC: Excellent. Thank you, guys.

Thank you. At this time, I'd like to turn the floor back over to management for any additional or closing comments.

Thank you, guys, for attending the call today. It was a little less noisy than our last call and we'll look forward to seeing you throughout the quarter. Also, look forward to hearing from you right after the call. Thank you. And have a great day. Bye-bye.

Ladies and gentlemen, thank you for your participation. This concludes today's conference. You may disconnect your lines at this time and have a wonderful day.