Good day, ladies and gentlemen, and welcome to Radware Limited Third Quarter Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator instructions) As a reminder today’s conference call is being recorded. I’d now like to turn the conference over to your host, Mr. Roy Zisapel, President and CEO. Please go ahead, sir.

Thank you. Good morning, everyone, and welcome to Radware’s third quarter 2012 earnings conference call. Joining me today is Meir Moshe, our Chief Financial Officer. Meir will start the call by reviewing the financial results, and afterwards I’ll discuss the business highlights of the third quarter results. After my comments, we’ll open the discussion for Q&A. Meir?

Thank you, Roy, and welcome everyone to our third quarter conference call. First, I would like to review the Safe Harbor language. During the course of this conference call, we will make projections or other forward-looking statements regarding future events or the future financial performance of the company. We wish to caution you that such statements are just predictions, and that actual events or results may differ materially, including, but are not limited to general business conditions and our ability to address changes in our industry, changes in demand for products, the timing and amount of orders, and other risks detailed from time-to-time in Radware’s filings. We refer you to the documents the company files from time-to-time with the Securities and Exchange Commission, specifically the company’s last Form 20-F, filed in March 2012. And now ladies and gentlemen for the financials: in spite of difficult economic condition, specifically in Europe, revenues for the third quarter increased to a record of $47.5 million, representing 13% year-over-year growth. Non-GAAP EPS amounted to $0.45. Non-GAAP operating expenses amounted to $28.9 million. Non-GAAP operating margin amounted to $10.1 million, or 21.3%. The non-GAAP net income for the third quarter of 2012 amounted to $10.4 million, or $0.45 per share, compared to a net income of $7.8 million, or $0.34 per share for the third quarter of last year. Stock-based compensation expenses in the amount of $1.4 million, amortization of intangible assets in the amount of $700,000, and exchange rate expenses in the amount of $60,000 bring the GAAP net profit this quarter to $8.2 million, or $0.35 per share, compared to a net gain of $5.4 million, or $0.24 per share in the third quarter of 2011. Non-GAAP gross margin remained at 82% as in the previous quarter. The head count at the end of the quarter was 788 employees. During the third quarter, we generated cash in an amount of $16 million. Thus, our cash position including GAAP, long-term and short-term bank deposits and marketable securities, increased this quarter to $265 million or $12 per share – per outstanding shares and we have no debt. Shareholders’ equity amounted to $260 million. Guidance for the fourth quarter. We expect revenues to range between $49.5 million to $50.5 million, 82% gross margin, operating expenses between $30 million to $30.2 million, financial income at $1.3 million and non-GAAP EPS to range between $0.45 to $0.49. As you can see, ladies and gentlemen, revenues are up, profitability continues to improve, cash is up by $50 million and we expect better results in the next quarter. And now, I would like to turn the call over to Roy.

Thank you, Meir. We are pleased with our third quarter results, demonstrating solid execution and meet the challenging economic environment. As you have noted our continued product revenue growth and in particular growth in North America. Consistent with prior quarters, the growth in North America is well balanced as across enterprise customers, online, and carriers. Both our Attack Mitigation Solutions and our Application Delivery Solutions with its leading virtualization architecture are gaining traction, and we are securing wins with major new customers. This past quarter, we had record revenues, results in new customers in North America and we believe we’re gaining share in the region. To demonstrate, this past quarter, we announced two major North American mobile carriers that shows our Alteon 10000 to support the mobile integrity. Mobile data traffic was skyrocketed due to the huge increase in smartphone and tablet usage, together with the rising popularity of mobile video streaming services and other digital applications. This explosion of mobile data requires operators to intelligently optimize and mange traffic by dynamically steering it, based on user, application, location and content awareness. The two mobile carriers purchased Alteon 10000 to fully and cost effectively as of this emerging mobile data challenges. The Alteon 10000 delivers high-end processing capacity and performance superiority in all layer phones in seven metrics, coupled with the most advanced traffic steering and mobile data acceleration capability. In addition, the Alteon 10000 is a great fit for large carriers with its ADC standard-based architecture and our value capability that allow our customers to consolidate up to 256 ADCs into each one platforms, 16 times higher than the competition. Another excellent example of the strength of this solution comes from our recent win with one of the world’s largest mobile carrier groups that purchased over $1 million of…

(Operator Instructions) Our first question comes from Mark Sue of RBC Capital Markets. Please go ahead. Mark Sue – RBC Capital Markets: Thank you. Good morning, gentlemen. If we could think get a sense of how you are proceeding the macro, is it – would you classify it as still challenging or, A, nationally it’s getting more challenging particularly as we finished a calendar year? What are your customer saying in terms of urgency deal sizes and also just kind of the need to kind of upgrade at the near term that would be helpful.

Good morning Mark. Your question was on Europe specifically or overall? Mark Sue – RBC Capital Markets: Overall. But maybe if you want to add some color on Europe and North America and Asia that would be great?

Okay. So currently we are seeing very different market conditions. In Europe, I think the environment is challenging, but at least that we are – what we are seeing both in carriers and large enterprises and we are not seeing a lot of growth and momentum for our business deals. In North America on the other hand where we see a lot of investments at both large enterprise and carriers. Those investments are really focused on creating their cost effective environment and we are seeing them in the consolidation projects, we’re seeing them doing the datacenter migration and the virtualization projects. On the carrier side, with certain investments would definitely demonstrate that the scale of the mobile traffic. So we are seeing different environments now in different markets. Mark Sue – RBC Capital Markets: Okay, that’s helpful. And then if I look at your partnerships, any thoughts in terms of now that we’re into it a little bit, which one is going better, which one is below plan and which one can actually be incremental as we finish the year Check Point, Juniper and others?

So I don’t want to relate to the others category like, but between Check Point and Juniper, we’re definitely seeing a very good momentum around in Check Point and previously we’re going in the first quarter of this full alliance and announced end of June, but we think the Q4 is getting better and better and also due to next year. So definitely we’re seeing currently a lot of momentum with Check Point. Mark Sue – RBC Capital Markets: Okay. Lastly, if I look at Cisco and I look at the potential upgrades, all the competitors are saying it’s an opportunity for them. Is there a way to quantify what this means for Radware, should we just kind of look at market share and say it’s going to be divided up to among the players. Cisco provides power with – say they are not going to see any market share. And just kind of tactically what you’re going to do to kind of replace a competitor that’s leading the market.

Thinking of the – definitely the Cisco opportunity over the current year or two years can be significant, given the – not only their recent market share that we fix but the overall installed base. Until the opportunity is focused on larger customers by nature and I’ believe that our product line and especially the VADI architecture fits very well into the Cisco, will pitch in as their product benefits which used to be the mutual context they have. So I think architecture – from an architecture point of view, I think we have a perfect solution and now it’s about reaching the customers. And while Cisco will be recommending or referring customers to a Citrix, I do believe that the fact that Cisco announced publicly they are going to reduce investments in the product line in core customers we have a vehicles complete valuation of the product in the industry. And being today with serving market share without LIBOR, I think our probability of being invited to grow backups have increased even Cisco growing well. Once we are in, once we are in the second re-evaluation, I think that we’re doing extremely well. So I do believe and we are looking for gaining more than our market share in the Cisco replacement opportunity. In order to achieve that obviously we’re very focused on the Cisco customer install base and we have unique capabilities in integrating the Cisco infrastructure to a Radware infrastructure. And our teams and channels are all equipped I think in the right tools and knowledge base. Mark Sue – RBC Capital Markets: All right. That’s helpful. Thank you so much, gentlemen.

Our next question comes from Alex Henderson of Needham & Company. Please go ahead. Alex Henderson – Needham & Company: Hey, guys. I had a little crackle on my line when you gave the gross margin guide and the OpEx guide. Can you just re-give – give that again? And then the second, I was wondering if you could just go through the geographic percentages for us?

Okay. So maybe I’ll repeat on our – the entire guidance for the quarter. Revenues range between $49.5 million to $50.5 million; gross margin 82%; operating expenses $30 million to $30.2 million; financial income $1.3 million; and non-GAAP EPS range between $0.45 to $0.49. Alex Henderson – Needham & Company: Thanks.

About the, yeah, you asked also about the split between regions, this quarter it was 32% in North America, EMEA 26% and Asia-Pac 42%. Alex Henderson – Needham & Company: Okay. So the growth looks like it was a little bit more skewed from a geographic basis to Asia-Pac in the quarter. Am I reading that correctly?

I think it’s Asia-Pac and the U.S. yes. Alex Henderson – Needham & Company: And within the U.S. marketplace, can you talk a little bit about the win rates that you’re seeing versus the competition when you get in, particularly when you are going up against big IP customers, which don’t virtualize versus your virtualization capable products in your stackable versions. It seems to me like the biggest issue for you guys really is seeing the deals in the U.S. And can you talk about win rates and how that might look in the marketplace, particularly in rackables?

So in the U.S., I think the win rate is very high. When we get into the competition, I think in every product metric, I tried to discuss it in my colleagues, I think we have a big advantage of the big IP stack of the line products, whether it’s performance, shared transaction through second, whether it’s the OnDemand that customer can buy from us the 1-gig platform and scale it all the way to 16 gig, without the need to change platform that is on executive commission for five years moving to further need to support versus every some years change of platforms all the way. Like you’ve mentioned the neutralization where we allow them to run multiple applications with our installations between them and guarantee that through which you cannot achieve with a big IP. Where I have been through that now perhaps IBM, I think we have the very strong solution, very competitive, I think it has done with the local benefits and our key focus is extending our reach, channel, sales teams, and so on, so we are in modules. Alex Henderson – Needham & Company: So going back to the point, if you go in and pitch against a big IP that doesn’t have the ability to virtualize because its lack of VM density for vADCs and they come back with a Viprion. Doesn’t that give you a substantial competitive edge to take advantage of it? It seems to be a critical variable. How often does that conversation come up? I know VM deployments are fairly small portion of the total, but it seems like that’s a pretty good cutting edge advantage. How often does that come up in the competitive bid?

So it depends on the sales team and channel we are working against platforms. For some of them we’ll try to speak in appliances versus appliance and try to convince the customers that consolidation or running instant thorough application is not needed and we will try them to compete one-to-one. Others when they see the, especially when they understand the customers fully brought into the architecture of application installation and consolidation, we’ll try to offer the WPO 2400 in a very steep discount. But I think also versus the 2400 with a single blade only allow – for instances in our low end – our low-end 50 to 24, we can run 24 instances. So I think once we are leading the customers into the application for instance consolidation, the transaction discussion and there is a new product, well I think we’re in extremely good position to win the deals. Alex Henderson – Needham & Company: Could you tell us what percentage of your product sales were sold with VM licensing or vADC licensing operative as opposed to sold with conventional transactions?

I don’t have that in front of me, but currently we are pushing all the flow backs at least with two vADC. Now it’s not guaranteed that the customers would use it or that we see the value inputs from at least from a single perspective and net agility perspective, all of our platforms are capable and shipping with two dual team. Alex Henderson – Needham & Company: So you don’t know what percentage actually turned it on? Do you know what the percentage of people actually turning on to the license increased quarter-to-quarter or whether there is any change in that?

We are seeing their gigabits of ADC capacity and increasing the amount of licenses. So we definitely see a big increase in the density of the ADC instances and total amount of instances that customers are using, which means that they are using, that they are using more and more not only from a box consolidation, architecture but they’re actually moving all the way to an instances up architecture. Alex Henderson – Needham & Company: Okay, we try. One more last try at it now and then I’ll leave the floor. Can you give us the sense of what the growth rate of licenses is or given us a growth rate of active licenses or some other metric that tracks the portion of vADC, some metrics that we can use to track it?

We are not sharing this, but let us review to know if we can find a good metric for the future goal to share with the audience to show the traction that we have in this – in this market. But in general, our revenues from virtualization growth is dramatically higher than the overall company growth. We will come back with a better leading indicator. Alex Henderson – Needham & Company: You think it’s triple digit year-over-year?

In terms of amountability, yes. Alex Henderson – Needham & Company: Okay. Thank you.

Our next question comes from Ittai Kidron of Oppenheimer. Please go ahead. Ittai Kidron – Oppenheimer: Thank you. And I’d like thank the previous analyst for letting others ask questions as well. Roy, can you talk about Juniper and Check Point on the combined basis, can you talk about the trajectory of that revenue in the September quarter versus June and how do you think about it into December?

We had some – equally. The Check Point really was very low and we literally start, we will see, we believe a pickup in December. And also from the combination we believe both will be growing next year. In Juniper, the revenues are more lumpy, the dependence on carrier reach, on carrier infrastructure reach. In Check Point it’s more transactional business and sales for both enterprise and carriers across the world. We are seeing from our current information and again very early on the Check Point relationship given a third cycle of 6 to 9 months, the first real deals will start to close December and more in Q1. But from a – what we are seeing in Check Point, I think that there is a lot of growth there and also ability for us to leverage that so and we see sales in the future. Ittai Kidron – Oppenheimer: Got you, okay. And going back to the original splits, can you give us also the splits between the enterprise and service provider? And also Roy, when you look at your service provider business right now, can you talk about it if from a feature standpoint, what is the one feature that you are seeing the biggest traction with carriers and what are others that you think can come along over time?

We just go for the split enterprise was 75% and carrier and service provider 25% this quarter. Ittai Kidron – Oppenheimer: Okay.

Look, in terms of the key features or applications, we’re seeing a lot of traction on the cloud business as they are building cloud and then they need many instances with ADCs. And so we saw that new cloud results, we are seeing a lot of traction there, secondly and I had mentioned some of the moves in my remark is the mobile shop steering, simply the growth in data and the requirement of optimization. And still it is the Attack Mitigation carriers are becoming more and more worried and are seeing the latest attack on AT&T, this past quarter they brought down to VMS service. So we are seeing carriers deploying Attack Mitigation systems both, for protecting their own infrastructure as well as starting to create services, cost to security services for their customers. Third one is the true value to traction to date. Ittai Kidron – Oppenheimer: Okay, very good, good luck guys, and I will leave the floor to others. Thanks.

Our next question comes from Joseph Wolf of Barclays. Please go ahead. Joseph Wolf – Barclays: Hi, thanks. Just another one more detailed question on the revenue mix. Could you give us maybe it’s small but just the cloud business and how you see that shaping up either as a percentage of sales, or a growth rate in terms of the opportunity right now given the – given our – and in switch products how you are competing there. And then when you look at the, I guess the customer activity and the economic environment, could you go through the differences perhaps between the ADC and the Attack Mitigation size of the business as you look into the fourth quarter particular given the macro weakness?

So I’ll answer the second question about the splits and let me answer the revenue breakdown. And regarding the split between ADC and security going forward, we’re seeing both markets growing nicely and we do have some slight differences from quarter-to-quarter and – but overall I think both resembles the growth rate of the company. The security business is more tied to the number and the density of attacks around the – definitely under the bigger attack ways like the one we achieve for U.S. banking industry several weeks ago, we are seeing a very high values in Internet project budgets, so this type of a solution. In other areas, we don’t experience a lot about that to invest a lot in our type of solution. So first is general, and I don’t think – I think that both ADC and security, and especially when we speak about ADC in the specific market opportunity as I’ve mentioned like cloud is being down, mobile traffic experience, datacenter consolidation, I do believe that those products have got critical even in economic downturn. And I would say there are ADC opportunities like a general upgrade of an existing appliance supporting one circle application, but obviously maybe deferred. But our focus of the company even though the opportunity of the markets and it’s being for quite some time that we feel, A, we have a very large advantage, and B, the investment is critical, so it’s necessary we will be replacing the competitor given, A, believe and B, our competitive advantage. As far as the split in this stage we don’t share it into the market. Joseph Wolf – Barclays: Any color, any direction or some sort of color on that opportunity?

No, of course this is after every quarter more opportunities, but again in this stage we don’t share with you at the moment. Joseph Wolf – Barclays: Okay, maybe just – and going back to Roy’s comments. If you look at your wins right now, how much of it is your own business and how much of it do you think is where you’re replacing other companies and taking market share if you look at the win rates?

I think being larger enterprise and carriers, they all have an ADC vendor and security vendor. In ADC that vendor will be strategic and it might be that for example in a carrier that ADC vendor is deployed in the mobile side and now they are using the cloud environment, which is new. But from a customer perspective this has been the larger – the large or high end of the market is no Greenfield opportunity. So most of them are penetration engines and are competitive environment, we are doing this again by drawing storage approach to specific market opportunities. In security, the Attack Mitigation space of the line of service protection in the new market, none of the existing security tools are able to protect and that’s why you are seeing all these attacks being very successful. I think it’s another proof point product, it’s the long-term relationship with Check Point, obviously Check Point has a very broad network security offerings, from inclusion, preventions to firewalls, VPN and so on. And it’s still based for the need to augment that with our solutions. So in Attack Mitigation most of the opportunities are Greenfield as well the customer has established securities on this. Joseph Wolf – Barclays: Thank you.

Our next question comes from Jess Lubert of Wells Fargo. Please go ahead. Jess Lubert – Wells Fargo: For taking my question. A couple of questions. Can you talk about linearity in the quarter and perhaps help us understand if there was a change in visibility towards the end of the period and maybe when you started to see some weakness?

Okay, the analysis of the quarter was 30% in the first month, 20% in the second month and with September was 50%.

I think the visibility, there was no real change, the only point again I would like to highlight on the call is that we were expecting until the very last minutes of the quarter better results and still we were not able to. So we really saw only in Europe issues in closing and also our team was very opportunistic on some of this year’s – very last we were not able to close. Jess Lubert – Wells Fargo: And were there any big deals that you saw would close that didn’t close or any metrics surrounding big deals? Some of your competitors suggested there were fewer big deals this quarter versus others and if there were deals that’s slipped, do they slip into Q4 or do you think they’re a little bit further out on the horizon?

We didn’t see any specific issue with the – with big deals versus small deals. In fact, some of the wins that I’ve mentioned are significant over $1 million orders and get others as well. We do see something specific to large deals and so – and so in Europe it is a mix of these. And when we’ll go and some are closing very quickly and some are pushed back through this. So I think we are in the same – the same area. Jess Lubert – Wells Fargo: And then final question for me, with respect to Cisco, can you talk about what you’re doing to make sure that Cisco base is aware of your solutions, your trading program? And maybe walk through how you’re planning to build brand awareness? Talk about your hiring plans as some of your competitors are hiring fairly aggressively, they’re going after the same opportunity. And then maybe you can talk a little bit about how you’re planning to balance the need to invest versus growth? I think that would be helpful as it does seem like you’re backing away from your prior goal of exiting the year 23% operating margins.

Okay. So – and in terms of the Cisco opportunity, there is several ways of doing that and we are trying to do it in a multichannel approach. Of course, with our sales team across the world we are doing wider touch to the customers that we know and the large ones that we know that there is a larger installed base for these products, we’re using our channel and some of our channels were combined Cisco and larger channels. So through them we think we have good access to the sold Cisco 8, so they know the lost Cisco 8 business. And third we’re doing marketing campaign and then that we’re targeting this environment. So – and all the regular changes to this state. In terms of hiring, we are focusing our hiring where we are seeing a lot of success and we are adding around the world carrier team. We are adding more capability especially in the U.S and Kala to cover more markets, so more sales teams that are targeting the regular enterprise, and main account and so on. In terms of balancing the investments and growth, I think we’ve done a relatively good job in this aspect of the industry, I’m using this one to continue to do so, I mean we are not seeing a set function of investments, what needs to be done in order to support growth, it’s not a continued approach. Growth of the business that funds low investment both in R&D, but of course a lot in sales and marketing to support the future growth and so on and by doing that expanding the operational margins of the company. Jess Lubert – Wells Fargo: Very good. Thanks guys.

Thank you.

Our next question comes from Rohit Chopra of Wedbush. Please go ahead. Rohit Chopra – Wedbush: Thanks very much. Can I ask you three questions? One, can you just give us a status update on IBM and how that’s progressing after a couple of quarters of them pushing out the pure systems? Can you also talk Roy about average deal sizes about a year ago, you’ve mentioned that average deals sizes had moved from the 80,000 range to about 100,000 and something range low 100,000 maybe where that is today? And then there has been some talk about competition on this call especially with Cisco, but could you talk a little bit about some of the others out there if you’re seeing any desperation or any aggressive pricing maybe at the lower end that’s impacting the overall market and I’ll live it there.

Can you just repeat the third question I didn’t hear it well. Rohit Chopra – Wedbush: The last question is just on the competitive environment Roy, just are you seeing any pricing that mid and low end, any aggression by some of the smaller vendor out there?

Sorry I was asking for the first question. Rohit Chopra – Wedbush: The first one.

Yes. Rohit Chopra – Wedbush: I just want to get a status update on IBM.

Okay. So on IBM I don’t have anything new to our space, we have the alliance on the few system side and that’s meeting the channel and customer, and I think overall the whole IBM relationship is progressing well and there is multiple programs, but I don’t have anything specific commentary to update on the call. In regards to average DSO, it did move up, but I think it’s relatively flat we’re not seeing it’s going up or down in the recent quarters we feel below taken average in the last three quarters or so, it’s in the 100,000 figures. Regarding pricing, we don’t see a lot of price pressure – price pressure. Of course an average deal that is becoming competitive understanding there are some risk going – but if you look at our gross margin I think and also in some of our large competitors’ gross margins, that look pretty solid and it’s a combination of some reduced pricing may be on the door balance year I would call it offset by a more and more capability, the licenses that we’re seeing customers by, so I don’t think there is a major pressure on pricing, even in this environment. Rohit Chopra – Wedbush: Thanks, Roy.

Thank you.

(Operator Instructions) Our next question is a follow up from Alex Henderson of Needham & Company. Please go ahead. Alex Henderson – Needham & Company: Hey guys. So I’m glad everybody had plenty of time to ask questions. Just wanted to ask one more question on the channel build, obliviously a big part of the deal with Check Point is your ability to go into the bars that they’ve been using which is one of the better bar channels out there and get an introduction. Can you talk a little bit about your initial response as you’ve gone out to talk the bars through that introduction along with the DDoS protector and what their receptivity is to pushing the ADC product line?

It’s very early on in this cycle. First, we are doing the field meeting with the Check Point sales team and Channel Managers and then we are deciding with them what would be the right approach for those channels or certain channels. And then process starts. We also first we’re focusing to make this channel successful selling the Check Point DDoS protector and then as they gain confidence and they also see the Radware solution, the Radware technology try to offset that into the ADC. It’s very early in the quarter, but we started of course they’ve driven the ADC’s Check Point and slowly they are introducing us to the channel. I think the more activity once those channels have started to complete their first sales cycles with the (inaudible) not before. Alex Henderson – Needham & Company: And just one last question along the same lines, can you give us the break up between ADC and Security and what the relative growth rates were?

Usually, we don’t break it again between lines, but this is the same that we discussed sometime before like 20% to 25% security. Alex Henderson – Needham & Company: Thank you.

(Operator Instructions) I’m showing no further questions at this time. I would like to turn the conference back over to management for any closing remarks.

I would like to thank everybody for joining us today, and have a great day. Thank you.

Ladies and gentlemen, this does conclude today’s conference. You may all disconnect, and have a wonderful day.