Good day ladies and gentlemen, and welcome to the Radware Ltd. Q4 Results Conference Call. (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 of Radware. Please go ahead.

Thank you. Good morning everyone, and welcome to Radware’s Q4 2012 Earnings Conference Call. Joining me today is Meir Moshe, Chief Financial Officer. Meir will start the call by reviewing the financial results and afterwards I’ll discuss the business highlights of the Q4 results. After my comments we’ll open the discussion for Q&A. Meir?

Thank you, Roy, and welcome everyone to our Q4 conference call. First I would like to review the Safe Harbor language. During the course of this conference call we’ll make projections or other forward-looking statements regarding the 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 not limited to general business conditions and our ability to address changes in our industry; changes in demand for our products; the timing and demand of orders, and other risks detailed from time to time in Radware’s filings. We refer you to documents that 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. We are pleased to report an additional record quarter and an additional record year of revenues and profitability. Revenues for Q4 totaled to a record of $49.8 million representing 5% sequential growth and 11% year-over-year. Revenues for 2012 totaled to a record of $189 million, an increase of 13% compared to revenues of $167 million in 2011. Non-GAAP gross margin remained at 82% in Q4 as well as for the whole of 2012 compared to 81% in 2011. The non-GAAP net income this quarter has increased to $11.2 million or $0.48 per share compared to income of $9.5 million or $0.42 per share in Q4 2011. The non-GAAP net income for 2012 has increased to $40.5 million or $1.70 per share, an increase of 32% compared to a net income of $30.7 million or $1.30 per share. Stock-based compensation expenses in the amount of $1 million, amortization of intangible assets in the amount of $800,000, and exchange rates expenses in the amount of $300,000 bring the GAAP net income this quarter to $9.1 million or $0.39 per share compared to net profit of $6.6 million or $0.29 per share in Q4 last year. Non-GAAP operating expenses reached $30 million in Q4 bringing our non-GAAP operating margin to a record of 22%. The headcount for the end of the quarter was 800 employees. During Q4, we generated cash in the amount of $10 million, bringing our total cash generation in 2012 to an amount of $56 million. And our cash position including short-term and long-term deposits and marketable securities amounted to $275 million and we have no debt. Shareholders’ equity amounted to $271 million. Guidance for Q1: we expect revenues to range between $48.5 million to $49.5 million, 82% of gross margins; operating expenses will range between $30.1 million to $30.3 million; financial income at $1.4 million; and non-GAAP EPS to range between $0.43 to $0.46. As you can see, ladies and gentlemen, revenues are up, profitability continues to improve. Cash is up. We expect higher and better results in 2013 and now I’d like to turn the call over to Roy.

Thank you, Meir. Our Q4 results reflect another quarter of solid performance. The North American market continued to grow significantly for us, closing the year with over 30% of annual growth. We are seeing a lot of activity in cloud datacenters, datacenter consolidation projects and Cisco ACE replacements. Yet, the most significant increase in demand and pipeline is coming recently from our Attack Mitigation Solution given the ongoing waves of attacks on financial institutes, government agencies and online businesses. We believe these growth solutions are expanding Radware’s addressable markets from the traditional load balancing and application delivery use cases to becoming the control plane and critical component in enterprise datacenters and carrier infrastructure. On the ADC front, our VADI solutions transform physical application delivery controllers into virtual instances that can reside either in a dedicated hardware platform or as a software-based virtual appliance on top of VMware and KVM or as an instance on top of a multi-instance consolidation platform that we call ADC-VX. We are leading the industry in the dense [secure] instances per platform we can provide which directly impacts the cost of a carrier or cloud provider to serve their customers. We also lead the market in offering application delivery instances across all platforms and capacity ranges, enabling our enterprise customers to cost effectively consolidate their infrastructure while providing better availability and [full tolerance] for the IT operation. During the last several quarters we considerably enhanced our VADI solution with Radware ADC Fabric which is the first solution to pull virtual ADC instances across multiple platforms and datacenters. The result is improved application [style] agility, mobility, and birthing within a single datacenter, across datacenters or to the cloud. We also introduced AppShape that provides an application perspective for shaping the datacenter infrastructure to specific application needs. AppShape…

(Operator instructions.) Our first question comes from Alex Henderson of Needham & Company. Please go ahead. Alex Henderson – Needham & Company: Hey guys. Can you give us a little bit of a breakout between the geographies – delineate how the US did versus Europe and what you’re seeing in terms of those geographies as you’re looking out into your guidance? Particularly when you look at the US can you also break out between the rate of growth of product sales versus the rate of growth of service?

Okay, I’ll give the break for Q4. The US was 31% of our total revenues. The international was 69% split between EMEA 33% and Asia-Pac 36%. Overall the product sales were growing faster than the overall company, faster than the services and Roy will give more color on that.

Yeah, so in terms of the geographies we believe the conditions in North America continue to be very good and we continue to see strong growth in that market. The most challenging geography we believe is EMEA and currently we’re seeing flattish performance there. We believe there are opportunities for growth but from the macro perspective that’s the most challenging. And Asia-Pacific is in between – it depends on the exact country. As Meir mentioned, we are seeing – and it’s consistent over the last year – stronger product growth versus maintenance, renewals, and services; and obviously we think there’s also room for improvement on the services side given what we’re seeing in the industry. Alex Henderson – Needham & Company: One more question if I could: so is it reasonable to think that the services lagged considerably to the product sales growth? It looks like your product sales growth was up 31%, the overall revenue growth was up 31% in the US, down 9% or so in Europe. So if I look at that mix, is it accurate to say that your product sales growth was closer to 40%?

In the US. Alex Henderson – Needham & Company: In the US?

Yes. Alex Henderson – Needham & Company: Okay, thank you.

Our next question comes from Michael Saloio of Oppenheimer. Please go ahead. Michael Saloio – Oppenheimer & Co.: Hi, thanks for taking my question. Could you give us a sense of the size of the Checkpoint revenue at this point or at least how we should be thinking about the growth trajectory through this quarter and looking at next quarter? And then I was wondering if you could also give us some similar color on the Juniper relationship. Thanks.

Okay, so regarding Checkpoint, we’ve recognized minimal revenues this quarter and we continue to be on track for a ramp in Q1 and beyond. So we believe there are a lot of joint opportunities together with them and we are optimistic on the actual revenue potential in 2013 from this partnership. Obviously you know we continuously need to train all the various Checkpoint offices and channels and it’s an ongoing task but we constantly see an increased pipeline and a very interesting deal in that regard. Concerning Juniper, there is some booking maybe in Q1. In Q2 we think there might be an upside given some of the wins that have been communicated to us but overall we need more work to get this alliance to where we think it can get to. Michael Saloio – Oppenheimer & Co.: Okay, and then secondly can you just give us a breakdown between enterprise and service provider in the quarter?

Yeah, the enterprise was 72% while the carrier was 28%. Michael Saloio – Oppenheimer & Co.: Okay, thanks.

Our next question comes from Joseph Wolf of Barclays. Please go ahead. Joseph Wolf – Barclays : Thanks, a quick follow-up on that last question is are you more willing to give any sort of revenue target for the OEM agreements for 2013? And then as a follow-up question could you go into some of the end markets or can we get an end market split for 2012 – datacenter, cloud, security – within the businesses?

Unfortunately Joseph, we don’t break out by the specific application or target environment our revenue. Regarding OEM, we would like to see more actual Checkpoint ramp up revenues and then we can be I think more specific with the exact target number for 2013. So it’s a bit premature; hopefully in the quarter we will be in a better position to assess that. Joseph Wolf – Barclays : Right now you’re more focused on the, or you see more near-term opportunity from Checkpoint than Juniper is what I’m understanding here – is that fair?

That’s correct but there’s a difference in the opportunities. With Juniper we’re working on the carrier market so there’s maybe fewer opportunities but they are generally larger in size. The Checkpoint solution targets more segments but more specifically the enterprise market and then we’re seeing many, many opportunities but obviously of smaller size. So I think it’s different in nature and target market, but short term we believe that the Checkpoint revenues would surpass the Juniper revenue. Joseph Wolf – Barclays : Okay, great, thank you.

Our next question comes from Jess Lubert of Wells Fargo. Please go ahead. Jess Lubert – Wells Fargo: Hi guys, thanks for taking my questions. A couple questions: first, can you comment on overall visibility levels – to what extent you’re seeing activity and visibility improve or deteriorate, to what extent you’re factoring in an added level of conservatism in your outlook here?

No, I don’t think there’s a major shift or change in the visibility that we have. I think in the second half we did see a decline in visibility in EMEA but I think we are not expecting a worsening environment there from what we can tell. So that level of visibility or performance is in our guidance. Regarding the other markets I think there was no change in the past year to the level of visibility that we have into them so I think we can be pretty accurate. Jess Lubert – Wells Fargo: In Europe, are things better or worse on the carrier or enterprise side? Any incremental detail you can offer there?

I’m not sure whether it’s our own view or in general but I think enterprise depends on the segments – they’re doing well in some countries. The carriers were a bit weak in the second half but I’m not sure it’s something to take as a conclusion. It can be also from the timing of projects and sometimes execution that we can improve, etc. but that’s what we’ve seen. Jess Lubert – Wells Fargo: And then finally it seems like hiring slowed a little bit in Q4 relative to Q3. Can you discuss what drove the sequential decrease, talk about how you’re thinking about hiring going into 2013? And previously you’ve discussed getting to a 23% operating margin exiting 2012 – is there any granularity or detail you can offer as to where you think you might end up exiting 2013?

So first regarding hiring, in the numbers you see that you know, especially in hiring in the field and personnel you’re going to see some change in that – some of it is timing. So I believe we will go back to a higher hiring rate and I think you’ll see that already in Q1 headcount numbers. And in the total headcount there was some shift internally between our departments. So I would say that our hiring in the field and especially in North America has not slowed down; it’s actually accelerated in Q4 and we foresee that also for the coming quarter or two quarters. Now regarding the model, I’ll let Meir answer that.

Okay, regarding the model we prefer not to… [technical difficulties]

We apologize for that. I’ll let Meir return to the model.

Again, about the model we prefer to give right now long-term model, three years’ target of 30% operating margin rather than a short-term model. Later on in the year as Roy mentioned we’ll have more visibility so we can share with you all the short-term targets. Right now we’ll leave it as it is as a long-term model of 30%. Jess Lubert – Wells Fargo: Meir, would you expect to see leverage in 2013? It does seem like you’re going to be ramping hiring here in the upcoming year so is that longer-term target, is that leverage happening in ’14 and ’15 and not necessarily ’13? How are you thinking about that?

It’s a little bit complex, what you ask. It makes sense what you mention but on top of it bear in mind that we enjoyed over 80% gross margins so the marginal million dollars can impact our operating margin over one full point. That means that we should again review this one later on in the year to see if we expect to go higher than any number that we see right now. So because of that let me say for the next quarter we are committed to increasing top line, bottom line and margins but of course we cannot be committed for every given quarter such because the revenues always are lagging behind the expenses. We hire people right now; when they are fully onboard and contributing to [the staff] it takes six to nine months – this is the timing. Jess Lubert – Wells Fargo: Alright, thanks guys.

Our next question comes from Rohit Chopra of Wedbush. Please go ahead. Rohit Chopra – Wedbush Securities: Thanks very much. Three questions: one, I just wanted to get a sense of the security business. Can you tell us qualitatively at least is the security business growing faster than the core business? My other question is on Juniper – Roy, you sounded a little bit more optimistic for Q1 and Q2. Can you tell us if you’ve made any changes on the go to market strategy there and if you’ve had any discussions with Juniper? And lastly, Meir, maybe if you can tell us about linearity.

Okay. So regarding the Juniper relationship, I’ll start with that, we are constantly in discussions with them and working together. The go to market is obviously for the Juniper sales organization to take it to market and we are helping them when they see it necessary to bring us in front of customers, etc. And they do sound better because we see more, they’ve communicated more wins to us that resulted in us having this visibility. Again, I want to remind you that Juniper is booking with us and we are recognizing only in the very final stages of their project delivery. So they are winning the customers, they are installing and they’re actually booking with us in the final stages. So on one hand we have pretty good visibility when they (inaudible) and on the other hand, the (inaudible) is beyond what we know because that we conflate into regular [zoning] feature into future quarters.

As for the linearity, the first month of the quarter in Q4 were 28% of revenues; the second month 25% and December was 47%. Rohit Chopra – Wedbush Securities: Okay, and then just remind us on security – is that as a business or as a segment growing faster than the overall?

That depends on the quarter. It depends on the quarter and the geography. Recently in Q4 I think it grew faster but overall, looking a couple of years back it’s relatively the same growth as for example the ADC market or ADC virtualization and so on. So security is growing faster when there’s attacks in that geography or in that market segment. So for example, I would say that North America currently is a very hot market for security solutions, especially in financial markets, online and government agencies. Rohit Chopra – Wedbush Securities: Thank you.

Our next question comes from Mark Sue of RBC Capital Markets. Please go ahead. Mark Sue – RBC Capital Markets: Thank you. Gentlemen, if we can get a sense of how you’re thinking about new product introductions for 2013 – I understand that there’s the new DefensePro but maybe if you can talk about the approach to new products, where you might be focusing on and how you might be proactively upgrading the installed base. That would be helpful.

I would speak in general terms because at the moment we are not discussing future product introductions until they are available and we will keep this principle. So in general, we have we believe a very strong pipeline of introductions in application delivery and also in application security in 2013. In application delivery, we believe that the VADI concept can be extended – the virtual application delivery infrastructure can be extended with additional services and capabilities that are very well adapted to a cloud datacenter that is more remote from the users than the enterprise datacenter, and with additional services that provide the scalability, performance and security of this infrastructure and more robust for this type of cloud, hybrid cloud, private or public environments. And I believe that we are coming with new product introductions already in the first half. In terms of security we’ve just released DefensePro, our next-gen high end platform, the x420. The reaction from the market is very good and a lot of interest from the large online companies, carrier companies and so on. We will be announcing additional products in security at some big shows coming up relatively soon and we believe we will have major announcements in expanding that business as well. Mark Sue – RBC Capital Markets: Okay, sounds good. We’ll see you at RSA. Maybe if we can switch gears and talk about the Cisco opportunity, the pace of upgrades for you – many of the competitors are doing [trade-in] programs. Anything else that you can do to gain more than your share of that business as a replacement opportunity?

We believe that the VADI concept is very well adapted to replace the Cisco ACE platforms. The Cisco claim to fame was the concept of virtual contacts. It is similar in principle to our instance (inaudible) but it is a [material] solution because there’s no physical separation between the inputs (inaudible) – the virtual contacts are just separated from a management point of view. And we believe customers will see our ADC solution as a next-gen architecture where it’s easy to separate not only from a management point of view but from operations, from a software/firmware point of view, from actual capacity, the (inaudible) size allocated and so on. We are (inaudible) replacements; as a matter of fact, a large North American carrier is going live next week, the beginning of February with our [RTO 18K] multi-instance build converging their Cisco ACE infrastructure and we see similar opportunities around the world. I would say that the deals that we are executing right now of replacements are deals that were started before the Cisco announcement. Maybe the Cisco announcement will accelerate them but it really deals with the customers who have already decided to upgrade or to look for an alternative solution before the announcement. Following the announcement, and since that we are seeing more activity. The Cisco ACE customers are starting to look at their options and obviously we’re focused on that. So we think we have a good product, better than the competitors’ to match what the Cisco ACE, especially the blade customers were using and at the same time we are focused with our sales team which we believe are covering well the large enterprise and carrier markets to execute on this. So we are working [to completion] and that’s why we think we can get more than our fair share. Mark Sue – RBC Capital Markets: That’s helpful. Good luck, gentlemen, and thank you.

Our next question is a follow-up from Alex Henderson of Needham & Company. Please go ahead. Alex Henderson – Needham & Company: Thanks. So we had a lot of product announcements out of F5 the last quarter and a half, particularly several announcements this morning. I’m sure you guys have been quite cognizant of what they’re announcing. Can you talk a little bit about how you see your competitive position against particularly the Rackable line extensions that they’ve come out with – I think they’re out with the 2000 and 10,000 today along with the 4000 which was out earlier.

Yes. So you know, frankly when F5 says that they are the first ADC vendor to do something I’m not sure anymore what the “first” word means. So let’s start with the 2000. The claim to fame there is a 10 GB interface and on the low end ADC as far as I understood from the press release. Our Alteon 5224 that was announced more than a year ago starts at 1 GB all the way to 16 GB with two 10 GB ports and [24 1GB] ports and has all our VADI capabilities – the multi-instances and so on. So I don’t think the 2000 or the 4000 brings any new dimension to the competitive landscape as far as I see today. And as far as we can tell these don’t include the instances, the virtualization capabilities so our advantages as we see them and our focus stay the same following these announcements. Alex Henderson – Needham & Company: So just to be clear, you see both the 2000 and the 4000 as conventional ADCs with no hypervisor.

Correct, correct. Alex Henderson – Needham & Company: Thanks.

One word regarding the 10,000, again, the announcement is focusing on the first ADC with a 40 GB port and we’ve announced the Alteon 6420 I think around six months ago with four 40 GB ports and twenty 10 GB ports and a complete set of our virtual capabilities. I generally believe it’s dramatically more than what the 10,000 offers so we see competitively versus F5 we do have a superior product and especially to a virtual and cloud datacenter our leadership stays intact. Alex Henderson – Needham & Company: So if you look at the 10,000 that does come with a hypervisor and I believe it allows six virtual instances. How does that compare with your products in a comparable price point? What do you see the price point at?

Yeah, so we don’t really have the exact price point of what F5 would be as the press release was just issued this morning and but regarding the density, this product is probably targeting the high end of the market, the 10,000 – the 80 GB market [and around], and they have a [bare] six instances. So each application, if you divide it is roughly 14 GB, 13 GB. We don’t believe that’s a typical application of an enterprise customer. As a matter of fact, in our 1 GB solution we already have 24 instances, so four times of this high end. If you want to have many instances in high capacity our Alteon 10,000 offers 80 GB which is a similar bandwidth capacity to the 10,000 – it’s offering 256 instances versus 6. So we don’t understand how a cloud provider or carrier can use only six instances and we believe it’s going to be at least 50, 100 and probably multiple hundreds. So we don’t clearly understand why these six instances will be the total amount of instances the platform will give. Alex Henderson – Needham & Company: If I can just ask one more question along that line: if your environments at the very high end of the market, say a JP Morgan or a Citigroup with a huge datacenter, that would justify a much larger device with very high throughput characteristics – that would have fewer instances? Or do you see the need even in the high end application environments to have a large number of virtual instances on each of the boxes?

We believe the right architecture is to have an instance per application, and that guarantees for the isolation between applications – the one does not impact the other and does not interfere with the other. So for example, if you need to [migrate] applications from one datacenter to the other it’s very easy because it’s already like a silo – it has its own dedicated instance. If you don’t have a dedicated instance how are you going to break out this one application out of the other hundred applications that are sharing the same instance? So architecturally and operationally and from a compliance point of view we clearly believe that instance per application is the right way to go; and then if you think about a Citibank or a Bank of America you’re speaking about hundreds of applications. Alex Henderson – Needham & Company: So there isn’t enough volume in any one application to absorb the capacity of a high end product and therefore you’d still need the higher number of virtuals.

Right, certainly not in the enterprise market. You might think about a Facebook or something like that but not in the enterprise market. Alex Henderson – Needham & Company: Okay, thank you.

(Operator instructions.) Our next question comes from Luis Scull of Open Field Capital. Please go ahead. Luis Scull – Open Field Capital: Good morning, gentlemen. I was wondering, given that your competitors are disclosing their products by product line, breaking out security and products, I was wondering what the reasoning is for you not to disclose that.

I’m not sure to which competitor you refer to when you say they are breaking by product line. As far as I know for example, F5 is… Luis Scull – Open Field Capital: Pardon me, product category I mean. I see F5 break out security and ADC revenues. I’m just wondering given that you participate in those two markets as well, maybe in different areas in the securities side, why you’re not breaking out security and ADC.

I’m not aware that F5 breaks out security and ADC. I’m aware that they’re breaking out their storage virtualization and all the rest. Regardless, our own policies do not really encompass too much of F5. We think that a lot of our modules are shared between application delivery and application security, so for instance if it’s an encrypted attack you’re using our ADC module, the Alteon product as part of the complete (inaudible) solution. So building a system for a bank or for an online company that uses HTTPS, the encrypted web protocol, in every project we have a combination. Now, do we start in ADC or do we start the security? It’s very, very hard to set. We as a company believe application delivery and security, this is in the end going to be one market which will include all the services and application (inaudible) in order to be delivered in an optimum manner from the datacenter. So we think this break between the two segments is maybe interesting from a product and an R&D point of view but not for our customers’ and markets’ approach. Luis Scull – Open Field Capital: Thank you.

(Operator instructions.) I’m showing no further questions at this time and I’d 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.