“GAAP EPS is expected to be approximately $0.45 less.”

In context

“Gil Shwed (Founder and CEO): Thank you very much, Roei. And I'm very excited to be here and share some of the insight on Q3, which actually was a very good quarter. So I think you already heard from Roei. Revenues, EPS, we were above the midpoint of our projections. I've looked at almost every financial metrics, and they all look pretty good. I think we've mentioned the Infinity platform continued strong demand. The Harmony Email, which reached over $100 million in ARR, maybe I can speak more about that, which I think is something very good. And I think what's more important is that we've continued to grow and continue to invest in additional areas. So I think one area that's very important and a focus of this quarter is expanding our Infinity global services. That's a very important unit that we have over 3,400 customers, which is pretty significant. The main step that we did here was to get into the SOC market, the security operations center with the recent acquisition, which is all about threat intelligence, and I'll expand on what it means. It does show you that we are pretty consistent about making acquisitions, expanding, and trying out new things. And I think actually you'll see even some examples actually, most of them actually work pretty well. So this is our tenth acquisition in just five years. Looking a little bit on customers, you can see that we continue to win deals. This is a combination of new customers and existing customers, but you see some impressive names of customers that allowed us to share their names, and you can see it from all over from the Deutsche Börse in Germany to Mayo Clinic in the U.S. to the U.S. Department of State, which chose us to protect some of your most important assets of the United States, Porsche Informatik in Germany, automotive Siemens, actually, this is Siemens America. So you see customers embracing Check Point and what we do. And this is reflected both in growing existing customers and winning new customers in many different categories. In the last few quarters, we spoke a little bit about wins in the public sector, and that continues to be important. You see here over 40 countries, 65 new government agencies in the public sector, that's just from the third quarter, but it's not just public sectors; financial services, 40 new customers in 23 countries; health care, 28 new customers in 17 countries. The list goes on in additional sectors just to demonstrate the positive success that I think we have and the potential that we have because I think these numbers can be much, much higher in the future. I've talked a little bit about email. Email has been one of the most critical entry points for malware into organizations. We protect the network, and I think – and that's the most important element. But email continues to be a vector that is connected to the network, where malware gets into the organization. We've realized a few years ago that it's experiencing quite an interesting transition in the marketplace from on-prem email to cloud-based email, and that's a big opportunity for us. That's why we acquired Avanan to get into that space. Through that space, we became one of the fastest-growing and providing the best security for email. In three years, we've quadrupled this business. Our ARR now is way over $100 million. We are getting more and more large enterprise customers to buy into this platform and the pipeline is good and the field is very, very positive about that. You can see high double-digit growth year-over-year, well over 50% growth in the amount of business that we do, so this is something quite positive and quite good to see in our business, where actually our strategy works, the platform works and our acquisitions work. So thanks to everybody that made that happen. This may be the next one, which I hope is going to be another example like that, and that's expanding our portfolio into the SOC into the security operations center. For us, I think it's very important strategically to get – to be not just on the network, not just on the cloud, but also to be in the center with the SOC. We found a unique opportunity here, and that's the external threat management, external exposure platform. So we acquired Cyberint to expand what we do. We have over 180 employees that just joined Check Point with Cyberint, way over 200 enterprise customers with some very big names, Fortune 500, even Fortune 100 and I think even Fortune 50 names amongst the customer list, a fast-growing company, still relatively small but I think very promising. What we actually do, Cyberint scans the organization assets. It can be web servers that are all over the internet, not just the main network. It can be the main network of the company. Also, many other assets that we don't see. Like what people write about us on the dark web. What people write about us on the open web. There are amazing things you can find. For example, employees that lost their credentials. Someone has information on how to get into our company because some employee forgot their username and password. Many different resources like that, hidden certificates, cloud keys. A lot of things that get kind of, I would call them lost; they aren't all lost. Sometimes they are being stolen; sometimes they are being manipulated because they were stolen from third parties, not from our employees, but from third parties. These can end up on the dark web, and people can use them to attack us. Cyberint does constant scans of our assets, our open web and the dark web; it finds these vulnerabilities, checks them out, and gives us a real-time report of the things we need to close. All of that is an interesting market sector. That's what Check Point does because we always say that we are about the best security and we focus on prevention, not just reports. We want to create together with the Cyberint acquisition a shift from merely producing reports into actual prevention. When we see compromised employee credentials, if they are really compromised, we can lock down the accounts. If we see maybe a server on the internet that’s actually impersonating our company, that's another asset that Cyberint can identify, companies imitating a company website and use that to trick their employees. We have ways to do takedowns. That's a very impressive operation; something that can, within minutes, take down a malicious or impersonating asset like that. In the future, we want to be able to turn on network security capabilities and many other capabilities to move that from being purely a report to something actionable. We want to show how we take different elements of the cybersecurity space and demonstrate that they can work together and generate more value. I'm very excited about that acquisition. We completed it, I think, in the last few days of the quarter, so we didn't have much financial impact in the last quarter. But hopefully, in the next few years, it will have a bigger and bigger impact. In the future, we hope to show similar results to what we had with e-mail and the ones we will have on SASE and other areas that present great additions to our platform and growth potential for Check Point. Overall, I think we've had a very solid quarter, very good quarter. Revenues and EPS above the midpoint of our projections. Roei also mentioned that in the last few quarters, we see positive internal indicators, not just external results. We are seeing good signs in the Americas, in the U.S., which is the most important market. Infinity continues to deliver strength; Harmony has exceeded the $100 million ARR; and we've expanded our SOC offering, transforming security operations and threat intelligence through the Cyberint acquisition. Overall, I believe we had a very good quarter. I'm proud of what our team did, and I'm even more excited about what the team can achieve moving forward. Thank you very much. Before we open the call for questions, maybe a little about projections for the fourth quarter and for the full year. For the full year, we are not changing our guidance and are well within the range that we published before. I’ll start with the full year. We started the year with a range for revenues from $2,475 million to $2,625 million. It's now on the right side of the center, and the midpoint is right-sized from where we started the year. I'm proud that this year with all the things that we've done and the challenges that some markets faced, we haven't faced too much of that. We're not just finishing at the midpoint; we expect to finish above the midpoint for both revenues and EPS. We started the year with a broad range for EPS from $8.70 to $9.30, and we will finish it between $9.05 to $9.15, well over the midpoint that we started the year. You can calculate from that what the range for the quarter should be. The quarter range will be very consistent with our original plans, revenues $675 million to $715 million, earnings per share between $2.60 to $2.70. GAAP EPS is expected to be approximately $0.45 less. You know my regular caveat, projecting the future is always very challenging, and there's a high level of uncertainty as results can be better or worse. But I feel confident that we are entering the fourth quarter with a healthy pipeline, an energetic workforce, and a lot to offer and a lot of things coming, not just in the sales pipeline but in the product pipeline, with new innovations and new acquisitions. Q4 will be an exciting quarter for us, and I’m looking forward to it.”