“we finalized the acquisition of Lakera, a leader in AI-driven security for agent applications, which will create a margin headwind of about 0.5 points in Q4.”

In context

“Roei Golan (CFO): Thank you, Nadav, and thank you, everyone, for joining the call. As Nadav mentioned, we had a strong quarter, driven by robust demand across our portfolio. Our revenue grew by 7% to $678 million, exceeding our midpoint by $6 million. Our non-GAAP EPS reached $3.94 per diluted share, also above our guidance. This figure includes a one-time tax benefit related to a tax settlement during the quarter, adding $1.47 to both our GAAP and non-GAAP EPS. Excluding this benefit, our EPS outperformed the midpoint of our projection by about $0.02. Our revenues increased by 7%, and deferred revenues rose by 8% to $1.887 billion. Our calculated billings were $672 million, showing strong year-over-year growth of 20%, bolstered by double-digit growth across our portfolio and geographies. It's worth noting that our billing effect was impacted by approximately 3 points due to delayed revenues from the previous quarter, which we discussed in our last call. We also had one significant early renewal that provided a 2% benefit, moving revenue from Q4 to Q3 and contributing 2 points to our billings. Looking at our current calculated billings, they grew by 14% to $642 million. Our remaining performance obligation increased by 9% to $2.4 billion. We witnessed strong demand across our offerings, particularly within our services calculated billings—growing 21% compared to 7% last year—spanning our entire portfolio, including the Quantum firewall, Harmony email, and Harmony SASE. Our emerging technology products, including Harmony SASE, Harmony email, and external risk management, each saw organic ARR growth of over 40% year-over-year, becoming increasingly important to our overall business. In terms of global revenue distribution, we experienced double-digit growth in the Americas with a 10% increase, accounting for 42% of our Q3 revenues. EMEA, making up 45% of our revenues this quarter, grew by 3%, while the APAC region grew by 8%, representing 13% of our total revenues. Regarding our operating performance, our gross profit increased from $563 million to $602 million, maintaining a gross margin of 89%. Operating expenses rose by 11%, largely due to our ongoing organic investments and the inclusion of Cyberint and Veriti acquisitions, which were not part of Q3 last year. Our non-GAAP operating income remains solid at $282 million, ensuring a 42% operating margin. As I mentioned in our previous earnings call, the U.S. dollar has weakened significantly since the start of Q3 against the Israeli shekel. Because a substantial portion of our expenses is in shekels, this currency fluctuation has negatively impacted our P&L, contributing roughly 1 point to our margin or about $0.06 this quarter. As we look ahead, we plan to continue hedging our foreign exchange exposures, anticipating a similar 1 point headwind to our margin in Q4. Additionally, as Nadav noted earlier, we finalized the acquisition of Lakera, a leader in AI-driven security for agent applications, which will create a margin headwind of about 0.5 points in Q4. Looking further to 2026, based on current exchange rates, we could see an increase in NL expenses between $50 million and $60 million, a point we touched on last quarter, and I wanted to reiterate here. On the cash flow front, we generated strong operating cash flow of $241 million, which included a $66 million one-time tax payment linked to the settled tax issue discussed earlier. Excluding this payment, our operating cash flow grew by 23%. Our total cash at the end of the quarter stands at $2.8 billion, consisting of cash, marketable securities, and deposits. During the quarter, we announced our plans for a new Check Point campus in Tel Aviv, Israel, for which we paid approximately $160 million for the land, a figure reflected in our cash flow from investments. We do not anticipate significant further investments until 2027. Moreover, our stock buyback program is ongoing, with about $325 million worth of shares repurchased at an average price of $198. To sum up, it was a strong quarter, with revenues and EPS surpassing our expectations, driven by a 20% increase in calculated billings and solid operating cash flow alongside profitability. Looking ahead to Q4, our revenue guidance ranges from $724 million to $764 million, indicating 6% growth at the midpoint. Our non-GAAP EPS is forecasted between $2.70 and $2.80, while GAAP EPS is expected to be $0.60 less. For the annual guidance, the midpoint of our updated revenue forecast is projected to be $15 million above the previous midpoint, with a range between $2.705 and $2.745, and a midpoint of $2.725, reflecting 6% year-over-year growth. Our non-GAAP EPS is anticipated to fall between $11.22 and $11.32, with GAAP EPS around $2.29, which also factors in the earlier mentioned tax benefit. As a reminder, Q4 is particularly back-end loaded and includes significant hardware projects, along with a substantial refresh project expected during the quarter. The EPS in Q4 will be influenced by factors such as the FX impact, estimated at about $0.07 to $0.08 based on current rates, plus the expected effect from Lakera, estimated at $0.04 to $0.05 on Q4 EPS. That's all from me, and I'll hand it over to Kip for the Q&A.”