Greetings and welcome to the Check Point Software 2024 Third Quarter Financial Results Video Conference. I'm Kip Meintzer, Global Head of Investor Relations, and joining me today are Founder and CEO, Gil Shwed; and Chief Financial Officer, Roei Golan. Before we begin, I'd like to remind everyone that the conference is being recorded and will be available for replay on our website at checkpoint.com. During the formal presentation, all participants are in listen-only mode to be followed by a Q&A session. During the presentation, Check Point's representatives may make forward-looking statements. Forward-looking statements generally relate to future events or our future financial or operating performance. These statements involve risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. Any forward-looking statements made speak only as of the date hereof, and Check Point undertakes no obligation to update publicly any forward-looking statements. 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 reasons for our presentation of non-GAAP information. If you have any questions after the call, please feel free to contact Investor Relations by e-mail at [email protected]. Now I'd like to turn the call over to Roei Golan.

Thank you, Kip, and thank you, everyone, for joining the call. One moment, I'll open the presentation. Can you see my… Yes, yes. So can you see now? Okay, great. Thank you. Thank you. So we had a very good quarter. We'll start with the revenues and EPS. During the third quarter, our revenues grew by 7% to $635 million, $3 million above the midpoint of our projections. Our non-GAAP EPS grew by 9% to $2.25, $0.01 above the midpoint of our projections, so overall very good results. Going further into our revenues and our business, so as I mentioned, the revenues grew by 7%, our subscription revenue grew by 12% to $277 million. The calculated billing reached $562 million, which represents 6% growth year-over-year, while our current calculated billings grew by 5% to $563 million. The calculated billings this quarter were affected by several deals that were pushed from Q3 to Q4 that we expected them to close by September 30 were pushed to Q4 and mainly in Europe and we do expect that this will provide us a benefit of approximately 3 points to the billing in Q4 as some of them were already closed in October, and the majority will be closed before the end of the year. So that's, I think, important to mention regarding our billings. As for the revenues, revenues, as I mentioned, grew by 7%, that was driven mainly by product and subscription revenues that grew to $396 million. That's mainly driven from strong demand for our Infinity consolidated platform, our Harmony Email that continues to show strong demand. And we did see also demand and we see the product revenue grew by 4%. So we see an increase also in the demand for our appliances. I mentioned the Infinity. Infinity had another great quarter. It continued to flow in an accelerated way to the revenues. Another quarter with strong double-digit growth year-over-year, becoming more and more significant to our total revenues which now is approximately 15% of our total revenues. And we see more and more customers, existing customers and new logos that are adopting our platform, addressing their needs under one umbrella of products and services. Now let's look at the revenue by geographies. So America had – in terms of revenues, America consists of 41% of our revenue then grew 3%. It is important to note that in terms of new business bookings, actually, America had a very good quarter, continuing the first two quarters in 2024 with double-digit growth in new business. EMEA revenues were up 46% of our total revenues and they grew by 7% year-over-year. I mentioned already about the billing effect in EMEA. So it's also – again, we did see some deals that were pushed from Q3 and Q4 in Europe. But again, we expect that this will be closed by the end of the year. And in APAC, we did see 17% growth in revenues. Also in terms of new business, APAC had a very good quarter. So I think – yes, so that's the revenues by geographies. Moving into our P&L. So our gross profit increased by 5% to $563 million representing 89% gross margin. Our operating expenses increased by 9% to $289 million. This is mainly as a result of our continued investment in our workforce organically and also the additional expenses related to – with the acquisition of Perimeter 81 that we closed at the end of Q3 last year. Our non-GAAP operating income was $274 million, while our net income grew by 5% to $255 million and the EPS was – the non-GAAP EPS was $2.25, grew by 9% year-over-year. Our GAAP EPS was $1.83. As for the cash flow and our cash positions we had a very strong operating cash flow. We closed the quarter with $249 million of operating cash flow growth compared to last year. Our cash balances amounted to $2.9 billion, while also this quarter, we closed the acquisition of Cyberint and the net cash paid for this acquisition was $186 million. Gil will have more about this acquisition in his slides. And we continue to do our buyback by purchasing through the quarter $325 million of shares at an average price of $182 per share. To summarize our financials, so again, revenues and EPS, both above the midpoint of our projections. Our revenues accelerated to 7%, mainly driven by strong Infinity and Harmony emails performance and another quarter with strong profitability, strong operating cash flow. So in general, again, a good quarter for us in Q3 and looking toward Q4.

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.

As always, please keep your questions to one if possible. First up, we’ll have Shaul Eyal, followed by Adam Tindle. Shaul?

Thank you. Good afternoon. Gil, on the billings miss, I understand the regional softness in EMEA given a typically sleepy quarter. Did you have any eight-digit contracts? Was it several seven-digit related transactions? And maybe I can squeeze another one. Since you’ve announced that Doug is replacing you, one prevailing view on the Street, at least, that we’ve been getting is that given Doug's VC background, Kaplan is likely to embark on an M&A spree, accelerating growth in the mid-teens, lowering operating margins in the mid-high 30s, you've got to see the numbers out there. I’m interested in hearing your views on this. Thank you for that.

It's two separate subjects. For the billing thing, we are not managing too much of the billings. We are becoming more and more sensitive to that because U.S. analysts watch that, and we're trying to build a healthy pipeline of good deals. If we can give customers immediate billing, it’s good; if we can let them use the fact that we aren't short on cash and give them a long-term billing, which results in lower billings, that’s also good for us as long as we get good healthy business, and I think that’s what we are doing. We're more and more sensitive to that. I think Roei mentioned that we had a couple of deals that slipped from Q3 to Q4, which had no impact on the financial results. These are deals that didn’t affect revenues or didn’t have much of an impact on the immediate results. They should have come forward, and some have already arrived in early October. I won’t look at it as anything indicating something to be aware of. Overall, I'm happy with the results. Regarding the transition over the past few months, I’m working on a transition plan with Nadav. It’s working extremely well. I'm very happy about everything we’re doing and the potential. I think we are embarking on new expansion and new strategies. In the short term, I'm not expecting any major changes. We've done ten acquisitions over the last five years, and while we're going to do some acquisitions, I'm not looking for a strategy now to make mega acquisitions that we wouldn’t have made otherwise. We want to keep our operational discipline. My focus has never been on margin, but rather how we generate good security, best security, healthy growth, profitable growth. I don’t think that agenda is changing, and I believe positive changes will come to Check Point because Nadav brings amazing energy and amazing skills that Check Point needs.

Next up is Adam Tindle, followed by Tal Liani.

Thanks. Good morning. Gil, at the end there, you talked about how you’re seeing internal indicators that we may not see from a reporting standpoint, but those internal indicators that you see are very positive. I wonder if you could expand on that. I know it’s probably a little too early to talk about fiscal 2025, but based on your guidance here, you’re going to finish this year at about 6% growth, which is a tougher comparison. However, it sounds like those internal indicators are very positive. Is this a level that you might be able to hold in terms of growth on a future basis? Thanks.

Most of the – first, I think if we look at the industry, we know that cyber security is a need. We all see the level of attacks rising. I don’t think we mentioned it here, but last year, there’s been nearly 57% growth in cyber attacks in the U.S. and almost all over the world, and the attacks are becoming more sophisticated. We will need more cybersecurity. That’s a macro. Within Check Point, I don’t have strong indications for 2025. For Q4, first, I’m always careful, especially this quarter due to many moving parts in Check Point. I would be a little bit careful. But we started the quarter with a healthy pipeline, one that justifies the projections we give. So I’m seeing good positive energy. The U.S. market is always the best indicator and the most important market. The last few quarters have been quite positive concerning our deal flow in the Americas, which is great. I don't know if you remember but we've also had management changes in our Americas organization. It's not coming in a vacuum, and it's too early to say if that organization will rise to its full potential next year, which is much higher. But at least after two or three quarters of the U.S. performing well, it's actually a very good indicator showing that we are taking market share, gaining customers, and fighting where we need to fight.

Next up is Tal Liani, followed by Joseph Gallo.

Sorry, I need to whisper because I'm in a public space. First question is what's your position on vendor financing? We've seen other companies in the space being more aggressive on vendor financing and providing financing to customers. The second one is more strategic. Roei, you spoke about double-digit growth for a while and the ability to achieve sustainable double-digit growth. But the beat you're delivering is very dismal; it's minimal. What needs to happen? You have so many products and acquisitions. What needs to happen for you to break this mid-single-digit growth rate and get to sustainable double-digit growth? Thanks.

Do you want to start, Gil, or should I? I'll start with the double-digit growth question. I think that in terms of double-digit growth, we are better positioned today to accelerate our growth than we have been in the past. First, we made significant investments. The last significant acquisition was Perimeter 81, and we've also expanded. We have a completely new SASE offering, and we are investing a lot on both R&D and the go-to-market side. We mentioned that it's going to take some time for us to see the significant effect on our business. Infinity is driving that growth. We are seeing more and more customers adopting Infinity products, not only the firewall and network security Quantum but also more of our products. Many of these customers are also taking Harmony Email, and we are starting to see customers adopting Harmony SASE in the last few quarters. I think that's the main driver for accelerated growth. Regarding vendor financing, we are – I mean, we're talking a lot about Infinity. The flexibility we're providing to our customers, not only when they are using their allowances and licenses but also around the billing terms. We've seen more Infinity agreements that feature some flexible billing terms. I don't want to call it financing, but they are much more flexible than standard deals. So we don't typically do financing, but I think with our current cash position and the strength of our balance sheet, we can be flexible in terms of billing.

Anything else, Tal?

Got it. Thank you.

Next up is Joseph Gallo, followed by Brad Zelnick.

Hey, guys. Thanks for the question. Maybe a follow-up on the Perimeter 81 comment. How are you tracking towards having that fully integrated in Q4? How is the pipeline building there? When you talk to customers, particularly in the high-end enterprise, what is the willingness to eventually adopt that SASE solution? When can we expect that to happen? Thanks.

We're actually seeing positive traction with Perimeter 81. If you remember, we started a year ago, and I think this is crucial for our network security platform to have a SASE cloud-delivered security as part of the platform. We started selling it for the last year, and sales have been fine, and we started the integration. First, I think we're doing well on the integration timeline. Second, last quarter, we observed some nice jumps in quarterly sales, indicating a positive trend. It's still small, so I'm not pointing to it as the big achievement, but when you see sales growing a few percent every quarter, then jumping to double digits, that’s a very positive change. For Q4, we have a few seven-digit deals on that SASE platform. Overall, there are reasons to be optimistic about this, and hopefully, we can accelerate what we are doing. My job as CEO is to ask everyone to accelerate; their job is to do the best they can, and I think we're doing a good job there.

Next up is Brad Zelnick, followed by Rob Owens.

Thanks so much for taking my questions. It's good to hear that you expect next quarter to see three points of benefit to billings growth, which comes from deals that slipped out of the quarter. I think it’s more like five points of growth if they hadn’t slipped from Q3. But naturally, deal slips every quarter. Is there anything specific to Check Point, the environment or competitively, that explains these deals slipping when you do your root cause analysis? For Roei, we continue to hear about your success with Infinity contracts and recurring revenue products like Harmony and CloudGuard. As these continue to contribute more to the mix and seem to exceed your own internal expectations, what impact does this have on the model? How should we think about that going forward? Thank you.

I think overall, we had a pretty positive quarter. I’ve conducted an in-depth analysis of the quarter, and we had many regions in the world with good results. However, we had a few regions with some softness. In the Americas, there are areas that did extremely well, but also some that were soft overall. For instance, US was excellent for us last quarter. I'm excited about the internal indicators. It’s related to previous quarters; we've seen some weaknesses among competitors. I hope this lack of strength reflects short-term issues and is not a longer-term trend. Overall, we are gaining ground in key indicators like product and billings, which is positive. Cybersecurity remains one of the healthiest sectors. We've seen a weakness among some of our competitors recently, and I hope this is not a long-term reflection on the market. For example, in Europe, it’s always a challenge. We see business, but it’s hard to change things and resolve bottlenecks during summer vacations. That could have caused some softness. At the end of the day, we had a positive quarter, healthy numbers, and the projected orders which indicate deals that slept in Q4.

Regarding the mix, we definitely see that Harmony Email is growing significantly. We've disclosed that we exceeded the $100 million ARR, and it’s clearly becoming a more significant part of subscription revenues. This, alongside SASE, will become more significant mainly in 2025 after integration. I think that will drive our growth and subscription revenues. The momentum with the email and the other products, SASE, is accelerating. We see Infinity, which is becoming 15% of our total revenues and is driving our growth. There has been less in terms of immediate order recognition due to Infinity, and we need to factor that into our plans.

Next up is Rob Owens, followed by Roger Boyd.

Thanks. Good afternoon, and thank you for taking my question. Gil, in your prepared remarks, you talked about new customer acquisitions across different verticals and geographies. Are you seeing an inflection relative to new customer acquisition? It's not something you've called out recently. And with those new customers, where are you seeing success with what products? And who are you displacing?

It's a good question. I think it's across the board. Most of the new customers are still network security customers, which is good because that's the core market where we have the highest potential to gain share. We also have e-mail as a great entry point to acquire new customers, and we want to grow into other products as well. On the SASE side, we're also winning some customers. All of these exist, but even though we recognize our email business is great for acquiring customers, we need to cross-sell and upsell, which is important. Overall, the vast majority of new customers have been in our core network security segment, and that's very positive.

Rob, you’re on mute.

Great. I guess the spirit of the question then is where are you seeing displacement? Who do you believe you're taking share from in core network security?

I think we're taking share from all of our competitors, but it's still in small numbers. I don't want to brag about that, but I think we can do it in the future. For instance, some enterprise customers have adopted policies stating they want dual vendors for different security and business reasons; we are seeing that new orders are increasingly coming to us. After a few years of balancing competition between vendors, they begin to choose the best value and security. I’ve seen loyal long-term customers purchasing more from us again after not buying for years. That’s a positive reflection of our growth.

Next up is Roger Boyd, followed by Hamza Fodderwala.

Thanks, Kip. Gil, you continue to talk about the importance of building around the SOC and IGS, with XDR and MDR continuing to do well. You've now added Cyberint to the platform. Some key competitors have been aggressive in their push into the SIEM and security analytics market. What’s your perspective on that? Given all the disruption in the SIEM market, why not go after that a little more directly?

To be honest, I think it’s something we’re looking at. We want to evaluate what can be done. However, I’m not sure that we have a good opportunity to be a leader in SIEM based on our current technology. We might see inflection points in that market and changes, especially with AI potentially impacting things. However, this isn't a straightforward entry point. We are present; playing a little with that with XDR and other technologies, but I'm not convinced that this is the market that we should pursue right away. If we find a significant breakthrough internally or externally, that could change, but at this point, I don’t think this is our main growth focus. Still, I believe Cyberint represents a strong entry into the SOC market with its unique value proposition and potential value in the near future.

Thank you. Was there more to your question?

Great. Good morning. Thank you for taking my question. Gil, I have a question regarding network security architectures. Network traffic has increased by over 20% since COVID. You launched new appliances earlier this year, and we're seeing healthy growth again in product revenue. I'm curious, as enterprises consider refreshing some hardware, how long do you think this refresh can last, given that some organizations are looking to remain hybrid and possibly on-premise longer than we initially thought?

It's taking longer than I would like. I think we are seeing a healthy refresh cycle. We are winning those refresh deals, but I would have wanted to see them come faster. Our new product line is definitely equipped for that with more bandwidth and capabilities to accommodate the traffic growth. Our clustering technologies and Maestro hyperscaling technology position us well. However, as I mentioned, I’m optimistic about our results but aware that the year wasn't green for everyone, and ideally, I would like to see much higher growth.

Next up is Shyam Patil, followed by Gabriela Borges.

Hi guys, good afternoon. I had a question about the go-to-market strategy, specifically regarding the Channel Partner Program that you launched earlier this year. How is that going in comparison to expectations? What feedback have you received so far?

I think we're getting very good feedback from our channel organization. We've just completed a few channel conferences around the world, and the feedback has been exclusively positive. However, I don’t know that it has had any large impact on results so far.

Next up is Gabriela Borges, followed by Saket Kalia.

Hey, good. Thanks for taking the question, team. I want to follow up on the opportunity you might have with the embedded DPU chips with NVIDIA as we approach shipment dates. How are you thinking about business models to monetize that opportunity? Thank you.

I think it's a huge opportunity to secure hyperscalers of AI and to be on the AI hardware infrastructure. It’s still early to state the potential impact and size, but it presents a unique value proposition that the world will need.

Up next is Saket Kalia, followed by Joel P. Fishbein, Jr.

Okay, great. Hey, guys. Thanks for taking my question here. Roei, I think we talked about Infinity being about 15% of total revenue, and that’s clearly growing a lot faster than the overall. I’d love to talk about the other 85% a little. As you think about the model in the future, Infinity is clearly going to become a bigger mix. Is that going to come at the expense of the other 85%? Do you think both the 15% and 85% can grow together? Or does that 85% need to decrease in absolute dollar terms?

It's a good question. I think definitely, both can grow together. We see that Infinity is driving growth significantly. More customers are adopting Infinity compared to those who aren't. This doesn’t mean that customers in the other 85% aren’t growing; for instance, Harmony Email has a portion that’s part of Infinity, but it’s also sold standalone, and it's growing fast. Therefore, both can definitely grow together. In our view, that will be the future of Check Point.

I will jump in and say when I measure Infinity's success, there are two variables: how many people move to the platform and deploy more technologies with longer-term commitments, and whether they’re actually growing. A conversion of a contract to Infinity with no growth is good for a commitment but not driving revenue. Overall, Infinity customers are driving high growth. Last time I checked, Infinity customers' growth was 20% faster than non-Infinity customers. We want to facilitate transitioning customers to Infinity not just for tech implementation but for the value we provide.

Next up is Joel P. Fishbein, Jr, followed by John DiFucci.

Good morning. Just a quick question. At CPX 2024, you spoke a lot about the CNAPP market. How integral is CNAPP to gain traction in your move to double-digit growth? Can you elaborate on where you think you stand in that market? Thanks.

We started the year with challenging conditions in the cloud market. Over the last two to three quarters, we have seen a significant improvement in our cloud business. However, judgment is still out on our potential in CNAPP. We've done a great job modernizing our CNAPP product, and I was very impressed with our current features, which compare well against competitors. Yet, there’s still a long road ahead to maximize our CNAPP potential, and it’s uncertain whether we should focus more on CNAPP or on other cloud technologies to offer value in the cloud space.

Next up is John DiFucci, followed by Ben Bollin.

Thanks. Gil, you mentioned that Europe is usually soft in the quarter. Was this more than usual, and if so, what caused that? Are you implying softer demand for network security in general, or was this simply an execution issue for those deals that slipped on the part of Check Point?

Honestly, I don't have the full answer and I don't want to mislead you. Even though Europe is usually weak in Q3, we secured some big deal achievements in Europe, which made comparisons tougher. This hasn’t been an excuse but provided a tough benchmark. I don't see strong attribution toward weakness in Q3 compared to the previous quarters, though I do notice market weakness with some of our competitors. Overall, we had a positive quarter with healthy numbers, and projected orders that should materialize in Q4. We've also seen a couple of large Q4 deals arrive earlier, which indicates positive momentum.

Next up is Ben Bollin, followed by Andrew Nowinski.

Good morning, and thank you for taking the question. I'm interested in how the current guidance framework thinks about the budget flush opportunity in Q4 this year versus prior years. Additionally, how is the competitive landscape influencing the duration of sales cycles or close rates?

Regarding the guidance, the midpoint didn’t consider any significant budget flush this year. Two years ago, we didn't see much of a budget flush. A year ago, we noted a bit more budget flush than two years prior, and again we expect some, but it's not significant. We did not consider significant budget flush in our guidance. As for sales cycles, we're constantly monitoring close rates and haven't noticed any significant changes in close rates. It varies by deal and customer, but generally, there hasn’t been anything remarkable this quarter. Infinity deals mean mega transactions, so their longer approval cycles can sometimes extend timeframes for closing.

Thank you. Next up is Andrew Nowinski, followed by Patrick Colville.

Thank you. Good afternoon. I want to ask about billings again. In Q2, you had a few large deals, I think, pay upfront, which boosted your billings growth by 1.5 points. If you normalize this quarter, growth would have accelerated from 8.5% to 11%. Given positive trends from Q1 to Q2 to Q3, how will you think about the normalized growth rate in Q4?

We don't provide guidance around billing specifically. But we do see a strong pipeline that will contribute positively to Q4 including the benefit from slipped deals. So we anticipate having a strong Q4 based on our current pipeline.

Next up is Patrick Colville, followed by Gregg Moskowitz, who will probably be our last question of the day.

Thank you so much for having me on. Roei, I want to ask about the guidance. Nice to see the midpoint raise. I know you don't guide line by line. But should we expect sustained re-acceleration in the product line in Q4? Also, in terms of Cyberint's inorganic contribution in Q4, can you provide some kind of guidepost?

Currently, we expect good product growth in Q4. We see a strong pipeline for appliances and demand there. However, there is some risk of the timing of Infinity deals that could result in revenue recognition being pushed into 2025. That’s why our guidance is a wider range. Regarding Cyberint, while we expect it to contribute, we believe it will be less than 1% of our total revenues in Q4.

All right. Our last question of the day is going to come from Gregg Moskowitz.

Thank you very much. Two quick ones. First, I apologize if I missed it, but Roei, RPO, I know it grew 10% last quarter. In Q2, this quarter, you had some slip deals, I'm sure it had an impact. What was the RPO growth in Q3? Also, regarding Cyberint since it closed just before the end of Q3, can you clarify what that added to deferred revenue?

RPO actually grew by 8% in Q3. Regarding Cyberint, there was no significant effect on P&L because it was closed in the last few days of the quarter; it amounted to less than 1% of our total revenues.

Ladies and gentlemen, thank you for joining us today. I'm sure we'll be talking to you throughout the day and throughout the quarter. We look forward to seeing you at the year-end in January. Have a great day.

Thank you very much, everyone.