Check Point Software Technologies Ltd.

Welcome to Check Point Software Technologies First Quarter 2020 Financial Results. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Kip E. Meintzer, Global Head of Investor Relations. Thank you. You may begin.

Thank you, Sherry. I'd like to thank all of you for joining us today to discuss Check Point's first quarter 2020 financial results. Joining me remotely today on the call are Gil Shwed, founder and CEO, along with our CFO and COO, Tao Peng. As a reminder, this call is webcast live on our website and is recorded for replay. To access the live webcast and replay information, please visit the company's website at CheckPoint.com. For your convenience, the conference call replay will be available through May 4th. If you'd like to reach us after the call, please contact Investor Relations by email at kip.checkpoint.com. Before we begin with management's presentation, I would like to highlight the following. During the course of this presentation, Check Point's representatives may have made certain forward-looking statements. These forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21 of the Securities and Exchange Act of 1934 include but are not limited to statements related to checkpoints expectations regarding business, financial performance, and customers, the introduction of new products programs, and the success of those products and programs, the environment for security threats and trends in the market, our strategy and focus areas, demand for our solutions, the impact of COVID-19 on our business, including on our product development, sales, and marketing efforts, and then our financial condition and results of operation. The impact of COVID-19 on our customers, suppliers, and business partners and the macroeconomic environment as a whole. Because these statements pertain to future events, they are subject to risks and uncertainties. Actual results could differ materially from Check Point's current expectations and beliefs. Factors that could cause or contribute to such differences are contained in Check Point's earnings press release issued on April 27, 2020, which is available on our website. and other factors and risks, including those discussed in Checkpoint's annual report on Form 20F for the year ended December 31st, 2019, which is on file with the Securities and Exchange Commission. Checkpoint assumes no obligation to update information concerning its expectations or beliefs except as required by law. 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 the reasons for our presentation of non-GAAP information. Now I'd like to turn the call over to Tal Payne for a review of our financial results.

Thank you, Kip. Good morning and good afternoon to everyone joining us on the call today. I hope you and your family stay healthy during this unprecedented time. During this period, our top priority is ensuring the health and safety of all of our employees around the globe as we continue to serve our customers. Today, Gil will elaborate on the COVID-19 effects on different aspects of our business, steps we are taking to operate through the pandemic, and provide updates to our guidance. During the quarter, we sustained elevated business activity levels and delivered results toward the upper half of our guidance. Revenues for the quarter increased by 3% year-over-year to $486 million, and our non-GAAP EPS grew by 7%, to $1.42. Before I proceed further into the numbers, let me remind you that our GAAP financial results include stock-based compensation charges, the motivation of acquired intangible assets and acquisition-related expenses, as well as the related tax effects. Keep in mind, as applicable, non-GAAP information is presented excluding these items. Now let's take a look at the financial highlights for the quarter. Products and security subscription revenues were $269 million, a 5% increase year-over-year. Our subscription revenues continue to be strong, with 10% growth year-over-year, reaching $159 million. Our software update and maintenance revenues increased to $217 million, representing 1% growth year-over-year. On the product side, we saw an increase in remote access VPN solutions, and in scaling up networks where needed. On the other hand, products are continuing to transition partially to the cloud solution, which are included in the subscription line. The reduction in the product line is naturally driving lower support levels. The growth in our subscription revenues is driven by our advanced solution, mainly cloud and SunGlass Zero Day threat prevention. Infinity Consolidation solution also started to flow into the revenues and show nice trends. During the quarter, we had Infinity deals in variety of industries, including government, telecommunications, and industrial. We also saw growth in our cloud business. Both clouds and Infinity annual run rate increased over 100% year-over-year. Last week, we finished the launch of the new Quantum Security Gateway series. Quantum includes our Sunblast Network Zero-Day Protection, bundled by default. Our old appliances bundle the Next Generation Threat Protection and GPP. Naturally, the new package carries higher value. According to accounting rules, the fair value of software blades is separated from their appliance price, deferred, and recognized over the service period. As a result, we expect to see shifts from product revenues to deferred revenues that will be recognized over 12 months. The annual effect depends on the pace of the transition and the appliance mix, and we will have more color in the coming quarter. Besides revenues, as of March 31st, 2020, we reached $1,349,000,000, a growth of $36,000,000, or 3%, over March 31st, 2019. Revenue distribution by geography for the quarter was as follows. 46% of the revenues came from America. 43% of revenues came from Europe, Middle East and Africa region. The remaining 11% came from Asia Pacific. This quarter we had a strong execution in America and the growth came from most regions in the US. We have seen strength in financial services and healthcare vertical. Non-GAAP operating margin for the quarter were 48% compared to 50% last year. The reduction relates to the increased investment in our workforce and cloud infrastructure in a year-over-year comparison. This margin is higher than planned as a result of the higher level of revenue and the natural savings relating to the new environment, for example, from slightly lower travel costs and move to virtualized events. Our financial income this quarter reached $19 million. Financial income is expected to be slightly reduced during the remainder of the year as a result of reduced interest rates in the U.S. Effective loan gap tax rates for the quarter was 18%, in line with our expectations. Remember, it can be 1% up, 1% down fluctuations. Gap net income for the first quarter of 2020 was $179 million. on $1.23 per diluted share. Non-GAAP net income was $206 million on $1.42 per diluted share and increased 7% from the first quarter of 2019 and 2 cents above the midpoint of our guidance. Our cash balances as of March 31st increased to $4 billion. We are one of the strongest companies in the industry with significant cash balances and no debt The company has exceptional balances and we can handle a very wide range of scenarios in the future. Majority of our cash is invested in marketable securities. Unrealized gain as of March 31st was $21 million. We invest in Europe's smaller marketable securities that are rated at a minimum of A-minus. We reviewed the securities that the fair value was lower than the book value and deemed it to be temporary reduction, hence no impairment was recorded or needed. Operating cash flow was $359 million. Collection from customers continued to be strong. As a reminder, we hedge our balance sheet against currency fluctuations. The hedge affects our cash flow with minimal effect on our P&L as intended. During the quarter, the dollar strengthened against the Israeli shekel, resulting in a hedge cost of approximately $12 million on cash flow versus cash income of $7.5 million last year. Our operating cash flow net of hedge effect is similar to last year. On the margin, we expect to see some of our customers who are seeing a disproportionate economic impact are likely to be credit constrained and are working with them to adopt their payment terms to ensure continued service to help our customers. Naturally, it will have an effect on some of the second quarter cash flow. In February, we approved an extension of our buyback program for additional $2 billion and up to $325 million per quarter. During the quarter, we continued our buyback program and purchased 3 million shares for $325 million, the full capacity, at an average price of $110. Now, let's turn the call over to Gior for his comments.