Chris Reimer: Hi, thanks for taking my questions. Can you mention some of the measures that have contributed or will further contribute to the cost management side of things?
Roy Zisapel: We’re doing several things. One, we’ve looked at the sales and marketing organization as a whole. And we looked for places that we thought our investment did not yield the right ROI. And obviously, we either consolidated or changed that level of investment. Second, we took some measures in some of the third-party or overlay investments that we had. And maybe it’s more, I would say, quota-carrying direct selling relationship. Third, we’ve taken some of those costs that we’ve taken out of the model and actually allocated them towards our cloud security business, to improve cloud success managers and numbers and coverage, to improve the operation, to invest more towards R&D. So all in all, we’ve done the measured steps on the organization to align the level of business.
Starting to see, obviously, as Guy mentioned, in the third quarter, the results in the P&L. And we’re going to continue to balance the revenue with expense. And as you see from our guidance, we do expect profitability, because of these steps, to improve.
Chris Reimer: Great, thank you. That’s it for me.
Operator: [Operator Instructions] And we will take our next question from Alex Henderson with Needham & Company. Your line is open. And Mr. Henderson, your line is open, please check your mute button.
Alex Henderson: Let me start off by saying thanks for the print, but I also hope everybody is safe in Israel and that all your families are safe. But with that as a starting point, can you talk a little bit about whether there’s — what percentage of your employees were called up from reserves and if that’s a factor in the outlook going forward if the war stays more extended in time, just so that we can talk to that risk.
Guy Avidan: Yes. So as of today, around 60 employees are in reserve. We don’t expect this number to increase. That’s 5% of total head count in the company. We’ve replaced, in terms of functions, all these people. So we don’t see any impact on the business.
Alex Henderson: Perfect. Didn’t expect there to be, but I wanted to make sure I had the statistics. The second question, can you talk a little bit about the exchange rate and how your hedging programs or — what’s going on there for the simple reason that the shekel is obviously under a lot of pressure over the last couple of quarters.
Guy Avidan: Yes. So for the time being, and as we earlier discussed previously, 2023 is hedged already. So the impact of the above four FX will not be seen this year. That being said, we hedged some of 2024. We still have room to hedge, and that will allude to the conclusion that, obviously, we will have a better hedging strategy next year, which means lower OpEx.
Alex Henderson: And it does seem like the events in Israel have resulted in some pull-in in expectations and spending intentions. So is the macro environment showing any change in conditions from September into October? Or is that relatively stable? Or is it too early to tell? Can you talk to that a little bit?
Guy Avidan: We mentioned in the prepared commentary that we are seeing some early signs, and we are watching linearity. We also mentioned that in the script that, let’s say, the first month of the quarter, this quarter was better than the quarter before. It means that macro-wise, we think we’re in a better position versus the last two quarters.
Roy Zisapel: And just to add to that, also from the activity in the threat landscape, actually we’re seeing a lot of attacks across in Israel, of course, but more importantly, for the global, across the world, whether it’s U.S., Canada, all of Western Europe and so on. So actually, from a demand perspective and the criticality of our solutions, this geopolitical event is actually creating more sense of urgency, we think. So all in all, we are cautiously optimistic that there’s actually not going to be a pull down from the war and might be actually a bit acceleration of cycles.
