Radware Ltd. Announces Second Quarter 2016 Earnings


2016 Second Quarter Highlights

* Revenues of $49.6 Million
* Non-GAAP EPS of $0.06
* Non-GAAP gross margin of 82.7%
* Repurchase of shares in a total amount of $4.9 Million

TEL AVIV, ISRAEL, July 26, 2016 (GLOBE NEWSWIRE) -- Radware® (NASDAQ:RDWR), a leading provider of cyber security and application delivery solutions ensuring optimal service level for applications in virtual, cloud and software defined data centers, today announced its consolidated financial results for the second quarter ended June 30, 2016.

“Despite challenging market conditions this year, we have made solid progress this past quarter with our subscription booking and revenues,” said Roy Zisapel, Radware President & CEO.  “We are starting to bear the fruit of our technological investments with the launch of our new Cloud WAF, the expansions of our DDoS Scrubbing services and our technological achievements in ADC with NFV.  Their availability in the market should help allow us to resume revenues growth in the second half of 2016.”

Financial Highlights for the second quarter of 2016

Revenues for the second quarter of 2016 totaled $49.6 million, representing a decrease of 11% compared with revenues of $56.0 million for the second quarter of 2015, and an increase of 2% compared with revenues of $48.4 million for the first quarter of 2016.

Net loss on a GAAP basis for the second quarter of 2016 was $1.3 million or ($0.03) per share, compared with net income of $7.2 million or $0.15 per diluted share for the second quarter of 2015 and compared with net loss of $2.8 million or ($0.06) per diluted share for the first quarter of 2016.

Excluding the impact of the patent litigation expense, stock-based compensation, exchange rate differences, net on balance sheet items and amortization of intangible assets, non-GAAP net income was $2.6 million or $0.06 per diluted share, compared with non-GAAP net income of $10.8 million or $0.23 per diluted share for the second quarter of 2015 and compared with non-GAAP net income of $2.3 million or $0.05 per diluted share for the first quarter of 2016.

As of June 30, 2016 the Company had cash, cash equivalents, short-term and long-term bank deposits and marketable securities of $314.8 million.

Cash generated from operations in the second quarter of 2016 totaled $7.8 million.

During the second quarter we repurchased our shares in a total amount of $4.9 million.

A reconciliation of each of the company’s non-GAAP measures to the comparable GAAP measured is included at the end of this press release.

During the second quarter of 2016, Radware released the following significant announcements:

Product:

Customers:

Financial

Conference Call

Company management will host a quarterly investor conference call at 8:45am ET on July 26, 2016. The call will focus on financial results for the quarter ending June 30, 2016 and other matters related to the Company’s business.

The conference call will be webcast on July 26, 2016 at 8:45am ET in the “listen only” mode via the Internet at: http://www.radware.com/IR/ and will be available for replay during the next 12 months. 

Participants in the US call: Toll Free 1 (800) 230-1951

Participants Internationally call:  +1- 612-332-0335

Conference ID:  397592

Please find a link to the upcoming webcast presentation on the following web page:
http://www.radware.com/IR/

Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with generally accepted accounting principles (GAAP), Radware uses non-GAAP measures of net income and earnings per share, which are adjustments from results based on GAAP to exclude stock-based compensation expenses, in accordance with ASC No. 718, amortization of intangible assets, litigation costs and exchange rate differences, net on balance sheet items included in finance income. Such exchange rate differences may vary from period to period due to changes in exchange rates driven by general market conditions or other circumstances outside of the normal course of Radware's operations. Management believes that exclusion of these charges allows comparisons of operating results that are consistent across past, present and future periods. Radware’s management believes the non-GAAP financial information provided in this release is useful to investors for the purpose of understanding and assessing Radware’s ongoing operations. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of the non-GAAP financial measures discussed in this press release, to the most directly comparable GAAP financial measures, is included with the financial information contained in this press release. Management uses both GAAP and non-GAAP information in evaluating and operating business internally and, as such, has determined that it is important to provide this information to investors.

Safe Harbor Statement

This press release may contain statements concerning Radware’s future prospects that are “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. Statements preceded by, followed by, or that otherwise include the words "believes", "expects", "anticipates", "intends", "estimates", "plans", and similar expressions or future or conditional verbs such as "will", "should", "would", "may" and "could" are generally forward-looking in nature and not historical facts. Because such statements deal with future events, they are subject to various risks and uncertainties and actual results, expressed or implied by such forward-looking statements, could differ materially from Radware's current forecasts and estimates. Factors that could cause or contribute to such differences include, but are not limited to: the impact of global economic conditions and volatility of the market for our products; changes in the competitive landscape; inability to realize our investment objectives; timely availability and customer acceptance of our new and existing products; risks and uncertainties relating to acquisitions; the impact of economic and political uncertainties and weaknesses in various regions of the world, including the commencement or escalation of hostilities or acts of terrorism; Competition in the market for Application Delivery and Network Security solutions and our industry in general is intense; and other factors and risks on which we may have little or no control. This list is intended to identify only certain of the principal factors that could cause actual results to differ. For a more detailed description of the risks and uncertainties affecting Radware, reference is made to Radware’s Annual Report on Form 20-F which is on file with the Securities and Exchange Commission (SEC) and the other risk factors discussed from time to time by Radware in reports filed with, or furnished to, the SEC. Forward-looking statements speak only as of the date on which they are made and, except as required by applicable law, Radware undertakes no commitment to revise or update any forward-looking statement in order to reflect events or circumstances after the date any such statement is made.  Radware’s public filings are available from the SEC’s website at www.sec.gov or may be obtained on Radware’s website at www.radware.com.

About Radware

Radware® (NASDAQ:RDWR), is a global leader of application delivery and cyber security solutions for virtual, cloud and software defined data centers. Its award-winning solutions portfolio delivers service level assurance for business-critical applications, while maximizing IT efficiency. Radware’s solutions empower more than 10,000 enterprise and carrier customers worldwide to adapt to market challenges quickly, maintain business continuity and achieve maximum productivity while keeping costs down.  For more information, please visit www.radware.com

Radware encourages you to join our community and follow us on: Facebook, Google+, LinkedIn, Radware Blog, SlideShare, Twitter, YouTube, Radware Connect app for iPhone® and our security center DDoSWarriors.com that provides a comprehensive analysis on DDoS attack tools, trends and threats.
©2016 Radware Ltd. All rights reserved. Radware and all other Radware product and service names are registered trademarks or trademarks of Radware in the U.S. and other countries. All other trademarks and names are property of their respective owners.

CONTACTS
Chief Financial Officer
Doron Abramovitch
+972-3766-8610

Corporate Media Relations:
Deborah Szajngarten
(201) 785-3206
deborah.szajngarten@radware.com

  
 Radware Ltd.
 Condensed Consolidated Balance Sheets
 (U.S. Dollars in thousands)
  
  June 30,
 2016
 December 31,
 2015
  (Unaudited)  
Assets    
     
Current assets    
Cash and cash equivalents  21,928   33,744 
Available-for-sale marketable securities  16,341   16,003 
Short-term bank deposits  183,465   80,922 
Trade receivables, net  26,057   26,410 
Other receivables and prepaid expenses  4,382   5,042 
Inventories  16,181   16,322 
   268,354   178,443 
Long-term investments    
Available-for-sale marketable securities  83,904   87,814 
Long-term bank deposits  9,143   96,643 
Severance pay funds  2,699   2,724 
   95,746   187,181 
     
Property and equipment, net  27,177   26,203 
Intangible assets, net  2,959   3,518 
Other assets  6,677   5,473 
Goodwill  30,069   30,069 
     
Total assets  430,982   430,887 
     
Liabilities and shareholders’ equity    
     
Current liabilities    
Trade payables  6,087   9,255 
Deferred revenues  52,530   46,061 
Other payables and accrued expenses  22,547   22,098 
   81,164   77,414 
Long-term liabilities    
Deferred revenues  27,261   25,136 
Other long-term liabilities  14,088   9,214 
   41,349   34,350 
     
Shareholders’ equity    
Share capital  661   661 
Additional paid-in capital  318,331   312,784 
Accumulated other comprehensive income, net of tax  847   1,257 
Treasury stock, at cost  (105,761)  (94,049)
Retained earnings  94,391   98,470 
Total shareholders’ equity  308,469   319,123 
     
Total liabilities and shareholders' equity  430,982   430,887 


Radware Ltd.
Condensed Consolidated Statements of Income
(U.S. Dollars in thousands, except share and per share data)
 
 For the Three months ended
June 30,
 For the Six months ended
 June 30,

  2016   2015   2016   2015 
 (Unaudited)  (Unaudited)   (Unaudited)   (Unaudited) 
     
Revenues 49,585   56,027   98,010   113,251 
Cost of revenues 8,887   9,684   17,541   19,784 
Gross profit 40,698   46,343   80,469   93,467 
Operating expenses:    
Research and development, net 13,001   12,239   26,425   24,190 
Selling and marketing 25,865   22,082   50,777   45,662 
General and administrative 3,893   4,400   9,662   8,497 
Total operating expenses 42,759   38,721   86,864   78,349 
Operating income (loss) (2,061)  7,622   (6,395)  15,118 
Financial income, net 1,232   1,450   3,172   2,100 
Income (loss) before taxes on income (829)  9,072   (3,223)  17,218 
Taxes on income 498   1,886   856   3,573 
Net income (loss) (1,327)  7,186   (4,079)  13,645 
                
Basic net earnings (loss) per share
$(0.03) $0.16  $(0.09) $0.29 
                
Weighted average number of shares used to compute basic net earnings (loss) per share 43,944,924   46,304,373   44,206,677   46,350,151 
     
Diluted net earnings (loss) per share$(0.03) $0.15  $(0.09) $0.29 
                
Weighted average number of shares used to compute diluted net earnings (loss) per share 43,944,924   47,659,321   44,206,677   47,552,869 
                


Radware Ltd.
Non-GAAP Reconciliation of Supplemental Financial Information
(U.S. Dollars in thousands, except share and per share data)
 
 For the Three months ended
 June 30,
 For the Six months ended
June 30,

 
 2016 2015 2016 2015
 (Unaudited) (Unaudited)
 (Unaudited)
 (Unaudited)
     
GAAP net Income (loss) (1,327)  7,186   (4,079)  13,645 
     
Stock-based compensation expenses, included in:    
Cost of revenues 39   35   81   69 
Research and development, net 667   644   1,450   1,262 
Selling and marketing 1,394   1,017   2,662   1,906 
General and administrative 644   716   1,428   1,392 
  2,744   2,412   5,621   4,629 
Amortization of intangible assets included in:    
Cost of revenues 254   294   507   607 
Selling and marketing 26   28   52   66 
  280   322   559   673 
                
Exchange rate differences, net on balance sheet items included in financial income
 460
   (107)  157   525 
                
Litigation costs 433   959   2,597   1,771 
                
Non-GAAP net income 2,590   10,772   4,855   21,243 
     
Non-GAAP diluted net earnings per share$0.06  $0.23  $0.11  $0.45 
                
Weighted average number of shares used to compute Non-GAAP diluted net earnings per share  44,101,539   47,659,321   44,354,630   47,552,869 
                


     
Radware Ltd.
Condensed Consolidated Statements of Cash Flows
(U.S. Dollars in thousands)
     
  For the Three months ended
on June 30,
 For the Six months ended
on June 30,
   2016   2015   2016   2015 
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash flows from operating activities:        
                 
Net income (loss)  (1,327)  7,186   (4,079)  13,645 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:        
Depreciation and amortization  2,561   2,348   5,095   4,553 
Stock based compensation  2,744   2,412   5,621   4,629 
Gain from sale of available-for-sale marketable securities  (549)  (229)  (1,126)  (423)
Amortization of premiums, accretion of discounts and accrued interest on available-for-sale marketable securities, net  514   486   892   1,921 
Accrued interest on bank deposits  6   (490)  (655)  (831)
Increase (decrease) in accrued severance pay, net  19   (6)  341   41 
Decrease in trade receivables, net  1,848   2,188   353   1,879 
Increase in other current assets and prepaid expenses and deferred income taxes, net  (106)  (709)  (410)  (829)
Decrease (increase) in inventories  395   (60)  141   531 
Increase (decrease) in trade payables  1,010   207   (3,168)  (2,503)
Increase (decrease) in deferred revenues  (73)  (2,448)  8,594   2,947 
Increase in other payables and accrued expenses and other long-term liabilities  679   3,760   4,931   1,087 
Excess tax benefit from stock-based compensation  74   (230)  74   (460)
         
Net cash provided by operating activities  7,795   14,415   16,604   26,187 
         
Cash flows from investing activities:        
         
Purchase of property and equipment  (2,881)  (4,247)  (5,510)  (7,200)
Proceeds from (investment in) other long-term assets  (16)  -   3   (51)
Investment in bank deposits, net  (9,952)  (17,652)  (14,388)  (40,845)
Proceeds from (investment in) available-for-sale marketable securities  155   (869)  3,261   16,518 
         
Net cash used in investing activities  (12,694)  (22,768)  (16,634)  (31,578)
         


     
Radware Ltd.
Condensed Consolidated Statements of Cash Flows
(U.S. Dollars in thousands)
     
  For the Three months
ended on June 30,
 For the Six months
ended on June 30,
   2016   2015   2016   2015 
   (Unaudited) (Unaudited)  (Unaudited) (Unaudited)
         
Cash flows from financing activities:        
         
Proceeds from exercise of stock options  -   5,493   -   7,703 
Excess tax benefit from stock-based compensation  (74)  230   (74)  460 
Repurchase of shares  (4,932)  -   (11,712)  (19,727)
         
Net cash provided by (used in) financing activities  (5,006)  5,723   (11,786)  (11,564)
         
Decrease in cash and cash equivalents  (9,905)  (2,630)  (11,816)  (16,955)
Cash and cash equivalents at the beginning of the period  31,833   30,654   33,744   44,979 
         
Cash and cash equivalents at the end of the period  21,928   28,024   21,928   28,024