Fourth Quarter 2016 Financial Highlights

  • Revenues of $51.7 Million
  • Non-GAAP EPS of $0.06; GAAP EPS of ($0.05)
  • Cash flow from operations of $23.3 Million
  • Cash used for stock repurchase of $10.3 Million

Full Year 2016 Financial Highlights

  • Revenues of $196.6 Million
  • Non-GAAP EPS of $0.20; GAAP EPS of ($0.20)
  • Cash flow from operations of $38.6 Million
  • Cash used for stock repurchase of $22.0 Million

TEL AVIV, Israel, Feb. 08, 2017 (GLOBE NEWSWIRE) --  Radware® (NASDAQ:RDWR), a leading provider of cyber security and application delivery solutions securing the digital experience for applications in virtual, cloud and software defined data centers, today announced its consolidated financial results for the quarter and year ended December 31, 2016.

“We reported solid results for the fourth quarter of 2016 and are very pleased with the underlying business trends, which led to record bookings for the quarter, primarily due to the success of our subscription and cloud security solutions,” said Roy Zisapel, Radware President & CEO. “Overall, our business continues its desired and strategic transition towards increased data center security sales and a growing proportion of service and subscription sales. We have expanded this offering last week with the acquisition of Seculert, which brings us cutting-edge cloud-based machine learning and big data analytics capabilities. Our comprehensive solution offering addresses the core challenges of applications delivery and security, and our flexible deployment models are aligned with the continued migration of applications to the cloud. Radware is therefore well positioned to deliver long term growth.”

Financial Highlights for the Fourth Quarter of 2016
Revenues for the fourth quarter of 2016 totaled $51.7 million, compared with revenues of $55.3 million for the fourth quarter of 2015, and revenues of $46.9 million for the third quarter of 2016.

Revenues in the Americas region were $22.7 million for the fourth quarter of 2016, up 8.7% from revenues of $20.9 in the fourth quarter of 2015. Revenues in the EMEA region were $14.9 million for the fourth quarter of 2016, down 16.0% from revenues of $17.8 in the fourth quarter of 2015. Revenues in the APAC region were $14.1 million for the fourth quarter of 2016, down 15.1% from revenues of $16.6 in the fourth quarter of 2015.

Net loss on a GAAP basis for the fourth quarter of 2016 was ($2.1) million or ($0.05) per share, compared with net income of $4.3 million or $0.09 per diluted share for the fourth quarter of 2015.

Non-GAAP net income for the fourth quarter of 2016 was $2.5 million or $0.06 per diluted share, compared with non- GAAP net income of $7.6 million or $0.17 per diluted share for the fourth quarter of 2015.

Financial Highlights for the Full Year of 2016
Revenues for the full year of 2016 totaled $196.6 million, compared with revenues of $216.6 million for the full year of 2015.

Revenues in the Americas region were $84.7 million for the full year of 2016, down 4.5% from revenues of $88.7 in the full year of 2015. Revenues in the EMEA region were $53.7 million for the full year of 2016, down 14.3% from revenues of $62.7 in the full year of 2015. Revenues in the APAC region were $58.1 million for the full year of 2016, down 10.8% from revenues of $65.2 in the full year of 2015.

Net loss on a GAAP basis for the full year of 2016 was ($8.7) million or ($0.20) per share, compared with net income of $18.6 million or $0.40 per diluted share for the full year of 2015.

Non-GAAP net income for the full year of 2016 was $8.9 million or $0.20 per diluted share, compared with non- GAAP net income of $33.7 million or $0.72 per diluted share for the full year of 2015.

Non-GAAP results are calculated excluding the impact of the patent litigation expense, stock-based compensation, exchange rate differences, net on balance sheet items and amortization of intangible assets. 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.

As of December 31, 2016 the Company had cash, cash equivalents, short-term and long-term bank deposits and marketable securities of $320.1 million. Cash generated from operations in the fourth quarter of 2016 totaled $23.3 million. Cash used for share repurchase in the fourth quarter of 2016 totaled $10.3 million. Cash generated from operations in the full year of 2016 totaled $38.6 million. Cash used for share repurchase in the full year of 2016 totaled $22.0 million.

Conference Call

Radware management will host a call on Wednesday, February 8, 2017 at 8:30 am ET to discuss its fourth quarter and full year 2016 results and the company’s outlook for 2017.

Participants in the US call: Toll Free 866-393-4306

Participants Internationally call:  +1-734-385-2616 

Conference ID:  43641113

A replay will be available for 2 days, starting 2 hours after the end of the call, on telephone number +1-404-537-3406 or (US toll-free) 855-859-2056.  

A live webcast of the conference call can also be heard by accessing the Company's website at: http://www.radware.com/IR/. The webcast will remain available for replay during the next 12 months. 

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 gross profit, operating income, financial income, 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. Furthermore, Radware uses a measure called “total deferred revenues” which is defined as the sum of short and long term deferred revenues on the balance sheet and uncollected billed amounts that were offset against trade receivables, and are not presented on the balance sheet. 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, including costs and difficulties related to integration of acquired businesses; 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 most recent 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

©2017 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.

Radware Ltd.
Condensed Consolidated Balance Sheets
(U.S. Dollars in thousands)
     
  December 31, December 31,
  2016 2015
  (Unaudited)  
Assets    
     
Current assets    
Cash and cash equivalents 79,639  33,744 
Available-for-sales marketable securities 20,452  16,003 
Short-term bank deposits 125,995  80,922 
Trade receivables, net 19,407  26,410 
Other receivables and prepaid expenses 4,159  5,042 
Inventories 17,114  16,322 
  266,766  178,443 
     
Long-term investments    
Available-for-sales marketable securities 74,967  87,814 
Long-term bank deposits 19,092  96,643 
Severance pay funds 2,597  2,724 
  96,656  187,181 
     
     
Property and equipment, net 26,354  26,203 
Intangible assets, net 2,399  3,518 
Other assets 7,595  5,473 
Goodwill 30,069  30,069 
     
Total assets 429,839  430,887 
     
     
Liabilities and shareholders' equity    
     
Current Liabilities    
Trade payables 5,971  9,255 
Deferred revenues 53,061  46,061 
Other payables and accrued expenses 26,232  22,098 
  85,264  77,414 
     
Long-term liabilities    
Deferred revenues 31,100  25,136 
Other long-term liabilities 13,846  9,214 
  44,946  34,350 
     
Shareholders' equity    
Share capital 663  661 
Additional paid-in capital 325,204  312,784 
Accumulated other comprehensive income, net of tax (20)  1,257 
Treasury stock, at cost (116,029)  (94,049) 
Retained earnings 89,811  98,470 
Total shareholders' equity 299,629  319,123 
     
Total liabilities and shareholders' equity 429,839  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 For the year ended
  December 31, December 31,
  2016 2015 2016 2015
  (Unaudited) (Unaudited) (Unaudited) (Audited)
         
Revenues 51,712  55,256  196,585  216,566 
Cost of revenues 9,596  9,910  35,695  38,200 
Gross profit 42,116  45,346  160,890  178,366 
         
Operating expenses:        
Research and development, net 12,235  12,972  51,732  49,987 
Selling and marketing 28,144  24,946  103,774  93,347 
General and administrative 4,226  4,055  18,133  17,033 
Total operating expenses 44,605  41,973  173,639  160,367 
         
Operating income (loss) (2,489)  3,373  (12,749)  17,999 
Financing income, net 863  2,394  5,741  5,867 
Income (loss) before taxes on income (1,626)  5,767  (7,008)  23,866 
Taxes on income (507)  (1,504)  (1,651)  (5,297) 
Net income (loss) (2,133)  4,263  (8,659)  18,569 
         
Basic net earnings (loss) per share (0.05)  0.09  (0.20)  0.40 
         
Weighted average number of shares used to compute basic net earnings (loss) per share 43,313,644  45,048,937  43,868,221  45,895,321 
         
Diluted net earnings (loss) per share (0.05)  0.09  (0.20)  0.40 
         
Weighted average number of shares used to compute diluted net earnings (loss) per share 43,313,644  45,300,967  43,868,221  46,738,604 
         


 Radware Ltd.
 Reconciliation of GAAP to Non-GAAP Financial Information
 (U.S Dollars in thousands, except share and per share data)
         
  For the three months ended For the year ended
  December 31, December 31,
  2016 2015 2016 2015
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
GAAP gross profit42,116  45,346 160,890  178,366
 Stock-based compensation52  42 180  141
 Amortization of intangible assets254  254 1,014  1,114
Non-GAAP gross profit42,422  45,642 162,084  179,621
         
GAAP research and development, net12,235  12,972 51,732  49,987
 Stock-based compensation948  575 3,339  2,456
Non-GAAP Research and development, net11,287  12,397 48,393  47,531
         
GAAP selling and marketing28,144  24,946 103,774  93,347
 Stock-based compensation1,743  1,187 5,661  4,098
 Amortization of intangible assets26  29 105  124
Non-GAAP selling and marketing26,375  23,730 98,008  89,125
         
GAAP general and administrative4,226  4,055 18,133  17,033
 Stock-based compensation478  452 2,340  2,634
 Litigation related charges784  744 4,270  3,383
Non-GAAP general and administrative2,964  2,859 11,523  11,016
         
GAAP total operating expenses44,605  41,973 173,639  160,367
 Stock-based compensation3,169  2,214 11,340  9,188
 Amortization of intangible assets26  29 105  124
 Litigation related charges784  744 4,270  3,383
Non-GAAP total operating expenses40,626  38,986 157,924  147,672
         
GAAP operating income (loss)(2,489)  3,373 (12,749)  17,999
 Stock-based compensation3,221  2,256 11,520  9,329
 Amortization of intangible assets280  283 1,119  1,238
 Litigation related charges784  744 4,270  3,383
Non-GAAP operating income (loss)1,796  6,656 4,160  31,949
         
GAAP finance income863  2,394 5,741  5,867
 Exchange rate differences, net on balance sheet items included in financial income341  87 674  1,146
Non-GAAP finance income1,204  2,481 6,415  7,013
         
GAAP income (loss) before taxes on income(1,626)  5,767 (7,008)  23,866
 Stock-based compensation3,221  2,256 11,520  9,329
 Amortization of intangible assets280  283 1,119  1,238
 Litigation related charges784  744 4,270  3,383
 Exchange rate differences, net on balance sheet items included in financial income341  87 674  1,146
Non-GAAP income before taxes on income3,000  9,137 10,575  38,962
         
GAAP net income (loss)(2,133)  4,263 (8,659)  18,569
 Stock-based compensation3,221  2,256 11,520  9,329
 Amortization of intangible assets280  283 1,119  1,238
 Litigation related charges784  744 4,270  3,383
 Exchange rate differences, net on balance sheet items included in financial income341  87 674  1,146
Non GAAP net income2,493  7,633 8,924  33,665
         
GAAP Net income (loss) per diluted share(0.05)  0.09 (0.20)  0.40
 Stock-based compensation0.07  0.05 0.26  0.20
 Amortization of intangible assets0.01  0.01 0.03  0.03
 Litigation related charges0.02  0.02 0.10  0.07
 Exchange rate differences, net on balance sheet items included in financial income0.01  0.00 0.01  0.02
Non GAAP Net income per diluted share0.06  0.17 0.20  0.72
         
Weighted average number of shares used to compute Non-GAAP diluted net earnings (loss) per share43,721,973  45,300,967 44,125,436  46,738,604
         


Radware Ltd.
Condensed Consolidated Statements of Cash Flow
(U.S. Dollars in thousands)
         
  For the three months ended For the year ended
  December 31, December 31,
  2016 2015 2016 2015
         
Cash flow from operating activities:        
         
Net income (loss) (2,133)  4,263  (8,659)  18,569 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:        
Depreciation and amortization 2,663  2,411  10,372  9,401 
Stock based compensation 3,221  2,256  11,520  9,329 
Gain from sale of available-for-sale marketable securities 5  (1,298)  (1,772)  (2,438) 
Amortization of premium, accretion of discounts and accrued interest on available-for- sale marketable securities, net 670  520  1,947  3,208 
Accrued interest on bank deposits 1,633  (648)  1,179  (1,998) 
Increase in accrued severance pay, net 111  0  401  125 
Decrease (increase) in trade receivables, net 1,939  (2,229)  7,003  (773) 
Decrease (increase) in other current assets and prepaid expenses and deferred income taxes, net (498)  2,794  (759)  112 
Decrease (increase) in inventories (302)  69  (792)  522 
Decrease (increase) in trade payables 920  3,229  (3,284)  (562) 
Increase in deferred revenues 11,144  6,003  12,964  3,849 
Increase (decrease) in other payables and accrued expenses 3,302  (1,779)  7,813  424 
Excess tax benefit from stock-based compensation 605  58  679  (632) 
Net cash provided by operating activities 23,280  15,649  38,612  39,136 
         
Cash flows from investing activities:        
         
Purchase of property and equipment (1,333)  (3,056)  (9,404)  (13,774) 
Investment in other long-term assets, net (53)  (16)  (53)  (100) 
Proceeds from (investment in) bank deposits, net 29,586  4,063  31,295  (33,824) 
Proceeds from sale, redemption of and purchase of available-for-sale marketable securities, net (1,079)  4,621  6,521  40,845 
Net cash provided by (used in) investing activities 27,121  5,612  28,359  (6,853) 
         
Cash flows from financing activities:        
         
Proceeds from exercise of stock options 1,253  175  1,583  8,746 
Excess tax benefit from stock-based compensation (605)  (58)  (679)  632 
Repurchase of shares (10,268)  (8,389)  (21,980)  (52,896) 
Net cash used in financing activities (9,620)  (8,272)  (21,076)  (43,518) 
         
Increase (decrease) in cash and cash equivalents 40,781  12,989  45,895  (11,235) 
Cash and cash equivalents at the beginning of the period 38,858  20,755  33,744  44,979 
Cash and cash equivalents at the end of the period 79,639  33,744  79,639  33,744 
         
CONTACTS

Investor Relations:
Anat Earon-Heilborn
+972 723917548
ir@radware.com

Media Contacts:
Deborah Szajngarten
Radware
201-785-3206
deborah.szajngarten@radware.com