Fourth Quarter 2017 Results and Financial Highlights

  • Revenues of $58 Million, up 13% from the fourth quarter of 2016
  • Non-GAAP EPS of $0.09; GAAP EPS of 0.05

Full Year 2017 Results and Financial Highlights

  • Revenues of $211 Million, up 8% from 2016
  • Non-GAAP EPS of $0.17; GAAP EPS of )$0.17)

TEL AVIV, Israel, Feb. 07, 2018 (GLOBE NEWSWIRE) -- Radware® (NASDAQ:RDWR), a leading provider of cyber security and application delivery solutions, today announced its consolidated financial results for the quarter and year ended December 31, 2017.

“We ended 2017 on a very strong note, delivering record bookings and strong revenue growth. The quarter concluded a strong year for Radware, which was highlighted by robust performance in our security business, and high growth in cloud services and product subscriptions,” said Roy Zisapel, Radware President & CEO. “This success provides us with excellent visibility entering 2018, and we have confidence in our growth prospects for the year.”

Financial Highlights for the Fourth Quarter of 2017

Revenues for the fourth quarter of 2017 totaled $58.5 million, up 13% from revenues of $51.7 million for the fourth quarter of 2016:

  • Revenues in the Americas region were $28.7 million for the fourth quarter of 2017, up 27% from revenues of $22.7 million in the fourth quarter of 2016.
  • Revenues in the EMEA region were $15.1 million for the fourth quarter of 2017, up 1% from revenues of $14.9 million in the fourth quarter of 2016.
  • Revenues in the APAC region were $14.6 million for the fourth quarter of 2017, up 4% from revenues of $14.1 million in the fourth quarter of 2016.

Net income on a GAAP basis for the fourth quarter of 2017 was $2.1 million or $0.05 per diluted share, compared with net loss of ($2.1) million or ($0.05) per diluted share for the fourth quarter of 2016.

Non-GAAP net income for the fourth quarter of 2017 was $3.9 million or $0.09 per diluted share, compared with non- GAAP net income of $2.5 million or $0.06 per diluted share for the fourth quarter of 2016.

Financial Highlights for the Full Year of 2017

Revenues for the full year of 2017 totaled $211.4 million, up 8% from revenues of $196.6 million for the full year of 2016:

  • Revenues in the Americas region were $97.9 million for the full year of 2017, up 16% from revenues of $84.7 in the full year of 2016.
  • Revenues in the EMEA region were $56.6 million for the full year of 2017, up 5% from revenues of $53.7 in the full year of 2016.
  • Revenues in the APAC region were $56.9 million for the full year of 2017, down 2% from revenues of $58.1 in the full year of 2016.

Net loss on a GAAP basis for the full year of 2017 was ($7.5) million or ($0.17) per share, compared with net loss of ($8.7) million or ($0.20) per diluted share for the full year of 2016.

Non-GAAP net income for the full year of 2017 was $7.6 million or $0.17 per diluted share, compared with non-GAAP net income of $8.9 million or $0.20 per diluted share for the full year of 2016.

Non-GAAP results are calculated excluding the impact of stock-based compensation, exchange rate differences, net on balance sheet items included in financial income, amortization of intangible assets, acquisition costs, litigation costs and gains, and changes in federal tax rate. 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, 2017, the Company had cash, cash equivalents, short-term and long-term bank deposits and marketable securities of $344.3 million. Cash generated from operations in the fourth quarter of 2017 totaled $8.0 million. Cash generated from operations in the full year of 2017 totaled $31.5 million.

Investor Meeting

The Company will host a meeting with analysts and institutional investors on February 20, 2018, in New York, where members of Radware’s executive team will provide an update on the Company’s business and outlook. To register for attendance, please email ir@radware.com. The presentation materials and a live webcast of the meeting will be available on the Company’s website. The webcast will remain available for replay during the next 12 months. 

Conference Call

Radware management will host a call on Wednesday, February 7, 2018 at 8:30 am ET to discuss its fourth quarter and full year 2017 results and the company’s outlook for the first quarter of 2018.

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

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

Conference ID: 7879889

A replay will be available for 2 days, starting 2 hours after the end of the call, on telephone number +1-416-621-4642 or (US toll-free) 800-585-8367.  

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, acquisition costs, litigation costs and gains, exchange rate differences, net on balance sheet items included in finance income and changes in the federal rate. 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; 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, as amended, 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 cyber security and application delivery solutions for physical, cloud, and software defined data centers. Its award-winning solutions portfolio secures the digital experience by providing infrastructure, application, and corporate IT protection and availability services to enterprises globally. Radware’s solutions empower more than 12,500 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.

©2018 Radware Ltd. All rights reserved. The Radware products and solutions mentioned in this press release are protected by trademarks, patents and pending patent applications of Radware in the U.S. and other countries. For more details please see: https://www.radware.com/LegalNotice/. All other trademarks and names are property of their respective owners.

CONTACTS

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

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

 
Radware Ltd.
Condensed Consolidated Balance Sheets
(U.S. Dollars in thousands)
     
  December 31, December 31,
  2017
 2016
  (Unaudited) (Unaudited)
Assets    
     
Current assets    
Cash and cash equivalents 65,237  79,639 
Available-for-sale marketable securities 42,573  20,452 
Short-term bank deposits  93,151  125,995 
Trade receivables, net 16,150  19,407 
Other receivables and prepaid expenses 12,252  4,159 
Inventories 18,772  17,114 
  248,135  266,766 
     
Long-term investments    
Available-for-sale marketable securities 54,427  74,967 
Long-term bank deposits 88,911  19,092 
Severance pay funds 3,251  2,597 
  146,589  96,656 
     
     
Property and equipment, net 23,642  26,354 
Intangible assets, net 10,415  2,399 
Other long-term assets 8,133  8,092 
Goodwill 32,174  30,069 
     
Total assets 469,088  430,336 
     
     
Liabilities and shareholders' equity    
     
Current Liabilities    
Trade payables 5,367  5,971 
Deferred revenues 69,829  53,061 
Other payables and accrued expenses 32,174  26,232 
  107,370  85,264 
     
Long-term liabilities    
Deferred revenues 43,482  31,100 
Other long-term liabilities 2,880  14,209 
  46,362  45,309 
     
Shareholders' equity    
Share capital 673  663 
Additional paid-in capital 349,250  325,338 
Accumulated other comprehensive loss, net of tax (443) (20)
Treasury stock, at cost (116,442) (116,029)
Retained earnings 82,318  89,811 
Total shareholders' equity 315,356  299,763 
     
Total liabilities and shareholders' equity 469,088  430,336 
     


 
Radware Ltd.
Condensed Consolidated Statements of Income (Loss)
(U.S Dollars in thousands, except share and per share data)
         
  For the three months ended For the year ended
  December 31, December 31,
  2017
 2016
 2017  2016
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
         
Revenues 58,454  51,712  211,369  196,585 
Cost of revenues 11,060  9,596  39,616  35,695 
Gross profit 47,394  42,116  171,753  160,890 
         
Operating expenses:        
Research and development, net 15,072  12,235  59,003  51,732 
Selling and marketing 29,166  28,144  108,744  103,774 
General and administrative  4,265  4,226  17,577  18,133 
Other income (6,900) -  (6,900) - 
Total operating expenses 41,603  44,605  178,424  173,639 
         
Operating income (loss) 5,791  (2,489) (6,671) (12,749)
Financial income, net 935  863  4,830  5,741 
Income (loss) before taxes on income 6,726  (1,626) (1,841) (7,008)
Taxes on income (4,605) (507) (5,652) (1,651)
Net income (loss) 2,121  (2,133) (7,493) (8,659)
         
Basic net earnings (loss) per share 0.05  (0.05) (0.17) (0.20)
         
Weighted average number of shares used to compute basic net earnings (loss) per share 43,859,400  43,313,644  43,475,844  43,868,221 
         
Diluted net earnings (loss) per share 0.05  (0.05) (0.17) (0.20)
         
Weighted average number of shares used to compute diluted net earnings (loss) per share 45,728,792  43,313,644  43,475,844  43,868,221 
             


 
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,
 2017 2016 2017 2016
 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
GAAP gross profit47,394  42,116  171,753  160,890 
Stock-based compensation60  52  241  180 
Amortization of intangible assets86  254  1,137  1,014 
Acquisition costs550  -  550  - 
Non-GAAP gross profit48,090  42,422  173,681  162,084 
        
GAAP research and development, net15,072  12,235  59,003  51,732 
Stock-based compensation984  948  3,867  3,339 
Acquisition costs204  -  204  - 
Non-GAAP Research and development, net13,884  11,287  54,932  48,393 
        
GAAP selling and marketing29,166  28,144  108,744  103,774 
Stock-based compensation1,717  1,743  6,894  5,661 
Amortization of intangible assets24  26  94  105 
Non-GAAP selling and marketing27,425  26,375  101,756  98,008 
        
GAAP general and administrative4,265  4,226  17,577  18,133 
Stock-based compensation456  478  2,029  2,340 
Acquisition costs-  -  340  - 
Litigation costs76  784  2,052  4,270 
Non-GAAP general and administrative3,733  2,964  13,156  11,523 
        
GAAP other income(6,900) -  (6,900) - 
Court verdict(6,900) -  (6,900) - 
Non-GAAP other income-  -  -  - 
        
GAAP total operating expenses41,603  44,605  178,424  173,639 
Stock-based compensation3,157  3,169  12,790  11,340 
Acquisition costs204  -  544  - 
Amortization of intangible assets24  26  94  105 
Litigation costs76  784  2,052  4,270 
Court verdict(6,900) -  (6,900) - 
Non-GAAP total operating expenses45,042  40,626  169,844  157,924 
        
GAAP operating income (loss)5,791  (2,489) (6,671) (12,749)
Stock-based compensation3,217  3,221  13,031  11,520 
Acquisition costs754  -  1,094  - 
Amortization of intangible assets110  280  1,231  1,119 
Litigation costs76  784  2,052  4,270 
Court verdict(6,900) -  (6,900) - 
Non-GAAP operating income3,048  1,796  3,837  4,160 
        
GAAP finance income935  863  4,830  5,741 
Exchange rate differences, net on balance sheet items included in financial income558  341  635  674 
Non-GAAP finance income1,493  1,204  5,465  6,415 
        
GAAP income (loss) before taxes on income6,726  (1,626) (1,841) (7,008)
Stock-based compensation3,217  3,221  13,031  11,520 
Acquisition costs754  -  1,094  - 
Amortization of intangible assets110  280  1,231  1,119 
Litigation costs76  784  2,052  4,270 
Court verdict(6,900) -  (6,900) - 
Exchange rate differences, net on balance sheet items included in financial income558  341  635  674 
Non-GAAP income before taxes on income4,541  3,000  9,302  10,575 
        
GAAP taxes on income(4,605) (507) (5,652) (1,651)
Change in the federal rate3,249  -  3,249  - 
Court verdict724  -  724  - 
Non-GAAP taxes on income(632) (507) (1,679) (1,651)
        
GAAP net income (loss)2,121  (2,133) (7,493) (8,659)
Stock-based compensation 3,217  3,221  13,031  11,520 
Acquisition costs754  -  1,094  - 
Amortization of intangible assets110  280  1,231  1,119 
Litigation costs76  784  2,052  4,270 
Exchange rate differences, net on balance sheet items included in financial income558  341  635  674 
Change in the federal rate3,249  -  3,249  - 
Court verdict(6,176) -  (6,176) - 
Non-GAAP net income3,909  2,493  7,623  8,924 
        
GAAP Net earnings (loss) per diluted share0.05  (0.05) (0.17) (0.20)
Stock-based compensation 0.07  0.07  0.30  0.26 
Acquisition costs0.02  -  0.02  - 
Amortization of intangible assets-  0.01  0.03  0.03 
Litigation costs-  0.02  0.05  0.10 
Exchange rate differences, net on balance sheet items included in financial income0.01  0.01  0.01  0.01 
Change in the federal rate0.08  -  0.07  - 
Court verdict(0.14) -  (0.14) - 
Non GAAP Net earnings per diluted share0.09  0.06  0.17  0.20 
        
        
Weighted average number of shares used to compute non-GAAP diluted net earnings per share45,728,792  43,721,973  44,756,732  44,125,436 
        


 
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,
  2017
 2016
 2017
 2016
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash flow from operating activities:        
         
Net income (loss) 2,121  (2,133) (7,493) (8,659)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:        
Depreciation and amortization 2,567  2,663  11,234  10,372 
Stock based compensation 3,217  3,221  13,031  11,520 
Loss (gain) from sale of available-for-sale marketable securities (18) 6  (18) (1,771)
Amortization of premium, accretion of discounts and accrued interest on available-for- sale marketable securities, net 465  672  1,546  1,949 
Accrued interest on bank deposits (586) 1,633  226  1,179 
Increase (decrease) in accrued severance pay, net (430) 111  (210) 401 
Decrease (increase) in trade receivables, net (3,836) 1,939  3,390  7,003 
Increase in other current assets, prepaid expenses and deferred income taxes, net (8,258) (1,542) (7,879) (1,804)
Increase in inventories (48) (302) (1,658) (792)
Increase (decrease) in trade payables 817  920  (734) (3,284)
Increase in deferred revenues 11,119  11,143  28,781  12,964 
Increase (decrease) in other payables and accrued expenses 826  4,344  (8,753) 8,855 
Excess tax benefit from stock-based compensation -  473  -  547 
Net cash provided by operating activities 7,956  23,148  31,463  38,480 
         
Cash flows from investing activities:        
         
Purchase of property and equipment (1,613) (1,333) (7,210) (9,404)
Investment in other long-term assets, net (18) (53) (6) (53)
Proceeds from (investment in) bank deposits, net -  29,586  (37,200) 31,295 
Proceeds from (investment in) sale, redemption of and purchase of available-for-sale marketable securities ,net (2,119) (1,079) (3,657) 6,521 
Payment for acquisition of subsidiary, net of cash acquired -  -  (8,269) - 
Net cash provided (used in) in investing activities (3,750) 27,121  (56,342) 28,359 
         
Cash flows from financing activities:        
         
Proceeds from exercise of stock options 7,501  1,253  10,890  1,583 
Excess tax benefit from stock-based compensation -  (473) -  (547)
Repurchase of shares -  (10,268) (413) (21,980)
Net cash provided by (used in) financing activities 7,501  (9,488) 10,477  (20,944)
         
Increase (decrease) in cash and cash equivalents 11,707  40,781  (14,402) 45,895 
Cash and cash equivalents at the beginning of the period 53,530  38,858  79,639  33,744 
Cash and cash equivalents at the end of the period 65,237  79,639  65,237  79,639