Radware Announces Third Quarter 2020 Earnings

Mahwah, New Jersey, UNITED STATES


Third Quarter 2020 Results and Financial Highlights

  • Revenues of $62.5 million
  • Non-GAAP EPS of $0.18; GAAP EPS of $0.08
  • Net cash provided by operating activities of $50 million for the last twelve months

TEL AVIV, Israel, Nov. 04, 2020 (GLOBE NEWSWIRE) -- Radware® (NASDAQ: RDWR), a leading provider of cyber security and application delivery solutions, today announced its consolidated financial results for the quarter ended September 30, 2020.

“We are pleased with the results for the third quarter, during which we enjoyed a very strong and broad-based bookings growth, spanning across all our geographic regions and product lines,” said Roy Zisapel, Radware’s President & CEO. “Our strategic OEM relationships delivered record booking in the quarter, further enhancing our strong position within the large enterprise segment, and contributing positively to the growth in our recurring revenues.”

Financial Highlights for the Third Quarter of 2020

Revenues for the third quarter of 2020 totaled $62.5 million, down 1% from revenues of $62.9 million for the third quarter of 2019. Revenues for the first nine months of 2020 totaled $181.0 million, down 2% from revenues of $184.7 million for the first nine months of 2019:

  • Revenues in the Americas region were $30.2 million for the third quarter of 2020, up 24% from revenues of $24.5 million in the third quarter of 2019. For the first nine months of 2020, revenues in the Americas region increased 13% over the same period in 2019.
  • Revenues in the Europe, Middle East and Africa (“EMEA”) region were $18.3 million for the third quarter of 2020, down 5% from revenues of $19.4 million in the third quarter of 2019. For the first nine months of 2020, revenues in the EMEA region decreased 1% over the same period in 2019.
  • Revenues in the Asia-Pacific (“APAC”) region were $14.0 million for the third quarter of 2020, down 27% from revenues of $19.0 million in the third quarter of 2019. For the first nine months of 2020, revenues in the APAC region decreased 25% over the same period in 2019.

Net income on a GAAP basis for the third quarter of 2020 was $3.6 million, or $0.08 per diluted share, compared with net income of $7.1 million, or $0.15 per diluted share, for the third quarter of 2019.

Non-GAAP net income for the third quarter of 2020 was $8.4 million, or $0.18 per diluted share, compared with non- GAAP net income of $11.9 million, or $0.25 per diluted share, for the third quarter of 2019.

Non-GAAP results are calculated excluding, as applicable, the impact of stock-based compensation expenses, amortization of intangible assets, acquisition costs, litigation costs, exchange rate differences, net on balance sheet items included in finance income, other loss (gain) adjustment and tax related adjustments. A reconciliation of each of the Company’s non-GAAP measures to the comparable GAAP measure is included at the end of this press release.

As of September 30, 2020, the Company had cash, cash equivalents, short-term and long-term bank deposits and marketable securities of $437.4 million. Net cash provided by operating activities in the third quarter of 2020 totaled $6.8 million. Net cash spent on share repurchases in the third quarter of 2020 totaled $15.9 million.

Conference Call

Radware management will host a call on Wednesday, November 4, 2020 at 8:30 a.m. ET to discuss its third quarter 2020 results and the Company’s outlook for the fourth quarter of 2020.

Participants in the US call: Toll Free 833-241-4257

Participants Internationally call: +1-647-689-4208

Conference ID: 8719353

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, research and development expense, selling and marketing expense, general and administrative expense, total operating expenses, operating income, financial income, income before taxes on income, taxes on income, net income and earnings per share, which are adjustments from results based on GAAP to exclude stock-based compensation expenses, amortization of intangible assets, acquisition costs, litigation costs, exchange rate differences, net on balance sheet items included in finance income, other loss (gain) adjustment and tax related adjustments. Management believes that exclusion of these charges allows for meaningful comparisons of operating results across past, present and future periods. Radware’s management believes the non-GAAP financial measures provided in this release are useful to investors for the purpose of understanding and assessing Radware’s ongoing operations. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of each non-GAAP financial measure 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 financial measures in evaluating and operating the business and, as such, has determined that it is important to provide this information to investors.

Safe Harbor Statement

This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements made herein that are not statements of historical fact, including statements about Radware’s plans, outlook, beliefs or opinions, are forward-looking statements. Generally, forward-looking statements may be identified by words such as “believes,” “expects,” “anticipates,” “intends,” “estimates,” “plans,” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could.” 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; natural disasters and public health crises, such as the coronavirus disease 2019 (COVID-19) pandemic; our ability to expand our operations effectively; timely availability and customer acceptance of our new and existing solutions; risks and uncertainties relating to acquisitions or other investments; 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; intense competition in the market for cyber security and application delivery solutions and in our industry in general and changes in the competitive landscape; changes in government regulation; outages, interruptions or delays in hosting services or our internal network system; compliance with open source and third-party licenses; the risk that our intangible assets or goodwill may become impaired; our dependence on independent distributors to sell our products; long sales cycles for our solutions; changes in foreign currency exchange rates; undetected defects or errors in our products or a failure of our products to protect against malicious attacks; the availability of components and manufacturing capacity; the ability of vendors to provide our hardware platforms and components for our main accessories; our ability to protect our proprietary technology; intellectual property infringement claims made by third parties; changes in tax laws; our ability to realize our investment objectives for our cash and liquid investments; our ability to attract, train and retain highly qualified personnel; and other factors and risks over 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, refer to Radware’s Annual Report on Form 20-F, filed 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.

©2020 Radware Ltd. All rights reserved. Any 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.

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



Radware Ltd.
Condensed Consolidated Balance Sheets
(U.S. Dollars in thousands)
    
 September 30, December 31,
 2020 2019
 (Unaudited) (Unaudited)
Assets   
    
Current assets   
Cash and cash equivalents48,429 40,751
Marketable securities62,930 36,924
Short-term bank deposits179,675 100,276
Trade receivables, net14,330 22,610
Other receivables and prepaid expenses8,100 7,469
Inventories13,290 13,940
 326,754 221,970
    
Long-term investments   
Marketable securities75,912 112,696
Long-term bank deposits70,491 137,095
Severance pay funds2,252 2,300
 148,655 252,091
    
    
Property and equipment, net23,141 22,971
Other long-term assets25,959 24,398
Operating lease right-of-use assets28,185 18,144
Goodwill and intangible assets, net54,198 55,625
Total assets606,892 595,199
    
    
Liabilities and shareholders' equity   
    
Current Liabilities   
Trade payables3,818 6,315
Deferred revenues90,813 79,239
Operating lease liabilities4,903 5,193
Other payables and accrued expenses36,128 34,794
 135,662 125,541
    
Long-term liabilities   
Deferred revenues53,333 50,888
Operating lease liabilities24,181 13,914
Other long-term liabilities10,113 9,525
 87,627 74,327
    
Shareholders' equity   
Share capital718 710
Additional paid-in capital434,815 414,581
Accumulated other comprehensive income, net of tax1,917 1,145
Treasury stock, at cost(184,802) (145,226)
Retained earnings130,955 124,121
Total shareholders' equity383,603 395,331
    
Total liabilities and shareholders' equity606,892 595,199



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 nine months ended
 September 30, September 30,
 2020 2019 2020 2019
 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
        
Revenues62,524 62,859 180,981 184,710
Cost of revenues11,646 11,527 32,893 33,180
Gross profit50,878 51,332 148,088 151,530
        
Operating expenses, net:       
Research and development, net16,747 15,108 49,088 45,738
Selling and marketing27,659 27,094 82,616 80,435
General and administrative4,513 4,403 14,114 14,209
Total operating expenses, net48,919 46,605 145,818 140,382
        
Operating income1,959 4,727 2,270 11,148
Financial income, net2,897 2,137 7,404 6,047
Income before taxes on income (tax benefit)4,856 6,864 9,674 17,195
Taxes on income (tax benefit)1,269 (257) 2,840 1,960
Net income3,587 7,121 6,834 15,235
        
Basic net earnings per share0.08 0.15 0.15 0.33
        
Weighted average number of shares used to compute basic net earnings per share46,341,046 46,850,137 46,547,504 46,788,870
        
Diluted net earnings per share0.08 0.15 0.14 0.31
        
Weighted average number of shares used to compute diluted net earnings per share47,673,698 48,488,313 47,841,411 48,595,899



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 nine months ended
 September 30, September 30,
 2020 2019 2020 2019
 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
GAAP gross profit50,878 51,332 148,088 151,530
Stock-based compensation48 57 135 171
Amortization of intangible assets465 997 1,427 1,818
Non-GAAP gross profit51,391 52,386 149,650 153,519
        
GAAP research and development, net16,747 15,108 49,088 45,738
Stock-based compensation1,301 640 3,199 2,064
Non-GAAP Research and development, net15,446 14,468 45,889 43,674
        
GAAP selling and marketing27,659 27,094 82,616 80,435
Stock-based compensation2,083 1,954 5,814 5,258
Amortization of intangible assets- 17 - 52
Non-GAAP selling and marketing25,576 25,123 76,802 75,125
        
GAAP general and administrative4,513 4,403 14,114 14,209
Stock-based compensation975 741 2,809 2,290
Acquisition costs- - - 264
Litigation costs44 24 303 883
Non-GAAP general and administrative3,494 3,638 11,002 10,772
        
GAAP total operating expenses, net48,919 46,605 145,818 140,382
Stock-based compensation4,359 3,335 11,822 9,612
Amortization of intangible assets- 17 - 52
Acquisition costs- - - 264
Litigation costs44 24 303 883
Non-GAAP total operating expenses, net44,516 43,229 133,693 129,571
        
GAAP operating income1,959 4,727 2,270 11,148
Stock-based compensation4,407 3,392 11,957 9,783
Amortization of intangible assets465 1,014 1,427 1,870
Acquisition costs- - - 264
Litigation costs44 24 303 883
Non-GAAP operating income6,875 9,157 15,957 23,948
        
GAAP financial income, net2,897 2,137 7,404 6,047
Other loss (gain) adjustment- (253) 247 (563)
Exchange rate differences, net on balance sheet items included in financial income, net(72) 878 480 2,418
Non-GAAP financial income, net2,825 2,762 8,131 7,902
        
GAAP income before taxes on income (tax benefit)4,856 6,864 9,674 17,195
Stock-based compensation4,407 3,392 11,957 9,783
Amortization of intangible assets465 1,014 1,427 1,870
Acquisition costs- - - 264
Litigation costs44 24 303 883
Other loss (gain) adjustment- (253) 247 (563)
Exchange rate differences, net on balance sheet items included in financial income, net(72) 878 480 2,418
Non-GAAP income before taxes on income (tax benefit)9,700 11,919 24,088 31,850
        
GAAP taxes on income (tax benefit)1,269 (257) 2,840 1,960
Tax related adjustments62 266 245 195
Non-GAAP taxes on income1,331 9 3,085 2,155
        
GAAP net income3,587 7,121 6,834 15,235
Stock-based compensation4,407 3,392 11,957 9,783
Amortization of intangible assets465 1,014 1,427 1,870
Acquisition costs- - - 264
Litigation costs44 24 303 883
Other loss (gain) adjustment- (253) 247 (563)
Exchange rate differences, net on balance sheet items included in financial income, net(72) 878 480 2,418
Tax related adjustments(62) (266) (245) (195)
Non-GAAP net income8,369 11,910 21,003 29,695
        
GAAP diluted net earnings per share0.08 0.15 0.14 0.31
Stock-based compensation0.09 0.07 0.25 0.20
Amortization of intangible assets0.01 0.02 0.03 0.04
Acquisition costs0.00 0.00 0.00 0.01
Litigation costs0.00 0.00 0.01 0.02
Other loss (gain) adjustment0.00 (0.01) 0.01 (0.01)
Exchange rate differences, net on balance sheet items included in financial income, net(0.00) 0.02 0.01 0.05
Tax related adjustments(0.00) (0.01) (0.01) (0.00)
Non-GAAP diluted net earnings per share0.18 0.25 0.44 0.61
        
        
Weighted average number of shares used to compute Non-GAAP diluted net earnings per share47,673,698 48,488,313 47,841,411 48,595,899



Radware Ltd.
Condensed Consolidated Statements of Cash Flow
(U.S. Dollars in thousands)
        
 For the three months ended For the nine months ended
 September 30, September 30,
 2020 2019 2020 2019
 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash flow from operating activities:       
        
Net income3,587 7,121 6,834 15,235
Adjustments to reconcile net income to net cash provided by operating activities:       
Depreciation and amortization2,616 3,106 7,883 8,494
Stock-based compensation4,407 3,392 11,957 9,783
Amortization of premium, accretion of discounts and accrued interest on marketable securities, net337 141 647 468
Gain related to securities, net(517) (253) (580) (563)
Accrued interest on bank deposits(598) (804) (971) 1,527
Increase (decrease) in accrued severance pay, net48 (109) 235 824
Decrease in trade receivables, net2,865 2,621 8,280 5,150
Increase in other receivables and prepaid expenses and other long-term assets(465) (1,163) (2,395) (4,849)
Decrease in inventories816 881 650 3,318
Increase (decrease) in trade payables(1,078) 203 (2,497) (535)
Increase (decrease) in deferred revenues(7,648) 4,893 14,019 8,676
Increase in other payables and accrued expenses2,456 39 1,735 511
Operating lease liabilities, net(26) 194 (64) 854
Net cash provided by operating activities6,800 20,262 45,733 48,893
        
Cash flows from investing activities:       
        
Purchase of property and equipment(1,629) (1,810) (6,626) (6,153)
Proceeds from (investment in) other long-term assets, net(15) 73 (26) 11
Proceeds from (investment in) bank deposits, net(2,666) (5,674) (11,824) 13,773
Proceeds from (investment in) sale, redemption of and purchase of marketable securities, net8,249 (1,997) 11,712 (45,232)
Payment for acquisition of subsidiary, net of cash acquired0 0 0 (12,239)
Net cash provided by (used in) investing activities3,939 (9,408) (6,764) (49,840)
        
Cash flows from financing activities:       
        
Proceeds from exercise of stock options4,947 3,751 8,285 14,593
Repurchase of shares(15,907) (8,841) (39,576) (18,894)
Net cash used in financing activities(10,960) (5,090) (31,291) (4,301)
        
Increase (decrease) in cash and cash equivalents(221) 5,764 7,678 (5,248)
Cash and cash equivalents at the beginning of the period48,650 34,191 40,751 45,203
Cash and cash equivalents at the end of the period48,429 39,955 48,429 39,955