Radware Reports 17% Revenue Growth for the Third Quarter 2021

Mahwah, New Jersey, UNITED STATES


Third Quarter 2021 Results and Financial Highlights

  • Record revenue of $73 million, up 17% year-over-year, exceeding high end of guidance
  • ARR of $185 million, up 9% year-over-year
  • Non-GAAP operating income of $11.6 million, an increase of 69% year-over-year
  • Non-GAAP EPS of $0.23, exceeding high end of guidance; GAAP EPS of $0.10
  • Cash flow from operations of $18 million

TEL AVIV, Israel, Nov. 03, 2021 (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 the nine months ended September 30, 2021.

“We are pleased to report another strong quarter. Driven by our cloud and subscription business, we achieved record quarterly revenue of $73 million. In addition, we saw double digit growth across key financial metrics. Compared to the same period last year, total revenue grew 17%, cloud and subscription ARR increased by 26%, and EPS rose 32%,” said Roy Zisapel, president and CEO, Radware. “The growing number of increasingly complex cyber-attacks is creating more urgency and driving more organizations to strengthen the defenses around their critical assets. We are confident that this demand, coupled with our best of breed security offering — which includes DDoS protection; Web application, API and Bot security; and cloud posture security — will fuel our growth in the coming quarters.”

Financial Highlights for the Third Quarter of 2021
Revenue for the third quarter of 2021 totaled $73.4 million:

  • Revenue in the Americas region was $35.7 million for the third quarter of 2021, up 18% from $30.2 million in the third quarter of 2020.
  • Revenue in the Europe, Middle East and Africa (“EMEA”) region was $23.6 million for the third quarter of 2021, up 29% from $18.3 million in the third quarter of 2020.
  • Revenue in the Asia-Pacific (“APAC”) region was $14.1 million for the third quarter of 2021, up 1% from $14.0 million in the third quarter of 2020.

GAAP net income for the third quarter of 2021 was $5.0 million, or $0.10 per diluted share, compared to GAAP net income of $3.6 million, or $0.08 per diluted share, for the third quarter of 2020.

Non-GAAP net income for the third quarter of 2021 was $11.0 million, or $0.23 per diluted share, compared to non-GAAP net income of $8.4 million, or $0.18 per diluted share, for the third quarter of 2020.

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

As of September 30, 2021, the Company had cash, cash equivalents, short-term and long-term bank deposits and marketable securities of $455.9 million. Net cash provided by operating activities in the third quarter of 2021 totaled $17.9 million.

Conference Call
Radware management will host a call today, November 3, 2021 at 8:30 a.m. ET to discuss its third quarter 2021 results and the Company’s outlook. To participate in the call, please use the following numbers:

Participants in the US call: Toll Free 888-510-2008
Participants Internationally call: 1 646-960-0306
Conference ID: 1864701

A replay will be available for two days, starting two hours after the end of the call, on telephone number +1-647-362-9199 or (US toll-free) 800-770-2030. Passcode 1864701.

The call will be webcast live on 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 and Key Performance Indicators
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, as applicable, stock-based compensation expenses, amortization of intangible assets, litigation costs, acquisition costs, exchange rate differences, net on balance sheet items included in financial income, other loss 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 measure 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.

Annual recurring revenue ("ARR") is a key performance indicator defined as the annualized value of booked orders for term-based cloud services, subscription licenses and maintenance contracts that are in effect at the end of a reporting period. ARR should be viewed independently of revenue and deferred revenue and is not intended to be combined with or to replace either of those items. ARR is not a forecast of future revenue, which can be impacted by contract start and end dates and renewal rates and does not include revenue reported as perpetual license or professional services revenue in our consolidated statement of operations. We consider ARR a key performance indicator of the value of the recurring components of our business.

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 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; real or perceived shortcomings, defects or vulnerabilities in our products or solutions or if we or our end-users experience security breaches; the availability of components and manufacturing capacity; our reliance on a single managed security service provider to provide us with scrubbing center services; 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 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.

©2021 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.

CONTACTS
Investor Relations:
Yisca Erez, +972-72-3917211, ir@radware.com

Media Contacts:
Gerri Dyrek, gerri.dyrek@radware.com


Radware Ltd.
Condensed Consolidated Balance Sheets
(U.S. Dollars in thousands)
    
 September 30, December 31,
 2021 2020
 (Unaudited) (Unaudited)
Assets   
    
Current assets   
Cash and cash equivalents63,205  54,771 
Marketable securities51,234  64,684 
Short-term bank deposits159,208  191,038 
Trade receivables, net11,476  16,848 
Other receivables and prepaid expenses11,798  6,526 
Inventories12,403  13,935 
 309,324  347,802 
    
Long-term investments   
Marketable securities84,741  66,836 
Long-term bank deposits97,550  71,421 
Severance pay funds2,391  2,453 
 184,682  140,710 
    
    
Property and equipment, net20,606  22,976 
Intangible assets, net11,196  12,588 
Other long-term assets35,879  30,222 
Operating lease right-of-use assets25,131  27,823 
Goodwill41,144  41,144 
Total assets627,962  623,265 
    
    
Liabilities and shareholders' equity   
    
Current Liabilities   
Trade payables2,994  3,882 
Deferred revenues93,542  92,127 
Operating lease liabilities4,503  5,224 
Other payables and accrued expenses44,424  42,514 
 145,463  143,747 
    
Long-term liabilities   
Deferred revenues62,455  54,797 
Operating lease liabilities22,617  24,851 
Other long-term liabilities11,841  11,409 
 96,913  91,057 
    
Shareholders' equity   
Share capital728  721 
Additional paid-in capital462,976  443,018 
Accumulated other comprehensive income, net of tax298  1,517 
Treasury stock, at cost(225,575) (190,552)
Retained earnings147,159  133,757 
Total shareholders' equity385,586  388,461 
    
Total liabilities and shareholders' equity627,962  623,265 
      


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,
 2021 2020 2021 2020
 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
        
Revenues73,418 62,524 209,854 180,981
Cost of revenues13,294 11,646 38,398 32,893
Gross profit60,124 50,878 171,456 148,088
        
Operating expenses, net:       
Research and development, net18,639 16,747 54,501 49,088
Selling and marketing29,588 27,659 87,827 82,616
General and administrative6,024 4,513 15,771 14,114
Total operating expenses, net54,251 48,919 158,099 145,818
        
Operating income5,873 1,959 13,357 2,270
Financial income, net1,013 2,897 4,870 7,404
Income before taxes on income6,886 4,856 18,227 9,674
Taxes on income1,921 1,269 4,825 2,840
Net income4,965 3,587 13,402 6,834
        
Basic net earnings per share0.11 0.08 0.29 0.15
        
Weighted average number of shares used to compute basic net earnings per share45,838,968 46,341,046 45,891,234 46,547,504
        
Diluted net earnings per share0.10 0.08 0.28 0.14
        
Weighted average number of shares used to compute diluted net earnings per share47,620,254 47,673,698 47,451,932 47,841,411
        


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,
 2021  2020  2021  2020 
 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
GAAP gross profit60,124  50,878  171,456  148,088 
Stock-based compensation51  48  149  135 
Amortization of intangible assets464  465  1,393  1,427 
Non-GAAP gross profit60,639  51,391  172,998  149,650 
        
GAAP research and development, net18,639  16,747  54,501  49,088 
Stock-based compensation1,434  1,301  3,786  3,199 
Non-GAAP Research and development, net17,205  15,446  50,715  45,889 
        
GAAP selling and marketing29,588  27,659  87,827  82,616 
Stock-based compensation2,212  2,083  6,294  5,814 
Non-GAAP selling and marketing27,376  25,576  81,533  76,802 
        
GAAP general and administrative6,024  4,513  15,771  14,114 
Stock-based compensation894  975  1,973  2,809 
Litigation costs67  44  288  303 
Acquisition costs629  -  629  - 
Non-GAAP general and administrative4,434  3,494  12,881  11,002 
        
GAAP total operating expenses, net54,251  48,919  158,099  145,818 
Stock-based compensation4,540  4,359  12,053  11,822 
Litigation costs67  44  288  303 
Acquisition costs629  -  629  - 
Non-GAAP total operating expenses, net49,015  44,516  145,129  133,693 
        
GAAP operating income5,873  1,959  13,357  2,270 
Stock-based compensation4,591  4,407  12,202  11,957 
Amortization of intangible assets464  465  1,393  1,427 
Litigation costs67  44  288  303 
Acquisition costs629  -  629  - 
Non-GAAP operating income11,624  6,875  27,869  15,957 
        
GAAP financial income, net1,013  2,897  4,870  7,404 
Other loss adjustment-  -  -  247 
Exchange rate differences, net on balance sheet items included in financial income, net388  (72) 219  480 
Non-GAAP financial income, net1,401  2,825  5,089  8,131 
        
GAAP income before taxes on income6,886  4,856  18,227  9,674 
Stock-based compensation4,591  4,407  12,202  11,957 
Amortization of intangible assets464  465  1,393  1,427 
Litigation costs67  44  288  303 
Acquisition costs629  -  629  - 
Other loss adjustment-  -  -  247 
Exchange rate differences, net on balance sheet items included in financial income, net388  (72) 219  480 
Non-GAAP income before taxes on income13,025  9,700  32,958  24,088 
        
GAAP taxes on income1,921  1,269  4,825  2,840 
Tax related adjustments62  62  185  245 
Non-GAAP taxes on income1,983  1,331  5,010  3,085 
        
GAAP net income4,965  3,587  13,402  6,834 
Stock-based compensation4,591  4,407  12,202  11,957 
Amortization of intangible assets464  465  1,393  1,427 
Litigation costs67  44  288  303 
Acquisition costs629  -  629  - 
Other loss adjustment-  -  -  247 
Exchange rate differences, net on balance sheet items included in financial income, net388  (72) 219  480 
Tax related adjustments(62) (62) (185) (245)
Non-GAAP net income11,042  8,369  27,948  21,003 
        
GAAP diluted net earnings per share0.10  0.08  0.28  0.14 
Stock-based compensation0.10  0.09  0.26  0.25 
Amortization of intangible assets0.01  0.01  0.03  0.03 
Litigation costs0.00  0.00  0.01  0.01 
Acquisition costs0.01  0.00  0.01  0.00 
Other loss adjustment0.00  0.00  0.00  0.01 
Exchange rate differences, net on balance sheet items included in financial income, net0.01  (0.00) 0.00  0.01 
Tax related adjustments(0.00) (0.00) (0.00) (0.01)
Non-GAAP diluted net earnings per share0.23  0.18  0.59  0.44 
        
        
Weighted average number of shares used to compute non-GAAP diluted net earnings per share47,620,254  47,673,698  47,451,932  47,841,411 
            


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,
  2021 2020 2021 2020
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash flow from operating activities:        
         
Net income 4,965  3,587  13,402  6,834 
Adjustments to reconcile net income to net cash provided by operating activities:       
Depreciation and amortization 2,527  2,616  7,712  7,883 
Stock-based compensation 4,591  4,407  12,202  11,957 
Amortization of premium, accretion of discounts and accrued interest on marketable securities, net 768  337  1,903  647 
Gain related to securities, net (327) (517) (424) (580)
Accrued interest on bank deposits 1,504  (598) 1,421  (971)
Increase in accrued severance pay, net 88  48  453  235 
Decrease in trade receivables, net 7,023  2,865  5,372  8,280 
Increase in other receivables and prepaid expenses and other long-term assets (627) (465) (10,606) (2,395)
Decrease in inventories 797  816  1,532  650 
Decrease in trade payables (2,554) (1,078) (888) (2,497)
Increase (decrease) in deferred revenues (2,317) (7,648) 9,073  14,019 
Increase in other payables and accrued expenses 1,280  2,456  1,951  1,735 
Operating lease liabilities, net 161  (26) (263) (64)
Net cash provided by operating activities 17,879  6,800  42,840  45,733 
         
Cash flows from investing activities:        
         
Purchase of property and equipment (1,458) (1,629) (3,950) (6,626)
Proceeds from (investment in) other long-term assets, net 11  (15) 42  (26)
Proceeds from (investment in) bank deposits, net (154) (2,666) 4,280  (11,824)
Proceeds from (investment in) sale, redemption of and purchase of marketable securities, net (15,852) 8,249  (7,518) 11,712 
Net cash provided by (used in) investing activities (17,453) 3,939  (7,146) (6,764)
         
Cash flows from financing activities:        
         
Proceeds from exercise of stock options 1,917  4,947  7,762  8,285 
Repurchase of shares (195) (15,907) (35,022) (39,576)
Net cash provided by (used in) financing activities 1,722  (10,960) (27,260) (31,291)
         
Increase (decrease) in cash and cash equivalents 2,148  (221) 8,434  7,678 
Cash and cash equivalents at the beginning of the period 61,057  48,650  54,771  40,751 
Cash and cash equivalents at the end of the period 63,205  48,429  63,205  48,429