Radware Announces Second Quarter 2019 Earnings


Second Quarter 2019 Results and Financial Highlights

  • Revenues of $60.5 Million, up 6% from the second quarter of 2018
  • Non-GAAP Operating income and margin of $7.2 Million and 12%
  • Non-GAAP EPS of $0.18; GAAP EPS of $0.08
  • Net cash provided by operating activities for the last twelve months of $63 million

First Six Months 2019 Results and Financial Highlights

  • Revenues of $121.9 Million, up 9% from the first six months of 2018
  • Non-GAAP EPS of $0.37; GAAP EPS of $0.17

TEL AVIV, ISRAEL, July 31, 2019 (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 June 30, 2019.

“We are pleased to report solid second quarter results, with revenue growth for the first half of 2019 at 9%,” said Roy Zisapel, Radware President & CEO. “Our product subscriptions and cloud security offerings continue to grow quickly, providing our customers with unmatched business value and excellent business outcomes as they migrate to a multi-cloud application infrastructure.”  

Financial Highlights for the Second Quarter of 2019

Revenues for the second quarter of 2019 totaled $60.5 million, up 6% from revenues of $57.3 million for the second quarter of 2018. Revenues for the first six months of 2019 totaled $121.9 million, up 9% from revenues of $111.8 million for the first six months of 2018:

  • Revenues in the Americas region were $27.6 million for the second quarter of 2019, up 16% compared to revenues of $23.9 million in the second quarter of 2018. For the first six months of 2019, revenues in the Americas region increased 9% over the same period in 2018.
  • Revenues in the Europe, Middle East and Africa (“EMEA”) region were $16.9 million for the second quarter of 2019, compared with revenues of $19.8 million in the second quarter of 2018. For the first six months of 2019, revenues in the EMEA region increased 1% over the same period of 2018.
  • Revenues in the Asia-Pacific (“APAC”) region were $15.9 million for the second quarter of 2019, up 17% from revenues of $13.6 million in the second quarter of 2018. For the first six months of 2019, revenues in the APAC region increased 19% over the same period of 2018.

Net income on a GAAP basis for the second quarter of 2019 was $3.7 million, or $0.08 per diluted share, compared with net income of $1.7 million, or $0.04 per diluted share for the second quarter of 2018.

Non-GAAP net income for the second quarter of 2019 was $8.9 million, or $0.18 per diluted share, compared with non- GAAP net income of $5.0 million, or $0.10 per diluted share for the second quarter of 2018.

Non-GAAP results are calculated excluding, as applicable, 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 other gain adjustments, net of tax. 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 June 30, 2019, the Company had cash, cash equivalents, short-term and long-term bank deposits and marketable securities of $414.0 million, compared with $401.1 million as of December 31, 2018. Net cash provided by operating activities in the second quarter of 2019 totaled $5.1 million. Net cash provided by operating activities in the last 12 months totaled $63.2 million.

Conference Call

Radware management will host a call on Wednesday, July 31, 2019 at 8:30 a.m. ET to discuss its second quarter 2019 results and the Company’s outlook for the third quarter of 2019.

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

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

Conference ID: 4971594

A replay will be available for two days, starting two hours after the end of the call, at 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 Measures
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, sales and marketing expense, general and administrative expense, other income, total operating expenses, operating income, financial income, income before 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 and other gain adjustment, net of tax. 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; 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 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 Application Delivery and Network Security solutions and in our industry in general; 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 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.

©2019 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)
    
 June 30, December 31,
 2019 2018
 (Unaudited) (Unaudited)
Assets   
    
Current assets   
Cash and cash equivalents34,191 45,203
Available-for-sale marketable securities25,923 15,742
Short-term bank deposits193,944 255,454
Trade receivables, net14,987 17,166
Other receivables and prepaid expenses10,182 7,071
Inventories15,964 18,401
 295,191 359,037
    
Long-term investments   
Available-for-sale marketable securities120,174 84,669
Long-term bank deposits39,732 0
Severance pay funds2,267 2,973
 162,173 87,642
    
    
Property and equipment, net23,538 23,677
Other long-term assets21,425 20,724
Operating lease right-of-use assets19,868 0
Goodwill and intangible assets, net54,838 41,641
Total assets577,033 532,721
    
    
Liabilities and shareholders' equity   
    
Current Liabilities   
Trade payables3,802 4,483
Deferred revenues86,207 83,955
Operating lease liabilities5,495 0
Other payables and accrued expenses29,729 29,596
 125,233 118,034
    
Long-term liabilities   
Deferred revenues45,446 43,796
Operating lease liabilities15,033 0
Other long-term liabilities10,171 6,934
 70,650 50,730
    
Shareholders' equity   
Share capital704 693
Additional paid-in capital400,756 383,536
Accumulated other comprehensive income (loss), net of tax791 (1,110)
Treasury stock, at cost(130,770) (120,717)
Retained earnings109,669 101,555
Total shareholders' equity381,150 363,957
    
Total liabilities and shareholders' equity577,033 532,721
    


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 six months ended
  June 30, June 30,
  2019 2018 2019 2018
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
         
Revenues 60,454 57,287 121,851 111,823
Cost of revenues 10,644 10,340 21,653 20,280
Gross profit 49,810 46,947 100,198 91,543
         
Operating expenses, net:        
Research and development, net 15,400 14,633 30,630 29,295
Selling and marketing 26,680 27,803 53,341 55,986
General and administrative 5,042 3,811 9,806 7,866
Total operating expenses, net 47,122 46,247 93,777 93,147
         
Operating income (loss) 2,688 700 6,421 (1,604)
Financial income, net 2,119 1,701 3,910 3,390
Income before taxes on income 4,807 2,401 10,331 1,786
Taxes on income (1,061) (727) (2,217) (1,107)
Net income 3,746 1,674 8,114 679
         
Basic net earnings per share 0.08 0.04 0.17 0.02
         
Weighted average number of shares used to compute basic net earnings per share 46,899,813 44,839,420 46,757,981 44,583,442
         
Diluted net earnings per share 0.08 0.04 0.17 0.01
         
Weighted average number of shares used to compute diluted net earnings per share 48,722,684 47,396,099 48,649,438 46,936,309
         


 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 six months ended
  June 30, June 30,
  2019 2018 2019 2018
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
GAAP gross profit49,810 46,947 100,198 91,543
 Stock-based compensation59 59 114 117
 Amortization of intangible assets410 212 821 442
Non-GAAP gross profit50,279 47,218 101,133 92,102
         
GAAP research and development, net15,400 14,633 30,630 29,295
 Stock-based compensation714 679 1,424 1,610
Non-GAAP Research and development, net14,686 13,954 29,206 27,685
         
GAAP selling and marketing26,680 27,803 53,341 55,986
 Stock-based compensation1,735 1,774 3,304 3,678
 Amortization of intangible assets18 21 35 41
Non-GAAP selling and marketing24,927 26,008 50,002 52,267
         
GAAP general and administrative5,042 3,811 9,806 7,866
 Stock-based compensation782 378 1,549 785
 Acquisition costs- - 264 -
 Litigation costs777 143 859 413
Non-GAAP general and administrative3,483 3,290 7,134 6,668
         
GAAP total operating expenses, net47,122 46,247 93,777 93,147
 Stock-based compensation3,231 2,831 6,277 6,073
 Acquisition costs- - 264 -
 Amortization of intangible assets18 21 35 41
 Litigation costs777 143 859 413
Non-GAAP total operating expenses, net43,096 43,252 86,342 86,620
         
GAAP operating income (loss)2,688 700 6,421 (1,604)
 Stock-based compensation3,290 2,890 6,391 6,190
 Acquisition costs- - 264 -
 Amortization of intangible assets428 233 856 483
 Litigation costs777 143 859 413
Non-GAAP operating income7,183 3,966 14,791 5,482
         
GAAP financial income, net2,119 1,701 3,910 3,390
 Other gain adjustments(310) - (310) -
 Exchange rate differences, net on balance sheet items included in financial income, net909 26 1,540 (177)
Non-GAAP financial income, net2,718 1,727 5,140 3,213
         
GAAP income  before taxes on income4,807 2,401 10,331 1,786
 Stock-based compensation3,290 2,890 6,391 6,190
 Acquisition costs- - 264 -
 Amortization of intangible assets428 233 856 483
 Litigation costs777 143 859 413
 Other gain adjustments(310) - (310) -
 Exchange rate differences, net on balance sheet items included in financial income, net909 26 1,540 (177)
Non-GAAP income before taxes on income9,901 5,693 19,931 8,695
         
GAAP taxes on income(1,061) (727) (2,217) (1,107)
 Tax expenses on other gain adjustments71 - 71 -
Non-GAAP taxes on income(990) (727) (2,146) (1,107)
         
GAAP net income3,746 1,674 8,114 679
 Stock-based compensation3,290 2,890 6,391 6,190
 Acquisition costs- - 264 -
 Amortization of intangible assets428 233 856 483
 Litigation costs777 143 859 413
 Other gain adjustments(310) - (310) -
 Exchange rate differences, net on balance sheet items included in financial income, net909 26 1,540 (177)
 Tax expenses on other gain adjustments71 - 71 -
Non-GAAP net income8,911 4,966 17,785 7,588
         
GAAP diluted net earnings per share0.08 0.04 0.17 0.02
 Stock-based compensation0.07 0.06 0.13 0.13
 Acquisition costs0.00 0.00 0.01 0.00
 Amortization of intangible assets0.01 0.00 0.02 0.01
 Litigation costs0.02 0.00 0.02 0.01
 Other gain adjustments(0.01) 0.00 (0.01) 0.00
 Exchange rate differences, net on balance sheet items included in financial income, net0.02 0.00 0.03 (0.00)
 Tax expenses on other gain adjustments0.00 0.00 0.00 0.00
Non-GAAP diluted net earnings per share0.18 0.10 0.37 0.16
         
         
Weighted average number of shares used to compute Non-GAAP diluted net earnings per share48,722,684 47,396,099 48,649,438 46,936,309
         


Radware Ltd.
Condensed Consolidated Statements of Cash Flow
(U.S. Dollars in thousands)
        
 For the three months ended For the six months ended
 June 30, June 30,
 2019 2018 2019 2018
 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash flow from operating activities:       
        
Net income3,746 1,674 8,114 679
Adjustments to reconcile net income to net cash provided by operating activities:       
Depreciation and amortization2,701 2,443 5,388 4,948
Stock based compensation3,290 2,890 6,391 6,190
Amortization of premium, accretion of discounts and accrued interest on available-for-sale marketable securities, net149 414 327 690
Other gain(310) 0 (310) 0
Accrued interest on bank deposits3,160 (146) 2,331 (212)
Increase (decrease) in accrued severance pay, net65 (97) 933 142
Decrease (increase) in trade receivables, net(641) (2,564) 2,529 (2,601)
Decrease (increase) in other receivables and prepaid expenses and other long-term assets(1,721) (2,501) (3,686) 4,697
Decrease in inventories1,221 477 2,437 329
Decrease (increase) in trade payables(28) 424 (738) (623)
Increase (decrease) in deferred revenues(7,237) (1,700) 3,783 7,166
Increase (decrease) in other payables and accrued expenses463 1,245 472 (6,682)
Operating lease liabilities, net285 0 660 0
Net cash provided by operating activities5,143 2,559 28,631 14,723
        
Cash flows from investing activities:       
        
Purchase of property and equipment(2,382) (1,187) (4,343) (3,276)
Proceeds from (investment in) other long-term assets, net(33) 131 (62) 40
Proceeds from (investment in) bank deposits, net19,529 (9,067) 19,447 (26,067)
Investment in sale, redemption of and purchase of available-for-sale marketable securities, net(33,574) (686) (43,235) (1,872)
Payment for acquisition of subsidiary, net of cash acquired43 0 (12,239) 0
Net cash used in investing activities(16,417) (10,809) (40,432) (31,175)
        
Cash flows from financing activities:       
        
Proceeds from exercise of stock options3,109 7,939 10,842 12,891
Repurchase of shares(10,005) 0 (10,053) 0
Net cash provided by (used in) financing activities(6,896) 7,939 789 12,891
        
Decrease in cash and cash equivalents(18,170) (311) (11,012) (3,561)
Cash and cash equivalents at the beginning of the period52,361 61,987 45,203 65,237
Cash and cash equivalents at the end of the period34,191 61,676 34,191 61,676