Third Quarter 2018 Results and Financial Highlights

  • Revenues of $59 Million, up 11% from the third quarter of 2017
  • Non-GAAP operating income and margin of $6.3Million and 11%, respectively
  • Non-GAAP EPS of $0.15; GAAP EPS of $0.06
  • Operating cash flow for the last twelve months of $32 million

First Nine Months 2018 Results and Financial Highlights

  • Revenues of $171 Million, up 12% from the first nine months of 2017
  • Non-GAAP operating income and margin of $11.8Million and 7%, respectively
  • Non-GAAP EPS of $0.31; GAAP EPS of $0.08

TEL AVIV, Israel, Nov. 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 ended September 30, 2018. 

“We are pleased with our results for the third quarter, which included year over year double-digit revenue growth and operating margin expansion for the fifth consecutive quarter. We are very well positioned to benefit from the increasing demand for cloud security solutions and continue to invest in our portfolio and market reach in order to continue deliver growth and profitability in the future,” said Roy Zisapel, Radware President & CEO.

Financial Highlights for the Third Quarter of 2018

Revenues for the third quarter of 2018 totaled $58.8 million, up 11% from revenues of $53.0 million for the third quarter of 2017:

  • Revenues in the Americas region were $26.7 million for the third quarter of 2018, essentially flat compared to revenues of $26.6 million in the third quarter of 2017. For the first nine months of 2018, revenues in the Americas region were up 8% over the same period in 2017
  • Revenues in the EMEA region were $17.7 million for the third quarter of 2018, up 28% from revenues of $13.8 million in the third quarter of 2017. For the first nine months of 2018, revenues in the EMEA region increased 27% over the same period of 2017
  • Revenues in the APAC region were $14.4 million for the third quarter of 2018, up 14% from revenues of $12.7 million in the third quarter of 2017. For the first nine months of 2018, revenues in the APAC region increased 2% over the same period of 2017

Net profit on a GAAP basis for the third quarter of 2018 was $3.1 million or $0.06 per diluted share, compared with net loss of ($1.5) million or ($0.03) per diluted share for the third quarter of 2017.

Non-GAAP net income for the third quarter of 2018 was $7.1 million or $0.15 per diluted share, compared with non- GAAP net income of $1.8 million or $0.04 per diluted share for the third quarter of 2017.

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 and litigation costs. 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 September 30, 2018, the Company had cash, cash equivalents, short-term and long-term bank deposits and marketable securities of $382.2 million, up from $367.2 million as of the end of June 30, 2018.

Conference Call

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

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

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

Conference ID: 6086038

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 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; 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, 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)
    
 September 30, December 31,
 2018 2017
 (Unaudited) (Unaudited)
Assets   
    
Current assets   
Cash and cash equivalents59,565 65,237
Available-for-sale marketable securities37,004 42,573
Short-term bank deposits203,299 93,151
Trade receivables, net18,491 16,150
Other receivables and prepaid expenses6,308 12,252
Inventories20,463 18,772
 345,130 248,135
    
Long-term investments   
Available-for-sale marketable securities61,078 54,427
Long-term bank deposits21,258 88,911
Severance pay funds3,105 3,251
 85,441 146,589
    
    
Property and equipment, net21,848 23,642
Intangible assets, net9,699 10,415
Other long-term assets20,064 8,133
Goodwill32,174 32,174
Total assets514,356 469,088
    
    
Liabilities and shareholders' equity   
    
Current Liabilities   
Trade payables5,424 5,367
Deferred revenues76,663 69,829
Other payables and accrued expenses30,663 32,174
 112,750 107,370
    
Long-term liabilities   
Deferred revenues41,040 43,482
Other long-term liabilities5,484 2,880
 46,524 46,362
    
Shareholders' equity   
Share capital691 673
Additional paid-in capital378,067 349,250
Accumulated other comprehensive loss, net of tax(1,168) (443)
Treasury stock, at cost(116,442) (116,442)
Retained earnings93,934 82,318
Total shareholders' equity355,082 315,356
    
Total liabilities and shareholders' equity514,356 469,088
    



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 nine
months ended
 
  September 30, September 30, 
  2018 2017 2018 2017
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
         
Revenues 58,764 53,047 170,587 152,915
Cost of revenues 10,278 9,928 30,558 28,556
Gross profit 48,486 43,119 140,029 124,359
         
Operating expenses:        
Research and development, net 14,434 14,678 43,729 43,931
Selling and marketing 27,263 27,189 83,249 79,578
General and administrative 3,985 4,152 11,851 13,312
Total operating expenses 45,682 46,019 138,829 136,821
         
Operating income (loss) 2,804 (2,900) 1,200 (12,462)
Financial income, net 1,487 2,148 4,877 3,895
Income (loss) before taxes on income 4,291 (752) 6,077 (8,567)
Taxes on income (1,178) (725) (2,285) (1,047)
Net income (loss) 3,113 (1,477) 3,792 (9,614)
         
Basic net income (loss) per share 0.07 (0.03) 0.08 (0.22)
         
  Weighted average number of shares used to compute basic net earnings (loss) per share 45,537,801 43,951,325 45,030,328 43,347,092
         
Diluted net earnings (loss) per share 0.06 (0.03) 0.08 (0.22)
         
  Weighted average number of shares used to compute diluted net earnings (loss) per share 48,519,880 43,951,325 48,012,407 43,347,092
         


 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,
  2018 2017 2018 2017
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
GAAP gross profit48,486 43,119 140,029 124,359
 Stock-based compensation54 65 171 181
 Amortization of intangible assets212 379 654 1,051
Non-GAAP gross profit48,752 43,563 140,854 125,591
         
GAAP research and development, net14,434 14,678 43,729 43,931
 Stock-based compensation819 957 2,429 2,883
Non-GAAP Research and development, net13,615 13,721 41,300 41,048
         
GAAP selling and marketing27,263 27,189 83,249 79,578
 Stock-based compensation1,666 1,678 5,344 5,177
 Amortization of intangible assets20 23 61 70
Non-GAAP selling and marketing25,577 25,488 77,844 74,331
         
GAAP general and administrative3,985 4,152 11,851 13,312
 Stock-based compensation527 570 1,312 1,573
 Acquisition costs- - - 340
 Litigation costs214 357 627 1,976
Non-GAAP general and administrative3,244 3,225 9,912 9,423
         
GAAP total operating expenses45,682 46,019 138,829 136,821
 Stock-based compensation3,012 3,205 9,085 9,633
 Acquisition costs- - - 340
 Amortization of intangible assets20 23 61 70
 Litigation costs214 357 627 1,976
Non-GAAP total operating expenses42,436 42,434 129,056 124,802
         
GAAP operating income (loss)2,804 (2,900) 1,200 (12,462)
 Stock-based compensation3,066 3,270 9,256 9,814
 Acquisition costs- - - 340
 Amortization of intangible assets232 402 715 1,121
 Litigation costs214 357 627 1,976
Non-GAAP operating income (loss)6,316 1,129 11,798 789
         
GAAP finance income1,487 2,148 4,877 3,895
 Exchange rate differences, net on balance sheet items included in financial income432 (729) 255 77
Non-GAAP finance income1,919 1,419 5,132 3,972
         
GAAP income (loss) before taxes on income4,291 (752) 6,077 (8,567)
 Stock-based compensation3,066 3,270 9,256 9,814
 Acquisition costs- - - 340
 Amortization of intangible assets232 402 715 1,121
 Litigation costs214 357 627 1,976
 Exchange rate differences, net on balance sheet items included in financial income432 (729) 255 77
Non-GAAP income before taxes on income8,235 2,548 16,930 4,761
         
GAAP net income (loss)3,113 (1,477) 3,792 (9,614)
 Stock-based compensation3,066 3,270 9,256 9,814
 Acquisition costs- - - 340
 Amortization of intangible assets232 402 715 1,121
 Litigation costs214 357 627 1,976
 Exchange rate differences, net on balance sheet items included in financial income432 (729) 255 77
Non-GAAP net income7,057 1,823 14,645 3,714
         
GAAP Net earnings (loss) per diluted share0.06 (0.03) 0.08 (0.22)
 Stock-based compensation0.06 0.07 0.19 0.22
 Acquisition costs0.00 0.00 0.00 0.01
 Amortization of intangible assets0.01 0.01 0.02 0.03
 Litigation costs0.01 0.01 0.01 0.04
 Exchange rate differences, net on balance sheet items included in financial income0.01 (0.02) 0.01 0.00
Non-GAAP Net earnings per diluted share0.15 0.04 0.31 0.08
         
         
Weighted average number of shares used to compute Non-GAAP diluted net earnings per share48,519,880 45,210,495 48,012,407 44,431,570
         


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,
  2018 2017 2018 2017
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash flow from operating activities:        
         
Net income (loss) 3,113 (1,477) 3,792 (9,614)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:        
Depreciation and amortization 2,433 2,861 7,380 8,667
Stock based compensation 3,066 3,270 9,256 9,814
Amortization of premium, accretion of discounts and accrued interest on available-for- sale marketable securities, net 192 450 882 1,081
Accrued interest on bank deposits (1,217) (720) (1,429) 812
Increase (decrease) in accrued severance pay, net (8) 44 134 220
Decrease (increase) in trade receivables, net 107 5,324 (2,494) 7,226
Decrease (increase) in other receivables and prepaid expenses and other long-term assets (206) (459) 4,493 379
Decrease (increase) in inventories (2,020) 731 (1,691) (1,610)
Increase (decrease) in trade payables 680 (1,415) 57 (1,551)
Increase (decrease) in deferred revenues (2,774) 2,713 4,392 17,662
Increase (decrease) in other payables and accrued expenses 5,465 (5,483) (1,217) (9,579)
Net cash provided by operating activities 8,831 5,839 23,555 23,507
         
Cash flows from investing activities:        
         
Purchase of property and equipment (1,595) (1,240) (4,870) (5,597)
Proceeds from (investment in) other long-term assets, net 0 (4) 38 12
Investment in bank deposits, net (15,000) (2,074) (41,067) (37,200)
Proceeds from (investment in) sale, redemption of and purchase of available-for-sale marketable securities ,net (1,035) 485 (2,907) (1,538)
Payment for acquisition of subsidiary, net of cash acquired 0 0 0 (8,269)
Net cash used in investing activities (17,630) (2,833) (48,806) (52,592)
         
Cash flows from financing activities:        
         
Proceeds from exercise of stock options 6,688 851 19,579 3,389
Repurchase of shares 0 (413) 0 (413)
Net cash provided by financing activities 6,688 438 19,579 2,976
         
Increase (decrease) in cash and cash equivalents (2,111) 3,444 (5,672) (26,109)
Cash and cash equivalents at the beginning of the period 61,676 50,086 65,237 79,639
Cash and cash equivalents at the end of the period 59,565 53,530 59,565 53,530