Radware Ltd.

31/07/2024 | Press release | Distributed by Public on 31/07/2024 09:05

Radware Reports Second Quarter 2024 Financial Results Form 6 K

Radware Reports Second Quarter 2024 Financial Results

Second Quarter 2024 Financial Results and Highlights


•
Revenue of $67 million, an increase of 3% year-over-year

•
Cloud ARR of $70 million, an increase of 19% year-over-year

•
Non-GAAP operating expenses of $49 million, a decrease of 6% year-over-year

•
Non-GAAP diluted EPS of $0.20; GAAP diluted EPS of $0.04

•
Cash flow from operations of $23 million

TEL AVIV, Israel, July 31, 2024 - Radware® (NASDAQ: RDWR), a leading provider of cyber security and application delivery solutions, today announced its consolidated financial results for the second quarter ended June 30, 2024.

"We are pleased with our second quarter 2024 results, which exceeded the high-end of our revenue and non-GAAP EPS guidance," said Roy Zisapel, Radware's president and CEO. "We are excited about the launch of Radware EPIC-AI™ and the accelerated AI and GenAI innovation it represents. Together with our strong cloud security offering, we are optimistic these factors will contribute significantly to the second half of 2024."

Financial Highlights for the Second Quarter 2024

Revenue for the second quarter of 2024 totaled $67.3 million:


•
Revenue in the Americas region was $30.1 million for the second quarter of 2024, an increase of 12% from $26.8 million in the second quarter of 2023.

•
Revenue in the Europe, Middle East, and Africa ("EMEA") region was $22.8 million for the second quarter of 2024, an increase of 1% from $22.6 million in the second quarter of 2023.

•
Revenue in the Asia-Pacific ("APAC") region was $14.4 million for the second quarter of 2024, a decrease of 11% from $16.2 million in the second quarter of 2023.

GAAP net income for the second quarter of 2024 was $1.7 million, or $0.04 per diluted share, compared to GAAP net loss of $5.8 million, or $(0.13) per diluted share, for the second quarter of 2023.

Non-GAAP net income for the second quarter of 2024 was $8.8 million, or $0.20 per diluted share, compared to non-GAAP net income of $4.5 million, or $0.10 per diluted share, for the second quarter of 2023.


As of June 30, 2024, the Company had cash, cash equivalents, short-term and long-term bank deposits, and marketable securities of $396.6 million. Cash flow from operations was $23.0 million in the second quarter of 2024.

Non-GAAP results are calculated excluding, as applicable, the impact of stock-based compensation expenses, amortization of intangible assets, litigation costs, acquisition costs, restructuring costs, exchange rate differences, net on balance sheet items included in financial income, net, 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.

Conference Call
Radware management will host a call today, July 31, 2024, at 8:30 a.m. EDT to discuss its second quarter 2024 results and third quarter 2024 outlook. To participate on the call, please use the following numbers:
U.S. participants call toll free: 888-510-2008
International participants 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 +1-609-800-9099 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, net, income before taxes on income, taxes on income, net income and diluted 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,restructuring costs, exchange rate differences, net on balance sheet items included in financial income, net, 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, including as a result of the state of war declared in Israel in October 2023 and instability in the Middle East, the war in Ukraine, and the tensions between China and Taiwan; our dependence on independent distributors to sell our products; our ability to manage our anticipated growth effectively; a shortage of components or manufacturing capacity could cause a delay in our ability to fulfill orders or increase our manufacturing costs; our business may be affected by sanctions, export controls, and similar measures, targeting Russia and other countries and territories, as well as other responses to Russia's military conflict in Ukraine, including indefinite suspension of operations in Russia and dealings with Russian entities by many multi-national businesses across a variety of industries; the ability of vendors to provide our hardware platforms and components for the manufacture of our products; our ability to attract, train, and retain highly qualified personnel; intense competition in the market for cyber security and application delivery solutions and in our industry in general, and changes in the competitive landscape; our ability to develop new solutions and enhance existing solutions; the impact to our reputation and business in the event of real or perceived shortcomings, defects, or vulnerabilities in our solutions, if our end-users experience security breaches, if our information technology systems and data, or those of our service providers and other contractors, are compromised by cyber-attackers or other malicious actors, or by a critical system failure; outages, interruptions, or delays in hosting services; the risks associated with our global operations, such as difficulties and costs of staffing and managing foreign operations, compliance costs arising from host country laws or regulations, partial or total expropriation, export duties and quotas, local tax exposure, economic or political instability, including as a result of insurrection, war, natural disasters, and major environmental, climate, or public health concerns, such as the COVID-19 pandemic; our net losses in the past two years and possibility we may incur losses in the future; a slowdown in the growth of the cyber security and application delivery solutions market or in the development of the market for our cloud-based solutions; long sales cycles for our solutions; risks and uncertainties relating to acquisitions or other investments; risks associated with doing business in countries with a history of corruption or with foreign governments; changes in foreign currency exchange rates; risks associated with undetected defects or errors in our products; our ability to protect our proprietary technology; intellectual property infringement claims made by third parties; laws, regulations, and industry standards affecting our business; compliance with open source and third-party licenses; 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 in application security and delivery solutions for multi-cloud environments. The company's cloud application, infrastructure, and API security solutions use AI-driven algorithms for precise, hands-free, real-time protection from the most sophisticated web, application, and DDoS attacks, API abuse, and bad bots. Enterprises and carriers worldwide rely on Radware's solutions to address evolving cybersecurity challenges and protect their brands and business operations while reducing costs. For more information, please visit the Radware website.

Radware encourages you to join our community and follow us on: Facebook, LinkedIn, Radware Blog, X, YouTube, and Radware Mobile for iOS.

©2024 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.

Radware believes the information in this document is accurate in all material respects as of its publication date. However, the information is provided without any express, statutory, or implied warranties and is subject to change without notice.

The contents of any website or hyperlinks mentioned in this press release are for informational purposes and the contents thereof are not part of this press release.

CONTACTS
Investor Relations:
Yisca Erez, +972-72-3917211, [email protected]

Media Contact:
Gerri Dyrek, [email protected]


Radware Ltd.
Condensed Consolidated Balance Sheets
(U.S. Dollars in thousands)

June 30,
December 31,
2024
2023
(Unaudited)
(Unaudited)
Assets
Current assets
Cash and cash equivalents
86,802
70,538
Marketable securities
122,310
86,372
Short-term bank deposits
169,376
173,678
Trade receivables, net
25,499
20,267
Other receivables and prepaid expenses
9,187
9,529
Inventories
13,796
15,544
426,970
375,928
Long-term investments
Marketable securities
8,096
33,131
Long-term bank deposits
10,007
-
Other assets
2,033
2,166
20,136
35,297
Property and equipment, net
17,042
18,221
Intangible assets, net
13,734
15,718
Other long-term assets
36,506
37,967
Operating lease right-of-use assets
19,142
20,777
Goodwill
68,008
68,008
Total assets
601,538
571,916
Liabilities and equity
Current liabilities
Trade payables
4,077
4,298
Deferred revenues
111,680
105,012
Operating lease liabilities
4,533
4,684
Other payables and accrued expenses
45,576
41,021
165,866
155,015
Long-term liabilities
Deferred revenues
70,219
60,499
Operating lease liabilities
13,919
16,020
Other long-term liabilities
14,547
17,108
98,685
93,627
Equity
Radware Ltd. equity
Share capital
748
742
Additional paid-in capital
542,643
529,209
Accumulated other comprehensive income (loss) (413)
77
Treasury stock, at cost
(366,588
)
(365,749
)
Retained earnings
120,254
119,812
Total Radware Ltd. shareholder's equity
296,644
284,091
Non-controlling interest
40,343
39,183
Total equity
336,987
323,274
Total liabilities and equity
601,538
571,916




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,
2024
2023
2024
2023
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Revenues
67,276
65,607
132,361
134,648
Cost of revenues
13,056
12,742
25,868
26,048
Gross profit
54,220
52,865
106,493
108,600
Operating expenses, net:
Research and development, net
18,701
21,141
37,597
42,291
Selling and marketing
29,744
31,917
59,445
63,836
General and administrative
6,984
8,307
14,323
16,554
Total operating expenses, net
55,429
61,365
111,365
122,681
Operating loss
(1,209
)
(8,500
)
(4,872
)
(14,081
)
Financial income, net
4,417
3,419
8,025
6,910
Income (loss) before taxes on income
3,208
(5,081
)
3,153
(7,171
)
Taxes on income
1,544
727
2,711
1,718
Net income (loss)
1,664
(5,808
)
442
(8,889
)
Basic net income (loss) per share attributed to Radware Ltd.'s shareholders
0.04
(0.13
)
0.01
(0.20
)
Weighted average number of shares used to compute basic net income (loss) per share
41,857,259
43,400,635
41,803,638
43,725,443
Diluted net income (loss) per share attributed to Radware Ltd.'s shareholders
0.04
(0.13
)
0.01
(0.20
)
Weighted average number of shares used to compute diluted net income (loss) per share
43,148,129
43,400,635
43,011,501
43,725,443




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,
2024
2023
2024
2023
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
GAAP gross profit
54,220
52,865
106,493
108,600
Share-based compensation
80
113
159
226
Amortization of intangible assets
992
992
1,984
1,984
Non-GAAP gross profit
55,292
53,970
108,636
110,810
GAAP research and development, net
18,701
21,141
37,597
42,291
Share-based compensation
1,536
2,177
3,258
4,136
Non-GAAP Research and development, net
17,165
18,964
34,339
38,155
GAAP selling and marketing
29,744
31,917
59,445
63,836
Share-based compensation
2,609
3,537
5,160
6,931
Non-GAAP selling and marketing
27,135
28,380
54,285
56,905
GAAP general and administrative
6,984
8,307
14,323
16,554
Share-based compensation
2,077
3,068
4,472
6,599
Acquisition costs
192
545
412
558
Non-GAAP general and administrative
4,715
4,694
9,439
9,397
GAAP total operating expenses, net
55,429
61,365
111,365
122,681
Share-based compensation
6,222
8,782
12,890
17,666
Acquisition costs
192
545
412
558
Non-GAAP total operating expenses, net
49,015
52,038
98,063
104,457
GAAP operating loss
(1,209
)
(8,500
)
(4,872
)
(14,081
)
Share-based compensation
6,302
8,895
13,049
17,892
Amortization of intangible assets
992
992
1,984
1,984
Acquisition costs
192
545
412
558
Non-GAAP operating income
6,277
1,932
10,573
6,353
GAAP financial income, net
4,417
3,419
8,025
6,910
Exchange rate differences, net on balance sheet items included in financial income, net
(298
)
(32
)
(145
)
(807
)
Non-GAAP financial income, net
4,119
3,387
7,880
6,103
GAAP income (loss) before taxes on income
3,208
(5,081
)
3,153
(7,171
)
Share-based compensation
6,302
8,895
13,049
17,892
Amortization of intangible assets
992
992
1,984
1,984
Acquisition costs
192
545
412
558
Exchange rate differences, net on balance sheet items included in financial income, net
(298
)
(32
)
(145
)
(807
)
Non-GAAP income before taxes on income
10,396
5,319
18,453
12,456
GAAP taxes on income
1,544
727
2,711
1,718
Tax related adjustments
61
61
123
123
Non-GAAP taxes on income
1,605
788
2,834
1,841
GAAP net income (loss)
1,664
(5,808
)
442
(8,889
)
Share-based compensation
6,302
8,895
13,049
17,892
Amortization of intangible assets
992
992
1,984
1,984
Acquisition costs
192
545
412
558
Exchange rate differences, net on balance sheet items included in financial income, net
(298
)
(32
)
(145
)
(807
)
Tax related adjustments
(61
)
(61
)
(123
)
(123
)
Non-GAAP net income
8,791
4,531
15,619
10,615
GAAP diluted net income (loss) per share
0.04
(0.13
)
0.01
(0.20
)
Share-based compensation
0.15
0.20
0.30
0.40
Amortization of intangible assets
0.02
0.02
0.04
0.05
Acquisition costs
0.00
0.01
0.01
0.01
Exchange rate differences, net on balance sheet items included in financial income, net
(0.01
)
(0.00
)
(0.00
)
(0.02
)
Tax related adjustments
(0.00
)
(0.00
)
(0.00
)
(0.00
)
Non-GAAP diluted net earnings per share
0.20
0.10
0.36
0.24
Weighted average number of shares used to compute non-GAAP diluted net earnings per share
43,148,129
44,268,786
43,011,501
44,513,899


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,
2024
2023
2024
2023
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Cash flow from operating activities:
Net income (loss)
1,664
(5,808
)
442
(8,889
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization
3,028
3,113
5,971
6,191
Share-based compensation
6,302
8,895
13,049
17,892
Amortization of premium, accretion of discounts and accrued interest on marketable securities, net
80
718
7
955
Loss (gain) related to securities, net
-
(1
)
-
244
Increase (decrease) in accrued interest on bank deposits
5,468
229
5,459
(1,525
)
Increase (decrease) in accrued severance pay, net
17
(36
)
(41
)
(105
)
Decrease (increase) in trade receivables, net
(5,013
)
1,937
(5,232
)
932
Decrease (increase) in other receivables and prepaid expenses and other long-term assets
(199
)
532
406
(2,326
)
Decrease (increase) in inventories
744
(1,044
)
1,748
(895
)
Increase (decrease) in trade payables
(1,627
)
3,020
(221
)
1,383
Increase in deferred revenues
7,494
470
16,388
1,216
Increase (decrease) in other payables and accrued expenses
5,310
(6,944
)
6,793
(11,442
)
Operating lease liabilities, net
(238
)
(215
)
(617
)
(1
)
Net cash provided by operating activities
23,030
4,866
44,152
3,630
Cash flows from investing activities:
Purchase of property and equipment
(1,034
)
(1,595
)
(2,808
)
(3,363
)
Proceeds from (investment in) other long-term assets, net
19
1
(6
)
48
Proceeds from (investment in) bank deposits, net
6,734
21,000
(11,164
)
30,200
Investment in, redemption of and purchase of marketable securities, net
(13,499
)
(3,857
)
(9,997
)
(1,881
)
Net cash provided by (used in) investing activities
(7,780
)
15,549
(23,975
)
25,004
Cash flows from financing activities:
Proceeds from exercise of share options
3
88
3
308
Repurchase of shares
-
(19,741
)
(839
)
(32,483
)
Payment of contingent consideration related to acquisition
(3,077
)
-
(3,077
)
-
Net cash used in financing activities
(3,074
)
(19,653
)
(3,913
)
(32,175
)
Increase (decrease) in cash and cash equivalents
12,176
762
16,264
(3,541
)
Cash and cash equivalents at the beginning of the period
74,626
41,882
70,538
46,185
Cash and cash equivalents at the end of the period
86,802
42,644
86,802
42,644


Radware Ltd.
RECONCILIATION OF GAAP NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA (NON-GAAP)
(U.S Dollars in thousands)

For the three months ended
For the six months ended
June 30,
June 30,
2024
2023
2024
2023
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
GAAP net income (loss)
1,664
(5,808
)
442
(8,889
)
Exclude: Financial income, net
(4,417
)
(3,419
)
(8,025
)
(6,910
)
Exclude: Depreciation and amortization expense
3,028
3,113
5,971
6,191
Exclude: Taxes on income
1,544
727
2,711
1,718
EBITDA
1,819
(5,387
)
1,099
(7,890
)
Share-based compensation
6,302
8,895
13,049
17,892
Acquisition costs
192
545
412
558
Adjusted EBITDA
8,313
4,053
14,560
10,560

For the three months ended
For the six months ended
June 30,
June 30,
2024
2023
2024
2023
Amortization of intangible assets
992
992
1,984
1,984
Depreciation
2,036
2,121
3,987
4,207
3,028
3,113
5,971
6,191