Radware Announces Third Quarter 2019 Earnings


Third Quarter 2019 Results and Financial Highlights

  • Revenues of $62.9 million, up 7% from the third quarter of 2018
  • Non-GAAP Operating income and margin of $9.2 million and 15%
  • Non-GAAP EPS of $0.25, up 67% from the third quarter of 2018; GAAP EPS of $0.15
  • Net cash provided by operating activities for the last twelve months of $74.6 million

First Nine Months 2019 Results and Financial Highlights

  • Revenues of $184.7 million, up 8% from the first nine months of 2018
  • Non-GAAP EPS of $0.61; GAAP EPS of $0.31

TEL AVIV, Israel, Nov. 06, 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 September 30, 2019.

“The third quarter was another solid quarter for Radware, with continued revenue growth and strong profitability,” said Roy Zisapel, Radware President & CEO. “Our market position is strong, and our solution portfolio meets our customers’ evolving needs. We combine superior attack detection and mitigation capabilities, with agility and flexibility in deploying them across private, hybrid and public clouds. We look forward to continued growth.”  

Financial Highlights for the Third Quarter of 2019

Revenues for the third quarter of 2019 totaled $62.9 million, up 7% from revenues of $58.8 million for the third quarter of 2018. Revenues for the first nine months of 2019 totaled $184.7 million, up 8% from revenues of $170.6 million for the first nine months of 2018:

  • Revenues in the Americas region were $24.5 million for the third quarter of 2019, compared with revenues of $26.7 million in the third quarter of 2018. For the first nine months of 2019, revenues in the Americas region increased 3% over the same period in 2018.
  • Revenues in the Europe, Middle East and Africa (“EMEA”) region were $19.4 million for the third quarter of 2019, up 10% from revenues of $17.7 million in the third quarter of 2018. For the first nine months of 2019, revenues in the EMEA region increased 4% over the same period of 2018.
  • Revenues in the Asia-Pacific (“APAC”) region were $19.0 million for the third quarter of 2019, up 32% from revenues of $14.4 million in the third quarter of 2018. For the first nine months of 2019, revenues in the APAC region increased 23% over the same period of 2018.

Net income on a GAAP basis for the third quarter of 2019 was $7.1 million, or $0.15 per diluted share, compared with net income of $3.1 million, or $0.06 per diluted share for the third quarter of 2018.

Non-GAAP net income for the third quarter of 2019 was $11.9 million, or $0.25 per diluted share, compared with non- GAAP net income of $7.1 million, or $0.15 per diluted share for the third quarter of 2018.

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 gain adjustment and tax effect related to amortization of deferred tax liability related to intangible assets and other gain adjustment. 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, 2019, the Company had cash, cash equivalents, short-term and long-term bank deposits and marketable securities of $428.6 million, compared with $401.1 million as of December 31, 2018. Net cash provided by operating activities in the third quarter of 2019 totaled $20.3 million. Net cash provided by operating activities in the last 12 months totaled $74.6 million.

Conference Call

Radware management will host a call on Wednesday, November 6, 2019 at 8:30 a.m. ET to discuss its third quarter 2019 results and the Company’s outlook for the fourth quarter of 2019.

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

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

Conference ID: 3959748

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, other gain adjustment and tax effect related to amortization of deferred tax liability related to intangible assets and other gain adjustment. 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)
    
 September 30, December 31,
 2019 2018
 (Unaudited) (Unaudited)
Assets   
    
Current assets   
Cash and cash equivalents39,955  45,203 
Available-for-sale marketable securities28,177  15,742 
Short-term bank deposits153,812  255,454 
Trade receivables, net12,366  17,166 
Other receivables and prepaid expenses9,390  7,071 
Inventories15,083  18,401 
 258,783  359,037 
    
Long-term investments   
Available-for-sale marketable securities120,326  84,669 
Long-term bank deposits86,342  0 
Severance pay funds2,313  2,973 
 208,981  87,642 
    
    
Property and equipment, net23,256  23,677 
Other long-term assets21,495  20,724 
Operating lease right-of-use assets18,849  0 
Goodwill and intangible assets, net56,127  41,641 
Total assets587,491  532,721 
    
    
Liabilities and shareholders' equity   
    
Current Liabilities   
Trade payables4,005  4,483 
Deferred revenues81,987  83,955 
Operating lease liabilities5,183  0 
Other payables and accrued expenses28,089  29,596 
 119,264  118,034 
    
Long-term liabilities   
Deferred revenues54,556  43,796 
Operating lease liabilities14,520  0 
Other long-term liabilities12,343  6,934 
 81,419  50,730 
    
Shareholders' equity   
Share capital707  693 
Additional paid-in capital407,897  383,536 
Accumulated other comprehensive income (loss), net of tax1,026  (1,110)
Treasury stock, at cost(139,612) (120,717)
Retained earnings116,790  101,555 
Total shareholders' equity386,808  363,957 
    
Total liabilities and shareholders' equity587,491  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 nine months ended
 September 30, September 30,
 2019 2018 2019 2018
 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
        
Revenues62,859  58,764 184,710 170,587
Cost of revenues11,527  10,278 33,180 30,558
Gross profit51,332  48,486 151,530 140,029
        
Operating expenses, net:       
Research and development, net15,108  14,434 45,738 43,729
Selling and marketing27,094  27,263 80,435 83,249
General and administrative4,403  3,985 14,209 11,851
Total operating expenses, net46,605  45,682 140,382 138,829
        
Operating income4,727  2,804 11,148 1,200
Financial income, net2,137  1,487 6,047 4,877
Income before taxes on income6,864  4,291 17,195 6,077
Taxes on income (tax benefit)(257) 1,178 1,960 2,285
Net income7,121  3,113 15,235 3,792
        
Basic net earnings per share0.15  0.07 0.33 0.08
        
Weighted average number of shares used to compute basic net earnings per share46,850,137  45,537,801 46,788,870 45,030,328
        
Diluted net earnings per share0.15  0.06 0.31 0.08
        
Weighted average number of shares used to compute diluted net earnings per share48,488,313  48,519,880 48,595,899 48,012,407
         


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,
 2019 2018 2019 2018
 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
GAAP gross profit51,332  48,486 151,530  140,029
Stock-based compensation57  54 171  171
Amortization of intangible assets997  212 1,818  654
Non-GAAP gross profit52,386  48,752 153,519  140,854
        
GAAP research and development, net15,108  14,434 45,738  43,729
Stock-based compensation640  819 2,064  2,429
Non-GAAP Research and development, net14,468  13,615 43,674  41,300
        
GAAP selling and marketing27,094  27,263 80,435  83,249
Stock-based compensation1,954  1,666 5,258  5,344
Amortization of intangible assets17  20 52  61
Non-GAAP selling and marketing25,123  25,577 75,125  77,844
        
GAAP general and administrative4,403  3,985 14,209  11,851
Stock-based compensation741  527 2,290  1,312
Acquisition costs-  - 264  -
Litigation costs24  214 883  627
Non-GAAP general and administrative3,638  3,244 10,772  9,912
        
GAAP total operating expenses, net46,605  45,682 140,382  138,829
Stock-based compensation3,335  3,012 9,612  9,085
Acquisition costs-  - 264  -
Amortization of intangible assets17  20 52  61
Litigation costs24  214 883  627
Non-GAAP total operating expenses, net43,229  42,436 129,571  129,056
        
GAAP operating income4,727  2,804 11,148  1,200
Stock-based compensation3,392  3,066 9,783  9,256
Acquisition costs-  - 264  -
Amortization of intangible assets1,014  232 1,870  715
Litigation costs24  214 883  627
Non-GAAP operating income9,157  6,316 23,948  11,798
        
GAAP financial income, net2,137  1,487 6,047  4,877
Other gain adjustment(253) - (563) -
Exchange rate differences, net on balance sheet items included in financial income, net878  432 2,418  255
Non-GAAP financial income, net2,762  1,919 7,902  5,132
        
GAAP income before taxes on income (tax benefit)6,864  4,291 17,195  6,077
Stock-based compensation3,392  3,066 9,783  9,256
Acquisition costs-  - 264  -
Amortization of intangible assets1,014  232 1,870  715
Litigation costs24  214 883  627
Other gain adjustment(253) - (563) -
Exchange rate differences, net on balance sheet items included in financial income, net878  432 2,418  255
Non-GAAP income before taxes on income11,919  8,235 31,850  16,930
        
GAAP taxes on income (tax benefit)(257) 1,178 1,960  2,285
Amortization of deferred tax liability related to intangible assets247  - 247  -
Tax related to other gain adjustment19  - (52) -
Non-GAAP taxes on income9  1,178 2,155  2,285
        
GAAP net income7,121  3,113 15,235  3,792
Stock-based compensation3,392  3,066 9,783  9,256
Acquisition costs-  - 264  -
Amortization of intangible assets1,014  232 1,870  715
Litigation costs24  214 883  627
Other gain adjustment(253) - (563) -
Exchange rate differences, net on balance sheet items included in financial income, net878  432 2,418  255
Amortization of deferred tax liability related to intangible assets(247) - (247) -
Tax related to other gain adjustment(19) - 52  -
Non-GAAP net income11,910  7,057 29,695  14,645
        
GAAP diluted net earnings per share0.15  0.06 0.31  0.08
Stock-based compensation0.07  0.06 0.20  0.19
Acquisition costs0.00  0.00 0.01  0.00
Amortization of intangible assets0.02  0.01 0.04  0.02
Litigation costs0.00  0.01 0.02  0.01
Other gain adjustment(0.01) 0.00 (0.01) 0.00
Exchange rate differences, net on balance sheet items included in financial income, net0.02  0.01 0.05  0.01
Amortization of deferred tax liability related to intangible assets(0.01) 0.00 (0.01) 0.00
Tax related to other gain adjustment(0.00) 0.00 0.00  0.00
Non-GAAP diluted net earnings per share0.25  0.15 0.61  0.31
        
        
Weighted average number of shares used to compute Non-GAAP diluted net earnings per share48,488,313  48,519,880 48,595,899  48,012,407
          


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,
 2019 2018 2019 2018
 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash flow from operating activities:       
        
Net income7,121  3,113  15,235  3,792 
Adjustments to reconcile net income to net cash provided by operating activities:       
Depreciation and amortization3,106  2,433  8,494  7,380 
Stock based compensation3,392  3,066  9,783  9,256 
Amortization of premium, accretion of discounts and accrued interest on available-for-sale marketable securities, net141  192  468  882 
Other gain(253) 0  (563) 0 
Accrued interest on bank deposits(804) (1,217) 1,527  (1,429)
Increase (decrease) in accrued severance pay, net(109) (8) 824  134 
Decrease (increase) in trade receivables, net2,621  107  5,150  (2,494)
Decrease (increase) in other receivables and prepaid expenses and other long-term assets(1,163) (206) (4,849) 4,493 
Decrease (increase) in inventories881  (2,020) 3,318  (1,691)
Decrease (increase) in trade payables203  680  (535) 57 
Increase (decrease) in deferred revenues4,893  (2,774) 8,676  4,392 
Increase (decrease) in other payables and accrued expenses39  5,465  511  (1,217)
Operating lease liabilities, net194  0  854  0 
Net cash provided by operating activities20,262  8,831  48,893  23,555 
        
Cash flows from investing activities:       
        
Purchase of property and equipment(1,810) (1,595) (6,153) (4,870)
Proceeds from other long-term assets, net73  0  11  38 
Proceeds from (investment in) bank deposits, net(5,674) (15,000) 13,773  (41,067)
Investment in sale, redemption of and purchase of available-for-sale marketable securities, net(1,997) (1,035) (45,232) (2,907)
Payment for acquisition of subsidiary, net of cash acquired0  0  (12,239) 0 
Net cash used in investing activities(9,408) (17,630) (49,840) (48,806)
        
Cash flows from financing activities:       
        
Proceeds from exercise of stock options3,751  6,688  14,593  19,579 
Repurchase of shares(8,841) 0  (18,894) 0 
Net cash provided by (used in) financing activities(5,090) 6,688  (4,301) 19,579 
        
Increase (decrease) in cash and cash equivalents5,764  (2,111) (5,248) (5,672)
Cash and cash equivalents at the beginning of the period34,191  61,676  45,203  65,237 
Cash and cash equivalents at the end of the period39,955  59,565  39,955  59,565