Fourth Quarter 2018 Results and Financial Highlights

  • Record Revenues of $64 Million, up 9% from the fourth quarter of 2017
  • Non-GAAP operating income and margin of $9.8Million and 15%, respectively
  • Non-GAAP EPS of $0.24 GAAP EPS of $0.16

Full Year 2018 Results and Financial Highlights

  • Record Revenues of $234 Million, up 11% from 2017
  • Non-GAAP operating income and margin of $22 Million and 9.2%, respectively
  • Non-GAAP EPS of $0.55; GAAP EPS of $0.25
  • Operating cash flow of $49 million

TEL AVIV, Israel, Feb. 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 and year ended December 31, 2018. 

“We are pleased with our strong results for the fourth quarter, concluding a strong year that exceeded our expectations. Revenue growth, profitability and cash generation have all markedly increased from 2017. We continued to execute our strategy, focusing on datacenter and cloud, and delivered on our goals. Our portfolio is the widest and most advanced it has ever been, reflecting innovative technology leadership and a close alignment to customer needs, especially given our focus on subscriptions and cloud security solutions. We look forward to the opportunities ahead of us in 2019 and beyond,” said Roy Zisapel, Radware President & CEO.

Financial Highlights for the Fourth Quarter of 2018

Revenues for the fourth quarter of 2018 totaled $63.8 million, up 9% from revenues of $58.5 million for the fourth quarter of 2017:

  • Revenues in the Americas region were $27.7 million for the fourth quarter of 2018, down 4% compared to revenues of $28.7 million in the fourth quarter of 2017.
  • Revenues in the EMEA region were $23.2 million for the fourth quarter of 2018, up 53% from revenues of $15.1 million in the fourth quarter of 2017.
  • Revenues in the APAC region were $12.9 million for the fourth quarter of 2018, down 12% from revenues of $14.6 million in the fourth quarter of 2017.

Net profit on a GAAP basis for the fourth quarter of 2018 was $7.9 million or $0.16 per diluted share, compared with net income of $2.1 million or $0.05 per diluted share for the fourth quarter of 2017.

Non-GAAP net income for the fourth quarter of 2018 was $11.4 million or $0.24 per diluted share, compared with non- GAAP net income of $3.9 million or $0.09 per diluted share for the fourth quarter of 2017.

Financial Highlights for the Full Year of 2018

Revenues for the full year of 2018 totaled $234.4 million, up 11% from revenues of $211.4 million for the full year of 2017:

  • Revenues in the Americas region were $102.5 million for the full year of 2018, up 5% from revenues of $97.9 in the full year of 2017.
  • Revenues in the EMEA region were $75.8 million for the full year of 2018, up 34% from revenues of $56.6 in the full year of 2017.
  • Revenues in the APAC region were $56.2 million for the full year of 2018, down 1% from revenues of $56.9 in the full year of 2017. 

Net profit on a GAAP basis for the full year of 2018 was $11.7 million or $0.25 per share, compared with net loss of ($7.5) million or ($0.17) per diluted share for the full year of 2017.

Non-GAAP net income for the full year of 2017 was $26.0 million or $0.55 per diluted share, compared with non-GAAP net income of $7.6 million or $0.17 per diluted share for the full year 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 December 31, 2018, the Company had cash, cash equivalents, short-term and long-term bank deposits and marketable securities of $401.1 million, up from $382.2 million as of the end of September 30, 2018 and $344.3 million as of December 31st, 2017. Cash generated from operations in the fourth quarter of 2018 totaled $25.7 million. Cash generated from operations in the full year of 2018 totaled $49.3 million. Cash used for share repurchase in the fourth quarter and full year of 2018 totaled $4.3 million.

Conference Call

Radware management will host a call on Wednesday, February 6, 2019 at 8:30 am ET to discuss its fourth quarter and full year 2018 results and the company’s outlook for the first quarter of 2019.

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

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

Conference ID: 4794777

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.

©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)
    
 December 31, December 31,
 2018 2017
 (Unaudited) (Unaudited)
Assets   
    
Current assets   
Cash and cash equivalents45,203 65,237
Available-for-sale marketable securities15,742 42,573
Short-term bank deposits255,454 93,151
Trade receivables, net17,166 16,150
Other receivables and prepaid expenses6,667 12,252
Inventories18,401 18,772
 358,633 248,135
    
Long-term investments   
Available-for-sale marketable securities84,669 54,427
Long-term bank deposits0 88,911
Severance pay funds2,973 3,251
 87,642 146,589
    
    
Property and equipment, net23,677 23,642
Intangible assets, net9,467 10,415
Other long-term assets20,724 8,133
Goodwill32,174 32,174
Total assets532,317 469,088
    
    
Liabilities and shareholders' equity   
    
Current Liabilities   
Trade payables4,483 5,367
Deferred revenues83,955 69,829
Other payables and accrued expenses29,918 32,174
 118,356 107,370
    
Long-term liabilities   
Deferred revenues43,796 43,482
Other long-term liabilities6,208 2,880
 50,004 46,362
    
Shareholders' equity   
Share capital693 673
Additional paid-in capital383,536 349,250
Accumulated other comprehensive loss, net of tax(1,110) (443)
Treasury stock, at cost(120,717) (116,442)
Retained earnings101,555 82,318
Total shareholders' equity363,957 315,356
    
Total liabilities and shareholders' equity532,317 469,088
    

 

                   

 
 
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 year ended
 December 31, December 31,
 2018 2017 2018 2017
 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
        
Revenues63,817 58,454 234,404 211,369
Cost of revenues11,117 11,060 41,675 39,616
Gross profit52,700 47,394 192,729 171,753
        
Operating expenses, net:       
Research and development, net13,945 15,072 57,674 59,003
Selling and marketing28,137 29,166 111,386 108,744
General and administrative4,294 4,265 16,145 17,577
Other income0 (6,900) 0 (6,900)
Total operating expenses, net46,376 41,603 185,205 178,424
        
Operating income (loss)6,324 5,791 7,524 (6,671)
Financial income, net2,397 935 7,274 4,830
Income (loss) before taxes on income8,721 6,726 14,798 (1,841)
Taxes on income778 4,605 3,063 5,652
Net income (loss)7,943 2,121 11,735 (7,493)
        
Basic net income (loss) per share0.17 0.05 0.26 (0.17)
        
Weighted average number of shares used to compute basic net earnings (loss) per share46,357,278 43,859,400 45,289,296 43,475,844
        
Diluted net earnings (loss) per share0.16 0.05 0.25 (0.17)
        
Weighted average number of shares used to compute diluted net earnings (loss) per share48,279,751 45,728,792 47,691,868 43,475,844
        
        

 

  
 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 year ended
  December 31, December 31,
  2018 2017 2018 2017
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
GAAP gross profit52,700 47,394 192,729 171,753
 Stock-based compensation50 60 221 241
 Amortization of intangible assets212 86 866 1,137
 Acquisition costs- 550 - 550
Non-GAAP gross profit52,962 48,090 193,816 173,681
         
GAAP research and development, net13,945 15,072 57,674 59,003
 Stock-based compensation694 984 3,123 3,867
 Acquisition costs20 204 20 204
Non-GAAP Research and development, net13,231 13,884 54,531 54,932
         
GAAP selling and marketing28,137 29,166 111,386 108,744
 Stock-based compensation1,727 1,717 7,071 6,894
 Amortization of intangible assets21 24 82 94
Non-GAAP selling and marketing26,389 27,425 104,233 101,756
         
GAAP general and administrative4,294 4,265 16,145 17,577
 Stock-based compensation775 456 2,087 2,029
 Acquisition costs(222) - (222) 340
 Litigation costs202 76 829 2,052
Non-GAAP general and administrative3,539 3,733 13,451 13,156
         
GAAP other income- (6,900) - (6,900)
 Court verdict- (6,900) - (6,900)
Non-GAAP other income- - - -
         
GAAP total operating expenses, net46,376 41,603 185,205 178,424
 Stock-based compensation3,196 3,157 12,281 12,790
 Acquisition costs(202) 204 (202) 544
 Amortization of intangible assets21 24 82 94
 Litigation costs202 76 829 2,052
 Court verdict- (6,900) - (6,900)
Non-GAAP total operating expenses, net43,159 45,042 172,215 169,844
         
GAAP operating income (loss)6,324 5,791 7,524 (6,671)
 Stock-based compensation3,246 3,217 12,502 13,031
 Acquisition costs(202) 754 (202) 1,094
 Amortization of intangible assets233 110 948 1,231
 Litigation costs202 76 829 2,052
 Court verdict- (6,900) - (6,900)
Non-GAAP operating income (loss)9,803 3,048 21,601 3,837
         
GAAP financial income, net2,397 935 7,274 4,830
 Exchange rate differences, net on balance sheet items included in financial income, net(59) 558 196 635
Non-GAAP financial income, net2,338 1,493 7,470 5,465
         
GAAP income (loss) before taxes on income8,721 6,726 14,798 (1,841)
 Stock-based compensation3,246 3,217 12,502 13,031
 Acquisition costs(202) 754 (202) 1,094
 Amortization of intangible assets233 110 948 1,231
 Litigation costs202 76 829 2,052
 Court verdict- (6,900) - (6,900)
 Exchange rate differences, net on balance sheet items included in financial income, net(59) 558 196 635
Non-GAAP income before taxes on income12,141 4,541 29,071 9,302
         
GAAP taxes on income778 4,605 3,063 5,652
 Change in the federal rate- 3,249 - 3,249
 Court verdict- 724 - 724
Non-GAAP taxes on income778 8,578 3,063 9,625
         
GAAP net income (loss)7,943 2,121 11,735 (7,493)
 Stock-based compensation3,246 3,217 12,502 13,031
 Acquisition costs(202) 754 (202) 1,094
 Amortization of intangible assets233 110 948 1,231
 Litigation costs202 76 829 2,052
 Exchange rate differences, net on balance sheet items included in financial income, net(59) 558 196 635
 Change in the federal rate- 3,249 - 3,249
 Court verdict- (6,176) - (6,176)
Non-GAAP net income11,363 3,909 26,008 7,623
         
GAAP Net earnings (loss) per diluted share0.16 0.05 0.25 (0.17)
 Stock-based compensation0.07 0.07 0.26 0.30
 Acquisition costs(0.00) 0.02 (0.00) 0.02
 Amortization of intangible assets0.00 0.00 0.02 0.03
 Litigation costs0.00 0.00 0.02 0.05
 Exchange rate differences, net on balance sheet items included in financial income, net(0.00) 0.01 0.00 0.01
 Change in the federal rate0.00 0.08 0.00 0.07
 Court verdict0.00 (0.14) 0.00 (0.14)
Non-GAAP Net earnings per diluted share0.24 0.09 0.55 0.17
         
         
Weighted average number of shares used to compute Non-GAAP diluted net earnings per share48,279,751 45,728,792 47,691,868 44,756,732
         


 
 
Radware Ltd.
Condensed Consolidated Statements of Cash Flow
(U.S. Dollars in thousands)
        
 For the three months ended For the year ended
 December 31, December 31,
 2018 2017 2018 2017
 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash flow from operating activities:       
        
Net income (loss)7,943 2,121 11,735 (7,493)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:       
Depreciation and amortization2,402 2,567 9,782 11,234
Stock based compensation3,246 3,217 12,502 13,031
Loss (gain) from sale of available-for-sale marketable securities0 (18) 0 (18)
Amortization of premium, accretion of discounts and accrued interest on available-for- sale marketable securities, net513 465 1,395 1,546
Accrued interest on bank deposits(962) (586) (2,391) 226
Increase (decrease) in accrued severance pay, net189 (430) 323 (210)
Decrease (increase) in trade receivables, net1,325 (3,836) (1,169) 3,390
Decrease (increase) in other receivables and prepaid expenses and other long-term assets(1,359) (8,258) 3,133 (7,879)
Decrease (increase) in inventories2,062 (48) 371 (1,658)
Increase (decrease) in trade payables(941) 817 (884) (734)
Increase in deferred revenues10,048 11,119 14,440 28,781
Increase (decrease) in other payables and accrued expenses1,231 826 14 (8,753)
Net cash provided by operating activities25,697 7,956 49,251 31,463
        
Cash flows from investing activities:       
        
Purchase of property and equipment(3,998) (1,613) (8,869) (7,210)
Proceeds from (investment in) other long-term assets, net0 (18) 40 (6)
Investment in bank deposits, net(29,935) 0 (71,002) (37,200)
Proceeds from (investment in) sale, redemption of and purchase of available-for-sale marketable securities, net(2,765) (2,119) (5,672) (3,657)
Payment for acquisition of subsidiary, net of cash acquired0 0 0 (8,269)
Net cash used in investing activities(36,698) (3,750) (85,503) (56,342)
        
Cash flows from financing activities:       
        
Proceeds from exercise of stock options2,223 7,501 21,802 10,890
Repayment of contingent consideration(1,310) 0 (1,310) 0
Repurchase of shares(4,274) 0 (4,274) (413)
Net cash provided by financing activities(3,361) 7,501 16,218 10,477
        
Increase (decrease) in cash and cash equivalents(14,362) 11,707 (20,034) (14,402)
Cash and cash equivalents at the beginning of the period59,565 53,530 65,237 79,639
Cash and cash equivalents at the end of the period45,203 65,237 45,203 65,237