Radware Reports First Quarter 2024 Financial Results

First Quarter 2024 Financial Results and Highlights

  • Revenue of $65.1 million, a decrease of 6% yearoveryear
  • Cloud ARR of $67.0 million, an increase of 22% year-over-year
  • Non-GAAP EPS of $0.16; GAAP net loss per diluted share of $0.03
  • Cash flow from operations of $21.1 million.

TEL AVIV, Israel, May 08, 2024 (GLOBE NEWSWIRE) — Radware® (NASDAQ: RDWR), a leading provider of cyber security and application delivery solutions, today announced its consolidated financial results for the first quarter ended March 31, 2024.

“We delivered a solid first quarter performance in 2024, exceeding the high-end of our revenue and EPS guidance while producing 22% year-over-year growth in cloud ARR,” said Roy Zisapel, Radware’s president and CEO. “During the quarter, we saw recovery in customer spending, driven by a slight improvement in the business environment and a surge in cyber-attacks. Looking ahead in 2024, we intend to capitalize on the strong growth across our cloud security business and partner channels and the market need for best-in-class critical security. Combined with cost discipline, we believe we are well-positioned to return to revenue growth and improved profitability.”

Financial Highlights for the First Quarter 2024
Revenue for the first quarter of 2024 totaled $65.1 million:

  • Revenue in the Americas region was $27.1 million for the first quarter of 2024, the same as in the first quarter of 2023.
  • Revenue in the Europe, Middle East, and Africa (“EMEA”) region was $22.7 million for the first quarter of 2024, a decrease of 24% from $29.7 million in the first quarter of 2023.
  • Revenue in the Asia-Pacific (“APAC”) region was $15.3 million for the first quarter of 2024, an increase of 25% from $12.2 million in the first quarter of 2023.

GAAP net loss for the first quarter of 2024 was $1.2 million, or $(0.03) per diluted share, compared to GAAP net loss of $3.1 million, or $(0.07) per diluted share, for the first quarter of 2023.

Non-GAAP net income for the first quarter of 2024 was $6.8 million, or $0.16 per diluted share, compared to non-GAAP net income of $6.1 million, or $0.14 per diluted share, for the first quarter of 2023.

As of March 31, 2024, the Company had cash, cash equivalents, short-term bank deposits, and marketable securities of $382.8 million. Cash flow from operations was $21.1 million in the first 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, May 8, 2024, at 8:30 a.m. EDT to discuss its first quarter of 2024 results and the Company’s second 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 taxrelated 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 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 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 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)
       
  March 31,   December 31,
  2024     2023  
  (Unaudited)   (Unaudited)
Assets      
       
Current assets      
Cash and cash equivalents 74,626     70,538  
Marketable securities 97,743     86,372  
Short-term bank deposits 191,585     173,678  
Trade receivables, net 20,486     20,267  
Other receivables and prepaid expenses 9,199     9,529  
Inventories 14,540     15,544  
  408,179     375,928  
       
Long-term investments      
Marketable securities 18,853     33,131  
Other assets 2,083     2,166  
  20,936     35,297  
       
Property and equipment, net 18,044     18,221  
Intangible assets, net 14,726     15,718  
Other long-term assets 37,052     37,967  
Operating lease right-of-use assets 20,268     20,777  
Goodwill 68,008     68,008  
Total assets 587,213     571,916  
       
Liabilities and equity      
       
Current liabilities      
Trade payables 5,704     4,298  
Deferred revenues 101,892     105,012  
Operating lease liabilities 4,537     4,684  
Other payables and accrued expenses 42,757     41,021  
  154,890     155,015  
       
Long-term liabilities      
Deferred revenues 72,513     60,499  
Operating lease liabilities 15,279     16,020  
Other long-term liabilities 15,164     17,108  
  102,956     93,627  
       
Equity      
Radware Ltd. equity      
Share capital 744     742  
Additional paid-in capital 536,881     529,209  
Accumulated other comprehensive income (loss) (66)     77  
Treasury stock, at cost (366,588)     (365,749)  
Retained earnings 118,590     119,812  
Total Radware Ltd. shareholder’s equity 289,561     284,091  
       
Non–controlling interest 39,806     39,183  
       
Total equity 329,367     323,274  
       
Total liabilities and equity 587,213     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
    March 31,
    2024     2023  
    (Unaudited)   (Unaudited)
         
Revenues   65,085     69,041  
Cost of revenues   12,812     13,306  
Gross profit   52,273     55,735  
         
Operating expenses, net:        
Research and development, net   18,896     21,150  
Selling and marketing   29,701     31,919  
General and administrative   7,339     8,247  
Total operating expenses, net   55,936     61,316  
         
Operating loss   (3,663)     (5,581)  
Financial income, net   3,608     3,491  
Loss before taxes on income   (55)     (2,090)  
Taxes on income   1,167     991  
Net loss   (1,222)     (3,081)  
         
Basic net loss per share attributed to Radware Ltd.’s shareholders   (0.03)     (0.07)  
         
Weighted average number of shares used to compute basic net loss per share   41,750,203     44,053,402  
         
Diluted net loss per share attributed to Radware Ltd.’s shareholders   (0.03)     (0.07)  
         
Weighted average number of shares used to compute diluted net loss per share   41,750,203     44,053,402  
         
  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
    March 31,
    2024     2023  
    (Unaudited)   (Unaudited)
GAAP gross profit 52,273     55,735  
  Share-based compensation 79     113  
  Amortization of intangible assets 992     992  
Non-GAAP gross profit 53,344     56,840  
         
GAAP research and development, net 18,896     21,150  
  Share-based compensation 1,722     1,959  
Non-GAAP Research and development, net 17,174     19,191  
         
GAAP selling and marketing 29,701     31,919  
  Share-based compensation 2,551     3,394  
Non-GAAP selling and marketing 27,150     28,525  
         
GAAP general and administrative 7,339     8,247  
  Share-based compensation 2,395     3,531  
  Acquisition costs 220     13  
Non-GAAP general and administrative 4,724     4,703  
         
GAAP total operating expenses, net 55,936     61,316  
  Share-based compensation 6,668     8,884  
  Acquisition costs 220     13  
Non-GAAP total operating expenses, net 49,048     52,419  
         
GAAP operating loss (3,663)     (5,581)  
  Share-based compensation 6,747     8,997  
  Amortization of intangible assets 992     992  
  Acquisition costs 220     13  
Non-GAAP operating income 4,296     4,421  
         
GAAP financial income, net 3,608     3,491  
  Exchange rate differences, net on balance sheet items included in financial income, net 153     (775)  
Non-GAAP financial income, net 3,761     2,716  
         
GAAP loss before taxes on income (55)     (2,090)  
  Share-based compensation 6,747     8,997  
  Amortization of intangible assets 992     992  
  Acquisition costs 220     13  
  Exchange rate differences, net on balance sheet items included in financial income, net 153     (775)  
Non-GAAP income before taxes on income 8,057     7,137  
         
GAAP taxes on income 1,167     991  
  Tax related adjustments 62     62  
Non-GAAP taxes on income 1,229     1,053  
         
GAAP net loss (1,222)     (3,081)  
  Share-based compensation 6,747     8,997  
  Amortization of intangible assets 992     992  
  Acquisition costs 220     13  
  Exchange rate differences, net on balance sheet items included in financial income, net 153     (775)  
  Tax related adjustments (62)     (62)  
Non-GAAP net income 6,828     6,084  
         
GAAP diluted net loss per share (0.03)     (0.07)  
  Share-based compensation 0.16     0.20  
  Amortization of intangible assets 0.02     0.02  
  Acquisition costs 0.01     0.00  
  Exchange rate differences, net on balance sheet items included in financial income, net 0.00     (0.02)  
  Tax related adjustments (0.00)     (0.00)  
Non-GAAP diluted net earnings per share 0.16     0.14  
         
         
Weighted average number of shares used to compute non-GAAP diluted net earnings per share 42,875,058     44,762,161  
           
  Radware Ltd.
  RECONCILIATION OF GAAP NET LOSS TO EBITDA AND ADJUSTED EBITDA (NON-GAAP)
  (U.S Dollars in thousands)
         
    For the three months ended
    March 31,
    2024     2023  
    (Unaudited)   (Unaudited)
GAAP net loss (1,222)     (3,081)  
  Exclude: Financial income, net (3,608)     (3,491)  
  Exclude: Depreciation and amortization expense 2,943     3,078  
  Exclude: Taxes on income 1,167     991  
EBITDA (720)     (2,503)  
         
  Share-based compensation 6,747     8,997  
  Acquisition costs 220     13  
Adjusted EBITDA 6,247     6,507  
         
         
    For the three months ended
    March 31,
    2024     2023  
  Amortization of intangible assets 992     992  
  Depreciation 1,951     2,086  
         
    2,943     3,078  
         
Radware Ltd.
Condensed Consolidated Statements of Cash Flow
(U.S. Dollars in thousands)
         
    For the three months ended
    March 31,
    2024     2023  
    (Unaudited)   (Unaudited)
Cash flow from operating activities:        
         
Net loss   (1,222)     (3,081)  
Adjustments to reconcile net loss to net cash provided by operating activities:        
Depreciation and amortization   2,943     3,078  
Share-based compensation   6,747     8,997  
Amortization of premium, accretion of discounts and accrued interest on marketable securities, net   (73)     237  
Loss related to securities, net       245  
Decrease in accrued interest on bank deposits   (9)     (1,754)  
Decrease in accrued severance pay, net   (58)     (69)  
Increase in trade receivables, net   (219)     (1,005)  
Decrease (increase) in other receivables and prepaid expenses and other long-term assets   605     (2,858)  
Decrease in inventories   1,004     149  
Increase (decrease) in trade payables   1,406     (1,637)  
Increase in deferred revenues   8,894     746  
Increase (decrease) in other payables and accrued expenses   1,483     (4,498)  
Operating lease liabilities, net   (379)     214  
Net cash provided by (used in) operating activities   21,122     (1,236)  
         
Cash flows from investing activities:        
         
Purchase of property and equipment   (1,774)     (1,768)  
Proceeds from (investment in) other long-term assets, net   (25)     47  
Proceeds from (investment in) bank deposits, net   (17,898)     9,200  
Investment in, redemption of and purchase of marketable securities ,net   3,502     1,976  
Net cash provided by (used in) investing activities   (16,195)     9,455  
         
Cash flows from financing activities:        
         
Proceeds from exercise of share options       220  
Repurchase of shares   (839)     (12,742)  
Net cash used in financing activities   (839)     (12,522)  
         
Increase (decrease) in cash and cash equivalents   4,088     (4,303)  
Cash and cash equivalents at the beginning of the period   70,538     46,185  
Cash and cash equivalents at the end of the period   74,626     41,882  
         

 


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