Radware Reports Record Revenue for the Second Quarter 2021

Second Quarter 2021 Results and Financial Highlights

  • Record revenue of $70 million, up 19% year over year, exceeding high end of the guidance
  • ARR of $177 million, up 8% year over year
  • Non-GAAP operating income of $8.8 million, an increase of 106% year over year
  • Non-GAAP EPS of $0.19, exceeding high end of the guidance; GAAP EPS of $0.10

First Six Months 2021 Results and Financial Highlights

  • Total revenue of $136 million, up 15% year over year, exceeding high end of the guidance
  • Non-GAAP operating income of $16 million, an increase of 79% year over year
  • Non-GAAP EPS of $0.36; GAAP EPS of $0.18
  • Cash flow from operations of $50 million in the last twelve months

TEL AVIV, Israel, July 28, 2021 (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 the six months ended June 30, 2021.

“We had an excellent quarter, driven by our application security and cloud solutions. We delivered record revenue and double-digit growth in revenue and earnings per share, as well as tripled our new customer bookings,” said Roy Zisapel, President and CEO, Radware.

Mr. Zisapel continued, “The momentum continues to be strong across our business lines and geographies. The market provides many opportunities as enterprises are accelerating their digital transformation and at the same time experiencing more cyber attacks than ever. Our pipeline is robust, and we are confident in our ability to execute on it.”

Financial Highlights for the Second Quarter and the First Six Months of 2021
Revenue for the second quarter of 2021 totaled $69.7 million. Revenue for the first six months of 2021 totaled $136.4 million:

  • Revenue in the Americas region were $28.1 million for the second quarter of 2021, up 2% from $27.5 million in the second quarter of 2020.
    For the first six months of 2021, revenue in the Americas were $61.8 million, an increase of 9% compared to the same period in 2020.
  • Revenue in the Europe, Middle East and Africa (“EMEA”) region were $24.0 million for the second quarter of 2021, up 36% from $17.7 million in the second quarter of 2020.
    For the first six months of 2021, revenue in EMEA were $45.1 million, an increase of 26% compared to the same period in 2020.
  • Revenue in the Asia-Pacific (“APAC”) region were $17.6 million for the second quarter of 2021, up 32% from $13.3 million in the second quarter of 2020.
    For the first six months of 2021, revenue in APAC were $29.5 million, an increase of 14% compared to the same period in 2020.

GAAP net income for the second quarter of 2021 was $4.5 million, or $0.10 per diluted share, compared to GAAP net income of $0.7 million, or $0.01 per diluted share, for the second quarter of 2020.

Non-GAAP net income for the second quarter of 2021 was $8.9 million, or $0.19 per diluted share, compared to non-GAAP net income of $6.0 million, or $0.13 per diluted share, for the second quarter of 2020.

Non-GAAP results are calculated excluding, as applicable, the impact of stock-based compensation expenses, amortization of intangible assets, litigation costs, exchange rate differences, net on balance sheet items included in finance income, other loss adjustment and tax related adjustments. 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 June 30, 2021, the Company had cash, cash equivalents, short-term and long-term bank deposits and marketable securities of $440.2 million. Net cash provided by operating activities in the second quarter of 2021 totaled $8.8 million.

Conference Call
Radware management will host a call today, July 28, 2021 at 8:30 a.m. ET to discuss its second quarter 2021 results and the Company’s outlook. To participate in the call, please use the following numbers:

Participants in the US call: Toll Free 833-968-2213
Participants Internationally call: 1 778-560-2898
Conference ID: 1895308

A replay will be available for two days, starting two hours after the end of the call, on telephone number +1-416-621-4642 or (US toll-free) 800-585-8367. Passcode 1895308.

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, income before taxes on income, 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, litigation costs, exchange rate differences, net on balance sheet items included in finance income, other loss adjustment 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.” For example when we say that the momentum continues to be strong and that our pipeline is robust, and that we are confident in our ability to execute on it, these are forward looking statements. 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; natural disasters and public health crises, such as the COVID-19 pandemic; our ability to expand our operations effectively; timely availability and customer acceptance of our new and existing solutions; 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 cyber security and application delivery solutions and in our industry in general and changes in the competitive landscape; 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; real or perceived shortcomings, defects or vulnerabilities in our products or solutions or if we or our end-users experience security breaches; the availability of components and manufacturing capacity; our reliance on a single managed security service provider to provide us with scrubbing center services; 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 realize our investment objectives for our cash and liquid investments; 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 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.

©2021 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.

CONTACTS
Investor Relations:
Yisca Erez, +972-72-3917211, ir@radware.com

Media Contacts:
Gerri Dyrek, gerri.dyrek@radware.com

Radware Ltd.
Condensed Consolidated Balance Sheets
(U.S. Dollars in thousands)
    
 June 30, December 31,
 2021 2020
 (Unaudited) (Unaudited)
Assets   
    
Current assets   
Cash and cash equivalents61,057  54,771 
Marketable securities56,509  64,684 
Short-term bank deposits195,010  191,038 
Trade receivables, net18,499  16,848 
Other receivables and prepaid expenses12,726  6,526 
Inventories13,200  13,935 
 357,001  347,802 
    
Long-term investments   
Marketable securities64,531  66,836 
Long-term bank deposits63,097  71,421 
Severance pay funds2,338  2,453 
 129,966  140,710 
    
    
Property and equipment, net21,212  22,976 
Intangible assets, net11,659  12,588 
Other long-term assets34,227  30,222 
Operating lease right-of-use assets26,143  27,823 
Goodwill41,144  41,144 
Total assets621,352  623,265 
    
    
Liabilities and shareholders' equity   
    
Current Liabilities   
Trade payables5,548  3,882 
Deferred revenues102,266  92,127 
Operating lease liabilities4,649  5,224 
Other payables and accrued expenses43,144  42,514 
 155,607  143,747 
    
Long-term liabilities   
Deferred revenues56,048  54,797 
Operating lease liabilities23,322  24,851 
Other long-term liabilities11,701  11,409 
 91,071  91,057 
    
Shareholders' equity   
Share capital726  721 
Additional paid-in capital456,469  443,018 
Accumulated other comprehensive income, net of tax664  1,517 
Treasury stock, at cost(225,379) (190,552)
Retained earnings142,194  133,757 
Total shareholders' equity374,674  388,461 
    
Total liabilities and shareholders' equity621,352  623,265 
      


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,
  2021 2020 2021 2020
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
         
Revenues 69,667 58,445  136,436 118,457
Cost of revenues 12,838 10,558  25,104 21,247
Gross profit 56,829 47,887  111,332 97,210
         
Operating expenses, net:        
Research and development, net 18,127 16,509  35,862 32,341
Selling and marketing 29,248 26,755  58,239 54,957
General and administrative 4,551 4,889  9,747 9,601
Total operating expenses, net 51,926 48,153  103,848 96,899
         
Operating income (loss) 4,903 (266) 7,484 311
Financial income, net 1,187 1,783  3,857 4,507
Income before taxes on income 6,090 1,517  11,341 4,818
Taxes on income 1,558 844  2,904 1,571
Net income 4,532 673  8,437 3,247
         
Basic net earnings per share 0.10 0.01  0.18 0.07
         
Weighted average number of shares used to compute basic net earnings per share 45,618,971 46,387,585  45,918,605 46,652,734
         
Diluted net earnings per share 0.10 0.01  0.18 0.07
         
Weighted average number of shares used to compute diluted net earnings per share 47,138,142 47,632,309  47,369,008 47,927,268
          


 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,
  2021 2020 2021 2020
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
GAAP gross profit56,829  47,887  111,332  97,210 
 Stock-based compensation51  49  98  87 
 Amortization of intangible assets465  464  929  962 
Non-GAAP gross profit57,345  48,400  112,359  98,259 
         
GAAP research and development, net18,127  16,509  35,862  32,341 
 Stock-based compensation1,013  1,089  2,352  1,898 
Non-GAAP Research and development, net17,114  15,420  33,510  30,443 
         
GAAP selling and marketing29,248  26,755  58,239  54,957 
 Stock-based compensation2,030  1,845  4,082  3,731 
Non-GAAP selling and marketing27,218  24,910  54,157  51,226 
         
GAAP general and administrative4,551  4,889  9,747  9,601 
 Stock-based compensation143  931  1,079  1,834 
 Litigation costs158  140  221  259 
Non-GAAP general and administrative4,250  3,818  8,447  7,508 
         
GAAP total operating expenses, net51,926  48,153  103,848  96,899 
 Stock-based compensation3,186  3,865  7,513  7,463 
 Litigation costs158  140  221  259 
Non-GAAP total operating expenses, net48,582  44,148  96,114  89,177 
         
GAAP operating income (loss)4,903  (266) 7,484  311 
 Stock-based compensation3,237  3,914  7,611  7,550 
 Amortization of intangible assets465  464  929  962 
 Litigation costs158  140  221  259 
Non-GAAP operating income8,763  4,252  16,245  9,082 
         
GAAP financial income, net1,187  1,783  3,857  4,507 
 Other loss adjustment-  -  -  247 
 Exchange rate differences, net on balance sheet items included in financial income, net555  859  (169) 552 
Non-GAAP financial income, net1,742  2,642  3,688  5,306 
         
GAAP income before taxes on income6,090  1,517  11,341  4,818 
 Stock-based compensation3,237  3,914  7,611  7,550 
 Amortization of intangible assets465  464  929  962 
 Litigation costs158  140  221  259 
 Other loss adjustment-  -  -  247 
 Exchange rate differences, net on balance sheet items included in financial income, net555  859  (169) 552 
Non-GAAP income before taxes on income10,505  6,894  19,933  14,388 
         
GAAP taxes on income1,558  844  2,904  1,571 
 Tax related adjustments61  61  123  183 
Non-GAAP taxes on income1,619  905  3,027  1,754 
         
GAAP net income4,532  673  8,437  3,247 
 Stock-based compensation3,237  3,914  7,611  7,550 
 Amortization of intangible assets465  464  929  962 
 Litigation costs158  140  221  259 
 Other loss adjustment-  -  -  247 
 Exchange rate differences, net on balance sheet items included in financial income, net555  859  (169) 552 
 Tax related adjustments(61) (61) (123) (183)
Non-GAAP net income8,886  5,989  16,906  12,634 
         
GAAP diluted net earnings per share0.10  0.01  0.18  0.07 
 Stock-based compensation0.07  0.08  0.16  0.16 
 Amortization of intangible assets0.01  0.01  0.02  0.02 
 Litigation costs0.00  0.00  0.00  0.01 
 Other loss adjustment0.00  0.00  0.00  0.01 
 Exchange rate differences, net on balance sheet items included in financial income, net0.01  0.02  (0.00) 0.01 
 Tax related adjustments(0.00) (0.00) (0.00) (0.00)
Non-GAAP diluted net earnings per share0.19  0.13  0.36  0.26 
         
         
Weighted average number of shares used to compute non-GAAP diluted net earnings per share47,138,142  47,632,309  47,369,008  47,927,268 
            


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,
  2021 2020 2021 2020
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash flow from operating activities:        
         
Net income 4,532  673  8,437  3,247 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization 2,537  2,637  5,185  5,267 
Stock-based compensation 3,237  3,914  7,611  7,550 
Amortization of premium, accretion of discounts and accrued interest on marketable securities, net 727  114  1,135  310 
Gain related to securities, net (95) (226) (97) (63)
Accrued interest on bank deposits 698  (178) (83) (373)
Increase (decrease) in accrued severance pay, net 140  (29) 365  187 
Decrease (increase) in trade receivables, net (8,591) 9,444  (1,651) 5,415 
Increase in other receivables and prepaid expenses and other long-term assets (5,519) (1,471) (9,981) (1,930)
Decrease (increase) in inventories 211  748  735  (166)
Increase (decrease) in trade payables 1,422  (3) 1,666  (1,419)
Increase in deferred revenues 2,468  1,637  11,390  21,667 
Increase (decrease) in other payables and accrued expenses6,664  (100) 671  (721)
Operating lease liabilities, net 358  800  (424) (38)
Net cash provided by operating activities 8,789  17,960  24,959  38,933 
         
Cash flows from investing activities:        
         
Purchase of property and equipment (1,159) (2,545) (2,492) (4,997)
Proceeds from (investment in) other long-term assets, net(11) (9) 31  (11)
Proceeds from (investment in) bank deposits, net 4,577  (4,652) 4,434  (9,158)
Proceeds from sale, redemption of and purchase of marketable securities, net 10,825  940  8,334  3,463 
Net cash used in investing activities 14,232  (6,266) 10,307  (10,703)
         
Cash flows from financing activities:        
         
Proceeds from exercise of stock options 3,695  1,749  5,847  3,338 
Repurchase of shares (4,638) (5,000) (34,827) (23,669)
Net cash used in financing activities (943) (3,251) (28,980) (20,331)
         
Increase in cash and cash equivalents 22,078  8,443  6,286  7,899 
Cash and cash equivalents at the beginning of the period38,979  40,207  54,771  40,751 
Cash and cash equivalents at the end of the period 61,057  48,650  61,057  48,650 
         

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