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Radware Announces Second Quarter 2018 Earnings

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Second Quarter 2018 Results and Financial Highlights

  • Revenues of $57 Million, up 12% from the second quarter of 2017
  • Non-GAAP EPS of $0.10; GAAP EPS of $0.04

TEL AVIV, Israel, Aug. 01, 2018 (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 June 30, 2018.

"We are pleased to report another strong quarter, with continued growth in bookings, revenue, and profitability. We remain committed to our mission of ensuring network and application availability and security. The cyber threats landscape continues to evolve, and as threats grow more complex, our innovation around adaptive and analytics-based early attack detection, surgical mitigation, and advanced automation, all become more valuable" said Roy Zisapel, Radware President & CEO.

Financial Highlights for the Second Quarter of 2018

Revenues for the second quarter of 2018 totaled $57.3 million, up 12% from revenues of $51.0 million for the second quarter of 2017:

  • Revenues in the Americas region were $23.9 million for the second quarter of 2018, down 2% from revenues of $24.3 million in the second quarter of 2017. For the first six months of 2018, revenues in the Americas region were up 13% over the same period in 2017

  • Revenues in the EMEA region were $19.8 million for the second quarter of 2018, up 51% from revenues of $13.1 million in the second quarter of 2017. For the first six months of 2018, revenues in the EMEA region increased 26% over the same period of 2017

  • Revenues in the APAC region were $13.6 million for the second quarter of 2018, same as in the second quarter of 2017. For the first six months of 2018, revenues in the APAC region decreased 3% over the same period of 2017

Net profit on a GAAP basis for the second quarter of 2018 was $1.7 million or $0.04 per diluted share, compared with net loss of ($4.1) million or ($0.09) per diluted share for the second quarter of 2017.

Non-GAAP net income for the second quarter of 2018 was $5.0 million or $0.10 per diluted share, compared with non- GAAP net income of $1.2 million or $0.03 per diluted share for the second quarter 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 June 30, 2018, the Company had cash, cash equivalents, short-term and long-term bank deposits and marketable securities of $367.2 million, up from $358.1 million as of the end of March 31, 2018.

Conference Call

Radware management will host a call on Wednesday, August 1, 2018 at 8:30 am ET to discuss its second quarter 2018 results and the company's outlook for the third quarter of 2018.

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

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

Conference ID: 8599407

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.

©2018 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)
       
  June 30,   December 31,
  2018   2017
  (Unaudited)   (Unaudited)
Assets      
       
Current assets      
Cash and cash equivalents 61,676   65,237
Available-for-sale marketable securities 41,234   42,573
Short-term bank deposits 149,622   93,151
Trade receivables, net 18,598   16,150
Other receivables and prepaid expenses 7,687   12,252
Inventories 18,443   18,772
  297,260   248,135
       
Long-term investments      
Available-for-sale marketable securities 55,948   54,427
Long-term bank deposits 58,718   88,911
Severance pay funds 3,039   3,251
  117,705   146,589
       
       
Property and equipment, net 22,453   23,642
Intangible assets, net 9,932   10,415
Other long-term assets 18,492   8,133
Goodwill 32,174   32,174
Total assets 498,016   469,088
       
       
Liabilities and shareholders' equity      
       
Current Liabilities      
Trade payables 4,744   5,367
Deferred revenues 76,758   69,829
Other payables and accrued expenses 25,212   32,174
  106,714   107,370
       
Long-term liabilities      
Deferred revenues 43,719   43,482
Other long-term liabilities 5,413   2,880
  49,132   46,362
       
Shareholders' equity      
Share capital 685   673
Additional paid-in capital 368,318   349,250
Accumulated other comprehensive loss, net of tax (1,212)   (443)
Treasury stock, at cost (116,442)   (116,442)
Retained earnings 90,821   82,318
Total shareholders' equity 342,170   315,356
       
Total liabilities and shareholders' equity 498,016   469,088
       


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,
    2018   2017   2018   2017
    (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
                 
Revenues   57,287   50,956   111,823   99,868
Cost of revenues   10,340   9,634   20,280   18,628
Gross profit   46,947   41,322   91,543   81,240
                 
Operating expenses:                
Research and development, net   14,633   15,013   29,295   29,253
Selling and marketing   27,803   26,410   55,986   52,389
General and administrative   3,811   4,380   7,866   9,160
Total operating expenses   46,247   45,803   93,147   90,802
                 
Operating income (loss)   700   (4,481)   (1,604)   (9,562)
Financial income, net   1,701   640   3,390   1,747
Income (loss) before taxes on income   2,401   (3,841)   1,786   (7,815)
Taxes on income   (727)   (218)   (1,107)   (322)
Net income (loss)   1,674   (4,059)   679   (8,137)
                 
Basic net income (loss) per share   0.04   (0.09)   0.02   (0.19)
                 
Weighted average number of shares used to compute basic net earnings (loss) per share   44,839,420   43,821,006   44,583,442   43,282,607
                 
Diluted net earnings (loss) per share   0.04   (0.09)   0.01   (0.19)
                 
Weighted average number of shares used to compute diluted net earnings (loss) per share   47,396,099   43,821,006   46,936,309   43,282,607


  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,
    2018   2017   2018   2017
    (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
GAAP gross profit 46,947   41,322   91,543   81,240
  Stock-based compensation 59   61   117   116
  Amortization of intangible assets 212   419   442   672
Non-GAAP gross profit 47,218   41,802   92,102   82,028
                 
GAAP research and development, net 14,633   15,013   29,295   29,253
  Stock-based compensation 679   1,028   1,610   1,926
Non-GAAP Research and development, net 13,954   13,985   27,685   27,327
                 
GAAP selling and marketing 27,803   26,410   55,986   52,389
  Stock-based compensation 1,774   1,875   3,678   3,499
  Amortization of intangible assets 21   24   41   47
Non-GAAP selling and marketing 26,008   24,511   52,267   48,843
                 
GAAP general and administrative 3,811   4,380   7,866   9,160
  Stock-based compensation 378   583   785   1,003
  Acquisition costs -   -   -   340
  Litigation costs 143   600   413   1,619
Non-GAAP general and administrative 3,290   3,197   6,668   6,198
                 
GAAP total operating expenses 46,247   45,803   93,147   90,802
  Stock-based compensation 2,831   3,486   6,073   6,428
  Acquisition costs -   -   -   340
  Amortization of intangible assets 21   24   41   47
  Litigation costs 143   600   413   1,619
Non-GAAP total operating expenses 43,252   41,693   86,620   82,368
                 
GAAP operating income (loss) 700   (4,481)   (1,604)   (9,562)
  Stock-based compensation 2,890   3,547   6,190   6,544
  Acquisition costs -   -   -   340
  Amortization of intangible assets 233   443   483   719
  Litigation costs 143   600   413   1,619
Non-GAAP operating income (loss) 3,966   109   5,482   (340)
                 
GAAP finance income 1,701   640   3,390   1,747
  Exchange rate differences, net on balance sheet items included in financial income 26   659   (177)   806
Non-GAAP finance income 1,727   1,299   3,213   2,553
                 
GAAP income (loss) before taxes on income 2,401   (3,841)   1,786   (7,815)
  Stock-based compensation 2,890   3,547   6,190   6,544
  Acquisition costs -   -   -   340
  Amortization of intangible assets 233   443   483   719
  Litigation costs 143   600   413   1,619
  Exchange rate differences, net on balance sheet items included in financial income 26   659   (177)   806
Non-GAAP income before taxes on income 5,693   1,408   8,695   2,213
                 
GAAP net income (loss) 1,674   (4,059)   679   (8,137)
  Stock-based compensation 2,890   3,547   6,190   6,544
  Acquisition costs -   -   -   340
  Amortization of intangible assets 233   443   483   719
  Litigation costs 143   600   413   1,619
  Exchange rate differences, net on balance sheet items included in financial income 26   659   (177)   806
Non GAAP net income 4,966   1,190   7,588   1,891
                 
GAAP Net earnings (loss) per diluted share 0.04   (0.09)   0.01   (0.19)
  Stock-based compensation 0.06   0.08   0.13   0.15
  Acquisition costs 0.00   0.00   0.00   0.01
  Amortization of intangible assets 0.00   0.01   0.01   0.02
  Litigation costs 0.00   0.01   0.01   0.04
  Exchange rate differences, net on balance sheet items included in financial income 0.00   0.01   (0.00)   0.02
Non GAAP Net earnings per diluted share 0.10   0.02   0.16   0.04
                 
                 
Weighted average number of shares used to compute Non-GAAP diluted net earnings per share 47,396,099   45,054,172   46,936,309   44,279,284


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,
    2018   2017   2018   2017
    (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
Cash flow from operating activities:                
                 
Net income (loss)   1,674   (4,059)   679   (8,137)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:                
Depreciation and amortization   2,443   2,987   4,948   5,806
Stock based compensation   2,890   3,547   6,190   6,544
Amortization of premium, accretion of discounts and accrued interest on available-for- sale marketable securities, net   414   270   690   631
Accrued interest on bank deposits   (146)   150   (212)   1,532
Increase (decrease) in accrued severance pay, net   (97)   41   142   176
Decrease (increase) in trade receivables, net   (2,564)   3,352   (2,601)   1,902
Decrease (increase) in other current assets and prepaid expenses and other long-term assets   (2,501)   (196)   4,697   838
Decrease (increase) in inventories   477   (1,063)   329   (2,341)
Increase (decrease) in trade payables   424   1,574   (623)   (136)
Increase (decrease) in deferred revenues   (1,700)   8,135   7,166   14,949
Increase (decrease) in other payables and accrued expenses   1,245   (3,374)   (6,682)   (4,096)
Net cash provided by operating activities   2,559   11,364   14,723   17,668
                 
Cash flows from investing activities:                
                 
Purchase of property and equipment   (1,187)   (2,475)   (3,276)   (4,357)
Proceeds from (investment in) other long-term assets, net   131   (31)   40   16
Investment in bank deposits, net   (9,067)   (1,219)   (26,067)   (35,126)
Investment in sale, redemption of and purchase of available-for-sale marketable securities ,net   (686)   (5,910)   (1,872)   (2,023)
Payment for acquisition of subsidiary, net of cash acquired   0   0   0   (8,269)
Net cash used in investing activities   (10,809)   (9,635)   (31,175)   (49,759)
                 
Cash flows from financing activities:                
                 
Proceeds from exercise of stock options   7,939   1,228   12,891   2,538
Net cash provided by financing activities   7,939   1,228   12,891   2,538
                 
Increase (decrease) in cash and cash equivalents   (311)   2,957   (3,561)   (29,553)
Cash and cash equivalents at the beginning of the period   61,987   47,129   65,237   79,639
Cash and cash equivalents at the end of the period   61,676   50,086   61,676   50,086
                 

 

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