Second Quarter 2020 Results and Financial Highlights

  • Revenues of $58.4 million
  • Non-GAAP EPS of $0.13; GAAP EPS of $0.01
  • Net cash provided by operating activities of $18 million

First Six Months 2020 Results and Financial Highlights

  • Revenues of $118.5 million
  • Non-GAAP EPS of $0.26; GAAP EPS of $0.07
  • Net cash provided by operating activities of $39 million; net cash provided by operating activities of $63 million for the last twelve months

TEL AVIV, Israel, July 29, 2020 (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, 2020.

“We are pleased with the results for the second quarter, despite the unusual COVID-19 related circumstances as our strong business fundamentals continued to provide us with resilience,” said Roy Zisapel, Radware’s President & CEO. “Strong bookings performance in North America, coupled with continued progress with our OEM partners and strong performance in our security business were the highlights of the quarter and we expect them to continue throughout the year.”

Financial Highlights for the Second Quarter of 2020

Revenues for the second quarter of 2020 totaled $58.4 million, down 3% from revenues of $60.5 million for the second quarter of 2019. Revenues for the first six months of 2020 totaled $118.5 million, down 3% from revenues of $121.9 million for the first six months of 2019:

  • Revenues in the Americas region were $27.5 million for the second quarter of 2020, down 1% compared to revenues of $27.6 million in the second quarter of 2019. For the first six months of 2020, revenues in the Americas region increased 8% over the same period in 2019.
  • Revenues in the Europe, Middle East and Africa (“EMEA”) region were $17.7 million for the second quarter of 2020, up 5% from revenues of $16.9 million in the second quarter of 2019. For the first six months of 2020, revenues in the EMEA region increased 2% over the same period in 2019.
  • Revenues in the Asia-Pacific (“APAC”) region were $13.3 million for the second quarter of 2020, down 17% from revenues of $15.9 million in the second quarter of 2019. For the first six months of 2020, revenues in the APAC region decreased 25% over the same period in 2019.

Net income on a GAAP basis for the second quarter of 2020 was $0.7 million, or $0.01 per diluted share, compared with net income of $3.7 million, or $0.08 per diluted share, for the second quarter of 2019.

Non-GAAP net income for the second quarter of 2020 was $6.0 million, or $0.13 per diluted share, compared with non- GAAP net income of $8.9 million, or $0.18 per diluted share, for the second quarter of 2019.

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 loss (gain) 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, 2020, the Company had cash, cash equivalents, short-term and long-term bank deposits and marketable securities of $442.8 million. Net cash provided by operating activities in the second quarter of 2020 totaled $18.0 million. Net cash spent on share repurchases in the second quarter of 2020 totaled $5.0 million.

Conference Call

Radware management will host a call on Wednesday, July 29, 2020 at 8:30 a.m. ET to discuss its second quarter 2020 results and the Company’s outlook for the third quarter of 2020.

Participants in the US call: Toll Free 833-968-2213

Participants Internationally call:  +1-778-560-2898

Conference ID: 1278452

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, 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, acquisition costs, litigation costs, exchange rate differences, net on balance sheet items included in finance income, other loss (gain) 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 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; natural disasters and public health crises, such as the coronavirus disease 2019 (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; 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 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 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.

©2020 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:
Anat Earon-Heilborn
+972 723917548
ir@radware.com 

Media Contact:
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,
 2020 2019
 (Unaudited) (Unaudited)
Assets   
    
Current assets   
Cash and cash equivalents48,650 40,751
Marketable securities63,568 36,924
Short-term bank deposits114,137 100,276
Trade receivables, net17,195 22,610
Other receivables and prepaid expenses8,444 7,469
Inventories14,106 13,940
 266,100 221,970
    
Long-term investments   
Marketable securities83,647 112,696
Long-term bank deposits132,765 137,095
Severance pay funds2,191 2,300
 218,603 252,091
    
    
Property and equipment, net23,663 22,971
Other long-term assets25,358 24,398
Operating lease right-of-use assets24,117 18,144
Goodwill and intangible assets, net54,663 55,625
Total assets612,504 595,199
    
    
Liabilities and shareholders' equity   
    
Current Liabilities   
Trade payables4,896 6,315
Deferred revenues97,703 79,239
Operating lease liabilities4,573 5,193
Other payables and accrued expenses33,672 34,794
 140,844 125,541
    
Long-term liabilities   
Deferred revenues54,091 50,888
Operating lease liabilities20,469 13,914
Other long-term liabilities10,004 9,525
 84,564 74,327
    
Shareholders' equity   
Share capital713 710
Additional paid-in capital425,466 414,581
Accumulated other comprehensive income, net of tax2,444 1,145
Treasury stock, at cost(168,895) (145,226)
Retained earnings127,368 124,121
Total shareholders' equity387,096 395,331
    
Total liabilities and shareholders' equity612,504 595,199
    


 
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,
  2020 2019 2020 2019
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
         
Revenues 58,445 60,454 118,457 121,851
Cost of revenues 10,558 10,644 21,247 21,653
Gross profit 47,887 49,810 97,210 100,198
         
Operating expenses, net:        
Research and development, net 16,509 15,400 32,341 30,630
Selling and marketing 26,755 26,680 54,957 53,341
General and administrative 4,889 5,042 9,601 9,806
Total operating expenses, net 48,153 47,122 96,899 93,777
         
Operating income (loss) (266) 2,688 311 6,421
Financial income, net 1,783 2,119 4,507 3,910
Income before taxes on income 1,517 4,807 4,818 10,331
Taxes on income 844 1,061 1,571 2,217
Net income 673 3,746 3,247 8,114
         
Basic net earnings per share 0.01 0.08 0.07 0.17
         
  Weighted average number of shares used to compute basic net earnings per share 46,387,585 46,899,813 46,652,734 46,757,981
         
Diluted net earnings per share 0.01 0.08 0.07 0.17
         
  Weighted average number of shares used to compute diluted net earnings per share 47,632,309 48,722,684 47,927,268 48,649,438
         


  
 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,
   2020 2019 2020 2019
   (Unaudited) (Unaudited) (Unaudited) (Unaudited)
GAAP gross profit47,887 49,810 97,210 100,198
 Stock-based compensation 49 59 87 114
 Amortization of intangible assets 464 410 962 821
Non-GAAP gross profit48,400 50,279 98,259 101,133
          
GAAP research and development, net16,509 15,400 32,341 30,630
 Stock-based compensation 1,089 714 1,898 1,424
Non-GAAP Research and development, net15,420 14,686 30,443 29,206
          
GAAP selling and marketing26,755 26,680 54,957 53,341
 Stock-based compensation 1,845 1,735 3,731 3,304
 Amortization of intangible assets - 18 - 35
Non-GAAP selling and marketing24,910 24,927 51,226 50,002
          
GAAP general and administrative4,889 5,042 9,601 9,806
 Stock-based compensation 931 782 1,834 1,549
 Acquisition costs - - - 264
 Litigation costs 140 777 259 859
Non-GAAP general and administrative3,818 3,483 7,508 7,134
          
GAAP total operating expenses, net48,153 47,122 96,899 93,777
 Stock-based compensation 3,865 3,231 7,463 6,277
 Amortization of intangible assets - 18 - 35
 Acquisition costs - - - 264
 Litigation costs 140 777 259 859
Non-GAAP total operating expenses, net44,148 43,096 89,177 86,342
          
GAAP operating income (loss)(266) 2,688 311 6,421
 Stock-based compensation 3,914 3,290 7,550 6,391
 Amortization of intangible assets 464 428 962 856
 Acquisition costs - - - 264
 Litigation costs 140 777 259 859
Non-GAAP operating income4,252 7,183 9,082 14,791
          
GAAP financial income, net1,783 2,119 4,507 3,910
 Other loss (gain) adjustment - (310) 247 (310)
 Exchange rate differences, net on balance sheet items included in financial income, net 859 909 552 1,540
Non-GAAP financial income, net2,642 2,718 5,306 5,140
          
GAAP income before taxes on income1,517 4,807 4,818 10,331
 Stock-based compensation 3,914 3,290 7,550 6,391
 Amortization of intangible assets 464 428 962 856
 Acquisition costs - - - 264
 Litigation costs 140 777 259 859
 Other loss (gain) adjustment - (310) 247 (310)
 Exchange rate differences, net on balance sheet items included in financial income, net 859 909 552 1,540
Non-GAAP income before taxes on income6,894 9,901 14,388 19,931
          
GAAP taxes on income844 1,061 1,571 2,217
 Tax related adjustments 61 (71) 183 (71)
Non-GAAP taxes on income905 990 1,754 2,146
          
GAAP net income673 3,746 3,247 8,114
 Stock-based compensation 3,914 3,290 7,550 6,391
 Amortization of intangible assets 464 428 962 856
 Acquisition costs - - - 264
 Litigation costs 140 777 259 859
 Other loss (gain) adjustment - (310) 247 (310)
 Exchange rate differences, net on balance sheet items included in financial income, net 859 909 552 1,540
 Tax related adjustments (61) 71 (183) 71
Non-GAAP net income5,989 8,911 12,634 17,785
          
GAAP diluted net earnings per share0.01 0.08 0.07 0.17
 Stock-based compensation 0.08 0.07 0.16 0.13
 Amortization of intangible assets 0.01 0.01 0.02 0.02
 Acquisition costs 0.00 0.00 0.00 0.01
 Litigation costs 0.00 0.02 0.01 0.02
 Other loss (gain) adjustment 0.00 (0.01) 0.01 (0.01)
 Exchange rate differences, net on balance sheet items included in financial income, net 0.02 0.02 0.01 0.03
 Tax related adjustments (0.00) 0.00 (0.00) 0.00
Non-GAAP diluted net earnings per share0.13 0.18 0.26 0.37
          
          
Weighted average number of shares used to compute Non-GAAP diluted net earnings per share47,632,309 48,722,684 47,927,268 48,649,438
          


 
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,
  2020 2019 2020 2019
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash flow from operating activities:        
         
Net income 673 3,746 3,247 8,114
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation and amortization 2,637 2,701 5,267 5,388
Stock-based compensation 3,914 3,290 7,550 6,391
Amortization of premium, accretion of discounts and accrued interest on marketable securities, net 114 149 310 327
Gain related to securities, net (226) (310) (63) (310)
Accrued interest on bank deposits (178) 3,160 (373) 2,331
Increase (decrease) in accrued severance pay, net (29) 65 187 933
Decrease (increase) in trade receivables, net 9,444 (641) 5,415 2,529
Increase in other receivables and prepaid expenses and other long-term assets (1,471) (1,721) (1,930) (3,686)
Decrease (increase) in inventories 748 1,221 (166) 2,437
Decrease in trade payables (3) (28) (1,419) (738)
Increase (decrease) in deferred revenues 1,637 (7,237) 21,667 3,783
Increase (decrease) in other payables and accrued expenses (100) 463 (721) 472
Operating lease liabilities, net 800 285 (38) 660
Net cash provided by operating activities 17,960 5,143 38,933 28,631
         
Cash flows from investing activities:        
         
Purchase of property and equipment (2,545) (2,382) (4,997) (4,343)
Investment in other long-term assets, net (9) (33) (11) (62)
Proceeds from (investment in) bank deposits, net (4,652) 19,529 (9,158) 19,447
Proceeds from (investment in) sale, redemption of and purchase of marketable securities ,net 940 (33,574) 3,463 (43,235)
Payment for acquisition of subsidiary, net of cash acquired 0 43 0 (12,239)
Net cash used in investing activities (6,266) (16,417) (10,703) (40,432)
         
Cash flows from financing activities:        
         
Proceeds from exercise of stock options 1,749 3,109 3,338 10,842
Repurchase of shares (5,000) (10,005) (23,669) (10,053)
Net cash provided by (used in) financing activities (3,251) (6,896) (20,331) 789
         
Increase (decrease) in cash and cash equivalents 8,443 (18,170) 7,899 (11,012)
Cash and cash equivalents at the beginning of the period 40,207 52,361 40,751 45,203
Cash and cash equivalents at the end of the period 48,650 34,191 48,650 34,191

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