Radware : Reports Record Revenue for the Second Quarter 2021 (Form 6-K)

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 - 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.

o 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.

o 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.

o 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 [phone] 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.

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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.

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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, [phone], [e-mail]

Media Contacts:

Gerri Dyrek, [phone], [e-mail]

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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 equivalents			61,057				54,771
Marketable securities			56,509				64,684
Short-term bank deposits			195,010				191,038
Trade receivables, net			18,499				16,848
Other receivables and prepaid expenses			12,726				6,526
Inventories			13,200				13,935
			357,001				347,802
Long-term investments
Marketable securities			64,531				66,836
Long-term bank deposits			63,097				71,421
Severance pay funds			2,338				2,453
			129,966				140,710
Property and equipment, net			21,212				22,976
Intangible assets, net			11,659				12,588
Other long-term assets			34,227				30,222
Operating lease right-of-use assets			26,143				27,823
Goodwill			41,144				41,144
Total assets			621,352				623,265
Liabilities and shareholders' equity
Current Liabilities
Trade payables			5,548				3,882
Deferred revenues			102,266				92,127
Operating lease liabilities			4,649				5,224
Other payables and accrued expenses			43,144				42,514
			155,607				143,747
Long-term liabilities
Deferred revenues			56,048				54,797
Operating lease liabilities			23,322				24,851
Other long-term liabilities			11,701				11,409
			91,071				91,057
Shareholders' equity
Share capital			726				721
Additional paid-in capital			456,469				443,018
Accumulated other comprehensive income, net of tax			664				1,517
Treasury stock, at cost			(225,379	)			(190,552	)
Retained earnings			142,194				133,757
Total shareholders' equity			374,674				388,461
Total liabilities and shareholders' equity			621,352				623,265

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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

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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 profit			56,829				47,887				111,332				97,210
Stock-based compensation			51				49				98				87
Amortization of intangible assets			465				464				929				962
Non-GAAP gross profit			57,345				48,400				112,359				98,259
GAAP research and development, net			18,127				16,509				35,862				32,341
Stock-based compensation			1,013				1,089				2,352				1,898
Non-GAAP Research and development, net			17,114				15,420				33,510				30,443
GAAP selling and marketing			29,248				26,755				58,239				54,957
Stock-based compensation			2,030				1,845				4,082				3,731
Non-GAAP selling and marketing			27,218				24,910				54,157				51,226
GAAP general and administrative			4,551				4,889				9,747				9,601
Stock-based compensation			143				931				1,079				1,834
Litigation costs			158				140				221				259
Non-GAAP general and administrative			4,250				3,818				8,447				7,508
GAAP total operating expenses, net			51,926				48,153				103,848				96,899
Stock-based compensation			3,186				3,865				7,513				7,463
Litigation costs			158				140				221				259
Non-GAAP total operating expenses, net			48,582				44,148				96,114				89,177
GAAP operating income (loss)			4,903				(266	)			7,484				311
Stock-based compensation			3,237				3,914				7,611				7,550
Amortization of intangible assets			465				464				929				962
Litigation costs			158				140				221				259
Non-GAAP operating income			8,763				4,252				16,245				9,082
GAAP financial income, net			1,187				1,783				3,857				4,507
Other loss adjustment			-				-				-				247
Exchange rate differences, net on balance sheet items included in financial income, net			555				859				(169	)			552
Non-GAAP financial income, net			1,742				2,642				3,688				5,306
GAAP income before taxes on income			6,090				1,517				11,341				4,818
Stock-based compensation			3,237				3,914				7,611				7,550
Amortization of intangible assets			465				464				929				962
Litigation costs			158				140				221				259
Other loss adjustment			-				-				-				247
Exchange rate differences, net on balance sheet items included in financial income, net			555				859				(169	)			552
Non-GAAP income before taxes on income			10,505				6,894				19,933				14,388
GAAP taxes on income			1,558				844				2,904				1,571
Tax related adjustments			61				61				123				183
Non-GAAP taxes on income			1,619				905				3,027				1,754
GAAP net income			4,532				673				8,437				3,247
Stock-based compensation			3,237				3,914				7,611				7,550
Amortization of intangible assets			465				464				929				962
Litigation costs			158				140				221				259
Other loss adjustment			-				-				-				247
Exchange rate differences, net on balance sheet items included in financial income, net			555				859				(169	)			552
Tax related adjustments			(61	)			(61	)			(123	)			(183	)
Non-GAAP net income			8,886				5,989				16,906				12,634
GAAP diluted net earnings per share			0.10				0.01				0.18				0.07
Stock-based compensation			0.07				0.08				0.16				0.16
Amortization of intangible assets			0.01				0.01				0.02				0.02
Litigation costs			0.00				0.00				0.00				0.01
Other loss adjustment			0.00				0.00				0.00				0.01
Exchange rate differences, net on balance sheet items included in financial income, net			0.01				0.02				(0.00	)			0.01
Tax related adjustments			(0.00	)			(0.00	)			(0.00	)			(0.00	)
Non-GAAP diluted net earnings per share			0.19				0.13				0.36				0.26
Weighted average number of shares used to compute non-GAAP diluted net earnings per share			47,138,142				47,632,309				47,369,008				47,927,268

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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 expenses			6,664				(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 period			38,979				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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