Radware Ltd. Announces Record Results and Nomination of Chairman

Record Quarterly Revenues of $29.2 Million; Non-GAAP Profitability Tripled Sequentially From Previous Quarter to $0.12 EPS

• Press Release
• Source: Radware Ltd
• On 5:30 am EST, Tuesday November 3, 2009

TEL AVIV, Israel, November 3 /PRNewswire-FirstCall/ -- Radware (NASDAQ: RDWR - News), the leading provider of integrated application delivery (http://www.radware.com/Products/ApplicationDelivery/default.aspx) solutions for business-smart networking, today reported record quarterly revenues of $29.2 million for the third quarter of 2009. This represents an increase of 24% compared with revenues of $23.5 million for the third quarter of 2008 and an increase of 8% compared with revenues of $27.1 in the second quarter of 2009.

Net income on a GAAP basis for the third quarter of 2009 was $0.2 million or $0.01 per diluted share compared with a net loss of $8.5 million or $0.44 per diluted share in the third quarter of 2008.

Net income on a Non-GAAP basis for the third quarter of 2009 was $2.3 million or $0.12 per diluted share, compared with a net loss of $4.3 million or $0.22 per diluted share in the third quarter of 2008.

At the end of the third quarter of 2009, the company's overall cash position including cash, short-term and long-term bank deposits and marketable securities amounted to $120.2 million an increase of $5.4 million over previous quarter.

"We are pleased to report yet another record quarter of results along with a significant increase in profitability," advised Roy Zisapel, CEO Radware. "For several quarters now we have been able to sequentially increase market share. This is a direct result of our ability to competitively win key customer accounts, strike several new distribution and reseller partnerships and further capitalize on the Alteon acquisition while we continue to extend and innovate the capabilities of our solutions. In just a year we've cost-effectively and successfully driven the business to over 20% growth with strong profitability leverage."

    During the quarter ended September 30, 2009, Radware released the
    following significant announcements:

    - Radware Receives a 2009 INTERNET TELEPHONY Excellence Award
    - Radware Discusses Next-Generation Data Center Strategies at its Global
      Executive Exchange Forums
    - Radware Prevents Network Downtime for Carolinas HealthCare System, One
      of the Largest Healthcare Systems in the U.S.
    - Radware Upgrades DefensePro Security Solution to Protect Against
      High-Volume Cybercriminal Activity
    - Financial Express Selects Radware to Guarantee Performance and Security
      for Web Applications
    - Radware's AppDirector Achieves Oracle Validated Integration with
      Oracle® E-Business Suite 12.0
    - Optivor Signs Reseller Partnership with Radware for Alteon Products
    - Radware's AppDirector Ensures 'Always Up' Communications on the
      Microsoft Office Communications Server 2007 R2 Environment
    - Radware Provides Full Availability, Performance and Security to Oracle
      Customers
    - Radware to Present at DEFCON; The Risk of Software Updates - How to
      Protect Your Infrastructure When It is the Most Vulnerable?
    - Radware and RSA Form Technology Partnership to Offer Service for
      Increased Protection Against Trojan and Phishing Attacks
    - Key [Nortel] Alteon Reseller Packet Fusion Signs with Radware
    - Radware First to Offer Comprehensive Protection Against Recent Wave of
      Cyber Attacks Which Strike US and South Korean Government and
      Commercial Websites

In addition, Radware's Board of Directors has chosen Mr. Yehuda Zisapel to serve as non-employee Chairman of the Board. Mr. Zisapel has served as a member of the Board since the company's inception and served as Chairman of the Board until August 2006. Mr. Zisapel is also a founder and a director of RAD Data Communications Ltd., a worldwide data communications company headquartered in Israel, and BYNET Data Communications Ltd., a distributor of data communications products in Israel and serves as director of other companies in the RAD-Bynet Group, including SILICOM Ltd., and several private companies.

Company management will host a quarterly investor conference call at 8:45 AM EDT on November 3, 2009. The call will focus on financial results for the quarter ending September 30, 2009, and certain other matters related to the Company's business.

The conference call will be webcast on November 3, 2009 at 8:45 AM EST in the "listen only" mode via the Internet at: http://www.radware.com/Company/InvestorRelations/default.aspx and will be available for replay during the next 30 days.

Please use the following dial-in numbers to participate in the third quarter 2009 call: Participants in the US call: Toll Free 1-800-230-1059

International participants call: +1-612-234-9959

About Radware

    Radware (NASDAQ:RDWR - News), the global leader in integrated application
delivery (http://www.radware.com/Products/ApplicationDelivery/default.aspx)
solutions, assures the full availability, maximum performance, and complete
security of business-critical applications for nearly 10,000 enterprises and
carriers worldwide. With APSolute®, Radware's comprehensive and
award-winning suite of application delivery
(http://www.radware.com/Products/ApplicationDelivery/default.aspx) and
network security
(http://www.radware.com/Products/ApplicationNetworkSecurity/default.aspx)
products, companies in every industry can drive business productivity,
improve profitability, and reduce IT operating and infrastructure costs by
making their networks "business smart". For more information, please visit
http://www.radware.com.

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 net income and earnings per share, which are adjustments from results based on GAAP to exclude stock-based compensation expenses, in accordance with SFAS 123R, non-recurring retention expenses , amortization of intangible assets and acquisition-related expenses. 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.

This press release may contain forward-looking statements that are subject to risks and uncertainties. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, general business conditions in the Application Switching and Network Security industry, changes in demand for Application Switching and Network Security products, the timing and amount or cancellation of orders and other risks detailed from time to time in Radware's filings with the Securities and Exchange Commission, including Radware's Form 20-F.

                          Condensed Consolidated Balance Sheets
                               (U.S. Dollars in thousands)

                                          December 31,     September 30,

                                                 2008             2009
                                             (Audited)        (Unaudited)
    Current assets
    Cash and cash equivalents                  28,065            26,130
    Available-for-sale marketable
      securities and deposits                  60,731            39,954
    Trade receivables, net                     13,348            15,734
    Other receivables and prepaid
      expenses                                  2,046             2,259
    Inventories                                 6,712             9,330
                                              110,902            93,407

    Long-term investments
    Available-for-sale marketable
      securities and deposits                  45,112            54,068
    Severance pay funds                         1,995             2,416
                                               47,107            56,484

    Property and equipment, net                11,693            11,911

    Other assets
    Goodwill and other intangible
      assets                                   15,762            41,692

    Total assets                              185,464           203,494

    Current liabilities
    Trade payables                              4,646             5,726
    Deferred revenues, other
      payables and accrued expenses            23,964            36,170
                                               28,610            41,896

    Long-term liabilities                       8,792            16,001

    Shareholders' equity
    Share capital                                 465               464
    Additional paid-in capital                185,985           189,972
    Accumulated other comprehensive
      income (loss)                              (873)              716
    Treasury stock, at cost                   (17,619)          (18,036)
    Accumulated deficit                       (19,896)          (27,519)
    Total shareholders' equity                148,062           145,597

    Total liabilities and
      shareholders' equity                    185,464           203,494



                 Condensed Consolidated Statements of Operations
           (U.S. Dollars in thousands, except share and per share data)

                                For the Three months     For the Nine months
                                 ended September 30,     ended September 30,

                                   2008        2009        2008        2009
                              (Unaudited) (Unaudited) (Unaudited) (Unaudited)

    Revenues                      23,507      29,212      69,693      76,786
    Cost of revenues               4,864       5,999      14,402      15,767
    Gross profit                  18,643      23,213      55,291      61,019

    Operating expenses:
    Research and development       7,057       6,705      21,616      19,329
    Selling and marketing         15,790      14,327      49,977      40,823
    General and administrative     4,743       2,506       9,738       9,378
    Total operating expenses      27,590      23,538      81,331      69,530
    Operating loss                (8,947)       (325)    (26,040)     (8,511)
    Financial income, net            869         682       3,093       1,481
    Income (loss) before
      income taxes                (8,078)        357     (22,947)     (7,030)
    Income taxes                    (410)       (206)       (943)       (593)
    Net income (loss)             (8,488)        151     (23,890)     (7,623)

    Basic net income (loss)
      per share                  $ (0.44)     $ 0.01     $ (1.22)    $ (0.40)
    Weighted average number of
      shares used to compute
      basic net income (loss)
      per share               19,340,656  18,860,021  19,613,556  18,878,697


    Diluted net income (loss)
      per share                  $ (0.44)     $ 0.01     $ (1.22)    $ (0.40)
    Weighted average number of
      shares used to compute
      diluted net income (loss)
      per share               19,340,656  19,036,249  19,613,556  18,878,697




               Reconciliation of Supplemental Financial Information
           (U.S. Dollars in thousands, except share and per share data)

                          For the Three months     For the Nine months
                           ended September 30,     ended September 30,

                                2008        2009        2008        2009
                            (Unaudited) (Unaudited) (Unaudited) (Unaudited)

    GAAP net income (loss)    (8,488)        151     (23,890)     (7,623)

    Stock-based
      compensation
      expenses, included
      in:
    Cost of revenues              24          13          77          55
    Research and
      development                361         176       1,157         791
    Selling and
      marketing                  560         314       1,798       1,323
    General and
      administrative             730         579       2,234       1,591
                               1,675       1,082       5,266       3,760
    Amortization of
      intangible assets
      included in:
    Cost of revenues             189         427         564         948
    Selling and
      marketing                   39         630         117       1,299
    Income taxes                  40           -         122           -
                                 268       1,057         803       2,247

    Non recurring
      retention expenses       2,231           -       2,231           -

    Acquisition related
      expenses                     -           -           -       2,485

    Non-GAAP net
      income (loss)           (4,314)      2,290     (15,590)        869


    Non-GAAP diluted net
      income (loss) per
      share                  $ (0.22)     $ 0.12     $ (0.79)     $ 0.05

    Weighted average
      number of shares
      used to compute
      Non-GAAP diluted net
      income (loss) per
      share               19,340,656  19,036,249  19,613,556  18,963,382



    CONTACTS

    Chief Financial Officer
    Meir Moshe
    +972-3766-8610

    Corporate Relations
    Christine D. Aruza
    +1-201-785-3236
    christine.aruza@radware.com

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