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Radware Announces Fourth Quarter and Full Year 2019 Earnings

Fourth Quarter 2019 Results and Financial Highlights

  • Record Revenues of $67.4 million, up 6% from the fourth quarter of 2018

  • Non-GAAP operating income and margin of $9.5 million and 14%, respectively

  • Non-GAAP EPS of $0.23; GAAP EPS of $0.15

Full Year 2019 Results and Financial Highlights

  • Record Revenues of $252.1 million, up 8% from 2018

  • Non-GAAP operating income and margin of $33.5 million and 13%, respectively

  • Non-GAAP EPS of $0.84, up 53% from 2018; GAAP EPS of $0.47

  • Net cash provided by operating activities of $53 million

TEL AVIV, Israel, Feb. 12, 2020 (GLOBE NEWSWIRE) -- Radware® (RDWR), a leading provider of cyber security and application delivery solutions, today announced its consolidated financial results for the quarter and year ended December 31, 2019.

“We are pleased with our performance in the fourth quarter, with record quarterly bookings and revenues,” said Roy Zisapel, Radware’s President & CEO. “Radware today is at a stronger financial, technological and competitive position than it has ever been. The intensity and complexity of the cyber-attacks landscape continue to drive demand for managed security services and strong growth in our cloud and subscriptions business. We look forward to continuing to bring value to our customers as we address additional cyber security challenges, while delivering growth and profitability.”

Financial Highlights for the Fourth Quarter of 2019
Revenues for the fourth quarter of 2019 totaled $67.4 million, up 6% from revenues of $63.8 million for the fourth quarter of 2018:

  • Revenues in the Americas region were $29.7 million for the fourth quarter of 2019, up 7% compared to revenues of $27.7 million in the fourth quarter of 2018.

  • Revenues in the APAC region were $17.1 million for the fourth quarter of 2019, up 32% from revenues of $12.9 million in the fourth quarter of 2018.

  • Revenues in the EMEA region were $20.6 million for the fourth quarter of 2019, down 11% from revenues of $23.2 million in the fourth quarter of 2018.

Net income on a GAAP basis for the fourth quarter of 2019 was $7.3 million, or $0.15 per diluted share, compared with net income of $7.9 million, or $0.16 per diluted share, for the fourth quarter of 2018.

Non-GAAP net income for the fourth quarter of 2019 was $10.9 million, or $0.23 per diluted share, compared with non- GAAP net income of $11.4 million, or $0.24 per diluted share, for the fourth quarter of 2018.

Financial Highlights for the Full Year of 2019
Revenues for the full year of 2019 totaled $252.1 million, up 8% from revenues of $234.4 million for the full year of 2018:

  • Revenues in the Americas region were $106.4 million for the full year of 2019, up 4% from revenues of $102.5 in the full year of 2018.

  • Revenues in the APAC region were $70.4 million for the full year of 2019, up 25% from revenues of $56.2 in the full year of 2018.

  • Revenues in the EMEA region were $75.3 million for the full year of 2019, down 1% from revenues of $75.8 in the full year of 2018.

Net income on a GAAP basis for the full year of 2019 was $22.6 million, or $0.47 per diluted share, compared with net income of $11.7 million, or $0.25 per diluted share, for the full year of 2018.

Non-GAAP net income for the full year of 2019 was $40.6 million, or $0.84 per diluted share, compared with non-GAAP net income of $26.0 million, or $0.55 per diluted share, for the full year of 2018.

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 gain adjustment and tax effect related to amortization of deferred tax liability related to intangible assets and other gain adjustment. 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 December 31, 2019, the Company had cash, cash equivalents, short-term and long-term bank deposits and marketable securities of $427.7 million, up from $401.1 million as of December 31, 2018. Net cash provided by operating activities in the fourth quarter of 2019 totaled $4.0 million. Net cash provided by operating activities in the full year of 2019 totaled $52.9 million.

Conference Call

Radware management will host a call on Wednesday, February 12, 2020 at 8:30 a.m. ET to discuss its fourth quarter and full year 2019 results and the Company’s outlook for the first quarter and full year of 2020.

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

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

Conference ID: 8198484

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, sales and marketing expense, general and administrative expense, other income, 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 gain adjustment and tax effect related to amortization of deferred tax liability related to intangible assets and other gain adjustment. 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.” For example, when we discuss the strong growth in our cloud and subscriptions business, we are using forward-looking statements. In addition, the announced financial results are preliminary, unaudited and subject to year-end audit adjustment. 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 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 or the impact of the recent coronavirus outbreak; intense competition in the market for Application Delivery and Network Security solutions and in our industry in general; 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; outages, interruptions or delays in hosting services or our internal network system; 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 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® (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 Contacts:
Deborah Szajngarten
Radware
201-785-3206
deborah.szajngarten@radware.com


Radware Ltd.

Condensed Consolidated Balance Sheets

(U.S. Dollars in thousands)

December 31,

December 31,

2019

2018

(Unaudited)

(Unaudited)

Assets

Current assets

Cash and cash equivalents

40,751

45,203

Available-for-sale marketable securities

36,924

15,742

Short-term bank deposits

100,276

255,454

Trade receivables, net

22,610

17,166

Other receivables and prepaid expenses

8,032

7,071

Inventories

13,940

18,401

222,533

359,037

Long-term investments

Available-for-sale marketable securities

112,696

84,669

Long-term bank deposits

137,095

-

Severance pay funds

2,300

2,973

252,091

87,642

Property and equipment, net

22,971

23,677

Intangible assets, net

14,481

9,467

Other long-term assets

24,293

20,724

Operating lease right-of-use assets

18,144

-

Goodwill

41,144

32,174

Total assets

595,657

532,721

Liabilities and shareholders' equity

Current Liabilities

Trade payables

6,878

4,483

Deferred revenues

79,239

83,955

Operating lease liabilities

5,193

-

Other payables and accrued expenses

34,689

29,596

125,999

118,034

Long-term liabilities

Deferred revenues

50,888

43,796

Operating lease liabilities

13,914

-

Other long-term liabilities

9,525

6,934

74,327

50,730

Shareholders' equity

Share capital

710

693

Additional paid-in capital

414,581

383,536

Accumulated other comprehensive income (loss), net of tax

1,145

(1,110)

Treasury stock, at cost

(145,226)

(120,717)

Retained earnings

124,121

101,555

Total shareholders' equity

395,331

363,957

Total liabilities and shareholders' equity

595,657

532,721


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 year ended

December 31,

December 31,

2019

2018

2019

2018

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Revenues

67,362

63,817

252,072

234,404

Cost of revenues

11,994

11,117

45,174

41,675

Gross profit

55,368

52,700

206,898

192,729

Operating expenses, net:

Research and development, net

16,103

13,945

61,841

57,674

Selling and marketing

29,121

28,137

109,556

111,386

General and administrative

4,375

4,294

18,584

16,145

Total operating expenses, net

49,599

46,376

189,981

185,205

Operating income

5,769

6,324

16,917

7,524

Financial income, net

2,745

2,397

8,792

7,274

Income before taxes on income

8,514

8,721

25,709

14,798

Taxes on income

1,183

778

3,143

3,063

Net income

7,331

7,943

22,566

11,735

Basic net earnings per share

0.16

0.17

0.48

0.26

Weighted average number of shares used to compute basic net earnings per share

46,900,711

46,357,278

46,816,899

45,289,296

Diluted net earnings per share

0.15

0.16

0.47

0.25

Weighted average number of shares used to compute diluted net earnings per share

48,304,507

48,279,751

48,523,120

47,691,868


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 year ended

December 31,

December 31,

2019

2018

2019

2018

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

GAAP gross profit

55,368

52,700

206,898

192,729

Stock-based compensation

53

50

224

221

Amortization of intangible assets

486

212

2,304

866

Non-GAAP gross profit

55,907

52,962

209,426

193,816

GAAP research and development, net

16,103

13,945

61,841

57,674

Stock-based compensation

791

694

2,855

3,123

Acquisition costs

-

20

-

20

Non-GAAP Research and development, net

15,312

13,231

58,986

54,531

GAAP selling and marketing

29,121

28,137

109,556

111,386

Stock-based compensation

1,696

1,727

6,954

7,071

Amortization of intangible assets

17

21

69

82

Non-GAAP selling and marketing

27,408

26,389

102,533

104,233

GAAP general and administrative

4,375

4,294

18,584

16,145

Stock-based compensation

742

775

3,032

2,087

Acquisition costs

(18)

(222)

246

(222)

Litigation costs

-

202

883

829

Non-GAAP general and administrative

3,651

3,539

14,423

13,451

GAAP total operating expenses, net

49,599

46,376

189,981

185,205

Stock-based compensation

3,229

3,196

12,841

12,281

Acquisition costs

(18)

(202)

246

(202)

Amortization of intangible assets

17

21

69

82

Litigation costs

-

202

883

829

Non-GAAP total operating expenses, net

46,371

43,159

175,942

172,215

GAAP operating income

5,769

6,324

16,917

7,524

Stock-based compensation

3,282

3,246

13,065

12,502

Acquisition costs

(18)

(202)

246

(202)

Amortization of intangible assets

503

233

2,373

948

Litigation costs

-

202

883

829

Non-GAAP operating income

9,536

9,803

33,484

21,601

GAAP financial income, net

2,745

2,397

8,792

7,274

Other gain adjustment

-

-

(563)

-

Exchange rate differences, net on balance sheet items included in financial income, net

(148)

(59)

2,270

196

Non-GAAP financial income, net

2,597

2,338

10,499

7,470

GAAP income before taxes on income

8,514

8,721

25,709

14,798

Stock-based compensation

3,282

3,246

13,065

12,502

Acquisition costs

(18)

(202)

246

(202)

Amortization of intangible assets

503

233

2,373

948

Litigation costs

-

202

883

829

Other gain adjustment

-

-

(563)

-

Exchange rate differences, net on balance sheet items included in financial income, net

(148)

(59)

2,270

196

Non-GAAP income before taxes on income

12,133

12,141

43,983

29,071

GAAP taxes on income

1,183

778

3,143

3,063

Amortization of deferred tax liability related to intangible assets

39

-

286

-

Tax related to other gain adjustment

-

-

(52)

-

Non-GAAP taxes on income

1,222

778

3,377

3,063

GAAP net income

7,331

7,943

22,566

11,735

Stock-based compensation

3,282

3,246

13,065

12,502

Acquisition costs

(18)

(202)

246

(202)

Amortization of intangible assets

503

233

2,373

948

Litigation costs

-

202

883

829

Other gain adjustment

-

-

(563)

-

Exchange rate differences, net on balance sheet items included in financial income, net

(148)

(59)

2,270

196

Amortization of deferred tax liability related to intangible assets

(39)

-

(286)

-

Tax related to other gain adjustment

-

-

52

-

Non-GAAP net income

10,911

11,363

40,606

26,008

GAAP diluted net earnings per share

0.15

0.16

0.47

0.25

Stock-based compensation

0.07

0.07

0.27

0.26

Acquisition costs

(0.00)

(0.00)

0.01

(0.00)

Amortization of intangible assets

0.01

0.00

0.05

0.02

Litigation costs

0.00

0.00

0.02

0.02

Other gain adjustment

0.00

0.00

(0.01)

0.00

Exchange rate differences, net on balance sheet items included in financial income, net

(0.00)

(0.00)

0.05

0.00

Amortization of deferred tax liability related to intangible assets

(0.00)

0.00

(0.01)

0.00

Tax related to other gain adjustment

0.00

0.00

0.00

0.00

Non-GAAP diluted net earnings per share

0.23

0.24

0.84

0.55

Weighted average number of shares used to compute Non-GAAP diluted net earnings per share

48,304,507

48,279,751

48,523,120

47,691,868


Radware Ltd.

Condensed Consolidated Statements of Cash Flow

(U.S. Dollars in thousands)

For the three months ended

For the year ended

December 31,

December 31,

2019

2018

2019

2018

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Cash flow from operating activities:

Net income

7,331

7,943

22,566

11,735

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

2,789

2,402

11,283

9,782

Stock based compensation

3,282

3,247

13,065

12,503

Amortization of premium, accretion of discounts and accrued interest on available-for-sale marketable securities, net

150

513

618

1,395

Other loss (gain)

26

-

(537)

-

Accrued interest on bank deposits

596

(962)

2,123

(2,391)

Increase in accrued severance pay, net

64

189

888

323

Decrease (increase) in trade receivables, net

(7,557)

1,325

(2,407)

(1,169)

Decrease (increase) in other receivables and prepaid expenses and other long-term assets

(2,599)

(1,765)

(7,448)

2,727

Decrease in inventories

1,143

2,062

4,461

371

Decrease (increase) in trade payables

2,873

(941)

2,338

(884)

Increase (decrease) in deferred revenues

(6,416)

10,048

2,260

14,440

Increase in other payables and accrued expenses

2,168

1,636

2,679

419

Operating lease liabilities, net

109

-

963

-

Net cash provided by operating activities

3,959

25,697

52,852

49,251

Cash flows from investing activities:

Purchase of property and equipment

(2,002)

(3,998)

(8,155)

(8,869)

Proceeds from (investment in) other long-term assets, net

(7)

-

4

40

Proceeds from (investment in) bank deposits, net

2,187

(29,935)

15,960

(71,002)

Investment in sale, redemption of and purchase of available-for-sale marketable securities ,net

(1,131)

(2,765)

(46,363)

(5,672)

Payment for acquisition of subsidiary, net of cash acquired

-

-

(12,239)

-

Net cash used in investing activities

(953)

(36,698)

(50,793)

(85,503)

Cash flows from financing activities:

Proceeds from exercise of stock options

3,406

2,224

17,999

21,803

Repayment of contingent consideration

-

(1,310)

-

(1,310)

Repurchase of shares

(5,616)

(4,275)

(24,510)

(4,275)

Net cash provided by (used in) financing activities

(2,210)

(3,361)

(6,511)

16,218

Increase (decrease) in cash and cash equivalents

796

(14,362)

(4,452)

(20,034)

Cash and cash equivalents at the beginning of the period

39,955

59,565

45,203

65,237

Cash and cash equivalents at the end of the period

40,751

45,203

40,751

45,203