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Radware Announces Second Quarter 2020 Earnings

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·16 min read
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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 equivalents

48,650

40,751

Marketable securities

63,568

36,924

Short-term bank deposits

114,137

100,276

Trade receivables, net

17,195

22,610

Other receivables and prepaid expenses

8,444

7,469

Inventories

14,106

13,940

266,100

221,970

Long-term investments

Marketable securities

83,647

112,696

Long-term bank deposits

132,765

137,095

Severance pay funds

2,191

2,300

218,603

252,091

Property and equipment, net

23,663

22,971

Other long-term assets

25,358

24,398

Operating lease right-of-use assets

24,117

18,144

Goodwill and intangible assets, net

54,663

55,625

Total assets

612,504

595,199

Liabilities and shareholders' equity

Current Liabilities

Trade payables

4,896

6,315

Deferred revenues

97,703

79,239

Operating lease liabilities

4,573

5,193

Other payables and accrued expenses

33,672

34,794

140,844

125,541

Long-term liabilities

Deferred revenues

54,091

50,888

Operating lease liabilities

20,469

13,914

Other long-term liabilities

10,004

9,525

84,564

74,327

Shareholders' equity

Share capital

713

710

Additional paid-in capital

425,466

414,581

Accumulated other comprehensive income, net of tax

2,444

1,145

Treasury stock, at cost

(168,895)

(145,226)

Retained earnings

127,368

124,121

Total shareholders' equity

387,096

395,331

Total liabilities and shareholders' equity

612,504

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 profit

47,887

49,810

97,210

100,198

Stock-based compensation

49

59

87

114

Amortization of intangible assets

464

410

962

821

Non-GAAP gross profit

48,400

50,279

98,259

101,133

GAAP research and development, net

16,509

15,400

32,341

30,630

Stock-based compensation

1,089

714

1,898

1,424

Non-GAAP Research and development, net

15,420

14,686

30,443

29,206

GAAP selling and marketing

26,755

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 marketing

24,910

24,927

51,226

50,002

GAAP general and administrative

4,889

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 administrative

3,818

3,483

7,508

7,134

GAAP total operating expenses, net

48,153

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, net

44,148

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 income

4,252

7,183

9,082

14,791

GAAP financial income, net

1,783

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, net

2,642

2,718

5,306

5,140

GAAP income before taxes on income

1,517

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 income

6,894

9,901

14,388

19,931

GAAP taxes on income

844

1,061

1,571

2,217

Tax related adjustments

61

(71)

183

(71)

Non-GAAP taxes on income

905

990

1,754

2,146

GAAP net income

673

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 income

5,989

8,911

12,634

17,785

GAAP diluted net earnings per share

0.01

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 share

0.13

0.18

0.26

0.37

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

47,632,309

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