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Radware Reports Record Revenue for the Second Quarter 2021

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  • RDWR

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 (GLOBE NEWSWIRE) -- 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.
    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.
    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.
    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 +1-416-621-4642 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.

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.

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, +972-72-3917211, ir@radware.com

Media Contacts:
Gerri Dyrek, gerri.dyrek@radware.com

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


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


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


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