Radware Announces Third Quarter 2020 Earnings

Posted by GlobeNewswire November 4, 2020

Third Quarter 2020 Results and Financial Highlights

  • Revenues of $62.5 million
  • Non-GAAP EPS of $0.18; GAAP EPS of $0.08
  • Net cash provided by operating activities of $50 million for the last twelve months

TEL AVIV, Israel, Nov. 04, 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 September 30, 2020.

“We are pleased with the results for the third quarter, during which we enjoyed a very strong and broad-based bookings growth, spanning across all our geographic regions and product lines,” said Roy Zisapel, Radware’s President & CEO. “Our strategic OEM relationships delivered record booking in the quarter, further enhancing our strong position within the large enterprise segment, and contributing positively to the growth in our recurring revenues.”

Financial Highlights for the Third Quarter of 2020

Revenues for the third quarter of 2020 totaled $62.5 million, down 1% from revenues of $62.9 million for the third quarter of 2019. Revenues for the first nine months of 2020 totaled $181.0 million, down 2% from revenues of $184.7 million for the first nine months of 2019:

  • Revenues in the Americas region were $30.2 million for the third quarter of 2020, up 24% from revenues of $24.5 million in the third quarter of 2019. For the first nine months of 2020, revenues in the Americas region increased 13% over the same period in 2019.
  • Revenues in the Europe, Middle East and Africa (“EMEA”) region were $18.3 million for the third quarter of 2020, down 5% from revenues of $19.4 million in the third quarter of 2019. For the first nine months of 2020, revenues in the EMEA region decreased 1% over the same period in 2019.
  • Revenues in the Asia-Pacific (“APAC”) region were $14.0 million for the third quarter of 2020, down 27% from revenues of $19.0 million in the third quarter of 2019. For the first nine months of 2020, revenues in the APAC region decreased 25% over the same period in 2019.

Net income on a GAAP basis for the third quarter of 2020 was $3.6 million, or $0.08 per diluted share, compared with net income of $7.1 million, or $0.15 per diluted share, for the third quarter of 2019.

Non-GAAP net income for the third quarter of 2020 was $8.4 million, or $0.18 per diluted share, compared with non- GAAP net income of $11.9 million, or $0.25 per diluted share, for the third 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 September 30, 2020, the Company had cash, cash equivalents, short-term and long-term bank deposits and marketable securities of $437.4 million. Net cash provided by operating activities in the third quarter of 2020 totaled $6.8 million. Net cash spent on share repurchases in the third quarter of 2020 totaled $15.9 million.

Conference Call

Radware management will host a call on Wednesday, November 4, 2020 at 8:30 a.m. ET to discuss its third quarter 2020 results and the Company’s outlook for the fourth quarter of 2020.

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

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

Conference ID: 8719353

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.

Corporate Media Relations:
Deborah Szajngarten
(201) 785-3206
[email protected]

Radware Ltd.
Condensed Consolidated Balance Sheets
(U.S. Dollars in thousands)
       
  September 30,   December 31,
  2020   2019
  (Unaudited)   (Unaudited)
Assets      
       
Current assets      
Cash and cash equivalents 48,429   40,751
Marketable securities 62,930   36,924
Short-term bank deposits 179,675   100,276
Trade receivables, net 14,330   22,610
Other receivables and prepaid expenses 8,100   7,469
Inventories 13,290   13,940
  326,754   221,970
       
Long-term investments      
Marketable securities 75,912   112,696
Long-term bank deposits 70,491   137,095
Severance pay funds 2,252   2,300
  148,655   252,091
       
       
Property and equipment, net 23,141   22,971
Other long-term assets 25,959   24,398
Operating lease right-of-use assets 28,185   18,144
Goodwill and intangible assets, net 54,198   55,625
Total assets 606,892   595,199
       
       
Liabilities and shareholders’ equity      
       
Current Liabilities      
Trade payables 3,818   6,315
Deferred revenues 90,813   79,239
Operating lease liabilities 4,903   5,193
Other payables and accrued expenses 36,128   34,794
  135,662   125,541
       
Long-term liabilities      
Deferred revenues 53,333   50,888
Operating lease liabilities 24,181   13,914
Other long-term liabilities 10,113   9,525
  87,627   74,327
       
Shareholders’ equity      
Share capital 718   710
Additional paid-in capital 434,815   414,581
Accumulated other comprehensive income, net of tax 1,917   1,145
Treasury stock, at cost (184,802)   (145,226)
Retained earnings 130,955   124,121
Total shareholders’ equity 383,603   395,331
       
Total liabilities and shareholders’ equity 606,892   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 nine months ended
  September 30,   September 30,
  2020   2019   2020   2019
  (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
               
Revenues 62,524   62,859   180,981   184,710
Cost of revenues 11,646   11,527   32,893   33,180
Gross profit 50,878   51,332   148,088   151,530
               
Operating expenses, net:              
Research and development, net 16,747   15,108   49,088   45,738
Selling and marketing 27,659   27,094   82,616   80,435
General and administrative 4,513   4,403   14,114   14,209
Total operating expenses, net 48,919   46,605   145,818   140,382
               
Operating income 1,959   4,727   2,270   11,148
Financial income, net 2,897   2,137   7,404   6,047
Income before taxes on income (tax benefit) 4,856   6,864   9,674   17,195
Taxes on income (tax benefit) 1,269   (257)   2,840   1,960
Net income 3,587   7,121   6,834   15,235
               
Basic net earnings per share 0.08   0.15   0.15   0.33
               
Weighted average number of shares used to compute basic net earnings per share 46,341,046   46,850,137   46,547,504   46,788,870
               
Diluted net earnings per share 0.08   0.15   0.14   0.31
               
Weighted average number of shares used to compute diluted net earnings per share 47,673,698   48,488,313   47,841,411   48,595,899
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 nine months ended
  September 30,   September 30,
  2020   2019   2020   2019
  (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
GAAP gross profit 50,878   51,332   148,088   151,530
Stock-based compensation 48   57   135   171
Amortization of intangible assets 465   997   1,427   1,818
Non-GAAP gross profit 51,391   52,386   149,650   153,519
               
GAAP research and development, net 16,747   15,108   49,088   45,738
Stock-based compensation 1,301   640   3,199   2,064
Non-GAAP Research and development, net 15,446   14,468   45,889   43,674
               
GAAP selling and marketing 27,659   27,094   82,616   80,435
Stock-based compensation 2,083   1,954   5,814   5,258
Amortization of intangible assets –   17   –   52
Non-GAAP selling and marketing 25,576   25,123   76,802   75,125
               
GAAP general and administrative 4,513   4,403   14,114   14,209
Stock-based compensation 975   741   2,809   2,290
Acquisition costs –   –   –   264
Litigation costs 44   24   303   883
Non-GAAP general and administrative 3,494   3,638   11,002   10,772
               
GAAP total operating expenses, net 48,919   46,605   145,818   140,382
Stock-based compensation 4,359   3,335   11,822   9,612
Amortization of intangible assets –   17   –   52
Acquisition costs –   –   –   264
Litigation costs 44   24   303   883
Non-GAAP total operating expenses, net 44,516   43,229   133,693   129,571
               
GAAP operating income 1,959   4,727   2,270   11,148
Stock-based compensation 4,407   3,392   11,957   9,783
Amortization of intangible assets 465   1,014   1,427   1,870
Acquisition costs –   –   –   264
Litigation costs 44   24   303   883
Non-GAAP operating income 6,875   9,157   15,957   23,948
               
GAAP financial income, net 2,897   2,137   7,404   6,047
Other loss (gain) adjustment –   (253)   247   (563)
Exchange rate differences, net on balance sheet items included in financial income, net (72)   878   480   2,418
Non-GAAP financial income, net 2,825   2,762   8,131   7,902
               
GAAP income before taxes on income (tax benefit) 4,856   6,864   9,674   17,195
Stock-based compensation 4,407   3,392   11,957   9,783
Amortization of intangible assets 465   1,014   1,427   1,870
Acquisition costs –   –   –   264
Litigation costs 44   24   303   883
Other loss (gain) adjustment –   (253)   247   (563)
Exchange rate differences, net on balance sheet items included in financial income, net (72)   878   480   2,418
Non-GAAP income before taxes on income (tax benefit) 9,700   11,919   24,088   31,850
               
GAAP taxes on income (tax benefit) 1,269   (257)   2,840   1,960
Tax related adjustments 62   266   245   195
Non-GAAP taxes on income 1,331   9   3,085   2,155
               
GAAP net income 3,587   7,121   6,834   15,235
Stock-based compensation 4,407   3,392   11,957   9,783
Amortization of intangible assets 465   1,014   1,427   1,870
Acquisition costs –   –   –   264
Litigation costs 44   24   303   883
Other loss (gain) adjustment –   (253)   247   (563)
Exchange rate differences, net on balance sheet items included in financial income, net (72)   878   480   2,418
Tax related adjustments (62)   (266)   (245)   (195)
Non-GAAP net income 8,369   11,910   21,003   29,695
               
GAAP diluted net earnings per share 0.08   0.15   0.14   0.31
Stock-based compensation 0.09   0.07   0.25   0.20
Amortization of intangible assets 0.01   0.02   0.03   0.04
Acquisition costs 0.00   0.00   0.00   0.01
Litigation costs 0.00   0.00   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 (0.00)   0.02   0.01   0.05
Tax related adjustments (0.00)   (0.01)   (0.01)   (0.00)
Non-GAAP diluted net earnings per share 0.18   0.25   0.44   0.61
               
               
Weighted average number of shares used to compute Non-GAAP diluted net earnings per share 47,673,698   48,488,313   47,841,411   48,595,899
Radware Ltd.
Condensed Consolidated Statements of Cash Flow
(U.S. Dollars in thousands)
               
  For the three months ended   For the nine months ended
  September 30,   September 30,
  2020   2019   2020   2019
  (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
Cash flow from operating activities:              
               
Net income 3,587   7,121   6,834   15,235
Adjustments to reconcile net income to net cash provided by operating activities:              
Depreciation and amortization 2,616   3,106   7,883   8,494
Stock-based compensation 4,407   3,392   11,957   9,783
Amortization of premium, accretion of discounts and accrued interest on marketable securities, net 337   141   647   468
Gain related to securities, net (517)   (253)   (580)   (563)
Accrued interest on bank deposits (598)   (804)   (971)   1,527
Increase (decrease) in accrued severance pay, net 48   (109)   235   824
Decrease in trade receivables, net 2,865   2,621   8,280   5,150
Increase in other receivables and prepaid expenses and other long-term assets (465)   (1,163)   (2,395)   (4,849)
Decrease in inventories 816   881   650   3,318
Increase (decrease) in trade payables (1,078)   203   (2,497)   (535)
Increase (decrease) in deferred revenues (7,648)   4,893   14,019   8,676
Increase in other payables and accrued expenses 2,456   39   1,735   511
Operating lease liabilities, net (26)   194   (64)   854
Net cash provided by operating activities 6,800   20,262   45,733   48,893
               
Cash flows from investing activities:              
               
Purchase of property and equipment (1,629)   (1,810)   (6,626)   (6,153)
Proceeds from (investment in) other long-term assets, net (15)   73   (26)   11
Proceeds from (investment in) bank deposits, net (2,666)   (5,674)   (11,824)   13,773
Proceeds from (investment in) sale, redemption of and purchase of marketable securities, net 8,249   (1,997)   11,712   (45,232)
Payment for acquisition of subsidiary, net of cash acquired 0   0   0   (12,239)
Net cash provided by (used in) investing activities 3,939   (9,408)   (6,764)   (49,840)
               
Cash flows from financing activities:              
               
Proceeds from exercise of stock options 4,947   3,751   8,285   14,593
Repurchase of shares (15,907)   (8,841)   (39,576)   (18,894)
Net cash used in financing activities (10,960)   (5,090)   (31,291)   (4,301)
               
Increase (decrease) in cash and cash equivalents (221)   5,764   7,678   (5,248)
Cash and cash equivalents at the beginning of the period 48,650   34,191   40,751   45,203
Cash and cash equivalents at the end of the period 48,429   39,955   48,429   39,955
               

 

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