Radware® (NASDAQ: RDWR), a leading provider of cyber security and
application delivery solutions, today announced its consolidated
financial results for the quarter ended March 31, 2020.
“Radware entered the COVID-19 crisis in a strong
position, and continues to execute on its strategy and pursue its
long-term goals through it,“ said Roy Zisapel, Radware’s President
& CEO. “Our performance in the first quarter reflects solid
revenue and profitability and strong cash generation. We believe
that with our strong customer base, large and growing subscription
business, superior cloud security offering, and solid cash
position, we are well-positioned to navigate this unprecedented
crisis and resume long-term growth.”
Financial Highlights for the
First Quarter of 2020
Revenues for the first quarter of 2020 totaled
$60.0 million, down 2% from revenues of $61.4 million for the first
quarter of 2019:
- Revenues in the Americas region were $29.2 million for the
first quarter of 2020, up 19% compared to revenues of $24.7 million
in the first quarter of 2019.
- Revenues in the EMEA region were $18.2 million for the first
quarter of 2020, down 1% from revenues of $18.4 million in the
first quarter of 2019.
- Revenues in the APAC region were $12.6 million for the first
quarter of 2020, down 31% from revenues of $18.4 million in the
first quarter of 2019.
Net income on a GAAP basis for the first quarter
of 2020 was $2.6 million, or $0.05 per diluted share, compared with
net income of $4.4 million, or $0.09 per diluted share, for the
first quarter of 2019.
Non-GAAP net income for the first quarter of
2020 was $6.6 million, or $0.14 per diluted share, compared with
non- GAAP net income of $8.9 million, or $0.18 per diluted share,
for the first 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 adjustment and tax effect
related to amortization of deferred tax liability related to
intangible assets and other loss 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 March 31, 2020, the Company had cash, cash
equivalents, short-term and long-term bank deposits and marketable
securities of $427.3 million. Net cash provided by operating
activities in the first quarter of 2020 totaled $21.0 million. Net
cash spent on share repurchases in the first quarter of 2020
totaled $18.7 million.
Share Repurchase Plan
The Company also announced that its Board of
Directors has authorized a new, one-year plan to repurchase up to
$40 million of its issued and outstanding ordinary shares. Combined
with the remaining availability on its stock repurchase plan
announced on March 20, 2020, the Company is authorized to purchase
up to $57 million of its shares. The Company currently has Israeli
court approval for approximately $17 million of repurchases until
July 15, 2020 and intends to request additional approvals and
extensions as required by Israeli law. The new repurchase plan
authorizes management to repurchase ordinary shares, from time to
time, in open market transactions, in privately negotiated
transactions or in other legally permissible ways depending on
market conditions, share price, trading volume and other factors.
Such repurchases will be made in accordance with applicable U.S.
securities laws and regulations, including Rule 10b-18 under the
U.S. Securities Exchange Act of 1934, as amended (the “Exchange
Act”) and applicable Israeli law. The Company may repurchase all or
a portion of the authorized repurchase amount pursuant to a plan
that is compliant with Rule 10b5-1 of the Exchange Act that is
designed to facilitate these purchases. The share repurchase plan
does not obligate the Company to repurchase any specific number of
shares and may be suspended or terminated at any time at
management’s discretion.
Conference Call
Radware management will host a call on
Wednesday, May 6, 2020 at 8:30 a.m. ET to discuss its first quarter
2020 results and the Company’s outlook for the second quarter of
2020.
Participants in the US call: Toll Free
833-241-4257
Participants Internationally call:
+1-647-689-4208
Conference ID: 4495924
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, 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 adjustment and tax effect
related to amortization of deferred tax liability related to
intangible assets and other loss 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.
The Company defines Total Deferred Revenue as
short term and long term deferred revenues presented on its balance
sheet, plus billed amounts that were uncollected and offset against
the balance sheet accounts receivables.
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 723917548ir@radware.com
Media Contacts:Deborah
SzajngartenRadware201-785-3206deborah.szajngarten@radware.com
Radware Ltd. |
Condensed Consolidated Balance Sheets |
(U.S. Dollars in thousands) |
|
|
|
|
|
March 31, |
|
December 31, |
|
2020 |
|
2019 |
|
(Unaudited) |
|
(Unaudited) |
Assets |
|
|
|
|
|
|
|
Current
assets |
|
|
|
Cash and cash equivalents |
40,207 |
|
40,751 |
Marketable securities |
52,259 |
|
36,924 |
Short-term bank deposits |
76,823 |
|
100,276 |
Trade receivables, net |
26,639 |
|
22,610 |
Other receivables and prepaid
expenses |
7,342 |
|
7,469 |
Inventories |
14,854 |
|
13,940 |
|
218,124 |
|
221,970 |
|
|
|
|
Long-term
investments |
|
|
|
Marketable securities |
92,711 |
|
112,696 |
Long-term bank deposits |
165,250 |
|
137,095 |
Severance pay funds |
2,091 |
|
2,300 |
|
260,052 |
|
252,091 |
|
|
|
|
|
|
|
|
Property and equipment,
net |
23,291 |
|
22,971 |
Other long-term assets |
25,914 |
|
24,398 |
Operating lease right-of-use
assets |
25,169 |
|
18,144 |
Goodwill and intangible
assets, net |
55,127 |
|
55,625 |
Total assets |
607,677 |
|
595,199 |
|
|
|
|
|
|
|
|
Liabilities and
shareholders' equity |
|
|
|
|
|
|
|
Current
Liabilities |
|
|
|
Trade payables |
4,899 |
|
6,315 |
Deferred revenues |
90,415 |
|
79,239 |
Operating lease
liabilities |
4,854 |
|
5,193 |
Other payables and accrued
expenses |
34,173 |
|
34,794 |
|
134,341 |
|
125,541 |
|
|
|
|
Long-term
liabilities |
|
|
|
Deferred revenues |
59,742 |
|
50,888 |
Operating lease
liabilities |
20,440 |
|
13,914 |
Other long-term
liabilities |
9,532 |
|
9,525 |
|
89,714 |
|
74,327 |
|
|
|
|
Shareholders'
equity |
|
|
|
Share capital |
712 |
|
710 |
Additional paid-in
capital |
419,804 |
|
414,581 |
Accumulated other
comprehensive income, net of tax |
306 |
|
1,145 |
Treasury stock, at cost |
(163,895) |
|
(145,226) |
Retained earnings |
126,695 |
|
124,121 |
Total shareholders'
equity |
383,622 |
|
395,331 |
|
|
|
|
Total liabilities and
shareholders' equity |
607,677 |
|
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 |
|
March 31, |
|
2020 |
|
2019 |
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
Revenues |
60,012 |
|
61,397 |
Cost of revenues |
10,689 |
|
11,009 |
Gross profit |
49,323 |
|
50,388 |
|
|
|
|
Operating expenses, net: |
|
|
|
Research and development,
net |
15,832 |
|
15,230 |
Selling and marketing |
28,202 |
|
26,661 |
General and
administrative |
4,712 |
|
4,764 |
Total operating expenses,
net |
48,746 |
|
46,655 |
|
|
|
|
Operating income |
577 |
|
3,733 |
Financial income, net |
2,724 |
|
1,791 |
Income before taxes on
income |
3,301 |
|
5,524 |
Taxes on income |
727 |
|
1,156 |
Net income |
2,574 |
|
4,368 |
|
|
|
|
Basic net earnings per
share |
0.05 |
|
0.09 |
|
|
|
|
Weighted average number
of shares used to compute basic net earnings per share |
46,921,344 |
|
46,612,325 |
|
|
|
|
Diluted net earnings per
share |
0.05 |
|
0.09 |
|
|
|
|
Weighted average number
of shares used to compute diluted net earnings per share |
48,225,688 |
|
48,572,366 |
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 |
|
March 31, |
|
2020 |
|
2019 |
|
(Unaudited) |
|
(Unaudited) |
GAAP gross profit |
49,323 |
|
50,388 |
Stock-based compensation |
38 |
|
55 |
Amortization of intangible assets |
498 |
|
411 |
Non-GAAP gross profit |
49,859 |
|
50,854 |
|
|
|
|
GAAP research and development, net |
15,832 |
|
15,230 |
Stock-based compensation |
809 |
|
710 |
Non-GAAP Research and development, net |
15,023 |
|
14,520 |
|
|
|
|
GAAP selling and marketing |
28,202 |
|
26,661 |
Stock-based compensation |
1,886 |
|
1,569 |
Amortization of intangible assets |
- |
|
17 |
Non-GAAP selling and marketing |
26,316 |
|
25,075 |
|
|
|
|
GAAP general and administrative |
4,712 |
|
4,764 |
Stock-based compensation |
903 |
|
767 |
Acquisition costs |
- |
|
264 |
Litigation costs |
119 |
|
82 |
Non-GAAP general and administrative |
3,690 |
|
3,651 |
|
|
|
|
GAAP total operating expenses, net |
48,746 |
|
46,655 |
Stock-based compensation |
3,598 |
|
3,046 |
Amortization of intangible assets |
- |
|
17 |
Acquisition costs |
- |
|
264 |
Litigation costs |
119 |
|
82 |
Non-GAAP total operating expenses, net |
45,029 |
|
43,246 |
|
|
|
|
GAAP operating income |
577 |
|
3,733 |
Stock-based compensation |
3,636 |
|
3,101 |
Amortization of intangible assets |
498 |
|
428 |
Acquisition costs |
- |
|
264 |
Litigation costs |
119 |
|
82 |
Non-GAAP operating income |
4,830 |
|
7,608 |
|
|
|
|
GAAP financial income, net |
2,724 |
|
1,791 |
Other loss adjustment |
247 |
|
- |
Exchange rate differences, net on balance sheet items included in
financial income, net |
(307) |
|
631 |
Non-GAAP financial income, net |
2,664 |
|
2,422 |
|
|
|
|
GAAP income before taxes on income |
3,301 |
|
5,524 |
Stock-based compensation |
3,636 |
|
3,101 |
Amortization of intangible assets |
498 |
|
428 |
Acquisition costs |
- |
|
264 |
Litigation costs |
119 |
|
82 |
Other loss adjustment |
247 |
|
- |
Exchange rate differences, net on balance sheet items included in
financial income, net |
(307) |
|
631 |
Non-GAAP income before taxes on income |
7,494 |
|
10,030 |
|
|
|
|
GAAP taxes on income |
727 |
|
1,156 |
Tax related adjustments |
122 |
|
- |
Non-GAAP taxes on income |
849 |
|
1,156 |
|
|
|
|
GAAP net income |
2,574 |
|
4,368 |
Stock-based compensation |
3,636 |
|
3,101 |
Amortization of intangible assets |
498 |
|
428 |
Acquisition costs |
- |
|
264 |
Litigation costs |
119 |
|
82 |
Other loss adjustment |
247 |
|
- |
Exchange rate differences, net on balance sheet items included in
financial income, net |
(307) |
|
631 |
Tax related adjustments |
(122) |
|
- |
Non-GAAP net income |
6,645 |
|
8,874 |
|
|
|
|
GAAP diluted net earnings per share |
0.05 |
|
0.09 |
Stock-based compensation |
0.08 |
|
0.06 |
Amortization of intangible assets |
0.01 |
|
0.01 |
Acquisition costs |
0.00 |
|
0.01 |
Litigation costs |
0.00 |
|
0.00 |
Other loss adjustment |
0.01 |
|
0.00 |
Exchange rate differences, net on balance sheet items included in
financial income, net |
(0.01) |
|
0.01 |
Tax related adjustments |
(0.00) |
|
0.00 |
Non-GAAP diluted net earnings per share |
0.14 |
|
0.18 |
|
|
|
|
|
|
|
|
Weighted average number of shares used to compute Non-GAAP
diluted net earnings per share |
48,225,688 |
|
48,572,366 |
Radware
Ltd. |
Condensed
Consolidated Statements of Cash Flow |
(U.S.
Dollars in thousands) |
|
|
|
|
|
For the
three months ended |
|
March 31, |
|
2020 |
|
2019 |
|
(Unaudited) |
|
(Unaudited) |
Cash flow from operating activities: |
|
|
|
|
|
|
|
Net income |
2,574 |
|
4,368 |
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation and amortization |
2,630 |
|
2,687 |
Stock-based compensation |
3,636 |
|
3,101 |
Amortization of premium, accretion of discounts and accrued
interest on marketable securities, net |
196 |
|
178 |
Loss related to securities, net |
163 |
|
0 |
Accrued interest on bank deposits |
(195) |
|
(829) |
Increase in accrued severance pay, net |
216 |
|
868 |
Decrease (increase) in trade receivables, net |
(4,029) |
|
3,170 |
Increase in other receivables and prepaid expenses and other
long-term assets |
(459) |
|
(1,965) |
Decrease (increase) in inventories |
(914) |
|
1,216 |
Increase in trade payables |
(1,416) |
|
(710) |
Increase in deferred revenues |
20,030 |
|
11,020 |
Increase (decrease) in other payables and accrued expenses |
(621) |
|
9 |
Operating lease liabilities, net |
(838) |
|
375 |
Net cash provided by operating activities |
20,973 |
|
23,488 |
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
Purchase of property and equipment |
(2,452) |
|
(1,961) |
Investment in other long-term assets, net |
(2) |
|
(29) |
Investment in bank deposits, net |
(4,506) |
|
(82) |
Proceeds from (investment in) sale, redemption of and purchase
of marketable securities ,net |
2,523 |
|
(9,661) |
Payment for acquisition of subsidiary, net of cash
acquired |
0 |
|
(12,282) |
Net cash used in investing activities |
(4,437) |
|
(24,015) |
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
Proceeds from exercise of stock options |
1,589 |
|
7,733 |
Repurchase of shares |
(18,669) |
|
(48) |
Net cash provided by (used in) financing activities |
(17,080) |
|
7,685 |
|
|
|
|
Increase (decrease) in cash and cash equivalents |
(544) |
|
7,158 |
Cash and cash equivalents at the beginning of the period |
40,751 |
|
45,203 |
Cash and cash equivalents at the end of the period |
40,207 |
|
52,361 |
|
|
|
|
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