Radware® (NASDAQ: 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 2019Revenues 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 2019Revenues 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 InformationIn 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® (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)
       
  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
               
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