First Quarter 2019 Results and Financial
Highlights
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, 2019.
“We delivered solid earnings for the quarter,
exceeding our expectation for revenues, profitability, and cash
generation. We are on track to meet our goals for the full year
2019. We successfully closed the ShieldSquare acquisition and are
rapidly integrating the Bot Management offering into our portfolio.
With a new solution for Cloud Workload Protection, we also continue
to enhance and expand our solution portfolio organically. Our
high-quality and comprehensive portfolio positions us to capture
the market opportunities that arise from the increasing demand for
cloud security services,” said Roy Zisapel, Radware President &
CEO.
Financial Highlights for the
First Quarter of 2019
Revenues for the first quarter of 2019 totaled
$61.4 million, up 13% from revenues of $54.5 million for the first
quarter of 2018:
- Revenues in the Americas region
were $24.7 million for the first quarter of 2019, up 2% compared to
revenues of $24.2 million in the first quarter of 2018.
- Revenues in the Europe, Middle East
and Africa (“EMEA”) region were $18.4 million for the first quarter
of 2019, up 21% from revenues of $15.1 million in the first quarter
of 2018.
- Revenues in the Asia-Pacific
(“APAC”) region were $18.4 million for the first quarter of 2019,
up 21% from revenues of $15.2 million in the first quarter of
2018.
Net income on a GAAP basis for the first quarter
of 2019 was $4.4 million or $0.09 per diluted share, compared with
net loss of $1.0 million, or $0.02 per diluted share for the first
quarter of 2018.
Non-GAAP net income for the first quarter of
2019 was $8.9 million or $0.18 per diluted share, compared with
non-GAAP net income of $2.6 million or $0.06 per diluted share for
the first quarter of 2018.
Non-GAAP results are calculated excluding, as
applicable, the impact of stock-based compensation, exchange rate
differences, net on balance sheet items included in financial
income, amortization of intangible assets, acquisition costs and
litigation costs. A reconciliation of each of the company’s
non-GAAP measures to the comparable GAAP measured is included at
the end of this press release.
As of March 31, 2019, the Company had cash, cash
equivalents, short-term and long-term bank deposits and marketable
securities of $420.1 million, up from $401.1 million as of December
31, 2018. Net cash provided by operating activities in the first
quarter of 2019 totaled $23.5 million.
Share Repurchase PlanThe
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. The Company currently has court
approval for the repurchase plan until August 6, 2019 and intends
to continue filing extension requests on an ongoing basis as
required by the Israeli courts. The share 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, which will be funded from available working
capital, 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”).
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 1, 2019 at 8:30 am ET to discuss its first quarter
2019 results and the Company’s outlook for the second quarter of
2019.
Participants in the US call: Toll Free 833-241-4257
Participants Internationally call:
+1-647-689-4208
Conference ID: 5797227
A replay will be available for two days, starting two hours
after the end of the call, at 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
MeasuresIn 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,
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 and exchange rate differences, net on balance sheet items
included in finance income. 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; 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; 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; 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.
©2019 Radware Ltd. All rights reserved. The
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, |
|
2019 |
|
2018 |
|
(Unaudited) |
|
(Unaudited) |
Assets |
|
|
|
|
|
|
|
Current
assets |
|
|
|
Cash and cash
equivalents |
52,361 |
|
45,203 |
Available-for-sale
marketable securities |
9,996 |
|
15,742 |
Short-term bank
deposits |
250,354 |
|
255,454 |
Trade receivables,
net |
14,346 |
|
17,166 |
Other receivables and
prepaid expenses |
8,632 |
|
7,071 |
Inventories |
17,185 |
|
18,401 |
|
352,874 |
|
359,037 |
|
|
|
|
Long-term
investments |
|
|
|
Available-for-sale
marketable securities |
101,346 |
|
84,669 |
Long-term bank
deposits |
6,011 |
|
0 |
Severance pay
funds |
2,187 |
|
2,973 |
|
109,544 |
|
87,642 |
|
|
|
|
|
|
|
|
Property and equipment,
net |
23,430 |
|
23,677 |
Other long-term
assets |
21,221 |
|
20,724 |
Operating lease
right-of-use assets |
20,539 |
|
0 |
Goodwill and intangible
assets, net |
54,913 |
|
41,641 |
Total assets |
582,521 |
|
532,721 |
|
|
|
|
|
|
|
|
Liabilities and
shareholders' equity |
|
|
|
|
|
|
|
Current
Liabilities |
|
|
|
Trade payables |
3,830 |
|
4,483 |
Deferred revenues |
89,068 |
|
83,955 |
Operating lease
liabilities |
5,197 |
|
0 |
Other payables and
accrued expenses |
29,628 |
|
29,596 |
|
127,723 |
|
118,034 |
|
|
|
|
Long-term
liabilities |
|
|
|
Deferred revenues |
50,122 |
|
43,796 |
Operating lease
liabilities |
15,717 |
|
0 |
Other long-term
liabilities |
8,733 |
|
6,934 |
|
74,572 |
|
50,730 |
|
|
|
|
Shareholders'
equity |
|
|
|
Share capital |
701 |
|
693 |
Additional paid-in
capital |
394,361 |
|
383,536 |
Accumulated other
comprehensive income (loss), net of tax |
6 |
|
(1,110) |
Treasury stock, at
cost |
(120,765) |
|
(120,717) |
Retained earnings |
105,923 |
|
101,555 |
Total shareholders'
equity |
380,226 |
|
363,957 |
|
|
|
|
Total liabilities and
shareholders' equity |
582,521 |
|
532,721 |
|
|
|
|
Radware Ltd. |
Condensed Consolidated Statements of Income
(Loss) |
(U.S Dollars in thousands, except share and per
share data) |
|
|
|
|
|
|
|
|
For the three months ended |
|
|
|
March 31, |
|
|
|
2019 |
|
2018 |
|
|
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
|
|
|
Revenues |
|
61,397 |
|
54,536 |
|
Cost of revenues |
|
11,009 |
|
9,940 |
|
Gross profit |
|
50,388 |
|
44,596 |
|
|
|
|
|
|
|
Operating expenses,
net: |
|
|
|
|
|
Research and
development, net |
|
15,230 |
|
14,662 |
|
Selling and
marketing |
|
26,661 |
|
28,183 |
|
General and
administrative |
|
4,764 |
|
4,055 |
|
Total operating
expenses, net |
|
46,655 |
|
46,900 |
|
|
|
|
|
|
|
Operating income
(loss) |
|
3,733 |
|
(2,304) |
|
Financial income,
net |
|
1,791 |
|
1,689 |
|
Income (loss) before
taxes on income |
|
5,524 |
|
(615) |
|
Taxes on income |
|
1,156 |
|
380 |
|
Net income (loss) |
|
4,368 |
|
(995) |
|
|
|
|
|
|
|
Basic net income (loss)
per share |
|
0.09 |
|
(0.02) |
|
|
|
|
|
|
|
Weighted average
number of shares used to compute basic net earnings (loss)
per share |
|
46,612,325 |
|
44,325,008 |
|
|
|
|
|
|
|
Diluted net earnings
(loss) per share |
|
0.09 |
|
(0.02) |
|
|
|
|
|
|
|
Weighted average
number of shares used to compute diluted net earnings (loss)
per share |
|
48,572,366 |
|
44,325,008 |
|
|
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, |
|
|
|
2019 |
|
2018 |
|
|
|
(Unaudited) |
|
(Unaudited) |
|
GAAP gross profit |
50,388 |
|
44,596 |
|
|
Stock-based compensation |
55 |
|
58 |
|
|
Amortization of intangible assets |
411 |
|
230 |
|
Non-GAAP gross profit |
50,854 |
|
44,884 |
|
|
|
|
|
|
|
GAAP research and development,
net |
15,230 |
|
14,662 |
|
|
Stock-based compensation |
710 |
|
931 |
|
Non-GAAP Research and development,
net |
14,520 |
|
13,731 |
|
|
|
|
|
|
|
GAAP selling and marketing |
26,661 |
|
28,183 |
|
|
Stock-based compensation |
1,569 |
|
1,904 |
|
|
Amortization of intangible assets |
17 |
|
20 |
|
Non-GAAP selling and marketing |
25,075 |
|
26,259 |
|
|
|
|
|
|
|
GAAP general and administrative |
4,764 |
|
4,055 |
|
|
Stock-based compensation |
767 |
|
407 |
|
|
Acquisition costs |
264 |
|
- |
|
|
Litigation costs |
82 |
|
270 |
|
Non-GAAP general and
administrative |
3,651 |
|
3,378 |
|
|
|
|
|
|
|
GAAP total operating expenses,
net |
46,655 |
|
46,900 |
|
|
Stock-based compensation |
3,046 |
|
3,242 |
|
|
Acquisition costs |
264 |
|
- |
|
|
Amortization of intangible assets |
17 |
|
20 |
|
|
Litigation costs |
82 |
|
270 |
|
Non-GAAP total operating expenses,
net |
43,246 |
|
43,368 |
|
|
|
|
|
|
|
GAAP operating income (loss) |
3,733 |
|
(2,304) |
|
|
Stock-based compensation |
3,101 |
|
3,300 |
|
|
Acquisition costs |
264 |
|
- |
|
|
Amortization of intangible assets |
428 |
|
250 |
|
|
Litigation costs |
82 |
|
270 |
|
Non-GAAP operating income |
7,608 |
|
1,516 |
|
|
|
|
|
|
|
GAAP financial income, net |
1,791 |
|
1,689 |
|
|
Exchange rate differences, net on balance sheet
items included in financial income, net |
631 |
|
(203) |
|
Non-GAAP financial income, net |
2,422 |
|
1,486 |
|
|
|
|
|
|
|
GAAP income (loss) before taxes on
income |
5,524 |
|
(615) |
|
|
Stock-based compensation |
3,101 |
|
3,300 |
|
|
Acquisition costs |
264 |
|
- |
|
|
Amortization of intangible assets |
428 |
|
250 |
|
|
Litigation costs |
82 |
|
270 |
|
|
Exchange rate differences, net on balance sheet
items included in financial income, net |
631 |
|
(203) |
|
Non-GAAP income before taxes on
income |
10,030 |
|
3,002 |
|
|
|
|
|
|
|
GAAP net income (loss) |
4,368 |
|
(995) |
|
|
Stock-based compensation |
3,101 |
|
3,300 |
|
|
Acquisition costs |
264 |
|
- |
|
|
Amortization of intangible assets |
428 |
|
250 |
|
|
Litigation costs |
82 |
|
270 |
|
|
Exchange rate differences, net on balance sheet
items included in financial income, net |
631 |
|
(203) |
|
Non-GAAP net income |
8,874 |
|
2,622 |
|
|
|
|
|
|
|
GAAP Net earnings (loss) per diluted
share |
0.09 |
|
(0.02) |
|
|
Stock-based compensation |
0.06 |
|
0.07 |
|
|
Acquisition costs |
0.01 |
|
0.00 |
|
|
Amortization of intangible assets |
0.01 |
|
0.01 |
|
|
Litigation costs |
0.00 |
|
0.01 |
|
|
Exchange rate differences, net on balance sheet
items included in financial income, net |
0.01 |
|
(0.00) |
|
Non-GAAP Net earnings per diluted
share |
0.18 |
|
0.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares
used to compute Non-GAAP diluted net earnings per share |
48,572,366 |
|
46,424,462 |
|
Radware
Ltd. |
Condensed
Consolidated Statements of Cash Flow |
(U.S.
Dollars in thousands) |
|
|
|
|
|
|
|
|
For the
three months ended |
|
|
|
December 31, |
|
|
|
2019 |
|
2018 |
|
|
|
(Unaudited) |
|
(Unaudited) |
|
Cash flow from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
4,368 |
|
(995) |
|
Adjustments to reconcile net income (loss) to net
cash provided byoperating activities: |
|
|
|
|
|
Depreciation and amortization |
|
2,687 |
|
2,504 |
|
Stock based compensation |
|
3,101 |
|
3,300 |
|
Amortization of premium, accretion of discounts
and accrued interest onavailable-for-sale marketable securities,
net |
|
178 |
|
276 |
|
Accrued interest on bank deposits |
|
(829) |
|
(66) |
|
Increase in accrued severance pay, net |
|
868 |
|
239 |
|
Decrease (increase) in trade receivables,
net |
|
3,170 |
|
(37) |
|
Decrease (increase) in other receivables and
prepaid expenses and otherlong-term assets |
|
(1,965) |
|
7,199 |
|
Decrease (increase) in inventories |
|
1,216 |
|
(148) |
|
Decrease in trade payables |
|
(710) |
|
(1,047) |
|
Increase in deferred revenues |
|
11,020 |
|
8,866 |
|
Increase (decrease) in other payables and accrued
expenses |
|
9 |
|
(7,927) |
|
Operating lease liabilities, net |
|
375 |
|
0 |
|
Net cash provided by operating activities |
|
23,488 |
|
12,164 |
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
Purchase of property and equipment |
|
(1,961) |
|
(2,089) |
|
Investment in other long-term assets, net |
|
(29) |
|
(91) |
|
Investment in bank deposits, net |
|
(82) |
|
(17,000) |
|
Investment in sale, redemption of and purchase of
available-for-salemarketable securities ,net |
|
(9,661) |
|
(1,186) |
|
Payment for acquisition of subsidiary, net of
cash acquired |
|
(12,282) |
|
0 |
|
Net cash used in investing activities |
|
(24,015) |
|
(20,366) |
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
Proceeds from exercise of stock options |
|
7,733 |
|
4,952 |
|
Repurchase of shares |
|
(48) |
|
0 |
|
Net cash provided by financing activities |
|
7,685 |
|
4,952 |
|
|
|
|
|
|
|
Increase (decrease) in cash and cash
equivalents |
|
7,158 |
|
(3,250) |
|
Cash and cash equivalents at the beginning of the
period |
|
45,203 |
|
65,237 |
|
Cash and cash equivalents at the end of the
period |
|
52,361 |
|
61,987 |
|
|
|
|
|
|
|
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