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Radware Ltd. Announces First Quarter 2016 Earnings

2016 First Quarter Highlights

* Revenues of $48.4 Million
* Non-GAAP EPS of $0.05
* Non-GAAP gross margin of 82.7%
* Repurchase of shares in a total amount of $6.8 Million

TEL AVIV, Israel, May 03, 2016 (GLOBE NEWSWIRE) -- Radware® (NASDAQ:RDWR), a leading provider of cyber security and application delivery solutions ensuring optimal service level for applications in virtual, cloud and software defined data centers, today announced its consolidated financial results for the first quarter ended March 31, 2016.

“We continue to navigate through difficult market conditions,” said Roy Zisapel, President and Chief Executive Officer at Radware. “With the migration into cloud and hybrid-cloud based offerings, we continually invest in developing a strong suite of application security cloud services, so that we are well positioned to capture market share in this transition. That and our leadership position in both Security and Application Delivery solutions should allow us to resume growth in the second half of 2016.”

Financial Highlights for the first quarter of 2016

Revenues for the first quarter of 2016 totaled $48.4 million, representing a decrease of 15% compared with revenues of $57.2 million for the first quarter of 2015.

Net loss on a GAAP basis for the first quarter of 2016 was $2.8 million or $0.06 per share, compared with net income of $6.5 million or $0.14 per diluted share for the first quarter of 2015.

Excluding the impact of the patent litigation expense, stock-based compensation, exchange rate differences, net on balance sheet items and amortization of intangible assets, non-GAAP net income was $2.3 million or $0.05 per diluted share, compared with non-GAAP net income of $10.5 million or $0.22 per diluted share for the first quarter of 2015.

As of March 31, 2016 the Company had cash, cash equivalents, short-term and long-term bank deposits and marketable securities of $315.0 million.

Cash generated from operations in the first quarter of 2016 totaled $8.8 million.

During the first quarter we repurchased our shares in a total amount of $6.8 million.

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.

During the first quarter of 2016, Radware released the following significant announcements:

Product

Business

Financial

Conference Call

Company management will host a quarterly investor conference call at 8:45am ET on May 3, 2016. The call will focus on financial results for the quarter ending March 31, 2016 and other matters related to the Company’s business.

The conference call will be webcast on May 3, 2016 at 8:45am ET in the “listen only” mode via the Internet at: http://www.radware.com/IR/ and will be available for replay during the next 12 months.

Participants in the US call: Toll Free 1 (800) 230-1092

Participants Internationally call: +1- 612-332-0107

Conference ID: 390974

Please find a link to the upcoming webcast presentation on the following web page:
http://www.radware.com/IR/

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 net income and earnings per share, which are adjustments from results based on GAAP to exclude stock-based compensation expenses, in accordance with ASC No. 718, amortization of intangible assets, litigation costs and exchange rate differences, net on balance sheet items included in finance income. Such exchange rate differences may vary from period to period due to changes in exchange rates driven by general market conditions or other circumstances outside of the normal course of Radware's operations. Management believes that exclusion of these charges allows comparisons of operating results that are consistent across past, present and future periods. Radware’s management believes the non-GAAP financial information provided in this release is useful to investors for the purpose of understanding and assessing Radware’s ongoing operations. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of the non-GAAP financial measures discussed in this press release, 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 information in evaluating and operating business internally and, as such, has determined that it is important to provide this information to investors.

Safe Harbor Statement

This press release may contain statements concerning Radware’s future prospects that are “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. Statements preceded by, followed by, or that otherwise include the words "believes", "expects", "anticipates", "intends", "estimates", "plans", and similar expressions or future or conditional verbs such as "will", "should", "would", "may" and "could" are generally forward-looking in nature and not historical facts. 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; 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; Competition in the market for Application Delivery and Network Security solutions and our industry in general is intense; and other factors and risks on 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, reference is made to Radware’s Annual Report on Form 20-F which is on file 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 application delivery and cyber security solutions for virtual, cloud and software defined data centers. Its award-winning solutions portfolio delivers service level assurance for business-critical applications, while maximizing IT efficiency. Radware’s solutions empower more than 10,000 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

Radware encourages you to join our community and follow us on: Facebook, Google+, LinkedIn, Radware Blog, SlideShare, Twitter, YouTube, Radware Connect app for iPhone® and our security center DDoSWarriors.com that provides a comprehensive analysis on DDoS attack tools, trends and threats.
©2016 Radware Ltd. All rights reserved. Radware and all other Radware product and service names are registered trademarks or trademarks of Radware in the U.S. and other countries. All other trademarks and names are property of their respective owners.


Radware Ltd.
Condensed Consolidated Balance Sheets
(U.S. Dollars in thousands)
March 31,
2016
December 31,
2015
(Unaudited) (Unaudited)
Assets
Current assets
Cash and cash equivalents 31,833 33,744
Available-for-sale marketable securities 17,305 16,003
Short-term bank deposits 150,844 80,922
Trade receivables, net 27,905 26,410
Other receivables and prepaid expenses 5,346 5,042
Inventories 16,576 16,322
249,809 178,443
Long-term investments
Available-for-sale marketable securities 83,186 87,814
Long-term bank deposits 31,818 96,643
Severance pay funds 2,747 2,724
117,751 187,181
Property and equipment, net 26,577 26,203
Intangible assets, net 3,239 3,518
Other assets 5,559 5,473
Goodwill 30,069 30,069
Total assets 433,004 430,887
Liabilities and shareholders’ equity
Current liabilities
Trade payables 5,077 9,255
Deferred revenues 53,029 46,061
Other payables and accrued expenses 21,849 22,098
79,955 77,414
Long-term liabilities
Deferred revenues 26,835 25,136
Other long-term liabilities 14,060 9,214
40,895 34,350
Shareholders’ equity
Share capital 661 661
Additional paid-in capital 315,661 312,784
Accumulated other comprehensive income 943 1,257
Treasury stock, at cost (100,829) (94,049)
Retained earnings 95,718 98,470
Total shareholders’ equity 312,154 319,123
Total liabilities and shareholders' equity 433,004 430,887


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,
2016 2015
(Unaudited) (Unaudited)
Revenues 48,425 57,224
Cost of revenues 8,654 10,100
Gross profit 39,771 47,124
Operating expenses:
Research and development, net 13,424 11,951
Selling and marketing 24,912 23,580
General and administrative 5,769 4,097
Total operating expenses 44,105 39,628
Operating income (loss) (4,334) 7,496
Financial income, net 1,940 650
Income (loss) before taxes on income (2,394) 8,146
Taxes on income 358 1,687
Net income (loss) (2,752) 6,459

Basic net earnings (loss) per share
(0.06) 0.14
Weighted average number of shares used to compute basic net earnings (loss) per share 44,468,827 46,398,833
Diluted net earnings (loss) per share
(0.06) 0.14
Weighted average number of shares used to compute diluted net earnings (loss) per share 44,468,827 47,449,320


Radware Ltd.
Non-GAAP Reconciliation of Supplemental Financial Information
(U.S. Dollars in thousands, except share and per share data)
For the Three months ended
March 31,

2016
2015
(Unaudited) (Unaudited)
GAAP net income (loss) (2,752) 6,459
Stock-based compensation expenses, included in:
Cost of revenues 42 34
Research and development, net 783 618
Selling and marketing 1,268 889
General and administrative 784 676
2,877 2,217
Amortization of intangible assets included in:
Cost of revenues 253 313
Selling and marketing 26 38
279 351
Exchange rate differences, net on balance sheet items included in financial income
(303) 631
Litigation costs 2,164 812
Non-GAAP net income 2,265 10,470
Non-GAAP diluted net earnings per share 0.05 0.22
Weighted average number of shares used to compute Non-GAAP diluted net earnings per share
44,608,119 47,449,320


Radware Ltd.
Condensed Consolidated Statements of Cash Flows
(U.S. Dollars in thousands)
For the three months
ended on March 31,
2016 2015
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net income (loss) (2,752) 6,459
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 2,534 2,205
Stock based compensation 2,877 2,217
Gain from sale of available-for-sale marketable securities (577) (194)
Amortization of premiums, accretion of discounts and accrued interest on available-for-sale marketable securities, net 378 1,435
Accrued interest on bank deposits (661) (341)
Increase in accrued severance pay, net 322 47
Increase in trade receivables, net (1,495) (309)
Increase in other assets and prepaid expenses (304) (120)
Decrease (increase) in inventories (254) 591
Decrease in trade payables (4,178) (2,710)
Increase in deferred revenues 8,667 5,395
Increase (decrease) in other payables and accrued expenses and other long-term liabilities 4,252 (2,673)
Tax benefit related to exercise of stock options - (230)
Net cash provided by operating activities 8,809 11,772
Cash flows from investing activities:
Purchase of property and equipment (2,629) (2,953)
Investment in (proceeds from) other long-term assets 19 (51)
Investment in bank deposits, net (4,436) (23,193)
Proceeds from sale, redemption of and purchase of available-for-sale marketable securities ,net 3,106 17,387
Net cash used in investing activities (3,940) (8,810)



Radware Ltd.
Consolidated Statements of Cash Flows
(U.S. Dollars in thousands)
For the three months
ended on March 31,
2016 2015
(Unaudited) (Unaudited)
Cash flows from financing activities:
Proceeds from exercise of stock options - 2,210
Excess tax benefit from stock-based compensation - 230
Repurchase of shares (6,780) (19,727)
Net cash used in financing activities (6,780) (17,287)
Decrease in cash and cash equivalents (1,911) (14,325)
Cash and cash equivalents at the beginning of the year 33,744 44,979
Cash and cash equivalents at the end of the year 31,833 30,654


CONTACTS Chief Financial Officer Doron Abramovitch +972-3766-8610 Corporate Media Relations: Deborah Szajngarten (201) 785-3206 deborah.szajngarten@radware.com

Source:Radware Ltd.