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Radware Announces Second Quarter 2017 Earnings

Second Quarter 2017 Results and Financial Highlights

  • Revenues of $51 Million, up 3% from the second quarter of 2016
  • Non-GAAP EPS of $0.03; GAAP EPS of ($0.09)
  • Operating cash flow for the last twelve months of $40 million

TEL AVIV, Israel, Aug. 02, 2017 (GLOBE NEWSWIRE) -- Radware® (NASDAQ:RDWR), a leading provider of cyber security and application delivery solutions securing the digital experience for applications in virtual, cloud and software defined data centers, today announced its consolidated financial results for the quarter ended June 30, 2017.

“We are pleased with our results for the second quarter of 2017, in which we continued to execute on our strategy. The business environment is solid and we are adding new opportunities to the pipeline at an accelerated pace,” said Roy Zisapel, Radware President & CEO. “Our solution offering is industry-leading in its ability to meet the challenges of the increasingly complex delivery environment and constantly evolving cyber threats. The digital transformation and the trend towards cloud migration provide us with multiple opportunities, and we are confident in our ability to capture them and deliver long-term growth for Radware.”

Financial Highlights for the Second Quarter of 2017

Revenues for the second quarter of 2017 totaled $51.0 million, up 3% from revenues of $49.6 million for the second quarter of 2016.

Revenues in the Americas region were $24.3 million for the second quarter of 2017, up 10% from revenues of $22.1 million in the second quarter of 2016. Revenues in the EMEA region were $13.1 million for the second quarter of 2017, down 7% from revenues of $14.0 million in the second quarter of 2016. Revenues in the APAC region were $13.6 million for the second quarter of 2017, up 1% from revenues of $13.5 million in the second quarter of 2016.

Net loss on a GAAP basis for the second quarter of 2017 was ($4.1) million or ($0.09) per diluted share, compared with net loss of ($1.3) million or ($0.03) per diluted share for the second quarter of 2016.

Non-GAAP net income for the second quarter of 2017 was $1.2 million or $0.03 per diluted share, compared with non-GAAP net income of $2.6 million or $0.06 per diluted share for the second quarter of 2016.

Non-GAAP results are calculated excluding the impact of stock-based compensation, exchange rate differences, net on balance sheet items, amortization of intangible assets, acquisition related expenses and patent litigation expense. 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 June 30, 2017 the Company had cash, cash equivalents, short-term and long-term bank deposits and marketable securities of $326 million. Cash generated from operations in the second quarter of 2017 totaled $11.4 million.

Conference Call

Radware management will host a call today, August 2, 2017 at 8:30 am ET to discuss its second quarter 2017 results.

Participants in the US call: Toll Free 866-393-4306

Participants Internationally call: +1-734-385-2616

Conference ID: 41367020

A replay will be available for 2 days, starting 2 hours after the end of the call, on telephone number +1-404-537-3406 or (US toll-free) 855-859-2056.

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, operating income, financial income, 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, acquisition costs, 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. Furthermore, Radware uses a measure called “total deferred revenues” which is defined as the sum of short and long term deferred revenues on the balance sheet and uncollected billed amounts that were offset against trade receivables, and are not presented on the balance sheet. 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, including costs and difficulties related to integration of acquired businesses; 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 most recent Annual Report on Form 20-F, as amended, 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

©2017 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)
June 30, December 31,
2017 2016
(Unaudited)
Assets
Current assets
Cash and cash equivalents 50,086 79,639
Available-for-sale marketable securities 21,350 20,452
Short-term bank deposits 84,830 125,995
Trade receivables, net 17,638 19,407
Other receivables and prepaid expenses 3,447 4,159
Inventories 19,455 17,114
196,806 266,766
Long-term investments
Available-for-sale marketable securities 75,478 74,967
Long-term bank deposits 93,851 19,092
Severance pay funds 2,830 2,597
172,159 96,656
Property and equipment, net 25,711 26,354
Intangible assets, net 10,922 2,399
Other long-term assets 8,072 8,092
Goodwill 32,174 30,069
Total assets 445,844 430,336
Liabilities and shareholders' equity
Current Liabilities
Trade payables 5,967 5,971
Deferred revenues 63,183 53,061
Other payables and accrued expenses 25,187 26,232
94,337 85,264
Long-term liabilities
Deferred revenues 36,296 31,100
Other long-term liabilities 14,490 14,209
50,786 45,309
Shareholders' equity
Share capital 665 663
Additional paid-in capital 334,418 325,338
Accumulated other comprehensive loss, net of tax (7) (20)
Treasury stock, at cost (116,029) (116,029)
Retained earnings 81,674 89,811
Total shareholders' equity 300,721 299,763
Total liabilities and shareholders' equity 445,844 430,336


Radware Ltd.
Condensed Consolidated Statements of Loss
(U.S Dollars in thousands, except share and per share data)
Three months endedSix months ended
June 30,June 30,
2017 2016 2017 2016
(Unaudited)(Unaudited)(Unaudited)(Unaudited)
Revenues 50,956 49,585 99,868 98,010
Cost of revenues 9,634 8,887 18,628 17,541
Gross profit 41,322 40,698 81,240 80,469
Operating expenses:
Research and development, net 15,013 13,001 29,253 26,425
Selling and marketing 26,410 25,865 52,389 50,777
General and administrative 4,380 3,893 9,160 9,662
Total operating expenses 45,803 42,759 90,802 86,864
Operating loss (4,481) (2,061) (9,562) (6,395)
Financial income, net 640 1,232 1,747 3,172
Loss before taxes on income (3,841) (829) (7,815) (3,223)
Taxes on income (218) (498) (322) (856)
Net loss (4,059) (1,327) (8,137) (4,079)
Basic net loss per share (0.09) (0.03) (0.19) (0.09)
Weighted average number of shares used to compute basic net loss per share43,821,006 43,944,924 43,282,607 44,206,677
Diluted net loss per share (0.09) (0.03) (0.19) (0.09)
Weighted average number of shares used to compute diluted net loss per share43,821,006 43,944,924 43,282,607 44,206,677
Radware Ltd.
Reconciliation of GAAP to Non-GAAP Financial Information
(U.S Dollars in thousands, except share and per share data)
Three Months EndedSix Months Ended
June 30,June 30,
2017 2016 2017 2016
(Unaudited)(Unaudited)(Unaudited)(Unaudited)
GAAP gross profit 41,322 40,698 81,240 80,469
Stock-based compensation 61 39 116 81
Amortization of intangible assets 419 254 672 507
Non-GAAP gross profit 41,802 40,991 82,028 81,057
GAAP research and development, net 15,013 13,001 29,253 26,425
Stock-based compensation 1,028 667 1,926 1,450
Non-GAAP Research and development, net 13,985 12,334 27,327 24,975
GAAP selling and marketing 26,410 25,865 52,389 50,777
Stock-based compensation 1,875 1,394 3,499 2,662
Amortization of intangible assets 24 26 47 52
Non-GAAP selling and marketing 24,511 24,445 48,843 48,063
GAAP general and administrative 4,380 3,893 9,160 9,662
Stock-based compensation 583 644 1,003 1,428
Acquisition costs - - 340 -
Litigation costs 600 433 1,619 2,597
Non-GAAP general and administrative 3,197 2,816 6,198 5,637
GAAP total operating expenses 45,803 42,759 90,802 86,864
Stock-based compensation 3,486 2,705 6,428 5,540
Acquisition costs - - 340 -
Amortization of intangible assets 24 26 47 52
Litigation costs 600 433 1,619 2,597
Non-GAAP total operating expenses 41,693 39,595 82,368 78,675
GAAP operating loss (4,481) (2,061) (9,562) (6,395)
Stock-based compensation 3,547 2,744 6,544 5,621
Acquisition costs - - 340 -
Amortization of intangible assets 443 280 719 559
Litigation costs 600 433 1,619 2,597
Non-GAAP operating income (loss) 109 1,396 (340) 2,382
GAAP finance income 640 1,232 1,747 3,172
Exchange rate differences, net on balance sheet items included in financial income 659 460 806 157
Non-GAAP finance income 1,299 1,692 2,553 3,329
GAAP loss before taxes on income (3,841) (829) (7,815) (3,223)
Stock-based compensation 3,547 2,744 6,544 5,621
Acquisition costs - - 340 -
Amortization of intangible assets 443 280 719 559
Litigation costs 600 433 1,619 2,597
Exchange rate differences, net on balance sheet items included in financial income 659 460 806 157
Non-GAAP income before taxes on income 1,408 3,088 2,213 5,711
GAAP net loss (4,059) (1,327) (8,137) (4,079)
Stock-based compensation 3,547 2,744 6,544 5,621
Acquisition costs - - 340 -
Amortization of intangible assets 443 280 719 559
Litigation costs 600 433 1,619 2,597
Exchange rate differences, net on balance sheet items included in financial income 659 460 806 157
Non GAAP net income 1,190 2,590 1,891 4,855
GAAP Net loss per diluted share (0.09) (0.03) (0.19) (0.09)
Stock-based compensation 0.08 0.06 0.15 0.13
Acquisition costs0.00
0.00 0.01 0.00
Amortization of intangible assets 0.01 0.01 0.02 0.01
Litigation costs 0.01 0.01 0.04 0.06
Exchange rate differences, net on balance sheet items included in financial income 0.02 0.01 0.01 0.00
Non GAAP Net income per diluted share 0.03 0.06 0.04 0.11
Weighted average number of shares used to compute Non-GAAP diluted net earnings per share 45,054,172 44,101,539 44,279,284 44,354,630


Radware Ltd.
Condensed Consolidated Statements of Cash Flow
(U.S. Dollars in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
2017 2016 2017 2016
Cash flow from operating activities:
Net loss (4,059) (1,327) (8,137) (4,079)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 2,987 2,561 5,806 5,095
Stock based compensation 3,547 2,744 6,544 5,621
Gain from sale of available-for-sale marketable securities - (549) - (1,126)
Amortization of premium, accretion of discounts and accrued interest on available-for- sale marketable securities, net 270 514 631 892
Accrued interest on bank deposits 150 6 1,532 (655)
Increase in accrued severance pay, net 41 19 176 341
Increase in trade receivables, net 3,352 1,848 1,902 353
Decrease (increase) in other current assets, prepaid expenses and deferred income taxes, net (196) (106) 838 (410)
Increase (decrease) in inventories (1,063) 395 (2,341) 141
Decrease (increase) in trade payables 1,574 1,010 (136) (3,168)
Increase (decrease) in deferred revenues 8,135 (73) 14,949 8,594
Increase (decrease) in other payables and accrued expenses (3,374) 679 (4,096) 4,931
Excess tax benefit from stock-based compensation - 74 - 74
Net cash provided by operating activities 11,364 7,795 17,668 16,604
Cash flows from investing activities:
Purchase of property and equipment (2,475) (2,881) (4,357) (5,510)
Proceeds from (investment in) other long-term assets, net (31) (16) 16 3
Investment in bank deposits, net (1,219) (9,952) (35,126) (14,388)
Proceeds from sale, redemption of and purchase of available-for-sale marketable securities ,net (5,910) 155 (2,023) 3,261
Payment for acquisition of subsidiary, net of cash acquired - - (8,269) -
Net cash used in investing activities (9,635) (12,694) (49,759) (16,634)
Cash flows from financing activities:
Proceeds from exercise of stock options 1,228 - 2,538 -
Excess tax benefit from stock-based compensation - (74) - (74)
Repurchase of shares - (4,932) - (11,712)
Net cash provided (used in) financing activities 1,228 (5,006) 2,538 (11,786)
Increase (decrease) in cash and cash equivalents 2,957 (9,905) (29,553) (11,816)
Cash and cash equivalents at the beginning of the period 47,129 31,833 79,639 33,744
Cash and cash equivalents at the end of the period 50,086 21,928 50,086 21,928


CONTACTS Investor Relations: Anat Earon-Heilborn +972 723917548 ir@radware.com Media Contacts: Deborah Szajngarten Radware 201-785-3206 deborah.szajngarten@radware.com

Source:Radware Inc.