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Radware Announces Third Quarter 2017 Earnings

Third Quarter 2017 Results and Financial Highlights

  • Revenues of $53 Million, up 13% from the third quarter of 2016
  • Non-GAAP EPS of $0.04; GAAP EPS of ($0.03)
  • Operating cash flow for the last twelve months of $47 million

TEL AVIV, Israel, Nov. 01, 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 September 30, 2017.

“We are very pleased with our performance and results for the third quarter, which came in at the high end of our expectations. We enjoyed strong bookings across product lines and geographies, with particularly strong growth in our cloud business,” said Roy Zisapel, Radware President & CEO. “With our leading technology, comprehensive offering and flexible deployment models, we are well positioned to address our customers’ most pressing security issues. We are committed to consistent execution of our strategy, and look forward to continue benefiting from positive market trends and deliver long-term growth for Radware.”

Financial Highlights for the Third Quarter of 2017

Revenues for the third quarter of 2017 totaled $53.0 million, up 13% from revenues of $46.9 million for the third quarter of 2016.

Revenues in the Americas region were $26.6 million for the third quarter of 2017, up 33% from revenues of $20.0 million in the third quarter of 2016. Revenues in the EMEA region were $13.8 million for the third quarter of 2017, up 13% from revenues of $12.2 million in the third quarter of 2016. Revenues in the APAC region were $12.7 million for the third quarter of 2017, down 14% from revenues of $14.7 million in the third quarter of 2016.

Net loss on a GAAP basis for the third quarter of 2017 was ($1.5) million or ($0.03) per diluted share, compared with net loss of ($2.4) million or ($0.06) per diluted share for the third quarter of 2016.

Non-GAAP net income for the third quarter of 2017 was $1.8 million or $0.04 per diluted share, compared with non- GAAP net income of $1.6 million or $0.04 per diluted share for the third quarter of 2016.

Non-GAAP results are calculated excluding 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 September 30, 2017, the Company had cash, cash equivalents, short-term and long-term bank deposits and marketable securities of $330.9 million. Cash generated from operations in the third quarter of 2017 totaled $5.8 million.

Conference Call

Radware management will host a call today, November 1, 2017 at 8:30 am ET to discuss its third quarter 2017 results.

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

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

Conference ID: 9186337

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.

CONTACTS

Investor Relations:
Anat Earon-Heilborn
+972 723917548
ir@radware.com

Media Contacts:
Deborah Szajngarten
Radware
201-785-3206
deborah.szajngarten@radware.com

Radware Ltd.
Condensed Consolidated Balance Sheets
(U.S. Dollars in thousands)
September 30, December 31,
2017 2016
(Unaudited)
Assets
Current assets
Cash and cash equivalents 53,530 79,639
Available-for-sale marketable securities 25,145 20,452
Short-term bank deposits 87,114 125,995
Trade receivables, net 12,314 19,407
Other receivables and prepaid expenses 3,905 4,159
Inventories 18,724 17,114
200,732 266,766
Long-term investments
Available-for-sale marketable securities 70,717 74,967
Long-term bank deposits 94,361 19,092
Severance pay funds 2,830 2,597
167,908 96,656
Property and equipment, net 24,487 26,354
Intangible assets, net 10,525 2,399
Other long-term assets 8,084 8,092
Goodwill 32,174 30,069
Total assets 443,910 430,336
Liabilities and shareholders' equity
Current Liabilities
Trade payables 4,552 5,971
Deferred revenues 63,534 53,061
Other payables and accrued expenses 25,107 26,232
93,193 85,264
Long-term liabilities
Deferred revenues 38,658 31,100
Other long-term liabilities 9,130 14,209
47,788 45,309
Shareholders' equity
Share capital 666 663
Additional paid-in capital 338,539 325,338
Accumulated other comprehensive loss, net of tax (31) (20)
Treasury stock, at cost (116,442) (116,029)
Retained earnings 80,197 89,811
Total shareholders' equity 302,929 299,763
Total liabilities and shareholders' equity 443,910 430,336





Radware Ltd.
Condensed Consolidated Statements of Loss
(U.S Dollars in thousands, except share and per share data)
Three months ended Nine months ended
September 30, September 30,
2017 2016 2017 2016
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues 53,047 46,863 152,915 144,873
Cost of revenues 9,928 8,558 28,556 26,099
Gross profit 43,119 38,305 124,359 118,774
Operating expenses:
Research and development, net 14,678 13,072 43,931 39,497
Selling and marketing 27,189 24,853 79,578 75,630
General and administrative 4,152 4,245 13,312 13,907
Total operating expenses 46,019 42,170 136,821 129,034
Operating loss (2,900) (3,865) (12,462) (10,260)
Financial income, net 2,148 1,706 3,895 4,878
Loss before taxes on income (752) (2,159) (8,567) (5,382)
Taxes on income (725) (288) (1,047) (1,144)
Net loss (1,477) (2,447) (9,614) (6,526)
Basic net loss per share (0.03) (0.06) (0.22) (0.15)
Weighted average number of shares used to compute basic net loss per share 43,951,325 43,752,220 43,347,092 44,053,422
Diluted net loss per share (0.03) (0.06) (0.22) (0.15)
Weighted average number of shares used to compute diluted net loss per share 43,951,325 43,752,220 43,347,092 44,053,422



Radware Ltd.
Reconciliation of GAAP to Non-GAAP Financial Information
(U.S Dollars in thousands, except share and per share data)
Three months ended Nine months ended
September 30, September 30,
2017 2016 2017 2016
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
GAAP gross profit43,119 38,305 124,359 118,774
Stock-based compensation65 47 181 128
Amortization of intangible assets379 253 1,051 760
Non-GAAP gross profit43,563 38,605 125,591 119,662
GAAP research and development, net14,678 13,072 43,931 39,497
Stock-based compensation957 941 2,883 2,391
Non-GAAP Research and development, net13,721 12,131 41,048 37,106
GAAP selling and marketing27,189 24,853 79,578 75,630
Stock-based compensation1,678 1,256 5,177 3,918
Amortization of intangible assets23 27 70 79
Non-GAAP selling and marketing25,488 23,570 74,331 71,633
GAAP general and administrative4,152 4,245 13,312 13,907
Stock-based compensation570 434 1,573 1,862
Acquisition costs- - 340 -
Litigation costs357 889 1,976 3,486
Non-GAAP general and administrative3,225 2,922 9,423 8,559
GAAP total operating expenses46,019 42,170 136,821 129,034
Stock-based compensation3,205 2,631 9,633 8,171
Acquisition costs- - 340 -
Amortization of intangible assets23 27 70 79
Litigation costs357 889 1,976 3,486
Non-GAAP total operating expenses42,434 38,623 124,802 117,298
GAAP operating loss(2,900) (3,865) (12,462) (10,260)
Stock-based compensation3,270 2,678 9,814 8,299
Acquisition costs- - 340 -
Amortization of intangible assets402 280 1,121 839
Litigation costs357 889 1,976 3,486
Non-GAAP operating income (loss)1,129 (18) 789 2,364
GAAP finance income2,148 1,706 3,895 4,878
Exchange rate differences, net on balance sheet items included in financial income(729) 176 77 333
Non-GAAP finance income1,419 1,882 3,972 5,211
GAAP loss before taxes on income(752) (2,159) (8,567) (5,382)
Stock-based compensation3,270 2,678 9,814 8,299
Acquisition costs- - 340 -
Amortization of intangible assets402 280 1,121 839
Litigation costs357 889 1,976 3,486
Exchange rate differences, net on balance sheet items included in financial income(729) 176 77 333
Non-GAAP income before taxes on income2,548 1,864 4,761 7,575
GAAP net loss(1,477) (2,447) (9,614) (6,526)
Stock-based compensation3,270 2,678 9,814 8,299
Acquisition costs- - 340 -
Amortization of intangible assets402 280 1,121 839
Litigation costs357 889 1,976 3,486
Exchange rate differences, net on balance sheet items included in financial income(729) 176 77 333
Non GAAP net income1,823 1,576 3,714 6,431
GAAP Net loss per diluted share(0.03) (0.06) (0.22) (0.15)
Stock-based compensation0.07 0.06 0.22 0.19
Acquisition costs0.00 0.00 0.01 0.00
Amortization of intangible assets0.01 0.01 0.03 0.02
Litigation costs0.01 0.02 0.04 0.08
Exchange rate differences, net on balance sheet items included in financial income(0.02) 0.00 0.00 0.01
Non GAAP Net income per diluted share0.04 0.04 0.08 0.15
Weighted average number of shares used to compute non-GAAP diluted net earnings per share45,210,495 44,077,078 44,431,570 44,260,343


Radware Ltd.
Condensed Consolidated Statements of Cash Flow
(U.S. Dollars in thousands)
Three months ended Nine months ended
September 30, September 30,
2017
2016
2017
2016
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash flow from operating activities:
Net loss (1,477) (2,447) (9,614) (6,526)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 2,861 2,614 8,667 7,709
Stock based compensation 3,270 2,678 9,814 8,299
Gain from sale of available-for-sale marketable securities - (651) - (1,778)
Amortization of premium, accretion of discounts and accrued interest on available-for- sale marketable securities, net 450 385 1,081 1,277
Accrued interest on bank deposits (720) 201 812 (455)
Increase (decrease) in accrued severance pay, net 44 (51) 220 290
Increase in trade receivables, net 5,324 4,711 7,226 5,064
Decrease (increase) in other current assets, prepaid expenses and deferred income taxes, net (459) 149 379 (260)
Increase (decrease) in inventories 731 (631) (1,610) (490)
Increase in trade payables (1,415) (1,036) (1,551) (4,204)
Increase (decrease) in deferred revenues 2,713 (6,773) 17,662 1,821
Increase (decrease) in other payables and accrued expenses (5,483) (421) (9,579) 4,512
Excess tax benefit from stock-based compensation - - - 74
Net cash provided by (used in) operating activities 5,839 (1,272) 23,507 15,333
Cash flows from investing activities:
Purchase of property and equipment (1,240) (2,561) (5,597) (8,071)
Proceeds from (investment in) other long-term assets, net (4) (3) 12 -
Proceeds from (investment in) bank deposits, net (2,074) 16,097 (37,200) 1,708
Proceeds from (investment in) sale, redemption of and purchase of available-for-sale marketable securities ,net 485 4,339 (1,538)
7,600
Payment for acquisition of subsidiary, net of cash acquired - - (8,269) -
Net cash provided (used in) in investing activities (2,833) 17,872 (52,592) 1,237
Cash flows from financing activities:
Proceeds from exercise of stock options 851 330 3,389 330
Excess tax benefit from stock-based compensation - - - (74)
Repurchase of shares (413) - (413) (11,712)
Net cash provided by (used in) financing activities 438 330 2,976 (11,456)
Increase (decrease) in cash and cash equivalents 3,444 16,930 (26,109) 5,114
Cash and cash equivalents at the beginning of the period 50,086 21,928 79,639 33,744
Cash and cash equivalents at the end of the period 53,530 38,858 53,530 38,858

Source:Radware Inc.