Radware Reports Second Quarter 2022 Financial Results


Second Quarter 2022 Results and Financial Highlights

  • Revenue of $75.1 million, up 8% yearoveryear
  • Total ARR of $195 million, up 10% year-over-year
  • Non-GAAP gross margin of 83.3% compared to 82.3% in the second quarter of last year
  • Cash flow from operations of $31.5 million
  • Non-GAAP EPS of $0.18; GAAP EPS of $0.07

TEL AVIV, Israel, Aug. 08, 2022 (GLOBE NEWSWIRE) — Radware® (NASDAQ: RDWR), a leading provider of cyber security and application delivery solutions, today announced its consolidated financial results for the second quarter ended June 30, 2022.

“We delivered solid revenue and earnings results in the second quarter. Our solutions, which protect our customers’ most critical applications and data centers in real time against cyber-attacks, are more critical to their businesses than ever before,” said Roy Zisapel, Radware’s president and CEO. “We have witnessed some delays in closing deals due to macro environment conditions that may have an impact on our short-term results. However, Radware is well-positioned to deliver sustained growth. Our business is backed by industry leading solutions, a diversified customer base, and strong balance sheet and positive cash flow. We plan to continue to invest in our business and global cloud footprint as we remain optimistic about the long-term opportunity ahead of us.”

Financial Highlights for the Second Quarter of 2022
Revenue for the second quarter of 2022 totaled $75.1 million:

  • Revenue in the Americas region was $29.7 million for the second quarter of 2022, an increase of 6% from $28.1 million in the second quarter of 2021.
  • Revenue in the Europe, Middle East, and Africa (“EMEA”) region was $29.7 million for the second quarter of 2022, an increase of 24% from $24.0 million in the second quarter of 2021.
  • Revenue in the Asia-Pacific (“APAC”) region was $15.7 million for the second quarter of 2022, a decrease of 10% from $17.6 million in the second quarter of 2021.

GAAP net income for the second quarter of 2022 was $3.2 million, or $0.07 per diluted share, compared to GAAP net income of $4.5 million, or $0.10 per diluted share, for the second quarter of 2021.

Non-GAAP net income for the second quarter of 2022 was $8.1 million, or $0.18 per diluted share, compared to non-GAAP net income of $8.9 million, or $0.19 per diluted share, for the second quarter of 2021.

As of June 30, 2022, the Company had cash, cash equivalents, short-term and long-term bank deposits, and marketable securities of $442.0 million. Net cash provided by operating activities was $31.5 million in the second quarter of 2022.

Non-GAAP results are calculated excluding, as applicable, the impact of stock-based compensation expenses, amortization of intangible assets, litigation costs, acquisition costs, exchange rate differences, net on balance sheet items included in financial income and tax-related adjustments. A reconciliation of each of the Company’s non-GAAP measures to the most directly comparable GAAP measure is included at the end of this press release.

Conference Call
Radware management will host a call today, August 8, 2022, at 8:30 a.m. EDT to discuss its second quarter 2022 results and the Company’s outlook. To participate in the call, please use the following numbers:
U.S. participants call toll free: 888-510-2008
International participants call: 1 646-960-0306
Conference ID: 1864701

A replay will be available for two days, starting two hours after the end of the call, on telephone number +1-647-362-9199 or (US toll-free) 800-770-2030. Passcode 1864701.

The call will be webcast live on 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 and Key Performance Indicators
In 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, selling and marketing expense, general and administrative expense, 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, as applicable, stock-based compensation expenses, amortization of intangible assets, litigation costs, acquisition costs, exchange rate differences, net on balance sheet items included in financial income and taxrelated adjustments. 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 measure 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.

Annual recurring revenue (“ARR”) is a key performance indicator defined as the annualized value of booked orders for term-based cloud services, subscription licenses, and maintenance contracts that are in effect at the end of a reporting period. ARR should be viewed independently of revenue and deferred revenue and is not intended to be combined with or to replace either of those items. ARR is not a forecast of future revenue, which can be impacted by contract start and end dates and renewal rates and does not include revenue reported as perpetual license or professional services revenue in our consolidated statement of operations. We consider ARR a key performance indicator of the value of the recurring components of our business.

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; natural disasters and public health crises, such as the coronavirus disease 2019 (COVID-19) pandemic; a shortage of components or manufacturing capacity could cause a delay in our ability to fulfill orders or increase our manufacturing costs; our business may be affected by sanctions, export controls and similar measures targeting Russia and other countries and territories as well as other responses to Russia’s military conflict in Ukraine, including indefinite suspension of operations in Russia and dealings with Russian entities by many multi-national businesses across a variety of industries; our ability to successfully implement our strategic initiative to accelerate our cloud business; our ability to expand our operations effectively; timely availability and customer acceptance of our new and existing solutions; 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 cyber security and application delivery solutions and in our industry in general, and changes in the competitive landscape; 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 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 realize our investment objectives for our cash and liquid investments; 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 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 the Radware website.

Radware encourages you to join our community and follow us on: FacebookLinkedIn, Radware Blog, Twitter, YouTube, and Radware Mobile for iOS and Android.

©2022 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.

Radware believes the information in this document is accurate in all material respects as of its publication date. However, the information is provided without any express, statutory, or implied warranties and is subject to change without notice.

The contents of any website or hyperlinks mentioned in this press release are for informational purposes and the contents thereof are not part of this press release.

CONTACTS
Investor Relations:
Yisca Erez, +972-72-3917211, ir@radware.com

Media Contact:
Gerri Dyrek, gerri.dyrek@radware.com

Radware Ltd.
Condensed Consolidated Balance Sheets
(U.S. Dollars in thousands)
         
    June 30,     December 31,  
    2022     2021  
    (Unaudited)     (Unaudited)  
Assets        
         
Current assets        
Cash and cash equivalents   49,199     92,513  
Marketable securities   25,055     39,497  
Short-term bank deposits   206,556     155,879  
Trade receivables, net   11,841     13,191  
Other receivables and prepaid expenses   13,360     8,046  
Inventories   11,403     11,580  
    317,414     320,706  
         
Long-term investments        
Marketable securities   112,053     98,224  
Long-term bank deposits   49,160     79,708  
Severance pay funds   2,154     2,454  
    163,367     180,386  
         
         
Property and equipment, net   20,742     20,240  
Goodwill and intangible assets, net   89,678     51,875  
Other long-term assets   37,608     37,334  
Operating lease right-of-use assets   23,376     24,829  
Total assets   652,185     635,370  
         
         
Liabilities and shareholders’ equity        
         
Current Liabilities        
Trade payables   7,440     4,310  
Deferred revenues   112,190     99,922  
Operating lease liabilities   4,454     5,090  
Other payables and accrued expenses   38,120     56,565  
    162,204     165,887  
         
Long-term liabilities        
Deferred revenues   75,297     67,065  
Operating lease liabilities   19,771     22,360  
Other long-term liabilities   19,384     10,065  
    114,452     99,490  
         
Shareholders’ equity        
Share capital   731     730  
Additional paid-in capital   482,037     471,173  
Accumulated other comprehensive loss, net of tax (6,384)     (455)  
Treasury stock, at cost   (284,345)     (243,023)  
Retained earnings   148,490     141,568  
Total shareholder’s equity   340,529     369,993  
         
Non–controlling interest   35,000      
         
Total shareholders’ equity   375,529     369,993  
         
Total liabilities and shareholders’ equity   652,185     635,370  
         
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 six months ended
  June 30,   June 30,
  2022   2021   2022   2021
  (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
               
Revenues 75,114   69,667   148,822   136,436
Cost of revenues 13,888   12,838   26,829   25,104
Gross profit 61,226   56,829   121,993   111,332
               
Operating expenses, net:              
Research and development, net 21,623   18,127   41,993   35,862
Selling and marketing 32,290   29,248   62,573   58,239
General and administrative 5,737   4,551   12,264   9,747
Total operating expenses, net 59,650   51,926   116,830   103,848
               
Operating income 1,576   4,903   5,163   7,484
Financial income, net 2,986   1,187   4,684   3,857
Income before taxes on income 4,562   6,090   9,847   11,341
Taxes on income 1,410   1,558   2,925   2,904
Net income 3,152   4,532   6,922   8,437
               
               
Basic net earnings per share 0.07   0.10   0.15   0.18
               
Weighted average number of shares used to compute basic net earnings per share 44,914,427   45,618,971   45,288,463   45,918,605
               
Diluted net earnings per share 0.07   0.10   0.15   0.18
               
Weighted average number of shares used to compute diluted net earnings per share 45,835,440   47,138,142   46,476,687   47,369,008
  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   For the six months ended
    June 30,   June 30,
    2022     2021     2022     2021  
    (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
GAAP gross profit 61,226     56,829     121,993     111,332  
  Stock-based compensation 94     51     184     98  
  Amortization of intangible assets 1,256     465     1,720     929  
Non-GAAP gross profit 62,576     57,345     123,897     112,359  
                 
GAAP research and development, net 21,623     18,127     41,993     35,862  
  Stock-based compensation 1,635     1,013     3,444     2,352  
Non-GAAP Research and development, net 19,988     17,114     38,549     33,510  
                 
GAAP selling and marketing 32,290     29,248     62,573     58,239  
  Stock-based compensation 3,043     2,030     4,892     4,082  
Non-GAAP selling and marketing 29,247     27,218     57,681     54,157  
                 
GAAP general and administrative 5,737     4,551     12,264     9,747  
  Stock-based compensation 876     143     1,544     1,079  
  Litigation costs     158         221  
  Acquisition costs         1,142      
Non-GAAP general and administrative 4,861     4,250     9,578     8,447  
                 
GAAP total operating expenses, net 59,650     51,926     116,830     103,848  
  Stock-based compensation 5,554     3,186     9,880     7,513  
  Litigation costs     158         221  
  Acquisition costs         1,142      
Non-GAAP total operating expenses, net 54,096     48,582     105,808     96,114  
                 
GAAP operating income 1,576     4,903     5,163     7,484  
  Stock-based compensation 5,648     3,237     10,064     7,611  
  Amortization of intangible assets 1,256     465     1,720     929  
  Litigation costs     158         221  
  Acquisition costs         1,142      
Non-GAAP operating income 8,480     8,763     18,089     16,245  
                 
GAAP financial income, net 2,986     1,187     4,684     3,857  
  Exchange rate differences, net on balance sheet items included in financial income, net (1,920)     555     (2,814)     (169)  
Non-GAAP financial income, net 1,066     1,742     1,870     3,688  
                 
GAAP income before taxes on income 4,562     6,090     9,847     11,341  
  Stock-based compensation 5,648     3,237     10,064     7,611  
  Amortization of intangible assets 1,256     465     1,720     929  
  Litigation costs     158         221  
  Acquisition costs         1,142      
  Exchange rate differences, net on balance sheet items included in financial income, net (1,920)     555     (2,814)     (169)  
Non-GAAP income before taxes on income 9,546     10,505     19,959     19,933  
                 
GAAP taxes on income 1,410     1,558     2,925     2,904  
  Tax related adjustments 61     61     123     123  
Non-GAAP taxes on income 1,471     1,619     3,048     3,027  
                 
GAAP net income 3,152     4,532     6,922     8,437  
  Stock-based compensation 5,648     3,237     10,064     7,611  
  Amortization of intangible assets 1,256     465     1,720     929  
  Litigation costs     158         221  
  Acquisition costs         1,142      
  Exchange rate differences, net on balance sheet items included in financial income, net (1,920)     555     (2,814)     (169)  
  Tax related adjustments (61)     (61)     (123)     (123)  
Non-GAAP net income 8,075     8,886     16,911     16,906  
                 
                 
GAAP diluted net earnings per share 0.07     0.10     0.15     0.18  
  Stock-based compensation 0.12     0.07     0.22     0.16  
  Amortization of intangible assets 0.03     0.01     0.04     0.02  
  Litigation costs 0.00     0.00     0.00     0.00  
  Acquisition costs 0.00     0.00     0.02     0.00  
  Exchange rate differences, net on balance sheet items included in financial income, net (0.04)     0.01     (0.06)     (0.00)  
  Tax related adjustments (0.00)     (0.00)     (0.00)     (0.00)  
Non-GAAP diluted net earnings per share 0.18     0.19     0.36     0.36  
                 
                 
Weighted average number of shares used to compute non-GAAP diluted net earnings per share 45,835,440     47,138,142     46,476,687     47,369,008  
Radware Ltd.      
Condensed Consolidated Statements of Cash Flow      
(U.S. Dollars in thousands)      
                 
    For the three months ended   For the six months ended
    June 30,   June 30,
    2022     2021     2022     2021  
    (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
Cash flow from operating activities:                
                 
Net income   3,152     4,532     6,922     8,437  
Adjustments to reconcile net income to net cash provided by operating activities:                
Depreciation and amortization   3,229     2,537     5,717     5,185  
Stock-based compensation   5,648     3,237     10,064     7,611  
Amortization of premium, accretion of discounts and accrued interest on marketable securities, net   798     727     1,386     1,135  
Gain related to securities, net   (1)     (95)     (60)     (97)  
Accrued interest on bank deposits   39     698     72     (83)  
Increase (decrease) in accrued severance pay, net   (53)     140     94     365  
Decrease (increase) in trade receivables, net   7,203     (8,591)     1,349     (1,651)  
Increase in other receivables and prepaid expenses and other long-term assets   (509)     (5,519)     (4,325)     (9,981)  
Decrease (increase) in inventories   (148)     211     177     735  
Increase (decrease) in trade payables   (713)     1,422     3,130     1,666  
Increase in deferred revenues   18,064     2,468     20,500     11,390  
Increase (decrease) in other payables and accrued expenses   (3,850)     6,664     (22,182)     671  
Operating lease liabilities, net   (1,335)     358     (1,772)     (424)  
Net cash provided by operating activities   31,524     8,789     21,072     24,959  
                 
Cash flows from investing activities:                
                 
Purchase of property and equipment   (2,333)     (1,159)     (4,497)     (2,492)  
Proceeds from (investment in) other long-term assets, net   92     (11)     37     31  
Proceeds from (investment in) bank deposits, net   (42,550)     4,577     (20,201)     4,434  
Proceeds from sale, redemption of and purchase of marketable securities ,net   (9,196)     10,825     (4,640)     8,334  
Payment for the acquisition of intangible assets           (30,000)      
Net cash provided by (used in) investing activities   (53,987)     14,232     (59,301)     10,307  
                 
Cash flows from financing activities:                
                 
Proceeds from exercise of stock options   239     3,695     801     5,847  
Repurchase of shares   (18,060)     (4,638)     (40,886)     (34,827)  
Proceeds from issuance of Preferred A shares in subsidiary   35,000         35,000      
Net cash provided by (used in) financing activities   17,179     (943)     (5,085)     (28,980)  
                 
Increase (decrease) in cash and cash equivalents   (5,284)     22,078     (43,314)     6,286  
Cash and cash equivalents at the beginning of the period   54,483     38,979     92,513     54,771  
Cash and cash equivalents at the end of the period   49,199     61,057     49,199     61,057  
                 

Radware Ltd



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