RDWR RADWARE Ltd

Radware® (NASDAQ: RDWR), a leading provider of cyber security and application delivery solutions, today announced its consolidated financial results for the quarter ended June 30, 2020.

“We are pleased with the results for the second quarter, despite the unusual COVID-19 related circumstances as our strong business fundamentals continued to provide us with resilience,” said Roy Zisapel, Radware’s President & CEO. “Strong bookings performance in North America, coupled with continued progress with our OEM partners and strong performance in our security business were the highlights of the quarter and we expect them to continue throughout the year.”

Financial Highlights for the Second Quarter of 2020

Revenues for the second quarter of 2020 totaled $58.4 million, down 3% from revenues of $60.5 million for the second quarter of 2019. Revenues for the first six months of 2020 totaled $118.5 million, down 3% from revenues of $121.9 million for the first six months of 2019:

• Revenues in the Americas region were $27.5 million for the second quarter of 2020, down 1% compared to revenues of $27.6 million in the second quarter of 2019. For the first six months of 2020, revenues in the Americas region increased 8% over the same period in 2019.
• Revenues in the Europe, Middle East and Africa (“EMEA”) region were $17.7 million for the second quarter of 2020, up 5% from revenues of $16.9 million in the second quarter of 2019. For the first six months of 2020, revenues in the EMEA region increased 2% over the same period in 2019.
• Revenues in the Asia-Pacific (“APAC”) region were $13.3 million for the second quarter of 2020, down 17% from revenues of $15.9 million in the second quarter of 2019. For the first six months of 2020, revenues in the APAC region decreased 25% over the same period in 2019.

Net income on a GAAP basis for the second quarter of 2020 was $0.7 million, or $0.01 per diluted share, compared with net income of $3.7 million, or $0.08 per diluted share, for the second quarter of 2019.

Non-GAAP net income for the second quarter of 2020 was $6.0 million, or $0.13 per diluted share, compared with non- GAAP net income of $8.9 million, or $0.18 per diluted share, for the second quarter of 2019.

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

As of June 30, 2020, the Company had cash, cash equivalents, short-term and long-term bank deposits and marketable securities of $442.8 million. Net cash provided by operating activities in the second quarter of 2020 totaled $18.0 million. Net cash spent on share repurchases in the second quarter of 2020 totaled $5.0 million.

Conference Call

Radware management will host a call on Wednesday, July 29, 2020 at 8:30 a.m. ET to discuss its second quarter 2020 results and the Company’s outlook for the third quarter of 2020.

Participants in the US call: Toll Free 833-968-2213

Participants Internationally call:  +1-778-560-2898

Conference ID: 1278452

A replay will be available for 2 days, starting 2 hours after the end of the call, on 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 InformationIn 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 stock-based compensation expenses, amortization of intangible assets, acquisition costs, litigation costs, exchange rate differences, net on balance sheet items included in finance income, other loss (gain) adjustment and tax related 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 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; natural disasters and public health crises, such as the coronavirus disease 2019 (COVID-19) pandemic; 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 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 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 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.

©2020 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.

CONTACTS

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

Media Contact:Deborah SzajngartenRadware201-785-3206deborah.szajngarten@radware.com

Radware Ltd.
Condensed Consolidated Balance Sheets
(U.S. Dollars in thousands)
			June 30,					December 31,
			2020					2019
			(Unaudited)					(Unaudited)
Assets
Current assets
Cash and cash equivalents			48,650					40,751
Marketable securities			63,568					36,924
Short-term bank deposits			114,137					100,276
Trade receivables, net			17,195					22,610
Other receivables and prepaid expenses			8,444					7,469
Inventories			14,106					13,940
			266,100					221,970
Long-term investments
Marketable securities			83,647					112,696
Long-term bank deposits			132,765					137,095
Severance pay funds			2,191					2,300
			218,603					252,091
Property and equipment, net			23,663					22,971
Other long-term assets			25,358					24,398
Operating lease right-of-use assets			24,117					18,144
Goodwill and intangible assets, net			54,663					55,625
Total assets			612,504					595,199
Liabilities and shareholders' equity
Current Liabilities
Trade payables			4,896					6,315
Deferred revenues			97,703					79,239
Operating lease liabilities			4,573					5,193
Other payables and accrued expenses			33,672					34,794
			140,844					125,541
Long-term liabilities
Deferred revenues			54,091					50,888
Operating lease liabilities			20,469					13,914
Other long-term liabilities			10,004					9,525
			84,564					74,327
Shareholders' equity
Share capital			713					710
Additional paid-in capital			425,466					414,581
Accumulated other comprehensive income, net of tax			2,444					1,145
Treasury stock, at cost			(168,895)					(145,226)
Retained earnings			127,368					124,121
Total shareholders' equity			387,096					395,331
Total liabilities and shareholders' equity			612,504					595,199

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,
		2020		2019		2020		2019
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Revenues		58,445		60,454		118,457		121,851
Cost of revenues		10,558		10,644		21,247		21,653
Gross profit		47,887		49,810		97,210		100,198
Operating expenses, net:
Research and development, net		16,509		15,400		32,341		30,630
Selling and marketing		26,755		26,680		54,957		53,341
General and administrative		4,889		5,042		9,601		9,806
Total operating expenses, net		48,153		47,122		96,899		93,777
Operating income (loss)		(266)		2,688		311		6,421
Financial income, net		1,783		2,119		4,507		3,910
Income before taxes on income		1,517		4,807		4,818		10,331
Taxes on income		844		1,061		1,571		2,217
Net income		673		3,746		3,247		8,114
Basic net earnings per share		0.01		0.08		0.07		0.17
Weighted average number of shares used to compute basic net earnings per share		46,387,585		46,899,813		46,652,734		46,757,981
Diluted net earnings per share		0.01		0.08		0.07		0.17
Weighted average number of shares used to compute diluted net earnings per share		47,632,309		48,722,684		47,927,268		48,649,438

	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,
			2020		2019		2020		2019
			(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
GAAP gross profit			47,887		49,810		97,210		100,198
	Stock-based compensation		49		59		87		114
	Amortization of intangible assets		464		410		962		821
Non-GAAP gross profit			48,400		50,279		98,259		101,133
GAAP research and development, net			16,509		15,400		32,341		30,630
	Stock-based compensation		1,089		714		1,898		1,424
Non-GAAP Research and development, net			15,420		14,686		30,443		29,206
GAAP selling and marketing			26,755		26,680		54,957		53,341
	Stock-based compensation		1,845		1,735		3,731		3,304
	Amortization of intangible assets		-		18		-		35
Non-GAAP selling and marketing			24,910		24,927		51,226		50,002
GAAP general and administrative			4,889		5,042		9,601		9,806
	Stock-based compensation		931		782		1,834		1,549
	Acquisition costs		-		-		-		264
	Litigation costs		140		777		259		859
Non-GAAP general and administrative			3,818		3,483		7,508		7,134
GAAP total operating expenses, net			48,153		47,122		96,899		93,777
	Stock-based compensation		3,865		3,231		7,463		6,277
	Amortization of intangible assets		-		18		-		35
	Acquisition costs		-		-		-		264
	Litigation costs		140		777		259		859
Non-GAAP total operating expenses, net			44,148		43,096		89,177		86,342
GAAP operating income (loss)			(266)		2,688		311		6,421
	Stock-based compensation		3,914		3,290		7,550		6,391
	Amortization of intangible assets		464		428		962		856
	Acquisition costs		-		-		-		264
	Litigation costs		140		777		259		859
Non-GAAP operating income			4,252		7,183		9,082		14,791
GAAP financial income, net			1,783		2,119		4,507		3,910
	Other loss (gain) adjustment		-		(310)		247		(310)
	Exchange rate differences, net on balance sheet items included in financial income, net		859		909		552		1,540
Non-GAAP financial income, net			2,642		2,718		5,306		5,140
GAAP income before taxes on income			1,517		4,807		4,818		10,331
	Stock-based compensation		3,914		3,290		7,550		6,391
	Amortization of intangible assets		464		428		962		856
	Acquisition costs		-		-		-		264
	Litigation costs		140		777		259		859
	Other loss (gain) adjustment		-		(310)		247		(310)
	Exchange rate differences, net on balance sheet items included in financial income, net		859		909		552		1,540
Non-GAAP income before taxes on income			6,894		9,901		14,388		19,931
GAAP taxes on income			844		1,061		1,571		2,217
	Tax related adjustments		61		(71)		183		(71)
Non-GAAP taxes on income			905		990		1,754		2,146
GAAP net income			673		3,746		3,247		8,114
	Stock-based compensation		3,914		3,290		7,550		6,391
	Amortization of intangible assets		464		428		962		856
	Acquisition costs		-		-		-		264
	Litigation costs		140		777		259		859
	Other loss (gain) adjustment		-		(310)		247		(310)
	Exchange rate differences, net on balance sheet items included in financial income, net		859		909		552		1,540
	Tax related adjustments		(61)		71		(183)		71
Non-GAAP net income			5,989		8,911		12,634		17,785
GAAP diluted net earnings per share			0.01		0.08		0.07		0.17
	Stock-based compensation		0.08		0.07		0.16		0.13
	Amortization of intangible assets		0.01		0.01		0.02		0.02
	Acquisition costs		0.00		0.00		0.00		0.01
	Litigation costs		0.00		0.02		0.01		0.02
	Other loss (gain) adjustment		0.00		(0.01)		0.01		(0.01)
	Exchange rate differences, net on balance sheet items included in financial income, net		0.02		0.02		0.01		0.03
	Tax related adjustments		(0.00)		0.00		(0.00)		0.00
Non-GAAP diluted net earnings per share			0.13		0.18		0.26		0.37
Weighted average number of shares used to compute Non-GAAP diluted net earnings per share			47,632,309		48,722,684		47,927,268		48,649,438

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,
			2020				2019				2020				2019
			(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Cash flow from operating activities:
Net income			673				3,746				3,247				8,114
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			2,637				2,701				5,267				5,388
Stock-based compensation			3,914				3,290				7,550				6,391
Amortization of premium, accretion of discounts and accrued interest on marketable securities, net			114				149				310				327
Gain related to securities, net			(226)				(310)				(63)				(310)
Accrued interest on bank deposits			(178)				3,160				(373)				2,331
Increase (decrease) in accrued severance pay, net			(29)				65				187				933
Decrease (increase) in trade receivables, net			9,444				(641)				5,415				2,529
Increase in other receivables and prepaid expenses and other long-term assets			(1,471)				(1,721)				(1,930)				(3,686)
Decrease (increase) in inventories			748				1,221				(166)				2,437
Decrease in trade payables			(3)				(28)				(1,419)				(738)
Increase (decrease) in deferred revenues			1,637				(7,237)				21,667				3,783
Increase (decrease) in other payables and accrued expenses			(100)				463				(721)				472
Operating lease liabilities, net			800				285				(38)				660
Net cash provided by operating activities			17,960				5,143				38,933				28,631
Cash flows from investing activities:
Purchase of property and equipment			(2,545)				(2,382)				(4,997)				(4,343)
Investment in other long-term assets, net			(9)				(33)				(11)				(62)
Proceeds from (investment in) bank deposits, net			(4,652)				19,529				(9,158)				19,447
Proceeds from (investment in) sale, redemption of and purchase of marketable securities ,net			940				(33,574)				3,463				(43,235)
Payment for acquisition of subsidiary, net of cash acquired			0				43				0				(12,239)
Net cash used in investing activities			(6,266)				(16,417)				(10,703)				(40,432)
Cash flows from financing activities:
Proceeds from exercise of stock options			1,749				3,109				3,338				10,842
Repurchase of shares			(5,000)				(10,005)				(23,669)				(10,053)
Net cash provided by (used in) financing activities			(3,251)				(6,896)				(20,331)				789
Increase (decrease) in cash and cash equivalents			8,443				(18,170)				7,899				(11,012)
Cash and cash equivalents at the beginning of the period			40,207				52,361				40,751				45,203
Cash and cash equivalents at the end of the period			48,650				34,191				48,650				34,191