Radware Reports 17% Revenue Growth for the Third Quarter 2021

Rhea-AI Summary

Radware reported a record revenue of $73 million for Q3 2021, marking a 17% increase year-over-year, surpassing guidance.

Annual Recurring Revenue (ARR) reached $185 million, a 9% year-over-year rise, supported by a 26% increase in cloud and subscription services.

Non-GAAP operating income improved 69% to $11.6 million, with non-GAAP EPS at $0.23. Cash flow from operations was $18 million.

Positive

• Record revenue of $73 million, up 17% year-over-year.
• Annual Recurring Revenue (ARR) of $185 million, up 9% year-over-year.
• Non-GAAP operating income increased by 69% to $11.6 million.
• Non-GAAP EPS rose by 32% to $0.23.

Negative

• Revenue growth of only 1% in the Asia-Pacific region compared to Q3 2020.

Third Quarter 2021 Results and Financial Highlights

• Record revenue of $73 million, up 17% year-over-year, exceeding high end of guidance
• ARR of $185 million, up 9% year-over-year
• Non-GAAP operating income of $11.6 million, an increase of 69% year-over-year
• Non-GAAP EPS of $0.23, exceeding high end of guidance; GAAP EPS of $0.10
• Cash flow from operations of $18 million
  

TEL AVIV, Israel, Nov. 03, 2021 (GLOBE NEWSWIRE) -- Radware® (NASDAQ: RDWR), a leading provider of cyber security and application delivery solutions, today announced its consolidated financial results for the quarter and the nine months ended September 30, 2021.

“We are pleased to report another strong quarter. Driven by our cloud and subscription business, we achieved record quarterly revenue of $73 million. In addition, we saw double digit growth across key financial metrics. Compared to the same period last year, total revenue grew 17%, cloud and subscription ARR increased by 26%, and EPS rose 32%,” said Roy Zisapel, president and CEO, Radware. “The growing number of increasingly complex cyber-attacks is creating more urgency and driving more organizations to strengthen the defenses around their critical assets. We are confident that this demand, coupled with our best of breed security offering — which includes DDoS protection; Web application, API and Bot security; and cloud posture security — will fuel our growth in the coming quarters.”

Financial Highlights for the Third Quarter of 2021
Revenue for the third quarter of 2021 totaled $73.4 million:

• Revenue in the Americas region was $35.7 million for the third quarter of 2021, up 18% from $30.2 million in the third quarter of 2020.
• Revenue in the Europe, Middle East and Africa (“EMEA”) region was $23.6 million for the third quarter of 2021, up 29% from $18.3 million in the third quarter of 2020.
• Revenue in the Asia-Pacific (“APAC”) region was $14.1 million for the third quarter of 2021, up 1% from $14.0 million in the third quarter of 2020.
  

GAAP net income for the third quarter of 2021 was $5.0 million, or $0.10 per diluted share, compared to GAAP net income of $3.6 million, or $0.08 per diluted share, for the third quarter of 2020.

Non-GAAP net income for the third quarter of 2021 was $11.0 million, or $0.23 per diluted share, compared to non-GAAP net income of $8.4 million, or $0.18 per diluted share, for the third quarter of 2020.

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, other loss adjustment 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.

As of September 30, 2021, the Company had cash, cash equivalents, short-term and long-term bank deposits and marketable securities of $455.9 million. Net cash provided by operating activities in the third quarter of 2021 totaled $17.9 million.

Conference Call
Radware management will host a call today, November 3, 2021 at 8:30 a.m. ET to discuss its third quarter 2021 results and the Company’s outlook. To participate in the call, please use the following numbers:

Participants in the US call: Toll Free 888-510-2008
Participants Internationally 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, other loss 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 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 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; real or perceived shortcomings, defects or vulnerabilities in our products or solutions or if we or our end-users experience security breaches; the availability of components and manufacturing capacity; our reliance on a single managed security service provider to provide us with scrubbing center services; 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 www.radware.com.

©2021 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:
Yisca Erez, +972-72-3917211, ir@radware.com

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

Radware Ltd.
Condensed Consolidated Balance Sheets
(U.S. Dollars in thousands)
	September 30,			December 31,
	2021			2020
	(Unaudited)			(Unaudited)
Assets
Current assets
Cash and cash equivalents	63,205			54,771
Marketable securities	51,234			64,684
Short-term bank deposits	159,208			191,038
Trade receivables, net	11,476			16,848
Other receivables and prepaid expenses	11,798			6,526
Inventories	12,403			13,935
	309,324			347,802
Long-term investments
Marketable securities	84,741			66,836
Long-term bank deposits	97,550			71,421
Severance pay funds	2,391			2,453
	184,682			140,710
Property and equipment, net	20,606			22,976
Intangible assets, net	11,196			12,588
Other long-term assets	35,879			30,222
Operating lease right-of-use assets	25,131			27,823
Goodwill	41,144			41,144
Total assets	627,962			623,265
Liabilities and shareholders' equity
Current Liabilities
Trade payables	2,994			3,882
Deferred revenues	93,542			92,127
Operating lease liabilities	4,503			5,224
Other payables and accrued expenses	44,424			42,514
	145,463			143,747
Long-term liabilities
Deferred revenues	62,455			54,797
Operating lease liabilities	22,617			24,851
Other long-term liabilities	11,841			11,409
	96,913			91,057
Shareholders' equity
Share capital	728			721
Additional paid-in capital	462,976			443,018
Accumulated other comprehensive income, net of tax	298			1,517
Treasury stock, at cost	(225,575	)		(190,552	)
Retained earnings	147,159			133,757
Total shareholders' equity	385,586			388,461
Total liabilities and shareholders' equity	627,962			623,265

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 nine months ended
	September 30,				September 30,
	2021		2020		2021		2020
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Revenues	73,418		62,524		209,854		180,981
Cost of revenues	13,294		11,646		38,398		32,893
Gross profit	60,124		50,878		171,456		148,088
Operating expenses, net:
Research and development, net	18,639		16,747		54,501		49,088
Selling and marketing	29,588		27,659		87,827		82,616
General and administrative	6,024		4,513		15,771		14,114
Total operating expenses, net	54,251		48,919		158,099		145,818
Operating income	5,873		1,959		13,357		2,270
Financial income, net	1,013		2,897		4,870		7,404
Income before taxes on income	6,886		4,856		18,227		9,674
Taxes on income	1,921		1,269		4,825		2,840
Net income	4,965		3,587		13,402		6,834
Basic net earnings per share	0.11		0.08		0.29		0.15
Weighted average number of shares used to compute basic net earnings per share	45,838,968		46,341,046		45,891,234		46,547,504
Diluted net earnings per share	0.10		0.08		0.28		0.14
Weighted average number of shares used to compute diluted net earnings per share	47,620,254		47,673,698		47,451,932		47,841,411

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 nine months ended
	September 30,						September 30,
	2021			2020			2021			2020
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
GAAP gross profit	60,124			50,878			171,456			148,088
Stock-based compensation	51			48			149			135
Amortization of intangible assets	464			465			1,393			1,427
Non-GAAP gross profit	60,639			51,391			172,998			149,650
GAAP research and development, net	18,639			16,747			54,501			49,088
Stock-based compensation	1,434			1,301			3,786			3,199
Non-GAAP Research and development, net	17,205			15,446			50,715			45,889
GAAP selling and marketing	29,588			27,659			87,827			82,616
Stock-based compensation	2,212			2,083			6,294			5,814
Non-GAAP selling and marketing	27,376			25,576			81,533			76,802
GAAP general and administrative	6,024			4,513			15,771			14,114
Stock-based compensation	894			975			1,973			2,809
Litigation costs	67			44			288			303
Acquisition costs	629			-			629			-
Non-GAAP general and administrative	4,434			3,494			12,881			11,002
GAAP total operating expenses, net	54,251			48,919			158,099			145,818
Stock-based compensation	4,540			4,359			12,053			11,822
Litigation costs	67			44			288			303
Acquisition costs	629			-			629			-
Non-GAAP total operating expenses, net	49,015			44,516			145,129			133,693
GAAP operating income	5,873			1,959			13,357			2,270
Stock-based compensation	4,591			4,407			12,202			11,957
Amortization of intangible assets	464			465			1,393			1,427
Litigation costs	67			44			288			303
Acquisition costs	629			-			629			-
Non-GAAP operating income	11,624			6,875			27,869			15,957
GAAP financial income, net	1,013			2,897			4,870			7,404
Other loss adjustment	-			-			-			247
Exchange rate differences, net on balance sheet items included in financial income, net	388			(72	)		219			480
Non-GAAP financial income, net	1,401			2,825			5,089			8,131
GAAP income before taxes on income	6,886			4,856			18,227			9,674
Stock-based compensation	4,591			4,407			12,202			11,957
Amortization of intangible assets	464			465			1,393			1,427
Litigation costs	67			44			288			303
Acquisition costs	629			-			629			-
Other loss adjustment	-			-			-			247
Exchange rate differences, net on balance sheet items included in financial income, net	388			(72	)		219			480
Non-GAAP income before taxes on income	13,025			9,700			32,958			24,088
GAAP taxes on income	1,921			1,269			4,825			2,840
Tax related adjustments	62			62			185			245
Non-GAAP taxes on income	1,983			1,331			5,010			3,085
GAAP net income	4,965			3,587			13,402			6,834
Stock-based compensation	4,591			4,407			12,202			11,957
Amortization of intangible assets	464			465			1,393			1,427
Litigation costs	67			44			288			303
Acquisition costs	629			-			629			-
Other loss adjustment	-			-			-			247
Exchange rate differences, net on balance sheet items included in financial income, net	388			(72	)		219			480
Tax related adjustments	(62	)		(62	)		(185	)		(245	)
Non-GAAP net income	11,042			8,369			27,948			21,003
GAAP diluted net earnings per share	0.10			0.08			0.28			0.14
Stock-based compensation	0.10			0.09			0.26			0.25
Amortization of intangible assets	0.01			0.01			0.03			0.03
Litigation costs	0.00			0.00			0.01			0.01
Acquisition costs	0.01			0.00			0.01			0.00
Other loss adjustment	0.00			0.00			0.00			0.01
Exchange rate differences, net on balance sheet items included in financial income, net	0.01			(0.00	)		0.00			0.01
Tax related adjustments	(0.00	)		(0.00	)		(0.00	)		(0.01	)
Non-GAAP diluted net earnings per share	0.23			0.18			0.59			0.44
Weighted average number of shares used to compute non-GAAP diluted net earnings per share	47,620,254			47,673,698			47,451,932			47,841,411

Radware Ltd.
Condensed Consolidated Statements of Cash Flow
(U.S. Dollars in thousands)
		For the three months ended						For the nine months ended
		September 30,						September 30,
		2021			2020			2021			2020
		(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Cash flow from operating activities:
Net income		4,965			3,587			13,402			6,834
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		2,527			2,616			7,712			7,883
Stock-based compensation		4,591			4,407			12,202			11,957
Amortization of premium, accretion of discounts and accrued interest on marketable securities, net		768			337			1,903			647
Gain related to securities, net		(327	)		(517	)		(424	)		(580	)
Accrued interest on bank deposits		1,504			(598	)		1,421			(971	)
Increase in accrued severance pay, net		88			48			453			235
Decrease in trade receivables, net		7,023			2,865			5,372			8,280
Increase in other receivables and prepaid expenses and other long-term assets		(627	)		(465	)		(10,606	)		(2,395	)
Decrease in inventories		797			816			1,532			650
Decrease in trade payables		(2,554	)		(1,078	)		(888	)		(2,497	)
Increase (decrease) in deferred revenues		(2,317	)		(7,648	)		9,073			14,019
Increase in other payables and accrued expenses		1,280			2,456			1,951			1,735
Operating lease liabilities, net		161			(26	)		(263	)		(64	)
Net cash provided by operating activities		17,879			6,800			42,840			45,733
Cash flows from investing activities:
Purchase of property and equipment		(1,458	)		(1,629	)		(3,950	)		(6,626	)
Proceeds from (investment in) other long-term assets, net		11			(15	)		42			(26	)
Proceeds from (investment in) bank deposits, net		(154	)		(2,666	)		4,280			(11,824	)
Proceeds from (investment in) sale, redemption of and purchase of marketable securities, net		(15,852	)		8,249			(7,518	)		11,712
Net cash provided by (used in) investing activities		(17,453	)		3,939			(7,146	)		(6,764	)
Cash flows from financing activities:
Proceeds from exercise of stock options		1,917			4,947			7,762			8,285
Repurchase of shares		(195	)		(15,907	)		(35,022	)		(39,576	)
Net cash provided by (used in) financing activities		1,722			(10,960	)		(27,260	)		(31,291	)
Increase (decrease) in cash and cash equivalents		2,148			(221	)		8,434			7,678
Cash and cash equivalents at the beginning of the period		61,057			48,650			54,771			40,751
Cash and cash equivalents at the end of the period		63,205			48,429			63,205			48,429

FAQ

What were Radware's Q3 2021 financial results?

Radware reported record revenue of $73 million for Q3 2021, a 17% increase year-over-year.

What is Radware's ARR for Q3 2021?

Radware's ARR reached $185 million, reflecting a 9% year-over-year growth.

What was Radware's non-GAAP EPS for Q3 2021?

Radware's non-GAAP EPS for Q3 2021 was $0.23, exceeding guidance.

How much cash flow from operations did Radware generate in Q3 2021?

Radware generated $18 million in cash flow from operations in Q3 2021.

What are the key financial highlights for Radware in Q3 2021?

Key highlights include record revenue of $73 million, 69% increase in non-GAAP operating income, and a 32% rise in non-GAAP EPS.