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Radware Reports Fourth Quarter and Full Year 2022 Financial Results

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Radware (NASDAQ: RDWR) reported its fourth quarter and full year 2022 results, highlighting a 3% revenue decline to $74.1 million in Q4, while full-year revenue rose 2% to $293.4 million. Annual recurring revenue (ARR) increased 7% to $202.4 million, with cloud and subscription revenue growing 13%. The company experienced a non-GAAP EPS of $0.17 but faced a GAAP net loss of $0.09 per share. Despite macroeconomic headwinds, management remains optimistic about long-term growth and plans to focus on cloud security solutions in 2023. They reported a cash position of $432 million as of December 31, 2022.

Positive
  • Recurring revenue increased to 68%.
  • Full-year 2022 revenue grew 2% to $293.4 million.
  • ARR rose 7% to $202.4 million.
  • Non-GAAP gross margin improved to 83.0%.
Negative
  • Q4 revenue declined 3% year-over-year.
  • GAAP net loss for Q4 was $4.1 million.
  • Revenue in the Americas decreased 4% for the full year.

Recurring revenue increased to 68%, full year 2022 cloud and subscription revenue increased 13%

Fourth Quarter 2022 Results and Financial Highlights

  • Revenue of $74.1 million, down 3% year-over-year

  • Non-GAAP gross margin of 82.7% compared to 82.4% in the fourth quarter of 2021

  • Non-GAAP EPS of $0.17; GAAP net loss per share of $0.09

Full Year 2022 Results and Financial Highlights

  • Revenue of $293.4 million, up 2% year-over-year

  • ARR of $202.4 million, up 7% year-over-year

  • Non-GAAP gross margin of 83.0% compared to 82.4% in 2021

  • Non-GAAP EPS of $0.68; GAAP EPS of $0.00

TEL AVIV, Israel, Feb. 08, 2023 (GLOBE NEWSWIRE) -- Radware® (NASDAQ: RDWR), a leading provider of cyber security and application delivery solutions, today announced its consolidated financial results for the fourth quarter and full year ended December 31, 2022.

“For the fourth quarter and full year of 2022, I’m pleased to report solid results, which were in-line with our guidance. The results were driven mainly by cloud and subscription revenue, which delivered double-digit growth during 2022, as well as a record number of new cloud wins in the fourth quarter,” said Roy Zisapel, Radware’s president and CEO. “While headwinds in the macro environment may continue to impact our results in the coming year, we remain optimistic about our long-term growth potential given the market adoption of our products. In 2023, the cloud will continue to play a pivotal role in our strategy as we increase our focus on our cloud security solutions, grow our presence in the mid-sized enterprise market, and expand our channel partnerships. Coupled with disciplined expense management, we remain committed to driving profitable growth.”

Financial Highlights for the Fourth Quarter and Full Year 2022
Revenue for the fourth quarter and full year of 2022 totaled $74.1 million and $293.4 million, respectively:

  • Revenue in the Americas region was $31.9 million for the fourth quarter of 2022, an increase of 2% from $31.2 million in the fourth quarter of 2021. Revenue in the Americas region for the full year of 2022 was $123.9 million, a decrease of 4% from $128.8 million in the full year of 2021.

  • Revenue in the Europe, Middle East, and Africa (“EMEA”) region was $24.3 million for the fourth quarter of 2022, a decrease of 18% from $29.7 million in the fourth quarter of 2021. Revenue in the EMEA region for the full year of 2022 was $104.2 million, up 6% from $98.4 million for the full year of 2021.

  • Revenue in the Asia-Pacific (“APAC”) region was $17.9 million for the fourth quarter of 2022, an increase of 14% from $15.7 million in the fourth quarter of 2021. Revenue in the APAC region for the full year of 2022 was $65.3 million, up 10% from $59.3 million for the full year of 2021.

GAAP net loss for the fourth quarter of 2022 was $4.1 million, or $(0.09) per diluted share, compared to GAAP net loss of $5.6 million, or $(0.12) per diluted share, for the fourth quarter of 2021. GAAP net loss for the full year of 2022 was $0.2 million, or $0.00 per diluted share, compared to GAAP net income of $7.8 million, or $0.16 per diluted share, for the full year of 2021.

Non-GAAP net income for the fourth quarter of 2022 was $7.7 million, or $0.17 per diluted share, compared to non-GAAP net income of $10.3 million, or $0.22 per diluted share, for the fourth quarter of 2021. Non-GAAP net income for the full year of 2022 was $31.3 million, or $0.68 per diluted share, compared to non-GAAP net income of $38.3 million, or $0.81 per diluted share, for the full year of 2021.

As of December 31, 2022, the Company had cash, cash equivalents, short-term and long-term bank deposits, and marketable securities of $432.0 million. Net cash provided by operating activities was $9.6 million in the fourth quarter of 2022 and $32.1 million for the full year 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 of balance sheet items included in financial income, net, 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, February 8, 2023, at 8:30 a.m. EST to discuss its fourth quarter and full year 2022 results and the Company’s 2023 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, net, income before taxes on income, taxes on income, net income and diluted 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, net, 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 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.

©2023 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)
    
 December 31, December 31,
 2022 2021
 (Unaudited) (Unaudited)
Assets   
    
Current assets   
Cash and cash equivalents46,185 92,513
Marketable securities44,180 39,497
Short-term bank deposits207,679 155,879
Trade receivables, net17,752 13,191
Other receivables and prepaid expenses8,646 8,046
Inventories11,428 11,580
 335,870 320,706
    
Long-term investments   
Marketable securities90,148 98,224
Long-term bank deposits43,765 79,708
Severance pay funds2,146 2,454
 136,059 180,386
    
    
Property and equipment, net21,068 20,240
Intangible assets, net19,686 10,731
Other long-term assets43,636 37,334
Operating lease right-of-use assets23,078 24,829
Goodwill68,008 41,144
Total assets647,405 635,370
    
Liabilities and equity   
    
Current liabilities   
Trade payables8,067 4,310
Deferred revenues108,243 99,922
Operating lease liabilities4,685 5,090
Other payables and accrued expenses45,444 56,565
 166,439 165,887
    
Long-term liabilities   
Deferred revenues72,219 67,065
Operating lease liabilities19,461 22,360
Other long-term liabilities20,843 10,065
 112,523 99,490
    
Equity   
Radware Ltd. equity   
Share capital732 730
Additional paid-in capital498,168 471,173
Accumulated other comprehensive loss, net of tax(4,844) (455)
Treasury stock, at cost(303,299) (243,023)
Retained earnings141,402 141,568
Total Radware Ltd. shareholder's equity332,159 369,993
    
Non–controlling interest36,284 -
    
Total equity368,443 369,993
    
Total liabilities and equity647,405 635,370



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 year ended
 December 31, December 31,
 2022 2021 2022 2021
 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
        
Revenues74,083 76,642 293,426 286,496
Cost of revenues13,917 14,048 53,884 52,446
Gross profit60,166 62,594 239,542 234,050
        
Operating expenses, net:       
Research and development, net22,486 19,597 86,562 74,098
Selling and marketing32,544 32,015 126,533 119,842
General and administrative10,244 6,114 29,786 21,885
Total operating expenses, net65,274 57,726 242,881 215,825
        
Operating income (loss)(5,108) 4,868 (3,339) 18,225
Financial income (expense), net2,018 (463) 8,052 4,407
Income (loss) before taxes on income(3,090) 4,405 4,713 22,632
Taxes on income1,034 9,996 4,879 14,821
Net income (loss)(4,124) (5,591) (166) 7,811
        
Basic net earnings (loss) per share attributed to Radware Ltd.'s shareholders(0.09) (0.12) (0.00) 0.17
        
Weighted average number of shares used to compute basic net earnings (loss) per share44,586,590 46,004,419 44,943,168 45,919,835
        
Diluted net earnings (loss) per share attributed to Radware Ltd.'s shareholders(0.09) (0.12) (0.00) 0.16
        
Weighted average number of shares used to compute diluted net earnings (loss) per share44,586,590 46,004,419 44,943,168 47,503,091



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 year ended
  December 31, December 31,
  2022 2021 2022 2021
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
GAAP gross profit60,166 62,594 239,542 234,050
 Stock-based compensation112 87 399 236
 Amortization of intangible assets992 465 3,704 1,858
Non-GAAP gross profit61,270 63,146 243,645 236,144
         
GAAP research and development, net22,486 19,597 86,562 74,098
 Stock-based compensation2,073 1,626 7,292 5,412
Non-GAAP Research and development, net20,413 17,971 79,270 68,686
         
GAAP selling and marketing32,544 32,015 126,533 119,842
 Stock-based compensation2,993 2,517 11,241 8,811
Non-GAAP selling and marketing29,551 29,498 115,292 111,031
         
GAAP general and administrative10,244 6,114 29,786 21,885
 Stock-based compensation4,480 1,142 8,421 3,115
 Litigation costs- - - 288
 Acquisition costs819 296 1,961 925
Non-GAAP general and administrative4,945 4,676 19,404 17,557
         
GAAP total operating expenses, net65,274 57,726 242,881 215,825
 Stock-based compensation9,546 5,285 26,954 17,338
 Litigation costs- - - 288
 Acquisition costs819 296 1,961 925
Non-GAAP total operating expenses, net54,909 52,145 213,966 197,274
         
GAAP operating income (loss)(5,108) 4,868 (3,339) 18,225
 Stock-based compensation9,658 5,372 27,353 17,574
 Amortization of intangible assets992 465 3,704 1,858
 Litigation costs- - - 288
 Acquisition costs819 296 1,961 925
Non-GAAP operating income6,361 11,001 29,679 38,870
         
GAAP financial income (loss), net2,018 (463) 8,052 4,407
 Exchange rate differences, net on balance sheet items included in financial income (loss), net413 1,592 (1,301) 1,811
Non-GAAP financial income, net2,431 1,129 6,751 6,218
         
GAAP income (loss) before taxes on income(3,090) 4,405 4,713 22,632
 Stock-based compensation9,658 5,372 27,353 17,574
 Amortization of intangible assets992 465 3,704 1,858
 Litigation costs- - - 288
 Acquisition costs819 296 1,961 925
 Exchange rate differences, net on balance sheet items included in financial income (loss), net413 1,592 (1,301) 1,811
Non-GAAP income before taxes on income8,792 12,130 36,430 45,088
         
GAAP taxes on income1,034 9,996 4,879 14,821
 Tax settlement- (8,247) - (8,247)
 Tax related adjustments61 61 246 246
Non-GAAP taxes on income1,095 1,810 5,125 6,820
         
GAAP net income (loss)(4,124) (5,591) (166) 7,811
 Stock-based compensation9,658 5,372 27,353 17,574
 Amortization of intangible assets992 465 3,704 1,858
 Litigation costs- - - 288
 Acquisition costs819 296 1,961 925
 Exchange rate differences, net on balance sheet items included in financial income, net413 1,592 (1,301) 1,811
 Tax settlement- 8,247 - 8,247
 Tax related adjustments(61) (61) (246) (246)
Non-GAAP net income7,697 10,320 31,305 38,268
         
GAAP diluted net earnings (loss) per share(0.09) (0.12) (0.00) 0.16
 Stock-based compensation0.21 0.11 0.60 0.37
 Amortization of intangible assets0.02 0.01 0.08 0.04
 Litigation costs0.00 0.00 0.00 0.01
 Acquisition costs0.02 0.01 0.04 0.02
 Exchange rate differences, net on balance sheet items included in financial income (loss), net0.01 0.03 (0.03) 0.04
 Tax settlement0.00 0.17 0.00 0.17
 Tax related adjustments(0.00) (0.00) (0.01) (0.01)
Non-GAAP diluted net earnings per share0.17 0.22 0.68 0.81
         
         
Weighted average number of shares used to compute non-GAAP diluted net earnings per share45,227,288 47,655,351 45,947,476 47,503,091



Radware Ltd.
RECONCILIATION OF GAAP NET INCOME TO EBITDA AND ADJUSTED EBITDA (NON-GAAP)
(U.S Dollars in thousands)
         
  For the three months ended For the twelve months ended
  December 31, December 31,
  2022 2021 2022 2021
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
GAAP net income (loss)(4,124) (5,591) (166) 7,811
 Exclude: Financial expense (income), net(2,018) 463 (8,052) (4,407)
 Exclude: Depreciation and amortization expense2,878 2,484 11,692 10,196
 Exclude: Taxes on income1,034 9,996 4,879 14,821
EBITDA(2,230) 7,352 8,353 28,421
         
 Share-based compensation9,658 5,372 27,353 17,574
 Litigation costs- - - 288
 Acquisition costs819 296 1,961 925
Adjusted EBITDA8,247 13,020 37,667 47,208
         
         
  For the three months ended For the twelve months ended
  December 31, December 31,
  2022 2021 2022 2021
         
 Amortization of intangible assets992 465 3,704 1,858
         
 Depreciation1,886 2,019 7,988 8,338
         
  2,878 2,484 11,692 10,196
         



Radware Ltd.
Condensed Consolidated Statements of Cash Flow
(U.S. Dollars in thousands)
        
 For the three months ended For the year ended
 December 31, December 31,
 2022 2021 2022 2021
 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash flow from operating activities:       
        
Net income (loss)(4,124) (5,591) (166) 7,811
Adjustments to reconcile net income to net cash provided by operating activities:       
Depreciation and amortization2,878 2,484 11,692 10,196
Share-based compensation9,658 5,372 27,353 17,574
Amortization of premium, accretion of discounts and accrued interest on marketable securities, net766 817 2,345 2,720
Gain related to securities, net(4) (14) (68) (438)
Increase (decrease) in accrued interest on bank deposits(1,424) 1,003 (2,480) 2,424
Increase in accrued severance pay, net301 15 219 468
Decrease (increase) in trade receivables, net(4,401) (1,715) (4,561) 3,657
Decrease (increase) in other receivables and prepaid expenses and other long-term assets(5,243) 2,515 (5,716) (8,091)
Decrease (increase) in inventories(574) 823 152 2,355
Increase in trade payables1,297 1,316 3,757 428
Increase in deferred revenues1,584 10,990 13,475 20,063
Increase (decrease) in other payables and accrued expenses8,418 10,287 (12,301) 12,238
Operating lease liabilities, net428 632 (1,553) 369
Net cash provided by operating activities9,560 28,934 32,148 71,774
        
Cash flows from investing activities:       
        
Purchase of property and equipment(1,768) (1,653) (8,814) (5,603)
Proceeds from (investment in) other long-term assets, net(71) 7 35 49
Proceeds from (investment in) bank deposits, net5,824 20,168 (13,377) 24,448
Investment in, redemption of and purchase of marketable securities ,net1,640 (3,527) (3,862) (11,045)
Payment for the business acquisition of SecurityDAM Ltd.- - (30,000) -
Net cash provided by (used in) investing activities5,625 14,995 (56,018) 7,849
        
Cash flows from financing activities:       
        
Proceeds from exercise of share options832 2,828 2,034 10,590
Repurchase of shares(12,301) (17,449) (59,492) (52,471)
Proceeds from issuance of Preferred A shares in subsidiary- - 35,000 -
Net cash used in financing activities(11,469) (14,621) (22,458) (41,881)
        
Increase (decrease) in cash and cash equivalents3,716 29,308 (46,328) 37,742
Cash and cash equivalents at the beginning of the period42,469 63,205 92,513 54,771
Cash and cash equivalents at the end of the period46,185 92,513 46,185 92,513


FAQ

What were Radware's Q4 2022 earnings results?

Radware reported a Q4 2022 revenue of $74.1 million, a decrease of 3% year-over-year, and a GAAP net loss per share of $0.09.

What is Radware's outlook for 2023?

Management remains optimistic about long-term growth, focusing on cloud security solutions and disciplined expense management in 2023.

How did Radware perform in terms of Annual Recurring Revenue (ARR) in 2022?

Radware's ARR increased by 7% in 2022, reaching $202.4 million.

What is Radware's non-GAAP EPS for 2022?

Radware reported a non-GAAP EPS of $0.68 for the full year 2022.

What financial highlights did Radware achieve in 2022?

Radware reported a full-year revenue of $293.4 million and a non-GAAP gross margin of 83.0%.

Radware Ltd.

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