Categories: Wire Stories

Radware Reports Third Quarter 2023 Financial Results

Third Quarter 2023 Financial Results and Highlights

  • Revenue of $61.6 million, down 13% yearoveryear
  • Cloud ARR of $62.5 million, up 25% year-over-year
  • Non-GAAP EPS of $0.07; GAAP net loss per diluted share of $0.16

TEL AVIV, Israel, Nov. 01, 2023 (GLOBE NEWSWIRE) — Radware® (NASDAQ: RDWR), a leading provider of cyber security and application delivery solutions, today announced its consolidated financial results for the third quarter ended September 30, 2023.

“During the third quarter of 2023, our cloud ARR growth accelerated to 25%,” said Roy Zisapel, Radware’s president and CEO. “Going forward, we intend to continue to focus on growing the cloud security business. Combined with cautious optimism regarding the recovery of our appliance business and prudent cost management, we believe we will emerge stronger from the current challenges.”

Financial Highlights for the Third Quarter 2023
Revenue for the third quarter of 2023 totaled $61.6 million:

  • Revenue in the Americas region was $24.9 million for the third quarter of 2023, a decrease of 24% from $32.9 million in the third quarter of 2022.
  • Revenue in the Europe, Middle East, and Africa (“EMEA”) region was $19.3 million for the third quarter of 2023, a decrease of 13% from $22.2 million in the third quarter of 2022.
  • Revenue in the Asia-Pacific (“APAC”) region was $17.4 million for the third quarter of 2023, an increase of 12% from $15.5 million in the third quarter of 2022.

GAAP net loss for the third quarter of 2023 was $6.9 million, or $(0.16) per diluted share, compared to GAAP net loss of $3.0 million, or $0.07 per diluted share, for the third quarter of 2022.

Non-GAAP net income for the third quarter of 2023 was $2.9 million, or $0.07 per diluted share, compared to non-GAAP net income of $6.7 million, or $0.15 per diluted share, for the third quarter of 2022.

As of September 30, 2023, the Company had cash, cash equivalents, short-term bank deposits, and marketable securities of $371.6 million. Cash flow from operations was negative $9.8 million in the third quarter of 2023.

Non-GAAP results are calculated excluding, as applicable, the impact of stock-based compensation expenses, amortization of intangible assets, litigation costs, acquisition costs, restructuring costs, exchange rate differences, net on 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, November 1, 2023, at 8:30 a.m. EDT to discuss its third quarter 2023 results and the Company’s fourth quarter 2023 outlook. To participate on 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, restructuring costs, exchange rate differences, net on balance sheet items included in financial income, net, 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; the effects of the current attacks by the terrorist groups Hamas and Hezbollah, and the war between Israel and Hamas and Israel and Hezbollah; 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)
 
       
  September 30,   December 31,
  2023   2022
  (Unaudited)   (Unaudited)
Assets      
       
Current assets      
Cash and cash equivalents 32,422   46,185
Available-for-sale marketable securities 85,409   44,180
Short-term bank deposits 203,913   207,679
Trade receivables, net 12,372   17,752
Other receivables and prepaid expenses 10,915   7,196
Inventories 12,994   11,428
  358,025   334,420
       
Long-term investments      
Available-for-sale marketable securities 49,898   90,148
Long-term bank deposits 0   43,765
Severance pay funds 2,061   2,146
  51,959   136,059
       
       
Property and equipment, net 19,321   21,068
Intangible assets, net 16,710   19,686
Other long-term assets 40,047   41,269
Operating lease right-of-use assets 20,132   23,078
Goodwill 68,008   68,008
Total assets 574,202   643,588
       
       
Liabilities and shareholders’ equity      
       
Current Liabilities      
Trade payables 6,069   6,464
Deferred revenues 106,109   108,243
Operating lease liabilities 4,439   4,685
Other payables and accrued expenses 33,206   44,643
  149,823   164,035
       
Long-term liabilities      
Deferred revenues 63,258   72,219
Operating lease liabilities 15,956   19,461
Other long-term liabilities 20,172   19,430
  99,386   111,110
       
Shareholders’ equity      
Share capital 733   732
Additional paid-in capital 521,196   498,168
Accumulated other comprehensive loss, net of tax (4,174)   (4,844)
Treasury stock, at cost (356,969)   (303,299)
Retained earnings 125,662   141,402
Total Radware Ltd. shareholder’s equity 286,448   332,159
       
Non–controlling interest 38,545   36,284
       
Total shareholders’ equity 324,993   368,443
       
Total liabilities and shareholders’ equity 574,202   643,588
       

Radware Ltd.
Condensed Consolidated Statements of Income (loss)
(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,
    2023   2022   2023   2022
    (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
                 
Revenues   61,612   70,521   196,260   219,343
Cost of revenues   12,838   13,138   38,886   39,967
Gross profit   48,774   57,383   157,374   179,376
                 
Operating expenses, net:                
Research and development, net   20,614   22,083   62,905   64,076
Selling and marketing   30,532   31,416   94,368   93,989
General and administrative   7,824   7,278   24,378   19,542
Total operating expenses, net   58,970   60,777   181,651   177,607
                 
Operating income (loss)   (10,196)   (3,394)   (24,277)   1,769
Financial income, net   3,778   1,350   10,688   6,034
Income (loss) before taxes on income   (6,418)   (2,044)   (13,589)   7,803
Taxes on income   433   920   2,151   3,845
Net income (loss)   (6,851)   (2,964)   (15,740)   3,958
                 
Basic net earnings (loss) per share   (0.16)   (0.07)   (0.36)   0.09
                 
Weighted average number of shares used to compute basic net earnings (loss) per share   42,261,637   44,623,247   43,232,405   45,063,925
                 
Diluted net earnings (loss) per share   (0.16)   (0.07)   (0.36)   0.09
                 
Weighted average number of shares used to compute diluted net earnings (loss) per share   42,261,637   44,623,247   43,232,405   46,189,437
                 

                 
  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,
    2023   2022   2023   2022
    (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
GAAP gross profit 48,774   57,383   157,374   179,376
  Share-based compensation 177   103   403   287
  Amortization of intangible assets 992   992   2,976   2,712
Non-GAAP gross profit 49,943   58,478   160,753   182,375
                 
GAAP research and development, net 20,614   22,083   62,905   64,076
  Share-based compensation 2,064   1,775   6,200   5,219
Non-GAAP Research and development, net 18,550   20,308   56,705   58,857
                 
GAAP selling and marketing 30,532   31,416   94,368   93,989
  Share-based compensation 2,134   3,356   9,065   8,248
  Restructuring costs 1,273     1,273  
Non-GAAP selling and marketing 27,125   28,060   84,030   85,741
                 
GAAP general and administrative 7,824   7,278   24,378   19,542
  Share-based compensation 2,884   2,397   9,483   3,941
  Acquisition costs 211     769  
  Litigation costs       1,142
Non-GAAP general and administrative 4,729   4,881   14,126   14,459
                 
GAAP total operating expenses, net 58,970   60,777   181,651   177,607
  Share-based compensation 7,082   7,528   24,748   17,408
  Acquisition costs 211     769  
  Litigation costs       1,142
  Restructuring costs 1,273     1,273  
Non-GAAP total operating expenses, net 50,404   53,249   154,861   159,057
                 
GAAP operating income (loss) (10,196)   (3,394)   (24,277)   1,769
  Share-based compensation 7,259   7,631   25,151   17,695
  Acquisition costs 211     769  
  Amortization of intangible assets 992   992   2,976   2,712
  Litigation costs       1,142
  Restructuring costs 1,273     1,273  
Non-GAAP operating income (461)   5,229   5,892   23,318
                 
GAAP financial income, net 3,778   1,350   10,688   6,034
  Exchange rate differences, net on balance sheet items included in financial income, net 37   1,100   (770)   (1,714)
Non-GAAP financial income, net 3,815   2,450   9,918   4,320
                 
GAAP income before taxes on income (loss) (6,418)   (2,044)   (13,589)   7,803
  Share-based compensation 7,259   7,631   25,151   17,695
  Acquisition costs 211     769  
  Amortization of intangible assets 992   992   2,976   2,712
  Litigation costs       1,142
  Restructuring costs 1,273     1,273  
  Exchange rate differences, net on balance sheet items included in financial income, net 37   1,100   (770)   (1,714)
Non-GAAP income before taxes on income 3,354   7,679   15,810   27,638
                 
GAAP taxes on income 433   920   2,151   3,845
  Tax related adjustments 62   62   185   185
Non-GAAP taxes on income 495   982   2,336   4,030
                 
GAAP net income (loss) (6,851)   (2,964)   (15,740)   3,958
  Share-based compensation 7,259   7,631   25,151   17,695
  Acquisition costs 211     769  
  Amortization of intangible assets 992   992   2,976   2,712
  Litigation costs       1,142
  Restructuring costs 1,273     1,273  
  Exchange rate differences, net on balance sheet items included in financial income, net 37   1,100   (770)   (1,714)
  Tax related adjustments (62)   (62)   (185)   (185)
Non-GAAP net income 2,859   6,697   13,474   23,608
                 
GAAP diluted net earnings (loss) per share (0.16)   (0.07)   (0.36)   0.09
  Share-based compensation 0.17   0.17   0.57   0.38
  Acquisition costs 0.00   0.00   0.02   0.00
  Amortization of intangible assets 0.03   0.02   0.07   0.06
  Litigation costs 0.00   0.00   0.00   0.03
  Restructuring costs 0.03   0.00   0.03   0.00
  Exchange rate differences, net on balance sheet items included in financial income, net 0.00   0.02   (0.02)   (0.04)
  Tax related adjustments 0.00   (0.00)   0.00   (0.00)
Non-GAAP diluted net earnings per share 0.07   0.15   0.31   0.51
                 
                 
Weighted average number of shares used to compute non-GAAP diluted net earnings per share 43,163,159   45,623,336   44,058,549   46,189,437

                 
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,
    2023   2022   2023   2022
    (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
Cash flow from operating activities:                
                 
Net income (loss)   (6,851)   (2,964)   (15,740)   3,958
Adjustments to reconcile net income to net cash provided by operating activities:                
Depreciation and amortization   3,025   3,097   9,216   8,814
Share-based compensation   7,259   7,631   25,151   17,695
Amortization of premium, accretion of discounts and accrued interest on marketable securities, net   161   193   1,116   1,579
Loss (gain) related to securities, net   0   (4)   244   (64)
Decrease in accrued interest on bank deposits   (2,289)   (1,128)   (3,814)   (1,056)
Decrease in accrued severance pay, net   (401)   (176)   (506)   (82)
Decrease (increase) in trade receivables, net   4,448   (1,509)   5,380   (160)
Decrease (increase) in other receivables and prepaid expenses and other long-term assets   (215)   3,852   (2,541)   (473)
Decrease (increase) in inventories   (671)   549   (1,566)   726
Increase (decrease) in trade payables   (1,778)   (670)   (395)   2,460
Increase (decrease) in deferred revenues   (12,311)   (8,609)   (11,095)   11,891
Increase (decrease) in other payables and accrued expenses   644   1,463   (10,798)   (20,719)
Decrease in operating lease liabilities, net   (804)   (209)   (805)   (1,981)
Net cash provided by (used in) operating activities   (9,783)   1,516   (6,153)   22,588
                 
Cash flows from investing activities:                
                 
Purchase of property and equipment   (1,130)   (2,549)   (4,493)   (7,046)
Proceeds from other long-term assets, net   29   69   77   106
Proceeds from (investment in) bank deposits, net   21,145   1,000   51,345   (19,201)
Proceeds from sale, redemption of and purchase of marketable securities, net   2,228   (862)   347   (5,502)
Payment for the business acquisition of SecurityDAM Ltd.   (2,063)   0   (2,063)   (30,000)
Net cash provided (used in) investing activities   20,209   (2,342)   45,213   (61,643)
                 
Cash flows from financing activities:                
                 
Proceeds from exercise of stock options   0   401   308   1,202
Repurchase of shares   (20,648)   (6,305)   (53,131)   (47,191)
Proceeds from issuance of Preferred A shares in subsidiary   0   0   0   35,000
Net cash used in financing activities   (20,648)   (5,904)   (52,823)   (10,989)
                 
Decrease in cash and cash equivalents   (10,222)   (6,730)   (13,763)   (50,044)
Cash and cash equivalents at the beginning of the period   42,644   49,199   46,185   92,513
Cash and cash equivalents at the end of the period   32,422   42,469   32,422   42,469
                 

         
  Radware Ltd.
RECONCILIATION OF GAAP NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA (NON-GAAP)
(U.S Dollars in thousands)
     
         
                 
    For the three months ended   For the nine months ended
    September 30,   September 30,
    2023   2022   2023   2022
    (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
GAAP net income (loss) (6,851)   (2,964)   (15,740)   3,958
  Exclude: Financial income, net (3,778)   (1,350)   (10,688)   (6,034)
  Exclude: Depreciation and amortization expense 3,025   3,097   9,216   8,814
  Exclude: Taxes on income 433   920   2,151   3,845
EBITDA (7,171)   (297)   (15,061)   10,583
                 
  Share-based compensation 7,259   7,631   25,151   17,695
  Litigation costs       1,142
  Restructuring costs 1,273     1,273  
  Acquisition costs 211     769  
Adjusted EBITDA 1,572   7,334   12,132   29,420
                 
                 
    For the three months ended   For the nine months ended
    September 30,   September 30,
    2023   2022   2023   2022
                 
  Amortization of intangible assets 992   992   2,976   2,712
                 
  Depreciation 2,033   2,105   6,240   6,102
                 
    3,025   3,097   9,216   8,814
                 

 

Alex

Recent Posts

The allure of Da Nang and Phu Quoc – top destinations for Indian tourists

Vietnam is increasingly popular among Indian tourists, consistently topping reports and surveys as a favoured…

7 hours ago

OctaTrader in 2024: a client-focused evolution of a trading platform

KUALA LUMPUR, MALAYSIA - Media OutReach Newswire - 24 December 2024 - For Octa, a…

8 hours ago

1win Brings Christmas Comfort to Cancer Patients in Ghana

ACCRA, GHANA - Media OutReach Newswire - 24 December 2024 - 1win, in partnership with…

10 hours ago

From Farm to Screen: Shopee’s Kempen Tani Cultivates Online Success for Agropreneurs

KUALA LUMPUR, MALAYSIA - Media OutReach Newswire - 24 December 2024 - Shopee Malaysia recently…

10 hours ago

Wildberries to More Than Double Warehouse Capacity in 2025

MOSCOW, RUSSIA - Media OutReach Newswire - 24 December 2024 - Wildberries, a leading e-commerce…

15 hours ago

JustMarkets Celebrates Key Milestones From 2024

HO CHI MINH CITY, VIETNAM - Media OutReach Newswire - 24 December 2024 - JustMarkets…

17 hours ago