Radware Announces Fourth Quarter and Full Year 2020 Earnings

Fourth Quarter 2020 Results and Financial Highlights

  • Record Revenues of $69 million
  • Record Cloud and Subscriptions ARR growing 35% year over year
  • Record year end ARR of $174 million, up 12% year over year
  • Non-GAAP EPS of $0.21; GAAP EPS of $0.06

Full Year 2020 Results and Financial Highlights

  • Revenues of $250 million
  • Non-GAAP EPS of $0.64; GAAP EPS of $0.20
  • Record net cash provided by operating activities of $62 million

TEL AVIV, Israel, Feb. 10, 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 year ended December 31, 2020.

“In the fourth quarter we enjoyed strong business performance in our security offerings, cloud and subscription businesses that are reflected in record ARR, bookings and revenues,” said Roy Zisapel, Radware’s President & CEO. “With accelerated digital transformation and the need to increase online availability of core business applications, comes the critical need to secure and protect these applications. This, coupled with a very active cyberthreat landscape, creates a strong business environment for Radware. Leveraging our market leading attack mitigation solutions which span DDoS Protection, Web Application Firewall, API security, Bot Management and Cloud Posture Security; and the strength and scale of our strategic partners, we have broadened our reach to yet more top tier customers and are protecting their mission-critical applications.”

Financial Highlights for the Fourth Quarter of 2020
Revenues for the fourth quarter of 2020 totaled $69.0 million:

  • Revenues in the Americas region were $27.5 million for the fourth quarter of 2020, down 7% from revenues of $29.7 million in the fourth quarter of 2019.
  • Revenues in the Europe, Middle East and Africa (“EMEA”) region were $24.2 million for the fourth quarter of 2020, up 17% from revenues of $20.6 million in the fourth quarter of 2019.
  • Revenues in the Asia-Pacific (“APAC”) region were $17.4 million for the fourth quarter of 2020, up 2% from revenues of $17.1 million in the fourth quarter of 2019.

Net income on a GAAP basis for the fourth quarter of 2020 was $2.8 million, or $0.06 per diluted share, compared with net income of $7.3 million, or $0.15 per diluted share, for the fourth quarter of 2019.

Non-GAAP net income for the fourth quarter of 2020 was $9.8 million, or $0.21 per diluted share, compared with non- GAAP net income of $10.9 million, or $0.23 per diluted share, for the fourth quarter of 2019.

Financial Highlights for the Full Year of 2020
Revenues for the full year of 2020 totaled $250 million:

  • Revenues in the Americas region were $114 million for the full year of 2020, up 8% from revenues of $106 million in the full year of 2019.
  • Revenues in the EMEA region were $78.4 million for the full year of 2020, up 4% from revenues of $75.3 million in the full year of 2019.
  • Revenues in the APAC region were $57.3 million for the full year of 2020, down 19% from revenues of $70.4 million in the full year of 2019.

Net income on a GAAP basis for the full year of 2020 was $9.6 million, or $0.20 per diluted share, compared with net income of $22.6 million, or $0.47 per diluted share, for the full year of 2019.

Non-GAAP net income for the full year of 2020 was $30.8 million, or $0.64 per diluted share, compared with non-GAAP net income of $40.6 million, or $0.84 per diluted share, for the full year 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 December 31, 2020, the Company had cash, cash equivalents, short-term and long-term bank deposits and marketable securities of $449 million, up from $428 million as of December 31, 2019. Net cash provided by operating activities in the fourth quarter of 2020 totaled $16.1 million. Net cash provided by operating activities in the full year of 2020 totaled $61.8 million. Net cash spent on share repurchases in 2020 totaled $45.3 million.

Conference Call

Radware management will host a call on Wednesday, February 10, 2021 at 8:30 a.m. ET to discuss its fourth quarter and full year 2020 results and the Company’s outlook for the first quarter of 2021.

Participants in the US call: Toll Free 833-665-0598

Participants Internationally call: +1-661-407-1612

Conference ID: 1277375

A replay will be available for 2 days, starting 2 hours after the end of the call, on telephone number +1-855-859-2056 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 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 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 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 revenues ("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.” For example, when we discuss the strong growth in our cloud and subscriptions business including annual recurring revenues, we are using forward-looking statements. 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 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:
Anat Earon-Heilborn
+972 723917548
ir@radware.com

Media Contacts:
Deborah Szajngarten
201-785-3206
deborah.szajngarten@radware.com


 
Radware Ltd.
Condensed Consolidated Balance Sheets
(U.S. Dollars in thousands)
    
 December 31,  December 31, 
 2020  2019 
 (Unaudited)  (Unaudited) 
Assets     
      
Current assets     
Cash and cash equivalents54,771  40,751 
Available-for-sale marketable securities64,684  36,924 
Short-term bank deposits191,038  100,276 
Trade receivables, net16,848  22,610 
Other receivables and prepaid expenses6,705  7,469 
Inventories13,935  13,940 
 347,981  221,970 
    
Long-term investments   
Available-for-sale marketable securities66,836  112,696 
Long-term bank deposits71,421  137,095 
Severance pay funds2,453  2,300 
 140,710  252,091 
    
    
Property and equipment, net22,976  22,971 
Intangible assets, net12,588  14,481 
Other long-term assets30,222  24,398 
Operating lease right-of-use assets27,823  18,144 
Goodwill41,144  41,144 
Total assets623,444  595,199 
    
    
Liabilities and shareholders' equity   
    
Current Liabilities   
Trade payables4,620  6,315 
Deferred revenues92,127  79,239 
Operating lease liabilities5,224  5,193 
Other payables and accrued expenses41,955  34,794 
 143,926  125,541 
    
Long-term liabilities   
Deferred revenues54,797  50,888 
Operating lease liabilities24,851  13,914 
Other long-term liabilities11,409  9,525 
 91,057  74,327 
    
Shareholders' equity   
Share capital721  710 
Additional paid-in capital443,018  414,581 
Accumulated other comprehensive income, net of tax1,517  1,145 
Treasury stock, at cost(190,552) (145,226)
Retained earnings133,757  124,121 
Total shareholders' equity388,461  395,331 
    
Total liabilities and shareholders' equity623,444  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 year ended
 December 31, December 31,
 2020 2019 2020 2019
 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
        
Revenues69,046 67,362 250,027 252,072
Cost of revenues12,191 11,994 45,084 45,174
Gross profit56,855 55,368 204,943 206,898
        
Operating expenses, net:       
Research and development, net17,748 16,103 66,836 61,841
Selling and marketing30,399 29,121 113,015 109,556
General and administrative4,810 4,375 18,924 18,584
Total operating expenses, net52,957 49,599 198,775 189,981
        
Operating income3,898 5,769 6,168 16,917
Financial income, net392 2,745 7,796 8,792
Income before taxes on income4,290 8,514 13,964 25,709
Taxes on income1,488 1,183 4,328 3,143
Net income2,802 7,331 9,636 22,566
        
Basic net earnings per share0.06 0.16 0.21 0.48
        
   Weighted average number of shares used to compute basic net earnings per share46,204,690 46,900,711 46,460,974 46,816,899
        
Diluted net earnings per share0.06 0.15 0.2 0.47
        
   Weighted average number of shares used to compute diluted net earnings per share47,440,556 48,304,507 47,739,540 48,523,120


  
 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,
  2020  2019  2020  2019 
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
GAAP gross profit56,855  55,368  204,943  206,898 
 Stock-based compensation53  53  188  224 
 Amortization of intangible assets464  486  1,891  2,304 
Non-GAAP gross profit57,372  55,907  207,022  209,426 
         
GAAP research and development, net17,748  16,103  66,836  61,841 
 Stock-based compensation1,210  791  4,409  2,855 
Non-GAAP Research and development, net16,538  15,312  62,427  58,986 
         
GAAP selling and marketing30,399  29,121  113,015  109,556 
 Stock-based compensation2,501  1,696  8,315  6,954 
 Amortization of intangible assets-  17  -  69 
Non-GAAP selling and marketing27,898  27,408  104,700  102,533 
         
GAAP general and administrative4,810  4,375  18,924  18,584 
 Stock-based compensation824  742  3,633  3,032 
 Acquisition costs-  (18) -  246 
 Litigation costs145  -  448  883 
Non-GAAP general and administrative3,841  3,651  14,843  14,423 
         
GAAP total operating expenses, net52,957  49,599  198,775  189,981 
 Stock-based compensation4,535  3,229  16,357  12,841 
 Acquisition costs-  (18) -  246 
 Amortization of intangible assets-  17  -  69 
 Litigation costs145  -  448  883 
Non-GAAP total operating expenses, net48,277  46,371  181,970  175,942 
         
GAAP operating income3,898  5,769  6,168  16,917 
 Stock-based compensation4,588  3,282  16,545  13,065 
 Acquisition costs-  (18) -  246 
 Amortization of intangible assets464  503  1,891  2,373 
 Litigation costs145  -  448  883 
Non-GAAP operating income9,095  9,536  25,052  33,484 
         
GAAP financial income, net392  2,745  7,796  8,792 
 Other loss (gain) adjustment-  -  247  (563)
 Exchange rate differences, net on balance sheet items included in financial income, net1,826  (148) 2,306  2,270 
Non-GAAP financial income, net2,218  2,597  10,349  10,499 
         
GAAP income before taxes on income4,290  8,514  13,964  25,709 
 Stock-based compensation4,588  3,282  16,545  13,065 
 Acquisition costs-  (18) -  246 
 Amortization of intangible assets464  503  1,891  2,373 
 Litigation costs145  -  448  883 
 Other loss (gain) adjustment-  -  247  (563)
 Exchange rate differences, net on balance sheet items included in financial income, net1,826  (148) 2,306  2,270 
Non-GAAP income before taxes on income11,313  12,133  35,401  43,983 
         
GAAP taxes on income1,488  1,183  4,328  3,143 
 Tax related adjustments61  39  306  234 
Non-GAAP taxes on income1,549  1,222  4,634  3,377 
         
GAAP net income2,802  7,331  9,636  22,566 
 Stock-based compensation4,588  3,282  16,545  13,065 
 Acquisition costs-  (18) -  246 
 Amortization of intangible assets464  503  1,891  2,373 
 Litigation costs145  -  448  883 
 Other loss (gain) adjustment-  -  247  (563)
 Exchange rate differences, net on balance sheet items included in financial income, net1,826  (148) 2,306  2,270 
 Tax related adjustments(61) (39) (306) (234)
Non-GAAP net income9,764  10,911  30,767  40,606 
         
GAAP diluted net earnings per share0.06  0.15  0.20  0.47 
 Stock-based compensation0.10  0.07  0.35  0.27 
 Acquisition costs0.00  (0.00 0.00  0.01 
 Amortization of intangible assets0.01  0.01  0.04  0.05 
 Litigation costs0.00  0.00  0.01  0.02 
 Other loss (gain) adjustment0.00  0.00  0.01  (0.01)
 Exchange rate differences, net on balance sheet items included in financial income, net0.04  0.00  0.05  0.05 
 Tax related adjustments(0.00 (0.00 (0.01) (0.00
Non-GAAP diluted net earnings per share0.21  0.23  0.64  0.84 
         
         
Weighted average number of shares used to compute Non-GAAP diluted net earnings per share47,440,556  48,304,507  47,739,540  48,523,120 
         


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,
 2020  2019  2020  2019 
 (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited) 
Cash flow from operating activities:           
            
Net income2,802  7,331  9,636  22,566 
Adjustments to reconcile net income to net cash provided by operating activities:           
Depreciation and amortization2,676  2,789  10,559  11,283 
Stock-based compensation4,588  3,282  16,545  13,064 
Amortization of premium, accretion of discounts and accrued interest on marketable securities, net284  150  931  618 
Other loss (gain)(58) 26  (638) (537)
Accrued interest on bank deposits(239) 596  (1,210) 2,123 
Increase (decrease) in accrued severance pay, net(33) 64  202  888 
Decrease (increase) in trade receivables, net(2,518) (7,557) 5,762  (2,407)
Increase in other receivables and prepaid expenses and other long-term assets(2,667) (2,140) (5,062) (6,989)
Decrease (increase) in inventories(645) 1,143  5  4,461 
Decrease (increase) in trade payables802  2,310  (1,695) 1,775 
Increase (decrease) in deferred revenues2,778  (6,416) 16,797  2,260 
Increase in other payables and accrued expenses6,955  2,272  8,690  2,784 
Operating lease liabilities, net1,353  109  1,289  963 
Net cash provided by operating activities16,078  3,959  61,811  52,852 
            
Cash flows from investing activities:           
            
Purchase of property and equipment(2,045) (2,002) (8,671) (8,155)
Proceeds from (investment in) other long-term assets, net(84) (7) (110) 4 
Proceeds from (investment in) bank deposits, net(12,054) 2,187  (23,878) 15,960 
Proceeds from (investment in) sale, redemption of and purchase of marketable securities, net6,579  (1,131) 18,291  (46,363)
Payment for acquisition of subsidiary, net of cash acquired0  0  0  (12,239)
Net cash used in investing activities(7,604) (953) (14,368) (50,793)
            
Cash flows from financing activities:           
            
Proceeds from exercise of stock options3,618  3,406  11,903  17,998 
Repurchase of shares(5,750) (5,616) (45,326) (24,509)
Net cash used in financing activities(2,132) (2,210) (33,423) (6,511)
        
Increase (decrease) in cash and cash equivalents6,342  796  14,020  (4,452)
Cash and cash equivalents at the beginning of the period48,429  39,955  40,751  45,203 
Cash and cash equivalents at the end of the period54,771  40,751  54,771  40,751 
        

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