GlobeNewswire Inc | Nov 4, 2020 06:00AM EST

November 04, 2020

ThirdQuarter 2020Results and Financial Highlights

-- Revenues of $62.5million -- Non-GAAP EPS of $0.18;GAAP EPS of $0.08 -- Net cash provided by operating activities of $50 million for the last twelve months

TEL AVIV, Israel, Nov. 04, 2020 (GLOBE NEWSWIRE) -- Radware (NASDAQ: RDWR), a leading provider of cyber security and application delivery solutions, today announced its consolidated financial results for the quarter ended September 30, 2020.

We are pleased with the results for the third quarter, during which we enjoyed a very strong and broad-based bookings growth, spanning across all our geographic regions and product lines, said Roy Zisapel, Radwares President & CEO. Our strategic OEM relationships delivered record booking in the quarter, further enhancing our strong position within the large enterprise segment, and contributing positively to the growth in our recurring revenues.

Financial Highlights for the Third Quarter of 2020

Revenues for the third quarter of 2020 totaled $62.5 million, down 1% from revenues of $62.9 million for the third quarter of 2019. Revenues for the first nine months of 2020 totaled $181.0 million, down 2% from revenues of $184.7 million for the first nine months of 2019:

-- Revenues in the Americas region were $30.2 million for the third quarter of 2020, up 24% from revenues of $24.5 million in the third quarter of 2019. For the first nine months of 2020, revenues in the Americas region increased 13% over the same period in 2019. -- Revenues in the Europe, Middle East and Africa (EMEA) region were $18.3 million for the third quarter of 2020, down 5% from revenues of $19.4 million in the third quarter of 2019. For the first nine months of 2020, revenues in the EMEA region decreased 1% over the same period in 2019. -- Revenues in the Asia-Pacific (APAC) region were $14.0 million for the third quarter of 2020, down 27% from revenues of $19.0 million in the third quarter of 2019. For the first nine months of 2020, revenues in the APAC region decreased 25% over the same period in 2019.

Net income on a GAAP basis for the third quarter of 2020 was $3.6 million, or $0.08 per diluted share, compared with net income of $7.1 million, or $0.15 per diluted share, for the third quarter of 2019.

Non-GAAP net income for the third quarter of 2020 was $8.4 million, or $0.18 per diluted share, compared with non- GAAP net income of $11.9 million, or $0.25 per diluted share, for the third quarter of 2019.

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

As of September 30, 2020, the Company had cash, cash equivalents, short-term and long-term bank deposits and marketable securities of $437.4 million. Net cash provided by operating activities in the third quarter of 2020 totaled $6.8 million. Net cash spent on share repurchases in the third quarter of 2020 totaled $15.9 million.

Conference Call

Radware management will host a call on Wednesday, November 4, 2020 at 8:30 a.m. ET to discuss its third quarter 2020 results and the Companys outlook for the fourth quarter of 2020.

Participants in the US call Toll Free 833-241-4257

Participants Internationally call +1-647-689-4208

Conference ID: 8719353

A replay will be available for 2 days, starting 2 hours after the end of the call, on telephone number +1-416-621-4642 or (US toll-free) 800-585-8367.

A live webcast of the conference call can also be heard by accessing the Company's website at: http://www.radware.com/IR/. The webcast will remain available for replay during the next 12 months.

Use of Non-GAAP Financial InformationIn addition to reporting financial results in accordance with generally accepted accounting principles (GAAP), Radware uses non-GAAP measures of gross profit, research and development expense, selling and marketing expense, general and administrative expense, total operating expenses, operating income, financial income, income before taxes on income, taxes on income, net income and earnings per share, which are adjustments from results based on GAAP to exclude stock-based compensation expenses, amortization of intangible assets, acquisition costs, litigation costs, exchange rate differences, net on balance sheet items included in finance income, otherloss(gain) adjustment and taxrelated adjustments. Management believes that exclusion of these charges allows for meaningful comparisons of operating results across past, present and future periods. Radwares management believes the non-GAAP financial measures provided in this release are useful to investors for the purpose of understanding and assessing Radwares ongoing operations. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measures is included with the financial information contained in this press release. Management uses both GAAP and non-GAAP financial measures in evaluating and operating the business and, as such, has determined that it is important to provide this information to investors.

Safe Harbor Statement

This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements made herein that are not statements of historical fact, including statements about Radwares 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 Radwares 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 Radwares 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. Radwares public filings are available from the SECs website at www.sec.gov or may be obtained on Radwares 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. Radwares solutions empower more than 12,500 enterprise and carrier customers worldwide to adapt to market challenges quickly, maintain business continuity and achieve maximum productivity while keeping costs down. For more information, please visit www.radware.com.

2020 Radware Ltd. All rights reserved. Any Radware products and solutions mentioned in this press release are protected by trademarks, patents and pending patent applications of Radware in the U.S. and other countries. For more details please see: https://www.radware.com/LegalNotice/. All other trademarks and names are property of their respective owners.

Corporate Media Relations:Deborah Szajngarten(201) 785-3206 deborah.szajngarten@radware.com

Radware Ltd.Condensed Consolidated Balance Sheets(U.S. Dollars in thousands) September 30, December 31, 2020 2019 (Unaudited) (Unaudited)Assets Current assets Cash and cash equivalents 48,429 40,751Marketable securities 62,930 36,924Short-term bank deposits 179,675 100,276Trade receivables, net 14,330 22,610Other receivables and prepaid expenses 8,100 7,469Inventories 13,290 13,940 326,754 221,970 Long-term investments Marketable securities 75,912 112,696Long-term bank deposits 70,491 137,095Severance pay funds 2,252 2,300 148,655 252,091 Property and equipment, net 23,141 22,971Other long-term assets 25,959 24,398Operating lease right-of-use assets 28,185 18,144Goodwill and intangible assets, net 54,198 55,625Total assets 606,892 595,199 Liabilities and shareholders' equity Current Liabilities Trade payables 3,818 6,315Deferred revenues 90,813 79,239Operating lease liabilities 4,903 5,193Other payables and accrued expenses 36,128 34,794 135,662 125,541 Long-term liabilities Deferred revenues 53,333 50,888Operating lease liabilities 24,181 13,914Other long-term liabilities 10,113 9,525 87,627 74,327 Shareholders' equity Share capital 718 710Additional paid-in capital 434,815 414,581Accumulated other comprehensive income, net of 1,917 1,145taxTreasury stock, at cost (184,802) (145,226)Retained earnings 130,955 124,121Total shareholders' equity 383,603 395,331 Total liabilities and shareholders' equity 606,892 595,199

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 nine months ended September 30, September 30, 2020 2019 2020 2019 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenues 62,524 62,859 180,981 184,710Cost of revenues 11,646 11,527 32,893 33,180Gross profit 50,878 51,332 148,088 151,530 Operating expenses, net:Research and 16,747 15,108 49,088 45,738development, netSelling and marketing 27,659 27,094 82,616 80,435General and 4,513 4,403 14,114 14,209administrativeTotal operating 48,919 46,605 145,818 140,382expenses, net Operating income 1,959 4,727 2,270 11,148Financial income, net 2,897 2,137 7,404 6,047Income before taxes on 4,856 6,864 9,674 17,195income (tax benefit)Taxes on income (tax 1,269 (257) 2,840 1,960benefit)Net income 3,587 7,121 6,834 15,235 Basic net earnings per 0.08 0.15 0.15 0.33share Weighted averagenumber of shares used 46,341,046 46,850,137 46,547,504 46,788,870to compute basic netearnings per share Diluted net earnings 0.08 0.15 0.14 0.31per share Weighted averagenumber of shares used 47,673,698 48,488,313 47,841,411 48,595,899to compute diluted netearnings per share

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, 2020 2019 2020 2019 (Unaudited) (Unaudited) (Unaudited) (Unaudited)GAAP gross profit 50,878 51,332 148,088 151,530Stock-based 48 57 135 171compensationAmortization of 465 997 1,427 1,818intangible assetsNon-GAAP gross profit 51,391 52,386 149,650 153,519 GAAP research and 16,747 15,108 49,088 45,738development, netStock-based 1,301 640 3,199 2,064compensationNon-GAAP Research and 15,446 14,468 45,889 43,674development, net GAAP selling and 27,659 27,094 82,616 80,435marketingStock-based 2,083 1,954 5,814 5,258compensationAmortization of - 17 - 52intangible assetsNon-GAAP selling and 25,576 25,123 76,802 75,125marketing GAAP general and 4,513 4,403 14,114 14,209administrativeStock-based 975 741 2,809 2,290compensationAcquisition costs - - - 264Litigation costs 44 24 303 883Non-GAAP general and 3,494 3,638 11,002 10,772administrative GAAP total operating 48,919 46,605 145,818 140,382expenses, netStock-based 4,359 3,335 11,822 9,612compensationAmortization of - 17 - 52intangible assetsAcquisition costs - - - 264Litigation costs 44 24 303 883Non-GAAP totaloperating expenses, 44,516 43,229 133,693 129,571net GAAP operating income 1,959 4,727 2,270 11,148Stock-based 4,407 3,392 11,957 9,783compensationAmortization of 465 1,014 1,427 1,870intangible assetsAcquisition costs - - - 264Litigation costs 44 24 303 883Non-GAAP operating 6,875 9,157 15,957 23,948income GAAP financial income, 2,897 2,137 7,404 6,047netOther loss (gain) - (253) 247 (563)adjustmentExchange ratedifferences, net onbalance sheet items (72) 878 480 2,418included in financialincome, netNon-GAAP financial 2,825 2,762 8,131 7,902income, net GAAP income beforetaxes on income (tax 4,856 6,864 9,674 17,195benefit)Stock-based 4,407 3,392 11,957 9,783compensationAmortization of 465 1,014 1,427 1,870intangible assetsAcquisition costs - - - 264Litigation costs 44 24 303 883Other loss (gain) - (253) 247 (563)adjustmentExchange ratedifferences, net onbalance sheet items (72) 878 480 2,418included in financialincome, netNon-GAAP income beforetaxes on income (tax 9,700 11,919 24,088 31,850benefit) GAAP taxes on income 1,269 (257) 2,840 1,960(tax benefit)Tax related 62 266 245 195adjustmentsNon-GAAP taxes on 1,331 9 3,085 2,155income GAAP net income 3,587 7,121 6,834 15,235Stock-based 4,407 3,392 11,957 9,783compensationAmortization of 465 1,014 1,427 1,870intangible assetsAcquisition costs - - - 264Litigation costs 44 24 303 883Other loss (gain) - (253) 247 (563)adjustmentExchange ratedifferences, net onbalance sheet items (72) 878 480 2,418included in financialincome, netTax related (62) (266) (245) (195)adjustmentsNon-GAAP net income 8,369 11,910 21,003 29,695 GAAP diluted net 0.08 0.15 0.14 0.31earnings per shareStock-based 0.09 0.07 0.25 0.20compensationAmortization of 0.01 0.02 0.03 0.04intangible assetsAcquisition costs 0.00 0.00 0.00 0.01Litigation costs 0.00 0.00 0.01 0.02Other loss (gain) 0.00 (0.01) 0.01 (0.01)adjustmentExchange ratedifferences, net onbalance sheet items (0.00) 0.02 0.01 0.05included in financialincome, netTax related (0.00) (0.01) (0.01) (0.00)adjustmentsNon-GAAP diluted net 0.18 0.25 0.44 0.61earnings per share Weighted averagenumber of shares usedto compute Non-GAAP 47,673,698 48,488,313 47,841,411 48,595,899diluted net earningsper share

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, 2020 2019 2020 2019 (Unaudited) (Unaudited) (Unaudited) (Unaudited)Cash flow from operating activities: Net income 3,587 7,121 6,834 15,235Adjustments toreconcile net incometo net cash provided by operatingactivities:Depreciation and 2,616 3,106 7,883 8,494amortizationStock-based 4,407 3,392 11,957 9,783compensationAmortization ofpremium, accretion ofdiscounts and accrued 337 141 647 468interest on marketablesecurities, netGain related to (517) (253) (580) (563)securities, netAccrued interest on (598) (804) (971) 1,527bank depositsIncrease (decrease) inaccrued severance pay, 48 (109) 235 824netDecrease in trade 2,865 2,621 8,280 5,150receivables, netIncrease in otherreceivables and (465) (1,163) (2,395) (4,849)prepaid expenses andother long-term assetsDecrease in 816 881 650 3,318inventoriesIncrease (decrease) in (1,078) 203 (2,497) (535)trade payablesIncrease (decrease) in (7,648) 4,893 14,019 8,676deferred revenuesIncrease in otherpayables and accrued 2,456 39 1,735 511expensesOperating lease (26) 194 (64) 854liabilities, netNet cash provided by 6,800 20,262 45,733 48,893operating activities Cash flows from investing activities: Purchase of property (1,629) (1,810) (6,626) (6,153)and equipmentProceeds from(investment in) other (15) 73 (26) 11long-term assets, netProceeds from(investment in) bank (2,666) (5,674) (11,824) 13,773deposits, netProceeds from(investment in) sale,redemption of and 8,249 (1,997) 11,712 (45,232)purchase of marketablesecurities, netPayment foracquisition of 0 0 0 (12,239)subsidiary, net ofcash acquiredNet cash provided by(used in) investing 3,939 (9,408) (6,764) (49,840)activities Cash flows from financing activities: Proceeds from exercise 4,947 3,751 8,285 14,593of stock optionsRepurchase of shares (15,907) (8,841) (39,576) (18,894)Net cash used in (10,960) (5,090) (31,291) (4,301)financing activities Increase (decrease) incash and cash (221) 5,764 7,678 (5,248)equivalentsCash and cashequivalents at the 48,650 34,191 40,751 45,203beginning of theperiodCash and cashequivalents at the end 48,429 39,955 48,429 39,955of the period