GlobeNewswire Inc | Jul 29, 2020 06:00AM EDT

July 29, 2020

Second Quarter 2020 Results and Financial Highlights

-- Revenues of $58.4 million -- Non-GAAP EPS of $0.13; GAAP EPS of $0.01 -- Net cash provided by operating activities of $18 million

First Six Months 2020 Results and Financial Highlights

-- Revenues of $118.5 million -- Non-GAAP EPS of $0.26; GAAP EPS of $0.07 -- Net cash provided by operating activities of $39 million; net cash provided by operating activities of $63 million for the last twelve months

TEL AVIV, Israel, July 29, 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 June 30, 2020.

We are pleased with the results for the second quarter, despite the unusual COVID-19 related circumstances as our strong business fundamentals continued to provide us with resilience, said Roy Zisapel, Radwares President & CEO. Strong bookings performance in North America, coupled with continued progress with our OEM partners and strong performance in our security business were the highlights of the quarter and we expect them to continue throughout the year.

Financial Highlights for the Second Quarter of 2020

Revenues for the second quarter of 2020 totaled $58.4 million, down 3% from revenues of $60.5 million for the second quarter of 2019. Revenues for the first six months of 2020 totaled $118.5 million, down 3% from revenues of $121.9 million for the first six months of 2019:

-- Revenues in the Americas region were $27.5 million for the second quarter of 2020, down 1% compared to revenues of $27.6 million in the second quarter of 2019. For the first six months of 2020, revenues in the Americas region increased 8% over the same period in 2019. -- Revenues in the Europe, Middle East and Africa (EMEA) region were $17.7 million for the second quarter of 2020, up 5% from revenues of $16.9 million in the second quarter of 2019. For the first six months of 2020, revenues in the EMEA region increased 2% over the same period in 2019. -- Revenues in the Asia-Pacific (APAC) region were $13.3 million for the second quarter of 2020, down 17% from revenues of $15.9 million in the second quarter of 2019. For the first six months of 2020, revenues in the APAC region decreased 25% over the same period in 2019.

Net income on a GAAP basis for the second quarter of 2020 was $0.7 million, or $0.01 per diluted share, compared with net income of $3.7 million, or $0.08 per diluted share, for the second quarter of 2019.

Non-GAAP net income for the second quarter of 2020 was $6.0 million, or $0.13 per diluted share, compared with non- GAAP net income of $8.9 million, or $0.18 per diluted share, for the second 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 June 30, 2020, the Company had cash, cash equivalents, short-term and long-term bank deposits and marketable securities of $442.8 million. Net cash provided by operating activities in the second quarter of 2020 totaled $18.0 million. Net cash spent on share repurchases in the second quarter of 2020 totaled $5.0 million.

Conference Call

Radware management will host a call on Wednesday, July 29, 2020 at 8:30 a.m. ET to discuss its second quarter 2020 results and the Companys outlook for the third quarter of 2020.

Participants in the US call Toll Free 833-968-2213

Participants Internationally call +1-778-560-2898

Conference ID: 1278452

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, 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. 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.

CONTACTS

Investor Relations:Anat Earon-Heilborn+972 723917548ir@radware.com

Media Contact:Deborah SzajngartenRadware201-785-3206deborah.szajngarten@radware.com

Radware Ltd.Condensed Consolidated Balance Sheets(U.S. Dollars in thousands) June 30, December 31, 2020 2019 (Unaudited) (Unaudited)Assets Current assets Cash and cash equivalents 48,650 40,751Marketable securities 63,568 36,924Short-term bank deposits 114,137 100,276Trade receivables, net 17,195 22,610Other receivables and prepaid expenses 8,444 7,469Inventories 14,106 13,940 266,100 221,970 Long-term investments Marketable securities 83,647 112,696Long-term bank deposits 132,765 137,095Severance pay funds 2,191 2,300 218,603 252,091 Property and equipment, net 23,663 22,971Other long-term assets 25,358 24,398Operating lease right-of-use assets 24,117 18,144Goodwill and intangible assets, net 54,663 55,625Total assets 612,504 595,199 Liabilities and shareholders' equity Current Liabilities Trade payables 4,896 6,315Deferred revenues 97,703 79,239Operating lease liabilities 4,573 5,193Other payables and accrued expenses 33,672 34,794 140,844 125,541 Long-term liabilities Deferred revenues 54,091 50,888Operating lease liabilities 20,469 13,914Other long-term liabilities 10,004 9,525 84,564 74,327 Shareholders' equity Share capital 713 710Additional paid-in capital 425,466 414,581Accumulated other comprehensive income, net of tax 2,444 1,145Treasury stock, at cost (168,895) (145,226)Retained earnings 127,368 124,121Total shareholders' equity 387,096 395,331 Total liabilities and shareholders' equity 612,504 595,199

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 six months ended June 30, June 30, 2020 2019 2020 2019 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenues 58,445 60,454 118,457 121,851Cost of revenues 10,558 10,644 21,247 21,653Gross profit 47,887 49,810 97,210 100,198 Operating expenses, net:Research and 16,509 15,400 32,341 30,630development, netSelling and 26,755 26,680 54,957 53,341marketingGeneral and 4,889 5,042 9,601 9,806administrativeTotal operating 48,153 47,122 96,899 93,777expenses, net Operating income (266) 2,688 311 6,421(loss)Financial income, 1,783 2,119 4,507 3,910netIncome before taxes 1,517 4,807 4,818 10,331on incomeTaxes on income 844 1,061 1,571 2,217Net income 673 3,746 3,247 8,114 Basic net earnings 0.01 0.08 0.07 0.17per share Weighted averagenumber of sharesused to compute 46,387,585 46,899,813 46,652,734 46,757,981basic net earningsper share Diluted net 0.01 0.08 0.07 0.17earnings per share Weighted averagenumber of sharesused to compute 47,632,309 48,722,684 47,927,268 48,649,438diluted 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 six months ended June 30, June 30, 2020 2019 2020 2019 (Unaudited) (Unaudited) (Unaudited) (Unaudited)GAAP gross profit 47,887 49,810 97,210 100,198 Stock-based 49 59 87 114 compensation Amortization of intangible 464 410 962 821 assetsNon-GAAP gross profit 48,400 50,279 98,259 101,133 GAAP research and 16,509 15,400 32,341 30,630development, net Stock-based 1,089 714 1,898 1,424 compensationNon-GAAP Research and 15,420 14,686 30,443 29,206development, net GAAP selling and 26,755 26,680 54,957 53,341marketing Stock-based 1,845 1,735 3,731 3,304 compensation Amortization of intangible - 18 - 35 assetsNon-GAAP selling and 24,910 24,927 51,226 50,002marketing GAAP general and 4,889 5,042 9,601 9,806administrative Stock-based 931 782 1,834 1,549 compensation Acquisition - - - 264 costs Litigation costs 140 777 259 859Non-GAAP general and 3,818 3,483 7,508 7,134administrative GAAP total operating 48,153 47,122 96,899 93,777expenses, net Stock-based 3,865 3,231 7,463 6,277 compensation Amortization of intangible - 18 - 35 assets Acquisition - - - 264 costs Litigation costs 140 777 259 859Non-GAAP totaloperating expenses, 44,148 43,096 89,177 86,342net GAAP operating income (266) 2,688 311 6,421(loss) Stock-based 3,914 3,290 7,550 6,391 compensation Amortization of intangible 464 428 962 856 assets Acquisition - - - 264 costs Litigation costs 140 777 259 859Non-GAAP operating 4,252 7,183 9,082 14,791income GAAP financial income, 1,783 2,119 4,507 3,910net Other loss (gain) - (310) 247 (310) adjustment Exchange rate differences, net on balance sheet 859 909 552 1,540 items included in financial income, netNon-GAAP financial 2,642 2,718 5,306 5,140income, net GAAP income before 1,517 4,807 4,818 10,331taxes on income Stock-based 3,914 3,290 7,550 6,391 compensation Amortization of intangible 464 428 962 856 assets Acquisition - - - 264 costs Litigation costs 140 777 259 859 Other loss (gain) - (310) 247 (310) adjustment Exchange rate differences, net on balance sheet 859 909 552 1,540 items included in financial income, netNon-GAAP income before 6,894 9,901 14,388 19,931taxes on income GAAP taxes on income 844 1,061 1,571 2,217 Tax related 61 (71) 183 (71) adjustmentsNon-GAAP taxes on 905 990 1,754 2,146income GAAP net income 673 3,746 3,247 8,114 Stock-based 3,914 3,290 7,550 6,391 compensation Amortization of intangible 464 428 962 856 assets Acquisition - - - 264 costs Litigation costs 140 777 259 859 Other loss (gain) - (310) 247 (310) adjustment Exchange rate differences, net on balance sheet 859 909 552 1,540 items included in financial income, net Tax related (61) 71 (183) 71 adjustmentsNon-GAAP net income 5,989 8,911 12,634 17,785 GAAP diluted net 0.01 0.08 0.07 0.17earnings per share Stock-based 0.08 0.07 0.16 0.13 compensation Amortization of intangible 0.01 0.01 0.02 0.02 assets Acquisition 0.00 0.00 0.00 0.01 costs Litigation costs 0.00 0.02 0.01 0.02 Other loss (gain) 0.00 (0.01) 0.01 (0.01) adjustment Exchange rate differences, net on balance sheet 0.02 0.02 0.01 0.03 items included in financial income, net Tax related (0.00) 0.00 (0.00) 0.00 adjustmentsNon-GAAP diluted net 0.13 0.18 0.26 0.37earnings per share Weighted averagenumber of shares usedto compute Non-GAAP 47,632,309 48,722,684 47,927,268 48,649,438diluted net earningsper share

Radware Ltd.Condensed Consolidated Statements of Cash Flow(U.S. Dollars in thousands) For the three months ended For the six months ended June 30, June 30, 2020 2019 2020 2019 (Unaudited) (Unaudited) (Unaudited) (Unaudited)Cash flow fromoperating activities: Net income 673 3,746 3,247 8,114Adjustments toreconcile net incometo net cash provided by operatingactivities:Depreciation and 2,637 2,701 5,267 5,388amortizationStock-based 3,914 3,290 7,550 6,391compensationAmortization ofpremium, accretionof discounts and 114 149 310 327accrued interest onmarketablesecurities, netGain related to (226) (310) (63) (310)securities, netAccrued interest on (178) 3,160 (373) 2,331bank depositsIncrease (decrease)in accrued (29) 65 187 933severance pay, netDecrease (increase)in trade 9,444 (641) 5,415 2,529receivables, netIncrease in otherreceivables andprepaid expenses (1,471) (1,721) (1,930) (3,686)and other long-termassetsDecrease (increase) 748 1,221 (166) 2,437in inventoriesDecrease in trade (3) (28) (1,419) (738)payablesIncrease (decrease)in deferred 1,637 (7,237) 21,667 3,783revenuesIncrease (decrease)in other payables (100) 463 (721) 472and accruedexpensesOperating lease 800 285 (38) 660liabilities, netNet cash providedby operating 17,960 5,143 38,933 28,631activities Cash flows frominvesting activities: Purchase ofproperty and (2,545) (2,382) (4,997) (4,343)equipmentInvestment in otherlong-term assets, (9) (33) (11) (62)netProceeds from(investment in) (4,652) 19,529 (9,158) 19,447bank deposits, netProceeds from(investment in)sale, redemption of 940 (33,574) 3,463 (43,235)and purchase ofmarketablesecurities ,netPayment foracquisition of 0 43 0 (12,239)subsidiary, net ofcash acquiredNet cash used ininvesting (6,266) (16,417) (10,703) (40,432)activities Cash flows fromfinancing activities: Proceeds fromexercise of stock 1,749 3,109 3,338 10,842optionsRepurchase of (5,000) (10,005) (23,669) (10,053)sharesNet cash providedby (used in) (3,251) (6,896) (20,331) 789financingactivities Increase (decrease)in cash and cash 8,443 (18,170) 7,899 (11,012)equivalentsCash and cashequivalents at the 40,207 52,361 40,751 45,203beginning of theperiodCash and cashequivalents at the 48,650 34,191 48,650 34,191end of the period