GlobeNewswire Inc | Feb 10, 2021 06:00AM EST

February 10, 2021

Fourth Quarter 2020 Results and Financial Highlights

-- RecordRevenues of $69million -- 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 $250million -- 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, Radwares 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 FourthQuarter of 2020Revenues 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 2020Revenues 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 Companys 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 Companys 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 IndicatorsIn 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 measureis 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 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.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 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 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 723917548ir@radware.com

Media Contacts:Deborah Szajngarten201-785-3206deborah.szajngarten@radware.com

Radware Ltd.Condensed Consolidated Balance Sheets(U.S. Dollars in thousands) December December 31, 31, 2020 2019 (Unaudited) (Unaudited) Assets Current assets Cash and cash equivalents 54,771 40,751 Available-for-sale marketable securities 64,684 36,924 Short-term bank deposits 191,038 100,276 Trade receivables, net 16,848 22,610 Other receivables and prepaid expenses 6,705 7,469 Inventories 13,935 13,940 347,981 221,970 Long-term investments Available-for-sale marketable securities 66,836 112,696 Long-term bank deposits 71,421 137,095 Severance pay funds 2,453 2,300 140,710 252,091 Property and equipment, net 22,976 22,971 Intangible assets, net 12,588 14,481 Other long-term assets 30,222 24,398 Operating lease right-of-use assets 27,823 18,144 Goodwill 41,144 41,144 Total assets 623,444 595,199 Liabilities and shareholders' equity Current Liabilities Trade payables 4,620 6,315 Deferred revenues 92,127 79,239 Operating lease liabilities 5,224 5,193 Other payables and accrued expenses 41,955 34,794 143,926 125,541 Long-term liabilities Deferred revenues 54,797 50,888 Operating lease liabilities 24,851 13,914 Other long-term liabilities 11,409 9,525 91,057 74,327 Shareholders' equity Share capital 721 710 Additional paid-in capital 443,018 414,581 Accumulated other comprehensive income, net of 1,517 1,145 taxTreasury stock, at cost (190,552 ) (145,226 )Retained earnings 133,757 124,121 Total shareholders' equity 388,461 395,331 Total liabilities and shareholders' equity 623,444 595,199

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) Revenues 69,046 67,362 250,027 252,072Cost of revenues 12,191 11,994 45,084 45,174Gross profit 56,855 55,368 204,943 206,898 Operating expenses, net:Research and 17,748 16,103 66,836 61,841development, netSelling and marketing 30,399 29,121 113,015 109,556General and 4,810 4,375 18,924 18,584administrativeTotal operating 52,957 49,599 198,775 189,981expenses, net Operating income 3,898 5,769 6,168 16,917Financial income, net 392 2,745 7,796 8,792Income before taxes on 4,290 8,514 13,964 25,709incomeTaxes on income 1,488 1,183 4,328 3,143Net income 2,802 7,331 9,636 22,566 Basic net earnings per 0.06 0.16 0.21 0.48share Weighted averagenumber of shares used 46,204,690 46,900,711 46,460,974 46,816,899to compute basic netearnings per share Diluted net earnings 0.06 0.15 0.2 0.47per share Weighted averagenumber of shares used 47,440,556 48,304,507 47,739,540 48,523,120to 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 year ended December 31, December 31, 2020 2019 2020 2019 (Unaudited) (Unaudited) (Unaudited) (Unaudited)GAAP gross 56,855 55,368 204,943 206,898 profit Stock-based 53 53 188 224 compensation Amortization of 464 486 1,891 2,304 intangible assetsNon-GAAP gross 57,372 55,907 207,022 209,426 profit GAAP researchand 17,748 16,103 66,836 61,841 development,net Stock-based 1,210 791 4,409 2,855 compensationNon-GAAPResearch and 16,538 15,312 62,427 58,986 development,net GAAP selling 30,399 29,121 113,015 109,556 and marketing Stock-based 2,501 1,696 8,315 6,954 compensation Amortization of - 17 - 69 intangible assetsNon-GAAPselling and 27,898 27,408 104,700 102,533 marketing GAAP generaland 4,810 4,375 18,924 18,584 administrative Stock-based 824 742 3,633 3,032 compensation Acquisition - (18 ) - 246 costs Litigation 145 - 448 883 costsNon-GAAPgeneral and 3,841 3,651 14,843 14,423 administrative GAAP totaloperating 52,957 49,599 198,775 189,981 expenses, net Stock-based 4,535 3,229 16,357 12,841 compensation Acquisition - (18 ) - 246 costs Amortization of - 17 - 69 intangible assets Litigation 145 - 448 883 costsNon-GAAP totaloperating 48,277 46,371 181,970 175,942 expenses, net GAAP operating 3,898 5,769 6,168 16,917 income Stock-based 4,588 3,282 16,545 13,065 compensation Acquisition - (18 ) - 246 costs Amortization of 464 503 1,891 2,373 intangible assets Litigation 145 - 448 883 costsNon-GAAPoperating 9,095 9,536 25,052 33,484 income GAAP financial 392 2,745 7,796 8,792 income, net Other loss (gain) - - 247 (563 ) adjustment Exchange rate differences, net on balance 1,826 (148 ) 2,306 2,270 sheet items included in financial income, netNon-GAAPfinancial 2,218 2,597 10,349 10,499 income, net GAAP incomebefore taxes on 4,290 8,514 13,964 25,709 income Stock-based 4,588 3,282 16,545 13,065 compensation Acquisition - (18 ) - 246 costs Amortization of 464 503 1,891 2,373 intangible assets Litigation 145 - 448 883 costs Other loss (gain) - - 247 (563 ) adjustment Exchange rate differences, net on balance 1,826 (148 ) 2,306 2,270 sheet items included in financial income, netNon-GAAP incomebefore taxes on 11,313 12,133 35,401 43,983 income GAAP taxes on 1,488 1,183 4,328 3,143 income Tax related 61 39 306 234 adjustmentsNon-GAAP taxes 1,549 1,222 4,634 3,377 on income GAAP net income 2,802 7,331 9,636 22,566 Stock-based 4,588 3,282 16,545 13,065 compensation Acquisition - (18 ) - 246 costs Amortization of 464 503 1,891 2,373 intangible assets Litigation 145 - 448 883 costs Other loss (gain) - - 247 (563 ) adjustment Exchange rate differences, net on balance 1,826 (148 ) 2,306 2,270 sheet items included in financial income, net Tax related (61 ) (39 ) (306 ) (234 ) adjustmentsNon-GAAP net 9,764 10,911 30,767 40,606 income GAAP dilutednet earnings 0.06 0.15 0.20 0.47 per share Stock-based 0.10 0.07 0.35 0.27 compensation Acquisition 0.00 (0.00 ) 0.00 0.01 costs Amortization of 0.01 0.01 0.04 0.05 intangible assets Litigation 0.00 0.00 0.01 0.02 costs Other loss (gain) 0.00 0.00 0.01 (0.01 ) adjustment Exchange rate differences, net on balance 0.04 0.00 0.05 0.05 sheet items included in financial income, net Tax related (0.00 ) (0.00 ) (0.01 ) (0.00 ) adjustments Non-GAAPdiluted net 0.21 0.23 0.64 0.84 earnings pershare Weightedaverage numberof shares usedto compute 47,440,556 48,304,507 47,739,540 48,523,120 Non-GAAPdiluted netearnings pershare

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 flowfrom operatingactivities: Net income 2,802 7,331 9,636 22,566 Adjustmentsto reconcilenet incometo net cash provided byoperatingactivities:Depreciationand 2,676 2,789 10,559 11,283 amortizationStock-based 4,588 3,282 16,545 13,064 compensationAmortizationof premium,accretion ofdiscountsand accrued 284 150 931 618 interest onmarketablesecurities,netOther loss (58 ) 26 (638 ) (537 )(gain)Accruedinterest on (239 ) 596 (1,210 ) 2,123 bankdepositsIncrease(decrease)in accrued (33 ) 64 202 888 severancepay, netDecrease(increase)in trade (2,518 ) (7,557 ) 5,762 (2,407 )receivables,netIncrease inotherreceivablesand prepaid (2,667 ) (2,140 ) (5,062 ) (6,989 )expenses andotherlong-termassetsDecrease(increase) (645 ) 1,143 5 4,461 ininventoriesDecrease(increase) 802 2,310 (1,695 ) 1,775 in tradepayablesIncrease(decrease) 2,778 (6,416 ) 16,797 2,260 in deferredrevenuesIncrease inotherpayables and 6,955 2,272 8,690 2,784 accruedexpensesOperatinglease 1,353 109 1,289 963 liabilities,netNet cashprovided by 16,078 3,959 61,811 52,852 operatingactivities Cash flowsfrom investingactivities: Purchase ofproperty and (2,045 ) (2,002 ) (8,671 ) (8,155 )equipmentProceedsfrom(investment (84 ) (7 ) (110 ) 4 in) otherlong-termassets, netProceedsfrom(investment (12,054 ) 2,187 (23,878 ) 15,960 in) bankdeposits,netProceedsfrom(investmentin) sale,redemption 6,579 (1,131 ) 18,291 (46,363 )of andpurchase ofmarketablesecurities,netPayment foracquisitionof 0 0 0 (12,239 )subsidiary,net of cashacquiredNet cashused in (7,604 ) (953 ) (14,368 ) (50,793 )investingactivities Cash flowsfrom financingactivities: Proceedsfromexercise of 3,618 3,406 11,903 17,998 stockoptionsRepurchase (5,750 ) (5,616 ) (45,326 ) (24,509 )of sharesNet cashused in (2,132 ) (2,210 ) (33,423 ) (6,511 )financingactivities Increase(decrease)in cash and 6,342 796 14,020 (4,452 )cashequivalentsCash andcashequivalents 48,429 39,955 40,751 45,203 at thebeginning ofthe periodCash andcashequivalents 54,771 40,751 54,771 40,751 at the endof theperiod