GlobeNewswire Inc | May 5, 2021 06:00AM EDT

May 05, 2021

First Quarter 2021 Results and Financial Highlights

-- Total revenuesof $67 million, up 11% year over year, exceeding high end of the guidance

-- Americasrevenuesgrew 15% year over year and accounts for 50% of total revenues

-- Record ARR of $176 million, up 10% year over year

-- Non-GAAP operating income increased 55% year over year to $7.5 million

-- Non-GAAP EPS of $0.17, exceeding high end of the guidance; GAAP EPS of $0.08

-- Cash flow from operations of $59 million in the last twelve months

TEL AVIV, Israel, May 05, 2021 (GLOBE NEWSWIRE) -- (NASDAQ: RDWR), a leading provider of cyber security and application delivery solutions, today announced its consolidated financial results for the quarter ended March 31, 2021.

We are pleased to start the year with a strong quarter, highlighted by double-digit growth in total revenue and earnings per share. We continue to execute on our growth pillars, focusing on our security and cloud offerings, said Roy Zisapel, President and CEO, Radware.

Mr. Zisapel continued, We are facing a new reality with an increased level of infrastructure and application attacks. As a result, organizations are seeking innovative and sophisticated solutions to protect their assets and applications. The business climate is very positive and given the breadth of our product offering, we are well positioned to capture the opportunities ahead of us.

Financial Highlights for the First Quarterof 2021

Revenues for the first quarter of 2021 totaled $66.8 million:

-- Revenues in the Americas region were $33.7 million for the first quarter of 2021, up 15% from $29.2 million in the first quarter of 2020.

-- Revenues in the Europe, Middle East and Africa (EMEA) region were $21.1 million for the first quarter of 2021, up 16% from $18.2 million in the first quarter of 2020.

-- Revenues in the Asia-Pacific (APAC) region were $12.0 million for the first quarter of 2021, down 5% from $12.6 million in the first quarter of 2020.

GAAP net income for the first quarter of 2021 was $3.9 million, or $0.08 per diluted share, compared to GAAP net income of $2.6 million, or $0.05 per diluted share, for the first quarter of 2020.

Non-GAAP net income for the first quarter of 2021 was $8.0 million, or $0.17 per diluted share, compared to non-GAAP net income of $6.6 million, or $0.14 per diluted share, for the first quarter of 2020.

Non-GAAP results are calculated excluding, as applicable, the impact of stock-based compensation expenses, amortization of intangible assets, litigation costs, exchange rate differences, net on balance sheet items included in finance income, other loss 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 March 31, 2021, the Company had cash, cash equivalents, short-term and long-term bank deposits and marketable securities of $435.3 million, up from $427.3 million as of March 31, 2020. Net cash provided by operating activities in the first quarter of 2021 totaled $16.2 million. Net cash spent on share repurchases in the first quarter of 2021 totaled $30.2 million.

Conference CallRadware management will host a call today, May 5, 2021 at 8:30 a.m. ET to discuss its first quarter 2021 results and the Companys outlook. To participate in the call, please use the followingnumbers:Participants in the US call: Toll Free 833-968-2213 Participants Internationally call: +1-778-560-2898Conference ID: 5036077

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.The call will be webcast live on the Companys website at: . 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, litigation costs, exchange rate differences, net on balance sheet items included in finance income, other lossadjustment 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 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

About RadwareRadware (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: . All other trademarks and names are property of their respective owners.

CONTACTSInvestor Relations:Yisca Erez, +972-72-3917211,

Media Contacts:Joel Arabia, +1 201-4945988,

Radware Ltd.Condensed Consolidated Balance Sheets(U.S. Dollars in thousands) March 31, December 31, 2021 2020 (Unaudited) (Unaudited)Assets Current assets Cash and cash equivalents 38,979 54,771 Available-for-sale marketable securities 70,215 64,684 Short-term bank deposits 205,554 191,038 Trade receivables, net 9,908 16,848 Other receivables and prepaid expenses 10,190 6,526 Inventories 13,411 13,935 348,257 347,802 Long-term investments Available-for-sale marketable securities 62,690 66,836 Long-term bank deposits 57,829 71,421 Severance pay funds 2,312 2,453 122,831 140,710 Property and equipment, net 22,124 22,976 Intangible assets, net 12,125 12,588 Other long-term assets 31,139 30,222 Operating lease right-of-use assets 26,892 27,823 Goodwill 41,144 41,144 Total assets 604,512 623,265 Liabilities and shareholders' equity Current Liabilities Trade payables 4,126 3,882 Deferred revenues 99,595 92,127 Operating lease liabilities 5,165 5,224 Other payables and accrued expenses 36,520 42,514 145,406 143,747 Long-term liabilities Deferred revenues 56,251 54,797 Operating lease liabilities 23,197 24,851 Other long-term liabilities 11,494 11,409 90,942 91,057 Shareholders' equity Share capital 723 721 Additional paid-in capital 449,542 443,018 Accumulated other comprehensive income, net of tax 978 1,517 Treasury stock, at cost (220,741 ) (190,552 )Retained earnings 137,662 133,757 Total shareholders' equity 368,164 388,461 Total liabilities and shareholders' equity 604,512 623,265

Radware Ltd.Condensed Consolidated Statements of Income(U.S Dollars in thousands, except share and per share data) For the three months ended March 31, 2021 2020 (Unaudited) (Unaudited) Revenues 66,769 60,012 Cost of revenues 12,266 10,689 Gross profit 54,503 49,323 Operating expenses, net: Research and development, net 17,735 15,832 Selling and marketing 28,991 28,202 General and administrative 5,196 4,712 Total operating expenses, net 51,922 48,746 Operating income 2,581 577 Financial income, net 2,670 2,724 Income before taxes on income 5,251 3,301 Taxes on income 1,346 727 Net income 3,905 2,574 Basic net earnings per share 0.08 0.05 Weighted average number of shares used to 46,225,882 46,921,344 compute basic net earnings per share Diluted net earnings per share 0.08 0.05 Weighted average number of shares used to 47,607,518 48,225,688 compute diluted net earnings 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 March 31, 2021 2020 (Unaudited) (Unaudited)GAAP gross profit 54,503 49,323 Stock-based compensation 47 38 Amortization of intangible assets 464 498 Non-GAAP gross profit 55,014 49,859 GAAP research and development, net 17,735 15,832 Stock-based compensation 1,339 809 Non-GAAP Research and development, net 16,396 15,023 GAAP selling and marketing 28,991 28,202 Stock-based compensation 2,052 1,886 Non-GAAP selling and marketing 26,939 26,316 GAAP general and administrative 5,196 4,712 Stock-based compensation 936 903 Litigation costs 63 119 Non-GAAP general and administrative 4,197 3,690 GAAP total operating expenses, net 51,922 48,746 Stock-based compensation 4,327 3,598 Litigation costs 63 119 Non-GAAP total operating expenses, net 47,532 45,029 GAAP operating income 2,581 577 Stock-based compensation 4,374 3,636 Amortization of intangible assets 464 498 Litigation costs 63 119 Non-GAAP operating income 7,482 4,830 GAAP financial income, net 2,670 2,724 Other loss adjustment - 247 Exchange rate differences, net on balance sheet (724 ) (307 )items included in financial income, netNon-GAAP financial income, net 1,946 2,664 GAAP income before taxes on income 5,251 3,301 Stock-based compensation 4,374 3,636 Amortization of intangible assets 464 498 Litigation costs 63 119 Other loss adjustment - 247 Exchange rate differences, net on balance sheet (724 ) (307 )items included in financial income, netNon-GAAP income before taxes on income 9,428 7,494 GAAP taxes on income 1,346 727 Tax related adjustments 62 122 Non-GAAP taxes on income 1,408 849 GAAP net income 3,905 2,574 Stock-based compensation 4,374 3,636 Amortization of intangible assets 464 498 Litigation costs 63 119 Other loss adjustment - 247 Exchange rate differences, net on balance sheet (724 ) (307 )items included in financial income, netTax related adjustments (62 ) (122 )Non-GAAP net income 8,020 6,645 GAAP diluted net earnings per share 0.08 0.05 Stock-based compensation 0.09 0.08 Amortization of intangible assets 0.01 0.01 Litigation costs 0.00 0.00 Other loss adjustment 0.00 0.01 Exchange rate differences, net on balance sheet (0.02 ) (0.01 )items included in financial income, netTax related adjustments (0.00 ) (0.00 )Non-GAAP diluted net earnings per share 0.17 0.14 Weighted average number of shares used to 47,607,518 48,225,688 compute Non-GAAP diluted net earnings per share

Radware Ltd.Condensed Consolidated Statements of Cash Flow(U.S. Dollars in thousands) For the three months ended March 31, 2021 2020 (Unaudited) (Unaudited)Cash flow from operating activities: Net income 3,905 2,574 Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization 2,648 2,630 Stock based compensation 4,374 3,636 Amortization of premium, accretion of discountsand accrued interest on marketable securities, 408 196 netOther loss (gain) (2 ) 163 Accrued interest on bank deposits (781 ) (195 )Increase in accrued severance pay, net 225 216 Decrease (increase) in trade receivables, net 6,940 (4,029 )Increase in other receivables and prepaid (4,462 ) (459 )expenses and other long-term assetsDecrease (increase) in inventories 524 (914 )Increase (decrease) in trade payables 244 (1,416 )Increase in deferred revenues 8,922 20,030 Decrease in other payables and accrued expenses (5,993 ) (621 )Operating lease liabilities, net (782 ) (838 )Net cash provided by operating activities 16,170 20,973 Cash flows from investing activities: Purchase of property and equipment (1,333 ) (2,452 )Proceeds from (investment in) other long-term 42 (2 )assets, netInvestment in bank deposits, net (143 ) (4,506 )Proceeds from (investment in) sale, redemption of (2,491 ) 2,523 and purchase of marketable securities, netNet cash used in investing activities (3,925 ) (4,437 ) Cash flows from financing activities: Proceeds from exercise of stock options 2,152 1,589 Repurchase of shares (30,189 ) (18,669 )Net cash used in financing activities (28,037 ) (17,080 ) Decrease in cash and cash equivalents (15,792 ) (544 )Cash and cash equivalents at the beginning of the 54,771 40,751 periodCash and cash equivalents at the end of the 38,979 40,207 period