GlobeNewswire Inc | Jul 28, 2021 06:00AM EDT

July 28, 2021

Second Quarter 2021 Results and Financial Highlights

-- Record revenue of $70 million, up 19% year over year, exceeding high end of the guidance -- ARR of $177 million, up 8% year over year -- Non-GAAP operating income of $8.8 million, an increase of 106%year over year -- Non-GAAP EPS of $0.19, exceeding high end of the guidance; GAAP EPS of $0.10

First Six Months 2021 Results and Financial Highlights

-- Total revenue of $136 million, up 15% year over year, exceeding high end of the guidance -- Non-GAAP operating income of $16 million, an increase of79% year over year -- Non-GAAP EPS of $0.36; GAAP EPS of $0.18 -- Cash flow from operations of $50 million in the last twelve months

TEL AVIV, Israel, July 28, 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 the six months ended June 30, 2021.

We had an excellent quarter, driven by our application security and cloud solutions. We delivered record revenue and double-digit growth in revenue and earnings per share, as well as tripled our new customer bookings, said Roy Zisapel, President and CEO, Radware.

Mr. Zisapel continued, The momentum continues to be strong across our business lines and geographies. The market provides many opportunities as enterprises are accelerating their digital transformation and at the same time experiencing more cyber attacks than ever. Our pipeline is robust, and we are confident in our ability to execute on it.

Financial Highlights for the SecondQuarter and the First Six Months of 2021Revenue for the second quarter of 2021 totaled $69.7 million. Revenue for the first six months of 2021 totaled $136.4 million:

-- Revenue in the Americas region were $28.1 million for the second quarter of 2021, up 2% from $27.5 million in the second quarter of 2020.For the first six months of 2021, revenue in the Americas were $61.8 million, an increase of 9% compared to the same period in 2020.

-- Revenue in the Europe, Middle East and Africa (EMEA) region were $24.0 million for the second quarter of 2021, up 36% from $17.7 million in the second quarter of 2020.For the first six months of 2021, revenue in EMEA were $45.1 million, an increase of 26% compared to the same period in 2020.

-- Revenue in the Asia-Pacific (APAC) region were $17.6 million for the second quarter of 2021, up 32% from $13.3 million in the second quarter of 2020.For the first six months of 2021, revenue in APAC were $29.5 million, an increase of 14% compared to the same period in 2020.

GAAP net income for the second quarter of 2021 was $4.5 million, or $0.10 per diluted share, compared to GAAP net income of $0.7 million, or $0.01 per diluted share, for the second quarter of 2020.

Non-GAAP net income for the second quarter of 2021 was $8.9 million, or $0.19 per diluted share, compared to non-GAAP net income of $6.0 million, or $0.13 per diluted share, for the second 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 June 30, 2021, the Company had cash, cash equivalents, short-term and long-term bank deposits and marketable securities of $440.2 million. Net cash provided by operating activities in the second quarter of 2021 totaled $8.8 million.

Conference CallRadware management will host a call today, July 28, 2021 at 8:30 a.m. ET to discuss its second 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: 1895308

A replay will be available for two days, starting two hours after the end of the call, on telephone number +1-416-621-4642 or (US toll-free) 800-585-8367. Passcode 1895308.

The call will be webcast live on the Companys 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, 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 revenue ("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 say that the momentum continues to be strong and that our pipeline is robust, and that we are confident in our ability to execute on it, these are 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 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; real or perceived shortcomings, defects or vulnerabilities in our products or solutions or if we or our end-users experience security breaches; the availability of components and manufacturing capacity; our reliance on a single managed security service provider to provide us with scrubbing center services; 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 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: https://www.radware.com/LegalNotice/. All other trademarks and names are property of their respective owners.

CONTACTSInvestor Relations:Yisca Erez, +972-72-3917211, ir@radware.com

Media Contacts:Gerri Dyrek,gerri.dyrek@radware.com

Radware Ltd.Condensed Consolidated Balance Sheets(U.S. Dollars in thousands) June 30, December 31, 2021 2020 (Unaudited) (Unaudited)Assets Current assets Cash and cash equivalents 61,057 54,771 Marketable securities 56,509 64,684 Short-term bank deposits 195,010 191,038 Trade receivables, net 18,499 16,848 Other receivables and prepaid expenses 12,726 6,526 Inventories 13,200 13,935 357,001 347,802 Long-term investments Marketable securities 64,531 66,836 Long-term bank deposits 63,097 71,421 Severance pay funds 2,338 2,453 129,966 140,710 Property and equipment, net 21,212 22,976 Intangible assets, net 11,659 12,588 Other long-term assets 34,227 30,222 Operating lease right-of-use assets 26,143 27,823 Goodwill 41,144 41,144 Total assets 621,352 623,265 Liabilities and shareholders' equity Current Liabilities Trade payables 5,548 3,882 Deferred revenues 102,266 92,127 Operating lease liabilities 4,649 5,224 Other payables and accrued expenses 43,144 42,514 155,607 143,747 Long-term liabilities Deferred revenues 56,048 54,797 Operating lease liabilities 23,322 24,851 Other long-term liabilities 11,701 11,409 91,071 91,057 Shareholders' equity Share capital 726 721 Additional paid-in capital 456,469 443,018 Accumulated other comprehensive income, net of tax 664 1,517 Treasury stock, at cost (225,379 ) (190,552 )Retained earnings 142,194 133,757 Total shareholders' equity 374,674 388,461 Total liabilities and shareholders' equity 621,352 623,265

Radware Ltd.Condensed Consolidated Statements of Income(U.S Dollars in thousands, except share and per share data) For the three months ended For the six months ended June 30, June 30, 2021 2020 2021 2020 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenues 69,667 58,445 136,436 118,457Cost of revenues 12,838 10,558 25,104 21,247Gross profit 56,829 47,887 111,332 97,210 Operating expenses, net:Research and 18,127 16,509 35,862 32,341development, netSelling and 29,248 26,755 58,239 54,957marketingGeneral and 4,551 4,889 9,747 9,601administrativeTotal operating 51,926 48,153 103,848 96,899expenses, net Operating income 4,903 (266 ) 7,484 311(loss)Financial income, 1,187 1,783 3,857 4,507netIncome before 6,090 1,517 11,341 4,818taxes on incomeTaxes on income 1,558 844 2,904 1,571Net income 4,532 673 8,437 3,247 Basic netearnings per 0.10 0.01 0.18 0.07share Weighted averagenumber of sharesused to compute 45,618,971 46,387,585 45,918,605 46,652,734basic netearnings pershare Diluted netearnings per 0.10 0.01 0.18 0.07share Weighted averagenumber of sharesused to compute 47,138,142 47,632,309 47,369,008 47,927,268diluted netearnings pershare

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, 2021 2020 2021 2020 (Unaudited) (Unaudited) (Unaudited) (Unaudited)GAAP gross 56,829 47,887 111,332 97,210 profit Stock-based 51 49 98 87 compensation Amortization of 465 464 929 962 intangible assetsNon-GAAP gross 57,345 48,400 112,359 98,259 profit GAAP researchand 18,127 16,509 35,862 32,341 development,net Stock-based 1,013 1,089 2,352 1,898 compensationNon-GAAPResearch and 17,114 15,420 33,510 30,443 development,net GAAP selling 29,248 26,755 58,239 54,957 and marketing Stock-based 2,030 1,845 4,082 3,731 compensationNon-GAAPselling and 27,218 24,910 54,157 51,226 marketing GAAP generaland 4,551 4,889 9,747 9,601 administrative Stock-based 143 931 1,079 1,834 compensation Litigation 158 140 221 259 costsNon-GAAPgeneral and 4,250 3,818 8,447 7,508 administrative GAAP totaloperating 51,926 48,153 103,848 96,899 expenses, net Stock-based 3,186 3,865 7,513 7,463 compensation Litigation 158 140 221 259 costsNon-GAAP totaloperating 48,582 44,148 96,114 89,177 expenses, net GAAP operating 4,903 (266 ) 7,484 311 income (loss) Stock-based 3,237 3,914 7,611 7,550 compensation Amortization of 465 464 929 962 intangible assets Litigation 158 140 221 259 costsNon-GAAPoperating 8,763 4,252 16,245 9,082 income GAAP financial 1,187 1,783 3,857 4,507 income, net Other loss - - - 247 adjustment Exchange rate differences, net on balance 555 859 (169 ) 552 sheet items included in financial income, netNon-GAAPfinancial 1,742 2,642 3,688 5,306 income, net GAAP incomebefore taxes on 6,090 1,517 11,341 4,818 income Stock-based 3,237 3,914 7,611 7,550 compensation Amortization of 465 464 929 962 intangible assets Litigation 158 140 221 259 costs Other loss - - - 247 adjustment Exchange rate differences, net on balance 555 859 (169 ) 552 sheet items included in financial income, netNon-GAAP incomebefore taxes on 10,505 6,894 19,933 14,388 income GAAP taxes on 1,558 844 2,904 1,571 income Tax related 61 61 123 183 adjustmentsNon-GAAP taxes 1,619 905 3,027 1,754 on income GAAP net income 4,532 673 8,437 3,247 Stock-based 3,237 3,914 7,611 7,550 compensation Amortization of 465 464 929 962 intangible assets Litigation 158 140 221 259 costs Other loss - - - 247 adjustment Exchange rate differences, net on balance 555 859 (169 ) 552 sheet items included in financial income, net Tax related (61 ) (61 ) (123 ) (183 ) adjustmentsNon-GAAP net 8,886 5,989 16,906 12,634 income GAAP dilutednet earnings 0.10 0.01 0.18 0.07 per share Stock-based 0.07 0.08 0.16 0.16 compensation Amortization of 0.01 0.01 0.02 0.02 intangible assets Litigation 0.00 0.00 0.00 0.01 costs Other loss 0.00 0.00 0.00 0.01 adjustment Exchange rate differences, net on balance 0.01 0.02 (0.00 ) 0.01 sheet items included in financial income, net Tax related (0.00 ) (0.00 ) (0.00 ) (0.00 ) adjustmentsNon-GAAPdiluted net 0.19 0.13 0.36 0.26 earnings pershare Weightedaverage numberof shares usedto compute 47,138,142 47,632,309 47,369,008 47,927,268 non-GAAPdiluted netearnings pershare

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, 2021 2020 2021 2020 (Unaudited) (Unaudited) (Unaudited) (Unaudited)Cash flow fromoperating activities: Net income 4,532 673 8,437 3,247 Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and 2,537 2,637 5,185 5,267 amortizationStock-based 3,237 3,914 7,611 7,550 compensationAmortization ofpremium, accretionof discounts and 727 114 1,135 310 accrued interest onmarketablesecurities, netGain related to (95 ) (226 ) (97 ) (63 )securities, netAccrued interest on 698 (178 ) (83 ) (373 )bank depositsIncrease (decrease)in accrued 140 (29 ) 365 187 severance pay, netDecrease (increase)in trade (8,591 ) 9,444 (1,651 ) 5,415 receivables, netIncrease in otherreceivables andprepaid expenses (5,519 ) (1,471 ) (9,981 ) (1,930 )and other long-termassetsDecrease (increase) 211 748 735 (166 )in inventoriesIncrease (decrease) 1,422 (3 ) 1,666 (1,419 )in trade payablesIncrease in 2,468 1,637 11,390 21,667 deferred revenuesIncrease (decrease) inother payables and 6,664 (100 ) 671 (721 )accrued expensesOperating lease 358 800 (424 ) (38 )liabilities, netNet cash providedby operating 8,789 17,960 24,959 38,933 activities Cash flows frominvesting activities: Purchase ofproperty and (1,159 ) (2,545 ) (2,492 ) (4,997 )equipmentProceeds from(investment in) other (11 ) (9 ) 31 (11 )long-term assets, netProceeds from(investment in) 4,577 (4,652 ) 4,434 (9,158 )bank deposits, netProceeds from sale,redemption of andpurchase of 10,825 940 8,334 3,463 marketablesecurities, netNet cash used ininvesting 14,232 (6,266 ) 10,307 (10,703 )activities Cash flows fromfinancing activities: Proceeds fromexercise of stock 3,695 1,749 5,847 3,338 optionsRepurchase of (4,638 ) (5,000 ) (34,827 ) (23,669 )sharesNet cash used infinancing (943 ) (3,251 ) (28,980 ) (20,331 )activities Increase in cashand cash 22,078 8,443 6,286 7,899 equivalentsCash and cashequivalents at the 38,979 40,207 54,771 40,751 beginning of theperiodCash and cashequivalents at the 61,057 48,650 61,057 48,650 end of the period