GlobeNewswire Inc | Nov 3, 2021 06:00AM EDT

November 03, 2021

Third Quarter 2021 Results and Financial Highlights

-- Record revenueof $73 million, up 17% year-over-year, exceeding high end of guidance -- ARR of $185 million, up 9% year-over-year -- Non-GAAP operatingincome of $11.6million, an increase of 69%year-over-year -- Non-GAAP EPS of $0.23, exceeding high end of guidance; GAAP EPS of $0.10 -- Cash flow from operations of $18 million

TEL AVIV, Israel, Nov. 03, 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 nine months ended September 30, 2021.

We are pleased to report another strong quarter. Driven by our cloud and subscription business, we achieved record quarterly revenue of $73 million. In addition, we saw double digit growth across key financial metrics. Compared to the same period last year, total revenue grew 17%, cloud and subscription ARR increased by 26%, and EPS rose 32%, said Roy Zisapel, president and CEO, Radware. The growing number of increasingly complex cyber-attacks is creating more urgency and driving more organizations to strengthen the defenses around their critical assets. We are confident that this demand, coupled with our best of breed security offering which includes DDoS protection; Web application, API and Bot security; and cloud posture security will fuel our growth in the coming quarters.

Financial Highlights for the Third Quarter of 2021Revenue for the third quarter of 2021 totaled $73.4 million:

-- Revenue in the Americas region was $35.7 million for the third quarter of 2021, up 18% from $30.2 million in the third quarter of 2020. -- Revenue in the Europe, Middle East and Africa (EMEA) region was $23.6 million for the third quarter of 2021, up 29% from $18.3 million in the third quarter of 2020. -- Revenue in the Asia-Pacific (APAC) region was $14.1 million for the third quarter of 2021, up 1% from $14.0 million in the third quarter of 2020.

GAAP net income for the third quarter of 2021 was $5.0 million, or $0.10 per diluted share, compared to GAAP net income of $3.6 million, or $0.08 per diluted share, for the third quarter of 2020.

Non-GAAP net income for the third quarter of 2021 was $11.0 million, or $0.23 per diluted share, compared to non-GAAP net income of $8.4 million, or $0.18 per diluted share, for the third quarter of 2020.

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

As of September 30, 2021, the Company had cash, cash equivalents, short-term and long-term bank deposits and marketable securities of $455.9 million. Net cash provided by operating activities in the third quarter of 2021 totaled $17.9 million.

Conference CallRadware management will host a call today, November 3, 2021 at 8:30 a.m. ET to discuss its third quarter 2021 results and the Companys outlook. To participate in the call, please use the followingnumbers:

Participants in the US call: Toll Free 888-510-2008 Participants Internationally call: 1 646-960-0306Conference ID: 1864701

A replay will be available for two days, starting two hours after the end of the call, on telephone number +1-647-362-9199 or (US toll-free) 800-770-2030. Passcode 1864701.

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, as applicable, stock-based compensation expenses, amortization of intangible assets, litigation costs, acquisition costs, exchange rate differences, net on balance sheet items included in financialincome, 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 StatementThis 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 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) September 30, December 31, 2021 2020 (Unaudited) (Unaudited)Assets Current assets Cash and cash equivalents 63,205 54,771 Marketable securities 51,234 64,684 Short-term bank deposits 159,208 191,038 Trade receivables, net 11,476 16,848 Other receivables and prepaid expenses 11,798 6,526 Inventories 12,403 13,935 309,324 347,802 Long-term investments Marketable securities 84,741 66,836 Long-term bank deposits 97,550 71,421 Severance pay funds 2,391 2,453 184,682 140,710 Property and equipment, net 20,606 22,976 Intangible assets, net 11,196 12,588 Other long-term assets 35,879 30,222 Operating lease right-of-use assets 25,131 27,823 Goodwill 41,144 41,144 Total assets 627,962 623,265 Liabilities and shareholders' equity Current Liabilities Trade payables 2,994 3,882 Deferred revenues 93,542 92,127 Operating lease liabilities 4,503 5,224 Other payables and accrued expenses 44,424 42,514 145,463 143,747 Long-term liabilities Deferred revenues 62,455 54,797 Operating lease liabilities 22,617 24,851 Other long-term liabilities 11,841 11,409 96,913 91,057 Shareholders' equity Share capital 728 721 Additional paid-in capital 462,976 443,018 Accumulated other comprehensive income, net of 298 1,517 taxTreasury stock, at cost (225,575 ) (190,552 )Retained earnings 147,159 133,757 Total shareholders' equity 385,586 388,461 Total liabilities and shareholders' equity 627,962 623,265

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 nine months ended September 30, September 30, 2021 2020 2021 2020 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenues 73,418 62,524 209,854 180,981Cost of revenues 13,294 11,646 38,398 32,893Gross profit 60,124 50,878 171,456 148,088 Operating expenses, net:Research and 18,639 16,747 54,501 49,088development, netSelling and marketing 29,588 27,659 87,827 82,616General and 6,024 4,513 15,771 14,114administrativeTotal operating 54,251 48,919 158,099 145,818expenses, net Operating income 5,873 1,959 13,357 2,270Financial income, net 1,013 2,897 4,870 7,404Income before taxes on 6,886 4,856 18,227 9,674incomeTaxes on income 1,921 1,269 4,825 2,840Net income 4,965 3,587 13,402 6,834 Basic net earnings per 0.11 0.08 0.29 0.15share Weighted averagenumber of shares used 45,838,968 46,341,046 45,891,234 46,547,504to compute basic netearnings per share Diluted net earnings 0.10 0.08 0.28 0.14per share Weighted averagenumber of shares used 47,620,254 47,673,698 47,451,932 47,841,411to 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, 2021 2020 2021 2020 (Unaudited) (Unaudited) (Unaudited) (Unaudited)GAAP gross 60,124 50,878 171,456 148,088 profitStock-based 51 48 149 135 compensationAmortizationof intangible 464 465 1,393 1,427 assetsNon-GAAP gross 60,639 51,391 172,998 149,650 profit GAAP researchand 18,639 16,747 54,501 49,088 development,netStock-based 1,434 1,301 3,786 3,199 compensationNon-GAAPResearch and 17,205 15,446 50,715 45,889 development,net GAAP selling 29,588 27,659 87,827 82,616 and marketingStock-based 2,212 2,083 6,294 5,814 compensationNon-GAAPselling and 27,376 25,576 81,533 76,802 marketing GAAP generaland 6,024 4,513 15,771 14,114 administrativeStock-based 894 975 1,973 2,809 compensationLitigation 67 44 288 303 costsAcquisition 629 - 629 - costsNon-GAAPgeneral and 4,434 3,494 12,881 11,002 administrative GAAP totaloperating 54,251 48,919 158,099 145,818 expenses, netStock-based 4,540 4,359 12,053 11,822 compensationLitigation 67 44 288 303 costsAcquisition 629 - 629 - costsNon-GAAP totaloperating 49,015 44,516 145,129 133,693 expenses, net GAAP operating 5,873 1,959 13,357 2,270 incomeStock-based 4,591 4,407 12,202 11,957 compensationAmortizationof intangible 464 465 1,393 1,427 assetsLitigation 67 44 288 303 costsAcquisition 629 - 629 - costsNon-GAAPoperating 11,624 6,875 27,869 15,957 income GAAP financial 1,013 2,897 4,870 7,404 income, netOther loss - - - 247 adjustmentExchange ratedifferences,net on balancesheet items 388 (72 ) 219 480 included infinancialincome, netNon-GAAPfinancial 1,401 2,825 5,089 8,131 income, net GAAP incomebefore taxes 6,886 4,856 18,227 9,674 on incomeStock-based 4,591 4,407 12,202 11,957 compensationAmortizationof intangible 464 465 1,393 1,427 assetsLitigation 67 44 288 303 costsAcquisition 629 - 629 - costsOther loss - - - 247 adjustmentExchange ratedifferences,net on balancesheet items 388 (72 ) 219 480 included infinancialincome, netNon-GAAPincome before 13,025 9,700 32,958 24,088 taxes onincome GAAP taxes on 1,921 1,269 4,825 2,840 incomeTax related 62 62 185 245 adjustmentsNon-GAAP taxes 1,983 1,331 5,010 3,085 on income GAAP net 4,965 3,587 13,402 6,834 incomeStock-based 4,591 4,407 12,202 11,957 compensationAmortizationof intangible 464 465 1,393 1,427 assetsLitigation 67 44 288 303 costsAcquisition 629 - 629 - costsOther loss - - - 247 adjustmentExchange ratedifferences,net on balancesheet items 388 (72 ) 219 480 included infinancialincome, netTax related (62 ) (62 ) (185 ) (245 )adjustmentsNon-GAAP net 11,042 8,369 27,948 21,003 income GAAP dilutednet earnings 0.10 0.08 0.28 0.14 per shareStock-based 0.10 0.09 0.26 0.25 compensationAmortizationof intangible 0.01 0.01 0.03 0.03 assetsLitigation 0.00 0.00 0.01 0.01 costsAcquisition 0.01 0.00 0.01 0.00 costsOther loss 0.00 0.00 0.00 0.01 adjustmentExchange ratedifferences,net on balancesheet items 0.01 (0.00 ) 0.00 0.01 included infinancialincome, netTax related (0.00 ) (0.00 ) (0.00 ) (0.01 )adjustmentsNon-GAAPdiluted net 0.23 0.18 0.59 0.44 earnings pershare Weightedaverage numberof shares usedto compute 47,620,254 47,673,698 47,451,932 47,841,411 non-GAAPdiluted netearnings pershare

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, 2021 2020 2021 2020 (Unaudited) (Unaudited) (Unaudited) (Unaudited)Cash flow fromoperating activities: Net income 4,965 3,587 13,402 6,834 Adjustments toreconcile net incometo net cash provided by operatingactivities:Depreciation and 2,527 2,616 7,712 7,883 amortizationStock-based 4,591 4,407 12,202 11,957 compensationAmortization ofpremium, accretionof discounts and 768 337 1,903 647 accrued interest onmarketablesecurities, netGain related to (327 ) (517 ) (424 ) (580 )securities, netAccrued interest on 1,504 (598 ) 1,421 (971 )bank depositsIncrease in accrued 88 48 453 235 severance pay, netDecrease in trade 7,023 2,865 5,372 8,280 receivables, netIncrease in otherreceivables andprepaid expenses (627 ) (465 ) (10,606 ) (2,395 )and other long-termassetsDecrease in 797 816 1,532 650 inventoriesDecrease in trade (2,554 ) (1,078 ) (888 ) (2,497 )payablesIncrease (decrease)in deferred (2,317 ) (7,648 ) 9,073 14,019 revenuesIncrease in otherpayables and 1,280 2,456 1,951 1,735 accrued expensesOperating lease 161 (26 ) (263 ) (64 )liabilities, netNet cash providedby operating 17,879 6,800 42,840 45,733 activities Cash flows frominvesting activities: Purchase ofproperty and (1,458 ) (1,629 ) (3,950 ) (6,626 )equipmentProceeds from(investment in) 11 (15 ) 42 (26 )other long-termassets, netProceeds from(investment in) (154 ) (2,666 ) 4,280 (11,824 )bank deposits, netProceeds from(investment in)sale, redemption of (15,852 ) 8,249 (7,518 ) 11,712 and purchase ofmarketablesecurities, netNet cash providedby (used in) (17,453 ) 3,939 (7,146 ) (6,764 )investingactivities Cash flows fromfinancing activities: Proceeds fromexercise of stock 1,917 4,947 7,762 8,285 optionsRepurchase of (195 ) (15,907 ) (35,022 ) (39,576 )sharesNet cash providedby (used in) 1,722 (10,960 ) (27,260 ) (31,291 )financingactivities Increase (decrease)in cash and cash 2,148 (221 ) 8,434 7,678 equivalentsCash and cashequivalents at the 61,057 48,650 54,771 40,751 beginning of theperiodCash and cashequivalents at the 63,205 48,429 63,205 48,429 end of the period