Radware Announces Fourth Quarter and Full Year 2020 Earnings

Fourth Quarter 2020 Results and Financial H


ighlights

• Record
  R
  evenues of $
  69
  m
  illion
• Record
  Cloud and Subscriptions ARR growing 35% year over year
• Record
  year end
  ARR of $
  17
  4
  million
  , up 12%
  year over year
• Non-GAAP EPS of $0.
  21
  ;
  GAAP EPS of
  $
  0.
  0
  6

Full Year


2020


Results and Financial Highlights

• Revenues of $
  250
  m
  illion
• Non-GAAP EPS of $0.
  64
  ; GAAP EPS of
  $
  0.
  20
• Record n
  et 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, Radware’s 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


H


ighlights


for the


Fourth


Q


uarter of


20


20

Revenues 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


H


ighlights for the


Full Year


of


2020

Revenues 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 Company’s 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 Company’s 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 Indicators


In 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
adjustment
s
.
Management believes that exclusion of these charges allows
for meaningful
comparisons of operating results across past,
present
and future periods. Radware’s management believes the non-GAAP financial
measures
provided in this release
are
useful to investors for the purpose
of understanding
and assessing Radware’s 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

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 Radware’s 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 Radware’s 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 Radware’s 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. Radware’s public filings are available from the SEC’s website at www.sec.gov or may be obtained on Radware’s 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. Radware’s 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 723917548
[email protected]

Media Contacts:

Deborah Szajngarten
201-785-3206
[email protected]

Radware Ltd.
Condensed Consolidated Balance Sheets
(U.S. Dollars in thousands)
	December 31,			December 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 tax	1,517			1,145
Treasury 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		252,072
Cost of revenues	12,191		11,994		45,084		45,174
Gross profit	56,855		55,368		204,943		206,898
Operating expenses, net:
Research and development, net	17,748		16,103		66,836		61,841
Selling and marketing	30,399		29,121		113,015		109,556
General and administrative	4,810		4,375		18,924		18,584
Total operating expenses, net	52,957		49,599		198,775		189,981
Operating income	3,898		5,769		6,168		16,917
Financial income, net	392		2,745		7,796		8,792
Income before taxes on income	4,290		8,514		13,964		25,709
Taxes on income	1,488		1,183		4,328		3,143
Net income	2,802		7,331		9,636		22,566
Basic net earnings per share	0.06		0.16		0.21		0.48
Weighted average number of shares used to compute basic net earnings per share	46,204,690		46,900,711		46,460,974		46,816,899
Diluted net earnings per share	0.06		0.15		0.2		0.47
Weighted average number of shares used to compute diluted net earnings per share	47,440,556		48,304,507		47,739,540		48,523,120

	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 profit		56,855			55,368			204,943			206,898
	Stock-based compensation	53			53			188			224
	Amortization of intangible assets	464			486			1,891			2,304
Non-GAAP gross profit		57,372			55,907			207,022			209,426
GAAP research and development, net		17,748			16,103			66,836			61,841
	Stock-based compensation	1,210			791			4,409			2,855
Non-GAAP Research and development, net		16,538			15,312			62,427			58,986
GAAP selling and marketing		30,399			29,121			113,015			109,556
	Stock-based compensation	2,501			1,696			8,315			6,954
	Amortization of intangible assets	–			17			–			69
Non-GAAP selling and marketing		27,898			27,408			104,700			102,533
GAAP general and administrative		4,810			4,375			18,924			18,584
	Stock-based compensation	824			742			3,633			3,032
	Acquisition costs	–			(18	)		–			246
	Litigation costs	145			–			448			883
Non-GAAP general and administrative		3,841			3,651			14,843			14,423
GAAP total operating expenses, net		52,957			49,599			198,775			189,981
	Stock-based compensation	4,535			3,229			16,357			12,841
	Acquisition costs	–			(18	)		–			246
	Amortization of intangible assets	–			17			–			69
	Litigation costs	145			–			448			883
Non-GAAP total operating expenses, net		48,277			46,371			181,970			175,942
GAAP operating income		3,898			5,769			6,168			16,917
	Stock-based compensation	4,588			3,282			16,545			13,065
	Acquisition costs	–			(18	)		–			246
	Amortization of intangible assets	464			503			1,891			2,373
	Litigation costs	145			–			448			883
Non-GAAP operating income		9,095			9,536			25,052			33,484
GAAP financial income, net		392			2,745			7,796			8,792
	Other loss (gain) adjustment	–			–			247			(563	)
	Exchange rate differences, net on balance sheet items included in financial income, net	1,826			(148	)		2,306			2,270
Non-GAAP financial income, net		2,218			2,597			10,349			10,499
GAAP income before taxes on income		4,290			8,514			13,964			25,709
	Stock-based compensation	4,588			3,282			16,545			13,065
	Acquisition costs	–			(18	)		–			246
	Amortization of intangible assets	464			503			1,891			2,373
	Litigation costs	145			–			448			883
	Other loss (gain) adjustment	–			–			247			(563	)
	Exchange rate differences, net on balance sheet items included in financial income, net	1,826			(148	)		2,306			2,270
Non-GAAP income before taxes on income		11,313			12,133			35,401			43,983
GAAP taxes on income		1,488			1,183			4,328			3,143
	Tax related adjustments	61			39			306			234
Non-GAAP taxes on income		1,549			1,222			4,634			3,377
GAAP net income		2,802			7,331			9,636			22,566
	Stock-based compensation	4,588			3,282			16,545			13,065
	Acquisition costs	–			(18	)		–			246
	Amortization of intangible assets	464			503			1,891			2,373
	Litigation costs	145			–			448			883
	Other loss (gain) adjustment	–			–			247			(563	)
	Exchange rate differences, net on balance sheet items included in financial income, net	1,826			(148	)		2,306			2,270
	Tax related adjustments	(61	)		(39	)		(306	)		(234	)
Non-GAAP net income		9,764			10,911			30,767			40,606
GAAP diluted net earnings per share		0.06			0.15			0.20			0.47
	Stock-based compensation	0.10			0.07			0.35			0.27
	Acquisition costs	0.00			(0.00	)		0.00			0.01
	Amortization of intangible assets	0.01			0.01			0.04			0.05
	Litigation costs	0.00			0.00			0.01			0.02
	Other loss (gain) adjustment	0.00			0.00			0.01			(0.01	)
	Exchange rate differences, net on balance sheet items included in financial income, net	0.04			0.00			0.05			0.05
	Tax related adjustments	(0.00	)		(0.00	)		(0.01	)		(0.00	)
Non-GAAP diluted net earnings per share		0.21			0.23			0.64			0.84
Weighted average number of shares used to compute Non-GAAP diluted net earnings per share		47,440,556			48,304,507			47,739,540			48,523,120

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 flow from operating activities:
Net income	2,802			7,331			9,636			22,566
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	2,676			2,789			10,559			11,283
Stock-based compensation	4,588			3,282			16,545			13,064
Amortization of premium, accretion of discounts and accrued interest on marketable securities, net	284			150			931			618
Other loss (gain)	(58	)		26			(638	)		(537	)
Accrued interest on bank deposits	(239	)		596			(1,210	)		2,123
Increase (decrease) in accrued severance pay, net	(33	)		64			202			888
Decrease (increase) in trade receivables, net	(2,518	)		(7,557	)		5,762			(2,407	)
Increase in other receivables and prepaid expenses and other long-term assets	(2,667	)		(2,140	)		(5,062	)		(6,989	)
Decrease (increase) in inventories	(645	)		1,143			5			4,461
Decrease (increase) in trade payables	802			2,310			(1,695	)		1,775
Increase (decrease) in deferred revenues	2,778			(6,416	)		16,797			2,260
Increase in other payables and accrued expenses	6,955			2,272			8,690			2,784
Operating lease liabilities, net	1,353			109			1,289			963
Net cash provided by operating activities	16,078			3,959			61,811			52,852
Cash flows from investing activities:
Purchase of property and equipment	(2,045	)		(2,002	)		(8,671	)		(8,155	)
Proceeds from (investment in) other long-term assets, net	(84	)		(7	)		(110	)		4
Proceeds from (investment in) bank deposits, net	(12,054	)		2,187			(23,878	)		15,960
Proceeds from (investment in) sale, redemption of and purchase of marketable securities, net	6,579			(1,131	)		18,291			(46,363	)
Payment for acquisition of subsidiary, net of cash acquired	0			0			0			(12,239	)
Net cash used in investing activities	(7,604	)		(953	)		(14,368	)		(50,793	)
Cash flows from financing activities:
Proceeds from exercise of stock options	3,618			3,406			11,903			17,998
Repurchase of shares	(5,750	)		(5,616	)		(45,326	)		(24,509	)
Net cash used in financing activities	(2,132	)		(2,210	)		(33,423	)		(6,511	)
Increase (decrease) in cash and cash equivalents	6,342			796			14,020			(4,452	)
Cash and cash equivalents at the beginning of the period	48,429			39,955			40,751			45,203
Cash and cash equivalents at the end of the period	54,771			40,751			54,771			40,751