Radware Announces Third Quarter 2016 Earnings

2016 Third Quarter Highlights

  • Revenues of $46.9 Million
  • Non-GAAP EPS of $0.04; GAAP EPS of ($0.06)
  • Cash and cash equivalents of $311 million

Radware® (NASDAQ: RDWR), a leading provider of cyber security and application delivery solutions ensuring optimal service level for applications in virtual, cloud and software defined data centers, today announced its consolidated financial results for the quarter ended September 30, 2016.

“Radware’s third quarter of 2016 was characterized by an accelerated shift towards an increased proportion of service and subscription sales, pressuring revenues in the short term, but reflecting a desired strategic transition in our business model,” said Roy Zisapel, Radware President & CEO. “Through our unified infrastructure for delivery and security of applications, we have become a key enabler of the transition of applications to the cloud, clearly one of the most dominant technological trends today. We are also strongly positioned to benefit from the ever-evolving security threats. Events over the past few weeks highlighted the Internet of Things security risks, and we expect demand for our products to increase as new threat vectors continue to emerge. Radware enjoys a unique product portfolio with very strong technologies, which provides genuine competitive advantages in a very exciting market. I therefore have strong confidence in the Company’s growth prospects”.

Financial Highlights for the second quarter of 2016

Revenues for the third quarter of 2016 totaled $46.9 million, compared with revenues of $48.1 million for the third quarter of 2015, and revenues of $49.6 million for the second quarter of 2016.

Revenues in the Americas region were $20.0 million for the third quarter of 2016, up 4.6% from revenues of $19.1 in the third quarter of 2015. Revenues in the EMEA region were $12.2 million for the third quarter of 2016, down 5.1% from revenues of $12.9 in the third quarter of 2015. Revenues in the APAC region were $14.7 million for the third quarter of 2016, down 8.8% from revenues of $16.1 in the third quarter of 2015.

Net loss on a GAAP basis for the third quarter of 2016 was ($2.4) million or ($0.06) per share, compared with net income of $0.7 million or $0.01 per diluted share for the third quarter of 2015.

Non-GAAP net income for the third quarter of 2016 was $1.6 million or $0.04 per diluted share, compared with non- GAAP net income of $4.8 million or $0.10 per diluted share for the third quarter of 2015.

Non-GAAP results are calculated excluding the impact of the patent litigation expense, stock-based compensation, exchange rate differences, net on balance sheet items and amortization of intangible assets. A reconciliation of each of the company’s non-GAAP measures to the comparable GAAP measured is included at the end of this press release.

As of September 30, 2016 the Company had cash, cash equivalents, short-term and long-term bank deposits and marketable securities of $311 million. Cash used for operations in the third quarter of 2016 totaled $1.3 million.

Fourth Quarter 2016 Guidance

Fourth quarter 2016 total revenues are expected to be in a range of $50 million to $52 million. Fourth quarter 2016 non-GAAP fully diluted earnings per share are expected to be in a range of $0.03 to $0.06.

Conference Call

Radware management will host a call Tuesday, November 1, 2016 at 8:30 am ET to discuss its third quarter 2016 results and the company’s outlook for 2016.

  • Participants in the US call: Toll Free 866-393-4306
  • Participants Internationally call: +1-734-385-2616
  • Conference ID: 97011227

A replay will be available for 2 days, starting 2 hours after the end of the call, on telephone number +1-404-537-3406 or (US toll-free) 855-859-2056.

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

In addition to reporting financial results in accordance with generally accepted accounting principles (GAAP), Radware uses non-GAAP measures of gross profit, operating income, financial income, net income and earnings per share, which are adjustments from results based on GAAP to exclude stock-based compensation expenses, in accordance with ASC No. 718, amortization of intangible assets, litigation costs and exchange rate differences, net on balance sheet items included in finance income. Such exchange rate differences may vary from period to period due to changes in exchange rates driven by general market conditions or other circumstances outside of the normal course of Radware's operations. Management believes that exclusion of these charges allows comparisons of operating results that are consistent across past, present and future periods. Furthermore, Radware uses a measure called “total deferred revenues” which is defined as the sum of short and long term deferred revenues on the balance sheet and uncollected billed amounts that were offset against trade receivables, and are not presented on the balance sheet. Radware’s management believes the non-GAAP financial information provided in this release is useful to investors for the purpose of understanding and assessing Radware’s ongoing operations. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of the non-GAAP financial measures discussed in this press release, to the most directly comparable GAAP financial measures, is included with the financial information contained in this press release. Management uses both GAAP and non-GAAP information in evaluating and operating business internally and, as such, has determined that it is important to provide this information to investors.

Safe Harbor Statement

This press release may contain statements concerning Radware’s future prospects that are “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. Statements preceded by, followed by, or that otherwise include the words "believes", "expects", "anticipates", "intends", "estimates", "plans", and similar expressions or future or conditional verbs such as "will", "should", "would", "may" and "could" are generally forward-looking in nature and not historical facts. 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; changes in the competitive landscape; inability to realize our investment objectives; timely availability and customer acceptance of our new and existing products; risks and uncertainties relating to acquisitions; 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; Competition in the market for Application Delivery and Network Security solutions and our industry in general is intense; and other factors and risks on 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, reference is made to Radware’s Annual Report on Form 20-F which is on file 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 application delivery and cyber security solutions for virtual, cloud and software defined data centers. Its award-winning solutions portfolio delivers service level assurance for business-critical applications, while maximizing IT efficiency. Radware’s solutions empower more than 10,000 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

©2016 Radware Ltd. All rights reserved. Radware and all other Radware product and service names are registered trademarks or trademarks of Radware in the U.S. and other countries. All other trademarks and names are property of their respective owners.

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