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Radware Announces Second Quarter 2017 Earnings

Second Quarter 2017 Results and Financial Highlights

  • Revenues of $51 Million, up 3% from the second quarter of 2016 
      
  • Non-GAAP EPS of $0.03; GAAP EPS of ($0.09) 
      
  • Operating cash flow for the last twelve months of $40 million

TEL AVIV, Israel, Aug. 02, 2017 (GLOBE NEWSWIRE) -- Radware® (NASDAQ:RDWR), a leading provider of cyber security and application delivery solutions securing the digital experience for applications in virtual, cloud and software defined data centers, today announced its consolidated financial results for the quarter ended June 30, 2017.

“We are pleased with our results for the second quarter of 2017, in which we continued to execute on our strategy. The business environment is solid and we are adding new opportunities to the pipeline at an accelerated pace,” said Roy Zisapel, Radware President & CEO. “Our solution offering is industry-leading in its ability to meet the challenges of the increasingly complex delivery environment and constantly evolving cyber threats. The digital transformation and the trend towards cloud migration provide us with multiple opportunities, and we are confident in our ability to capture them and deliver long-term growth for Radware.”

Financial Highlights for the Second Quarter of 2017

Revenues for the second quarter of 2017 totaled $51.0 million, up 3% from revenues of $49.6 million for the second quarter of 2016.

Revenues in the Americas region were $24.3 million for the second quarter of 2017, up 10% from revenues of $22.1 million in the second quarter of 2016. Revenues in the EMEA region were $13.1 million for the second quarter of 2017, down 7% from revenues of $14.0 million in the second quarter of 2016. Revenues in the APAC region were $13.6 million for the second quarter of 2017, up 1% from revenues of $13.5 million in the second quarter of 2016.

Net loss on a GAAP basis for the second quarter of 2017 was ($4.1) million or ($0.09) per diluted share, compared with net loss of ($1.3) million or ($0.03) per diluted share for the second quarter of 2016.

Non-GAAP net income for the second quarter of 2017 was $1.2 million or $0.03 per diluted share, compared with non-GAAP net income of $2.6 million or $0.06 per diluted share for the second quarter of 2016.

Non-GAAP results are calculated excluding the impact of stock-based compensation, exchange rate differences, net on balance sheet items, amortization of intangible assets, acquisition related expenses and patent litigation expense. 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 June 30, 2017 the Company had cash, cash equivalents, short-term and long-term bank deposits and marketable securities of $326 million. Cash generated from operations in the second quarter of 2017 totaled $11.4 million.

Conference Call

Radware management will host a call today, August 2, 2017 at 8:30 am ET to discuss its second quarter 2017 results.

/EIN News/ -- Participants in the US call: Toll Free 866-393-4306

Participants Internationally call: +1-734-385-2616 

Conference ID:  41367020

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, acquisition costs, 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, including costs and difficulties related to integration of acquired businesses; 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 most recent Annual Report on Form 20-F, as amended, 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

©2017 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.

 

Radware Ltd.
Condensed Consolidated Balance Sheets
(U.S. Dollars in thousands)
           
    June 30,   December 31,
    2017    2016 
    (Unaudited)    
Assets        
         
Current assets        
Cash and cash equivalents   50,086     79,639  
Available-for-sale marketable securities   21,350     20,452  
Short-term bank deposits   84,830     125,995  
Trade receivables, net   17,638     19,407  
Other receivables and prepaid expenses   3,447     4,159  
Inventories   19,455     17,114  
    196,806     266,766  
         
Long-term investments        
Available-for-sale marketable securities   75,478     74,967  
Long-term bank deposits   93,851     19,092  
Severance pay funds   2,830     2,597  
    172,159     96,656  
         
         
Property and equipment, net   25,711     26,354  
Intangible assets, net   10,922     2,399  
Other long-term assets   8,072     8,092  
Goodwill   32,174     30,069  
         
Total assets   445,844     430,336  
         
         
Liabilities and shareholders' equity        
         
Current Liabilities        
Trade payables   5,967     5,971  
Deferred revenues   63,183     53,061  
Other payables and accrued expenses   25,187     26,232  
    94,337     85,264  
         
Long-term liabilities        
Deferred revenues   36,296     31,100  
Other long-term liabilities   14,490     14,209  
    50,786     45,309  
         
Shareholders' equity        
Share capital   665     663  
Additional paid-in capital   334,418     325,338  
Accumulated other comprehensive loss, net of tax   (7 )   (20 )
Treasury stock, at cost   (116,029 )   (116,029 )
Retained earnings   81,674     89,811  
Total shareholders' equity   300,721     299,763  
         
Total liabilities and shareholders' equity   445,844     430,336  
         


Radware Ltd.
Condensed Consolidated Statements of Loss
(U.S Dollars in thousands, except share and per share data)
         
  Three months ended Six months ended
  June 30, June 30,
  2017  2016  2017  2016 
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
         
Revenues   50,956     49,585     99,868     98,010  
Cost of revenues   9,634     8,887     18,628     17,541  
Gross profit   41,322     40,698     81,240     80,469  
         
Operating expenses:        
Research and development, net   15,013     13,001     29,253     26,425  
Selling and marketing   26,410     25,865     52,389     50,777  
General and administrative   4,380     3,893     9,160     9,662  
Total operating expenses   45,803     42,759     90,802     86,864  
         
Operating loss   (4,481 )   (2,061 )   (9,562 )   (6,395 )
Financial income, net   640     1,232     1,747     3,172  
Loss before taxes on income   (3,841 )   (829 )   (7,815 )   (3,223 )
Taxes on income   (218 )   (498 )   (322 )   (856 )
Net loss   (4,059 )   (1,327 )   (8,137 )   (4,079 )
         
Basic net loss per share   (0.09 )   (0.03 )   (0.19 )   (0.09 )
         
Weighted average number of shares used to compute basic net loss per share 43,821,006   43,944,924   43,282,607   44,206,677  
         
Diluted net loss per share   (0.09 )   (0.03 )   (0.19 )   (0.09 )
         
Weighted average number of shares used to compute diluted net loss per share 43,821,006   43,944,924   43,282,607   44,206,677  
         
         
         
Radware Ltd.
Reconciliation of GAAP to Non-GAAP Financial Information
(U.S Dollars in thousands, except share and per share data)
         
  Three Months Ended Six Months Ended
  June 30, June 30,
  2017  2016  2017  2016 
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
GAAP gross profit   41,322     40,698     81,240     80,469  
Stock-based compensation   61     39     116     81  
Amortization of intangible assets   419     254     672     507  
Non-GAAP gross profit   41,802     40,991     82,028     81,057  
         
GAAP research and development, net   15,013     13,001     29,253     26,425  
Stock-based compensation   1,028     667     1,926     1,450  
Non-GAAP Research and development, net   13,985     12,334     27,327     24,975  
         
GAAP selling and marketing   26,410     25,865     52,389     50,777  
Stock-based compensation   1,875     1,394     3,499     2,662  
Amortization of intangible assets   24     26     47     52  
Non-GAAP selling and marketing   24,511     24,445     48,843     48,063  
         
GAAP general and administrative   4,380     3,893     9,160     9,662  
Stock-based compensation   583     644     1,003     1,428  
Acquisition costs  -     -      340    -   
Litigation costs   600     433     1,619     2,597  
Non-GAAP general and administrative   3,197     2,816     6,198     5,637  
         
GAAP total operating expenses   45,803     42,759     90,802     86,864  
Stock-based compensation   3,486     2,705     6,428     5,540  
Acquisition costs  -     -      340    -   
Amortization of intangible assets   24     26     47     52  
Litigation costs   600     433     1,619     2,597  
Non-GAAP total operating expenses   41,693     39,595     82,368     78,675  
         
GAAP operating loss   (4,481 )   (2,061 )   (9,562 )   (6,395 )
Stock-based compensation   3,547     2,744     6,544     5,621  
Acquisition costs  -     -      340    -   
Amortization of intangible assets   443     280     719     559  
Litigation costs   600     433     1,619     2,597  
Non-GAAP operating income (loss)   109     1,396     (340 )   2,382  
         
GAAP finance income   640     1,232     1,747     3,172  
Exchange rate differences, net on balance sheet items included in financial income   659     460     806     157  
Non-GAAP finance income   1,299     1,692     2,553     3,329  
         
GAAP loss before taxes on income   (3,841 )   (829 )   (7,815 )   (3,223 )
Stock-based compensation   3,547     2,744     6,544     5,621  
Acquisition costs  -     -      340    -   
Amortization of intangible assets   443     280     719     559  
Litigation costs   600     433     1,619     2,597  
Exchange rate differences, net on balance sheet items included in financial income   659     460     806     157  
Non-GAAP income before taxes on income   1,408     3,088     2,213     5,711  
         
GAAP net loss   (4,059 )   (1,327 )   (8,137 )   (4,079 )
Stock-based compensation   3,547     2,744     6,544     5,621  
Acquisition costs  -     -      340    -   
Amortization of intangible assets   443     280     719     559  
Litigation costs   600     433     1,619     2,597  
Exchange rate differences, net on balance sheet items included in financial income   659     460     806     157  
Non GAAP net income   1,190     2,590     1,891     4,855  
         
GAAP Net loss per diluted share   (0.09 )   (0.03 )   (0.19 )   (0.09 )
Stock-based compensation   0.08     0.06     0.15     0.13  
Acquisition costs 0.00
  0.00     0.01   0.00  
Amortization of intangible assets   0.01     0.01     0.02     0.01  
Litigation costs   0.01     0.01     0.04     0.06  
Exchange rate differences, net on balance sheet items included in financial income   0.02     0.01     0.01   0.00  
Non GAAP Net income per diluted share   0.03     0.06     0.04     0.11  
         
         
Weighted average number of shares used to compute Non-GAAP diluted net earnings per share   45,054,172   44,101,539   44,279,284   44,354,630  
         

 

 

Radware Ltd.
Condensed Consolidated Statements of Cash Flow
(U.S. Dollars in thousands)
                 
    Three Months Ended   Six Months Ended
    June 30,   June 30,
    2017    2016    2017    2016 
                 
Cash flow from operating activities:                
                 
Net loss   (4,059 )   (1,327 )   (8,137 )   (4,079 )
Adjustments to reconcile net loss to net cash provided by operating activities:                
Depreciation and amortization   2,987     2,561     5,806     5,095  
Stock based compensation   3,547     2,744     6,544     5,621  
Gain from sale of available-for-sale marketable securities   -     (549 )   -     (1,126 )
Amortization of premium, accretion of discounts and accrued interest on available-for- sale marketable securities, net   270     514     631     892  
Accrued interest on bank deposits   150     6     1,532     (655 )
Increase in accrued severance pay, net   41     19     176     341  
Increase in trade receivables, net   3,352     1,848     1,902     353  
Decrease (increase) in other current assets, prepaid expenses and deferred income taxes, net   (196 )   (106 )   838     (410 )
Increase (decrease) in inventories   (1,063 )   395     (2,341 )   141  
Decrease (increase) in trade payables   1,574     1,010     (136 )   (3,168 )
Increase (decrease) in deferred revenues   8,135     (73 )   14,949     8,594  
Increase (decrease) in other payables and accrued expenses   (3,374 )   679     (4,096 )   4,931  
Excess tax benefit from stock-based compensation   -     74     -     74  
Net cash provided by operating activities   11,364     7,795     17,668     16,604  
                 
Cash flows from investing activities:                
                 
Purchase of property and equipment   (2,475 )   (2,881 )   (4,357 )   (5,510 )
Proceeds from (investment in) other long-term assets, net   (31 )   (16 )   16     3  
Investment in bank deposits, net   (1,219 )   (9,952 )   (35,126 )   (14,388 )
Proceeds from sale, redemption of and purchase of available-for-sale marketable securities ,net   (5,910 )   155     (2,023 )   3,261  
Payment for acquisition of subsidiary, net of cash acquired   -     -     (8,269 )   -  
Net cash used in investing activities   (9,635 )   (12,694 )   (49,759 )   (16,634 )
                 
Cash flows from financing activities:                
                 
Proceeds from exercise of stock options   1,228     -     2,538     -  
Excess tax benefit from stock-based compensation   -     (74 )   -     (74 )
Repurchase of shares   -     (4,932 )   -     (11,712 )
Net cash provided (used in) financing activities   1,228     (5,006 )   2,538     (11,786 )
                 
Increase (decrease) in cash and cash equivalents   2,957     (9,905 )   (29,553 )   (11,816 )
Cash and cash equivalents at the beginning of the period   47,129     31,833     79,639     33,744  
Cash and cash equivalents at the end of the period   50,086     21,928     50,086     21,928  
                 

 

CONTACTS

Investor Relations:
Anat Earon-Heilborn
+972 723917548
ir@radware.com

Media Contacts:
Deborah Szajngarten
Radware
201-785-3206
deborah.szajngarten@radware.com

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