Third Quarter 2017 Results and Financial Highlights

• Revenues of $53 Million, up 13% from the third quarter of 2016
• Non-GAAP EPS of $0.04; GAAP EPS of ($0.03) 
• Operating cash flow for the last twelve months of $47 million

TEL AVIV, Israel, Nov. 01, 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 September 30, 2017.

“We are very pleased with our performance and results for the third quarter, which came in at the high end of our expectations. We enjoyed strong bookings across product lines and geographies, with particularly strong growth in our cloud business,” said Roy Zisapel, Radware President & CEO. “With our leading technology, comprehensive offering and flexible deployment models, we are well positioned to address our customers’ most pressing security issues. We are committed to consistent execution of our strategy, and look forward to continue benefiting from positive market trends and deliver long-term growth for Radware.” 

Financial Highlights for the Third Quarter of 2017

Revenues for the third quarter of 2017 totaled $53.0 million, up 13% from revenues of $46.9 million for the third quarter of 2016.

Revenues in the Americas region were $26.6 million for the third quarter of 2017, up 33% from revenues of $20.0 million in the third quarter of 2016. Revenues in the EMEA region were $13.8 million for the third quarter of 2017, up 13% from revenues of $12.2 million in the third quarter of 2016. Revenues in the APAC region were $12.7 million for the third quarter of 2017, down 14% from revenues of $14.7 million in the third quarter of 2016.

Net loss on a GAAP basis for the third quarter of 2017 was ($1.5) million or ($0.03) per diluted share, compared with net loss of ($2.4) million or ($0.06) per diluted share for the third quarter of 2016.

Non-GAAP net income for the third quarter of 2017 was $1.8 million or $0.04 per diluted share, compared with non- GAAP net income of $1.6 million or $0.04 per diluted share for the third quarter of 2016.

Non-GAAP results are calculated excluding the impact of stock-based compensation, exchange rate differences, net on balance sheet items included in financial income, amortization of intangible assets, acquisition costs and litigation costs. 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, 2017, the Company had cash, cash equivalents, short-term and long-term bank deposits and marketable securities of $330.9 million. Cash generated from operations in the third quarter of 2017 totaled $5.8 million.

Conference Call

Radware management will host a call today, November 1, 2017 at 8:30 am ET to discuss its third quarter 2017 results.

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

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

Conference ID:  9186337

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.  

CONTACTS

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

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

Radware Ltd.
Condensed Consolidated Balance Sheets
(U.S. Dollars in thousands)
		September 30,			December 31,
		2017			2016
		(Unaudited)
Assets
Current assets
Cash and cash equivalents		53,530			79,639
Available-for-sale marketable securities		25,145			20,452
Short-term bank deposits		87,114			125,995
Trade receivables, net		12,314			19,407
Other receivables and prepaid expenses		3,905			4,159
Inventories		18,724			17,114
		200,732			266,766
Long-term investments
Available-for-sale marketable securities		70,717			74,967
Long-term bank deposits		94,361			19,092
Severance pay funds		2,830			2,597
		167,908			96,656
Property and equipment, net		24,487			26,354
Intangible assets, net		10,525			2,399
Other long-term assets		8,084			8,092
Goodwill		32,174			30,069
Total assets		443,910			430,336
Liabilities and shareholders' equity
Current Liabilities
Trade payables		4,552			5,971
Deferred revenues		63,534			53,061
Other payables and accrued expenses		25,107			26,232
		93,193			85,264
Long-term liabilities
Deferred revenues		38,658			31,100
Other long-term liabilities		9,130			14,209
		47,788			45,309
Shareholders' equity
Share capital		666			663
Additional paid-in capital		338,539			325,338
Accumulated other comprehensive loss, net of tax		(31	)		(20		)
Treasury stock, at cost		(116,442	)		(116,029		)
Retained earnings		80,197			89,811
Total shareholders' equity		302,929			299,763
Total liabilities and shareholders' equity		443,910			430,336

Radware Ltd.
Condensed Consolidated Statements of Loss
(U.S Dollars in thousands, except share and per share data)
		Three months ended						Nine months ended
		September 30,						September 30,
		2017			2016			2017			2016
		(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenues		53,047			46,863			152,915			144,873
Cost of revenues		9,928			8,558			28,556			26,099
Gross profit		43,119			38,305			124,359			118,774
Operating expenses:
Research and development, net		14,678			13,072			43,931			39,497
Selling and marketing		27,189			24,853			79,578			75,630
General and administrative		4,152			4,245			13,312			13,907
Total operating expenses		46,019			42,170			136,821			129,034
Operating loss		(2,900	)		(3,865	)		(12,462	)		(10,260	)
Financial income, net		2,148			1,706			3,895			4,878
Loss before taxes on income		(752	)		(2,159	)		(8,567	)		(5,382	)
Taxes on income		(725	)		(288	)		(1,047	)		(1,144	)
Net loss		(1,477	)		(2,447	)		(9,614	)		(6,526	)
Basic net loss per share		(0.03	)		(0.06	)		(0.22	)		(0.15	)
Weighted average number of shares used to compute basic net loss per share		43,951,325			43,752,220			43,347,092			44,053,422
Diluted net loss per share		(0.03	)		(0.06	)		(0.22	)		(0.15	)
Weighted average number of shares used to compute diluted net loss per share		43,951,325			43,752,220			43,347,092			44,053,422

Radware Ltd.
Reconciliation of GAAP to Non-GAAP Financial Information
(U.S Dollars in thousands, except share and per share data)
		Three months ended						Nine months ended
		September 30,						September 30,
		2017			2016			2017			2016
		(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
GAAP gross profit		43,119			38,305			124,359			118,774
	Stock-based compensation	65			47			181			128
	Amortization of intangible assets	379			253			1,051			760
Non-GAAP gross profit		43,563			38,605			125,591			119,662
GAAP research and development, net		14,678			13,072			43,931			39,497
	Stock-based compensation	957			941			2,883			2,391
Non-GAAP Research and development, net		13,721			12,131			41,048			37,106
GAAP selling and marketing		27,189			24,853			79,578			75,630
	Stock-based compensation	1,678			1,256			5,177			3,918
	Amortization of intangible assets	23			27			70			79
Non-GAAP selling and marketing		25,488			23,570			74,331			71,633
GAAP general and administrative		4,152			4,245			13,312			13,907
	Stock-based compensation	570			434			1,573			1,862
	Acquisition costs	-			-			340			-
	Litigation costs	357			889			1,976			3,486
Non-GAAP general and administrative		3,225			2,922			9,423			8,559
GAAP total operating expenses		46,019			42,170			136,821			129,034
	Stock-based compensation	3,205			2,631			9,633			8,171
	Acquisition costs	-			-			340			-
	Amortization of intangible assets	23			27			70			79
	Litigation costs	357			889			1,976			3,486
Non-GAAP total operating expenses		42,434			38,623			124,802			117,298
GAAP operating loss		(2,900	)		(3,865	)		(12,462	)		(10,260	)
	Stock-based compensation	3,270			2,678			9,814			8,299
	Acquisition costs	-			-			340			-
	Amortization of intangible assets	402			280			1,121			839
	Litigation costs	357			889			1,976			3,486
Non-GAAP operating income (loss)		1,129			(18	)		789			2,364
GAAP finance income		2,148			1,706			3,895			4,878
	Exchange rate differences, net on balance sheet items included in financial income	(729	)		176			77			333
Non-GAAP finance income		1,419			1,882			3,972			5,211
GAAP loss before taxes on income		(752	)		(2,159	)		(8,567	)		(5,382	)
	Stock-based compensation	3,270			2,678			9,814			8,299
	Acquisition costs	-			-			340			-
	Amortization of intangible assets	402			280			1,121			839
	Litigation costs	357			889			1,976			3,486
	Exchange rate differences, net on balance sheet items included in financial income	(729	)		176			77			333
Non-GAAP income before taxes on income		2,548			1,864			4,761			7,575
GAAP net loss		(1,477	)		(2,447	)		(9,614	)		(6,526	)
	Stock-based compensation	3,270			2,678			9,814			8,299
	Acquisition costs	-			-			340			-
	Amortization of intangible assets	402			280			1,121			839
	Litigation costs	357			889			1,976			3,486
	Exchange rate differences, net on balance sheet items included in financial income	(729	)		176			77			333
Non GAAP net income		1,823			1,576			3,714			6,431
GAAP Net loss per diluted share		(0.03	)		(0.06	)		(0.22	)		(0.15	)
	Stock-based compensation	0.07			0.06			0.22			0.19
	Acquisition costs	0.00			0.00			0.01			0.00
	Amortization of intangible assets	0.01			0.01			0.03			0.02
	Litigation costs	0.01			0.02			0.04			0.08
	Exchange rate differences, net on balance sheet items included in financial income	(0.02	)		0.00			0.00			0.01
Non GAAP Net income per diluted share		0.04			0.04			0.08			0.15
Weighted average number of shares used to compute non-GAAP diluted net earnings per share		45,210,495			44,077,078			44,431,570			44,260,343

Radware Ltd.
Condensed Consolidated Statements of Cash Flow
(U.S. Dollars in thousands)
		Three months ended										Nine months ended
		September 30,										September 30,
		2017					2016					2017						2016
		(Unaudited)					(Unaudited)					(Unaudited)						(Unaudited)
Cash flow from operating activities:
Net loss		(1,477		)			(2,447		)			(9,614		)				(6,526		)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		2,861					2,614					8,667						7,709
Stock based compensation		3,270					2,678					9,814						8,299
Gain from sale of available-for-sale marketable securities		-					(651		)			-						(1,778		)
Amortization of premium, accretion of discounts and accrued interest on available-for- sale marketable securities, net		450					385					1,081						1,277
Accrued interest on bank deposits		(720		)			201					812						(455		)
Increase (decrease) in accrued severance pay, net		44					(51		)			220						290
Increase in trade receivables, net		5,324					4,711					7,226						5,064
Decrease (increase) in other current assets, prepaid expenses and deferred income taxes, net		(459		)			149					379						(260		)
Increase (decrease) in inventories		731					(631		)			(1,610		)				(490		)
Increase in trade payables		(1,415		)			(1,036		)			(1,551		)				(4,204		)
Increase (decrease) in deferred revenues		2,713					(6,773		)			17,662						1,821
Increase (decrease) in other payables and accrued expenses		(5,483		)			(421		)			(9,579		)				4,512
Excess tax benefit from stock-based compensation		-					-					-						74
Net cash provided by (used in) operating activities		5,839					(1,272		)			23,507						15,333
Cash flows from investing activities:
Purchase of property and equipment		(1,240		)			(2,561		)			(5,597		)				(8,071		)
Proceeds from (investment in) other long-term assets, net		(4		)			(3		)			12						-
Proceeds from (investment in) bank deposits, net		(2,074		)			16,097					(37,200		)				1,708
Proceeds from (investment in) sale, redemption of and purchase of available-for-sale marketable securities ,net			485					4,339					(1,538	)					7,600
Payment for acquisition of subsidiary, net of cash acquired		-					-					(8,269		)				-
Net cash provided (used in) in investing activities		(2,833		)			17,872					(52,592		)				1,237
Cash flows from financing activities:
Proceeds from exercise of stock options		851					330					3,389						330
Excess tax benefit from stock-based compensation		-					-					-						(74		)
Repurchase of shares		(413		)			-					(413		)				(11,712		)
Net cash provided by (used in) financing activities		438					330					2,976						(11,456		)
Increase (decrease) in cash and cash equivalents		3,444					16,930					(26,109		)				5,114
Cash and cash equivalents at the beginning of the period		50,086					21,928					79,639						33,744
Cash and cash equivalents at the end of the period		53,530					38,858					53,530						38,858

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