Fourth Quarter 2018 Results and Financial Highlights
- Record Revenues of $64 Million, up 9% from the fourth quarter of 2017
- Non-GAAP operating income and margin of $9.8Million and 15%, respectively
- Non-GAAP EPS of $0.24 GAAP EPS of $0.16
Full Year 2018 Results and Financial Highlights
- Record Revenues of $234 Million, up 11% from 2017
- Non-GAAP operating income and margin of $22 Million and 9.2%, respectively
- Non-GAAP EPS of $0.55; GAAP EPS of $0.25
- Operating cash flow of $49 million
TEL AVIV, Israel, Feb. 06, 2019 (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, 2018.
“We are pleased with our strong results for the fourth quarter, concluding a strong year that exceeded our expectations. Revenue growth, profitability and cash generation have all markedly increased from 2017. We continued to execute our strategy, focusing on datacenter and cloud, and delivered on our goals. Our portfolio is the widest and most advanced it has ever been, reflecting innovative technology leadership and a close alignment to customer needs, especially given our focus on subscriptions and cloud security solutions. We look forward to the opportunities ahead of us in 2019 and beyond,” said Roy Zisapel, Radware President & CEO.
Financial Highlights for the Fourth Quarter of 2018
Revenues for the fourth quarter of 2018 totaled $63.8 million, up 9% from revenues of $58.5 million for the fourth quarter of 2017:
- Revenues in the Americas region were $27.7 million for the fourth quarter of 2018, down 4% compared to revenues of $28.7 million in the fourth quarter of 2017.
- Revenues in the EMEA region were $23.2 million for the fourth quarter of 2018, up 53% from revenues of $15.1 million in the fourth quarter of 2017.
- Revenues in the APAC region were $12.9 million for the fourth quarter of 2018, down 12% from revenues of $14.6 million in the fourth quarter of 2017.
Net profit on a GAAP basis for the fourth quarter of 2018 was $7.9 million or $0.16 per diluted share, compared with net income of $2.1 million or $0.05 per diluted share for the fourth quarter of 2017.
Non-GAAP net income for the fourth quarter of 2018 was $11.4 million or $0.24 per diluted share, compared with non- GAAP net income of $3.9 million or $0.09 per diluted share for the fourth quarter of 2017.
Financial Highlights for the Full Year of 2018
Revenues for the full year of 2018 totaled $234.4 million, up 11% from revenues of $211.4 million for the full year of 2017:
- Revenues in the Americas region were $102.5 million for the full year of 2018, up 5% from revenues of $97.9 in the full year of 2017.
- Revenues in the EMEA region were $75.8 million for the full year of 2018, up 34% from revenues of $56.6 in the full year of 2017.
- Revenues in the APAC region were $56.2 million for the full year of 2018, down 1% from revenues of $56.9 in the full year of 2017.
Net profit on a GAAP basis for the full year of 2018 was $11.7 million or $0.25 per share, compared with net loss of ($7.5) million or ($0.17) per diluted share for the full year of 2017.
Non-GAAP net income for the full year of 2017 was $26.0 million or $0.55 per diluted share, compared with non-GAAP net income of $7.6 million or $0.17 per diluted share for the full year of 2017.
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 December 31, 2018, the Company had cash, cash equivalents, short-term and long-term bank deposits and marketable securities of $401.1 million, up from $382.2 million as of the end of September 30, 2018 and $344.3 million as of December 31st, 2017. Cash generated from operations in the fourth quarter of 2018 totaled $25.7 million. Cash generated from operations in the full year of 2018 totaled $49.3 million. Cash used for share repurchase in the fourth quarter and full year of 2018 totaled $4.3 million.
Conference Call
Radware management will host a call on Wednesday, February 6, 2019 at 8:30 am ET to discuss its fourth quarter and full year 2018 results and the company’s outlook for the first quarter of 2019.
Participants in the US call: Toll Free 833-241-4257
Participants Internationally call: +1-647-689-4208
Conference ID: 4794777
A replay will be available for 2 days, starting 2 hours after the end of the call, on telephone number +1-416-621-4642 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
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; 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 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 more than 12,500 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.
©2019 Radware Ltd. All rights reserved. The 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
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) | ||||||||||
| December 31, | December 31, | |||||||||
| 2018 | 2017 | |||||||||
| (Unaudited) | (Unaudited) | |||||||||
| Assets | ||||||||||
| Current assets | ||||||||||
| Cash and cash equivalents | 45,203 | 65,237 | ||||||||
| Available-for-sale marketable securities | 15,742 | 42,573 | ||||||||
| Short-term bank deposits | 255,454 | 93,151 | ||||||||
| Trade receivables, net | 17,166 | 16,150 | ||||||||
| Other receivables and prepaid expenses | 6,667 | 12,252 | ||||||||
| Inventories | 18,401 | 18,772 | ||||||||
| 358,633 | 248,135 | |||||||||
| Long-term investments | ||||||||||
| Available-for-sale marketable securities | 84,669 | 54,427 | ||||||||
| Long-term bank deposits | 0 | 88,911 | ||||||||
| Severance pay funds | 2,973 | 3,251 | ||||||||
| 87,642 | 146,589 | |||||||||
| Property and equipment, net | 23,677 | 23,642 | ||||||||
| Intangible assets, net | 9,467 | 10,415 | ||||||||
| Other long-term assets | 20,724 | 8,133 | ||||||||
| Goodwill | 32,174 | 32,174 | ||||||||
| Total assets | 532,317 | 469,088 | ||||||||
| Liabilities and shareholders’ equity | ||||||||||
| Current Liabilities | ||||||||||
| Trade payables | 4,483 | 5,367 | ||||||||
| Deferred revenues | 83,955 | 69,829 | ||||||||
| Other payables and accrued expenses | 29,918 | 32,174 | ||||||||
| 118,356 | 107,370 | |||||||||
| Long-term liabilities | ||||||||||
| Deferred revenues | 43,796 | 43,482 | ||||||||
| Other long-term liabilities | 6,208 | 2,880 | ||||||||
| 50,004 | 46,362 | |||||||||
| Shareholders’ equity | ||||||||||
| Share capital | 693 | 673 | ||||||||
| Additional paid-in capital | 383,536 | 349,250 | ||||||||
| Accumulated other comprehensive loss, net of tax | (1,110) | (443) | ||||||||
| Treasury stock, at cost | (120,717) | (116,442) | ||||||||
| Retained earnings | 101,555 | 82,318 | ||||||||
| Total shareholders’ equity | 363,957 | 315,356 | ||||||||
| Total liabilities and shareholders’ equity | 532,317 | 469,088 | ||||||||
| Radware Ltd. | ||||||||||||
| Condensed Consolidated Statements of Income (loss) | ||||||||||||
| (U.S Dollars in thousands, except share and per share data) | ||||||||||||
| For the three months ended | For the year ended | |||||||||||
| December 31, | December 31, | |||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||
| Revenues | 63,817 | 58,454 | 234,404 | 211,369 | ||||||||
| Cost of revenues | 11,117 | 11,060 | 41,675 | 39,616 | ||||||||
| Gross profit | 52,700 | 47,394 | 192,729 | 171,753 | ||||||||
| Operating expenses, net: | ||||||||||||
| Research and development, net | 13,945 | 15,072 | 57,674 | 59,003 | ||||||||
| Selling and marketing | 28,137 | 29,166 | 111,386 | 108,744 | ||||||||
| General and administrative | 4,294 | 4,265 | 16,145 | 17,577 | ||||||||
| Other income | 0 | (6,900) | 0 | (6,900) | ||||||||
| Total operating expenses, net | 46,376 | 41,603 | 185,205 | 178,424 | ||||||||
| Operating income (loss) | 6,324 | 5,791 | 7,524 | (6,671) | ||||||||
| Financial income, net | 2,397 | 935 | 7,274 | 4,830 | ||||||||
| Income (loss) before taxes on income | 8,721 | 6,726 | 14,798 | (1,841) | ||||||||
| Taxes on income | 778 | 4,605 | 3,063 | 5,652 | ||||||||
| Net income (loss) | 7,943 | 2,121 | 11,735 | (7,493) | ||||||||
| Basic net income (loss) per share | 0.17 | 0.05 | 0.26 | (0.17) | ||||||||
| Weighted average number of shares used to compute basic net earnings (loss) per share | 46,357,278 | 43,859,400 | 45,289,296 | 43,475,844 | ||||||||
| Diluted net earnings (loss) per share | 0.16 | 0.05 | 0.25 | (0.17) | ||||||||
| Weighted average number of shares used to compute diluted net earnings (loss) per share | 48,279,751 | 45,728,792 | 47,691,868 | 43,475,844 | ||||||||
| 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, | |||||||
| 2018 | 2017 | 2018 | 2017 | |||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||
| GAAP gross profit | 52,700 | 47,394 | 192,729 | 171,753 | ||||
| Stock-based compensation | 50 | 60 | 221 | 241 | ||||
| Amortization of intangible assets | 212 | 86 | 866 | 1,137 | ||||
| Acquisition costs | – | 550 | – | 550 | ||||
| Non-GAAP gross profit | 52,962 | 48,090 | 193,816 | 173,681 | ||||
| GAAP research and development, net | 13,945 | 15,072 | 57,674 | 59,003 | ||||
| Stock-based compensation | 694 | 984 | 3,123 | 3,867 | ||||
| Acquisition costs | 20 | 204 | 20 | 204 | ||||
| Non-GAAP Research and development, net | 13,231 | 13,884 | 54,531 | 54,932 | ||||
| GAAP selling and marketing | 28,137 | 29,166 | 111,386 | 108,744 | ||||
| Stock-based compensation | 1,727 | 1,717 | 7,071 | 6,894 | ||||
| Amortization of intangible assets | 21 | 24 | 82 | 94 | ||||
| Non-GAAP selling and marketing | 26,389 | 27,425 | 104,233 | 101,756 | ||||
| GAAP general and administrative | 4,294 | 4,265 | 16,145 | 17,577 | ||||
| Stock-based compensation | 775 | 456 | 2,087 | 2,029 | ||||
| Acquisition costs | (222) | – | (222) | 340 | ||||
| Litigation costs | 202 | 76 | 829 | 2,052 | ||||
| Non-GAAP general and administrative | 3,539 | 3,733 | 13,451 | 13,156 | ||||
| GAAP other income | – | (6,900) | – | (6,900) | ||||
| Court verdict | – | (6,900) | – | (6,900) | ||||
| Non-GAAP other income | – | – | – | – | ||||
| GAAP total operating expenses, net | 46,376 | 41,603 | 185,205 | 178,424 | ||||
| Stock-based compensation | 3,196 | 3,157 | 12,281 | 12,790 | ||||
| Acquisition costs | (202) | 204 | (202) | 544 | ||||
| Amortization of intangible assets | 21 | 24 | 82 | 94 | ||||
| Litigation costs | 202 | 76 | 829 | 2,052 | ||||
| Court verdict | – | (6,900) | – | (6,900) | ||||
| Non-GAAP total operating expenses, net | 43,159 | 45,042 | 172,215 | 169,844 | ||||
| GAAP operating income (loss) | 6,324 | 5,791 | 7,524 | (6,671) | ||||
| Stock-based compensation | 3,246 | 3,217 | 12,502 | 13,031 | ||||
| Acquisition costs | (202) | 754 | (202) | 1,094 | ||||
| Amortization of intangible assets | 233 | 110 | 948 | 1,231 | ||||
| Litigation costs | 202 | 76 | 829 | 2,052 | ||||
| Court verdict | – | (6,900) | – | (6,900) | ||||
| Non-GAAP operating income (loss) | 9,803 | 3,048 | 21,601 | 3,837 | ||||
| GAAP financial income, net | 2,397 | 935 | 7,274 | 4,830 | ||||
| Exchange rate differences, net on balance sheet items included in financial income, net | (59) | 558 | 196 | 635 | ||||
| Non-GAAP financial income, net | 2,338 | 1,493 | 7,470 | 5,465 | ||||
| GAAP income (loss) before taxes on income | 8,721 | 6,726 | 14,798 | (1,841) | ||||
| Stock-based compensation | 3,246 | 3,217 | 12,502 | 13,031 | ||||
| Acquisition costs | (202) | 754 | (202) | 1,094 | ||||
| Amortization of intangible assets | 233 | 110 | 948 | 1,231 | ||||
| Litigation costs | 202 | 76 | 829 | 2,052 | ||||
| Court verdict | – | (6,900) | – | (6,900) | ||||
| Exchange rate differences, net on balance sheet items included in financial income, net | (59) | 558 | 196 | 635 | ||||
| Non-GAAP income before taxes on income | 12,141 | 4,541 | 29,071 | 9,302 | ||||
| GAAP taxes on income | 778 | 4,605 | 3,063 | 5,652 | ||||
| Change in the federal rate | – | 3,249 | – | 3,249 | ||||
| Court verdict | – | 724 | – | 724 | ||||
| Non-GAAP taxes on income | 778 | 8,578 | 3,063 | 9,625 | ||||
| GAAP net income (loss) | 7,943 | 2,121 | 11,735 | (7,493) | ||||
| Stock-based compensation | 3,246 | 3,217 | 12,502 | 13,031 | ||||
| Acquisition costs | (202) | 754 | (202) | 1,094 | ||||
| Amortization of intangible assets | 233 | 110 | 948 | 1,231 | ||||
| Litigation costs | 202 | 76 | 829 | 2,052 | ||||
| Exchange rate differences, net on balance sheet items included in financial income, net | (59) | 558 | 196 | 635 | ||||
| Change in the federal rate | – | 3,249 | – | 3,249 | ||||
| Court verdict | – | (6,176) | – | (6,176) | ||||
| Non-GAAP net income | 11,363 | 3,909 | 26,008 | 7,623 | ||||
| GAAP Net earnings (loss) per diluted share | 0.16 | 0.05 | 0.25 | (0.17) | ||||
| Stock-based compensation | 0.07 | 0.07 | 0.26 | 0.30 | ||||
| Acquisition costs | (0.00) | 0.02 | (0.00) | 0.02 | ||||
| Amortization of intangible assets | 0.00 | 0.00 | 0.02 | 0.03 | ||||
| Litigation costs | 0.00 | 0.00 | 0.02 | 0.05 | ||||
| Exchange rate differences, net on balance sheet items included in financial income, net | (0.00) | 0.01 | 0.00 | 0.01 | ||||
| Change in the federal rate | 0.00 | 0.08 | 0.00 | 0.07 | ||||
| Court verdict | 0.00 | (0.14) | 0.00 | (0.14) | ||||
| Non-GAAP Net earnings per diluted share | 0.24 | 0.09 | 0.55 | 0.17 | ||||
| Weighted average number of shares used to compute Non-GAAP diluted net earnings per share | 48,279,751 | 45,728,792 | 47,691,868 | 44,756,732 | ||||
| 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, | ||||||
| 2018 | 2017 | 2018 | 2017 | ||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||
| Cash flow from operating activities: | |||||||
| Net income (loss) | 7,943 | 2,121 | 11,735 | (7,493) | |||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
| Depreciation and amortization | 2,402 | 2,567 | 9,782 | 11,234 | |||
| Stock based compensation | 3,246 | 3,217 | 12,502 | 13,031 | |||
| Loss (gain) from sale of available-for-sale marketable securities | 0 | (18) | 0 | (18) | |||
| Amortization of premium, accretion of discounts and accrued interest on available-for- sale marketable securities, net | 513 | 465 | 1,395 | 1,546 | |||
| Accrued interest on bank deposits | (962) | (586) | (2,391) | 226 | |||
| Increase (decrease) in accrued severance pay, net | 189 | (430) | 323 | (210) | |||
| Decrease (increase) in trade receivables, net | 1,325 | (3,836) | (1,169) | 3,390 | |||
| Decrease (increase) in other receivables and prepaid expenses and other long-term assets | (1,359) | (8,258) | 3,133 | (7,879) | |||
| Decrease (increase) in inventories | 2,062 | (48) | 371 | (1,658) | |||
| Increase (decrease) in trade payables | (941) | 817 | (884) | (734) | |||
| Increase in deferred revenues | 10,048 | 11,119 | 14,440 | 28,781 | |||
| Increase (decrease) in other payables and accrued expenses | 1,231 | 826 | 14 | (8,753) | |||
| Net cash provided by operating activities | 25,697 | 7,956 | 49,251 | 31,463 | |||
| Cash flows from investing activities: | |||||||
| Purchase of property and equipment | (3,998) | (1,613) | (8,869) | (7,210) | |||
| Proceeds from (investment in) other long-term assets, net | 0 | (18) | 40 | (6) | |||
| Investment in bank deposits, net | (29,935) | 0 | (71,002) | (37,200) | |||
| Proceeds from (investment in) sale, redemption of and purchase of available-for-sale marketable securities, net | (2,765) | (2,119) | (5,672) | (3,657) | |||
| Payment for acquisition of subsidiary, net of cash acquired | 0 | 0 | 0 | (8,269) | |||
| Net cash used in investing activities | (36,698) | (3,750) | (85,503) | (56,342) | |||
| Cash flows from financing activities: | |||||||
| Proceeds from exercise of stock options | 2,223 | 7,501 | 21,802 | 10,890 | |||
| Repayment of contingent consideration | (1,310) | 0 | (1,310) | 0 | |||
| Repurchase of shares | (4,274) | 0 | (4,274) | (413) | |||
| Net cash provided by financing activities | (3,361) | 7,501 | 16,218 | 10,477 | |||
| Increase (decrease) in cash and cash equivalents | (14,362) | 11,707 | (20,034) | (14,402) | |||
| Cash and cash equivalents at the beginning of the period | 59,565 | 53,530 | 65,237 | 79,639 | |||
| Cash and cash equivalents at the end of the period | 45,203 | 65,237 | 45,203 | 65,237 | |||