News Press Releases

Radware Ltd. Announces Second Quarter 2016 Earnings

RDWR | July 26, 2016

2016 Second Quarter Highlights

* Revenues of $49.6 Million
* Non-GAAP EPS of $0.06
* Non-GAAP gross margin of 82.7%
* Repurchase of shares in a total amount of $4.9 Million

TEL AVIV, ISRAEL, July 26, 2016 (GLOBE NEWSWIRE) -- 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 second quarter ended June 30, 2016.

“Despite challenging market conditions this year, we have made solid progress this past quarter with our subscription booking and revenues,” said Roy Zisapel, Radware President & CEO. “We are starting to bear the fruit of our technological investments with the launch of our new Cloud WAF, the expansions of our DDoS Scrubbing services and our technological achievements in ADC with NFV. Their availability in the market should help allow us to resume revenues growth in the second half of 2016.”

Financial Highlights for the second quarter of 2016

Revenues for the second quarter of 2016 totaled $49.6 million, representing a decrease of 11% compared with revenues of $56.0 million for the second quarter of 2015, and an increase of 2% compared with revenues of $48.4 million for the first quarter of 2016.

Net loss on a GAAP basis for the second quarter of 2016 was $1.3 million or ($0.03) per share, compared with net income of $7.2 million or $0.15 per diluted share for the second quarter of 2015 and compared with net loss of $2.8 million or ($0.06) per diluted share for the first quarter of 2016.

Excluding the impact of the patent litigation expense, stock-based compensation, exchange rate differences, net on balance sheet items and amortization of intangible assets, non-GAAP net income was $2.6 million or $0.06 per diluted share, compared with non-GAAP net income of $10.8 million or $0.23 per diluted share for the second quarter of 2015 and compared with non-GAAP net income of $2.3 million or $0.05 per diluted share for the first quarter of 2016.

As of June 30, 2016 the Company had cash, cash equivalents, short-term and long-term bank deposits and marketable securities of $314.8 million.

Cash generated from operations in the second quarter of 2016 totaled $7.8 million.

During the second quarter we repurchased our shares in a total amount of $4.9 million.

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.

During the second quarter of 2016, Radware released the following significant announcements:

Product:

Customers:

Financial

Conference Call

Company management will host a quarterly investor conference call at 8:45am ET on July 26, 2016. The call will focus on financial results for the quarter ending June 30, 2016 and other matters related to the Company’s business.

The conference call will be webcast on July 26, 2016 at 8:45am ET in the “listen only” mode via the Internet at: http://www.radware.com/IR/ and will be available for replay during the next 12 months.

Participants in the US call: Toll Free 1 (800) 230-1951

Participants Internationally call: +1- 612-332-0335

Conference ID: 397592

Please find a link to the upcoming webcast presentation on the following web page:
http://www.radware.com/IR/

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 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. 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

Radware encourages you to join our community and follow us on: Facebook, Google+, LinkedIn, Radware Blog, SlideShare, Twitter, YouTube, Radware Connect app for iPhone^® and our security center DDoSWarriors.com that provides a comprehensive analysis on DDoS attack tools, trends and threats.
©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.

CONTACTS
Chief Financial Officer
Doron Abramovitch
+972-3766-8610

Corporate Media Relations:
Deborah Szajngarten
(201) 785-3206
deborah.szajngarten@radware.com


Radware Ltd.
Condensed Consolidated Balance Sheets
(U.S. Dollars in thousands)

	June 30, 2016			December 31, 2015
	(Unaudited)
Assets

Current assets
Cash and cash equivalents		21,928			33,744
Available-for-sale marketable securities		16,341			16,003
Short-term bank deposits		183,465			80,922
Trade receivables, net		26,057			26,410
Other receivables and prepaid expenses		4,382			5,042
Inventories		16,181			16,322
		268,354			178,443
Long-term investments
Available-for-sale marketable securities		83,904			87,814
Long-term bank deposits		9,143			96,643
Severance pay funds		2,699			2,724
		95,746			187,181

Property and equipment, net		27,177			26,203
Intangible assets, net		2,959			3,518
Other assets		6,677			5,473
Goodwill		30,069			30,069

Total assets		430,982			430,887

Liabilities and shareholders’ equity

Current liabilities
Trade payables		6,087			9,255
Deferred revenues		52,530			46,061
Other payables and accrued expenses		22,547			22,098
		81,164			77,414
Long-term liabilities
Deferred revenues		27,261			25,136
Other long-term liabilities		14,088			9,214
		41,349			34,350

Shareholders’ equity
Share capital		661			661
Additional paid-in capital		318,331			312,784
Accumulated other comprehensive income, net of tax		847			1,257
Treasury stock, at cost		(105,761	)		(94,049	)
Retained earnings		94,391			98,470
Total shareholders’ equity		308,469			319,123

Total liabilities and shareholders' equity		430,982			430,887

Radware Ltd. Condensed Consolidated Statements of Income
(U.S. Dollars in thousands, except share and per share data)

	For the Three months ended June 30,					For the Six months ended June 30,
	2016				2015	2016				2015
	(Unaudited)				(Unaudited)		(Unaudited)			(Unaudited)

Revenues		49,585			56,027		98,010			113,251
Cost of revenues		8,887			9,684		17,541			19,784
Gross profit		40,698			46,343		80,469			93,467
Operating expenses:
Research and development, net		13,001			12,239		26,425			24,190
Selling and marketing		25,865			22,082		50,777			45,662
General and administrative		3,893			4,400		9,662			8,497
Total operating expenses		42,759			38,721		86,864			78,349
Operating income (loss)		(2,061	)		7,622		(6,395	)		15,118
Financial income, net		1,232			1,450		3,172			2,100
Income (loss) before taxes on income		(829	)		9,072		(3,223	)		17,218
Taxes on income		498			1,886		856			3,573
Net income (loss)		(1,327	)		7,186		(4,079	)		13,645

Basic net earnings (loss) per share	$	(0.03	)	$	0.16	$	(0.09	)	$	0.29

Weighted average number of shares used to compute basic net earnings (loss) per share		43,944,924			46,304,373		44,206,677			46,350,151

Diluted net earnings (loss) per share	$	(0.03	)	$	0.15	$	(0.09	)	$	0.29

Weighted average number of shares used to compute diluted net earnings (loss) per share		43,944,924			47,659,321		44,206,677			47,552,869

Radware Ltd. Non-GAAP Reconciliation of Supplemental Financial Information
(U.S. Dollars in thousands, except share and per share data)

	For the Three months ended June 30,						For the Six months ended June 30,
	2016			2015			2016			2015
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)

GAAP net Income (loss)		(1,327	)		7,186			(4,079	)		13,645

Stock-based compensation expenses, included in:
Cost of revenues		39			35			81			69
Research and development, net		667			644			1,450			1,262
Selling and marketing		1,394			1,017			2,662			1,906
General and administrative		644			716			1,428			1,392
		2,744			2,412			5,621			4,629
Amortization of intangible assets included in:
Cost of revenues		254			294			507			607
Selling and marketing		26			28			52			66
		280			322			559			673

Exchange rate differences, net on balance sheet items included in financial income		460			(107	)		157			525

Litigation costs		433			959			2,597			1,771

Non-GAAP net income		2,590			10,772			4,855			21,243

Non-GAAP diluted net earnings per share	$	0.06		$	0.23		$	0.11		$	0.45

Weighted average number of shares used to compute Non-GAAP diluted net earnings per share		44,101,539			47,659,321			44,354,630			47,552,869


Radware Ltd. Condensed Consolidated Statements of Cash Flows (U.S. Dollars in thousands)

	For the Three months ended on June 30,						For the Six months ended on June 30,
		2016			2015			2016			2015
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Cash flows from operating activities:

Net income (loss)		(1,327	)		7,186			(4,079	)		13,645
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		2,561			2,348			5,095			4,553
Stock based compensation		2,744			2,412			5,621			4,629
Gain from sale of available-for-sale marketable securities		(549	)		(229	)		(1,126	)		(423	)
Amortization of premiums, accretion of discounts and accrued interest on available-for-sale marketable securities, net		514			486			892			1,921
Accrued interest on bank deposits		6			(490	)		(655	)		(831	)
Increase (decrease) in accrued severance pay, net		19			(6	)		341			41
Decrease in trade receivables, net		1,848			2,188			353			1,879
Increase in other current assets and prepaid expenses and deferred income taxes, net		(106	)		(709	)		(410	)		(829	)
Decrease (increase) in inventories		395			(60	)		141			531
Increase (decrease) in trade payables		1,010			207			(3,168	)		(2,503	)
Increase (decrease) in deferred revenues		(73	)		(2,448	)		8,594			2,947
Increase in other payables and accrued expenses and other long-term liabilities		679			3,760			4,931			1,087
Excess tax benefit from stock-based compensation		74			(230	)		74			(460	)

Net cash provided by operating activities		7,795			14,415			16,604			26,187

Cash flows from investing activities:

Purchase of property and equipment		(2,881	)		(4,247	)		(5,510	)		(7,200	)
Proceeds from (investment in) other long-term assets		(16	)		-			3			(51	)
Investment in bank deposits, net		(9,952	)		(17,652	)		(14,388	)		(40,845	)
Proceeds from (investment in) available-for-sale marketable securities		155			(869	)		3,261			16,518

Net cash used in investing activities		(12,694	)		(22,768	)		(16,634	)		(31,578	)


Radware Ltd. Condensed Consolidated Statements of Cash Flows (U.S. Dollars in thousands)

	For the Three months ended on June 30,						For the Six months ended on June 30,
		2016			2015			2016			2015
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)

Cash flows from financing activities:

Proceeds from exercise of stock options		-			5,493			-			7,703
Excess tax benefit from stock-based compensation		(74	)		230			(74	)		460
Repurchase of shares		(4,932	)		-			(11,712	)		(19,727	)

Net cash provided by (used in) financing activities		(5,006	)		5,723			(11,786	)		(11,564	)

Decrease in cash and cash equivalents		(9,905	)		(2,630	)		(11,816	)		(16,955	)
Cash and cash equivalents at the beginning of the period		31,833			30,654			33,744			44,979

Cash and cash equivalents at the end of the period		21,928			28,024			21,928			28,024