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Radware Announces Third Quarter 2016 Earnings
[November 01, 2016]

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

TEL AVIV, Israel, Nov. 01, 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 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 third 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 million 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 million 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 million 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.


Radware Ltd.
Condensed Consolidated Balance Sheets
(U.S. Dollars in thousands)
     
  September 30, December 31,
   2016   2015 
  (Unaudited)  
Assets    
     
Current assets    
Cash and cash equivalents  38,858   33,744 
Available-for-sales marketable securities  20,016   16,003 
Short-term bank deposits  148,122   80,922 
Trade receivables, net  21,346   26,410 
Other receivables and prepaid expenses  4,297   5,042 
Inventories  16,812   16,322 
   249,451   178,443 
     
Long-term investments    
Available-for-sales marketable securities  75,692   87,814 
Long-term bank deposits  28,187   96,643 
Severance pay funds  2,812   2,724 
   106,691   187,181 
     
     
Property and equipment, net  27,404   26,203 
Intangible assets, net  2,679   3,518 
Other assets  6,739   5,473 
Goodwill  30,069   30,069 
     
Total assets  423,033   430,887 
     
     
Liabilities and shareholders' equity    
     
Current Liabilities    
Trade payables  5,051   9,255 
Deferred revenues  48,618   46,061 
Other payables and accrued expenses  22,201   22,098 
   75,870   77,414 
     
Long-term liabilities    
Deferred revenues  24,400   25,136 
Other long-term liabilities  14,075   9,214 
   38,475   34,350 
     
Shareholders' equity    
Share capital  662   661 
Additional paid-in capital  321,338   312,784 
Accumulated other comprehensive income, net of tax  505   1,257 
Treasury stock, at cost  (105,761)  (94,049)
Retained earnings  91,944   98,470 
Total shareholders' equity  308,688   319,123 
     
Total liabilities and shareholders' equity  423,033   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 For the Nine months ended
  September 30, September 30,
   2016   2015   2016   2015 
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
         
Revenues  46,863   48,059   144,873   161,310 
Cost of revenues  8,558   8,506   26,099   28,290 
Gross profit  38,305   39,553   118,774   133,020 
         
Operating expenses:        
Research and development, net  13,072   12,825   39,497   37,015 
Selling and marketing  24,853   22,739   75,630   68,401 
General and administrative  4,245   4,481   13,907   12,978 
Total operating expenses  42,170   40,045   129,034   118,394 
         
Operating income (loss)  (3,865)  (492)  (10,260)  14,626 
Financial income, net  1,706   1,373   4,878   3,473 
Income (loss) before taxes on income  (2,159)  881   (5,382)  18,099 
Taxes on income  (288)  (220)  (1,144)  (3,793)
Net income (loss)  (2,447)  661   (6,526)  14,306 
         
Basic net earnings (loss) per share  (0.06)  0.01   (0.15)  0.31 
         
  Weighted average number of shares used to compute basic net earnings (loss) per share  43,752,220   45,842,187   44,053,422   46,180,689 
         
Diluted net earnings (loss) per share  (0.06)  0.01   (0.15)  0.30 
         
  Weighted average number of shares used to compute diluted net earnings (loss) per share  43,752,220   46,557,853   44,053,422   47,221,057 
         


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 Nine months ended 
  September 30, September 30, 
   2016   2015   2016  2015 
  (Unaudited) (Unaudited) (Unaudited) (Unaudited) 
          
GAAP gross profit 38,305   39,553   118,774  133,020 
 Stock-based compensation 47   30   128  99 
 Amortization of intangible assets 253   253   760  860 
Non-GAAP gross profit 38,605   39,836   119,662  133,979 
          
GAAP Research and development, net 13,072   12,825   39,497  37,015 
 Stock-based compensation 941   619   2,391  1,881 
Non-GAAP Research and development, net 12,131   12,206   37,106  35,134 
          
GAAP selling and marketing 24,853   22,739   75,630  68,401 
 Stock-based compensation 1,256   1,005   3,918  2,911 
 Amortization of intangible assets 27   29   79  95 
Non-GAAP selling and marketing 23,570   21,705   71,633  65,395 
          
GAAP general and administrative 4,245   4,481   13,907  12,978 
 Stock-based compensation 434   790   1,862  2,182 
 Litigation related charges 889   868   3,486  2,639 
Non-GAAP general and administrative 2,922   2,823   8,559  8,157 
          
GAAP total operating expenses 42,170   40,045   129,034  118,394 
 Stock-based compensation 2,631   2,414   8,171  6,974 
 Amortization of intangible assets 27   29   79  95 
 Litigation related charges 889   868   3,486  2,639 
Non-GAAP total operating expenses 38,623   36,734   117,298  108,686 
          
GAAP operating income (loss) (3,865)  (492)  (10,260) 14,626 
 Stock-based compensation 2,678   2,444   8,299  7,073 
 Amortization of intangible assets 280   282   839  955 
 Litigation related charges 889   868   3,486  2,639 
Non-GAAP operating income (loss) (18)  3,102   2,364  25,293 
          
GAAP finance income 1,706   1,373   4,878  3,473 
 Exchange rate differences, net on balance sheet items included in financial income 176   535   333  1,059 
Non-GAAP finance income 1,882   1,908   5,211  4,532 
          
GAAP income (loss) before taxes on income (2,159)  881   (5,382) 18,099 
 Stock-based compensation 2,678   2,444   8,299  7,073 
 Amortization of intangible assets 280   282   839  955 
 Litigation related charges 889   868   3,486  2,639 
 Exchange rate differences, net on balance sheet items included in financial income 176   535   333  1,059 
Non-GAAP income before taxes on income 1,864   5,010   7,575  29,825 
          
GAAP net income (loss) (2,447)  661   (6,526) 14,306 
 Stock-based compensation 2,678   2,444   8,299  7,073 
 Amortization of intangible assets 280   282   839  955 
 Litigation related charges 889   868   3,486  2,639 
 Exchange rate differences, net on balance sheet items included in financial income 176   535   333  1,059 
Non GAAP net income 1,576   4,790   6,431  26,032 
          
GAAP Net income (loss) per diluted share (0.06)  0.01   (0.15) 0.30 
 Stock-based compensation 0.06   0.05   0.19  0.15 
 Amortization of intangible assets 0.01   0.01   0.02  0.02 
 Litigation related charges 0.02   0.02   0.08  0.06 
 Exchange rate differences, net on balance sheet items included in financial income 0.01   0.01   0.01  0.02 
Non GAAP Net income per diluted share 0.04   0.10   0.15  0.55 
          
          
Weighted average number of shares used to compute diluted net earnings (loss) per share 44,077,078   46,557,853   44,260,343  47,221,057 
          


Radware Ltd.
Condensed Consolidated Statements of Cash Flow
(U.S. Dollars in thousands)
         
  For the three months ended For the nine months ended
  September 30, September 30,
   2016   2015   2016   2015 
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash flow from operating activities:        
         
Net income (loss)  (2,447)  661   (6,526)  14,306 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:        
Depreciation and amortization  2,614   2,437   7,709   6,990 
Stock based compensation  2,678   2,444   8,299   7,073 
Gain from sale of available-for-sale marketable securities  (651)  (717)  (1,778)  (1,140)
Amortization of premium, accretion of discounts and accrued interest on available-for- sale marketable securities  385   767   1,277   2,688 
Accrued interest on bank deposits  201   (519)  (455)  (1,350)
Increase (decrease) in accrued severance pay, net  (51)  84   290   125 
Decrease (increase) in trade receivables, net  4,711   (423)  5,064   1,456 
Decrease (increase) in other current assets and prepaid expenses and deferred income taxes, net  149   (1,852)  (260)  (2,681)
Decrease (increase) in inventories  (631)  (78)  (490)  453 
Decrease in trade payables  (1,036)  (1,288)  (4,204)  (3,791)
Increase (decrease) in deferred revenues  (6,773)  (5,101)  1,821   (2,154)
Increase (decrease) in other payables and accrued expenses  (421)  1,115   4,512   2,202 
Excess tax benefit from stock-based compensation  0   (230)  74   (690)
Net cash provided by (used in) operating activities  (1,272)  (2,700)  15,333   23,487 
         
Cash flows from investing activities:        
         
Purchase of property and equipment  (2,561)  (3,518)  (8,071)  (10,718)
Investment in other long-term assets, net  (3)  (33)  0   (84)
Proceeds from sale, investment in bank deposits, net  16,097   2,958   1,708   (37,887)
Proceeds from sale, redemption of and purchase of available-for-sale marketable securities, net  4,339   19,706   7,600   36,224 
Net cash provided by (used in) investing activities  17,872   19,113   1,237   (12,465)
         
Cash flows from financing activities:        
         
Proceeds from exercise of stock options  330   868   330   8,571 
Excess tax benefit from stock-based compensation  0   230   (74)  690 
Repurchase of shares  0   (24,780)  (11,712)  (44,507)
Net cash provided by (used in) financing activities  330   (23,682)  (11,456)  (35,246)
         
Increase (decrease) in cash and cash equivalents  16,930   (7,269)  5,114   (24,224)
Cash and cash equivalents at the beginning of the period  21,928   28,024   33,744   44,979 
Cash and cash equivalents at the end of the period  38,858   20,755   38,858   20,755 
                 
                 
CONTACTS

Investor Relations:
Anat Earon-Heilborn
+972 723917548
[email protected]

Media Contacts:
Deborah Szajngarten
Radware
201-785-3206
[email protected]

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