Radware Reports Fourth Quarter and Full Year 2023 Financial Results

Published

Fourth Quarter 2023 Financial Results and Highlights

  • Revenue of $65.0 million, down 12% year-over-year
  • Cloud ARR of $64.9 million, up 22% year-over-year
  • Non-GAAP EPS of $0.13; GAAP net loss per diluted share of $0.14

Full Year 2023 Financial Results and Highlights

  • Revenue of $261.3 million, down 11% year-over-year
  • Non-GAAP EPS of $0.43; GAAP net loss per diluted share of $0.50

TEL AVIV, Israel, Feb. 07, 2024 (GLOBE NEWSWIRE) -- Radware® (NASDAQ: RDWR), a leading provider of cyber security and application delivery solutions, today announced its consolidated financial results for the fourth quarter and full year ended December 31, 2023.

“We closed 2023 on a positive note with our cloud security business delivering 22% year-over-year ARR growth,” said Roy Zisapel, Radware’s president and CEO. “As we look ahead, we remain cautiously optimistic in 2024. We intend to build upon early signs of improvement in the macro environment and capitalize on the growth in our cloud security business and partner channels, while remaining committed to cost discipline. We believe we are well positioned to return to revenue growth and improve profitability in 2024.”

Financial Highlights for the Fourth Quarter and Full Year 2023Revenue for the fourth quarter and full year of 2023 totaled $65.0 million and $261.3 million, respectively:

  • Revenue in the Americas region was $24.6 million for the fourth quarter of 2023, a decrease of 23% from $31.9 million in the fourth quarter of 2022. Revenue in the Americas region for the full year of 2023 was $103.4 million, a decrease of 17% from $123.9 million in the full year of 2022.
  • Revenue in the Europe, Middle East, and Africa (“EMEA”) region was $24.9 million for the fourth quarter of 2023, an increase of 2% from $24.3 million in the fourth quarter of 2022. Revenue in the EMEA region for the full year of 2023 was $96.5 million, a decrease of 7% from $104.2 million for the full year of 2022.
  • Revenue in the Asia-Pacific (“APAC”) region was $15.5 million for the fourth quarter of 2023, a decrease of 13% from $17.9 million in the fourth quarter of 2022. Revenue in the APAC region for the full year of 2023 was $61.4 million, a decrease of 6% from $65.3 million for the full year of 2022.

GAAP net loss for the fourth quarter of 2023 was $5.9 million, or $(0.14) per diluted share, compared to GAAP net loss of $4.1 million, or $(0.09) per diluted share, for the fourth quarter of 2022. GAAP net loss for the full year of 2023 was $21.6 million, or $(0.50) per diluted share, compared to GAAP net loss of $0.2 million, or $0.00 per diluted share, for the full year of 2022.

Non-GAAP net income for the fourth quarter of 2023 was $5.5 million, or $0.13 per diluted share, compared to non-GAAP net income of $7.7 million, or $0.17 per diluted share, for the fourth quarter of 2022. Non-GAAP net income for the full year of 2023 was $18.9 million, or $0.43 per diluted share, compared to non-GAAP net income of $31.3 million, or $0.68 per diluted share, for the full year of 2022.

As of December 31, 2023, the Company had cash, cash equivalents, short-term bank deposits, and marketable securities of $363.7 million. Cash flow from operating activities was $2.7 million in the fourth quarter of 2023 and negative at $3.5 million for the full year of 2023.

Non-GAAP results are calculated excluding, as applicable, the impact of stock-based compensation expenses, amortization of intangible assets, litigation costs, acquisition costs, restructuring costs, exchange rate differences, net on balance sheet items included in financial income, net, and tax-related adjustments. A reconciliation of each of the Company’s non-GAAP measures to the most directly comparable GAAP measure is included at the end of this press release.

Conference CallRadware management will host a call today, February 7, 2024, at 8:30 a.m. EST to discuss its fourth quarter and full year 2023 results and the Company’s first quarter 2024 outlook. To participate on the call, please use the following numbers:U.S. participants call toll free: 888-510-2008 International participants call: 1 646-960-0306Conference ID: 1864701

A replay will be available for two days, starting two hours after the end of the call, on telephone number +1-647-362-9199 or (US toll-free) 800-770-2030. Passcode 1864701.The call will be webcast live on 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 and Key Performance IndicatorsIn addition to reporting financial results in accordance with generally accepted accounting principles (GAAP), Radware uses non-GAAP measures of gross profit, research and development expense, selling and marketing expense, general and administrative expense, total operating expenses, operating income, financial income, net, income before taxes on income, taxes on income, net income and diluted earnings per share, which are adjustments from results based on GAAP to exclude, as applicable, stock-based compensation expenses, amortization of intangible assets, litigation costs, acquisition costs, restructuring costs, exchange rate differences, net on balance sheet items included in financial income, net, and tax-related adjustments. Management believes that exclusion of these charges allows for meaningful comparisons of operating results across past, present, and future periods. Radware’s management believes the non-GAAP financial measures provided in this release are useful to investors for the purpose of understanding and assessing Radware’s ongoing operations. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure is included with the financial information contained in this press release. Management uses both GAAP and non-GAAP financial measures in evaluating and operating the business and, as such, has determined that it is important to provide this information to investors.

Annual recurring revenue ("ARR") is a key performance indicator defined as the annualized value of booked orders for term-based cloud services, subscription licenses, and maintenance contracts that are in effect at the end of a reporting period. ARR should be viewed independently of revenue and deferred revenue and is not intended to be combined with or to replace either of those items. ARR is not a forecast of future revenue, which can be impacted by contract start and end dates and renewal rates and does not include revenue reported as perpetual license or professional services revenue in our consolidated statement of operations. We consider ARR a key performance indicator of the value of the recurring components of our business.

Safe Harbor Statement

This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements made herein that are not statements of historical fact, including statements about Radware’s plans, outlook, beliefs, or opinions, are forward-looking statements. Generally, forward-looking statements may be identified by words such as “believes,” “expects,” “anticipates,” “intends,” “estimates,” “plans,” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may,” and “could.” 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; the effects of the current attacks by the terrorist groups Hamas and Hezbollah, and the war between Israel and Hamas and Israel and Hezbollah; natural disasters and public health crises, such as the coronavirus disease 2019 (COVID-19) pandemic; a shortage of components or manufacturing capacity could cause a delay in our ability to fulfill orders or increase our manufacturing costs; our business may be affected by sanctions, export controls, and similar measures, targeting Russia and other countries and territories, as well as other responses to Russia’s military conflict in Ukraine, including indefinite suspension of operations in Russia and dealings with Russian entities by many multi-national businesses across a variety of industries; our ability to successfully implement our strategic initiative to accelerate our cloud business; our ability to expand our operations effectively; timely availability and customer acceptance of our new and existing solutions; risks and uncertainties relating to acquisitions or other investments; 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; intense competition in the market for cyber security and application delivery solutions and in our industry in general, and changes in the competitive landscape; changes in government regulation; outages, interruptions, or delays in hosting services or our internal network system; compliance with open source and third-party licenses; the risk that our intangible assets or goodwill may become impaired; our dependence on independent distributors to sell our products; long sales cycles for our solutions; changes in foreign currency exchange rates; undetected defects or errors in our products or a failure of our products to protect against malicious attacks; the availability of components and manufacturing capacity; the ability of vendors to provide our hardware platforms and components for our main accessories; our ability to protect our proprietary technology; intellectual property infringement claims made by third parties; changes in tax laws; our ability to realize our investment objectives for our cash and liquid investments; our ability to attract, train, and retain highly qualified personnel; and other factors and risks over 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, refer to Radware’s Annual Report on Form 20-F, filed 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 RadwareRadware® (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 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 the Radware website.

Radware encourages you to join our community and follow us on: FacebookLinkedIn, Radware Blog, Twitter, YouTube, and Radware Mobile for iOS and Android.

©2024 Radware Ltd. All rights reserved. Any 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.

Radware believes the information in this document is accurate in all material respects as of its publication date. However, the information is provided without any express, statutory, or implied warranties and is subject to change without notice.

The contents of any website or hyperlinks mentioned in this press release are for informational purposes and the contents thereof are not part of this press release.

CONTACTSInvestor Relations:Yisca Erez, +972-72-3917211, ir@radware.com

Media Contact:Gerri Dyrek, gerri.dyrek@radware.com

Radware Ltd.
Condensed Consolidated Balance Sheets
(U.S. Dollars in thousands)
    
 December 31, December 31,
 2023 2022
 (Unaudited) (Unaudited)
Assets   
    
Current assets   
Cash and cash equivalents70,538  46,185 
Marketable securities86,372  44,180 
Short-term bank deposits173,678  207,679 
Trade receivables, net18,959  17,752 
Other receivables and prepaid expenses10,015  7,196 
Inventories15,544  11,428 
 375,106  334,420 
    
Long-term investments   
Marketable securities33,131  90,148 
Long-term bank deposits-  43,765 
Other assets2,166  2,146 
 35,297  136,059 
    
    
Property and equipment, net18,221  21,068 
Intangible assets, net15,718  19,686 
Other long-term assets39,161  41,269 
Operating lease right-of-use assets20,777  23,078 
Goodwill68,008  68,008 
Total assets572,288  643,588 
    
Liabilities and equity   
    
Current liabilities   
Trade payables4,298  6,464 
Deferred revenues103,703  108,243 
Operating lease liabilities4,684  4,685 
Other payables and accrued expenses41,650  44,643 
 154,335  164,035 
    
Long-term liabilities   
Deferred revenues60,499  72,219 
Operating lease liabilities16,020  19,461 
Other long-term liabilities18,160  19,430 
 94,679  111,110 
    
Equity   
Radware Ltd. equity   
Share capital733  732 
Additional paid-in capital529,218  498,168 
Accumulated other comprehensive income (loss)77  (4,844)
Treasury stock, at cost(365,749) (303,299)
Retained earnings119,812  141,402 
Total Radware Ltd. shareholder's equity284,091  332,159 
    
Non–controlling interest39,183  36,284 
    
Total equity323,274  368,443 
    
Total liabilities and equity572,288  643,588 
    

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 year ended
  December 31, December 31,
  2023 2022 2023 2022
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
         
Revenues 65,032  74,083  261,292  293,426 
Cost of revenues 12,824  13,917  51,710  53,884 
Gross profit 52,208  60,166  209,582  239,542 
         
Operating expenses, net:        
Research and development, net 19,712  22,486  82,617  86,562 
Selling and marketing 31,869  32,544  126,237  126,533 
General and administrative 8,030  10,244  32,408  29,786 
Total operating expenses, net 59,611  65,274  241,262  242,881 
         
Operating loss (7,403) (5,108) (31,680) (3,339)
Financial income, net 3,239  2,018  13,927  8,052 
Income (Loss) before taxes on income (4,164) (3,090) (17,753) 4,713 
Taxes on income 1,686  1,034  3,837  4,879 
Net loss (5,850) (4,124) (21,590) (166)
         
Basic net loss per share attributed to Radware Ltd.'s shareholders (0.14) (0.09) (0.50) (0.00)
         
Weighted average number of shares used to compute basic net loss per share 41,806,042  44,586,590  42,871,770  44,943,168 
         
Diluted net loss per share attributed to Radware Ltd.'s shareholders (0.14) (0.09) (0.50) (0.00)
         
Weighted average number of shares used to compute diluted net loss per share 41,806,042  44,586,590  42,871,770  44,943,168 
             

 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,
  2023 2022 2023 2022
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
GAAP gross profit52,208  60,166  209,582  239,542 
 Share-based compensation112  112  515  399 
 Amortization of intangible assets992  992  3,968  3,704 
Non-GAAP gross profit53,312  61,270  214,065  243,645 
         
GAAP research and development, net19,712  22,486  82,617  86,562 
 Share-based compensation2,305  2,073  8,505  7,292 
Non-GAAP Research and development, net17,407  20,413  74,112  79,270 
         
GAAP selling and marketing31,869  32,544  126,237  126,533 
 Share-based compensation3,489  2,993  12,554  11,241 
 Restructuring costs578  -  1,851  - 
Non-GAAP selling and marketing27,802  29,551  111,832  115,292 
         
GAAP general and administrative8,030  10,244  32,408  29,786 
 Share-based compensation2,965  4,480  12,448  8,421 
 Acquisition costs359  819  1,128  1,961 
Non-GAAP general and administrative4,706  4,945  18,832  19,404 
         
GAAP total operating expenses, net59,611  65,274  241,262  242,881 
 Share-based compensation8,759  9,546  33,507  26,954 
 Restructuring costs578  -  1,851  - 
 Acquisition costs359  819  1,128  1,961 
Non-GAAP total operating expenses, net49,915  54,909  204,776  213,966 
         
GAAP operating loss(7,403) (5,108) (31,680) (3,339)
 Share-based compensation8,871  9,658  34,022  27,353 
 Amortization of intangible assets992  992  3,968  3,704 
 Restructuring costs578  -  1,851  - 
 Acquisition costs359  819  1,128  1,961 
Non-GAAP operating income3,397  6,361  9,289  29,679 
         
GAAP financial income, net3,239  2,018  13,927  8,052 
 Exchange rate differences, net on balance sheet items included in financial income, net563  413  (207) (1,301)
Non-GAAP financial income, net3,802  2,431  13,720  6,751 
         
GAAP income (loss) before taxes on income(4,164) (3,090) (17,753) 4,713 
 Share-based compensation8,871  9,658  34,022  27,353 
 Amortization of intangible assets992  992  3,968  3,704 
 Restructuring costs578  -  1,851  - 
 Acquisition costs359  819  1,128  1,961 
 Exchange rate differences, net on balance sheet items included in financial income, net563  413  (207) (1,301)
Non-GAAP income before taxes on income7,199  8,792  23,009  36,430 
         
GAAP taxes on income1,686  1,034  3,837  4,879 
 Tax related adjustments61  61  246  246 
Non-GAAP taxes on income1,747  1,095  4,083  5,125 
         
GAAP net loss(5,850) (4,124) (21,590) (166)
 Share-based compensation8,871  9,658  34,022  27,353 
 Amortization of intangible assets992  992  3,968  3,704 
 Restructuring costs578  -  1,851  - 
 Acquisition costs359  819  1,128  1,961 
 Exchange rate differences, net on balance sheet items included in financial income, net563  413  (207) (1,301)
 Tax related adjustments(61) (61) (246) (246)
Non-GAAP net income5,452  7,697  18,926  31,305 
         
GAAP diluted net loss per share(0.14) (0.09) (0.50) (0.00)
 Share-based compensation0.21  0.21  0.78  0.60 
 Amortization of intangible assets0.02  0.02  0.09  0.08 
 Restructuring costs0.02  0.00  0.04  0.00 
 Acquisition costs0.01  0.02  0.03  0.04 
 Exchange rate differences, net on balance sheet items included in financial income, net0.01  0.01  (0.00) (0.03)
 Tax related adjustments(0.00) (0.00) (0.01) (0.01)
Non-GAAP diluted net earnings per share0.13  0.17  0.43  0.68 
         
         
Weighted average number of shares used to compute non-GAAP diluted net earnings per share42,462,751  45,227,288  43,655,555  45,947,476 
            

Radware Ltd.
RECONCILIATION OF GAAP NET LOSS TO EBITDA AND ADJUSTED EBITDA (NON-GAAP)
(U.S Dollars in thousands)
         
  For the three months ended For the twelve months ended
  December 31, December 31,
  2023 2022 2023 2022
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
GAAP net loss(5,850) (4,124) (21,590) (166)
 Exclude: Financial income, net(3,239) (2,018) (13,927) (8,052)
 Exclude: Depreciation and amortization expense3,028  2,878  12,244  11,692 
 Exclude: Taxes on income1,686  1,034  3,837  4,879 
EBITDA(4,375) (2,230) (19,436) 8,353 
         
 Share-based compensation8,871  9,658  34,022  27,353 
 Restructuring costs578  -  1,851  - 
 Acquisition costs359  819  1,128  1,961 
Adjusted EBITDA5,433  8,247  17,565  37,667 
         
         
  For the three months ended For the twelve months ended
  December 31, December 31,
  2023 2022 2023 2022
         
 Amortization of intangible assets992  992  3,968  3,704 
 Depreciation2,036  1,886  8,276  7,988 
         
  3,028  2,878  12,244  11,692 
         

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,
  2023 2022 2023 2022
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash flow from operating activities:        
         
Net loss (5,850) (4,124) (21,590) (166)
Adjustments to reconcile net loss to net cash provided by operating activities:        
Depreciation and amortization 3,028  2,878  12,244  11,692 
Share-based compensation 8,871  9,658  34,022  27,353 
Amortization of premium, accretion of discounts and accrued interest on marketable securities, net 638  766  1,754  2,345 
Loss (gain) related to securities, net (1) (4) 243  (68)
Increase (decrease) in accrued interest on bank deposits 549  (1,424) (3,265) (2,480)
Increase (decrease) in accrued severance pay, net 207  301  (299) 219 
Increase in trade receivables, net (6,587) (4,401) (1,207) (4,561)
Decrease (increase) in other receivables and prepaid expenses and other long-term assets 1,017  (1,887) (1,524) (2,360)
Decrease (increase) in inventories (2,550) (574) (4,116) 152 
Increase (decrease) in trade payables (1,771) (306) (2,166) 2,154 
Increase (decrease) in deferred revenues (5,165) 1,584  (16,260) 13,475 
Increase (decrease) in other payables and accrued expenses 10,603  6,665  (195) (14,054)
Operating lease liabilities, net (336) 428  (1,141) (1,553)
Net cash provided by (used in) operating activities 2,653  9,560  (3,500) 32,148 
         
Cash flows from investing activities:        
         
Purchase of property and equipment (936) (1,768) (5,429) (8,814)
Proceeds from (investment in) other long-term assets, net (11) (71) 66  35 
Proceeds from (investment in) bank deposits, net 29,686  5,824  81,031  (13,377)
Investment in, redemption of and purchase of marketable securities ,net 16,764  1,640  17,111  (3,862)
Payment for the business acquisition of SecurityDAM Ltd. -  -  -  (30,000)
Net cash provided by (used in) investing activities 45,503  5,625  92,779  (56,018)
         
Cash flows from financing activities:        
         
Proceeds from exercise of share options 63  832  371  2,034 
Repurchase of shares (10,103) (12,301) (63,234) (59,492)
Payment of deferred consideration related to acquisition -  -  (2,063) - 
Proceeds from issuance of Preferred A shares in subsidiary -  -  -  35,000 
Net cash used in financing activities (10,040) (11,469) (64,926) (22,458)
         
Increase (decrease) in cash and cash equivalents 38,116  3,716  24,353  (46,328)
Cash and cash equivalents at the beginning of the period 32,422  42,469  46,185  92,513 
Cash and cash equivalents at the end of the period 70,538  46,185  70,538  46,185 
         

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Source: Radware Ltd.

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