Radware(RDWR) - 2024 Q3 - Quarterly Report

Radware Third Quarter 2024 Financial Results Financial Highlights Radware reported strong financial results for the third quarter of 2024, featuring a 13% year-over-year revenue increase to $69.5 million, a shift from GAAP net loss to a GAAP net income of $3.1 million, driven by EMEA growth and subscription revenue success Q3 2024 Key Financial Metrics vs. Q3 2023 | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | $69.5 million | $61.6 million | +13% YoY | | Cloud ARR | $71.6 million | N/A | +15% YoY | | GAAP Net Income (Loss) | $3.1 million | $(6.9) million | Significant Improvement | | GAAP Diluted EPS | $0.07 | $(0.16) | Significant Improvement | | Non-GAAP Net Income | $10.2 million | $2.9 million | +252% YoY | | Non-GAAP Diluted EPS | $0.23 | $0.07 | +229% YoY | | Cash Flow from Operations | $14.7 million | $(9.8) million | Significant Improvement | - CEO Roy Zisapel attributed the strong performance to double-digit growth in subscription revenue, robust sales of software subscriptions, and the ongoing success of the DefensePro X product[3] Q3 2024 Revenue by Geographic Region (in millions) | Region | Q3 2024 Revenue | Q3 2023 Revenue | Year-over-Year Change | | :--- | :--- | :--- | :--- | | Americas | $27.7 | $24.9 | +11% | | EMEA | $25.2 | $19.3 | +30% | | APAC | $16.6 | $17.4 | -5% | - As of September 30, 2024, the company maintained a strong liquidity position with cash, cash equivalents, bank deposits, and marketable securities totaling $411.7 million[5] Consolidated Financial Statements The consolidated financial statements detail Radware's financial position and performance, showing increased total assets, a shift to profitability with a net income of $3.1 million, and strong operational cash generation of $14.7 million in Q3 2024 Condensed Consolidated Balance Sheets As of September 30, 2024, Radware's total assets grew to $608.2 million from $571.9 million at year-end 2023, primarily driven by increased cash and cash equivalents, with total equity also rising to $347.2 million Balance Sheet Summary (in thousands) | Account | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total current assets | $365,620 | $375,928 | | Total assets | $608,177 | $571,916 | | Total current liabilities | $167,235 | $155,015 | | Total liabilities | $260,982 | $248,642 | | Total equity | $347,195 | $323,274 | | Total liabilities and equity | $608,177 | $571,916 | Condensed Consolidated Statements of Income (Loss) For Q3 2024, Radware reported revenues of $69.5 million, up from $61.6 million in Q3 2023, achieving a GAAP net income of $3.1 million, a significant improvement from a net loss of $6.9 million in the prior-year period Income Statement Highlights - Three Months Ended Sep 30 (in thousands) | Account | 2024 | 2023 | | :--- | :--- | :--- | | Revenues | $69,488 | $61,612 | | Gross profit | $56,096 | $48,774 | | Total operating expenses, net | $56,102 | $58,970 | | Operating loss | $(6) | $(10,196) | | Net income (loss) | $3,144 | $(6,851) | | Diluted net income (loss) per share | $0.07 | $(0.16) | Condensed Consolidated Statements of Cash Flow In Q3 2024, Radware generated $14.7 million in cash from operating activities, a substantial improvement from the $9.8 million used in Q3 2023, leading to a $28.6 million increase in cash and cash equivalents during the quarter Cash Flow Summary - Three Months Ended Sep 30 (in thousands) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $14,708 | $(9,783) | | Net cash provided by investing activities | $13,906 | $22,272 | | Net cash used in financing activities | $0 | $(22,711) | | Increase (decrease) in cash and cash equivalents | $28,614 | $(10,222) | | Cash and cash equivalents at end of period | $115,416 | $32,422 | Reconciliation of GAAP to Non-GAAP Measures Radware provides non-GAAP financial measures to offer a clearer view of its operational performance, with Q3 2024 non-GAAP net income at $10.2 million and Adjusted EBITDA at $9.2 million, significantly higher than GAAP figures Reconciliation of GAAP to Non-GAAP Financial Information The reconciliation details adjustments made to GAAP figures, including $6.1 million in share-based compensation and $1.0 million in amortization of intangible assets, resulting in a non-GAAP operating income of $7.2 million and non-GAAP net income of $10.2 million for Q3 2024 GAAP vs. Non-GAAP Reconciliation - Q3 2024 (in thousands) | Metric | GAAP | Adjustments | Non-GAAP | | :--- | :--- | :--- | :--- | | Gross Profit | $56,096 | $1,073 | $57,169 | | Operating Income (Loss) | $(6) | $7,209 | $7,203 | | Net Income | $3,144 | $7,061 | $10,205 | | Diluted EPS | $0.07 | $0.16 | $0.23 | Reconciliation of GAAP Net Income (Loss) to EBITDA and Adjusted EBITDA The company reconciles GAAP net income to Adjusted EBITDA, which for Q3 2024 was $9.2 million, a significant increase from $1.6 million in Q3 2023, primarily driven by higher net income and share-based compensation adjustments Adjusted EBITDA Reconciliation - Three Months Ended Sep 30 (in thousands) | Account | 2024 | 2023 | | :--- | :--- | :--- | | GAAP net income (loss) | $3,144 | $(6,851) | | EBITDA | $2,941 | $(7,171) | | Share-based compensation | $6,058 | $7,259 | | Restructuring costs | $0 | $1,273 | | Acquisition costs | $159 | $211 | | Adjusted EBITDA | $9,158 | $1,572 | Supplementary Information This section provides additional context for the financial report, including details for the investor conference call, an explanation of non-GAAP financial measures, the definition of Annual Recurring Revenue (ARR), and a Safe Harbor Statement regarding forward-looking statements - Management uses non-GAAP measures to allow for meaningful comparisons of operating results across periods by excluding items like stock-based compensation, amortization, and restructuring costs[11] - Annual Recurring Revenue (ARR) is defined as the annualized value of booked orders for term-based cloud services, subscription licenses, and maintenance contracts, and is considered a key indicator of the recurring components of the business[12] - The Safe Harbor Statement outlines various risks and uncertainties that could cause actual results to differ from forward-looking statements, including global economic conditions, competition, and supply chain issues[13]