Radware(RDWR) - 2024 Q4 - Annual Report

Radware Q4 and Full Year 2024 Financial Results Financial Highlights Radware reported strong growth in Q4 2024 with a 12% year-over-year revenue increase to $73.0 million and a significant jump in non-GAAP EPS to $0.27 For the full year 2024, revenue grew 5% to $274.9 million, driven by a 19% increase in Cloud ARR to $77.3 million and a substantial improvement in cash flow from operations to $71.6 million Q4 2024 Financial Highlights (YoY) | Metric | Q4 2024 | Q4 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | $73.0M | $65.0M | +12% | | Non-GAAP Diluted EPS | $0.27 | $0.13 | +108% | | GAAP Diluted EPS | $0.06 | $(0.14) | N/A | Full Year 2024 Financial Highlights (YoY) | Metric | FY 2024 | FY 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | $274.9M | $261.3M | +5% | | Cloud ARR | $77.3M | N/A | +19% | | Non-GAAP Diluted EPS | $0.87 | $0.43 | +102% | | GAAP Diluted EPS | $0.14 | $(0.50) | N/A | | Cash Flow from Operations | $71.6M | $(3.5)M | N/A | CEO Commentary and Outlook The CEO attributed the strong 2024 performance to accelerated cloud ARR growth, the success of the DefensePro X DDoS protection refresh, and robust OEM partnerships Looking forward, the company plans to increase investment to accelerate its cloud security growth by enhancing AI-enabled security capabilities, opening new cloud security service centers, and expanding cloud channels - Key drivers for 2024 success included 19% growth in cloud ARR, the DefensePro X DDoS protection refresh, and strong performance from OEM partnerships[3] - Future strategy focuses on accelerating cloud security growth through increased investment in AI capabilities, new cloud security service centers, and expanded cloud channels[3] Revenue by Geographic Region For the full year 2024, the Americas region was the primary growth driver with a 14% increase in revenue to $117.7 million The APAC region also grew by 3%, while the EMEA region experienced a slight 2% decline In Q4, the Americas showed strong 33% YoY growth Revenue by Region (YoY % Change) | Region | Q4 2024 Revenue | Q4 YoY Change | FY 2024 Revenue | FY YoY Change | | :--- | :--- | :--- | :--- | :--- | | Americas | $32.8M | +33% | $117.7M | +14% | | EMEA | $23.3M | -6% | $94.1M | -2% | | APAC | $16.9M | +8% | $63.1M | +3% | Detailed Financial Statements Condensed Consolidated Balance Sheets As of December 31, 2024, Radware's total assets increased to $618.7 million from $571.9 million in the prior year The company maintained a strong liquidity position with total cash, cash equivalents, bank deposits, and marketable securities amounting to $419.7 million Total equity grew to $357.1 million from $323.3 million Key Balance Sheet Items (in thousands) | Metric | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total cash, deposits & marketable securities | $419,658 | $363,719 | | Total Assets | $618,676 | $571,916 | | Total Liabilities | $261,601 | $248,642 | | Total Equity | $357,075 | $323,274 | Condensed Consolidated Statements of Income (Loss) For the full year 2024, Radware successfully returned to profitability, posting a GAAP net income of $6.0 million, a significant turnaround from a $21.6 million net loss in 2023 This was achieved on revenues of $274.9 million (up 5% YoY) and a 6.5% reduction in total operating expenses Full Year Income Statement Highlights (in thousands, except per share data) | Metric | FY 2024 | FY 2023 | | :--- | :--- | :--- | | Revenues | $274,880 | $261,292 | | Gross Profit | $221,628 | $209,582 | | Total Operating Expenses | $225,515 | $241,262 | | Operating Income (Loss) | $(3,887) | $(31,680) | | Net Income (Loss) | $6,038 | $(21,590) | | Diluted Net Income (Loss) per Share | $0.14 | $(0.50) | Condensed Consolidated Statements of Cash Flow The company demonstrated a dramatic improvement in cash generation, with net cash provided by operating activities reaching $71.6 million for the full year 2024, compared to a $3.5 million cash usage in 2023 Net cash used in investing was $39.5 million, and financing activities used $3.9 million, resulting in a net increase in cash and cash equivalents of $28.2 million for the year Full Year Cash Flow Summary (in thousands) | Metric | FY 2024 | FY 2023 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $71,609 | $(3,500) | | Net cash provided by (used in) investing activities | $(39,520) | $92,779 | | Net cash used in financing activities | $(3,913) | $(64,926) | | Increase in cash and cash equivalents | $28,176 | $24,353 | GAAP to Non-GAAP Reconciliation Reconciliation of GAAP to Non-GAAP Financial Information For the full year 2024, Radware's non-GAAP net income was $37.7 million ($0.87 per diluted share), substantially higher than the GAAP net income of $6.0 million ($0.14 per diluted share) The primary adjustments reconciling GAAP to non-GAAP results were the exclusion of share-based compensation ($26.0 million) and amortization of intangible assets ($4.0 million) Full Year 2024 GAAP to Non-GAAP Net Income Reconciliation (in thousands) | Description | Amount | | :--- | :--- | | GAAP net income | $6,038 | | Share-based compensation | $26,027 | | Amortization of intangible assets | $3,968 | | Acquisition costs | $701 | | Exchange rate differences, net | $1,232 | | Tax related adjustments | $(246) | | Non-GAAP net income | $37,720 | Reconciliation to EBITDA and Adjusted EBITDA For the full year 2024, Adjusted EBITDA nearly doubled to $34.7 million from $17.6 million in 2023 The calculation starts with GAAP net income and adds back taxes, financial income, depreciation & amortization, share-based compensation, and other non-recurring costs Full Year EBITDA and Adjusted EBITDA (in thousands) | Metric | FY 2024 | FY 2023 | | :--- | :--- | :--- | | GAAP net income (loss) | $6,038 | $(21,590) | | EBITDA | $7,949 | $(19,436) | | Adjusted EBITDA | $34,677 | $17,565 | Other Information Use of Non-GAAP Financial Information and KPIs Radware utilizes non-GAAP financial measures to exclude items like stock-based compensation and amortization, which management believes allows for more meaningful comparisons of operational results The company also defines and uses Annual Recurring Revenue (ARR) as a key performance indicator to measure the value of its recurring business components - Management uses non-GAAP measures to exclude charges such as stock-based compensation, amortization of intangibles, and litigation costs to better assess ongoing operations[12] - 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[13] Safe Harbor Statement The press release includes forward-looking statements subject to various risks and uncertainties The company cautions that actual results could differ materially from current forecasts due to factors such as global economic conditions, the war in Israel, supply chain disruptions, intense market competition, and cybersecurity risks - The report contains forward-looking statements about plans and outlook, which are not guarantees of future performance[14] - Significant risks that could affect results include the impact of global economic conditions, the war in Israel, supply chain shortages, competition, and potential defects or vulnerabilities in its solutions[14]