Radware(US:RDWR)2023-05-07 17:49Financial Data and Key Metrics Changes - Revenue for Q1 2023 was $69 million, a decline of 6% year-over-year from $73.7 million in Q1 2022 [22][41] - Earnings per share for Q1 2023 was $0.14, down from $0.19 in Q1 2022 [41] - Operating expenses were $52.4 million, a 1% increase compared to Q1 2022, but a 5% decrease from Q4 2022 [24] - Net income for Q1 2023 was $6.1 million, compared to $8.8 million in the same period last year [41] - Cash flow from operations was negative $1.2 million, an improvement from negative $10.5 million in Q1 2022 [42] Business Line Data and Key Metrics Changes - Cloud ARR grew 21% year-over-year, consistent with Q4 2022 growth, and accounted for 27% of total ARR compared to 24% last year [19][37] - Cloud security bookings saw close to 30% year-over-year growth, with a significant increase in the total number of cloud customers, particularly mid-sized enterprises [19][37] - Subscription bookings crossed 50% of total bookings for the first time, indicating a shift towards a subscription-based model [33] Market Data and Key Metrics Changes - Revenue in the Americas decreased 8% to $27 million compared to Q1 2022, while EMEA revenue increased 6% to $30 million [38][39] - APAC revenue decreased 24% year-over-year to $12 million [39] - Americas accounted for 39% of total revenues, EMEA for 43%, and APAC for 18% in Q1 2023 [39] Company Strategy and Development Direction - The company is focused on transitioning to a subscription-based model and enhancing cloud security offerings [33] - New product launches include next-generation DDoS mitigators and a new management system for enhanced security operations [7][19] - The company aims to capitalize on the increasing demand for cybersecurity solutions driven by rising cyber-attacks [6][21] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macroeconomic challenges leading to longer sales cycles and cautious spending [4][22] - Despite these challenges, management remains confident in the long-term growth prospects due to the critical nature of their solutions [6][21] - The company expects revenue for Q2 2023 to be in the range of $68 million to $70 million [26] Other Important Information - The company repurchased shares amounting to approximately $12.7 million during the quarter [43] - The gross margin for Q1 2023 was 82.3%, down from 83.2% in Q1 2022, primarily due to higher costs associated with new cloud security centers [40] Q&A Session Summary Question: Guidance on interest income for Q2 - Management did not provide specific guidance but expects financial income to continue growing at a similar pace as the previous quarter [28] Question: Positioning against foreign exchange impacts - The company is hedged for the rest of the year against the Israeli shekel's weakness, which should not impact the P&L [51] Question: Performance of service provider vertical - Management noted that the decline was particularly pronounced in service providers, with a shift in business mix affecting performance [52] Question: Progress of U.S. market reorganization - Management indicated improvements in execution and pipeline penetration in the U.S. despite Q1 challenges [55] Question: Changes in sales organization and early returns - Management reported a good quarter with Cisco, seeing increased activity and engagement in the field [62] Question: Onboarding process for emergency customers - The onboarding process can be completed quickly, often within hours, especially when customers are under attack [67][68]