Radware Q1 2025 Earnings Report

Radware EPS Results

• Actual EPS: $0.27
• Consensus EPS: $0.23
• Beat/Miss: Beat by +$0.04
• One Year Ago EPS: $0.16

Radware Revenue Results

• Actual Revenue: $72.08 million
• Expected Revenue: $70.56 million
• Beat/Miss: Beat by +$1.52 million
• YoY Revenue Growth: +10.80%

Radware Announcement Details

• Quarter: Q1 2025
• Date: 5/7/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, May 7, 2025
• Conference Call Time: 8:30AM ET

Radware (NASDAQ:RDWR) Ltd (NASDAQ: RDWR) is a global provider of cybersecurity and application delivery solutions designed to ensure the availability, performance and security of mission-critical applications. Serving physical, virtual, cloud and software-defined data centers, the company’s platforms deliver real-time, behavioral-based DDoS protection, web application firewalls, load balancing, secure application access and application delivery controllers. Its solutions help enterprises, service providers and cloud operators maintain uninterrupted online services and defend against evolving cyber threats.

At the core of Radware’s offerings is its DefensePro technology for volumetric, protocol and application-layer DDoS mitigation, which operates in inline or out-of-band modes to block attacks in real time. The company’s Alteon application delivery controllers provide intelligent traffic management, SSL offloading and performance optimization for web, mobile and cloud applications. Radware also offers the Cloud Security Service Engine (CSSE) for hybrid cloud deployments, combining on-premise appliances with cloud-based scrubbing centers to scale protection against large-scale attacks.

Founded in 1997 and headquartered in Mahwah, New Jersey, with research and development facilities in Tel Aviv, Israel, Radware has built a presence across the Americas, Europe, Middle East, Africa and the Asia-Pacific region. Over more than two decades, the company has secured thousands of enterprise environments in industries such as finance, e-commerce, telecommunications, healthcare and government. Regular updates to its security intelligence are informed by the company’s global sensor network, which analyzes attack data to enhance its behavioral-based detection and mitigation capabilities.

Radware is led by a management team with deep expertise in networking and cybersecurity. Co-founder Roy Zisapel serves as Executive Chairman, guiding the company’s strategic vision, while the board is chaired by Orna Berry, a veteran technology executive and former government Chief Scientist of Israel. Together with a leadership team of seasoned industry professionals, they drive Radware’s mission to enable businesses to deliver secure, high-performance digital experiences.

Radware Q1 2025 Earnings Call Transcript

Key Takeaways

• Radware reported 11% year-over-year revenue growth to $72 million in Q1 2025, with non-GAAP EPS up 60% to $0.27 and operating cash flow of $22 million.
• Cloud security ARR rose 19% year-over-year to $80 million, driving double-digit growth in new cloud application security bookings and positioning the company to target over 20% ARR growth to nearly $100 million by year-end.
• The company expanded its global footprint by opening cloud security service centers in Peru, India, and Kenya, growing to over 50 centers with a 15 Tb mitigation capacity to meet local data privacy requirements.
• OEM partnerships with Cisco and Check Point each grew over 20% year-over-year, fueling multi-million-dollar wins including a $1 million, five-year cloud deal with a UK retailer and a central bank deal in Latin America.
• For Q2 2025, Radware expects revenue of $73–74 million, non-GAAP operating expenses of $51–52 million, and EPS of $0.26–0.27.

Presentation

[Operator]

Welcome to the Radware Conference Call discussing First Quarter twenty twenty five Results. Thank you all for holding. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded on 05/07/2025.

[Operator]

I would now like to turn the call over to Yiska Erez, Director, Investor Relations at Radware. Please go ahead.

[Yisca Erez, Director of Investor Relations at Radware]

Thank you, operator. Good morning, everyone, and welcome to Radware's first quarter twenty twenty five earnings conference call. Joining me today are Roy Zisapelle, President and Chief Executive Officer and Gary Vidhan, Chief Financial Officer. A copy of today's press release and financial statements as well as the investor kit for the first quarter are available in the Investor Relations section of our website. During today's call, we may make projections or other forward looking statements regarding future events or the future financial performance of the company.

[Yisca Erez, Director of Investor Relations at Radware]

These forward looking statements are subject to various risks and uncertainties, and actual results 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, impact from the changing or severe global economic conditions, general business conditions and our ability to address changes in our industry, changes in demand for products, the timing in the amount of orders and other risks detailed from time to time in Radware's filings. We refer you to the documents the company files and furnishes from time to time with the SEC, specifically the company's last annual report on Form 20 F as filed on 03/28/2025. We undertake no commitments to revise or update any forward looking statements in order to reflect events or circumstances after the date of such statement is made. I will now turn the call to Roy Zisapple.

[Roy Zisapel, Co-Founder, CEO, President & Director at Radware]

Thank you, Iska, and thank you all for joining us today. I'm pleased to report a strong start to 2025 exceeding our guidance. Guidance. Our first quarter revenue increased 11% year over year to $72,000,000 This is the third quarter in a row of double digit revenue growth. Our non GAAP earnings per share rose 60% to $0.27 demonstrating the high leverage in our business model.

[Roy Zisapel, Co-Founder, CEO, President & Director at Radware]

And finally, cash flow from operations was 22,000,000 A major driver of our success is attributed to our Cloud Security business, which continues to grow in scale and potential. Cloud security ARR increased by 19% year over year to $80,000,000 We also achieved double digit growth in our total number of cloud customers, driven primarily by a rapid increase in new cloud application security bookings. Given these strong metrics, we continue to believe that focus on and investment in this business will position us to exceed a 20% ARR growth rate and achieve close to $100,000,000 in cloud security ARR by end of this year. Our results also highlight the solid progress we've made against our strategy to lead as the best of breed provider in application and data center security. Our growth strategy continues to be centered around three pillars: Win significant market share in cloud security, lead through AI innovation and automation, and enhance our go to market footprint.

[Roy Zisapel, Co-Founder, CEO, President & Director at Radware]

As we highlighted last quarter, we are expanding our cloud security infrastructure in order to further scale our business. Recently, we opened new cloud service centers in Peru, India, and Kenya, and have plans to expand in other regions in the near future. Today, we support a network of over 50 cloud security service centers worldwide, with a mitigation capacity of up to 15 terabits. This network enables customers to keep applications and data within their borders to meet strict data privacy regulations and provide excellent performance for local users. Our hybrid cloud security offering is another important business enabler for our customers.

[Roy Zisapel, Co-Founder, CEO, President & Director at Radware]

This offering has become a major competitive differentiator for us, translated into continued strong ARR growth. While some customers may favor cloud only models, which we offer, many larger enterprise clearly have a requirement for hybrid security across all their assets those that are located in the cloud and those that are located in the private data centers and our pipeline proves it. We continue to see steady healthy demand that include our DefensePro X refresh. With the push towards vendor consolidation, rather hybrid approach for DDoS and application security, which offers both cloud services and on prem solutions with integrated and consistent security capabilities, is giving us a clear edge. I'm pleased to report that our AI innovation efforts are also proving to be a competitive advantage.

[Roy Zisapel, Co-Founder, CEO, President & Director at Radware]

Our advanced AI based algorithms and algorithms first approach to security are delivering market leading detection and mitigation results for our customers, making our solutions the preferred choice for many. We are seeing this firsthand as we continue to replace the competition in bigger ticket deals. Between the fourth quarter of twenty twenty four and first quarter of this year, the total contract value of our competitive takeouts doubled. For example, we took out two competitors with our DDoS protection and web application firewall to close a seven digit deal with a government IT company in Asia Pacific. The win provides another proof point of the strength of our security offering in web application security and DDoS mitigation under a unified SecOps platform.

[Roy Zisapel, Co-Founder, CEO, President & Director at Radware]

Last quarter, we won our largest cloud security agreement to date. The multi year, eight digit deal broadened our relationship with a U. S. Fortune 500 financial services and payments company. They are significantly expanding with our full suite of cloud DDoS and application protection services to safeguard thousands of applications and billions of digital transactions.

[Roy Zisapel, Co-Founder, CEO, President & Director at Radware]

Our OEM channel also produced some major wins and continues to play an important role in our growth strategy. During the first quarter, our partnership with Cisco and Check Point once again generated strong results, both growing more than 20% year over year. Together with Cisco, we won a $1,000,000 5 year cloud deal with a UK retailer. At the end of twenty twenty four, the retailer was the target of a series of cyber attacks that disrupted its primary data centers and operations. Following emergency onboarding onto our Cloud DDoS Protection service, we successfully mitigated the attacks.

[Roy Zisapel, Co-Founder, CEO, President & Director at Radware]

With successful cross selling, we expanded the deal to include our threat intelligence services, as well as our web application and API protection. So really a great platform sale. In another partner win, we worked with Check Point to close a Cloud DDoS and Application Protection deal with a central bank in Latin America. Our win was based on our superior DDoS technology, strong SLAs and solid relationships. Given our double digit growth over the past three quarters, strong demand for our security offerings, and market opportunities ahead, particularly in cloud security, we plan to increase investments in sales, marketing, and R and D.

[Roy Zisapel, Co-Founder, CEO, President & Director at Radware]

These efforts will focus on scaling our cloud security business, accelerating AI driven innovation, and strengthening our presence in North America. This morning, we announced plans to accelerate our expansion in The U. S. Market, led by new leadership team with deep experience in driving ARR for SaaS companies. We are confident this team has the expertise to deliver meaningful results for our cloud business.

[Roy Zisapel, Co-Founder, CEO, President & Director at Radware]

In summary, in the first quarter of twenty twenty five, we demonstrated steady execution with progress across all financial parameters. In addition, we continued to scale our Cloud Security business, win marquee accounts and drive Cloud ARR, which is now at $80,000,000 Looking forward, we intend to accelerate our cloud ARR growth by securing new logos, collaborating with our OEM and channel partners, and driving AI innovation and automation. Additionally, by strengthening our presence in The U. S. Market, we believe we will be well positioned to gain additional market share and accelerate our overall growth and consequently our profitability.

[Roy Zisapel, Co-Founder, CEO, President & Director at Radware]

With that, I will turn the call over to Guy.

[Guy Avidan, Chief Financial Officer at Radware]

Thank you, Roy, and good day everyone. I'll provide an overview of our financial results and business performance for the first quarter as well as our outlook for the second quarter of twenty twenty five. Before beginning the financial overview, I would like to remind you that unless otherwise indicated, all financial results are non GAAP. A full reconciliation of our results on a GAAP to non GAAP basis is available in the earnings press release issued earlier today and in the Investors section of our website. Revenue for the first quarter of twenty twenty five grew 11% year over year to $72,000,000 driven mainly by another solid performance of our cloud security business and good contribution from our OEM partnerships.

[Guy Avidan, Chief Financial Officer at Radware]

Total ARR increased 9% year over year to $230,000,000 with Cloud ARR growing 19% to $80,000,000 Furthermore, recurring revenues grew to 82% of total revenue in the first quarter of twenty twenty five, compared to 7978% in Q1 twenty twenty four and Q4 twenty twenty four, respectively. In the first quarter of twenty twenty five, our regional performance showed growth across all regions. The Americas increased by 1% year over year to $27,400,000 accounting for 38% of total revenue. For the twelve trailing months, Americas revenue grew 14% year over year. EMEA revenue in Q1 twenty twenty five increased 25% year over year to $28,400,000 and accounted for 39% of total revenue.

[Guy Avidan, Chief Financial Officer at Radware]

For the twelve trailing months, EMEA revenue grew 11% year over year, and APAC Q1 revenue increased 7% year over year to $16,300,000 contributing 23% of total revenue, and for the twelve trailing months APAC revenue was flat year over year. I'll now discuss profits and expenses. Gross margin in Q1 twenty twenty five was 82.1%, a slight increase from 82 gross margin that was recorded in Q1 twenty twenty four. Operating income doubled in the first quarter of twenty twenty five to $8,600,000 compared to $4,300,000 in the same period of last year. As Roy highlighted in his prepared remarks, in response to a strong demand for our security offering and the market opportunities ahead mainly in cloud security, we plan to increase investment in sales, marketing, and R and D.

[Guy Avidan, Chief Financial Officer at Radware]

This investment will focus on branding expanding our cloud security business, accelerating AI driven innovation and strengthening our presence in North America. Our strong leverage in our business model allow us to increase investment that will support our ability to further drive top line growth in the future while improving profitability. Quadrant adjusted EBITDA for the first quarter of twenty twenty five increased by 72% to 10,800,000 compared to $6,800,000 in the same period of last year. Hardware adjusted EBITDA, excluding the HARCs business, for the first quarter of twenty twenty five was $13,400,000 and 18.6% margin, compared to $8,900,000 and 13.7% margin in the same period of last year. Financial income was $5,400,000 in the first quarter of twenty twenty five, compared to $3,800,000 in the first quarter of twenty twenty four.

[Guy Avidan, Chief Financial Officer at Radware]

The tax rate for the first quarter of twenty twenty five was 15.5% compared to 15.3% in the same period of last year. We expect the tax rate to remain approximately the same in the next quarter. Net income in the first quarter of twenty twenty five increased 73 percent year over year to $11,800,000 compared to $6,800,000 in the same period last year. Diluted earnings per share for Q1 twenty twenty five increased 69% year over year to $0.27 compared to the zero one six dollars we had in Q1 twenty twenty four. Turning to the cash flow statement and the balance sheet.

[Guy Avidan, Chief Financial Officer at Radware]

Cash flow from operations in Q1 twenty twenty five reached $22,400,000 compared to $21,100,000 in the same period last year. We ended the first quarter with approximately $448,000,000 in cash, cash equivalent, bank deposit and marketable securities. Before we move to guidance, I would like to address the recently announced tariffs and their potential impact on Radware. We expect the effect on our business to be minimal. We are proactively adjusting our supply chain to further reduce any potential cost pressure, and currently, we do not anticipate any material impact on our operation or financial performance.

[Guy Avidan, Chief Financial Officer at Radware]

And now to the guidance. We expect total revenue for the second quarter of twenty twenty five to be in the range of $73,000,000 to $74,000,000 We expect Q2 twenty twenty five non GAAP operating expenses to be between $51,000,000 to $52,000,000 We expect Q2 twenty twenty five non GAAP diluted net earnings per share to be between $0.02 6 and $0.27 I'll now turn the call over to the operator. Operator, please.

[Operator]

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue.

[Operator]

The first question is from Joseph Gallo from Jefferies. Please go ahead.

[Joseph Gallo, Senior Vice President at Jefferies & Company Inc]

Hey guys, thanks for the question. Nice job on the quarter. I appreciate the tariff color. Just regarding macro, did you see any changes in buying behavior from your customers? How was April? And what's embedded in your 2Q guidance?

[Roy Zisapel, Co-Founder, CEO, President & Director at Radware]

Okay, hi. We didn't see a noticeable change in the last several months. And also starting Q2, things are relatively the same, meaning not accelerating, not decelerating, and we didn't see anything specific to tariffs. In the beginning, we saw many questions. Some distributors were asking actually to accelerate shipments, but this has calmed down after a week or so, when the tariffs or the majority of them were put on hold.

[Roy Zisapel, Co-Founder, CEO, President & Director at Radware]

So we didn't see anything specific, and as Guy mentioned, as we focus more and more on the cloud business, in North America, that is a bit isolated from the old hardware portion of our business.

[Joseph Gallo, Senior Vice President at Jefferies & Company Inc]

That makes sense. Thank you for that. And then just as a follow-up, can you double click on some of those US market changes? A lot of new senior leadership, which is great, but that can also result in a couple of quarters of disruption. So is there any major change in process needed in The US market, and is that accounted for in the 2Q guide? Thank you.

[Roy Zisapel, Co-Founder, CEO, President & Director at Radware]

Yeah, so great question. Actually, our announcement is after all this infrastructure is already in place. So Randy, the head lead, I think, is now going into his third quarter, like nine months into the company. A lot of the individual sales heads were joining us between three to six months ago, so we're actually now expecting more and more productivity ramp up from them. And I think the newest addition, Connie, our Chief Growth Officer, she's like a month now into the company.

[Roy Zisapel, Co-Founder, CEO, President & Director at Radware]

So a lot of the major changes were already done, actually last quarter, I think, and a quarter before. We already started to see the fruits of that, and we are very strong believers that the future is brighter and we can grow forward from here and add, and that's what we announced, that we're going to add even more resources as we go forward, so we think we have a strong leadership team in place that's already executed several quarters and gets more and more productive as time passes now. We don't see any disruption. We are after that, so to speak.

[Joseph Gallo, Senior Vice President at Jefferies & Company Inc]

Great to hear. Thank you.

[Operator]

There are no further questions at this time. I would like to turn the floor back over to Roy Zisatel for closing comments.

[Roy Zisapel, Co-Founder, CEO, President & Director at Radware]

Okay. Thank you very much, and have a great day.

[Operator]

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Participants

Executives

• Yisca Erez, Director of Investor Relations
• Roy Zisapel, Co-Founder, CEO, President & Director
• Guy Avidan, Chief Financial Officer

Analysts

• Joseph Gallo, Senior Vice President at Jefferies & Company Inc