• Revenue: $69.5 million, up 13% year-over-year.
• Cloud ARR: Increased 15% to $71.6 million.
• Total ARR: Increased 9% year-over-year to $223.6 million.
• Gross Margin: 82.3%, an expansion of 120 basis points from Q3 2023.
• Operating Income: $7.2 million, compared to an operating loss of $0.5 million in Q3 2023.
• Net Income: $10.2 million, more than tripled from $2.9 million in Q3 2023.
• Diluted EPS: $0.23, compared to $0.07 in Q3 2023.
• Cash Flow from Operations: $14.7 million, compared to negative $9.8 million in Q3 2023.
• Cash and Equivalents: Approximately $412 million.
• Q4 2024 Revenue Guidance: Expected to be in the range of $71 million to $72 million.
• Q4 2024 Non-GAAP EPS Guidance: Expected to be between $0.23 and $0.24.

• Warning! GuruFocus has detected 7 Warning Signs with VRE.

Release Date: October 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Radware Ltd (NASDAQ:RDWR) reported a 13% year-over-year revenue growth, exceeding their guidance.
• The company achieved a substantial increase in non-GAAP EPS, delivering earnings of $0.23 per share, more than triple the EPS recorded in the third quarter of 2023.
• Radware Ltd (NASDAQ:RDWR)'s cloud security business continues to grow, with a record number of new cloud customers and a 15% year-over-year growth in cloud ARR.
• The company saw significant strength in its security product subscription, driven by the DefensePro X refresh.
• Radware Ltd (NASDAQ:RDWR) was recognized as a technology leader in the SPARK Matrix analysis for the web application firewall market for the fourth consecutive year.

Negative Points

• APAC revenue decreased by 5% year-over-year, accounting for 24% of total revenue.
• The Americas region showed a decrease in revenue on a 12-month trailing basis, with a 1% year-over-year decline.
• Service provider spending in North America was weak, impacting overall performance in the region.
• Despite strong results, the company faces challenges from the cautious spending behavior of customers due to the challenging economic environment.
• Radware Ltd (NASDAQ:RDWR) anticipates needing to increase investment in sales and marketing to sustain growth, which may impact short-term profitability.

Q & A Highlights

Q: Can you provide more details about the DefensePro X upgrade and its current shipment mix compared to DefensePro? Also, is there a timeline for ending sales of the DefensePro platform? A: Roy Zisapel, President and CEO, explained that there is no shortage of shipments, but the migration to DefensePro X is a process, especially for large customers. DefensePro X offers significant security advantages with new algorithms and enhanced performance. Approximately 60-70% of the current DefensePro line has been announced for end of sale, with the remaining platforms expected to follow in Q1 or Q2 next year. The transition is driven by both end-of-sale announcements and the enhanced security capabilities of DefensePro X.

Q: Are you upgrading the cloud scrubbing centers with DefensePro X, and does this drive incremental revenue? A: Roy Zisapel confirmed that Radware is upgrading its cloud infrastructure with the latest algorithms, which is a replacement of CapEx investments. The enhanced capabilities have led to significant customer wins, such as a large cloud contract with a major communication provider, driven by Radware's superior security capabilities.

Q: Is the 47% of total revenues from subscriptions a quarterly or year-to-date figure? A: Guy Avidan, CFO, clarified that the 47% figure is for the quarter, while the year-to-date subscription revenue is 46%.

Q: What is driving the strong traction in EMEA, and what kind of clients are you seeing in that region? A: Roy Zisapel noted that EMEA is performing well with a diversified mix of business, including strong cloud deals and cooperation with Cisco and Check Point. The region shows consistent results with growth in cloud and OEM execution, supported by large on-premises deals in carrier and government sectors.

Q: The Americas region seems soft; is this due to weaker service provider spending? What are the future expectations? A: Roy Zisapel acknowledged the weakness in North America, particularly in the service provider segment, but expressed optimism for future growth, especially in security MSSP and 5G deployments. Radware is investing in North America, seeing significant potential and aiming to scale its operations.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.