Title of each class | Name of each exchange on which registered |
Ordinary Shares, NIS 0.05 par value per share | The Nasdaq Stock Market LLC |
Large Accelerated Filer ☐ | Accelerated Filer ☒ |
Non-Accelerated Filer ☐ | Emerging growth company ☐ |
☒ | U.S. GAAP |
☐ | International Financial Reporting Standards as issued by the International Accounting Standards Board |
☐ | Other |
· | “we,” “us,” “our,” the “Company,” and “Radware” are to Radware Ltd. and its subsidiaries; |
· | “ordinary shares” are to our Ordinary Shares, par value NIS 0.05 per share; |
· | “Companies Law” or the “Israeli Companies Law” are to the Israeli Companies Law, 5759-1999, as amended; |
· | the “SEC” are to the U.S. Securities and Exchange Commission; |
· | the "U.S." are to the United States; |
· | “U.S. GAAP” are to generally accepted accounting principles in the United States; |
· | “ |
· | “dollars” |
· | “NIS” or “shekels” are to New Israeli Shekels. |
8 | |||||
8 | |||||
8 | |||||
9 | |||||
A. | Selected Financial Data | 9 | |||
B. | Capitalization and Indebtedness | 10 | |||
C. | Reasons for the Offer and Use of Proceeds | 11 | |||
D. | Risk Factors | 11 | |||
36 | |||||
A. | History and Development of the Company | 36 | |||
B. | Business Overview | 37 | |||
C. | Organizational Structure | 55 | |||
D. | Property, Plants and Equipment | 56 | |||
57 | |||||
57 | |||||
A. | Operating Results | 57 | |||
B. | Liquidity and Capital Resources | 75 | |||
C. | Research and Development, Patents and Licenses, etc. | 79 | |||
D. | Trend Information | 79 | |||
E. | Off-Balance Sheet Arrangements | 81 | |||
F. | Tabular Disclosure of Contractual Obligations | 81 | |||
82 | |||||
A. | Directors and Senior Management | 82 | |||
B. | Compensation | 86 | |||
C. | Board Practices | 90 | |||
D. | Employees | 98 | |||
E. | Share Ownership | 100 | |||
103 | |||||
A. | Major Shareholders | 103 | |||
B. | Related Party Transactions | 105 | |||
C. | Interests of Experts and Counsel | 107 | |||
108 | |||||
A. | Consolidated Statements and other Financial Information | 108 | |||
B. | Significant Changes | 108 |
109 | |||||
A. | Offer and Listing Details | 109 | |||
B. | Plan of Distribution | 109 | |||
C. | Markets | 109 | |||
D. | Selling Shareholders | 109 | |||
E. | Dilution | 109 | |||
F. | Expenses of the Issue | 109 | |||
110 | |||||
A. | Share Capital | 110 | |||
B. | Memorandum and Articles of Association | 110 | |||
C. | Material Contracts | 116 | |||
D. | Exchange Controls | 116 | |||
E. | Taxation | 117 | |||
F. | Dividends and Paying Agents | 131 | |||
G. | Statement by Experts | 131 | |||
H. | Documents on Display | 132 | |||
I. | Subsidiary Information | 132 | |||
133 | |||||
135 | |||||
136 | |||||
136 | |||||
136 | |||||
136 | |||||
ITEM 16. | RESERVED | 138 | |||
138 | |||||
138 | |||||
138 | |||||
139 | |||||
140 | |||||
141 | |||||
141 | |||||
141 |
142 | |||||
142 | |||||
142 | |||||
142 | |||||
144 |
Year ended December 31, | ||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||
(U.S. dollars and share amounts in thousands, except per share data) | ||||||||||||||||||||
Consolidated Statements of Income Data: | ||||||||||||||||||||
Revenues: | ||||||||||||||||||||
Products | $ | 110,186 | $ | 136,793 | ** | $ | 143,466 | ** | $ | 118,727 | $ | 119,279 | ||||||||
Services | 86,399 | 79,773 | ** | 78,426 | ** | 74,270 | 69,892 | |||||||||||||
196,585 | 216,566 | 221,892 | 192,997 | 189,171 | ||||||||||||||||
Cost of revenues: | ||||||||||||||||||||
Products | 27,320 | 29,159 | 29,448 | 27,066 | 26,386 | |||||||||||||||
Services | 8,375 | 9,041 | 10,284 | 9,669 | 9,333 | |||||||||||||||
35,695 | 38,200 | 39,732 | 36,735 | 35,719 | ||||||||||||||||
Gross profit | 160,890 | 178,366 | 182,160 | 156,262 | 153,452 | |||||||||||||||
Operating expenses: | ||||||||||||||||||||
Research and development, net | 51,732 | 49,987 | 44,081 | 40,983 | 36,187 | |||||||||||||||
Sales and marketing | 103,774 | 93,347 | 93,203 | 82,815 | 76,646 | |||||||||||||||
General and administrative | 18,133 | 17,033 | 19,797 | 14,895 | 9,696 | |||||||||||||||
Total operating expenses | 173,639 | 160,367 | 157,081 | 138,693 | 122,529 | |||||||||||||||
Operating income (loss) | (12,749 | ) | 17,999 | 25,079 | 17,569 | 30,923 | ||||||||||||||
Financial income, net | 5,741 | 5,867 | 5,802 | 4,494 | 4,792 | |||||||||||||||
Income (loss) before taxes on income | (7,008 | ) | 23,866 | 30,881 | 22,063 | 35,715 | ||||||||||||||
Taxes on income | (1,651 | ) | (5,297 | ) | (5,931 | ) | (4,008 | ) | (3,958 | ) | ||||||||||
Net income (loss) | $ | (8,659 | ) | $ | 18,569 | $ | 24,950 | $ | 18,055 | $ | 31,757 | |||||||||
Basic net earnings (loss) per share* | $ | (0.20 | ) | $ | 0.40 | $ | 0.55 | $ | 0.40 | $ | 0.73 | |||||||||
Diluted net earnings (loss) per share* | $ | (0.20 | ) | $ | 0.40 | $ | 0.53 | $ | 0.39 | $ | 0.68 |
Year ended December 31, | ||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||
(U.S. dollars and share amounts in thousands, except per share data) | ||||||||||||||||||||
Consolidated Statements of Income (loss) Data: | ||||||||||||||||||||
Revenues: | ||||||||||||||||||||
Products | $ | 118,062 | $ | 117,968 | $ | 110,186 | $ | 136,793 | ** | $ | 143,466 | ** | ||||||||
Services | 116,342 | 93,401 | 86,399 | 79,773 | ** | 78,426 | ** | |||||||||||||
234,404 | 211,369 | 196,585 | 216,566 | 221,892 | ||||||||||||||||
Cost of revenues: | ||||||||||||||||||||
Products | 30,803 | 30,862 | 27,320 | 29,159 | 29,448 | |||||||||||||||
Services | 10,872 | 8,754 | 8,375 | 9,041 | 10,284 | |||||||||||||||
41,675 | 39,616 | 35,695 | 38,200 | 39,732 | ||||||||||||||||
Gross profit | 192,729 | 171,753 | 160,890 | 178,366 | 182,160 | |||||||||||||||
Operating expenses, net: | ||||||||||||||||||||
Research and development, net | 57,674 | 59,003 | 51,732 | 49,987 | 44,081 | |||||||||||||||
Sales and marketing | 111,386 | 108,744 | 103,774 | 93,347 | 93,203 | |||||||||||||||
General and administrative | 16,145 | 17,577 | 18,133 | 17,033 | 19,797 | |||||||||||||||
Other income | - | (6,900 | ) | - | - | - | ||||||||||||||
Total operating expenses | 185,205 | 178,424 | 173,639 | 160,367 | 157,081 | |||||||||||||||
Operating income (loss) | 7,524 | (6,671 | ) | (12,749 | ) | 17,999 | 25,079 | |||||||||||||
Financial income, net | 7,274 | 4,830 | 5,741 | 5,867 | 5,802 | |||||||||||||||
Income (loss) before taxes on income | 14,798 | (1,841 | ) | (7,008 | ) | 23,866 | 30,881 | |||||||||||||
Taxes on income | 3,063 | 5,652 | 1,651 | 5,297 | 5,931 | |||||||||||||||
Net income (loss) | $ | 11,735 | $ | (7,493 | ) | $ | (8,659 | ) | $ | 18,569 | $ | 24,950 | ||||||||
Basic net earnings (loss) per share* | $ | 0.26 | $ | (0.17 | ) | $ | (0.20 | ) | $ | 0.40 | $ | 0.55 | ||||||||
Diluted net earnings (loss) per share* | $ | 0.25 | $ | (0.17 | ) | $ | (0.20 | ) | $ | 0.40 | $ | 0.53 |
Year ended December 31, | ||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Weighted average number of ordinary shares used in computing basic net earnings (loss) per share | 45,289 | 43,476 | 43,868 | 45,895 | 45,309 | |||||||||||||||
Weighted average number of ordinary shares used in computing diluted net earnings (loss) per share | 47,692 | 43,476 | 43,868 | 46,739 | 46,895 |
Year ended December 31, | ||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Weighted average number of ordinary shares used in computing basic net earnings (loss) per share | 43,868 | 45,895 | 45,309 | 44,760 | 43,709 | |||||||||||||||
Weighted average number of ordinary shares used in computing diluted net earnings (loss) per share | 43,868 | 46,739 | 46,895 | 46,717 | 46,589 |
As of December 31, | As of December 31, | |||||||||||||||||||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||||||||||||||
(U.S. dollars in thousands) | (U.S. dollars in thousands) | |||||||||||||||||||||||||||||||||||||||
Consolidated Balance Sheet Data: | ||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents, short-term bank deposits and marketable securities | $ | 226,086 | $ | 130,669 | $ | 104,416 | $ | 134,826 | $ | 88,207 | $ | 316,399 | $ | 200,961 | $ | 226,086 | $ | 130,669 | $ | 104,416 | ||||||||||||||||||||
Long-term bank deposits and marketable securities | 94,059 | 184,457 | 226,273 | 150,874 | 186,739 | 84,669 | 143,338 | 94,059 | 184,457 | 226,273 | ||||||||||||||||||||||||||||||
Working capital | 181,502 | 101,029 | 76,010 | 113,546 | 62,003 | 241,003 | 143,087 | 181,502 | 101,029 | 76,010 | ||||||||||||||||||||||||||||||
Total assets | 430,336 | 430,887 | 442,573 | 388,734 | 357,650 | 532,721 | 471,410 | 430,336 | 430,887 | 442,573 | ||||||||||||||||||||||||||||||
Shareholders’ equity | 299,763 | 319,123 | 333,697 | 294,120 | 271,230 | 363,957 | 315,356 | 299,763 | 319,123 | 333,697 | ||||||||||||||||||||||||||||||
Capital Stock | 326,001 | 313,445 | 294,738 | 263,420 | 250,338 | 384,229 | 349,923 | 326,001 | 313,445 | 294,738 |
· | demand for our solutions; |
· | sales cycles (see “Risk Factors— Our products generally have long sales cycles, which increase our costs in obtaining orders and reduce the predictability of our earnings”); |
· | seasonal trends, as more fully described below; |
· | new product announcements by us and our competitors; |
· | budgeting cycles of our customers; |
· | changes in our strategy; |
· | currency exchange rate fluctuations and economic conditions in the geographic areas where we operate; and |
· | those other factors discussed in this annual report. |
· | post-merger integration problems resulting from the combination of any acquired operations with our own operations or from the combination of two or more operations into a new merged entity; |
· | diversion of management’s attention from our core business; |
· | substantial expenditures, which could divert funds from other corporate uses; |
· | entering markets in which we have little or no experience; |
· | loss of key employees of the acquired operations; and |
· | known or unknown contingent liabilities, including, but not limited to, tax and litigation costs. |
· | A large portion of our expenses in Israel, principally salaries and related personnel expenses, are paid in NIS, whereas most of our revenues are generated in U.S. dollars. When the dollar is weak, our foreign currency denominated expenses will be higher, whereas if the dollar is strong, our foreign currency denominated expenses will be lower. If the NIS strengthens against the U.S. dollar (as happened in 2017), the dollar value of our Israeli expenses will increase and may have a material adverse effect on our business, operating results and financial condition; |
· | A portion of our international sales are denominated in currencies other than U.S. dollars, such as Euro, Chinese Yuan and Australian Dollar, thereby exposing us to currency fluctuations in such international sales transactions; |
· | We incur expenses in several other currencies in connection with our operations in Europe and Asia. Devaluation of the U.S. dollar relative to such local currencies causes our operational expenses to increase; and |
· | The majority of our international sales are denominated in U.S. dollars. Accordingly, devaluation in the local currencies of our customers relative to the U.S. dollar could cause our customers to decrease orders or default on payment. |
· | subject to limited exceptions, the judgment is final and non-appealable; |
· | the judgment was given by a court competent under the laws of the state of the court and is otherwise enforceable in such state; |
· | the judgment was rendered by a court competent under the rules of private international law applicable in Israel; |
· | the laws of the state in which the judgment was given provide for the enforcement of judgments of Israeli courts; |
· | adequate service of process has been effected and the defendant has had a reasonable opportunity to present his arguments and evidence; |
· | the judgment and its enforcement are not contrary to the law, public policy, security or sovereignty of the State of Israel; |
· | the judgment was not obtained by fraud and does not conflict with any other valid judgment in the same matter between the same parties; and |
· | an action between the same parties in the same matter was not pending in any Israeli court at the time the lawsuit was instituted in the U.S. court. |
· | On |
· | On December 31, |
· | On October 16, 2018 we announced the |
· | On July 31, 2018 we launched a new line of Alteon 7 Series, designed for carriers, mobile operators and |
· | On April |
· | On |
· | On April 12, 2018, we also introduced ERT Under Attack Service – a backup service for our customers’ security operations center (SOC) with an emergency response team (ERT) expert to support during complex attacks with a 10-minute service level agreement (SLA). |
· | On February 20, 2018, we announced |
· | On January 23, 2018, we |
· | Products – We offer a range of physical, software-based products, product subscriptions and |
IT and |
· |
o | DefensePro Attack Mitigation Device. DefensePro® is a real-time network attack prevention device that protects the user’s application infrastructure against network and |
o | AppWall Web Application Firewall. AppWall® is our Web Application Firewall (WAF) that is designed to secure the delivery of mission-critical Web applications for corporate networks and in the cloud. AppWall is an ICSA Labs certified WAF |
o | DefenseFlow Cyber Command and Control application. DefenseFlow® is a network-wide cyber command and control application that helps service providers to automate network security incidents response. DefenseFlow acts as a cyber-defense control-plane that collects and analyzes multiple sources of security telemetries and, based on this information, applies designated intelligent security actions. DefenseFlow enables service providers to handle large amounts of customers efficiently and with minimal errors. |
· | Alteon Deliver: For applications that require high performance ADCs with advanced layer 4-7 ADC functionality. |
· |
· |
o | Security Updates Subscription (SUS). Our SUS service consists of periodic updates, emergency updates, and custom filters (which are supported by our own security operations center for vulnerability and exploit detection); security risk assessment; and threat mitigation support services. The service provides immediate and ongoing security updates to protect customers |
o | Cloud DDoS Protection Service. Our Cloud DDoS Protection Services provide a full range of enterprise-grade DDoS protection services in the cloud. Based on our DDoS protection technology, it |
§ | On-Demand Cloud DDoS Protection Service - protects against Internet pipe saturation and is activated when the attack threatens to saturate the organization’s Internet pipe. Recommended for organizations that are looking for the lowest cost solution and are less sensitive to real-time detection of DDoS attacks.On-Demand Cloud DDoS Protection Service / Hybrid Protection – integrates with our on-premise Attack mitigation device – DefensePro - in the customer’s data center. |
Cloud WAF |
o | Certainty Support Program. We offer technical support for all our products through the Certainty Support Program. Certainty support levels include: |
o | Basic - Provides business day access including weekends from 9am to 5pm (local time) to technical support center services and technical documentation, either via the Web, e-mail or direct phone support during working days. New software releases are available for units covered under the certainty support program. |
o | Standard - This level increases access to the technical support center 24/7/365 and adds next business day replacement of failed hardware and waives customer shipping costs. |
o | Advanced - Increases certainty support level standard to 4 hours' replacement of failed hardware advanced replacement |
o | Professional Services. Our professional services group is staffed by a global team of experts possessing extensive knowledge and experience in security and application delivery both in data centers and the cloud. The group offers a full range of services to design, implement, automate and optimize our customer solutions. We offer the following key services: |
o | Design and Planning. Plan and design applications for future growth with Radware engineers. The service starts with a review of business goals, network optimization assessment and overview of application architecture and security requirements to help create a comprehensive deployment plan that is tailored to organizational IT requirements. |
o | Application and Security Optimization Services. Analyze and review the current implementation and design and provide recommendations to help optimize the system and achieve business goals. |
o | Resident Engineer. Our Resident Engineer service is a proactive on-site engineer who performs operations, design and automation activities. From initial deployment to ongoing management and day-to-day operation, our resident engineer decreases the time demands on our customer’s staff, allowing them to focus on their core business. |
o | Technical Account Manager (TAM). Our technical account manager (TAM) is a proactive consultant that implements best practices, provides guidance and optimizes networking and application resources. |
o | ERT Managed Service. Our ERT offers a fully managed network and application security service. The service is provided 24x7 by security experts and covers a broad range of attack types from different forms of denial-of-service to a variety of application attacks against the customer’s servers or data centers. It includes immediate response, onboarding, consulting, remote management and reporting. |
o | ERT Under Attack Service. The ERT Under Attack Service provides 24/7 access to a security expert within 10 minutes – one of the industry’s fastest SLA. The ERT engineer will take the lead, fight attacks off and provide post-mortem analysis of security events. The ERT Under Attack Service lets organizations know there is someone to rely on, guaranteeing support throughout the attack lifecycle from the moment it begins. The ERT experts are available 24x7x365 and assists large enterprises worldwide with complex multi-vector attacks against their networks, data centers and application services. |
· | We have launched the ERT Active Attackers Feed, a subscription on top of our DefensePro base product offering. It provides customers with information pertaining to attack sources recently involved in DDoS attacks. Provided by Radware’s Emergency Response Team (ERT), this feed enhances Radware’s Attack Mitigation Solution and extends the automated, real-time protection provided by Radware’s DDoS mitigation platform, DefensePro, enabling preemptive blocking of attackers before they target the customer’s network. |
· | We have launched new lines of Alteon 7 and 9 Series, designed for carriers, mobile operators and large enterprises. The Alteon 7 series is offered with On-demand throughput range of 160 & 200 Gbps and high performance SSL with support for latest encryption standards (i.e. ECC). The 7 series supports 100GbE, 40GbE, 25GbE and 10GbE traffic ports. The Alteon 9 series is offered with On-demand throughput range of 240 & 320Gbp and superior SSL performance with support for latest encryption standards. The 9 series supports 100GbE, 40GbE and 10GbE traffic ports. |
· | We have released Alteon versions 31 and 32 adding new features to improve solution visibility, feature set and ease of use. The main features including: |
o |
o |
o |
o |
o |
o |
· | We have released DefensePro version 8.15 adding new features to improve the security coverage including: |
o |
o | Traffic Filters. Traffic Filters complement the DefensePro protections with |
o |
o |
· | We have released Cloud WAF Service Versions 18 and 3.7 that focus on ease-of-use, self-service and visibility. The new enhancements and features include: |
o | Application |
o |
o |
o | Policy Distribution feature, allowing copying and distributing security-policy configurations from one application to other applications; |
o | Attack Geo Map – a new feature that shows the geographical origin of the attacks with ability to drill down into detailed security events per location for further investigation and analysis. |
· | We have continued our investment in the OEM agreement with Cisco for our cyber-security solutions: we have, added our cloud DDoS |
· | We have continued our investment in the OEM agreement with Check Point: we have upgraded Check Point DDoS Protector version to DefensePro version 8; we have added Cloud WAF, Cloud DDoS Protecting services into Check Point’ offering; we have added Alteon models into Check Point’ offering to offer on-premises WAF, SSL offloading and |
· | Innovation, proprietary technologies and thought leadership. We are offering innovative solutions in our domain: we were one of the first companies to offer hybrid attack mitigation solutions; behavioral DDoS attacks detection with automated real-time signature creation for attack mitigation; device fingerprinting technology implementation for advanced Bot-based attacks detection and auto-policy generation for our WAF solution. We believe this has given us significant expertise, know-how and leadership in the market for cyber-attack mitigation solutions and we take part in many technology communities, standard organizations and open source projects. At the same time, we continue to invest in research and development of cyber security and application delivery technologies in order to introduce new and innovative solutions, which are supported and protected by multiple patents and proprietary rights. |
· | Industry Awards. We gained multiple industry awards during 2018 including: Forrester DDoS Wave Leader, Forrester WAF Wave Strong Performer, Gartner Magic Quadrant for WAF –visionary vendor; Gartner Magic Quadrant for Firewalls -Cisco named a Leader with Radware DefensePro VA; 2018 Winner of Cloud Computing Product of the Year; Quadrant Solutions - 2018 Company of the Year in Global DDoS Mitigation Market; Frost & Sullivan (India) - 2018 WAF Vendor of the Year. |
· | Global presence. We have more than 12,500 customers worldwide and have global sales, support and marketing capabilities. For example, we offer global cloud and service infrastructure based on multiple service centers dispersed globally through service data centers in Europe, Asia, North America, South America, Africa and Australia. We currently have local presence in 30 local offices, subsidiaries or branches globally, across Asia-Pacific, Europe and the Americas. As such, our Technical Assistance Centers (TAC) are located to provide 24/7 support service to our customers. We offer services from a global network of Cloud Security Service centers consisting of 11 large scrubbing centers (SC) and a global network of 24 Points-of-Presence (POP) nodes focused on application attacks for our Cloud WAF service. The global network distribution includes: |
o |
o |
o | EMEA: three SCs (London, Frankfurt, Johannesburg) and seven Pops (Frankfurt, London, Paris, Milan, Oslo, Capetown and Tel Aviv); and |
o | Asia and Australia: four SCs (Tokyo, Hong Kong, Seoul, and Sydney) & six Pops (Chennai, Sydney, Seoul, Singapore, Tokyo & Hong Kong). |
· | Strategic relationships. We have |
· | Customers. Our customers include top-tier banks, stock exchanges, carriers, cloud service providers, internet service providers, retailers and higher-education institutions. We believe this portfolio of high profile customers demonstrates the advantage and recognition of our solution offerings. |
· | Focus on data center solutions. Focus on developing and selling holistic cyber security and application |
· | Continue investing in cloud and security. We aim to offer superior and innovative security solutions and cloud-based solutions and expand our portfolio in these two dimensions. We also intent to invest in go-to-market efforts related to cloud and security. |
· | Increase our market footprint. We believe that a significant market opportunity exists to sell our solutions with |
· | Pursue acquisitions and investments. In order to achieve our business objectives, we may evaluate and pursue the acquisition of, or significant investments in, other complementary companies, technologies, products and/or businesses that enable us to enhance and increase our technological capabilities and expand our product |
Name of Subsidiary | Country of Incorporation |
Radware Inc. | New Jersey, United States of America |
Radware UK Limited | United Kingdom |
Radware France | France |
Radware Srl | Italy |
Radware GmbH | Germany |
Nihon Radware KK | Japan |
Radware Australia Pty. Ltd. | Australia |
Radware Singapore Pte. Ltd. | Singapore |
Radware Korea Ltd. | Korea |
Radware Canada Inc. | Canada |
Radware India Pvt. Ltd. | India |
Kaalbi Technologies Limited Ltd. | India |
Radware China Ltd. 睿伟网络科技(上海)有限公司 | China |
Radware (Hong Kong) Limited | Hong Kong |
Radyoos Media Ltd.* | Israel |
Radware Canada Holdings Inc. | Canada |
Radware Iberia, S.L.U. | Spain |
AB-NET Communications Ltd. Binat Business Ltd. BYNET Data Communications Ltd. BYNET Electronics Ltd. BYNET SEMECH (outsourcing) Ltd. Bynet Software Systems Ltd. Bynet System Applications Ltd. | Ceragon Networks Ltd. Internet Binat Ltd. Nuance Hearing Ltd. Packetlight Networks Ltd. Rad-Ace Ltd. RAD-Bynet Properties and Services (1981) Ltd. Radbit Computers, Inc. Radcloud Ltd. RADCOM Ltd. RAD Data Communications Ltd. Radiflow Ltd. | RADWIN Ltd. SecurityDam Ltd. Silicom Ltd. |
· | We recognize physical product revenues when control of the product is transferred to the customer (i.e., when our performance obligation is satisfied), which typically occurs at shipment and we recognize revenues from product subscriptions, as part of the product |
· | Revenues from post-contract customer support (PCS), which represents mainly, help-desk support and unit repairs or replacements, professional services and ERT services, are recognized ratably over the contract or subscription period, which is typically between one year and three years. |
· | Revenue recognition; |
· | Deferred contract costs; |
· | Investment in marketable securities; |
· | Goodwill; |
· | Stock-based compensation; and |
· | Income taxes. |
· | Revenues from physical products and software-based products are recognized upon shipment when control of the promised goods is transferred to the customer, generally when the product has been delivered. Revenues from product subscriptions, included as product revenues, are recognized ratably, on a straight-line basis, over the subscription period. |
· | Revenues from customer support, which represents mainly, help-desk support and unit repairs or replacements, professional services and ERT services, are recognized ratably, on a straight-line basis, over the term of the related contract, which is typically between one year and three years. Renewals of support contracts create new performance obligations that are satisfied over the term with the revenues, recognized ratably, on a straight-line basis, over the renewed period. |
2016 | 2015 | 2014 | ||||||||||
(U.S. $ in thousands) | ||||||||||||
Revenues: | ||||||||||||
Products | $ | 110,186 | $ | 136,793 | * | $ | 143,466 | * | ||||
Services | 86,399 | 79,773 | * | 78,426 | * | |||||||
196,585 | 216,566 | 221,892 | ||||||||||
Cost of revenues: | ||||||||||||
Products | 27,320 | 29,159 | 29,448 | |||||||||
Services | 8,375 | 9,041 | 10,248 | |||||||||
35,695 | 38,200 | 39,732 | ||||||||||
Gross profit | 160,890 | 178,366 | 182,160 | |||||||||
Operating expenses: | ||||||||||||
Research and development, net | 51,732 | 49,987 | 44,081 | |||||||||
Sales and marketing | 103,774 | 93,347 | 93,203 | |||||||||
General and administrative | 18,133 | 17,033 | 19,797 | |||||||||
Total operating expenses | 173,639 | 160,367 | 157,081 | |||||||||
Operating income (loss) | (12,749 | ) | 17,999 | 25,079 | ||||||||
Financial income, net | 5,741 | 5,867 | 5,802 | |||||||||
Income (loss) before taxes on income | (7,008 | ) | 23,866 | 30,881 | ||||||||
Taxes on income | (1,651 | ) | (5,297 | ) | (5,931 | ) | ||||||
Net income (loss) | (8,659 | ) | 18,569 | 24,950 |
2018 | 2017 | 2016 | ||||||||||
(U.S. $ in thousands) | ||||||||||||
Revenues: | ||||||||||||
Products | $ | 118,062 | $ | 117,968 | $ | 110,186 | ||||||
Services | 116,342 | 93,401 | 86,399 | |||||||||
234,404 | 211,369 | 196,585 | ||||||||||
Cost of revenues: | ||||||||||||
Products | 30,803 | 30,862 | 27,320 | |||||||||
Services | 10,872 | 8,754 | 8,375 | |||||||||
41,675 | 39,616 | 35,695 | ||||||||||
Gross profit | 192,729 | 171,753 | 160,890 | |||||||||
Operating expenses, net: | ||||||||||||
Research and development, net | 57,674 | 59,003 | 51,732 | |||||||||
Sales and marketing | 111,386 | 108,744 | 103,774 | |||||||||
General and administrative | 16,145 | 17,577 | 18,133 | |||||||||
Other income | - | (6,900 | ) | - | ||||||||
Total operating expenses | 185,205 | 178,424 | 173,639 | |||||||||
Operating income (loss) | 7,524 | (6,671 | ) | (12,749 | ) | |||||||
Financial income, net | 7,274 | 4,830 | 5,741 | |||||||||
Income (loss) before taxes on income | 14,798 | (1,841 | ) | (7,008 | ) | |||||||
Taxes on income | 3,063 | 5,652 | 1,651 | |||||||||
Net income (loss) | 11,735 | (7,493 | ) | (8,659 | ) |
2018 | 2017 | 2016 | ||||||||||
Revenues: | ||||||||||||
Products | 50 | % | 56 | % | 56 | % | ||||||
Services | 50 | 44 | 44 | |||||||||
100 | 100 | 100 | ||||||||||
Cost of Revenues: | ||||||||||||
Products | 13 | 15 | 14 | |||||||||
Services | 5 | 4 | 4 | |||||||||
18 | 19 | 18 | ||||||||||
Gross profit | 82 | 81 | 82 | |||||||||
Operating expenses, net: | ||||||||||||
Research and development, net | ||||||||||||
25 | 28 | 26 | ||||||||||
Sales and marketing | 47 | 51 | 53 | |||||||||
General and administrative | 7 | 8 | 9 | |||||||||
Other income | - | (3 | ) | - | ||||||||
Total operating expenses | 79 | 84 | 88 | |||||||||
Operating income (loss) | 3 | (3 | ) | (6 | ) | |||||||
Financial income, net | 3 | 2 | 3 | |||||||||
Income (loss) before taxes on income | 6 | (1 | ) | (3 | ) | |||||||
Taxes on income | (1 | ) | (3 | ) | (1 | ) | ||||||
Net income (loss) | 5 | % | (4 | )% | (4 | )% |
2016 | 2015 | 2014 | ||||||||||
Revenues: | ||||||||||||
Products | 56 | % | 63 | % | 65 | % | ||||||
Services | 44 | 37 | 35 | |||||||||
100 | 100 | 100 | ||||||||||
Cost of Revenues: | ||||||||||||
Products | 14 | 13 | 13 | |||||||||
Services | 4 | 4 | 5 | |||||||||
18 | 18 | 18 | ||||||||||
Gross profit | 82 | 82 | 82 | |||||||||
Operating expenses: | ||||||||||||
Research and development, net | 26 | 23 | 20 | |||||||||
Sales and marketing | 53 | 43 | 42 | |||||||||
General and administrative | 9 | 8 | 9 | |||||||||
Total operating expenses | 88 | 74 | 71 | |||||||||
Operating income (loss) | (6 | ) | 8 | 11 | ||||||||
Financial income, net | 3 | 3 | 3 | |||||||||
Income (loss) before taxes on income | (3 | ) | 11 | 14 | ||||||||
Taxes on income | (1 | ) | (2 | ) | (3 | ) | ||||||
Net income (loss) | (4 | )% | 9 | % | 11 | % |
2018 | 2017 | 2016 | % Change 2018 vs. 2017 | % Change 2017 vs. 2016 | ||||||||||||||||||||||||||||
Products | 118,062 | 50 | % | 117,968 | 56 | % | 110,186 | 56 | % | 0 | % | 7 | % | |||||||||||||||||||
Services | 116,342 | 50 | % | 93,401 | 44 | % | 86,399 | 44 | % | 25 | % | 8 | % | |||||||||||||||||||
Total | 234,404 | 100 | % | 211,369 | 100 | % | 196,585 | 100 | % | 11 | % | 8 | % |
2016 | 2015 | 2014 | % Change 2016 vs. 2015 | % Change 2015 vs. 2014 | ||||||||||||||||||||||||||||
Products | 110,186 | 56 | % | 136,793 | * | 63 | % | 143,466 | * | 65 | % | (19 | )% | (5 | )% | |||||||||||||||||
Services | 86,399 | 44 | % | 79,773 | * | 37 | % | 78,426 | * | 35 | % | 8 | % | 2 | % | |||||||||||||||||
Total | 196,585 | 100 | % | 216,566 | 100 | % | 221,892 | 100 | % | (9 | )% | (2 | )% |
2016 | 2015 | 2014 | % Change 2016 vs. 2015 | % Change 2015 vs. 2014 | 2018 | 2017 | 2016 | % Change 2018 vs. 2017 | % Change 2017 vs. 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
North, Central and South America (principally the United States)(*) | 84,733 | 43 | % | 88,685 | 41 | % | 93,486 | 42 | % | (4 | )% | (5 | )% | 102,491 | 44 | % | 97,901 | 46 | % | 84,733 | 43 | % | 5 | % | 16 | % | ||||||||||||||||||||||||||||||||||||||
EMEA (Europe, the Middle East and Africa) | 53,724 | 27 | % | 62,689 | 29 | % | 55,375 | 25 | % | (14 | )% | 13 | % | 75,750 | 32 | % | 56,589 | 27 | % | 53,724 | 27 | % | 34 | % | 5 | % | ||||||||||||||||||||||||||||||||||||||
Asia-Pacific | 58,128 | 30 | % | 65,192 | 30 | % | 73,031 | 33 | % | (11 | )% | (11 | )% | 56,163 | 24 | % | 56,879 | 27 | % | 58,128 | 30 | % | (1 | )% | (2 | )% | ||||||||||||||||||||||||||||||||||||||
Total | 196,585 | 100 | % | 216,566 | 100 | % | 221,892 | 100 | % | (9 | )% | (2 | )% | 234,404 | 100 | % | 211,369 | 100 | % | 196,585 | 100 | % | 11 | % | 8 | % |
2018 | 2017 | 2016 | ||||||||||||||||||||||
Cost of Products | 30,803 | 26.1 | % | 30,862 | 26.2 | % | 27,320 | 24.8 | % | |||||||||||||||
Cost of Services | 10,872 | 9.3 | % | 8,754 | 9.4 | % | 8,375 | 9.7 | % | |||||||||||||||
Total | 41,675 | 17.8 | % | 39,616 | 18.7 | % | 35,695 | 18.2 | % |
2016 | 2015 | 2014 | ||||||||||||||||||||||
Cost of Products | 27,320 | 24.8 | % | $ | 29,159 | 21.3 | % | $ | 29,448 | 20.5 | % | |||||||||||||
Cost of Services | 8,375 | 9.7 | % | 9,041 | 11.3 | % | 10,284 | 13.1 | % | |||||||||||||||
Total | 35,695 | 18.2 | % | $ | 38,200 | 17.6 | % | $ | 39,732 | 17.9 | % |
2016 | 2015 | 2014 | % Change 2016 vs. 2015 | % Change 2015 vs. 2014 | 2018 | 2017 | 2016 | % Change 2018 vs. 2017 | % Change 2017 vs. 2016 | |||||||||||||||||||||||||||||||
Research and development, net | $ | 51,732 | $ | 49,987 | $ | 44,081 | 3 | % | 13 | % | $ | 57,674 | $ | 59,003 | $ | 51,732 | (2 | )% | 14 | % | ||||||||||||||||||||
Selling and marketing | 103,774 | 93,347 | 93,203 | 11 | % | 0.2 | % | 111,386 | 108,744 | 103,774 | 2 | % | 5 | % | ||||||||||||||||||||||||||
General and administrative | 18,133 | 17,033 | 19,797 | 6 | % | (14 | )% | 16,145 | 17,577 | 18,133 | (8 | )% | (3 | )% | ||||||||||||||||||||||||||
Other income | - | (6,900 | ) | - | ||||||||||||||||||||||||||||||||||||
Total | $ | 173,639 | $ | 160,367 | $ | 157,081 | 8 | % | 2 | % | $ | 185,205 | $ | 178,424 | $ | 173,639 | 4 | % | 3 | % |
2016 | 2015 | 2014 | 2018 | 2017 | 2016 | |||||||||||||||||||
Net cash provided by operating activities | $ | 38,480 | $ | 39,136 | $ | 52,177 | $ | 49,251 | $ | 31,464 | $ | 38,480 | ||||||||||||
Net cash provided by (used in) investing activities | 28,359 | (6,853 | ) | (36,032 | ) | (85,503 | ) | (56,342 | ) | 28,359 | ||||||||||||||
Net cash provided by (used in) financing activities | (20,944 | ) | (43,518 | ) | 8,767 | 16,218 | 10,478 | (20,944 | ) |
· | Applications are migrating to the cloud. Organizations therefore require broader protection that encompasses both the enterprise |
· | Datacenter architecture is changing, to include various models such as a physical datacenter, a virtual datacenter, a software defined datacenter, and private |
· | Application infrastructure is changing, from monolithic applications based on the 3-tier applications, client server and so on, to a cloud-native or micro-services architecture that are packaged as containers, providing a built-in ‘on-demand’ elasticity and availability application infrastructure. This shift in application lifecycle control and delivery methods is triggered by the need to match the ‘cloud clock’ for the ever-changing business needs, rely on a new application networking infrastructure, the service-mesh network. This enables to introduce and run the new generation of cloud-native applications, in a fast, adaptive and more efficient way by adapting DevOps tools and methods. |
· | Increasing complexity and intensity of security threats require expertise in identifying the attacks and recommending the right action. Attack delivery is aided by the growing presence of connected devices (IoT) which increases the threat surface against any kind of infrastructure, as well as traffic encryption (dark data) assisting hiding attacks, and attack tools are becoming more sophisticated as hackers use automation and weaponizing Artificial Intelligence. All of that leads to ever-morphing and scalable attack vectors. In addition, attack tools are increasingly available to all through the Dark net. The mass amount of uncontrolled IoT devices and the cloud hosting opens up the doors for new generation of botnets and bots, hard to classify and block. Moreover, the usage of public cloud infrastructure by most of the enterprises, creates the need to protect the cloud workloads and services from different attack surfaces, manifested by the fact that the cloud application’s DevOps processes are done from the outside the cloud ‘perimeter’ unlike the premise-based application development process (The insider becomes the outsider). Most organizations are not able to keep up with these developments with their internal cyber security resources and seek managed security services. |
· | Increasing expectations for applications availability |
· | We have developed a |
· | We continuously focus on innovation and believe that our products and services have, in many |
· | We offer our solutions in a wide array of deployment models |
Payments Due By Period (US $ in thousands) | ||||||||||||||||||||
Contractual obligations | Total | Less than 1 year* | 1-3 years | 3-5 years | More than 5 years | |||||||||||||||
Operating leases (1) | 10,168 | 4,661 | 3,986 | 850 | 671 | |||||||||||||||
Total contractual cash obligations (2)(3) | 10,168 | 4,661 | 3,986 | 850 | 671 |
Payments Due By Period (US $ in thousands) | ||||||||||||||||||||
Contractual obligations | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | |||||||||||||||
Operating leases(1) | 14,479 | 4,865 | 7,118 | 2,458 | 38 | |||||||||||||||
Total contractual cash obligations (2)(3) | 14,479 | 4,865 | 7,118 | 2,458 | 38 |
Name | Age | Position |
Yehuda Zisapel (1) | Chairman of the Board of Directors | |
Yair Tauman (2)(3)(4)(5) | Director, Chairman of the Compensation Committee | |
David Rubner (1)(3)(4)(5) | Director, Chairman of the Audit Committee | |
Yael Langer (6) | Director | |
Avraham Asheri (1) (4) (5) | Director | |
Joel Maryles (2)(4)(5) | Director | |
Roy Zisapel (2) | President, Chief Executive Officer and Director | |
Doron Abramovitch | Chief Financial Officer | |
David Aviv | 63 | Chief Technology Officer |
Gabi Malka | Chief Operating Officer | |
Sharon Trachtman | Chief Business Operation Officer | |
Anna Convery-Pelletier | Chief Marketing Officer | |
Yoav Gazelle | VP Sales EMEA & CALA | |
Terence Ying | VP Sales Asia-Pacific | |
Amir Peles | 47 | VP Technologies |
Salaries, fees, commissions and bonuses | Pension, retirement and other similar benefits | |||||||
2015 - All directors and officers as a group, consisting of 14 persons* | $ | 2,800,000 | $ | 444,000 | ||||
2016 - All directors and officers as a group, consisting of 15 persons** | $ | 2,645,000 | $ | 389,500 |
Salaries, fees, commissions and bonuses | Pension, retirement and other similar benefits | |||||||
2017 - All directors and officers as a group, consisting of 14 persons* | $ | 3,604,100 | $ | 504,900 | ||||
2018 - All directors and officers as a group, consisting of 15 persons* | $ | 4,050,500 | $ | 596,800 |
Bonus (including Sales Commissions) (2) | Equity-Based Compensation (3) | All Other Compensation (4) | ||||||||||||||||||||||||||||||||||||||||||
Name and Principal Position (1) | Year | Salary | Bonus (including Sales Commissions) (2) | Equity-Based Compensation (3) | All Other Compensation (4) | Total | Year | Salary | Total | |||||||||||||||||||||||||||||||||||
(US$ in thousands) | (US$ in thousands) | |||||||||||||||||||||||||||||||||||||||||||
Roy Zisapel, Chief Executive Officer, President and Director* | 2018 | 420 | (5) | 360 | (6) | 2,320 | 136 | 3,236 | ||||||||||||||||||||||||||||||||||||
Doron Abramovitch, Chief Financial Officer* | 2016 | 282 | 40 | 461 | 54 | 837 | 2018 | 304 | 118 | 694 | 93 | 1,209 | ||||||||||||||||||||||||||||||||
Gabi Malka, Chief Operating Officer* | 2016 | 252 | 50 | 313 | 62 | 677 | 2018 | 274 | 109 | 231 | 68 | 682 | ||||||||||||||||||||||||||||||||
Yoav Gazelle, VP EMEA & CALA | 2016 | 163 | 188 | 269 | 23 | 643 | ||||||||||||||||||||||||||||||||||||||
Terence Ying, Vice President Asia-Pacific | 2016 | 263 | 205 | 154 | 15 | 637 | ||||||||||||||||||||||||||||||||||||||
Roy Zisapel, Chief Executive Officer, President and Director* | 2016 | 397 | 80 | 0 | 74 | 551 | ||||||||||||||||||||||||||||||||||||||
Yoav Gazzele, VP Sales EMEA & CALA | 2018 | 183 | 289 | 154 | 44 | 670 | ||||||||||||||||||||||||||||||||||||||
Amir Peles, VP Technologies* | 2018 | 285 | 18 | 193 | 57 | 553 |
(1) | Unless otherwise indicated herein, all Covered Executives are (i) employed on a full-time (100%) basis; and (ii) subject to customary confidentiality, intellectual property assignment and non-solicitation provisions as well as an undertaking not to compete with us or in our field of business for at least 12 months following termination of employment. |
(2) | Amounts reported in this column represent annual bonuses, including sales commissions. Consistent with our Compensation Policy, such bonuses are based upon (i) for non-sales executive officers |
(3) | Amounts reported in this column represent the grant date fair value in accordance with accounting guidance for stock-based compensation. For a discussion of the assumptions used in reaching this valuation, see Note 2(r) to our consolidated financial statements included elsewhere in this annual report. |
(4) | Amounts reported in this column include benefits and perquisites, including those mandated by applicable law. Such benefits and perquisites may include, to the extent applicable to the Covered Executive, payments, contributions and/or allocations for savings funds (e.g., Managers Life Insurance Policy), education funds ('keren hishtalmut'), pension, severance, vacation, car or car allowance, medical insurances and benefits, risk insurances (e.g., life, or work disability insurance), phone, convalescence or recreation pay, relocation, payments for social security, tax gross-up payments and other benefits and perquisites consistent with Radware's guidelines. Unless otherwise indicated herein, all Covered Executives (i) are entitled to a notice period of at least 1 month prior to termination (other than termination for cause), during which they are generally entitled to all compensation and rights under their employment agreements; and (ii) are not entitled to any special bonuses or benefits upon a change of control of our Company, other than a potential acceleration of the vesting of their stock options pursuant to our equity incentive plan, as more fully described in Item 6E below. |
(5) | Mr. Roy Zisapel is entitled to a gross base salary of $300,000 (or the equivalent in NIS) per annum. However, he is also entitled to a quarterly payment of $25,000, effective as of the January 1, 2012 as compensation for his additional duties and tasks in the United States as manager of our entire on-going North America activities. The additional amount will be payable for as long as Mr. Zisapel maintains this additional position. The additional $20,000 over the aggregated total $400,000 annual salary is attributed to the change in the exchange rate of the $ vs. NIS since the date of the Shareholders’ Annual General Meeting in 2012 approving Mr. Zisapel’s salary and the average $/NIS exchange rate in 2018. |
(6) | Consistent with our Compensation Policy, and as approved by our shareholders in November 2015, Mr. Roy Zisapel is entitled to an annual bonus of up to $400,000 (or the equivalent in NIS). |
Class | Term expiring at the annual meeting for the year | Directors | ||
Class I | Yehuda Zisapel and Avraham Asheri | |||
Class II | 2019 | Roy Zisapel and Joel Maryles | ||
Class III | Yael Langer | |||
· | the company, the company’s controlling shareholder or its relative, or another entity affiliated with the company or its controlling shareholder, or |
· | a company without a controlling shareholder (or a shareholder that owns more than 25% of its voting power), such as Radware, any person who, at the time of appointment, is the chairman, the chief executive officer, the chief financial officer or a 5% shareholder of the company. |
· | an employment relationship; |
· | a business or professional relationship; |
· | control; and |
· | service as an office holder, excluding service as a director that was appointed to serve as an external director of a company that is about to make its initial public offering. |
· | at least a majority of the shares of non-controlling shareholders voted at the meeting in favor of the election; or |
· | the total number of shares voted against the election of the external director does not exceed 2% of the aggregate voting rights in the Company. |
Name of Body | No. of Meetings in 2016 | Average Attendance Rate | ||||||
Board of Directors | 8 | 94 | % | |||||
Audit Committee | 5 | 100 | % | |||||
Compensation Committee | 4 | 100 | % |
Name of Body | No. of Meetings in 2018 | Average Attendance Rate | ||||||
Board of Directors | 8 | 96 | % | |||||
Audit Committee | 6 | 100 | % | |||||
Compensation Committee | 8 | 100 | % |
· | Information regarding the advisability of a given action submitted for his or her approval or performed by him or her by virtue of his or her position; and |
· | All other important information pertaining to these actions. |
· | Refrain from any conflict of interest between the performance of his/her duties in the company and the performance of his or her other duties or his or her personal affairs; |
· | Refrain from any activity that is competitive with the company; |
· | Refrain from exploiting any business opportunity of the company to receive a personal gain for himself/herself or others; and |
· | Disclose to the company any information or documents relating to the company’s affairs which the office holder has received due to his/her position as an office holder. |
· | Other than in the ordinary course of business; |
· | Not on market terms; or |
· | That is likely to have a material impact on the company’s profitability, assets or liabilities. |
· | At least a majority of the shares of shareholders who have no personal interest in the transaction, and who are present and voting (in person, by proxy or by written ballot) vote in favor thereof; or |
· | The shareholders who have no personal interest in the transaction who vote against the transaction do not represent more than 2% of the voting power in the company. |
As at December 31, | As at December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2018 | 2017 | 2016 | |||||||||||||||||||
Approximate numbers of employees and subcontractors by geographic location: | Approximate numbers of employees and subcontractors by geographic location: | |||||||||||||||||||||||
Israel | 451 | (**) | 465 | (**) | 408 | (**) | 456 | 450 | (**) | 451 | (**) | |||||||||||||
United States | 209 | 200 | 168 | 196 | 209 | 209 | ||||||||||||||||||
Other | 319 | (*) | 331 | (*) | 319 | (*) | 309 | (*) | 319 | (*) | 319 | (*) | ||||||||||||
Total workforce | 979 | 996 | 895 | 961 | 978 | 979 | ||||||||||||||||||
Approximate numbers of employees and subcontractors by category of activity: | Approximate numbers of employees and subcontractors by category of activity: | |||||||||||||||||||||||
Research and development | 389 | (*) | 422 | (*) | 376 | (*) | 372 | (*) | 381 | (*) | 389 | (*) | ||||||||||||
Sales, technical support, business development and marketing | 473 | 455 | 406 | 452 | 474 | 473 | ||||||||||||||||||
Management, operations and administration | 117 | 119 | 113 | 137 | 123 | 117 | ||||||||||||||||||
Total workforce | 979 | (**) | 996 | (**) | 895 | (**) | 961 | 978 | (**) | 979 | (**) |
Name | Number of ordinary shares* | Percentage of outstanding ordinary shares** | ||||||
Yehuda Zisapel (1) | 1,525,276 | 3.24 | % | |||||
Roy Zisapel (2) | 1,440,755 | 3.06 | % | |||||
Avraham Asheri (3) | * | * | ||||||
Yael Langer (3) | * | * | ||||||
David Rubner (3) | * | * | ||||||
Yair Tauman (3) | * | * | ||||||
Joel Maryles (3) | * | * | ||||||
Doron Abramovitch (3) | * | * | ||||||
Gabi Malka (3) | * | * | ||||||
David Aviv (3) | * | * | ||||||
Sharon Trachtman (3) | * | * | ||||||
Anna Convery-Pelletier (3) | * | * | ||||||
Yoav Gazelle (3) | * | * | ||||||
Terence Ying (3) | * | * | ||||||
Amir Peles (3) | * | * | ||||||
All directors and executive officers as a group (15 persons) (4) | 3,306,531 | 6.97 | % |
Name | Number of ordinary shares | Percentage of outstanding ordinary shares | ||||||
Yehuda Zisapel (1) | 2,892,243 | 6.68 | % | |||||
Roy Zisapel (2) | 2,639,204 | 6.03 | % | |||||
Avraham Asheri (3) | * | * | ||||||
Yael Langer (3) | * | * | ||||||
David Rubner (3) | * | * | ||||||
Yair Tauman (3) | * | * | ||||||
Joel Maryles (3) | * | * | ||||||
Meir Moshe (3)^ | * | * | ||||||
Doron Abramovitch (3) | * | * | ||||||
Gabi Malka (3) | * | * | ||||||
David Aviv (3) | * | * | ||||||
Sharon Trachtman (3) | * | * | ||||||
Anna Convery-Pelletier | * | * | ||||||
Yoav Gazelle (3) | * | * | ||||||
Terence Ying (3) | * | * | ||||||
All directors and executive officers as a group (15 persons) (4) | 6,292,298 | 14.19 | % |
· | the persons to whom options or RSUs are granted; |
· | the number of shares underlying each equity award; |
· | the time or times at which the award shall be made; |
· | the exercise price, vesting schedule |
· | any other matter necessary or desirable for the administration of the plan. |
Name | Number of ordinary shares* | Percentage of outstanding ordinary shares** | ||||||
Senvest Management, LLC (1) | 5,832,115 | 12.42 | % | |||||
Cadian Capital Management, LP(2) | 3,649,771 | 7.77 | % | |||||
Nava Zisapel (3) | 2,860,776 | 6.09 | % |
Name | Number of ordinary shares | Percentage of outstanding ordinary shares | ||||||
Senvest Management, LLC (1) | 6,116,259 | 14.16 | % | |||||
Cadian Capital Management, LP(2) | 4,192,301 | 9.71 | % | |||||
Nava Zisapel (3) | 3,115,409 | 7.21 | % | |||||
Yehuda Zisapel (4) | 2,892,243 | 6.68 | % | |||||
Roy Zisapel (5) | 2,639,204 | 6.03 | % | |||||
· | Based on |
· | Based on Amendment |
· | Pursuant to Amendment No. 4 to Statement on Schedule 13D filed with the SEC by Mr. Yehuda Zisapel and Ms. Nava Zisapel on February 19, 2019, Mr. Yehuda Zisapel reported that he has sold and aggregate amount of 58,214 shares in February 2019. |
· | One lease or the “Headquarters Lease” is a five-story building in Tel Aviv, Israel, consisting of approximately 40,000 square feet, plus storage and parking space. The lease expires in June 2020. The annual rent amounts to approximately $703,000. |
· | Another lease consists of four floors in the Or Tower in Tel Aviv, Israel with approximately 60,000 square feet, plus parking spaces. The lease expires in June 2020. The annual rent amounts to approximately $1,800,000. |
· | We also lease approximately 3,600 square feet of space in Jerusalem, Israel, for development facilities from an affiliated company owned by Messrs. Yehuda and Zohar Zisapel. This lease expires in August 2020. The annual rent amounts to approximately $89,000. |
· | In addition, we lease approximately 15,000 square feet of space in Jerusalem, Israel, for manufacturing facilities from an affiliated company owned by Yehuda Nava and Zohar Zisapel. This lease expires in August 2019. The annual rent amounts to approximately $276,000. |
NASDAQ Global Select Market | ||||||||
High | Low | |||||||
2012 | $ | 19.87 | $ | 14.48 | ||||
2013 | $ | 19.28 | $ | 13.70 | ||||
2014 | $ | 22.67 | $ | 15.91 | ||||
2015 | ||||||||
First Quarter | $ | 23.49 | $ | 19.24 | ||||
Second Quarter | $ | 24.48 | $ | 20.69 | ||||
Third Quarter | $ | 21.95 | $ | 15.85 | ||||
Fourth Quarter | $ | 17.32 | $ | 13.97 | ||||
ANNUAL | $ | 24.91 | $ | 12.60 | ||||
2016 | ||||||||
First Quarter | $ | 14.76 | $ | 10.18 | ||||
Second Quarter | $ | 12.48 | $ | 10.50 | ||||
Third Quarter | $ | 13.87 | $ | 10.97 | ||||
October 2016 | $ | 13.80 | $ | 12.11 | ||||
November 2016 | $ | 13.79 | $ | 11.46 | ||||
December 2016 | $ | 15.10 | $ | 13.18 | ||||
Fourth Quarter | $ | 14.85 | $ | 11.85 | ||||
ANNUAL | $ | 15.20 | $ | 9.98 | ||||
2017 | ||||||||
January 2017 | $ | 14.76 | $ | 14.38 | ||||
February 2017 | $ | 16.37 | $ | 14.55 | ||||
March 2017 | $ | 16.16 | $ | 15.46 | ||||
April 2017* | $ | 15.94 | $ | 15.17 |
· | any amendment to the articles of association; |
· | an increase of the company’s authorized share capital; |
· | a merger; or |
· | approval of certain related party transactions and actions, which require shareholder approval pursuant to the Companies Law. |
· | a breach of his or her duty of care to us or to another person; |
· | a breach of his or her duty of loyalty to us, provided that the office holder acted in good faith and had reasonable cause to assume that his or her act would not prejudice our interests; |
· | a financial liability imposed upon him or her in favor of another person; |
· | expenses he or she incurs as a result of administrative proceedings that may be instituted against him or her under Israeli securities laws, if applicable, and payments made to injured persons under specific circumstances thereunder; and |
· | any other matter in respect of which it is permitted or will be permitted under applicable law to insure the liability of an office holder in the Company. |
· | a financial liability incurred by, or imposed on him or her in favor of another person by a court judgment, including a settlement or an arbitration award approved by the court. Such indemnification may be approved (i) after the liability has been incurred or (ii) in advance, provided that our undertaking to indemnify is limited to events that our Board of Directors believes are foreseeable in light of our actual operations at the time of providing the undertaking and to a sum or criterion that our Board of Directors determines to be reasonable under the circumstances; |
· | reasonable litigation expenses, including attorney’s fees, expended by the office holder as a result of an investigation or proceeding instituted against him or her by a competent authority, provided that such investigation or proceeding either (A) concluded without the filing of an indictment against him or her or (B) concluded with the imposition of financial liability in lieu of criminal proceedings other than with respect to a criminal offense that does not require proof of criminal intent or in connection with a financial sanction; |
· | reasonable litigation expenses, including attorneys’ fees, expended by the office holder or charged to him or her by a court in connection with proceedings we institute against him or her or instituted on our behalf or by another person, a criminal indictment from which he or she was acquitted, or a criminal indictment in which he or she was convicted for a criminal offense that does not require proof of criminal intent; |
· | expenses he or she incurs as a result of administrative proceedings that may be instituted against him or her under Israeli securities laws, if applicable, and payments made to injured persons under specific circumstances thereunder; and |
· | any other matter in respect of which it is permitted or will be permitted under applicable law to indemnify an office holder in the Company. |
· | A breach by the office holder of his or her duty of loyalty unless, with respect to indemnification or insurance coverage, the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company; |
· | A breach by the office holder of his or her duty of care if the breach was done intentionally or recklessly unless the breach was done negligently; |
· | Any act or omission done with the intent to derive an illegal personal benefit; or |
· | Any fine levied against the office holder. |
· | A reduced corporate tax rate for industrial enterprises, provided that more than 25% of their annual income is derived from export, which will apply to the enterprise’s entire preferred income so that in the tax years 2011 and 2012 the reduced tax rate was 10% for preferred income derived from industrial facilities located in development area A and 15% for those located elsewhere in Israel, in the tax year 2013 the reduced tax rate was 7% for development area A and 12.5% for the rest of Israel, and for the tax years of 2014, 2015 and 2016, the reduced tax rate is 9% for development area A and 16% for the rest of Israel, and as of the tax year 2017 and onwards, the reduced tax rate is 7.5% for development area A and 16% for the rest of Israel. |
· | The reduced tax rates will no longer be contingent upon making a minimum qualifying investment in productive assets. |
· | A definition of “preferred income” was introduced into the Investments Law to include certain types of income that are generated by the Israeli production activity of a preferred enterprise. |
· | A reduced dividend withholding tax rate of 15% will apply to dividends paid from preferred income to both Israeli and non-Israeli investors, which tax rate was increased to 20% for dividends paid from preferred income which was accumulated from 2014 and onwards, and with an exemption from such withholding tax applying to dividends paid to an Israeli company. |
· | A reduced flat corporate tax rate of 12% (or 7.5% for entities located in Development Area A) on qualifying income deriving from eligible Intellectual Property (“Preferred Technology Income”), subject to satisfaction of a number of conditions, including compliance with a minimal amount or ratio of annual R&D expenditure and R&D employees, as well as having at least 25% of annual income derived from export. |
· | A 12% capital gains tax rate on the sale of a preferred intangible asset to a foreign affiliated enterprise, provided that the asset was initially purchased from a foreign resident at an amount of NIS 200 million or more. |
· | A withholding tax rate of 20% for dividends paid from Preferred Technology Income (with an exemption on dividends paid to an Israeli company). Such rate may be reduced to 4% on dividends paid to a foreign resident company, subject to certain conditions regarding percentage of foreign ownership of the distributing entity. |
· | Special technological preferred enterprise - an enterprise for which total consolidated revenues of its parent company and all subsidiaries exceed NIS 10 billion. Such enterprise will be subject to tax at a rate of 6% on profits deriving from intellectual property, regardless of the enterprise's geographical location. |
· | Deduction of purchases of know-how and patents over an eight-year period for tax purposes; |
· | Right to elect, under specified conditions, to file a consolidated tax return with additional related Israeli Industrial Companies; |
· | Accelerated depreciation rates on equipment and buildings; and |
· | Deductions over a three-year period of expenses involved with the issuance and listing of shares on a recognized stock market. |
· | An individual citizen or resident of the United States for U.S. federal income tax purposes; |
· | A corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in the United States or under the laws of the United States or any political subdivision thereof or the District of Columbia; |
· | An estate, the income of which is subject to U.S. federal income tax regardless of its source; or |
· | A trust (i) if, in general a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of its substantial decisions, or (ii) that has in effect a valid election under applicable U.S. Treasury Regulations to be treated as a U.S. person. |
· | Are broker-dealers or insurance companies; |
· | Dealers or traders in securities, commodities or currencies; |
· | Have elected mark-to-market accounting method; |
· | Are tax-exempt organizations or retirement plans; |
· | Are grantor trusts; |
· | Partnerships or other pass-through entities; |
· | Partners or other equity owners in partnerships or other pass-through entities; |
· | U.S. Holders selling our ordinary shares short, |
· | U.S. Holders deemed to have sold our ordinary shares in a “constructive sale,” |
· | Are S corporations; |
· | Are financial institutions or “financial services entities” ; |
· | Hold their ordinary shares as part of a straddle, “hedge”, “integrated” or “conversion transaction” with other investments; |
· | Are certain former citizens or long-term residents of the United States; |
· | Acquired their ordinary shares upon the exercise of employee stock options or otherwise as compensation; |
· | Are real estate investment trusts or regulated investment companies; |
· | Pension funds; |
· | Own directly, indirectly or by attribution at least 10% of our shares by vote or value; or |
· | Have a functional currency that is not the U.S. dollar. |
· | such item is effectively connected with the conduct by the Non-U.S. Holder of a trade or business in the United States and, in the case of a resident of a country which has a treaty with the United States, such item is attributable to a permanent establishment or, in the case of an individual, a fixed place of business, in the United States; or |
· | the Non-U.S. Holder is an individual who holds the ordinary shares as a capital asset and is present in the United States for 183 days or more in the taxable year of the disposition and certain other requirements are met. |
Year ended December 31, | U.S. dollar against: | |||||||||||||||
NIS | Euro | Chinese Yuan | Australian Dollar | |||||||||||||
2014 | 12 | % | 13.4 | % | 3.0 | % | 9.1 | % | ||||||||
2015 | 0.3 | % | 11.6 | % | 5.2 | % | 12.2 | % | ||||||||
2016 | (1.5 | )% | 3.5 | % | 6.2 | % | 1.2 | % | ||||||||
2017 | (9.8 | )% | (12.2 | )% | 6.7 | % | (7.5 | )% | ||||||||
2018 | 8.1 | % | 4.6 | % | 5.6 | % | 10.7 | % |
Year ended December 31, | U.S. dollar against: | |||||||||||||||
NIS | Euro | Chinese Yuan | Australian Dollar | |||||||||||||
2012 | (2.3 | )% | (2.0 | )% | (1.2 | )% | (2.1 | )% | ||||||||
2013 | (7.0 | )% | (4.3 | )% | (2.7 | )% | 16.0 | % | ||||||||
2014 | 12 | % | 13.4 | % | 3.0 | % | 9.1 | % | ||||||||
2015 | 0.3 | % | 11.6 | % | 5.2 | % | 12.2 | % | ||||||||
2016 | (1.5 | )% | 3.5 | % | 6.2 | % | 1.2 | % | ||||||||
2017 (1) | (4.3 | )% | (1.9 | )% | (1.1 | )% | (4.1 | )% |
· | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets, and |
· | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors, and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. |
Year Ended December 31, | ||||||||||||||||
2017 | 2018 | |||||||||||||||
(US$ in thousands) | ||||||||||||||||
Audit and Audit Related Fees (1) | 341 | 54 | % | 335 | 55 | % | ||||||||||
Tax Fees (2) | 165 | 26 | % | 119 | 20 | % | ||||||||||
All Other Fees (3) | 124 | 20 | % | 154 | 25 | % | ||||||||||
Total | 630 | 100 | % | 608 | 100 | % |
Year Ended December 31, | ||||||||||||||||
2015 | 2016 | |||||||||||||||
(US$ in thousands) | ||||||||||||||||
Audit Fees (1) | 275 | 84 | % | 315 | 70 | % | ||||||||||
Tax Fees (2) | 31 | 9 | % | 92 | 21 | % | ||||||||||
All Other Fees (3) | 21 | 7 | % | 41 | 9 | % | ||||||||||
Total | 327 | 100 | % | 449 | 100 | % |
Period | (a) Total Number of Shares (or Units) Purchased | (b) Average Price Paid per Share (or Units) (in US$) | (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (1) | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (1) | (a) Total Number of Shares (or Units) Purchased | (b) Average Price Paid per Share (or Units) (in US$) | (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (1)(2) | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (1)(2) | ||||||||||||||||||||||||
January 1 through 31 | 0 | N/A | 0 | $ | 6,894,942 | (1) | 0 | N/A | 0 | $ | 39,587,815 | (1) | ||||||||||||||||||||
February 1 through 28 | 626,800 | 10.97 | 626,800 | $ | 131,047 | (1) | 0 | N/A | 0 | $ | 39,587,815 | (1) | ||||||||||||||||||||
March 1 through 31 | 0 | N/A | 0 | $ | 131,047 | (1) | 0 | N/A | 0 | $ | 39,587,815 | (1) | ||||||||||||||||||||
April 1 through 30 | 0 | N/A | 0 | $ | 131,047 | (1) | 0 | N/A | 0 | $ | 39,587,815 | (1) | ||||||||||||||||||||
May 1 through 31 | 456,952 | 10.77 | 456,952 | $ | 35,079,762 | (2) | 0 | N/A | 0 | $ | 40,000,000 | (2) | ||||||||||||||||||||
June 1 through 30 | 0 | N/A | 0 | $ | 35,079,762 | (2) | 0 | N/A | 0 | $ | 40,000,000 | (2) | ||||||||||||||||||||
July 1 through 31 | 0 | N/A | 0 | $ | 35,079,762 | (2) | 0 | N/A | 0 | $ | 40,000,000 | (2) | ||||||||||||||||||||
August 1 through 31 | 0 | N/A | 0 | $ | 35,079,762 | (2) | 0 | N/A | 0 | $ | 40,000,000 | (2) | ||||||||||||||||||||
September 1 through 30 | 0 | N/A | 0 | $ | 35,079,762 | (2) | 0 | N/A | 0 | $ | 40,000,000 | (2) | ||||||||||||||||||||
October 1 through 31 | 625,748 | 12.94 | 625,748 | $ | 26,980,883 | (2) | 0 | N/A | 0 | $ | 40,000,000 | (2) | ||||||||||||||||||||
November 1 through 30 | 174,528 | 12.38 | 174,528 | $ | 24,840,431 | (2) | 7,269 | 22.00 | 7,269 | $ | 39,840,090 | (2) | ||||||||||||||||||||
December 1 through 31 | 0 | N/A | 0 | $ | 24,840,431 | (2) | 187,435 | 21.91 | 194,704 | $ | 35,733,686 | (2) |
Exhibit No. | Exhibit |
101 | The following financial information from the Registrant’s Annual Report on Form 20-F for the year ended December 31, |
RADWARE LTD. | |||
By: | /s/ Roy Zisapel | ||
Roy Zisapel | |||
Chief Executive Officer | |||
Page | |
F2 | |
F4 | |
F6 | |
F7 | |
F8 | |
F9 | |
F11 - |
Tel-Aviv, Israel | /s/ KOST FORER GABBAY & KASIERER |
April | A Member of Ernst & Young Global |
December 31, | December 31, | |||||||||||||||
2016 | 2015 | 2018 | 2017 | |||||||||||||
ASSETS | ||||||||||||||||
CURRENT ASSETS: | ||||||||||||||||
Cash and cash equivalents | $ | 79,639 | $ | 33,744 | $ | 45,203 | $ | 65,237 | ||||||||
Available-for-sale marketable securities | 20,452 | 16,003 | 15,742 | 42,573 | ||||||||||||
Short-term bank deposits | 125,995 | 80,922 | 255,454 | 93,151 | ||||||||||||
Trade receivables (net of allowance for doubtful accounts and sales reserves in a total amount of $ 1,236 and $ 1,686 in 2016 and 2015, respectively) | 19,407 | 26,410 | ||||||||||||||
Trade receivables (net of allowance for doubtful accounts and sales reserves in a total amount of $ 1,770 and $ 1,993 in 2018 and 2017, respectively) | 17,166 | 16,150 | ||||||||||||||
Other current assets and prepaid expenses | 4,159 | 5,042 | 7,071 | 14,574 | ||||||||||||
Inventories | 17,114 | 16,322 | 18,401 | 18,772 | ||||||||||||
Total current assets | 266,766 | 178,443 | 359,037 | 250,457 | ||||||||||||
LONG-TERM INVESTMENTS: | ||||||||||||||||
Available-for-sale marketable securities | 74,967 | 87,814 | 84,669 | 54,427 | ||||||||||||
Long-term bank deposits | 19,092 | 96,643 | - | 88,911 | ||||||||||||
Severance pay fund | 2,597 | 2,724 | 2,973 | 3,251 | ||||||||||||
Total long-term investments | 96,656 | 187,181 | 87,642 | 146,589 | ||||||||||||
Property and equipment, net | 26,354 | 26,203 | 23,677 | 23,642 | ||||||||||||
Intangible assets, net | 2,399 | 3,518 | 9,467 | 10,415 | ||||||||||||
Goodwill | 30,069 | 30,069 | 32,174 | 32,174 | ||||||||||||
Other long-term assets | 8,092 | 5,473 | 20,724 | 8,133 | ||||||||||||
Total assets | $ | 430,336 | $ | 430,887 | $ | 532,721 | $ | 471,410 |
December 31, | December 31, | |||||||||||||||
2016 | 2015 | 2018 | 2017 | |||||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||
CURRENT LIABILITIES: | ||||||||||||||||
Trade payables | $ | 5,971 | $ | 9,255 | $ | 4,483 | $ | 5,367 | ||||||||
Deferred revenues | 53,061 | 46,061 | 83,955 | 69,829 | ||||||||||||
Employees and payroll accruals | 11,713 | 10,791 | 17,505 | 16,470 | ||||||||||||
Other payables and accrued expenses | 14,519 | 11,307 | 12,091 | 15,704 | ||||||||||||
Total current liabilities | 85,264 | 77,414 | 118,034 | 107,370 | ||||||||||||
LONG-TERM LIABILITIES: | ||||||||||||||||
Deferred revenues | 31,100 | 25,136 | 43,796 | 43,482 | ||||||||||||
Other long-term liabilities | 14,209 | 9,214 | 6,934 | 5,202 | ||||||||||||
Total long-term liabilities | 45,309 | 34,350 | 50,730 | 48,684 | ||||||||||||
COMMITMENTS AND CONTINGENT LIABILITIES | ||||||||||||||||
SHAREHOLDERS' EQUITY: | ||||||||||||||||
Share capital - | ||||||||||||||||
Ordinary shares of NIS 0.05 par value - Authorized: 60,000,000 at December 31, 2016 and 2015; Issued: 52,913,976 and 52,619,945 shares at December 31, 2016 and 2015, respectively; Outstanding: 43,188,850 and 44,778,847 shares at December 31, 2016 and 2015, respectively | 663 | 661 | ||||||||||||||
Ordinary shares of NIS 0.05 par value - Authorized: 60,000,000 at December 31, 2018 and 2017; Issued: 56,293,017 and 53,884,864 shares at December 31, 2018 and 2017, respectively; Outstanding: 46,347,403 and 44,133,954 shares at December 31, 2018 and 2017, respectively | 693 | 673 | ||||||||||||||
Additional paid-in capital | 325,338 | 312,784 | 383,536 | 349,250 | ||||||||||||
Treasury stock (9,725,128) and (7,841,098) of ordinary shares at December 31, 2016 and 2015, respectively | (116,029 | ) | (94,049 | ) | ||||||||||||
Accumulated other comprehensive income (loss) | (20 | ) | 1,257 | |||||||||||||
Treasury stock (9,945,614) and (9,750,910) of Ordinary shares at December 31, 2018 and 2017, respectively | (120,717 | ) | (116,442 | ) | ||||||||||||
Accumulated other comprehensive loss | (1,110 | ) | (443 | ) | ||||||||||||
Retained earnings | 89,811 | 98,470 | 101,555 | 82,318 | ||||||||||||
Total shareholders' equity | 299,763 | 319,123 | 363,957 | 315,356 | ||||||||||||
Total liabilities and shareholders' equity | $ | 430,336 | $ | 430,887 | $ | 532,721 | $ | 471,410 |
Year ended December 31, | Year ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2018 | 2017 | 2016 | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Products | $ | 110,186 | $ | 136,793 | $ | 143,466 | $ | 118,062 | $ | 117,968 | $ | 110,186 | ||||||||||||
Services | 86,399 | 79,773 | 78,426 | 116,342 | 93,401 | 86,399 | ||||||||||||||||||
Total revenues | 196,585 | 216,566 | 221,892 | 234,404 | 211,369 | 196,585 | ||||||||||||||||||
Cost of revenues: | ||||||||||||||||||||||||
Products | 27,320 | 29,159 | 29,448 | 30,803 | 30,862 | 27,320 | ||||||||||||||||||
Services | 8,375 | 9,041 | 10,284 | 10,872 | 8,754 | 8,375 | ||||||||||||||||||
Total cost of revenues | 35,695 | 38,200 | 39,732 | 41,675 | 39,616 | 35,695 | ||||||||||||||||||
Gross profit | 160,890 | 178,366 | 182,160 | 192,729 | 171,753 | 160,890 | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Operating expenses, net: | ||||||||||||||||||||||||
Research and development, net | 51,732 | 49,987 | 44,081 | 57,674 | 59,003 | 51,732 | ||||||||||||||||||
Sales and marketing | 103,774 | 93,347 | 93,203 | 111,386 | 108,744 | 103,774 | ||||||||||||||||||
General and administrative | 18,133 | 17,033 | 19,797 | 16,145 | 17,577 | 18,133 | ||||||||||||||||||
Other income | - | (6,900 | ) | - | ||||||||||||||||||||
Total operating expenses | 173,639 | 160,367 | 157,081 | |||||||||||||||||||||
Total operating expenses, net | 185,205 | 178,424 | 173,639 | |||||||||||||||||||||
Operating income (loss) | (12,749 | ) | 17,999 | 25,079 | 7,524 | (6,671 | ) | (12,749 | ) | |||||||||||||||
Financial income, net | 5,741 | 5,867 | 5,802 | 7,274 | 4,830 | 5,741 | ||||||||||||||||||
Income (loss) before taxes on income | (7,008 | ) | 23,866 | 30,881 | 14,798 | (1,841 | ) | (7,008 | ) | |||||||||||||||
Taxes on income | 1,651 | 5,297 | 5,931 | 3,063 | 5,652 | 1,651 | ||||||||||||||||||
Net income (loss) | $ | (8,659 | ) | $ | 18,569 | $ | 24,950 | $ | 11,735 | $ | (7,493 | ) | $ | (8,659 | ) | |||||||||
Basic net earnings (loss) per share | $ | (0.20 | ) | $ | 0.40 | $ | 0.55 | $ | 0.26 | $ | (0.17 | ) | $ | (0.20 | ) | |||||||||
Diluted net earnings (loss) per share | $ | (0.20 | ) | $ | 0.40 | $ | 0.53 | $ | 0.25 | $ | (0.17 | ) | $ | (0.20 | ) |
Year ended December 31, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Net income (loss) | $ | (8,659 | ) | $ | 18,569 | $ | 24,950 | |||||
Other comprehensive income (loss) before tax: | ||||||||||||
Unrealized gains (losses) on available-for-sale securities: | ||||||||||||
Changes in unrealized gains | 68 | 3,903 | (1,098 | ) | ||||||||
Less: reclassification adjustments for gains included in net income (loss) | (1,771 | ) | (2,438 | ) | (424 | ) | ||||||
Other comprehensive income (loss) before tax | (1,703 | ) | 1,465 | (1,522 | ) | |||||||
Income tax benefits (expense) related to components of other comprehensive income (loss) | 426 | (419 | ) | - | ||||||||
Other comprehensive income (loss), net of tax | (1,277 | ) | 1,046 | (1,522 | ) | |||||||
Comprehensive income (loss) | $ | (9,936 | ) | $ | 19,615 | $ | 23,428 |
Year ended December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
Net income (loss) | $ | 11,735 | $ | (7,493 | ) | $ | (8,659 | ) | ||||
Other comprehensive income (loss) before tax: | ||||||||||||
Unrealized gains (losses) on available-for-sale securities: | ||||||||||||
Changes in unrealized gains (losses) | (866 | ) | (530 | ) | 68 | |||||||
Less: reclassification adjustments for losses (gains) included in net income (loss) | - | (18 | ) | (1,771 | ) | |||||||
Other comprehensive loss before tax | (866 | ) | (548 | ) | (1,703 | ) | ||||||
Income tax benefits related to components of other comprehensive loss | 199 | 125 | 426 | |||||||||
Other comprehensive loss, net of tax | (667 | ) | (423 | ) | (1,277 | ) | ||||||
Comprehensive income (loss) | $ | 11,068 | $ | (7,916 | ) | $ | (9,936 | ) |
Number of outstanding Ordinary shares | Share capital | Additional paid-in capital | Treasury stock, at cost | Accumulated other comprehensive income (loss) | Retained earnings | Total | Number of outstanding ordinary shares | Share capital | Additional paid-in capital | Treasury stock, at cost | Accumulated other comprehensive income (loss) | Retained earnings | Total | |||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2013 | 44,733,589 | $ | 611 | $ | 262,809 | $ | (25,984 | ) | $ | 1,733 | $ | 54,951 | $ | 294,120 | ||||||||||||||||||||||||||||||||||||||||||
Repurchase of ordinary shares | (887,855 | ) | - | - | (15,169 | ) | - | - | (15,169 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Issuance of shares upon exercise of stock options | 3,080,763 | 43 | 22,450 | - | - | - | 22,493 | |||||||||||||||||||||||||||||||||||||||||||||||||
Stock based compensation | - | - | 7,382 | - | - | - | 7,382 | |||||||||||||||||||||||||||||||||||||||||||||||||
Tax benefit related to exercise of stock options | - | - | 1,443 | - | - | - | 1,443 | |||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss, net of tax | - | - | - | - | (1,522 | ) | - | (1,522 | ) | |||||||||||||||||||||||||||||||||||||||||||||||
Net income | - | - | - | - | - | 24,950 | 24,950 | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2014 | 46,926,497 | 654 | 294,084 | (41,153 | ) | 211 | 79,901 | 333,697 | ||||||||||||||||||||||||||||||||||||||||||||||||
Repurchase of ordinary shares | (2,824,772 | ) | - | - | (52,896 | ) | - | - | (52,896 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Issuance of shares upon exercise of stock options | 677,122 | 7 | 8,739 | - | - | - | 8,746 | |||||||||||||||||||||||||||||||||||||||||||||||||
Stock based compensation | - | - | 9,329 | - | - | - | 9,329 | |||||||||||||||||||||||||||||||||||||||||||||||||
Tax benefit related to exercise of stock options | - | - | 632 | - | - | - | 632 | |||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income, net of tax | - | - | - | - | 1,046 | - | 1,046 | |||||||||||||||||||||||||||||||||||||||||||||||||
Net income | - | - | - | - | - | 18,569 | 18,569 | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2015 | 44,778,847 | 661 | 312,784 | (94,049 | ) | 1,257 | 98,470 | 319,123 | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of January 1, 2016 | 44,778,847 | $ | 661 | $ | 312,784 | $ | (94,049 | ) | $ | 1,257 | $ | 98,470 | $ | 319,123 | ||||||||||||||||||||||||||||||||||||||||||
Repurchase of ordinary shares | (1,884,030 | ) | - | - | (21,980 | ) | - | - | (21,980 | ) | (1,884,030 | ) | - | - | (21,980 | ) | - | - | (21,980 | ) | ||||||||||||||||||||||||||||||||||||
Issuance of shares upon exercise of stock options | 294,033 | 2 | 1,581 | - | - | - | 1,583 | 294,033 | 2 | 1,581 | - | - | - | 1,583 | ||||||||||||||||||||||||||||||||||||||||||
Stock based compensation | - | - | 11,520 | - | - | - | 11,520 | - | - | 11,520 | - | - | - | 11,520 | ||||||||||||||||||||||||||||||||||||||||||
Tax deficiency related to exercise of stock options | - | - | (547 | ) | - | - | - | (547 | ) | - | - | (547 | ) | - | - | - | (547 | ) | ||||||||||||||||||||||||||||||||||||||
Other comprehensive loss, net of tax | - | - | - | - | (1,277 | ) | - | (1,277 | ) | - | - | - | - | (1,277 | ) | - | (1,277 | ) | ||||||||||||||||||||||||||||||||||||||
Net loss | - | - | - | - | - | (8,659 | ) | (8,659 | ) | - | - | - | - | - | (8,659 | ) | (8,659 | ) | ||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2016 | 43,188,850 | $ | 663 | $ | 325,338 | $ | (116,029 | ) | $ | (20 | ) | $ | 89,811 | $ | 299,763 | 43,188,850 | 663 | 325,338 | (116,029 | ) | (20 | ) | 89,811 | 299,763 | ||||||||||||||||||||||||||||||||
Repurchase of ordinary shares | (25,782 | ) | - | - | (413 | ) | - | - | (413 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Issuance of shares upon exercise of stock options | 970,886 | 10 | 10,881 | - | - | - | 10,891 | |||||||||||||||||||||||||||||||||||||||||||||||||
Stock based compensation | - | - | 13,031 | - | - | - | 13,031 | |||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss, net of tax | - | - | - | - | (423 | ) | - | (423 | ) | |||||||||||||||||||||||||||||||||||||||||||||||
Net loss | - | - | - | - | - | (7,493 | ) | (7,493 | ) | |||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2017 | 44,133,954 | 673 | 349,250 | (116,442 | ) | (443 | ) | 82,318 | 315,356 | |||||||||||||||||||||||||||||||||||||||||||||||
Cumulative-effect adjustment from adoption of ASC 606 | - | - | - | - | - | 7,502 | 7,502 | |||||||||||||||||||||||||||||||||||||||||||||||||
Repurchase of ordinary shares | (194,704 | ) | - | - | (4,275 | ) | - | - | (4,275 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Issuance of shares upon exercise of stock options | 2,408,153 | 20 | 21,783 | - | - | - | 21,803 | |||||||||||||||||||||||||||||||||||||||||||||||||
Stock based compensation | - | - | 12,503 | - | - | - | 12,503 | |||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss, net of tax | - | - | - | - | (667 | ) | - | (667 | ) | |||||||||||||||||||||||||||||||||||||||||||||||
Net income | - | - | - | - | - | 11,735 | 11,735 | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2018 | 46,347,403 | 693 | 383,536 | (120,717 | ) | (1,110 | ) | 101,555 | 363,957 |
Year ended December 31, | Year ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2018 | 2017 | 2016 | |||||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||||||
Net income (loss) | $ | (8,659 | ) | $ | 18,569 | $ | 24,950 | $ | 11,735 | $ | (7,493 | ) | $ | (8,659 | ) | |||||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||||||||||||||
Depreciation and amortization | 10,372 | 9,401 | 8,102 | 9,782 | 11,232 | 10,372 | ||||||||||||||||||
Stock based compensation | 11,520 | 9,329 | 7,382 | 12,503 | 13,031 | 11,520 | ||||||||||||||||||
Gain from sale of available-for-sale marketable securities | (1,771 | ) | (2,438 | ) | (424 | ) | - | (18 | ) | (1,771 | ) | |||||||||||||
Amortization of premiums, accretion of discounts and accrued interest on available-for-sale marketable securities, net | 1,949 | 3,208 | 2,964 | 1,395 | 1,546 | 1,949 | ||||||||||||||||||
Accrued interest on bank deposits | 1,179 | (1,998 | ) | 1,069 | (2,391 | ) | 226 | 1,179 | ||||||||||||||||
Increase (decrease) in accrued severance pay, net | 401 | 125 | (158 | ) | 323 | (210 | ) | 401 | ||||||||||||||||
Decrease (increase) in trade receivables, net | (1,169 | ) | 3,390 | 7,003 | ||||||||||||||||||||
Changes in deferred income taxes, net | (2,687 | ) | 215 | (1,775 | ) | (2,308 | ) | 91 | (2,687 | ) | ||||||||||||||
Decrease (increase) in trade receivables, net | 7,003 | (773 | ) | (726 | ) | |||||||||||||||||||
Decrease (increase) in other current assets and prepaid expenses | 883 | (103 | ) | (1,913 | ) | 5,035 | (7,969 | ) | 883 | |||||||||||||||
Decrease (increase) in inventories | (792 | ) | 522 | (2,654 | ) | 371 | (1,658 | ) | (792 | ) | ||||||||||||||
Increase (decrease) in trade payables | (3,284 | ) | (562 | ) | 1,019 | |||||||||||||||||||
Decrease in trade payables | (884 | ) | (734 | ) | (3,284 | ) | ||||||||||||||||||
Increase in deferred revenues (short-term and long-term) | 12,964 | 3,849 | 8,638 | 14,440 | 28,781 | 12,964 | ||||||||||||||||||
Increase in other payables and accrued expenses and other long-term liabilities | 8,855 | 424 | 7,146 | |||||||||||||||||||||
Excess tax deficiency (benefit) from stock-based compensation stock options | 547 | (632 | ) | (1,443 | ) | |||||||||||||||||||
Increase (decrease) in other payables and accrued expenses and other long-term liabilities | 419 | (8,753 | ) | 8,855 | ||||||||||||||||||||
Excess tax deficiency from stock-based compensation stock options | - | - | 547 | |||||||||||||||||||||
Net cash provided by operating activities | 38,480 | 39,136 | 52,177 | 49,251 | 31,462 | 38,480 | ||||||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||||||
Purchase of property and equipment | (9,404 | ) | (13,774 | ) | (9,482 | ) | (8,869 | ) | (7,210 | ) | (9,404 | ) | ||||||||||||
Proceeds from (investment in) other long-term assets | (53 | ) | (100 | ) | 34 | 40 | (6 | ) | (53 | ) | ||||||||||||||
Proceeds from (investment in) bank deposits, net | 31,295 | (33,824 | ) | (20,929 | ) | (71,002 | ) | (37,200 | ) | 31,295 | ||||||||||||||
Purchase of available-for-sale marketable securities | (16,219 | ) | (13,442 | ) | (44,063 | ) | (47,455 | ) | (24,595 | ) | (16,219 | ) | ||||||||||||
Proceeds from maturity of available-for-sale marketable securities | 17,205 | 26,530 | 29,390 | 41,783 | 20,075 | 17,205 | ||||||||||||||||||
Proceeds from redemption of available-for-sale marketable securities | 5,535 | 27,757 | 10,393 | - | 863 | 5,535 | ||||||||||||||||||
Purchase of an intangible asset | - | - | (1,375 | ) | ||||||||||||||||||||
Payment for the acquisition of subsidiary, net of cash acquired | - | (8,269 | ) | - | ||||||||||||||||||||
Net cash provided by (used in) investing activities | 28,359 | (6,853 | ) | (36,032 | ) | (85,503 | ) | (56,342 | ) | 28,359 |
Year ended December 31, | Year ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2018 | 2017 | 2016 | |||||||||||||||||||
Cash flows from financing activities: | ||||||||||||||||||||||||
Proceeds from exercise of stock options | 1,583 | 8,746 | 22,493 | 21,803 | 10,891 | 1,583 | ||||||||||||||||||
Excess tax (deficiency) benefit from stock-based compensation | (547 | ) | 632 | 1,443 | ||||||||||||||||||||
Repurchase of Ordinary shares | (21,980 | ) | (52,896 | ) | (15,169 | ) | ||||||||||||||||||
Payment of contingent consideration | (1,310 | ) | - | - | ||||||||||||||||||||
Excess tax deficiency from stock-based compensation | - | - | (547 | ) | ||||||||||||||||||||
Repurchase of ordinary shares | (4,275 | ) | (413 | ) | (21,980 | ) | ||||||||||||||||||
Net cash provided by (used in) financing activities | (20,944 | ) | (43,518 | ) | 8,767 | 16,218 | 10,478 | (20,944 | ) | |||||||||||||||
Increase (decrease) in cash and cash equivalents | 45,895 | (11,235 | ) | 24,912 | (20,034 | ) | (14,402 | ) | 45,895 | |||||||||||||||
Cash and cash equivalents at the beginning of the year | 33,744 | 44,979 | 20,067 | 65,237 | 79,639 | 33,744 | ||||||||||||||||||
Cash and cash equivalents at the end of the year | $ | 79,639 | $ | 33,744 | $ | 44,979 | $ | 45,203 | $ | 65,237 | $ | 79,639 | ||||||||||||
Supplemental disclosure of cash flow information: | ||||||||||||||||||||||||
Cash paid during the year for income taxes | $ | 1,730 | $ | 1,853 | $ | 2,285 | $ | 6,415 | $ | 14,352 | $ | 1,730 | ||||||||||||
Cumulative-effect adjustment from adoption of ASC 606 | $ | 7,502 | - | - |
NOTE 1:- | GENERAL |
a. | Radware Ltd. (the |
b. | The Company has established wholly-owned subsidiaries in the United States, France, Germany, Singapore, the United Kingdom, Japan, Korea, Canada, India, Australia, Italy, Hong Kong, China and |
c. | On January 30, 2017 ("the Closing Date"), the Company acquired 100% outstanding shares of Seculert Ltd. ("Seculert"), a company based in Israel and engaged in cyber-attack detection and HTTP analytics solutions and developing user and entity behavioral analysis ("UEBA") solutions. The consideration to acquire Seculert was $10,000 in cash and additional contingent consideration of up to $10,000, based on certain milestones to be achieved. The milestone-based contingent consideration was measured at fair value at the Closing Date and recorded as a liability on the consolidated balance sheet in the amount of nil and $1,550 as of December 31, 2018 and 2017, respectively. The derived goodwill from this acquisition is attributable to additional capabilities of the Group to expand its products portfolio. Goodwill generated from this business combination is primarily attributable to synergies between the Company's and Seculert's respective products and services. The acquisition was accounted for as a business combination. At the acquisition date, the Company recorded IPR&D, technology and goodwill in amount of $7,088, $2,183 and $2,105, respectively. The estimated useful life of the IPR&D and technology is approximately 9 years. |
d. | The Company depends on a few vendors to supply certain hardware platforms and components for the production of its products. If one of these suppliers fails to deliver or delays the delivery of the necessary components, the Company will be required to seek alternative sources of supply. A change in suppliers could result in manufacturing delays, which could cause a possible loss of sales and, consequently, could adversely affect the Company's results of operations and financial position. |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES |
a. | Use of estimates: |
b. | Financial statements in United States dollars: |
c. | Principles of consolidation: |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
d. | Cash equivalents: |
e. | Bank deposits: |
f. | Investment in marketable securities: |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
g. | Inventories: |
h. | Property and equipment, net: |
% | |
Computers, peripheral equipment and software | 15 - 33 (mainly 33) |
Office furniture and equipment | 6 - 20 (mainly 15) |
Leasehold improvements | Over the shorter of the term of the lease or the useful life of the asset |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
i. | Impairment of long lived assets and intangible assets subject to amortization: |
j. | Goodwill: |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
k. | Contingencies |
l. | Revenue recognition: |
· | Revenues from physical products and software-based products are recognized upon shipment when control of the promised goods is transferred to the customer (at a point in time), generally when the product has been delivered. Revenues from product subscriptions, included as product revenues, are recognized ratably, on a straight-line basis, over the subscription period. |
· | Revenues from post-contract customer support ("PCS"), which represent mainly, help-desk support and unit repairs or replacements, professional services, and ERT (emergency response team) services are recognized ratably, on a straight-line basis, over the term of the related contract, which is typically between one year and three years. Renewals of support contracts create new performance obligations that are satisfied over the term with the revenues recognized ratably, on a straight-line basis, over the renewed period. |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
December 31, 2018 | ||||
Trade receivables, net | $ | 17,166 | ||
Deferred revenues (short-term contract liability) | $ | 83,955 | ||
Deferred revenues (Long-term contract liability) | $ | 43,796 |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
December 31, 2017 | Adjustment due to Topic 606 | January 1, 2018 | ||||||||||
Trade receivables, net | 16,150 | (153 | ) | 15,997 | ||||||||
Other long-term assets | 8,133 | 10,171 | 18,304 | |||||||||
Deferred tax asset, net | 7,451 | (2,516 | ) | 4,935 |
Year ended December 31, 2018 | ||||||||||||
As reported | Impact of Adoption of ASC 606 | Amounts under Topic 605 | ||||||||||
Revenues | 234,404 | (268 | ) | 234,136 | ||||||||
Operating expenses: | ||||||||||||
Sales and marketing | 111,386 | 2,468 | 113,854 | |||||||||
Taxes on income | 3,063 | 608 | 3,671 | |||||||||
Net income | 11,735 | 3,344 | 8,391 |
NOTE 2:- |
As of December 31, 2018 | ||||||||||||
As reported | Impact of Adoption of ASC 606 | Amounts under Topic 605 | ||||||||||
Assets: | ||||||||||||
Trade receivables, net | 17,166 | (206 | ) | 16,960 | ||||||||
Other long-term assets | 20,724 | (10,732 | ) | 9,992 | ||||||||
Liabilities: | ||||||||||||
Deferred revenues | 83,955 | (94 | ) | 83,861 | ||||||||
Shareholders' equity: | ||||||||||||
Retained earnings | 363,957 | (10,844 | ) | 353,113 |
n. Cost of revenues: |
NOTE 2:- |
p. | Research and development |
q. Grants: |
r. | Accounting for stock-based compensation: |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
Year ended December 31, | Year ended December 31, | |||||||||||||||||
2016 | 2015 | 2014 | 2018 | 2017 | 2016 | |||||||||||||
Risk free interest rate | 1.12 | % | 1.21 | % | 1.10 | % | 2.78% | 1.66% | 1.12% | |||||||||
Dividend yields | 0 | % | 0 | % | 0 | % | 0% | 0% | 0% | |||||||||
Expected volatility | 34 | % | 34 | % | 40 | % | 30% | 32% | 34% | |||||||||
Weighted average expected term from grant date (in years) | 3.88 | 3.86 | 3.72 | 3.78 | 3.80 | 3.88 |
· | Income tax accounting: The Company is required to record excess tax benefits and tax deficiencies related to stock-based compensation as income tax benefit or expense in the consolidated statements of income (loss) prospectively when share-based awards vest or are settled. Since the Company utilized the entire previously unrecognized excess tax benefits before the adoption, no a cumulative-effect was recorded in the opening retained earnings. |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
· | Cash flow presentation of excess tax benefits: The Company is required to classify excess tax benefits along with other income tax cash flows as an operating activity either prospectively or retrospectively. The Company elected to apply the change in presentation to the consolidated statements of cash flows prospectively from January 1, 2017. |
s. | Income taxes: |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
t. | Concentrations of credit risks: |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
u. | Employee related benefits: |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
v. | Fair value of financial instruments: |
Level 1 | - | Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. |
Level 2 | - | Include other inputs that are directly or indirectly observable in the marketplace. |
Level 3 | - | Unobservable inputs which are supported by little or no market activity. |
w. Comprehensive income (loss): |
x. Treasury stock: |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
y. | Basic and diluted net income (loss) per share: |
z. | Business combinations: |
aa. |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
ab. | Impact of recently issued accounting pronouncements: |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
ac. | Reclassifications: |
NOTE 3:- | MARKETABLE SECURITIES |
December 31, | ||||||||||||||||||||||||||||||||
2018 | 2017 | |||||||||||||||||||||||||||||||
Adjusted | Gross unrealized | Gross unrealized | Market | Adjusted | Gross unrealized | Gross unrealized | Market | |||||||||||||||||||||||||
cost | losses | gains | value | cost | losses | gains | value | |||||||||||||||||||||||||
Foreign banks and government debentures | $ | 6,759 | $ | (11 | ) | $ | - | $ | 6,748 | $ | 22,294 | $ | (63 | ) | $ | 3 | $ | 22,234 | ||||||||||||||
Corporate debentures | 9,021 | (27 | ) | - | 8,994 | 20,354 | (20 | ) | 5 | 20,339 | ||||||||||||||||||||||
Total available-for-sale marketable securities | $ | 15,780 | $ | (38 | ) | $ | - | $ | 15,742 | $ | 42,648 | $ | (83 | ) | $ | 8 | $ | 42,573 |
December 31, | ||||||||||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||||||||||
Adjusted | Gross unrealized | Gross unrealized | Market | Adjusted | Gross unrealized | Gross unrealized | Market | |||||||||||||||||||||||||
cost | losses | gains | Value | cost | losses | gains | Value | |||||||||||||||||||||||||
Foreign banks and government debentures | $ | 15,361 | $ | (10 | ) | $ | 51 | $ | 15,402 | $ | 5,895 | $ | (15 | ) | $ | 16 | $ | 5,896 | ||||||||||||||
Corporate debentures | 5,046 | - | 4 | 5,050 | 4,393 | (1 | ) | 17 | 4,409 | |||||||||||||||||||||||
Corporate shares | - | - | - | - | 3,762 | - | 1,936 | 5,698 | ||||||||||||||||||||||||
Total available-for-sale marketable securities | $ | 20,407 | $ | (10 | ) | $ | 55 | $ | 20,452 | $ | 14,050 | $ | (16 | ) | $ | 1,969 | $ | 16,003 |
December 31, | ||||||||||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||||||||||
Adjusted | Gross unrealized | Gross unrealized | Market | Adjusted | Gross unrealized | Gross unrealized | Market | |||||||||||||||||||||||||
cost | losses | gains | Value | cost | losses | gains | Value | |||||||||||||||||||||||||
Foreign banks and government debentures | $ | 31,040 | $ | (45 | ) | $ | 76 | $ | 31,071 | $ | 38,383 | $ | (117 | ) | $ | 149 | $ | 38,415 | ||||||||||||||
Corporate debentures | 28,980 | (26 | ) | 65 | 29,019 | 32,008 | (143 | ) | 43 | 31,908 | ||||||||||||||||||||||
Total available-for-sale marketable securities | $ | 60,020 | $ | (71 | ) | $ | 141 | $ | 60,090 | $ | 70,391 | $ | (260 | ) | $ | 192 | $ | 70,323 |
December 31, | December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | 2015 | 2018 | 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted | Gross unrealized | Gross unrealized | Market | Adjusted | Gross unrealized | Gross unrealized | Market | Adjusted | Gross unrealized | Gross unrealized | Market | Adjusted | Gross unrealized | Gross unrealized | Market | |||||||||||||||||||||||||||||||||||||||||||||||||
cost | Losses | gains | Value | cost | Losses | gains | Value | cost | losses | gains | value | cost | losses | gains | value | |||||||||||||||||||||||||||||||||||||||||||||||||
Foreign banks and government debentures | $ | 7,738 | $ | (111 | ) | $ | - | $ | 7,627 | $ | 6,356 | $ | (71 | ) | $ | - | $ | 6,285 | $ | 43,266 | $ | (358 | ) | $ | 6 | $ | 42,914 | $ | 14,463 | $ | (61 | ) | $ | 2 | $ | 14,404 | ||||||||||||||||||||||||||||
Corporate debentures | 7,281 | (60 | ) | 29 | 7,250 | 11,342 | (136 | ) | - | 11,206 | 19,881 | (338 | ) | 5 | 19,548 | 9,554 | (19 | ) | 32 | 9,567 | ||||||||||||||||||||||||||||||||||||||||||||
Total available-for-sale marketable securities | $ | 15,019 | $ | (171 | ) | $ | 29 | $ | 14,877 | $ | 17,698 | $ | (207 | ) | $ | - | $ | 17,491 | $ | 63,147 | $ | (696 | ) | $ | 11 | $ | 62,462 | $ | 24,017 | $ | (80 | ) | $ | 34 | $ | 23,971 |
NOTE 3:- | MARKETABLE SECURITIES (Cont.) |
December 31, | ||||||||||||||||||||||||||||||||
2018 | 2017 | |||||||||||||||||||||||||||||||
Adjusted | Gross unrealized | Gross unrealized | Market | Adjusted | Gross unrealized | Gross unrealized | Market | |||||||||||||||||||||||||
cost | losses | gains | value | cost | losses | gains | value | |||||||||||||||||||||||||
Foreign banks and government debentures | $ | 11,926 | $ | (357 | ) | $ | - | $ | 11,569 | $ | 13,603 | $ | (198 | ) | $ | - | $ | 13,405 | ||||||||||||||
Corporate debentures | 10,998 | (360 | ) | - | 10,638 | 17,308 | (257 | ) | - | 17,051 | ||||||||||||||||||||||
Total available-for-sale marketable securities | $ | 22,924 | $ | (717 | ) | $ | - | $ | 22,207 | $ | 30,911 | $ | (455 | ) | $ | - | $ | 30,456 |
December 31, 2018 | ||||||||||||||||||||||||
Investments with continuous unrealized losses for less than 12 months | Investments with continuous unrealized losses for 12 months or greater | Total investments with continuous unrealized losses | ||||||||||||||||||||||
Fair Value | Unrealized losses | Fair value | Unrealized losses | Fair value | Unrealized losses | |||||||||||||||||||
Foreign banks and government debentures | $ | 26,860 | $ | (177 | ) | $ | 24,966 | $ | (550 | ) | $ | 51,826 | $ | (727 | ) | |||||||||
Corporate debentures | 11,947 | (122 | ) | 23,605 | (604 | ) | 35,552 | (726 | ) | |||||||||||||||
Total available-for-sale marketable securities | $ | 38,807 | $ | (299 | ) | $ | 48,571 | $ | (1,154 | ) | $ | 87,378 | $ | (1,453 | ) |
December 31, 2016 | ||||||||||||||||||||||||
Investments with continuous unrealized losses for less than 12 months | Investments with continuous unrealized losses for 12 months or greater | Total investments with continuous unrealized losses | ||||||||||||||||||||||
Fair Value | Unrealized losses | Fair value | Unrealized losses | Fair value | Unrealized losses | |||||||||||||||||||
Foreign banks and government debentures | $ | 20,118 | $ | (139 | ) | $ | 2,325 | $ | (28 | ) | $ | 22,443 | $ | (167 | ) | |||||||||
Corporate debentures | 13,444 | (79 | ) | 1,013 | (6 | ) | 14,457 | (85 | ) | |||||||||||||||
Total available-for-sale marketable securities | $ | 33,562 | $ | (218 | ) | $ | 3,338 | $ | (34 | ) | $ | 36,900 | $ | (252 | ) |
December 31, 2017 | ||||||||||||||||||||||||
Investments with continuous unrealized losses for less than 12 months | Investments with continuous unrealized losses for 12 months or greater | Total investments with continuous unrealized losses | ||||||||||||||||||||||
Fair value | Unrealized losses | Fair value | Unrealized losses | Fair value | Unrealized losses | |||||||||||||||||||
Foreign banks and government debentures | $ | 40,104 | $ | (275 | ) | $ | 6,486 | $ | (48 | ) | $ | 46,590 | $ | (323 | ) | |||||||||
Corporate debentures | 29,280 | (226 | ) | 8,173 | (69 | ) | 37,453 | (295 | ) | |||||||||||||||
Total available-for-sale marketable securities | $ | 69,384 | $ | (501 | ) | $ | 14,659 | $ | (117 | ) | $ | 84,043 | $ | (618 | ) |
December 31, 2015 | ||||||||||||||||||||||||
Investments with continuous unrealized losses for less than 12 months | Investments with continuous unrealized losses for 12 months or greater | Total investments with continuous unrealized losses | ||||||||||||||||||||||
Fair Value | Unrealized losses | Fair value | Unrealized losses | Fair value | Unrealized losses | |||||||||||||||||||
Foreign banks and government debentures | $ | 16,041 | $ | (64 | ) | $ | 15,660 | $ | (139 | ) | $ | 31,701 | $ | (203 | ) | |||||||||
Corporate debentures | 9,697 | (93 | ) | 24,347 | (188 | ) | 34,044 | (281 | ) | |||||||||||||||
Total available-for-sale marketable securities | $ | 25,738 | $ | (157 | ) | $ | 40,007 | $ | (327 | ) | $ | 65,745 | $ | (484 | ) |
NOTE 4:- | FAIR VALUE MEASUREMENTS |
December 31, 2018 | ||||||||||||||||
Fair value measurements using input type | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
Cash equivalents: | ||||||||||||||||
Money market funds | $ | 4,970 | $ | - | $ | - | $ | 4,970 | ||||||||
Government debentures | - | 4,986 | - | 4,986 | ||||||||||||
Available-for-sale: | ||||||||||||||||
Foreign banks and government debentures | - | 61,231 | - | 61,231 | ||||||||||||
Corporate debentures | - | 39,180 | - | 39,180 | ||||||||||||
Total financial assets | $ | 4,970 | $ | 105,397 | $ | - | $ | 110,367 |
December 31, 2016 | ||||||||||||||||
Fair value measurements using input type | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Cash equivalents: | ||||||||||||||||
Money market funds | $ | 578 | $ | - | $ | - | $ | 578 | ||||||||
Available-for-sale: | ||||||||||||||||
Foreign banks and government debentures | - | 54,100 | - | 54,100 | ||||||||||||
Corporate debentures | - | 41,319 | - | 41,319 | ||||||||||||
Total financial assets | $ | 578 | $ | 95,419 | $ | - | $ | 95,997 |
December 31, 2015 | ||||||||||||||||
Fair value measurements using input type | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Cash equivalents: | ||||||||||||||||
Money market funds | $ | 853 | $ | - | $ | - | $ | 853 | ||||||||
Available-for-sale: | ||||||||||||||||
Foreign banks and government debentures | - | 50,596 | - | 50,596 | ||||||||||||
Corporate debentures | - | 47,523 | - | 47,523 | ||||||||||||
Corporate shares | 5,698 | - | - | 5,698 | ||||||||||||
Total financial assets | $ | 6,551 | $ | 98,119 | $ | - | $ | 104,670 |
NOTE 4:- | FAIR VALUE MEASUREMENTS (Cont.) |
December 31, 2017 | ||||||||||||||||
Fair value measurements using input type | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
Cash equivalents: | ||||||||||||||||
Money market funds | $ | 501 | $ | - | $ | - | $ | 501 | ||||||||
Available-for-sale: | ||||||||||||||||
Foreign banks and government debentures | - | 50,043 | - | 50,043 | ||||||||||||
Corporate debentures | - | 46,957 | - | 46,957 | ||||||||||||
Total financial assets | $ | 501 | $ | 97,000 | $ | - | $ | 97,501 | ||||||||
Liabilities | ||||||||||||||||
Contingent consideration | $ | - | $ | - | $ | 1,550 | $ | 1,550 | ||||||||
Total financial liabilities | $ | - | $ | - | $ | 1,550 | $ | 1,550 |
Fair value at January 1, 2017 | $ | - | ||
Acquisition date fair value of contingent consideration related to investment in Seculert (see Note 1c) | 1,981 | |||
Changes in the fair value of contingent consideration in Seculert | (431 | ) | ||
Fair value at December 31,2017 | 1,550 | |||
Changes in the fair value of contingent consideration in Seculert | (240 | ) | ||
Payment of contingent consideration in Seculert | (1,310 | ) | ||
Fair value at December 31, 2018 | $ | - |
NOTE 5:- | INVENTORIES |
December 31, | December 31, | |||||||||||||||
2016 | 2015 | 2018 | 2017 | |||||||||||||
Raw materials and components | $ | 1,989 | $ | 2,655 | $ | 2,140 | $ | 1,963 | ||||||||
Work-in-progress | 429 | 442 | 1,894 | 279 | ||||||||||||
Finished products | 14,696 | 13,225 | 14,367 | 16,530 | ||||||||||||
$ | 17,114 | $ | 16,322 | $ | 18,401 | $ | 18,772 |
December 31, | ||||||||
2018 | 2017 | |||||||
Cost: | ||||||||
Computer, peripheral equipment and software | $ | 90,054 | $ | 84,670 | ||||
Office furniture and equipment | 11,121 | 10,416 | ||||||
Leasehold improvements | 6,188 | 5,790 | ||||||
107,363 | 100,876 | |||||||
Accumulated depreciation: | ||||||||
Computer, peripheral equipment and software | 72,236 | 67,275 | ||||||
Office furniture and equipment | 7,710 | 6,684 | ||||||
Leasehold improvements | 3,740 | 3,275 | ||||||
83,686 | 77,234 | |||||||
Property and equipment, net | $ | 23,677 | $ | 23,642 |
December 31, | ||||||||
2016 | 2015 | |||||||
Cost: | ||||||||
Computer, peripheral equipment and software | $ | 78,521 | $ | 71,571 | ||||
Office furniture and equipment | 10,103 | 8,953 | ||||||
Leasehold improvements | 5,607 | 5,193 | ||||||
94,231 | 85,717 | |||||||
Accumulated depreciation: | ||||||||
Computer, peripheral equipment and software | 59,696 | 52,645 | ||||||
Office furniture and equipment | 5,382 | 4,554 | ||||||
Leasehold improvements | 2,799 | 2,315 | ||||||
67,877 | 59,514 | |||||||
Property and equipment, net | $ | 26,354 | $ | 26,203 |
NOTE 7:- | INTANGIBLE ASSETS, NET |
Weighted | ||||||||||||
average | ||||||||||||
amortization | December 31, | |||||||||||
Period | 2018 | 2017 | ||||||||||
(years) | ||||||||||||
Cost: | ||||||||||||
Acquired technology | 8.2 | $ | 25,561 | $ | 25,561 | |||||||
Customers relationships and brand name | 5.8 | 9,817 | 9,817 | |||||||||
35,378 | 35,378 | |||||||||||
Accumulated amortization: | ||||||||||||
Acquired technology | 16,139 | 15,297 | ||||||||||
Customers relationships and brand name | 9,772 | 9,666 | ||||||||||
25,911 | 24,963 | |||||||||||
Intangible assets, net | $ | 9,467 | $ | 10,415 |
Weighted | |||||||||||
average | |||||||||||
amortization | December 31, | ||||||||||
Period | 2016 | 2015 | |||||||||
(years) | |||||||||||
Cost: | |||||||||||
Acquired technology | 7.6 | $ | 16,314 | $ | 16,314 | ||||||
Customers relationships and brand name | 6.8 | 9,817 | 9,817 | ||||||||
26,131 | 26,131 | ||||||||||
Accumulated amortization: | |||||||||||
Acquired technology | 14,160 | 13,146 | |||||||||
Customers relationships and brand name | 9,572 | 9,467 | |||||||||
23,732 | 22,613 | ||||||||||
Intangible assets, net | $ | 2,399 | $ | 3,518 |
December 31, | ||||||||
2017 | $ | 1,006 | ||||||
2018 | 687 | |||||||
2019 | 674 | $ | 1,712 | |||||
2020 | 32 | 1,071 | ||||||
2021 | 1,037 | |||||||
2022 | 1,037 | |||||||
2023 and thereafter | 4,610 | |||||||
Total | $ | 2,399 | $ | 9,467 |
NOTE 8:- | OTHER PAYABLES AND ACCRUED EXPENSES |
December 31, | ||||||||
2018 | 2017 | |||||||
Accrued expenses and other | $ | 7,068 | $ | 5,939 | ||||
Subcontractors accrual | 1,160 | 1,692 | ||||||
Accrued taxes | 3,863 | 6,523 | ||||||
Contingent consideration related to the acquisition | - | 1,550 | ||||||
$ | 12,091 | $ | 15,704 |
December 31, | ||||||||
2016 | 2015 | |||||||
Accrued expenses and other | $ | 8,330 | $ | 6,769 | ||||
Subcontractors accrual | 2,081 | 2,532 | ||||||
Accrued taxes | 4,108 | 2,006 | ||||||
$ | 14,519 | $ | 11,307 |
NOTE 9:- | COMMITMENTS AND CONTINGENT LIABILITIES |
a. | Lease commitments: |
2017 | $ | 4,865 | ||||||
2018 | 3,896 | |||||||
2019 | 3,222 | $ | 4,661 | |||||
2020 | 1,828 | 2,877 | ||||||
2021 | 668 | 1,109 | ||||||
2022 | 474 | |||||||
2023 and there after | 1,047 | |||||||
$ | 14,479 | $ | 10,168 |
b. | Litigation: |
1. | On April 4, 2016, F5 Networks, Inc. ("F5") filed a lawsuit against the Company’s Subsidiary ("Radware Inc.") in the United States District Court for the Western District of Washington, alleging infringement of three U.S. patents of F5 relating to Radware Inc. ADC and WAF products. On December 16, 2016, the Company filed an amended counterclaim in this action for patent infringement of a recently issued Radware patent directed to outbound link load balancing. In June 2017, the case was transferred to the United States District Court for the Northern District of California. On November 19, 2018, the Court granted partial summary judgment of non-infringement of the Company’s patent. The Company denies that any of its products infringe any valid claims of the asserted F5 patents and intends to continue to vigorously oppose F5’s claims. However, since discovery and litigation is still in a preliminary stage, the Company, based on its legal advisors, cannot estimate what impact, if any, the litigation may have on its results of operations, financial condition or cash flows. |
NOTE 9:- | COMMITMENTS AND CONTINGENT LIABILITIES (Cont.) |
2. | On August 29, 2013, F5 |
NOTE 9:- | COMMITMENTS AND CONTINGENT LIABILITIES (Cont.) |
3. |
4. | From time to time, the Company is party to other various legal proceedings, claims and litigation that arise in the normal course of business. It is the opinion of management that the ultimate outcome of these matters will not have a material adverse effect on the Company's financial position, results of operations or cash flows and believes that it had provided an adequate accrual to cover the costs to resolve the aforementioned legal proceedings, demands and claims. |
Number of options | Weighted-average exercise price | Weighted- average remaining contractual term (in years) | Aggregate intrinsic value | |||||||||||||
Outstanding at January 1, 2016 | 5,201,661 | $ | 16.51 | 3.06 | $ | 2,748 | ||||||||||
Granted | 2,772,300 | 12.94 | ||||||||||||||
Exercised | (139,400 | ) | 12.18 | |||||||||||||
Expired | (416,523 | ) | 17.06 | |||||||||||||
Forfeited | (1,389,150 | ) | 19.09 | |||||||||||||
Outstanding at December 31, 2016 | 6,028,888 | $ | 14.33 | 3.27 | $ | 5,070 | ||||||||||
Exercisable at December 31, 2016 | 2,014,403 | $ | 15.28 | 1.85 | $ | 597 | ||||||||||
Vested and expected to vest at December 31, 2016 | 5,475,668 | $ | 14.44 | 3.16 | $ | 4,236 |
Number of options | Weighted-average exercise price | Weighted- average remaining contractual term (in years) | Aggregate intrinsic value | Number of options | Weighted-average exercise price | Weighted- average remaining contractual term (in years) | Aggregate intrinsic value | |||||||||||||||||||||||||
Outstanding at January 1, 2015 | 4,702,920 | $ | 15.54 | 3.22 | $ | 30,474 | ||||||||||||||||||||||||||
Outstanding at January 1, 2018 | 6,549,043 | $ | 14.66 | 3.08 | $ | 31,202 | ||||||||||||||||||||||||||
Granted | 1,562,000 | 18.96 | 1,134,100 | 24.82 | ||||||||||||||||||||||||||||
Exercised | (600,393 | ) | 14.57 | (2,416,115 | ) | 14.51 | ||||||||||||||||||||||||||
Expired | (160,000 | ) | 16.92 | (5,000 | ) | 13.83 | ||||||||||||||||||||||||||
Forfeited | (302,866 | ) | 17.76 | (406,825 | ) | 16.32 | ||||||||||||||||||||||||||
Outstanding at December 31, 2015 | 5,201,661 | $ | 16.51 | 3.06 | $ | 2,748 | ||||||||||||||||||||||||||
Outstanding at December 31, 2018 | 4,855,203 | $ | 16.96 | 3.30 | $ | 29,774 | ||||||||||||||||||||||||||
Exercisable at December 31, 2015 | 1,791,130 | $ | 15.32 | 1.91 | $ | 1,578 | ||||||||||||||||||||||||||
Exercisable at December 31, 2018 | 1,121,414 | $ | 14.27 | 2.25 | $ | 9,250 | ||||||||||||||||||||||||||
Vested and expected to vest at December 31, 2015 | 4,878,629 | $ | 16.44 | 2.99 | $ | 2,655 | ||||||||||||||||||||||||||
Vested and expected to vest at December 31, 2018 | 4,475,576 | $ | 16.67 | 3.24 | $ | 28,253 |
Number of options | Weighted-average exercise price | Weighted- average remaining contractual term (in years) | Aggregate intrinsic value | |||||||||||||
Outstanding at January 1, 2014 | 7,073,511 | $ | 11.74 | 2.62 | $ | 44,716 | ||||||||||
Granted | 1,239,375 | 17.14 | ||||||||||||||
Exercised | (3,058,966 | ) | 7.35 | |||||||||||||
Expired | - | - | ||||||||||||||
Forfeited | (551,000 | ) | 14.83 | |||||||||||||
Outstanding at December 31, 2014 | 4,702,920 | $ | 15.54 | 3.22 | $ | 30,474 | ||||||||||
Exercisable at December 31, 2014 | 1,265,300 | $ | 15.57 | 1.58 | $ | 8,161 | ||||||||||
Vested and expected to vest at December 31, 2014 | 4,320,142 | $ | 15.99 | 3.14 | $ | 26,033 |
December 31, 2018 | ||||||||||||||||||||||
Outstanding | Exercisable | |||||||||||||||||||||
Weighted | ||||||||||||||||||||||
average | Weighted | Weighted | ||||||||||||||||||||
Ranges of | remaining | average | Average | |||||||||||||||||||
exercise | Number of | contractual | exercise | Number of | Exercise | |||||||||||||||||
price | options | life (years) | price | options | price | |||||||||||||||||
$ | 10.04-14.74 | 2,408,143 | 2.72 | $ | 13.47 | 755,327 | $ | 13.28 | ||||||||||||||
$ | 15.09-19.30 | 1,356,636 | 3.20 | $ | 16.80 | 354,136 | $ | 16.09 | ||||||||||||||
$ | 20.62-27.15 | 1,090,424 | 4.70 | $ | 24.88 | 11,951 | $ | 22.68 | ||||||||||||||
4,855,203 | 1,121,414 |
December 31, 2016 | ||||||||||||||||||||||
Outstanding | Exercisable | |||||||||||||||||||||
Weighted | ||||||||||||||||||||||
average | Weighted | Weighted | ||||||||||||||||||||
Ranges of | remaining | average | average | |||||||||||||||||||
exercise | Number of | contractual | exercise | Number of | exercise | |||||||||||||||||
price | options | life (years) | price | options | price | |||||||||||||||||
$ | 10.08-14.74 | 4,190,733 | 3.66 | 13.38 | 982,890 | 13.97 | ||||||||||||||||
$ | 15.09-19.30 | 1,793,905 | 2.37 | 16.34 | 1,031,513 | 16.52 | ||||||||||||||||
$ | 20.62-23.66 | 44,250 | 3.47 | 22.81 | - | - | ||||||||||||||||
6,028,888 | 2,014,403 |
December 31, 2015 | ||||||||||||||||||||||
Outstanding | Exercisable | |||||||||||||||||||||
Weighted | ||||||||||||||||||||||
average | Weighted | Weighted | ||||||||||||||||||||
Ranges of | remaining | average | average | |||||||||||||||||||
exercise | Number of | contractual | exercise | Number of | exercise | |||||||||||||||||
price | options | life (years) | price | options | price | |||||||||||||||||
$ | 12.18-14.74 | 1,861,208 | 2.98 | 13.91 | 863,792 | 13.56 | ||||||||||||||||
$ | 15.09-19.30 | 2,557,703 | 2.67 | 16.69 | 927,338 | 16.96 | ||||||||||||||||
$ | 20.62-23.66 | 782,750 | 4.53 | 22.10 | - | - | ||||||||||||||||
5,201,661 | 1,791,130 |
December 31, 2014 | ||||||||||||||||||||||
Outstanding | Exercisable | |||||||||||||||||||||
Weighted | ||||||||||||||||||||||
average | Weighted | Weighted | ||||||||||||||||||||
Ranges of | remaining | average | average | |||||||||||||||||||
exercise | Number of | contractual | exercise | Number of | exercise | |||||||||||||||||
price | options | life (years) | price | options | price | |||||||||||||||||
$ | 7.65 | 60,350 | 0.25 | 7.65 | 60,350 | 7.65 | ||||||||||||||||
$ | 11.94-14.47 | 1,861,533 | 3.32 | 13.58 | 334,200 | 12.19 | ||||||||||||||||
$ | 15.09-19.30 | 2,781,037 | 3.21 | 17.03 | 870,750 | 17.41 | ||||||||||||||||
4,702,920 | 1,265,300 |
Year ended December 31, | ||||
Outstanding at January 1, | ||||
Granted | ||||
Vested | ( | ) | ||
Forfeited | ( | ) | ||
Outstanding as of December 31, |
Year ended December 31, | Year ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2018 | 2017 | 2016 | |||||||||||||||||||
Cost of revenues | $ | 180 | $ | 141 | $ | 79 | $ | 221 | $ | 241 | $ | 180 | ||||||||||||
Research and development, net | 3,339 | 2,456 | 1,421 | 3,123 | 3,867 | 3,339 | ||||||||||||||||||
Sales and marketing | 5,661 | 4,098 | 2,950 | 7,072 | 6,894 | 5,661 | ||||||||||||||||||
General and administrative | 2,340 | 2,634 | 2,932 | 2,087 | 2,029 | 2,340 | ||||||||||||||||||
Total expenses | $ | 11,520 | $ | 9,329 | $ | 7,382 | $ | 12,503 | $ | 13,031 | $ | 11,520 |
NOTE 11:- | EARNINGS (LOSS) PER SHARE |
Year ended December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
Numerator for basic and diluted net earnings (loss) per share: | ||||||||||||
Net income (loss) | $ | 11,735 | $ | (7,493 | ) | $ | (8,659 | ) | ||||
Weighted average shares outstanding, net of treasury stock: | ||||||||||||
Denominator for basic net earnings (loss) per share | 45,289,296 | 43,475,844 | 43,868,221 | |||||||||
Effect of dilutive securities: | ||||||||||||
Employee stock options | 2,402,572 | - | - | |||||||||
Denominator for diluted net earnings (loss) per share | 47,691,868 | 43,475,844 | 43,868,221 | |||||||||
Basic net earnings (loss) per share | $ | 0.26 | $ | (0.17 | ) | $ | (0.20 | ) | ||||
Diluted net earnings (loss) per share | $ | 0.25 | $ | (0.17 | ) | $ | (0.20 | ) |
Year ended December 31, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Numerator for basic and diluted net earnings (loss) per share: | ||||||||||||
Net income (loss) | $ | (8,659 | ) | $ | 18,569 | $ | 24,950 | |||||
Weighted average shares outstanding, net of treasury stock: | ||||||||||||
Denominator for basic net earnings (loss) per share | 43,868,221 | 45,895,321 | 45,308,554 | |||||||||
Effect of dilutive securities: | ||||||||||||
Employee stock options | - | 843,283 | 1,586,061 | |||||||||
Denominator for diluted net earnings (loss) per share | 43,868,221 | 46,738,604 | 46,894,615 | |||||||||
Basic net earnings (loss) per share | $ | (0.20 | ) | $ | 0.40 | $ | 0.55 | |||||
Diluted net earnings (loss) per share | $ | (0.20 | ) | $ | 0.40 | $ | 0.53 |
NOTE 12:- | TAXES ON INCOME |
2016 | 2015 | 2018 | 2017 | |||||||||||||
Beginning balance | $ | 12,306 | $ | 10,117 | $ | 1,534 | $ | 13,217 | ||||||||
Additions for prior year tax positions | 911 | 36 | 221 | 290 | ||||||||||||
Reclassified from current tax payable | 574 | - | ||||||||||||||
Decrease for prior year tax positions | (88 | ) | (1,245 | ) | ||||||||||||
Additions for current year tax positions | - | 2,153 | 973 | - | ||||||||||||
Decreases relating to the settlement with tax authorities | - | (10,728 | ) | |||||||||||||
Ending balance | $ | 13,217 | $ | 12,306 | $ | 3,214 | $ | 1,534 |
NOTE 12:- | TAXES ON INCOME (Cont.) |
b. | Israeli |
1. | Foreign Exchange Regulations: |
2. | Tax rates: |
3. | Tax benefits under the Law for the Encouragement of Capital Investments, 1959 ("the Law"): |
NOTE 12:- | TAXES ON INCOME (Cont.) |
NOTE 12:- | TAXES ON INCOME (Cont.) |
NOTE 12:- | TAXES ON INCOME (Cont.) |
c. | Taxes on income are comprised as follows: |
Year ended December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
Current taxes | $ | 5,371 | $ | 5,561 | $ | 4,338 | ||||||
Deferred taxes | (2,308 | ) | 91 | (2,687 | ) | |||||||
$ | 3,063 | $ | 5,652 | $ | 1,651 | |||||||
Domestic | $ | 2,049 | $ | 238 | $ | 283 | ||||||
Foreign | 1,014 | 5,414 | 1,368 | |||||||||
$ | 3,063 | $ | 5,652 | $ | 1,651 |
Year ended December 31, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Current taxes | $ | 4,338 | $ | 5,082 | $ | 7,706 | ||||||
Deferred taxes | (2,687 | ) | 215 | (1,775 | ) | |||||||
$ | 1,651 | $ | 5,297 | $ | 5,931 | |||||||
Domestic | $ | 283 | $ | 3,084 | $ | 4,899 | ||||||
Foreign | 1,368 | 2,213 | 1,032 | |||||||||
$ | 1,651 | $ | 5,297 | $ | 5,931 |
Year ended December 31, | Year ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2018 | 2017 | 2016 | |||||||||||||||||||
Domestic taxes: | ||||||||||||||||||||||||
Current taxes | $ | 494 | $ | 2,715 | $ | 5,538 | $ | 2,206 | $ | 238 | $ | 494 | ||||||||||||
Deferred taxes | (211 | ) | 369 | (639 | ) | (157 | ) | - | (211 | ) | ||||||||||||||
283 | 3,084 | 4,899 | 2,049 | 238 | 283 | |||||||||||||||||||
Foreign taxes: | ||||||||||||||||||||||||
Current taxes | 3,844 | 2,367 | 2,168 | 3,165 | 5,323 | 3,844 | ||||||||||||||||||
Deferred taxes | (2,476 | ) | (154 | ) | (1,136 | ) | (2,151 | ) | 91 | (2,476 | ) | |||||||||||||
1,368 | 2,213 | 1,032 | 1,014 | 5,414 | 1,368 | |||||||||||||||||||
Taxes on income | $ | 1,651 | $ | 5,297 | $ | 5,931 | ||||||||||||||||||
$ | 3,063 | $ | 5,652 | $ | 1,651 |
NOTE 12:- | TAXES ON INCOME (Cont.) |
d. | Deferred income taxes: |
December 31, | December 31, | |||||||||||||||
2016 | 2015 | 2018 | 2017 | |||||||||||||
Carryforward tax losses | $ | 2,210 | $ | 1,625 | $ | 4,743 | $ | 5,626 | ||||||||
Deferred revenues | 5,764 | 4,172 | 6,350 | 6,598 | ||||||||||||
Temporary differences | 5,881 | 4,982 | 5,093 | 5,216 | ||||||||||||
Intangible assets | 36 | 294 | ||||||||||||||
Unrealized losses on marketable securities | 331 | 132 | ||||||||||||||
Deferred tax assets before valuation allowance | 13,891 | 11,073 | 16,517 | 17,572 | ||||||||||||
Valuation allowance | (1,495 | ) | (1,032 | ) | (3,247 | ) | (3,577 | ) | ||||||||
Net deferred tax asset | 12,396 | 10,041 | 13,270 | 13,995 | ||||||||||||
Intangible assets, including goodwill | (2,997 | ) | (2,931 | ) | (4,047 | ) | (4,536 | ) | ||||||||
Depreciable assets | (1,989 | ) | (1,840 | ) | (1,780 | ) | (2,008 | ) | ||||||||
Unrealized losses (gains) on marketable securities | 7 | (419 | ) | |||||||||||||
Deferred tax liability | (4,979 | ) | (5,190 | ) | (5,827 | ) | (6,544 | ) | ||||||||
Net deferred tax assets | $ | 7,417 | $ | 4,851 | $ | 7,443 | $ | 7,451 |
December 31, | ||||||||
2016 | 2015 | |||||||
Domestic deferred tax asset, net | $ | 1,233 | $ | 598 | ||||
Foreign deferred tax asset, net | 6,184 | 4,253 | ||||||
$ | 7,417 | $ | 4,851 |
December 31, | ||||||||
2018 | 2017 | |||||||
Domestic deferred tax asset, net | $ | 1,047 | $ | 1,359 | ||||
Foreign deferred tax asset, net | 6,396 | 6,092 | ||||||
$ | 7,443 | $ | 7,451 |
NOTE 12:- | TAXES ON INCOME (Cont.) |
e. | Foreign: |
f. | Income taxes of non-Israeli subsidiaries: |
NOTE 12:- | TAXES ON INCOME (Cont.) |
A reconciliation between the theoretical tax expense, assuming all income is taxed at the statutory tax rate applicable to income of the Company and the actual tax expense as reported in the statement of operations is as follows: |
Year ended December 31, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Income (loss) before taxes, as reported in the consolidated statements of income | $ | (7,008 | ) | $ | 23,866 | $ | 30,881 | |||||
Statutory tax rate | 25 | % | 26.5 | % | 26.5 | % | ||||||
Theoretical tax expense (benefit) on the above amount at the Israeli statutory tax rate | $ | (1,752 | ) | $ | 6,324 | $ | 8,183 | |||||
Tax adjustment in respect of different tax rate of foreign subsidiary | 427 | 622 | 190 | |||||||||
Non-deductible expenses and other permanent differences | 200 | 322 | 772 | |||||||||
Deferred taxes on losses for which valuation allowance was provided, net | 463 | 377 | 270 | |||||||||
Utilization of tax losses and deferred taxes for which valuation allowance was provided, net | - | (555 | ) | - | ||||||||
Stock compensation relating to stock options per ASC No. 718 | 1,342 | 1,186 | 1,624 | |||||||||
Approved, Privileged and Preferred enterprise loss (benefits) (*) | 916 | (3,047 | ) | (5,154 | ) | |||||||
Other | 55 | 68 | 46 | |||||||||
Actual tax expense | $ | 1,651 | $ | 5,297 | $ | 5,931 |
Year ended December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
Income (loss) before taxes, as reported in the consolidated statements of income (loss) | $ | 14,798 | $ | (1,841 | ) | $ | (7,008 | ) | ||||
Statutory tax rate | 23 | % | 24 | % | 25 | % | ||||||
Theoretical tax expense (benefit) on the above amount at the Israeli statutory tax rate | $ | 3,404 | $ | (442 | ) | $ | (1,752 | ) | ||||
Tax adjustment in respect of different tax rate of foreign subsidiary | 65 | 334 | 427 | |||||||||
Non-deductible expenses and other permanent differences | (340 | ) | 375 | 200 | ||||||||
Deferred taxes on losses for which valuation allowance was provided, net | 743 | 1,288 | 463 | |||||||||
Utilization of tax losses and deferred taxes for which valuation allowance was provided, net | (2,259 | ) | (709 | ) | - | |||||||
Stock compensation relating to stock options per ASC No. 718 | 1,073 | 1,976 | 1,342 | |||||||||
Income taxes in respect of prior years | 273 | (1,038 | ) | - | ||||||||
Change of tax rate | 696 | 3,249 | - | |||||||||
Approved, Privileged and Preferred enterprise loss (benefits) (*) | (684 | ) | 347 | 916 | ||||||||
Other | 92 | 272 | 55 | |||||||||
Actual tax expense | $ | 3,063 | $ | 5,652 | $ | 1,651 |
(*) | Basic earnings per share amounts of the benefit resulting from the "Approved, Privileged and Preferred Enterprise" status | $ | 0.00 | $ | 0.00 | $ | 0.03 | ||||||
Diluted earnings per share amounts of the benefit resulting from the "Approved, Privileged and Preferred Enterprise" status | $ | 0.00 | $ | 0.00 | $ | 0.03 |
(*) | Basic earnings per share amounts of the benefit resulting from the "Approved, Privileged and Preferred Enterprise" status | $ | 0.03 | $ | 0.07 | $ | 0.11 | ||||||
Diluted earnings per share amounts of the benefit resulting from the "Approved, Privileged and Preferred Enterprise" status | $ | 0.03 | $ | 0.06 | $ | 0.11 |
NOTE 12:- | TAXES ON INCOME (Cont.) |
Income (loss) before taxes on income |
Year ended December 31, | Year ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2018 | 2017 | 2016 | |||||||||||||||||||
Domestic | $ | (11,475 | ) | $ | 20,247 | $ | 28,203 | $ | 9,009 | $ | (5,918 | ) | $ | (11,475 | ) | |||||||||
Foreign | 4,467 | 3,619 | 2,678 | 5,789 | 4,077 | 4,467 | ||||||||||||||||||
Income (loss) before income taxes | $ | (7,008 | ) | $ | 23,866 | $ | 30,881 | |||||||||||||||||
Income (loss) before taxes on income | $ | 14,798 | $ | (1,841 | ) | $ | (7,008 | ) |
NOTE 13:- | GEOGRAPHIC INFORMATION |
Year ended December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
Revenues from sales to customers located at: | ||||||||||||
The United States | $ | 82,990 | $ | 78,464 | $ | 67,953 | ||||||
America - other | 19,501 | 19,437 | 16,780 | |||||||||
EMEA *) | 51,888 | 45,077 | 42,104 | |||||||||
Germany | 23,863 | 11,512 | 11,620 | |||||||||
Asia Pacific | 56,162 | 56,879 | 58,128 | |||||||||
$ | 234,404 | $ | 211,369 | $ | 196,585 |
Year ended December 31, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Revenues from sales to customers located at: | ||||||||||||
The United States | $ | 67,953 | $ | 69,125 | $ | 75,881 | ||||||
America – other | 16,780 | 19,560 | 17,605 | |||||||||
EMEA *) | 53,724 | 62,689 | 55,376 | |||||||||
Asia Pacific | 58,128 | 65,192 | 73,030 | |||||||||
$ | 196,585 | $ | 216,566 | $ | 221,892 |
*) | Europe, the Middle East and |
December 31, | ||||||||
2018 | 2017 | |||||||
Long-lived assets, by geographic region: | ||||||||
America (principally the United States) | $ | 1,736 | $ | 1,822 | ||||
Israel | 20,856 | 20,832 | ||||||
EMEA - other | 253 | 251 | ||||||
Asia Pacific | 832 | 737 | ||||||
$ | 23,677 | $ | 23,642 |
December 31, | ||||||||
2016 | 2015 | |||||||
Long-lived assets, by geographic region: | ||||||||
America (principally the United States) | $ | 1,973 | $ | 2,101 | ||||
Israel | 22,963 | 22,286 | ||||||
EMEA - other | 357 | 578 | ||||||
Asia Pacific | 1,061 | 1,238 | ||||||
$ | 26,354 | $ | 26,203 |
NOTE 14:- | SELECTED STATEMENTS OF INCOME DATA |
Year ended December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
Financial income, net: | ||||||||||||
Interest on bank deposits and other | $ | 5,279 | $ | 3,528 | $ | 2,947 | ||||||
Amortization of premiums, accretion of discounts and interest on available-for-sale marketable securities, net | 2,304 | 2,008 | 1,813 | |||||||||
Gain from sale of available-for-sale marketable securities | - | 18 | 1,771 | |||||||||
Bank charges | (113 | ) | (89 | ) | (116 | ) | ||||||
Foreign currency translation differences, net | (196 | ) | (635 | ) | (674 | ) | ||||||
$ | 7,274 | $ | 4,830 | $ | 5,741 |
Year ended December 31, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Financial income (expenses): | ||||||||||||
Interest on bank deposits and other | $ | 2,947 | $ | 2,580 | $ | 2,053 | ||||||
Amortization of premiums, accretion of discounts and interest on marketable debt securities, net | 1,813 | 2,153 | 3,404 | |||||||||
Gain from sale of available-for-sale marketable securities | 1,771 | 2,438 | 424 | |||||||||
Bank charges | (116 | ) | (157 | ) | (242 | ) | ||||||
Foreign currency translation differences, net | (674 | ) | (1,147 | ) | 163 | |||||||
$ | 5,741 | $ | 5,867 | $ | 5,802 |
a. | The following related party balances are included in the consolidated balance sheets: |
December 31, | December 31, | |||||||||||||||
2016 | 2015 | 2018 | 2017 | |||||||||||||
Trade receivables and prepaid expenses | $ | 1,620 | $ | 2,084 | $ | 963 | $ | 1,207 | ||||||||
Trade payables and accrued expenses | $ | 636 | $ | 1,323 | $ | 604 | $ | 205 |
b. | The following related party transactions are included in the consolidated statements of |
Year ended December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
Revenues (1) | $ | 1,324 | $ | 2,547 | $ | 1,766 | ||||||
Cost of revenues (2) | $ | 6,956 | $ | 4,280 | $ | 3,095 | ||||||
Operating expenses, net - primarily lease, sub-contractors and communications (3) | $ | 4,757 | $ | 4,853 | $ | 4,546 | ||||||
Purchase of property and equipment | $ | 2,761 | $ | 1,663 | $ | 1,869 |
Year ended December 31, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Revenues (1) | $ | 1,766 | $ | 2,304 | $ | 3,651 | ||||||
Expenses, net - primarily lease, sub-contractors and communications (2) | $ | 7,641 | $ | 6,331 | $ | 5,594 | ||||||
Purchase of property and equipment | $ | 1,869 | $ | 5,463 | $ | 4,209 |
(1) | Distribution of the Company's products on a non-exclusive basis. |
(2) | Related to cost of product purchased from one of the related companies. |
(3) | The Company leases office space and purchases other miscellaneous services from certain companies, which are considered to be related parties. In addition, the Company |
NOTE 16:- | EVENTS AFTER THE REPORTING DATE |
In March 2019, the Company completed the acquisition of Kaalbi Technologies Private Ltd. (“ShieldSquare”), a company engaged in in Bot mitigation and Bot management solutions for a total consideration of $14,000. |