RDWR - Earnings call transcript Q1 2022

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Operator

Ladies and gentlemen, good morning. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Radware conference call discussing first quarter 2022 results, and we thank you all for holding.

As a reminder, this conference is being recorded on May 3, 2022. [Operator Instructions]. to Investor call Relations like Erez, to now of Director at would turn over this Yisca I Radware. Please go ahead.

Yisca Erez

Thank welcome to Conference morning, everyone, Quarter Good Earnings Call. you, XXX Radware's Abby. First and

website. Roy Zisapel, Chief in the and first kit Avidan, A financial Joining me as Officer. of Investor today President Chief Relations as and Financial press Executive today's of available in well quarter the and section copy statements are Guy Officer; release our investor are the

and time such forward-looking call, or of make the on are and include, Roy of Zisapel. specifically February company's such statements date financial to order to company changes other These XX-F in the statements may to today's and regarding to last and the any is our to commitment after turn cause reflect would could contribute materially future update report that detailed time to the in performance company. to like time filed as our actual impact or forward-looking call During from conditions or orders or XX, XXXX. no other made. from uncertainties, We in for differ revise and SEC, subject the to in not refer from we events other timing syndemic, documents to, amount projections circumstances to the files products, from I on undertake Form furnishes you the estimates. with time risk the filings. to but are We risks events annual general the future forward-looking statement business ability Radware's industry, demand and COVID-XX results and various that current differences limited or statements changes Factors of address could the forecast

Roy Zisapel

step which is Thank we morning, of I'd of the a highlighting to Security, Yisca, initiatives released introducing This protector our in months news strategic business. this we the all today. announced for us spinoff our like cloud cloud-native thank joining couple ago. call SkyHawk and you services a a you, begin by spinoff is that

Before cloud SkyHawk, let opportunity first, details our initiatives. to this into get recap I me the about take

market centers opportunity applications growth security in cyber made in a attacks, the us our decision cloud protecting space. our accelerate large mission-critical front a and in investments of as against Given strategic service to focus data and the we

In additional steps style spinoff, on in of this important other taken initiative. we've several delivering

and cloud better acquired scrubbing customers. deliver we center cloud provider, assets data our Security-Dam, service to and First, our to synergies leverage

integration the we first completed quarter, successfully the During of security data.

recently we our cloud to network increased Second, the second. XX capacity of terabits per service global

growth meet are the again cyber our volume the attacks quarter, capacity demand and once customer being footprint count. by network our incremental This on and of we expanding working growing to driven in

are expanding on center delivery Third, our India well our with focusing as innovation. we to are cybersecurity Israeli as service in excellence. site, we drive innovation R&D development research cloud and Together

data routing management changes out-of-path and designed unique the to a in-line security increase new Its is on customers' removes hybrid need consistent, for multi Radware applications As complexity options from component latency, eliminate launched for cloud deliver across part innovation reduce deployed deployment high-grade and efforts, securities. the any to environments. Secure and path availability. reduce recently of game-changing Secure centralized we for cloud security It Radware our need application architecture. offers Pass, Pass these

comprehensive $XX flexibility. operate is the Radware have response. a together, value ability in and activity alerts. SkyHawk's Running of for to unlock uses malicious detection, Protector and a view to Global of and posture intend machine assurance SkyHawk making today, Finally, threats and position learning It security speed strengthen security cloud-native as automatic with will misconfiguration million have a to sales, Security. we more even algorithms compliance I Cloud as well cloud SkyHawk, mentioned provide detection marketing Management and and the separate as focus detects greater even scale delivers earlier, entity, in customers. product provides launched and investment and time as Native we real SkyHawk and

driven in commitment product Our cloud cloud first business is our grew on focus and results. XX% and first the quarter business. Revenue subscription reflected quarter financial our in our year-over-year, by

industry which double-digit increased XXX company noticeable We a and large application management websites contributed and on for operating service company deal our a attack. application income, clients, to its was visibility constant looking new behalf responsible $X.XX. for that to XX%, Several under cloud efficacy deployment. per automation, were earnings of which of This in in growth both websites its due also the financial space. solutions cloud is in financial thousands lack multinational XX% This security the public-facing quarter We year-over-year web of recorded current leader wins increased and bot with closed to first results. share, Fortune

Our deal win from had large quarters win a very was DDoS ago. we of a couple cross-sell a

to with to deliver against cloud attacks several key in global a information their integration technology last Airtel. won some to doubling geographies. The solution. secure heightened provider This center with best-in-class large first a wins. deal signed attacks large quarter, a also and presence than for global quarter first that front company was We to solution infrastructure DDoS and with DDoS deal led this of system also a company We partner, a could quarter compared looking the that wanted cyber more our XXXX. environment were cloud

target performance its more brand This first network last couple deal in solutions. a our the protection we centers The massively first This with launch continued protection closed demand platform, develop DDoS our won industry's built a the increased for proved offers deliver service For environments. customer needed of as mitigation partner and is we with the example, DefensePro mitigation XXX. of and years, the capabilities. and emerging for global and and DDoS it ultra-high result, collaboration enterprises new became led to first that major therapy, dozens and mitigation quarter. we connectivity for demand a for DDoS handle and in a attempts. bandwidth deal They their more data global The communication providers known hacking large granular for platform we next-generation Precision, powerful us to a state-of-the-art announced

Our development and to deals, us close innovation noticeable an Radware help but recognition. Awards. Cybersecurity not Excellence received only industry continue X also recently

well category. security a which and Our recognize the category. in to cloud-based its the analysts also continue of gold as Radware the In winner the service bot application the innovator the for Quadrant the metrics a In solution, industry. protection cloud-native named management a in for in protection, market. WAF protection our Radware analysis, summary, in was row a strong security WAF, leader very year. as part DDoS the Silver year start pleased in management, Protector was cloud I'm bot the as API leader application winner as includes second with And Industry technology workload

on made initiative have the laser-focused We are just great We we Security-Dam. We successfully announced on cloud where spin-off progress integrated execution. our SkyHawk. acquired and of

I grow their around and our a cloud number footprint solutions cyber against opportunity in would for employees We attacks. take are the to our successful customers and cloud services thank develop mounting this to protected world continue contribution quarter. ensure of to achieving innovate our another

to our Guy? months to Guy Avidan with call first Guy new a CFO. know, you we of most announced I want welcome ago, as earnings his few As Radware.

Guy Avidan

and second events. Thank investor I'm meeting be the XXXX. first I'm you today my upcoming call to of of business at pleased I you, look here day, to of of and provide for as our good outlook at the analysis Roy, first everyone. quarter well XXXX, performance as many for to the for results quarter excited financial Radware. earnings our forward

non-GAAP $XX.X would for period the revenue results otherwise financial basis ARR earlier release press indicated, a of I We overview, XXXX million you the financial high like revenue beginning and by in our and of X%, section year-over-year. was primarily also all subscription ARR, million XX% the growth of grew with first remind are million in GAAP which unless reconciliation non-GAAP. is by the growth available quarter in on started year. on Investors business. issued same reaching our website. was the A note on to earnings today Before results driven full that $XXX last $XX.X in driven subscription in cloud reaching Total XX% XXXX, our and Revenue compared quarter to increased and the

Looking at geographies.

reaching the revenues in grew strong quarter $XX.X grew Americas versus XXXX. in growth to Americas XX% $XX.X APAC. First of revenues period. the XXXX XXXX, EMEA and X% increased by the saw APAC this XX-month QX previous decrease Trailing a by compared million, quarter over quarter to by million. million, in EMEA first to XX% XX% We the and totaled of $XX.X

I account For total Americas for in APAC, revenue. XX% compared now of expansion will first basis XX% margin the was profits. for XX% XX% the XX.X% discuss the account expenses revenue, of of Gross XX.X% in XXXX, to an and APAC and and increased XXXX revenue EMEA XX period the trailing XX%. respectively, remainder months, same XX quarter in total EMEA and in and points.

increase count, offset in including the improved team, joining X% XXXX costs higher and cloud additional personnel result Operating $XX.X costs compared period well head as travel margin security same supply by is to related R&D expenses COVID time as in to XXXX integration related marketing first costs million of gross and impact infrastructure to of by mainly and in as the Our the due to security chain. increased quarter our and decreased.

operating a XX%. XXX sustainable we by million of compared our front Increase to $X.X leverage to in revenue opportunities continue in the significant the model. million We operating see and to in given income points margin a building infrastructure revenue of in by us. the $X.X margin is support XX% market basis to increased reflecting XXXX, Operating result company's growth grew growth, QX

$X.X we calls, of first marketable positive impact of As in which on million securities the to yield highlighted the previous income, financial from on the and XXXX $XXX,XXX the quarter decreased quarter first XXXX. decline in in

diluted financial the first to increased improvement. operating Earnings XX% quarter level the margin year-over-year at expect to XXXX income for gross We the resulting QX and same $X.XX, from XXXX. remain in per the share

last XXXX flow from of was operations compared in from return payment future. year. in Turning to to same was negative the that Cash impacted period tax the balance in million Cash million operation $XX cash extraordinary $XX sheet flow mainly and the will flow $XX million cash items. QX operations of positive from partially by flow

flow to positive cash healthy operation expect We quarters in generate the remaining and from XXXX. of

the quarter, $XX and deposits and of with marketable $XX and amount repurchased we million full approximately approximately QX the ended in buyback plan. securities. share XXXX completed cash million XXXX first We shares million in During our $XXX

We as SkyHawk. operate to to in welcoming market plan separate R&D Hawks in earnings our to and Before to on during Global turning that the to investment are core is adjacent our of Radware's market, addressable like with guidance, companies, the calls. aggregated catering an Roy on predominantly business. join ahead as fast-growing based edge security which I'll on like opportunities us. company, the I'd conclude To provide we guidance. quarterly will of focused markets capitalize my report progress on will update a SkyHawk, Tiger EdgeHawk, future investor on carriers large expenses remarks

be second of the expect we XXXX, million. of $XX total $XX.X million in For to the to revenue range quarter

I'll to expect $X.XX. is now expenses Operator? expected that, QX diluted for $XX.X million the between be over to call to We XXXX share With to million. per turn be our $X.XX between earnings questions. the operating operator and $XX

Operator

[Operator Instructions].

our George with Notter will Jefferies. We first from question take

George Notter

on I many could I terms the rationale the of in Maybe about behind what's value affect the that And showing kind forward? it customers? does of of spin-off business. love over? Radware's of investment you more would of you for How give how how to cloud-native protection moving in more do on I'm us your going that plan hear then guess employees in the interested kind are it financials? shareholders

Roy Zisapel

Okay.

Let me start with the rationale.

large customers, product of is enterprise we and finance are other as focused lines for we The carriers public friend product our we the mentioned, that and competitors customers, protector on in the the cloud the also customers of set have have different security. a native main this the and competitors. So cloud

cloud for the customers. the our the The spin initiatives, to our lot As all very very, for We on cloud similar WAF, public it security line to service. its security in focus growing we've to our to cloud we thought SkyHawk security a with off makes therefore, somewhat a want us be different faster set the think really sense very focused customers This as a and talent of would enable company. API, And DDoS, we bot the mentioned development road. of down in business, start-up-based the with to feedback better fast-growing, areas. that product to will company it attract best run and the providing be the us

on the, on on faster side, behind drives it and the on I the on us the So it. that's public Radware, logic It allows market. the say, more cloud would security run to Radware cloud focus

like would Regarding how will in it future to we you it? financials, show Guy, take

Guy Avidan

Yes.

earnings So the open will see the the about will And of on actually, it complete segment be in that we disclose will Hawks SkyHawk we annual, we aggregated, a call, P&L the as EdgeHawk. both Group. able talk the investment the you'll expenses, and as to the on Hawks so

George Notter

Got it.

of in the does quarter? your end company just how headcount, curiosity? change the this headcount Okay. was then of out the at And And what also, the then

Guy Avidan

quarter head today. future, growth The In change we headcount as doesn't It accelerate at mentioned, really end was the as at the expect the X,XXX. on of of SkyHawk. count the to Roy the

Roy Zisapel

And to SkyHawk, management from moved delivery XX product around predominantly people R&D Radware in functions. and

George Notter

Got it.

Great. Security-Dam Is integration? in that step-up assume, correct? I then Okay. headcount, is in by the driven part the And

Guy Avidan

Right.

the to So out of out you compare attributed XX to XXX if growth, close December to of Security-Dam. -- XXst, it

George Notter

Got it.

Okay.

on. it pass I'll Okay.

Operator

take & will question We Alex Needham our Henderson next with from Company.

Alexander Henderson

the I this $XX sheet guys are that million reading in contributing to balance cash am operation? So you right,

Roy Zisapel

No.

We are in not that investing operation.

and balance tax, acquisition. the what there the the sheet, -- the see the -- Those see impact you sheet. Those what think and Security-Dam you I So are on are what mentioned -- as main buybacks. the Guy the balance payments is

Alexander Henderson

to wanted that. just I Okay. clarify

issues Just some any need that U.K. exposure, that have Russian you basic on would down? you Ukraine upfront groundwork do other front write whether to or you -- you quantify any receivables

Roy Zisapel

No, nothing to write down.

Alexander Henderson

pipeline in in no on closure of change anything has either rates the Right, terms receivables. or EMEA the environment any contusion macro a on there result expected to exposure geography? that exposure so no been And revenues, as or to the of sort

Roy Zisapel

On see good EMEA, trends. business very we

Obviously, So we concerned. general. around on cybersecurity we people see are saw at some activity interruption in countries activity other any level. the EMEA nation or in neighboring implications in business the very in general, the didn't But

Alexander Henderson

you as look threat, macro your seeing in if change improving of in condition result at Broadly a increased of you cyber speaking, or Is are any slowing of that? and pipeline it business globally, down a as the considerations? result

Roy Zisapel

pace, specific. same the I in Nothing growing Relatively would take.

Alexander Henderson

Okay, so that changes in context. no real

Great. Okay.

space. share your from. creating are bit. Going more And back are pricing helping in The on significant any have of gain pricing guys little realize the to the across one that some pricing? most more But has particularly, operations of lot environment software-oriented, that increases been a a changes that's you are doing seen growth price I of the and where you is or opportunity? you you environment anything some coming networking

Roy Zisapel

quarter, end environment. didn't We single-digit the of if models We XX pricing time. the depends in et select the we've towards then for discussed last into changes major customer there's cetera. Obviously, did to in revenues I period increase as price a and Yes. on days see and execute also get initial it contracts at some it as takes specific mix, that time some think all,

towards pricing we However, We I make we didn't any on environment. major would environment yet current impact a think the pricing characterize our lift It's But QX. difference some price not how the QX, components, which that's see increases. I be don't see did the obviously there significant Overall, affecting will costs. and increases different market. in

Alexander Henderson

partners, give that particularly and is more one which within you're share to on question whether your us of Cisco terms the here? what's particularly is Can update going an Okay, an How partnerships, of and with on those acceleration Cisco? numbers seeing you partners, in obviously then largest. the partnership, contributing

Roy Zisapel

Yes.

to think highlight a couple previous of I So points like would I quarters. versus

believe their seen think with also I embed be coming continue That's key in quarters offerings the level of first, strategic will the on market. portfolio. and So into advance we I to one. our our partners more in this

also key us. of are we channels now Second, attracting their some to

to key those the based portfolio. and Radware in Cisco, to and create good represent of the relationships incentives full resellers and able So very a we're to go CheckPoint on market

for market mentioned credits on them. together a I Cisco offering sales Radware in activity took get Based think, America's to of very they press North the a a is through is biggest my our issued and in for we've good example, ability one Cisco, Procedure, example. very our that comments, their I've and also Procedure nice channels. strong directly and end-to-end, with very release relationship

still relationships initiative the think we promising capitalize it's This that we now channel. on early, is but to build capability those on to gained also it's through starting partnerships. those OEM I a broader So are

Alexander Henderson

Or deliver the what them partnerships have the an attractiveness the and a supply length the on therefore, can't with with because pressures either and extreme the people timing as shippable the Does into project, of timing other to systems that your impact considering way they in a Cisco because partners? you're negatively, products of impact result suite suite available, a their time the on they're chain or products, the go involved that and in companies salesman? either those rest to increases products? or choose delay of your to sell other of selling are on scale Any systems

Roy Zisapel

Yes.

complete and mindset better have supply, a our our partners we solutions, to it's positive that is product. ability the projects. because accelerate solutions appliances cloud -- those now Harder that think that's also a fact and it's to deliver to their the to move aside think to to sell, put to I ability are So cloud I for invoice appliances, hard the

are in end. in and with So helps Cisco cloud that I CheckPoint, think, the us solutions fact represented that our well we

we few, impacts to sitting can the products very we routers to in the not supply supply a that -- ours see asked, also the highlight to there's means tell customer next and them delayed hand, don't don't results didn't to. in I we projects doesn't fact if we you've equipment, security as switches months, On routers, I didn't connect also supply are the But significant appliances to are manner. accept on sometimes because you are infrastructure it and our going did that. X cannot switches -- I those want that can to other security of because that the and I nowhere top our large think want want since

So large, say, we that we did some don't very see But overall, projects, would impact. I infrastructure see phenomena. the

to times. products as growing well ability Our a is navigating services the scope those us lot as ship assisting our of cloud in

Alexander Henderson

Right.

So or negative? net it a is net a positive

Roy Zisapel

I partners, think for for for the what our do can positive channel, are we these them.

Operator

We our Barclays. Tavy question with Rosner next will from take

Tavy Rosner

Can me you okay? hear

Roy Zisapel

can. I Yes.

Tavy Rosner

Great.

significant Just on me one position? I'm cash contribution? deal. perspective, investor I'm wondering, taking have a value external quite what do you to SkyHawk last when why So the of for the terms follow-up in an Page operation see from your just you curious, adding

Roy Zisapel

Okay.

of EdgeHawk X key have Hawks, our customers it real to And That's a us. Tier think SkyHawk, and One, stand-alone that we point for seen join the company. from make sure start-up by this several to by I talent, wanted points. that, a VC view, is case, to one. SkyHawk, we achieved wanted and in really as

valuation of believe I continue from external -- and for finance to valuation highlights definitely what to become indication. X get they can it resources, I could, shareholders this VCs but also current today. to and We business invest expectation the of Second, own from course, this think the see our our it's this Tier important

think shareholders for So it's important get also our validation. external to I this

Tavy Rosner

But mentioned or about touching the U.S. mean, versus mid-single coming are trade mention market. you quarter decline at the last you quarters, digits. growing the you in did was business? then And the Understood. year. you how I look U.S. this pipeline months the XX Okay. When on Roy, growing your comfortable

Roy Zisapel

accelerated well. the regions, we do grow might year do We There yearly U.S. pace but to America as grow will on see an expect specific a basis. quarters, this all of to want growth continue So there. believe we obviously, be our in fluctuations North and to

the an there's achieving last a are and to that. we focused us highlighted months for XX we growth, X% better While on as definitely opportunity do there,

Tavy Rosner

from subscription. And of on sense it. Got of comes then much Can give some Great. your lastly, a new business how customer? us converting existing versus you on-prem

Roy Zisapel

business, cloud. there's little cloud on-prem to very from our migration In an

for customer DDoS cloud what will the customer, out our we see a the DDoS this call DDoS most a there. if was in hybrid, generally create implementation are far, solution you offering, the the strongest, with So on by on-prem, utilizing our hybrid And DDoS is, complement customers architecture. which cloud. to largest hybrid example, that protecting demand we

play. DDoS. with application we both security And only that's WAF, in security, API, a the So play cloud cloud predominantly as service

moving on-prem customers or WAF cannibalization are sense. that there's so not cloud, movement to to We with no the

businesses, the So into all the cloud environment. new deployments

Operator

question from Needham with And we will Alex & take follow-up Henderson a Company.

Alexander Henderson

splay wide or you of us numbers whatever to. X% to tighter overall there's year? side, because EPS the in bunch people you the So guidance I'm I expecting the want per environment on Can in kind kind want all looking revenues full guidance, a What you or the give estimates in growth at XX%, the they're of do specific of to mid-singles you of how share. high-singles spending range this really to -- $X and not full the I who very to the the tight, mid-XXs, but range? to on that, over assume growth? want but bring are If as terms of you numbers environment help year of Maybe giving pretty don't as characterize on about thinking the you're into necessarily overall are high you versus full The year the terms we know thinking know year, that for is margin in what don't the to but equation of year, kind map. for for of a side of terms the talk and

Roy Zisapel

for think is the calls. actually I CAGR in previous it indicator The ARR. we leading discussed Again, our also

pretty So a We the very enjoy new a much X%, that's it's in in definitely, expansion we our quarters. to X%, will growing opportunities this expansion. see as be of going of infrastructure. investment long growth and coming lot still as investment in healthy And market,

we're sales and headcount opportunities. both And Regarding a R&D marketing in capture we OpEx, seeing and again, to these as more a of lot add result, will opportunities.

EPS dramatically. should So not improve

Alexander Henderson

Okay.

So just $X.XX. put was to that XXXX in context, around

think a with of I for bias -- actually of And quarter, little now is the little kind was year up contraction of in both have of kind to consistent a bit edged there so EPS a you're bit prior. kind the that March and June commentary? flattish

Roy Zisapel

the guiding not is we're Again, for much this year, so too information.

I think is said we what enough.

Alexander Henderson

I Can't you, to have blame try.

Operator

Roy are no Mr. further call back you. over Zisapel, turn And time. at questions the I to there this

Roy Zisapel

Thank . have day. everyone, great you. for Thank joining a you, us, and

Operator

concludes this And call. conference today's

You now may disconnect.

Radware (RDWR) 3 May 222022 Q1 Earnings call transcript