RDWR - Earnings call transcript Q2 2022

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Operator

Welcome to the Radware Conference Call discussing Second Quarter 2022 Results, and thank you all for holding. [Operator Instructions] As a reminder, this conference is being recorded, August 8, 2022. I would now like to turn this call over to Yisca Erez, Director, Investor Relations at Radware. Please go ahead.

Yisca Erez

Thank you, Angela. welcome second and conference XXXX everyone, call. morning, to quarter Radware's earnings Good

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

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

Roy Zisapel

In Thank you, all solid results. us Yisca, thank you second today. of to we joining quarter, the drove for and

today's business a cash applications $X.XX from defending force in real-time environment. in operations serves most of fundamental at strong is a cyber our grew Cybersecurity total million. plays was and revenues EPS Radware year-over-year, pivotal customers flow provider $XX.X centers Our attacks. and from protection, X% a data role very was as And critical

Recently, As their sales in will might same customers strengthen America's the behavior large present with improve Therefore, in increase continuity, customers size continue continuous resilience grow of stage to ensure demand the the our also more reason solutions must the seen At usual, some of and the and than we we've lengthening environment landscape short-term. threat to opting for delays attacks, impact that time, we business macro with customer our to deals the and in every deployments. continues for have believe spending believe uncertainties some the that enterprise, in the in long-term. current in evolve customers our cycles experience. number

bigger is of We and picture, critical Looking in a market. company operate well-positioned addressable Radware market a healthy recession. and a at growing we are with the for times large

healthy deliver to sustain and high cash and continue from gross margin We growth, operations. forecast

technology best customers. of which provides for protection breed our We better have

with cyber application the diversified protection specifically infrastructure is of and using in for as of attacks. Europe conflict nation balance threats we $XXX The Therefore in armed use conflict. business clear is a solution out investments and will states and our months of to level long-term. by is Eastern attacks demand that ago, security in A across couple we strong We cybersecurity the initiatives. international the we is of continue and base a in of Communication highly to Special cloud for Radware attacks. about optimistic that have Ukraine strategic cloud make and and The face applications daily industries announced and our the we have of assets, security Protection DDoS remain State protect Service Information more cash. to cloud customer in a sheet these by large geographies, Backed million than correlated example

around these Our testament were DDoS more capabilities second second of of active and their attacks great investment XX% customers than needed the attacks, The solutions. midsize This by of attacks personnel the which landscape and are The that peers, afford that yet success challenge tripled Not threats very increased number and they relentless. to in so large mounting, number web like attacks a security to and threat quarter we themselves deploy is cyber DDoS to manage by XXX%. but In a CapEx are have blocking the required XXXX, the the enterprise bot attacks cannot same enterprises during rose only the huge the we second creates DDoS attacks blocked application XXXX. high-end have. the requirements, quarter the compared bad world. quarter to

plan increase In rates. the our increase them Our and enable new expand we customer We footprint enjoy base and new managed as our cloud geographies. protection to cloud in customers fully recently points our growth security and end Chile. quarter, continue the to continue Taiwan, global opened service to We presence high expansion footprint services and and a of allows level service to capacity. with us to second penetrate of

front, experience. the algorithms solutions. product continue that algorithms evade enable mitigation At these innovate genuine time, CAPTCHA a visitors also of block same We just to bots user set that on free website to frictionless released we crypto new sophisticated enjoy additional the the a

report. bundles, AI Radware application Key such Criteria Last to quarter as and receive leak GigaOm protection, and Radware categories, enhancement, rules Innovation market Our of the Leader management. recognition. highest Outperformer in and bot named was awarded in Protection Application the scores an data API discovery, continue the GigaOm's Hemisphere possible cloud security API Radar

like and Knowledge addition, Solutions technology in received would I Mitigation the and it experience Matrix excellence, leading share combined vendor the making customer SPARK Quadrant management, key in some we quarter. its to ratings report, In the customer of Radware highest named the had technology DDoS wins leader with comprehensive the overall. impact, for Radware for

a not incumbent their IT signed company. comprehensive deal attacks solution, experienced with robust that an alerting web hosting them we They more by instance, that large multiple blocked and and DDoS they protection. volumetric needed high services For were

is in intervention without solution attacks blocking any Our automatically daily, their and from these massive staffs. customers

During was of data partner software with Azion, largest We edge DDoS attacks. the our world's time the business This for cloud quarter, deal also another recap, it. SaaS one time our Internet comprehensive large for services is and solution been Infrastructure in we've CDN leading we in security bot South the a with protect suffering new been with of with region. Gateway company. application occasioned and building and This by our financial done saw has provider one and our expanded leading a deal portfolio This long center hybrid management customer America. protection sophisticated the this to building solutions. a outages, leading of massive customer To a bot chose

cloud enterprise We our customers the in our solutions around bring investing are initiatives world. broader set strategic to of to a

they and employees revenue to that, Radware. over Guy. We and I and thank geographies, in in to company healthy well shareholders turn our of sustained and financials for macro profitability. I diversified to with and in are terms deliver enabling trust would place With overcome will challenges terms growth like confidence a strong and us customers, now the their of customers call

Guy Avidan

analysis for and Thank day, and to provide everyone. quarter as performance results second well financial business of as for quarter the I'm pleased the XXXX. of our the our good you, outlook third Roy, XXXX of

full non-GAAP. the indicated, Before A financial available release of unless I'd that issued reconciliation like on and of on Investor is press GAAP in financial earnings our otherwise beginning the results earlier all non-GAAP overview, and to the are today results you our remind section website. basis

Americas in million, million the our On compared same quarters customers, $XX.X the by reaching representing large of modest our a of XX% revenue same the XX% was revenue period $XX.X Americas QX when X% the sales rate revenue. XXXX, growth in expansion represented and was on In year-over-year nearly and APAC double-digit the compared compare trailing of year-over-year last and in revenue affect period total in of of XXXX, the strong increase months. Second XX enterprise X% another QX profits. lengthening is cycle saw representing X% XXXX in EMEA will in second months. to XX% second months. represent million the compared XXXX. growth the of growth breakdown, the quarter a basis in which account the of EMEA $XX.X The XX the quarter X% in trailing APAC revenue growth the had XX Americas quarter XX% margin a over regional of for points. to in I trend APAC some The remainder the XX.X% compared XX.X% a region. account XX% year. XXXX. consistent week for XXX of we the QX we growth decrease total to the XXXX revenue in long-term discuss trend to expenses now QX grew each increased longer growth Gross to in revenue an million, same to trailing million, revenue last term with $XX.X $XX.X

new Hawks operating and business which with Security-Dam, as headcount impacted R&D the adjusted comprise SkyHawk, full was the on $XX.X compared results for a period adjusted Hawks of same partially COVID. Radware, increase million, and $X.XX is structure cloud travel which data quarter Increase which quarter of million application the by The focused the Operating was an related expenses compared the share initiatives. cost increase per of core diluted and due integration supply the XXXX of second delivery, higher cloud QX EdgeHawk. include of income in and million the for EBITDA $XX.X Earnings additional the application increase in of year. second to you negative second the complete our to the EBITDA was security integration to Radware's was and the service quarter, XXXX to cloud $X.X we mainly were impact Last infrastructure compared and in is XXXX. level. million $X.X quarter Security-Dam last and shared $X.X XXXX of hawks of of offset improve margin and expense in impact center the on by The consists predominantly Operating gross of to $X.XX group. Our chain. business was million, representing security the in cost XX%

deferred the generated sheet XX% to increased and the million second Deferred to cash items. strong flow in of primarily impacted in to this million. by the favorably operation flow by XXXX, strong $XXX million $X.X last over receivable XX% QX XXXX was grew over We as and $XXX by year. ARR XXXX account $XX.X and Cash QX increase balance in operation same period in revenue to compared collection, which revenues. quarter from by decrease of Turning in million flow from cash reflected totaled quarter

cash, in we During the million repurchased of amount remarks ended $XXX shares in and deposit my XXXX we second marketable approximately I'll QX and securities. guidance. with million $XX.X bank conclude with the quarter, approximately

poses while environment Roy spending expect we resilient As current earlier, to some while the current our macroeconomic uncertainties, the domain remain we mentioned in long-term. global -- in cybersecurity

large in customers. approach prudent However, cycle we're among more choose witnessing Therefore, enterprise longer we the sales short-term. to take

revenue for to be the the million range to expect of third million. $XX We in $XX.X quarter

long-term to invest these in and we in opportunities. future view our to and positive Given on market order R&D continue our the on opportunities, capitalize infrastructure,

$XX.X our expect million $XX.X between and be operating to million. We expenses

to QX XXXX share Given and all these anticipate earnings diluted developments trends we between $X.XX. per and earlier, be reviewed $X.XX

are of operator X% for questions. revenue now result expected a I'll growth over the XXXX. quarter, Operator, we call for forecasting revenue please. As the to third for annual the the turn

Operator

question Alex [Operator Instructions] We will first Needham. with our from Henderson now take

Alexander Henderson

very a guys. Thank talk Great. -- you you couple much. of hoping couple was about could issues. I Hey, a

$X.XX one had the So translation for you looks in not been the quarter. like it hit have about to higher had would first in me the it currency was quarter, earnings

very to pretty since significant second, and this that off, last you’ve is, right? much First exchange remind Obviously, the us hedged at the your Ukraine. what then is war move you’re approach over the seen in we look in rates you the as point. shekel And how started a forward, can

Guy Avidan

Alex. So, hi,

So will actually the second start with part the I of question.

half, let's the So the we half first of from the first of already middle say year. hedge

can can news when see you income look didn't can non-GAAP shekel. the the and the So dollar you you the a reporting. new and Israeli for at We XXXX. FX beginning lot But us from versus U.S shekel you impact already of non-GAAP the financial hedge GAAP -- impact of see compare really that then

question? part So what was the of first the

Alexander Henderson

of off your hedge before you going that, your yes, -- -- So get hedge just …

Guy Avidan

Partially mid XXXX.

Alexander Henderson

So to Mid when? mid 'XX? 'XX

Guy Avidan

it partially. hedge. Mid 'XX, is but not XXX% It's

Alexander Henderson

Partially.

Okay.

where a year your exchange that you current is, how the costs? Okay. stays would 'XX, on rate If much impact it levels? save stays would the How OpEx the at rate exchange if full

Guy Avidan

basis go to … down. saying supposed It's More points. than XXX I'm

Alexander Henderson

points So XXX a save on you would OpEx? basis

Guy Avidan

Again, it is we say, on of if the to the FX than more based today, XXX stays OpEx same in today, let's basis as point expect headcount reduce, as XXXX.

Alexander Henderson

I was for. what That's looking Thanks.

do of a piece take your are to of over been sign programs? concept pretty revenues. the this In thesis thinking, operational really to these slow all up that a phases in the have pretty, speaking, think partnerships all your signing, investment Or we Because of early back stretched get long lot down partnerships little business, time? And them at this macro a a a process to Because I play time impacting you been Going that need those And those business big How of the guys drive into go to and that making looking forward? that a the bit? environment, these for companies -- of from contract ramp. about generally a aspect a I to are meaningful is would aggressive lot contribution do of partnerships. can of where ramp does out? it's

Roy Zisapel

think be cetera. they I you reselling that I partnerships more are to Yes, their the side, might type towards and et MSSP that partnerships that of market At varies. increase minimize investments the feel the would future would or be they to to customer. the [indiscernible] from more say conservative, of right, see we were natural look more the it even partnership, the is or what actually time, an CDN, sharing same opportunity footprint

we're they a we can customers, in So very share for the CapEx. example, and their OpEx especially mentioned, the seeing in that fully play some activity at the many fact from they wing, others, of high of versus their I've bot level domain, very strongly increase a with as is need dedicated of now wallet actually a on those the service as actually lot the can management and for partners, have MSSP security managed them,

very in QX. depends nice ramping. on we them. we definitely, -- of very So I still acting and would see to well, promise invest in it They it's the are there. to but brought but partnership, say them plan very Yes, us some it's new continue early, logos Yes,

Alexander Henderson

had [indiscernible] to sitting of necessary and the backlog, revenues revenues, of important Cisco Similar to quarter Cisco product obviously, parts XX% relationship an on is unable the piece systems, but the puzzle. that that ship point. essentially their products, ship And PC you've So backlog of do impede your those four get does they and a with it's when about because how into of timing revenues product? your we account think this at realization the business non-material

Roy Zisapel

if result. [ph], the then obviously Obviously, Firepower Firewall, don't let's that our hardware, the pieces cannot top the firewall get Cisco Radware we of of reside software say on chip

bad think actually strengthen and the of pushing ours there environment ties challenges on environment. the in cloud in to Cisco appliances is also good. in every is However, actually supply our This partners other I chain of

quantities on So they in I lack a cloud ability result to cloud active to. be Cisco firewall of we're of ship, more with the expect WAF to the maybe end do as offering their used DDoS our offering,

Point solutions. we update still and think the you early will Cisco programs I around calls. But and we with can it's centered both have the future So in together new time some will that actually, do are cloud tell, Check we

Alexander Henderson

you. Great. the Thank cede I will floor.

Operator

from Rosner Tavy Your with next comes Barclays. question

Chris Reimer

was the and questions. further gross give my we're Chris is Reimer you any there? wondering Thank on to this color Tavy. contributing I for on margins could what's if you for Hi. taking seeing expansion

Roy Zisapel

of mentioned that XX.X%. XXX around point we grew basis point We a to

Some allow over Security-Dam. the over growth scrubbing the acquisition the or center of to globe get say let's gross having is the of spread higher most And to margin. attributed WAF and us more

Chris Reimer

confident you pipeline than if longer they you the customer considering the considering in the through changes expect? persist year, And are macro headwinds, next and behavior how if especially

Roy Zisapel

comments, draw much this our in that think can I my account we point. our as would that in like the ARR. to attention at we into in as to growth the forecast took I've I mentioned

getting to recurring So deferred in revenue million. that I increase would obviously the with early the annual us growth. also is gave close of $XXX now And sign say revenue confidence future as

the let's think backed quarters X%, growth rate even quarter the to that of So together to, future enhance XX%. today would it some looking. well around ARR. are at X% And some pipelines of that continue it's But delays closing, as call were I say because I it this previous we in in of of And were but level, to X% by that our quite this point, deferred the CAGR because the company, with record it revenues, by the the is consistent at we we alluding X%, pipeline.

[indiscernible] So the everything we we it. confident think gave that focus so about the that is even and for well have deferred I tailwind some on us and feel ARR giving we together, looking

Chris Reimer

Understood.

Okay, for thank you. That's it me.

Operator

Your with comes George Notter next question Jefferies. from

George Notter

like I'm revenue of guess much. I quarters. last the guys. has been be North would hiring, It of just very are sort a how an American it's general. Thanks seems looking was Any topped there. on Hi, guess know doing wondering Thanks. that guys of growth Americas you contribution issue handful I I I great. out hiring bit at thoughts sort in generation.

Roy Zisapel

George. Hi,

to We looking able we to faster, are clear. be. it want actually hiring where for grow we definitely, were to So to it's North bring America

in are, and new so. of relatively we even So less organization, those them closed But months, maybe obviously hiring. months X the the people X are on most

and solutions, sharper Together definitely our will focus. will America cloud in with So be in rates. personnel be focus believe It's that -- able we on North faster of focus security they to get this we ramping. growth to ramp definitely our

George Notter

headcount there work the remind me how Security-Dam? is for of those many can a then, number hedge from you new And company? And

Guy Avidan

came XX we with employees June So, to Actually side. X,XXX employees from for XX. ended XX, Security-Dam close the

George Notter

Got it.

you. Thank Okay.

Operator

Your next Oppenheimer. question comes from Tim with Horan

Timothy Horan

chain little reengineer, guess just those customers IT just buckets think guys. move the slowdown. Thanks, to the Do how it's else macro color driven? three out Maybe trying something driven on. as unless they Or to a to is more it whole or going on supply more I their there's you are the figure cloud? maybe

Roy Zisapel

to because all I examples look of high. exposure in I the that the we deals as range macro, specifically, is think America, say North to want three each prime that But that one of them our that of -- in I can them those had if -- large millions of like not of that on of the in I all dollar delays.

And more saw of that services, QX. budget growing that's of a profitable successful, By we've that talking I a because large, the the this of in on. than we macro have seen very we the even budgets, it's saw think So variable now, is quarter. By I June, beginning infrastructure, In company. more July. was forecasting case on for look of went [indiscernible] in on end financial and towards last anything, cetera. in pushing released investments et architecture, But more towards scrutiny, freezes we what actually think we're delay on quarter a now,

impacted that of in companies of not budgets, carriers, that the work it place heavily not the into It's their some scrutiny larger those by a those we the comes those are But those for business. the with enterprise, budget definitely, the -- macro. recession, So, it's delays, risk is times. are

Timothy Horan

or supply you chain are on chain? seeing think your decisions decisions revenue? And is real the any impact your or do having And other any supply you their

Roy Zisapel

we only last we paying I but suffering we think think it. inventory, quarter, remarks, to it we supply. for And is were the not increased supply margin, were able also were more mentioned our chain were navigate well. gross we've in seen components, in We able on from Guy his to I end, really

the the not However, they taking do do they're underlying deliverables equipment next a the is X new not switching They're to data cases, ready center, we ship without months. also in have infrastructure. because in some to that building nothing see with our it

reason say from cloud chain issues. focus It would because that's would cetera, that's say, we're I delay globally. frees and all guidance, supply some, hardware built is et supply on seeing overall to services. already our and I of chain another there into in us those that. security forecast, delays So But good

Timothy Horan

kind Got revenue of in X%. you're to to margin it. a few sacrifice And the you years next XX of in sure to weaker longer be months, growth, talking a X% If expansion just lastly, make for so expect term. the Will I we to kind be environment you're well-positioned about down? margins willing that know we're so

Roy Zisapel

least that, do to invest. in continue the at short-term might that's decision We to our

to long sales the you you the in believe the must towards with tell I that I [ph]. of growth Over run, model X%, X% delivered resumption the see would

So delivery that. bring want We the the to think I'm X% I X% back CAGR, not seen. to groceries be to about will worried our back

Timothy Horan

you. Thank

Operator

further are this to I the at Roy time. Mr. There turn will back Zisapel, you. no call questions

Roy Zisapel

and Thank for you great everyone a day. have attending

Operator

This conference. concludes today's

may now You disconnect.

Radware (RDWR) 8 Aug 222022 Q2 Earnings call transcript