RDWR - Earnings call 4 2023

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Operator

Welcome to the Radware conference call discussing fourth quarter and full year 2023 results, and thank you all for holding.

As a reminder, this conference is being recorded February 7, 2024.

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

Yisca Erez

Thank you, Ian. welcome Conference Fourth Call. and Year and everyone, Earnings XXXX morning, to Quarter Radware's Full Good

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

impact the statements ability orders differences amount call, financial we to demand changes changes projections regarding current uncertainties, and time filings. may the to could future not or Radware's These COVID-XX performance future for timing time Factors forward-looking but such materially and changing in or products, results differ company. the subject Radware's conditions, industry, the or risks, limited today's severe of address our that During general of economic to include, are business or events and the and from and in pandemic, make other to, from statements could estimates. actual difference forecast from other in cause our risks to conditions global forward-looking various are contribute and

or from time XX, XXXX. statement that We documents company date refer to any of as is March after events the on annual XX-F statements update you revise or filed forward-looking to company's We reflect such the report undertake with specifically last commitment files time and the the in SEC, furnishes circumstances to the on made. to order Form no

call to the Zisapel. now will turn I Roy

Roy Zisapel

adjusted in ended same and all with $XXX as of In discussed our to the earnings you share non-GAAP earnings revenue to fourth of XXXX, Yisca, We last in of and XXXX. Thank for increase quarter joining total compared period grew million, of thank XXXX quarter a us the call, per million, ARR $X.XX. diluted X% $XX fourth you, the today.

driving increase recurring XXXX. was is XX% exceeding reaching XX%, growth growth point and is total total The XX% company. for that ARR revenue revenue accounted is strong quarter comprised that, ARR by in to fourth revenue fueled for of accounted full $XXX total growth compared growth of year. XXXX. revenues, and year-over-year of The progress basis XX% as which as cloud-security-as-a for cloud we service once again million. Subscription million making This last product With XXX cloud the in subscriptions a a to $XX are of year, reaching and steady for the ARR well

optimistic cautiously about XXXX. are we forward, Looking

the we better witnessed environment a business in First, fourth quarter.

In The the Pacific. we addition reflected our across signs and CapEx early the recovery pipeline and business, Europe moving made progress we projects existing is and cloud in closing to of forward. in recovery growth also large in in subscription deals, specifically saw Asia

Second, the the XX% year customer attacks the as for intensify. protection Report, According of per in Intelligence full to compared cyber solid our grew XXXX. Global demand Threat market be attacks XXXX to by solutions to DDoS number continue

API attacks. attacks We increased the conflicts. tensions geography cyber a and of rose activity or would protection proposition, significant plays trend application addition, complexity geopolitical directly web increased application of against In part industry which not center Layer attacks our this web attacks, value slowed by application that in driven and malicious last driven Organizations cyberattacks surge observed or has frequency, XXX% data a sophistication regardless major X web down. DDoS we year. A and real-time XXXX. and throughout This by intensify of was to threats facing are believe

One preexisting offering address right rely companies year or the the our the emerged stay on and with in attackers, we continuously web confident caught attacks ahead solutions are Layer attacks. X the capabilities. last in that trends detection to are These we of To signatures enhancing DDoS is place emerging the and rate-based example new Third, have algorithms we marketplace. off-guard.

believe solution with in strengthen mitigate Our latency. battery be we DDoS web incoming capability last comprehensive protection DefensePro X attacks or of traction appliance DDoS DefensePro attacks to This cloud traffic web X. will of the in protection protection quarter, our unmatched year. In boosting announced offers against our algorithms based adding the DDoS these companies web without on-premise for decrypting significant its on a ability business. added We continues we the to fourth version market, this an

of application the Bot latest try continues detect that our attackers ARR cloud security security more. The to and over cloud Another reason, XX% cloud our optimistic forms enhancements bot evade Manager The generation organizations vulnerabilities, offering. XXXX. tools. AI year-over-year. module this new the identities who to enhanced we example These addresses, rotating growth against in fourth the sustained of business. solution help are recently rate detection can to about growth the We are threats, with by manipulating of capture of using XXXX developed recent is We exploiting our defend our throughout to believe generative is grow we cautiously expansion maintain mitigate enable and those

and We our more and are upsell cloud expanding within diligently offering, base. opportunities enhancing our cross-sell creating to customer

and market, large we OEM intend that market growing in our expanding with capitalize the The and our is geographic channels. opportunities with cloud security also are MSSP to We working footprint on.

is relationships. outlook by positive OEM behind optimistic strengthened our our Finally, the momentum

we and business in with particular, Check During Point Cisco. with our XXXX, expanded

Enterprise Agreement will that Our created build we opportunities Cisco upon many inclusion in XXXX. in has

of fourth with the of Before the prepared in XXXX. my quarter I notable that conclude deals like share remarks, some would I to closed we you

behind deal, its to carriers long-term relationship X return DDoS expanded a X positive the the of example, multimillion top For CapEx our with momentum the In large the centers. deals, extended beginning world. protection has data with in for customer we dollar

with quarter, and expansion, in we large of growing capitalizing Pacific. We and replacing security we have, upsell fourth closed Asia to successfully second DDoS Asia base. application their the a the with our Pacific. deal cross-sold a portfolio. leading win customer an our the breadth another highlights After DDoS and another customer company centers application quarter, success The our product our delivery different cloud a customer them, a closed sold business We including our of dollar government strength deal Alteon series data and a MSSP protection. the DDoS of on-premise its solutions portfolio full launched incumbents. in telecom entire to X in This that on showcased solution. In is agency also deal winning This multimillion our in we controller accommodate cloud

on XXXX summary, note. In we closed positive a

progress initiatives. strategic made we quarter, fourth on the important our During

about overall spending successfully business, a our and security security opportunities cost to cloud discipline, profitability. With XXXX. their improved that, world employees We us, our over our growth thank cautiously optimistic efforts signals claim look Guy. customer forward cloud continued With continue call for remain would and We a strong to grow positive like of around as the staking cloud-security-as-a-service in we to and continued to to company. ahead top I return line the turn

Guy Avidan

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

The non-GAAP reconciliation remind like the and release in A a that overview, Americas. in same for of Investors the website. Revenue year full of in financial large XXXX GAAP unless results and was $XXX.X is primarily in earlier last in all decline press I the the was attributed year. results basis section million closing Revenue to on in by are indicated, the otherwise to is $XX you greater constraints of XXXX. the fourth million to period on our deals financial earnings to $XX.X would quarter million due revenue compared compared issued budget the million available beginning to full XXXX customers, Before non-GAAP. delays our today for $XXX.X

proceeding million, towards company, a signs in as company. as business, year-end ARR producing highlighted, year-over-year, spending. $XX.X in us continued are solutions. In the macro we to of and to encouraging However, step do RPO more which excel, in the taking XX.X% cloud increased engine growth signs headwinds becoming These and of to of at customer reaching traction reflected improvement our is quarter, cloud-security-as-a-service see result, fourth compared million positive cloud a Roy the $XX the another -- security growth

portion revenue in full a decrease increased XXXX the $XX.X year XX% fourth $XX.X X% breakdown, a to security large in to compared same Americas full Our in $XXX.X the represents million to accounts the decrease Revenue $XXX.X year, last million. year-over-year. APAC for year-over-year. the $XXX.X X% of year-over-year. of business period a revenue for the was for revenue declined EMEA in quarter the majority million XXXX the of of XX% XXXX, compared quarter million which year. EMEA regional representing business Radware. On of quarter of $XX.X in to decline the $XX.X fourth same the to a million, of million $XX.X in XX% year-over-year XXXX total compared revenue million in XXXX year-over-year year period last Americas million the the fourth was XXXX was in

of compared For full $XX.X revenue year the XXXX, X% to APAC XXXX to by million. decreased

Americas total XXXX, XX% revenue. for of revenue remaining the accounted EMEA of of and and accounted quarter XX% for fourth the each, For total APAC

of in the compared XXXX now quarters company quarter change last decline and Gross revenue, the align to the expenses of for for full for expenses. accounted XX.X% The XXXX to XXXX. the profits the mainly XX% compared to in was the in is the continued margin was couple margin XX% QX revenue. we in XX% margin operating full the to for Americas year of level accounted and For the gross to fourth XXXX. Similar XXXX, of XX% EMEA to same below XX% total million. to accounted our of in reduce revenue. I'll operation, XX.X% in Gross in year $XX APAC total attributed and discuss full period year

to to discipline. We and due expense expenses, are our our we forward going profitability expect improve continued to minded

and million fourth fourth While increase XXXX last Adjusted $X.XX of $X.XX quarter reduced for to $XX.X in XXXX end-of-year same lower the rate compared year. QX higher million year-over-year was compared the expenses, quarter $X.X in and $X.X our rate Net tax due quarter XX.X%, pretax Diluted future updated the million as the negative of which in XX.X% expense based full negative XXXX continued same for fourth income year is which $X.XX XXXX Radware's was cost for from QX $X.X in XXXX of share for was interest and $X.X last Tax year Increase we our grow business. structure expenses of full primarily the XXXX year. our income compared was derived income a per not period we full to operate the foreign to year the million respectively, period in to business. to in full EBITDA due fourth to that quarter market. XX.X% and result our the $XX.X primarily $XX.X last Hawks compared business to for this from million, rates rate enable the which $X.XX of $XX.X and in to The reached was and tax subsidiaries, the the for the includes million EBITDA related for from on in million, of growth. Financial operating Hawks are in income the fourth with subject EBITDA this XXXX a of catch-up includes XX.X% period a adjusted efficient for $X.X million was earnings is EBITDA the of and was profits. Net quarter believe estimates. year. to tax and the period to year XXXX. in for XXXX of million same compared

$X.X XXXX. of to above. operations the the statement was to $X.X The negative and of lower $XX.X flow from in in cash from compared was cash lower the to from last $X.X period XXXX Cash full flow of in discussed operations a cash positive from year year. in sheet. million flow same Turning flow QX compared operation Cash million flow XXXX million profitability arise balance operations million from

the quarter repurchased of of year fourth approximately $XX and full we the and in million $XX the During shares million, amount XXXX, respectively.

million $XX the remained repurchase As bank million cash, my We cash and plan. $XXX quarter in equivalents, remarks approximately with ended deposits marketable XX, approximately of share securities. I'll conclude XXXX, guidance. our in with fourth December

of $XX total expect XXXX the $XX revenue for million. range be quarter of first to to We the in million

to operating expect be We QX to XXXX non-GAAP $XX.X in $XX between expenses million. million

please? to non-GAAP $X.XX now call expect be over questions. diluted We QX per net share XXXX earnings for to and the Operator, operator the turn $X.XX. I'll between

Operator

Our Instructions] Alex comes Henderson the question first [Operator with from Needham. line of

Alex Henderson

talk direction that coming off couple rates would forecast to you for little roll be of the hard might interest it starting a start about to externally. us the line? Just housekeeping it to and bit It's interest assume want XXXX, And Can have forecast on I interest of the down a we in that to rate bad with. don't that. a over,

So can sense think us that's what give of going you some do? to you

Guy Avidan

in of some XXXX balance still versus terms lower there in tailwind. as headwind because with well bonds we bonds. lower same time, interest think XXXX as long-term interest a throughout at I rate in XXXX XXXX. had We reduced But the have have or cash were

in of in million QX, same interest we fourth income $X.X quarter. the expect level overall, posted XXXX, So less we or more

Alex Henderson

rate should year? tax that any thinking And the Great. percentage the just for we be guidance on

Guy Avidan

tax be... XX% will XXXX, for rate see we way The

Alex Henderson

So no that. Great. change in

many have outlook. a trajectory pipeline is recover. Can like to bit increase that how -- what looks to stable What little do -- mechanics that the Is like, in or the the you the of close give deals? improving? does bit about more the you is confidence? talk You Is closure duration to improving? seem confidence the there the sound time deals starting in the a large what rate It are little an

Roy Zisapel

Okay.

that. points on several So

closing we large in first So deals started some first, see to QX.

If look over on we or had $X deals. million QX, on closing you those QX challenges

year, since It's but starting pipeline to not Second, better. that And moving completely not definitely of In this its some to close why cautiously also It's was and there optimistic. the seen. term, that at levels, better. regular deals back of we're beginning see chose the rates the QX was the previous to forward. we've that's moving definitely we

also It's the way, better, North by in America.

their up. on we in to opening security some optimistic leapfrog So their the ability are more are deals other and infrastructure had going the some of deals pipeline, that the Customers budgets forward.

and it's to hence, more well. across positive positive So world, the neutral overall, as about feeling I are it say would we

Alex Henderson

So saying expanding had improve? now Is time deal, is just I'm deal the you're that see there starting to to to close what closure you're be to what clear, hearing? the that take longer and that been

Roy Zisapel

were even expanding, just quarter not from were other. it's before, And Yes. They pushed to they not closing. the

those opportunities first half now we close some started of closing give us see will in So signs be more to in that and probably XXXX. other early concrete the confidence discussions of

the the momentum. seeing we in we're growth you we definitely, believe we recent signs So way, that during that all that maintain with good including had there. By couple years, XXXX, which cloud can security,

last gives XXXX. not So ARR overall, at now record levels, towards feel And levels. at that we more Obviously, obviously of better. us record least, mentioned visibility is RPO all that is Guy but our

Alex Henderson

Absolutely. Sure.

structure million XX it the one for we using $XX.X range for question reasonable the cost Is that cost that to Just X kind equation. the kind of think last Is to side all should on the be of of $XX that quarters? million -- year?

Roy Zisapel

Yes.

Operator

question the Chris from line Our Barclays. next Reimer [Operator with of Instructions] comes

Chris Reimer

results. strong the on Congratulations

America maybe weakness gradual headwinds recently You was any you're you're a wondering that more I North as start playing the and that challenges momentum. from seeing could year about get other you the in deals aside pickup talk you and to or out faster now. close mentioned if little the through seeing

Roy Zisapel

challenge this us, largest I far by think see. we the for is

results America in year the But geopolitical us, to unique specific obviously, to XXXX were challenges economy foresee predominantly. it's beyond for I North But it it that regular as in We as think for the geopolitical regular Russia, headwinds overall, to China, a the us. -- us in us. better relates are internationally America. we feel We looking, relates the don't North good

Chris Reimer

us Okay. might business overview the SkyHawk, an you the of of business? give impact And the it to like there and evolution when could start you regarding think will

Roy Zisapel

Yes.

basically public So the but into detect in time called cloud intrusion SkyHawk in addressing the talking new it's real a is it and cloud CDR. which other focused on is public understand and that, are a your There marketing we It's to response, hackers algorithms or whether before valuable and account startups block new niche is seeing, very a that actually market. cloud security, detection chain need realtime. kill the are see attack on the on. The is identities machine an and in developing based steal to data, malicious part based are we what multiple able anomalies on AI so are indicators, that, learning or to solution heavily of able are actually

unique the I in think is and very solution the advanced market.

generative realtime, AI detect product. But as not again, XXXX lot on in I would and there of new sensors it's attacks We of usage well a the foresee in material create very are as revenues. impact improve to new early. other adding

we and We are shareholder EPS. public But a losses, and forward although think the that the you the will in very there positioning. their believers we hurts cloud strong good in funded, consolidate look As fully technology, do success. to company for in see, with be security we is the our SkyHawk, opportunity value

Operator

further hand for I There back to the Zisapel at closing questions like are to time. call this Roy would remarks. no over some

Roy Zisapel

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

Operator

conference today's call. concludes This

may now disconnect. You

Radware (RDWR) 7 Feb 242023 Q4 Earnings call transcript