Radware Ltd. Q4 FY2024 earnings call

Management Statement and Operational Highlights:

• Strong fourth quarter with 12% year-over-year revenue growth and non-GAAP earnings per share more than doubled.
• Cloud security ARR accelerated to 19% in Q4 2024, with plans to invest in new cloud security centers, R&D, and OEM/MSSP partnerships to reach close to $100 million ARR by end of 2025.
• AI integration with EPIC-AI framework, including the AI SOC Xpert cloud service, which cuts mean time to resolution by up to 95%.
• DefensePro X had continuous uptake with new platform expansions and significant deals like European and U.S. service provider wins.
• OEM partnerships with Cisco and Check Point had double-digit growth in Q4, setting annual records, with new offerings unlocking growth opportunities.
• Regional performance: Americas had 33% year-over-year revenue growth in Q4 2024, EMEA had a 6% year-over-year decline, and APAC had 8% year-over-year growth in Q4 2024.

Segment Performance:

• Cloud security: Fourth quarter revenue grew 12% year-over-year, with cloud ARR accelerating to 19% (up from 15% in Q3 2024). Cloud and subscription revenue made up 48% of total revenue in Q4 2024 and 47% for the full year. Total ARR was $227 million, with cloud ARR at $77.3 million.
• DefensePro X: Continuous uptake driven by effective detection and blocking of sophisticated attacks, with new platform expansions and significant growth opportunities, including a seven-digit win with a European Internet service provider and a U.S. service provider deal.
• OEM partnerships: Cisco and Check Point had double-digit growth in Q4, setting annual records, with new offerings under Cisco Enterprise Agreement unlocking growth opportunities.

Guidance:

• Q1 2025 total revenue expected in the range of $70 million to $71 million.
• Q1 2025 non-GAAP operating expenses expected to be between $50.5 million to $51.5 million.
• Q1 2025 non-GAAP diluted net earnings per share expected to be between $0.22 and $0.23.
• Strong RPO of $350 million, representing 13% year-over-year growth, underscoring solid future revenue commitment.

Risks:

• Impact from changing or severe global economic conditions.
• General business conditions and ability to address changes in the industry.
• Changes in demand for products, timing and amount of orders.
• Risks detailed in Radware’s SEC filings, including factors like industry changes and ability to address market demands.

Question and Answer:

• Q: Chris Reimer asked about R&D investment and OpEx savings.

A: Roy Zisapel said they will increase investment in cloud security R&D and centers, with reallocation of resources for other investments.

• Q: Ryan Koontz asked about cloud ARR acceleration related to go-to-market.

A: Roy Zisapel said it was broad-based, including North America and international, with strong OEM and channel efforts.

• Q: Tim Horan asked about competitor bundling and go-to-market.

A: Roy Zisapel said they focus on application and data center security platform, with channel and direct sales approach, strengthening in North America and scaling OEM/MSSP channels.