Radware Ltd. Q1 FY2025 earnings call

Management Statement and Operational Highlights:

• First quarter revenue increased 11% y-o-y to $72 million, with non-GAAP EPS at $0.27 and cashflow from operations at $22 million.
• Cloud security business continues to grow, with ARR up 19% y-o-y to $80 million, and double-digit growth in cloud customers.
• AI innovation efforts are a competitive advantage, with competitive takeout total contract value doubling between Q4 2024 and Q1 2025.
• Major customer wins include a seven-digit deal with a government IT company in APAC and an eight-digit multi-year deal with a U.S. Fortune 500 company.
• OEM channel with Cisco and Checkpoint grew over 20% y-o-y, including a million-dollar five-year cloud deal with a UK retailer.
• Plans to increase investments in sales, marketing, and R&D to scale cloud business, accelerate AI innovation, and strengthen presence in North America.

Segment Performance: Radware's first quarter 2025 revenue increased 11% year-over-year to $72 million. Non-GAAP earnings per share were $0.27, and cashflow from operations was $22 million. Cloud security ARR increased by 19% year-over-year to $80 million. Recurring revenues grew to 82% of total revenue in Q1 2025. Regional performance: Americas revenue was $27.4 million (38% of total), EMEA was $28.4 million (39%), APAC was $16.3 million (23%). For 12 trailing months, Americas revenue grew 14%, EMEA grew 11%, and APAC was flat.

Guidance: Radware expects second quarter 2025 revenue to be in the range of $73 million to $74 million. Non-GAAP operating expenses are expected to be between $51 million to $52 million. Non-GAAP diluted net earnings per share are expected to be between $0.26 and $0.27.

Risks: Impact from changing or severe global economic conditions, general business conditions, changes in demand for products, timing and amount of orders. Also, potential impact from tariffs, but Radware expects minimal effect and is proactively adjusting supply chain.

Question and Answer: Q: Nice job on the quarter. I appreciate the tariff color. Just regarding macro, did you see any changes in buying behavior from your customers? How was April and what's embedded in your 2Q guidance?

A: We didn't see a noticeable change in the last several other months, and also starting Q2 things are relatively the same, meaning not accelerating, not decelerating, and we didn't see anything specific to tariffs. In the beginning, we saw many questions, some distributors were asking actually to accelerate shipments, but this has calmed down after a week or so when the tariffs or the majority of them were put on hold, so we didn't see anything specific. And as Guy mentioned, as we focus more and more on the cloud business in North America that is a bit isolated from the old hardware portion of our business.

Q: And then just as a follow up, can you double click on some of those U.S. market changes? A lot of new senior leadership, which is great, but that can also result in a couple quarters of disruption. So is there any major change in process needed in the U.S. market and is that accounted for in the 2Q guide?

A: Yes, so, so great question. Actually, our announcement is after all those -- all these infrastructure is already in place. So Randy, the Head Lead I think is now going into his third quarter, like nine months into the company. A lot of the individual sales heads were joining us between three to six months ago. So we're actually now expecting more and more productivity ramp-up from them. And I think the newest edition, Connie, our Chief Growth Officer, she's like a month now into the company. So a lot of the major changes were already done. Actually, last quarter I think, and a quarter before we already started to see the fruits of that and we are very strong believers that the future is brighter and we can grow forward from here and add, and that's what we announced, that we are going to add even more resources as we go forward. So we think we have a strong leadership team in place that's already executed several quarters and gets more and more productive as time passes now. We don't see any disruption we are after that so to speak.