Radware Ltd. Announces Q2 '08 Results

Radware Plans to Reactivate its Stock Repurchase Program

TEL AVIV, Israel, July 23 /PRNewswire-FirstCall/ --
* Quarterly revenues of $24.0 million
** GAAP loss per share $0.36, Non-GAAP loss per share $0.25
Radware (NASDAQ: RDWR), the leading provider of integrated application
delivery solutions for business-smart networking, today reported quarterly
revenues of $24.0 million for the second quarter of 2008. This represents an
increase of 12% compared with revenues of $21.5 million for the second
quarter of 2007 and an increase of 8% compared to revenues of $22.2 million
for the first quarter of 2008.
Net loss on a GAAP basis for the second quarter of 2008 was $7.1 million
or $0.36 per diluted share, compared to a net loss of $8.3 million or $0.42
per diluted share in the first quarter of 2008 and to a net loss of $4
million or $0.21 per diluted share in the second quarter of 2007.
Net loss on a non-GAAP basis for the second quarter of 2008 was $5.0
million or $0.25 per diluted share, compared with a net loss of $6.3 million
or $0.32 per diluted share in the first quarter of 2008 and to a net loss of
$2.4 million or $0.12 per diluted share in the second quarter of 2007.
Non-GAAP results exclude the effects of stock-based compensation expense and
amortization of intangible assets and acquisition related expenses.
During the second quarter, the continued devaluation of the US dollar
against the Israeli Shekel, the Euro, the Australian dollar and Asian
currencies resulted in an increase in operating expenses of $0.8 million
compared to the first quarter 2008. This increase was off-set by a decrease
in expenses derived from cutting operational costs.
At the end of the second quarter 2008 the company's overall cash
position, including cash, short-term and long-term bank deposits and
marketable securities totaled an amount of $148.6 million.
"The strategic and tactical plans set forth in the first quarter are
proving to be successful and are enabling Radware to make real headway in the
ADC market," said Roy Zisapel, President & CEO of Radware. "With the
introduction of APSolute Immunity, our new security strategy and key
partnerships such as joining Juniper Networks J-Partnership program as a
major application delivery solutions provider, we are well positioned for
continued growth in the next quarters."
Management's expectation is to reach an annual growth rate in the mid to
high teens and return to operating profitability by the fourth quarter of
2008.
Radware further announced that it plans to reactivate its stock
repurchase program. Purchases under Radware's stock repurchase program may be
made in the open market or in private transactions, from time to time,
through block trades or otherwise. These purchases, including scope and price
limits, will depend on market conditions and other factors and may be
commenced or suspended at any time without prior notice. The Company's
current intention is to implement the repurchase program in accordance with
the safe harbor rules of Rule 10b-18 under the US Securities Exchange Act of
1934.
As of July 21 2008, Radware had approximately 20 million shares
outstanding.
During the quarter ended June 30, 2008, Radware released the following
significant announcements:
- Radware's DefensePro Receives NSS Labs' "Approved" for Attack
Mitigation
- Radware Discovers Denial-of-Service Vulnerability in Apples' iPhone
Safari Internet Browser
- Radware Receives Network Products Guide 2008 Product Innovation Award
- Tongji University Deploys Radware's Application Delivery Solution to
Ensure Continuous & Secure Access for Campus Applications
- Radware Joins Juniper Networks J-Partner Solutions Alliance Program
- Austria's SKIDATA AG Upgrades Corporate Network with Radware's
DefensePro
- Radware Optimizes VoIP Network Reliability for Virtual PBX(TM)
- Radware Showcases Carrier Solutions to Drive Next-generation Service
Delivery at NXTcomm08
- disy Optimizes Offering with Failover Solution from Radware
- Radware's APSolute Immunity Provides Networks with Ability to Fight
Emerging Threats

Company management will host a quarterly investor conference call at 8:45
AM EDT on July 23, 2008. The call will focus on financial results for the
quarter ended June 30, 2008, and certain other matters related to the
Company's business.
The conference call will be webcast on July 23, 2008 at 8:45 AM EST in
the "listen only" mode via the Internet at:
http://www.radware.com/Company/InvestorRelations/default.aspx and would be
available for replay during the next 30 days.
Please use the following dial-in numbers to participate in the first
quarter 2008 call:
Participants in the US call: Toll Free 1-800-230-1951
International participants call: +1-612-332-0335
About Radware
Radware (NASDAQ:RDWR), the global leader in integrated application
delivery solutions, assures the full availability, maximum performance, and
complete security of business-critical applications for more than 5,000
enterprises and carriers worldwide. With APSolute(TM), Radware's
comprehensive and award-winning suite of intelligent front end, access, and
security products, companies in every industry can drive business
productivity, improve profitability, and reduce IT operating and
infrastructure costs by making their networks "business smart". For more
information, please visit http://www.radware.com.
Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with generally
accepted accounting principles, or GAAP, Radware uses non-GAAP measures of
net income and earnings per share, which are adjustments from results based
on GAAP to exclude stock-based compensation expense, in accordance with SFAS
123R, and amortization of intangible assets and acquisition related expenses.
Radware's management believes the non-GAAP financial information provided in
this release is useful to investors for the purpose of understanding and
assessment of Radware's ongoing operations. The presentation of this non-GAAP
financial information is not intended to be considered in isolation or as a
substitute for results prepared in accordance with GAAP. A reconciliation of
the non-GAAP financial measures discussed in this press release to the most
directly comparable GAAP financial measures is included with the financial
information contained in this press release. Management uses both GAAP and
non-GAAP information in evaluating and operating business internally and as
such has determined that it is important to provide this information to
investors.
This press release may contain forward-looking statements that are
subject to risks and uncertainties. Factors that could cause actual results
to differ materially from these forward-looking statements include, but are
not limited to, general business conditions in the Application Switching and
Network Security industry, changes in demand for Application Switching and
Network Security products, the timing and amount or cancellation of orders
and other risks detailed from time to time in Radware's filings with the
Securities and Exchange Commission, including Radware's Form 20-F.
Condensed Consolidated Balance Sheets
(U.S. Dollars in Thousands)
December 31, June 30,

2007 2008
(Audited) (Unaudited)
Current assets
Cash and cash equivalents 61,376 49,311
Short-term marketable
securities 80,498 41,317
Structured deposit 10,236 -
Trade receivables, net 17,192 13,232
Other receivables and prepaid 3,195 3,586
expenses
Inventories 5,428 6,185
177,925 113,631
Long-term investments
Long-term marketable securities 2,735 57,949
Severance pay funds 3,940 4,978
6,675 62,927

Property and equipment, net 12,217 12,722

Other assets
Intangible assets, net,
long-term deferred taxes and
other long-term assets 5,776 5,343
Goodwill 13,474 13,474
19,250 18,817

Total assets 216,067 208,097

Current liabilities
Trade payables 7,537 5,365
Deferred revenues, other
payables and accrued expenses 26,438 30,629
33,975 35,994

Accrued severance pay 5,379 6,541

Total liabilities 39,354 42,535

Shareholders' equity
Share capital 482 488
Additional paid-in capital 176,004 181,501
Accumulated other comprehensive
income (loss) 150 (1,102)
Treasury stock, at cost (11,049) (11,049)
Retained earnings (accumulated 11,126 (4,276)
deficit)
Total shareholders' equity 176,713 165,562

Total liabilities and 216,067 208,097
shareholders' equity

Condensed Consolidated Statements of Operations
(U.S. Dollars in thousands, except share and per share data)

For the For the For the Six For the Six
Three Three months months
months months ended June ended June
ended June ended June 30, 2007 30, 2008
30, 2007 30, 2008
(Unaudited) (Unaudited) (Unaudited) (Unaudited)

Revenues 21,463 24,021 41,183 46,186
Cost of revenues 4,322 4,942 9,410 9,538
Gross profit 17,141 19,079 31,773 36,648
Operating expenses:
Research and development, 5,978 7,261 11,185 14,559
net
Sales and marketing 14,896 16,927 27,922 34,187
General and administrative 1,825 2,578 3,580 4,995
Total operating expenses 22,699 26,766 42,687 53,741
Operating loss (5,558) (7,687) (10,914) (17,093)
Financial income, net 1,637 921 3,399 2,224
Loss before income taxes (3,921) (6,766) (7,515) (14,869)
Income taxes (92) (306) (69) (533)
Net loss (4,013) (7,072) (7,584) (15,402)

Basic net loss per share $ (0.21) $ (0.36) $ (0.39) $ (0.78)
Weighted average number of
shares used to compute
basic and diluted net loss
per share
19,460,835 19,798,753 19,442,657 19,750,006

Reconciliation of Supplemental Financial Information
(U.S. Dollars in thousands, except share and per share data)

For the For the For the For the
Three Three Six months Six months
months months ended June ended June
ended June ended June 30, 2007 30, 2008
30, 2007 30, 2008

GAAP Net loss (4,013) (7,072) (7,584) (15,402)
Stock-based compensation
expenses, included in:
Cost of revenues 22 24 40 53
Research and development, 347 387 564 796
net
Sales and marketing 559 600 877 1,238
General and administrative 403 836 784 1,504
1,331 1,847 2,265 3,591
Amortization of intangible
assets and acquisition
related expenses, included
in:
Cost of revenues 150 187 223 375
Research and development, 79 - 158 -
net
Sales and marketing 43 39 82 78
Income taxes 30 41 54 82
302 267 517 535

One-time inventory - - 1,200 -
write-off

Non-GAAP Net loss (2,380) (4,958) (3,602) (11,276)

Non-GAAP Diluted net loss $ (0.12) $ (0.25) $ (0.19) $ (0.57)
per share

Weighted average number of
shares used to compute
Non-GAAP diluted net loss
per share
19,460,835 19,798,753 19,442,657 19,750,006

SOURCE Radware Ltd

CONTACTS: Meir Moshe, Chief Financial Officer Radware Ltd., +972-3766-8610