Radware Reports Record Revenue, Exceeds Expectations, Stock Surges

Radware's stock climbed 4.7% on Nasdaq yesterday, closing at $37.16, following the company's announcement of record third-quarter revenue totaling $84.4 million, a 12% year-over-year increase. During trading, the stock reached a one-year high of $38.50. Approximately one million shares changed hands, more than triple the recent daily average, bringing the company's market capitalization to about $1.5 billion. Adjusted earnings per share (Non-GAAP) were 32 cents, surpassing analyst expectations of 29 cents and the company's own forecast of 28-29 cents. Revenue also exceeded projections of around $83 million and the company's previously issued guidance of $82.5-$83.5 million. The growth rate of 12.1% is higher than the 11% seen in the second quarter and the 10% in the fourth quarter of 2025. All three geographical regions experienced the same 12% growth rate: Americas contributed $39.6 million, Europe, the Middle East, and Africa added $25.6 million, and Asia-Pacific generated $19.2 million.

"We delivered another record quarter with accelerating revenue growth and continued expansion of our cloud security business," stated Roee Zisapel, Radware's President and CEO. He noted strong demand for their application security solutions, evidenced by cloud orders and significant deals closed during the quarter. Zisapel highlighted three major deals: a payment infrastructure provider in the Americas consolidating its security for sites, APIs, and DDoS attacks; a major Asian telecom company selecting Xploit Shield as its primary cloud application protection platform; and a global cloud provider renewing and expanding its DDoS protection systems. Annual recurring revenue from cloud operations (Cloud ARR) reached $107 million, up 21%, with total ARR at approximately $266 million, an 11% increase. The cloud's share of total ARR rose to 41%, up from 37% a year prior, marking a significant shift from the company's historical reliance on hardware sales to a more stable recurring revenue model.

The strengthening shekel negatively impacted Radware by $4.6 million in the quarter. While most revenues are in dollars, significant expenses, particularly employee salaries in Israel, are in shekels, making dollar depreciation costly. Adjusted operating profit remained stable at $11.9 million. Excluding currency effects, it would have been $16.5 million, a 37% increase. Adjusted earnings per share would have been 41 cents, a 24% rise, instead of the reported 32 cents. Adjusted gross margin decreased to 81.4% from 82.4% due to currency, product mix, and supply chain costs. Under GAAP, net profit from continuing operations fell to $4.5 million, or 11 cents per share, down from $8.2 million, or 19 cents, in the prior year's quarter. The company held $421.5 million in cash, deposits, and marketable investments at quarter-end. Operating cash flow was $15.5 million, a turnaround from a negative $2.1 million a year earlier, with free cash flow at $12.4 million. Radware repurchased $13.7 million of its stock during the quarter, totaling approximately $62 million year-to-date.

Zisapel also discussed artificial intelligence security products, stating that customers are increasingly choosing Radware's unified platform for protecting AI environments. He mentioned innovations like protection for MCP servers, which connect AI agents to enterprise systems, and tools for verifying agent identity and limiting their actions. Significant revenue from AI Protect, designed to prevent uncontrolled AI tool usage and data leakage, is anticipated in 2027. The company's threat report indicated a 110% surge in DDoS attacks on websites and applications in the first half of the year. For the fourth quarter, Radware forecasts revenues of $88-$90 million, a 10%-12% increase year-over-year, and adjusted earnings of 34-35 cents per share. CFO Guy Avidan clarified that the company is providing a one-quarter forecast and not a 2027 outlook at this time. Investment firm Jefferies raised its price target for the stock to $40 from $27, maintaining a 'hold' recommendation. The stock's rise follows a nearly 20% increase since the previous weekend and about 25% for the month, trading approximately 70% above its 52-week low.