Radware Ltd. Q2 FY2025 earnings call

• Radware reported strong Q2 results with revenue up 10% YoY to $74M, non-GAAP EPS up 39% to $0.28, and cash flow from ops $14.5M.
• Strategy pillars include cloud security growth, AI-driven innovation/automation, and go-to-market expansion. Cloud ARR reached $85M, up 21% YoY.
• Cloud security drivers: API protection solutions with AI, AI SOC for DDoS mitigation; secured wins with global event org, financial tech company, and Latin American data center provider.
• Go-to-market: deepened partner ecosystem, secured major deals.
• Financials: Revenue $74.2M, total ARR $235M, recurring revenue 84% of total.

In the second quarter, Radware's revenue grew 10% year-over-year to $74.2 million. Cloud ARR accelerated to $85 million, a 21% year-over-year growth. Regional performance: Americas contributed $30.1 million (41% of total revenue), EMEA $27.8 million (37%), and APAC $16.3 million (22%). Gross margin remained strong at 82.2%, operating income grew over 50% year-over-year to $9.5 million, adjusted EBITDA was $11.4 million, and cash flow from operations was $14.5 million.

• Expected Q3 2025 total revenue in the range of $74.5 million to $75.5 million.
• Q3 2025 non-GAAP operating expenses expected between $51.5 million to $52.5 million.
• Q3 2025 non-GAAP diluted net earnings per share expected between $0.26 and $0.27.

• Impact from changing global economic conditions, general business conditions, industry changes, demand for products, and timing of orders.

Q: Curious about early returns from sales and marketing investments, added 30 people in NA selling org.

A: Roy Zisapel says the investment in NA is paying off, with stronger pipeline, better engagement, and increased investments in NA.

Q: Bifurcation of selling organization (hunters and gathers).

A: Roy Zisapel states the split is working, with better coverage of existing customers, more upgrades/cross-selling, and successful hunting in new accounts.

Q: DefensePro X progress, sales mix on hardware.

A: Roy Zisapel says 100% on-prem DDoS now is DefensePro X, with new wins with a SaaS provider.

Q: Dynamics in Carrier segment, customer behavior.

A: Roy Zisapel mentions selling to carriers for network protection, MSSP business, and ADC; NA enterprise has long sales cycles and budget concerns but critical security investments continue.

Q: AI impact on attack surface for APIs, MSSP business models.

A: Roy Zisapel says AI changes the attack surface early, and MSSP portfolios are evolving with compliance and a shift towards cloud app security.

Q: Cloud ARR growth profile, API security competitors.

A: Roy Zisapel states cloud ARR was 20% short-term, targeting 25% long-term; API security uses AI in protection engines and SOC-X AI, where competitors lack real-time AI integration.

Q: Competitive environment, new entrants.

A: Roy Zisapel notes win ratio is up, competitors lack integrated AI solutions, and new entrants may emerge in AI apps.