Radware Ltd.

Ladies and gentlemen, thank you for standing by and welcome to the Radware Q3 2020 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. And I'd like to hand the conference over to Ms. Anat Yaron-Heilborn, VP Investor Relations. Please go ahead.

Thank you, Sharon. Good morning, everyone, and welcome to Radware's Third Quarter 2020 Earnings Conference Call. Joining me today are Roy Zisopel, President and Chief Executive Officer, and Dorona Brumovic, Chief Financial Officer. A copy of today's press release and financial statements, as well as the investor kits for the third quarter, are available in the investor relations section of our website. During today's call, we may make projections or other forward-looking statements regarding future events or the future financial performance of the company. These forward-looking statements are subject to various risks and uncertainties, and actual results could differ materially from Radware's current forecast and estimate. Factors that could cause or contribute to such differences include, but are not limited to, impacts from the COVID-19 pandemic, general business conditions, and our ability to address changes in our industry, changes in the map for products, the time and the amount of orders, and other risks detailed from time to time in Redwood's filings. We refer you to the documents the company files or furnishes from time to time with the SEC, specifically the company's last annual report on Form 20-F as filed on April 2nd, 2020. We undertake no commitment to revise or update any forward-looking statements in order to reflect events or circumstances after the date of such statement is made. Please note that management will virtually participate in the Bernberg CEO Conference and the Needham Network and Security Conference in November and in the Raymond James Technology Conference in December. I will now turn the call to Roy Disabel.

Thank you, Anant. We are pleased to deliver another quarter of solid results. We enjoyed strong road-based booking growth spanning across all our geographic regions and product lines. and across all components of our data center and application security offerings. DDoS, web application firewall, bot management, and cloud workload protection. As a result, our book to build was above one, and we benefit from increasing visibility for the coming quarters, despite the obvious challenges in the business environment. With regards to our cloud solution and product subscriptions, we saw continuous robust performance. This is reflected in our year-over-year ARR growth. For the third quarter, ARR reached $169 million, with growth rate accelerating to 12%, up from 10% in Q2. The main driver for this growth was cloud and product subscription ARR, which grew approximately 30% year-over-year. The GDPR transformation is accelerating. Users move to work from home, utilizing personal computers and mobile devices. At the same time, applications are moving more quickly to the cloud. These trends create an expanded attack surface. On the backdrop of this phenomena, the attack landscape continues to be very active, and traffic through our cloud security infrastructure reach all-time highs. In the third quarter, the number of DDoS attacks blocked by us was more than two and a half times larger than in the second quarter. And the volume of DDoS attacks blocked more than doubled. The total number of web application attacks blocked in the third quarter increased approximately 40% sequentially over Q2. These extensive level of attacks illustrate the need for a comprehensive security strategy that protects and secures the infrastructure and critical business applications, whether they are on-premise, in the cloud, or operating in a hybrid environment. It is this increased need for our holistic security portfolio that has provided us with opportunities to expand our presence with existing customers, as well as winning new business. For example, during August, A large-scale ransom attack forced the stock exchange, which was not a Radwell customer at the time, to halt trading for three days. Despite being protected by a competing cloud leader solution, the service failed to stop certain attack vectors. We deployed our defense pro-attack mitigation appliances in a very short time, and the attack traffic was immediately blocked. As a result, we secured an order early in Q4 through our strategic partner, Cisco. We are addressing this increased demand by further investing in our own infrastructure and operations. As we announced in late August, we recently added three new scrubbing centers in India, Brazil, and Israel, expanding both our geographic coverage and our total capacity. We also expanded and enhanced our main security operation center, tripling its size and equipping it with state-of-the-art monitoring and control systems. We continue to broaden our offering to deliver on our vision of a highly differentiated, full-stack application security offering, utilizing advanced algorithms across our portfolio. In June, we announced API protection capabilities, applying machine learning on API calls, and providing us with a highly differentiated capability. Recently, we announced that we developed a new set of behavioral algorithms to protect against sophisticated attacks in online gaming. This meets the specific needs of this sector for protection from UDP attacks, which is the core protocol used in these applications. We believe our investment in algorithms continues to provide us with significant competitive differentiation for the effectiveness and accuracy of our security solutions. Moving to the customers and sales front, in the third quarter we saw several multi-million, multi-solution cloud security deals, including a major win with an online trading platform we announced last month. Our OEM relationship continued to perform well and delivered record booking for the quarter. We continue to win new customers through these relationships, including Fortune 500 levels. One such win was with a Fortune 50 leading healthcare company that selected to displace its existing security solution with rather cloud DDoS protection services across six data centers globally. Last month, we announced our new reseller relationship with Airtel, India's largest integrated telco. Airtel is now offering Radware Cloud IDOS protection, Cloud WAF, and Bot Manager cloud security services to its enterprise customers. Under this agreement, we've already secured our first joint deal, and we're looking forward to securing many more. In summary, While the level of macro uncertainty is high, our visibility continues to increase, supported by increased backlog and accelerating ARR growth. With the rapidly accelerated digital transformation, cloud migration, and remote worker initiatives, the attack surface has expanded and cyber activity is at all-time high. Our comprehensive and differentiated data center security offering addresses the critical business need for continuous data center and application security and delivery. Our focus on large enterprises and carrier segments and leveraging our key strategic partners' market access creates for us a robust market demand for our solutions. All these position us very well for the future. I will now turn the call to go on.