Radware Ltd.

Good morning. Welcome to the Radware conference call discussing third quarter 2021 results and thank you all for holding. At this time, all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question at that time, simply press star followed by the number one on your telephone keypad. As a reminder, this conference is being recorded today, November 3rd, I would now like to turn this call over to Yiska Erez, Director of Investor Relations at Radware. Please go ahead.

Thank you, Operator. Good morning, everyone, and welcome to Radware's third quarter 2021 earnings conference call. Joining me today are Roy Zisopel, President and Chief Executive Officer, and Michael Goldberg, VP Finance. A copy of today's press release and financial statement, as well as the investor kit 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 future financial performance of the company. These forward-looking statements are subject to various risks and uncertainties, An actual result could differ materially from RADWRD's current forecast and estimate. Factors that could cause or contribute to such differences include, but are not limited to, impact from the COVID-19 pandemic, general business conditions, and our ability to address changes in our industry, changes in demand for products, the timing in the amount of orders, and other risk details from time to time in RADWRD's filing. We refer you to the documents the company files and furnishes from time to time with ACC, specifically the company's last annual report on Form 20-F as filed on April 20, 2021. We undertake no commitment to revise or update any forward statement in order to reflect events or circumstances after the date of such statement is made. I will now turn the call to Roy Zissel.

Thank you, Yiska, and thank you all for joining us today. We are pleased to report another strong quarter with double-divided growth across our major key financial metrics. In the third quarter, we set yet another revenue record, hitting $73 million of revenue. This represents 17% year-over-year growth. In addition, earnings per share grew 32% to 23 cents on the same basis. ARR grew sequentially by $7 million and 9% year-over-year. The ARR growth consistent with previous quarters was driven by cloud and subscription ARR, which grew 26% year-over-year and is increasing as a percentage of total ARR. The momentum in our cloud business is being supported by impressive growth in cloud application security, improved retention rates, and a steady increase in the number of customers each quarter. We are working diligently on expanding our cloud business. We're opening more points of presence for cloud application security and DDoS so we can be closer to the customer and grow our business faster. We are already opening one to two new POPs each quarter across the world and plan to continue to do so in the coming quarters. The strong performance I just outlined is attributed to the combination of strong market fundamentals, our ability to innovate, and the breadth of our product offerings. One of the market forces that continues to play in our favor is the consistent rise in the number of cyber attacks. In fact, they are at record levels and are becoming larger and more complex. During the third quarter of 2021, we blocked 30% more DDoS attacks, twice as many web application attacks, and three times more bad bot requests compared to the same period last year. The rise in the number and growing complexity of attacks is creating more urgency and driving organizations to strengthen the defenses around their critical assets. They no longer want to compromise protection levels given implications to their brand, business availability, customer privacy, and regulatory compliance. To meet the evolving needs of our customers, we continue to invest in innovation and lead the market with our superior technology. In the third quarter, we rolled out several new capabilities using sophisticated algorithms and automation to detect and mitigate the most advanced attacks. One example I want to share is our SSL protection. During the last year, attacks using the encrypted HTTPS protocol have soared. As the adoption of encryption increases, attackers are using it to cloak their activities by blending in with legitimate encrypted traffic. Our newest algorithms expose this new generation of attacks without requiring SSL decryption and at the same time offering mitigation at scale with even greater accuracy. Another challenge large cloud and service providers are facing is the ability to detect lower volume DDoS flood attacks within a high bandwidth network. According to our research, more than 90% of DDoS attacks are less than one gig. and will not be blocked easily by traditional solutions due to the lack of detection sensitivity. While these attacks will bring down specific critical resources, it's hard to pinpoint them in a high-bandwidth network. We are now completely innovating in this space. In a market first, we launched a new quantized algorithm that divides incoming traffic into sole segments or quantiles. With this granular level of detection, service providers and carriers automatically intercept phantom floods that historically have gone unnoticed. This new capability eliminates the costly and complex process of extensive manual configuration and ongoing threshold tuning. Our superior solutions continue to receive recognitions from industry research firms. Recently, Quadrant named Radwer as the leader in the Spark Metrics DDoS mitigation report. With the highest ranking across the parameters of technology excellence and customer impact, Radwer was positioned as the 2021 technology leader among 14 other vendors in the global DDoS mitigation market. We also were recognized by Gartner in the Gartner critical capabilities for cloud web application and API protection. We were ranked number two for API security and for high security use cases among 11 vendors included in this report. And we are able to translate the strength of our security offering into market wins. Let me share with you a few examples of the deals that we signed during the third quarter. We won a large deal with a U.S. service provider for the DDoS security stack. This new logo experienced major attacks on their infrastructure and realized that their current protection was not sufficient. We demonstrated an exceptional technical expertise and solution capabilities and won this leading customer. We also signed an expansion deal with a large U.S. service provider for cloud DDoS. This customer received a ransomware letter from one of the top hacking groups. The latter was followed immediately by a major DDoS attack, which we successfully diverted to our cloud scouting center. We won this deal because of customer satisfaction from our solution, proven success in mitigation, and the scale of our cloud DDoS solution. Another win in the quarter was a cloud application security deal with a multinational financial technology company that is an existing ADC customer of Radler. The company expanded its relationship with us and purchased our cloud application security. We won this deal based on our long-standing relationship coupled with the strengths of our cloud AppSec offering. Finally, we closed a large deal with a global European financial services group. This company experienced a volumetric attack when volumes surpassed their ISP mitigation capacity. The ISP was black-hauling the traffic and causing outages. They chose Radu to strengthen the security protection coverage. This deal was brought to us by Check Point. In summary, the third quarter was marked by a solid performance and strong demand for our solution as we continue to witness the impact of an increased level of cyber attacks. We are confident that this demand coupled with our broad security offering will fuel the growth for the coming quarters. And now to Michael.