Radware Ltd.

Welcome to the Radware conference call discussing fourth quarter and full year 2021 results, and thank you all for holding. As a reminder, this conference is being recorded today, February 9th, 2022. I would now like to turn this call over to Yiska Erez, Director of Investor Relations at Radware. Please go ahead.

Thank you, operators. Good morning, everyone, and welcome to Radware's fourth quarter and full year 2021 earnings conference call. Joining me today are Roy Disipel, President and Chief Executive Officer, and Gil Kivoli, VP Finance. A copy of today's press release and the financial statements, as well as the investor piece for the fourth quarter, are available in the investor relations section of our website. During today's call, we may make projections or other false blocking 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 differ materially from models' current forecasts and estimates. 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 demand for the product, the timing in the amount of orders, and other risk details from time to time in broadway filing. We refer you to the documents that the company files and furnishes from time to time with the SEC, 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-looking statement in order to reflect events or circumstances after the date of such statement is made. I will now turn the call to Roy Dissifer.

Thank you, Iska, and thank you all for joining us today. Q4 was another record quarter, which closed the record year for hardware. Our strategy to grow our cybersecurity and cloud services has proven very successful. In turn, we've made great progress transitioning from mainly a product-based perpetual license revenue model a revenue model that is based largely on ARR and subscriptions. The evidence of this shift is reflected in our 2021 performance. Total ARR reached a record of $190 million. Cloud and subscription ARR grew 23% year-over-year. Cloud and subscription revenues grew 44% year-over-year to $93 million. And now they account for 32% of total revenues, up from 26% in 2020. And we exited 2021 with a run rate of more than $100 million of subscription revenues. Looking forward, we see great momentum and significant potential in continuing to grow our data center and application security offerings. Our customers are advancing their multi-cloud infrastructure and have an elevated need for a strong security strategy. This is a huge market opportunity for us. It is further magnified by an extremely active cyber attack environment, and our recent statistics demonstrate that. Number of denial of service attacks that we blocked during 2021 increased by 45% compared to 2020. The web application attacks blocked by us grew by 88% and bot attacks increased by 123% year over year. Based on these market drivers, the resulting needs for best-in-class cloud security and our technology leadership, we continue to win many new customers and grow our existing relationships. In the fourth quarter, we closed several large cloud deals. For example, A Fortune 500 financial services company chose our Cloud DDoS solutions for our worldwide deployment to better protect and serve the global operations. Our global network footprint and quality, together with our security leadership, were the reasons noted by this new customer. Our bot manager also earned us a seven-digit deal from a Fortune 500 customer and one of the largest e-commerce organizations in the world. After we displaced a competitor solution a year ago, based on last year's success in blocking real-time attacks, this customer extended and expanded the scope of our agreement in our largest bot manager sale to date. Our state-of-the-art technology continues to be a major driver in the purchase decisions of both our new and existing customers. In the fourth quarter, we continue to evolve our solutions, features, and capabilities. In our cloud AppSec service, we significantly strengthened our API security with the introduction of the API discovery module. This feature uses an advanced machine learning algorithm to identify undocumented and legacy APIs that are hard to observe and control. Protecting APIs is paramount since hackers and bots can use broken or exposed APIs as an entry point and from their launch a full site. We also recently released our integrated content delivery network or CDN. that is now part of our cloud AppSec offering. In the fourth quarter, we closed our first deals with our integrated CDN solution. For example, a multinational conglomerate company in Asia Pacific that spans many industries purchased our complete cloud WAF, BOT, and CDN solution. The company, which was an existing customer of our ADC and DDoS protection products, was looking to consolidate and centralize control of those services. The customer decided to expand its relationship with Radwell due to our superior technical solution and our strong strategic relationship.