Radware Ltd.

ladies and gentlemen thank you for standing by today's conference call will begin momentarily until that time your lines will again be placed on music hold thank you for your patience Thank you. Ladies and gentlemen, good morning. My name is Abby and I will be your conference operator today. At this time, I would like to welcome everyone to the RADWARE conference call discussing first quarter 2022 results, and we thank you all for holding. As a reminder, this conference is being recorded on May 3rd, 2022. 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 during this time, simply press the star key followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 once again. I would now like to turn this call over to Yizka Erez, Director of Investor Relations at Radware. Please go ahead.

Thank you, Abby. Good morning, everyone, and welcome to Radware's first quarter 2022 earnings conference call. Joining me today are Roy Disipel, President and Chief Executive Officer, and Gaia Vidhan, Chief Financial Officer. A copy of today's press release and financial statement, as well as the investor kit for the first 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. Default looking statements are subjective at risk and uncertainties, and actual results could differ materially from what was current forecast and estimates. 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 product, the timing of the amount of orders and other risks, details from time to time, in other words, filings. We refer you to the document 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 11, 2022. 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 Issapello.

Thank you, Issa, and thank you all for joining us today. I'd like to begin our call by highlighting the news we released this morning introducing Skyhawk Security, which is a spin-off of our cloud-native Protector business. This spin-off is a strategic step in the cloud services initiatives that we announced a couple of months ago. Before I get into the details about Skyhawk, first let me take this opportunity to recap our cloud initiative. Given the large market opportunity in front of us in protecting mission critical applications and data centers against cyber attacks, we made a strategic decision to focus our investments and accelerate our growth in the cloud security as a service space. In addition to the Skyhawk spin-off, we've taken several other important steps in delivering on this initiative. First, we acquired Security Dam, our cloud data scrubbing center provider, to leverage assets and synergies and deliver better service to our cloud customers. During the first quarter, we successfully completed the integration of Security Dam. Second, We recently increased the cloud service capacity of our global network to 10 terabits per second. This quarter, we are once again working on expanding our capacity and network footprint to meet incremental demand being driven by the growing volume of cyber attacks and the growth in our customer count. Third, we are expanding our innovation center in India to drive Sabo security research and development as well as service delivery excellence. Together with our Israeli R&D site, we are focusing on cloud innovation. As part of these innovation efforts, we recently launched Rado SecurePath, a game-changing new cloud application security architecture. RADOS SecurePath is designed to deliver on our customers' need for consistent, high-grade security. It offers centralized security management for applications deployed across multi- and hybrid cloud environments. Its unique out-of-path deployment options remove the need for any in-line component from the data path to reduce complexity and reduce latency, eliminate routing changes, and increase availability. Finally, as I mentioned earlier, today we announced the launch of Skyhawk Security. Running as a separate entity, Skyhawk will have the ability to operate with even greater sales, marketing, and product focus, as well as speed and flexibility. Tiger Global Management is making a $35 million investment in Skyhawk, and together we intend to scale and strengthen Skyhawk's position and unlock even more security value for customers. Cloud Native Protector delivers a comprehensive view of the cloud security posture and uses machine learning algorithms to provide misconfiguration detection, compliance assurance, and malicious activity alerts. It detects cloud native threats in real time and provides automatic detection and response. Our commitment and focus on our cloud business is reflected in our first quarter financial results. Revenue in the first quarter grew 10% year-over-year, driven by our cloud and product subscription business. We also recorded double-digit year-over-year growth in both operating income, which increased 28%, and earning per share, which increased 11% to 19%. Several noticeable cloud application security wins contributed to our first quarter results. We closed a large cloud web application and bot management deal with a multinational Fortune 500 company in the financial industry space. This company is responsible for thousands of public-facing websites on behalf of its clients, websites that were under constant attack. This financial service leader was looking for new solutions due to the lack of automation, efficacy, and visibility in its current deployment. Our win was a cross-sell deal from a very large DDoS win we had a couple of quarters ago. We also signed a cloud DDoS deal with a global system integration and information technology company that wanted to secure the infrastructure against attacks in several key geographies. The company was looking for a solution provider with a large global presence that could deliver a best-in-class cloud DDoS solution. We won this deal with our partner, Airtel. DDoS attacks were front and center last quarter, more than doubling compared to the first quarter of 2021. This heightened cyber environment also led to some large first quarter wins. For example, we won a large DDoS deal with a major brand known for its global communication and collaboration solution. This customer network increased massively in the last couple of years, and as a result, it became a target for hacking attempts. They needed more granular mitigation for their dozens of global data centers, and we proved our protection capabilities. This is the first deal we closed with Presidio, a new partner that we announced in the first quarter. The continued demand for more powerful DDoS mitigation led us to develop and launch the industry's first Terabit DDoS mitigation platform, our Defense Pro 800. The platform offers enterprises and service providers state-of-the-art protection and performance built to handle ultra-high bandwidth demands. and deliver next-generation connectivity for emerging environments. Our development and innovation not only continue to help us close noticeable deals, but also earn industry recognition. RADO recently received two cybersecurity excellence awards. Our application protection as a service solution, which includes cloud-based WAF bot management, API security, and DDoS protection, was a silver winner in the application security category. And our cloud native Protector was a gold winner in the cloud workload protection category. Industry analysts also continue to recognize Radware as innovator in the industry. In its Spark metrics analysis, Quadrant named Radware the technology leader for bot management for the second year in a row, as well as a leader in the WAF market. In summary, I'm very pleased with the strong start of the year. We've made great progress on our cloud initiative where we are laser focused on execution. We just announced the spin-off of Skyhawk. We acquired and successfully integrated Security Dam. We continue to innovate and develop cloud solutions and grow our cloud services footprint to ensure our customers are protected against a mounting number of cyber attacks. I want to take this opportunity to thank our employees around the world for their contribution in achieving another successful quarter. As most of you know, a few months ago, we announced Guy Avidan as our new CFO. I want to welcome Guy to his first earning call with Radwer. Guy?