Radware Ltd.

Welcome to the Radware conference call discussing third quarter 2022 results, and thank you all for holding. 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 that time, simply press star, then the number one on your telephone keypad. To withdraw your question, press star one again. As a reminder, this conference is being recorded November 2nd, 2022. I would now like to turn this call over to Yiska Edrez, Director, Investor Relations at Radware. Please go ahead.

Thank you, Denis. Good morning, everyone, and welcome to Radware's third quarter 2022 earnings conference call. Joining me today are Roy Zisapel, 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 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 RADWA's current forecasts 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 products, the timing in the amount of orders, and other risks detailed from time to time in RADWAS filings. We refer you to the documents the company files and furnishes from time to time with the SEC, specifically the company's last annual report on Form 20F 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 Zisopel.

Thank you, Yiska, and thank you all for joining us today. During the last few weeks of the third quarter, we saw closing delays in some customer deals and an increase in multi-phase contracts in response to macroeconomic headwinds. These trends expanded globally and impacted our revenue, which came in below the low end of our guidance. We expect this environment to continue to impact our business in the short term. We continue to track the deals that did not close, and at this point, we are not aware that any have been lost to competition. We remain confident in our market position and competitiveness as evidenced by the continued wins we are seeing in large enterprises across all regions. We have a healthy pipeline and we see strong activity level among customers and prospects, which continue to be driven by a significant increase in cyber attacks. Given that, we're taking several measures to manage the business and leverage opportunities that will position Radwer for long-term success. First, We will continue to focus on and cater to the large enterprise market with our state-of-the-art protection. We believe the current environment and spending behavior are temporary and expect to see strong demand from large enterprises in the future. We believe there are significant opportunities in the market, even if the deals take more time to mature. For example, during the third quarter, we closed a multimillion-dollar application security deal with a Fortune 500 SaaS company. We won the deal based on our strong partnership and unique application security capabilities. Other examples of large enterprise wins include the new logo deal with a leading service provider in Latin America for our complete cloud security offering. Our frictionless approach to security was crucial to this customer in protecting their complex environment. In partnership with Cisco, we also closed another new logo deal with a major US financial services company to provide hybrid cloud DDoS protection. We displaced the incumbent who could not provide the level of visibility and protection that the customer needed. The second measure we are taking is to increase our investment in cloud security and shift resources to our cloud growth initiatives. In times of financial uncertainty, and an increased threat landscape, cloud security can help customers boost their security without committing to larger upfront CapEx investments. In response to this market need, we are constantly expanding our global footprint by opening more cloud security centers. During the third quarter, we opened two new centers in Dubai and Italy to expand our market share. For example, in the Emirates, several new customers already onboarded to the security center. One new logo from the financial sector found our Cloudidos solution critical to comply with regulations. Another new logo, which is from the media sector, moved from a private to public cloud and wanted to strengthen their application protection. The other new logo, which we won jointly with Check Point, was from the education center. but our cloud were following a demonstration of our advanced capabilities and was convinced in radio technology advantage, especially considering the local cloud center. The third step we're taking is reallocating resources to expand our footprint in the medium-sized enterprise market. The cybersecurity risks and needs of the mid-market are identical to the needs of the large enterprise market. However, the capacity and skill talent that mid-market companies have to manage their security environments are more limited. Our fully managed cloud security services are a great fit for this market, as evidenced by the significant number of medium-sized enterprises that are choosing our cloud application security offering. To leverage this opportunity, we are targeting mid-market security needs by expanding our channel relationships and offering cyber protections through a cloud-first approach. And lastly, we are taking measures to fine-tune our operational expenses to ensure our business is profitable with strong, positive cash flow from operations. This includes reallocating internal resources to focus on cloud growth initiatives and making focused investments on long-term growth opportunities that we expect will lead to better returns. As we look at the state of the cybersecurity landscape, we believe there are several market forces playing to our advantage. First, the number and level of sophistication of DDoS, WAF, and bot attacks continue to increase. Hackers are relentless. Organizations will continue to invest in protecting the critical applications and infrastructure, and we believe Radware has the right offering to ensure the best protection for them. In fact, in the third quarter, Gartner recognized Radware for its application security solution. In its critical capabilities report, Gartner once again ranked Radware the number two solution out of 14 companies for API security and DevOps use cases, as well as high security use case. According to Gartner, Radware provides a robust set of application security controls and offers one of the stronger API security offerings on the WAP market. Second, companies continue to struggle to achieve consistent high-quality application security. According to our multi-cloud application security report, 70% of respondents are not confident in their ability to apply security across on-prem and multi-cloud platforms. And 64% said that they don't trust the security offered by public cloud platforms. In short, More organizations are looking to have a dedicated application security solution in the public cloud, a need that Radul is especially suited to meet. While these are challenging and uncertain times, I'd like to reiterate that the fundamentals underlying our business are strong. Our company is healthy with a large and diversified customer base and robust balance sheet with more than $400 million on hand. We continue to generate cash from operations, build our annuity business, and invest in our cloud security footprint and capacity. Although this quarter revenue fell below expectations, we expect to end the year with a record revenue. With cyber attacks increasing in complexity and climbing in sheer volume, we believe the need for our solutions, and specifically real-time protection of applications, will remain strong. As we continue to fight for the good guys in this cyber war, we are confident that Radul is on the right track and well positioned for long-term growth. With that, I will now turn the call over to Guy.