Radware Ltd.

Welcome to the RADWARE conference call discussing second quarter 2023 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 this time, simply press the star key followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. As a reminder, this conference is being recorded August 2, 2023. I would now like to turn the call over to Yiska Erez, Director, Investor Relations at Radware. Please go ahead.

Good morning, everyone, and welcome to Radware's second quarter 2023 Earnings Conference Call. Joining me today are President and Chief Executive Officer, and Gaya Vidhan, Chief Financial Officer. A copy of today's press release and financial statements for the second quarter are available in the investor relations section of our website. During today's call, we may make projections of the forward-looking statements regarding future events and performance of the company. These forward-looking statements are subject to various risks and uncertainties, and actual results could differ materially from other current forecasts and estimates. Factors that could cause differences include, but are not limited to, from the changing or severe global economic conditions, the COVID-19 pandemic, general business conditions, and our ability to address changes in our industry, changes in demand for products, amount of orders, and other risks detailed from time to time in rather than filing. We refer you to the documents that the company files and furnishes from time with the SEC, specifically the company's last annual report on Form 20-F as filed on March 30, 2023. We undertake no commitment to revise or update any forward-looking statement in order to reflect events or circumstances where 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. We ended the second quarter of 2023 with revenues of $65.6 million and non-GAAP earnings per share of $0.10. Total ARR growth accelerated to $208 million compared to a 5% growth recorded in the first quarter of 2023. Our cloud security business had another strong quarter. Cloud ARR growth accelerated to 23%, reaching $59 million at the end of the second quarter. This strong cloud performance was reflected across multiple metrics, including cloud bookings, new logos, and the total number of cloud customers, which all grew double digits. The growing cloud business and the growth in our product subscriptions are gradually forming a sustainable and durable SaaS business model. This progress is reflected in the steady growth in recurring revenue, which increased by 7% in the quarter and now accounts for 79% of total revenues as compared to 65% in the second quarter of last year. While the cloud security business produced strong results in the second quarter, the appliance cloud encountered strong headwinds, which we believe is a temporary pullback. The spending patterns of large customers have impacted CapEx purchases. Over the last few weeks of the second quarter, we witnessed increased delays in closing large on-prem deals globally, primarily among large enterprises and carriers.