Radware Ltd.

Welcome to the Radware conference call discussing third quarter 2025 results, and thank you all for holding. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded today, October 29th, 2025. 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 Rado's third quarter 2025 earnings conference call. Joining me today are Roy Zisopel, President and Chief Executive Officer, and Guy Avidan, Chief Financial Officer. A copy of today's press release and financial statements, 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 RADWR's current forecasts and estimates. Factors that could cause or contribute to such differences include, but are not limited to, impact from changing or severe global economic conditions, 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 RADWR's filing. 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 March 28, 2025. We undertake no commitment to revise or update any forward-looking statements 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, Iska, and thank you all for joining us today. I'm pleased to share that we delivered another solid quarter with revenue of $75 million, representing 8% of the real growth. Non-gap earnings per share climbed 22% year-over-year to $0.28. The quarterly results demonstrate steady progress in delivering on our strategic priorities. We remain focused on expanding our business in cloud security, driving innovation through AI and automation, and strengthening our global go-to-market capabilities. Let's talk a bit about each one of those. Cloud security remained a key growth driver in the third quarter, delivering another exceptional performance. Cloud security ARR climbed to $89 million, up from $72 million in Q3 last year. Our cloud ARR growth trajectory accelerated once again from 21% last quarter to 24% year-over-year growth in Q3. We also saw continued double-digit growth in active cloud customers and a strong wave of new logo acquisitions backed by a robust and expanding pipeline. This sustained momentum reflects our strengths and competitive edge, the growing demand for our cloud security offerings, and accelerated growth in North America. To meet this growing demand and our expanding customer base, we've continued to scale our global cloud infrastructure and resources. we're adding more R&D, delivery, and sales personnel to support the growth. In the third quarter, we opened two additional cloud security centers, and we plan to open three more in the fourth quarter, bringing the total number of centers open in 2025 to eight. The growth in cloud security ARR was a key contributor to our overall subscription revenue growth, which grew 21% and rose to 52% of total revenue in the third quarter, compared to 47% in the same period last year. This shift from a product appliance revenue stream to a subscription revenue model driven by cloud security growth enhances both revenue visibility and long-term business stability. One of the cloud deals we closed in the third quarter was a competitive displacement in the U.S. healthcare sector. The customer selected Radware Cloud DDoS protection to replace their incumbent cloud-based solution. We secured this win through a combination of trusted relationship, Radware best-of-rate DDoS technology, and world-class support. As part of our broader cloud application security portfolio, Radware continues to drive innovation in API security. With APIs now central to modern application, and application layer attack surging, our AI-powered protection dynamically adapts to evolving threats, mapping business logic and defending against complex multi-endpoint attacks. Complementing this, our API analytics capabilities provide deep insights into API behavior, empowering teams to detect anomalies, understand business logic sequences, and optimize performance with actionable intelligence. Following our success in cloud DDoS protection and cloud application security, we see API security as the third wave in our cloud security growth strategy and believe it has a significant potential for 2026. Radar leadership in application security continues to be recognized. We were named the leader in the 2025 Spark Matrix for web application firewall and bot management, and an overall leader in the 2025 Copinger Core Leadership Compass Report for Web Application and API Protection. These honors reflect our commitment for delivering intelligent, scalable, and multi-layered security, including web application firewall, API protection, bot management, and DDoS mitigation across modern cloud environments. Our go-to-market strategy continued to gain momentum this quarter. In North America, the team is now fully ramped, as reflected in a 28% year-over-year revenue growth in the Americas and 15% growth over the trailing 12 months. We recorded solid business with our OEM partners, making our second-best quarter ever. This continued successful collaboration reflects the growing demand for our integrated solution and the strength of our joint value proposition. One example of this is a strategic win in EMEA through Cisco with a telecom provider. Seeking to transition from a legacy DDoS competitor, the customer required a more advanced and future-ready solution to support its expanding infrastructure and services. Our technical leadership and responsiveness to the customer evolving needs helped to build trust and position Cisco and Radware as a long-term strategic partner. Another win with Cisco was with a large US healthcare system. Facing increasing threats and limited internal resources, the organization sought comprehensive protection across web applications, API, and bot traffic. After evaluating multiple vendors, they selected our solution for its broad coverage and operational efficiency and our ability to align with their evolving needs. Third quarter performance was also fueled by a strong Defense Pro X refresh cycle, which grew approximately 40% year-over-year, alongside successful competitive displacement in DDoS that doubled during the quarter. As previously noted, the Defense Pro X refresh opportunity remains substantial, with less than 50% of our end-of-sailing store base upgraded to this. During the quarter, we secured several seven-digit DefenseProX refresh deals, including a deal with one of the largest telecom companies in the U.S., a deal with a European financial service provider, and with a leading European bank, among others. In closing, our third quarter performance highlights the steady progress we're making against our strategic plans. Cloud security continues to be our strong and growth driver with robust ARR expansion and accelerating momentum. We're seeing the benefits of deeper collaboration across our partner and channel ecosystem, which is helping us scale efficiently and reach new customers. At the same time, our continued investment in AI-powered innovation is enhancing our platform and reinforcing our competitive edge. With a healthy cloud security business, a growing global partner base and increasing demand for our security solutions, we believe in our ability to sustain our momentum and capture long-term growth opportunities. With that, I will turn the call over to Guy.