Radware (RDWR) AI Stock Analysis

• Market Cap: $989.90M
• Dividend Yield: N/A
• Average Volume (3M): 164.93K
• Price to Earnings (P/E): 168.7
• Beta (1Y): 0.81
• Revenue Growth: 5.20%
• EPS Growth: N/A
• Country: US
• Employees: 1,137
• Sector: Technology
• Sector Strength: 62
• Industry: Software - Infrastructure
• EPS (TTM): 0.14
• Shares Outstanding: 42,686,535
• 10 Day Avg. Volume: 210,148
• 30 Day Avg. Volume: 164,925
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 3.67
• Price to Cash Flow (P/CF): N/A
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $27.00
• Price Target Upside: 16.43% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3

Radware's overall stock score is driven by solid earnings call performance, highlighting significant revenue growth and strategic focus on AI and cloud security. However, financial performance shows mixed results with profitability challenges, and technical indicators suggest cautious market sentiment. The high P/E ratio raises valuation concerns, impacting the overall score.

Positive Factors

Earnings

RDWR delivered a strong 4Q, beating consensus Rev/EPS by 2%/+$0.03 and guiding 1Q above expectations.

Innovation

New initiatives being introduced by Radware are aimed at driving future growth and innovation.

Revenue Growth

Cloud ARR growth inflected back to 19% growth y/y after bottoming at 15% last Q.

Negative Factors

Cloud ARR Growth

Investors likely took caution on slowing Cloud ARR growth of 15%, down from 23% in the March quarter.

Market Sentiment

While more constructive on RDWR stock, Hold rating is maintained, pending a consistent trend of Revenue re-acceleration.

Radware Business Overview & Revenue Model

Company Description

Radware Ltd., together with its subsidiaries, develops, manufactures, and markets cyber security and application delivery solutions for applications in cloud, physical, and software defined data centers worldwide. The company offers DefensePro, a real-time network attack mitigation device; AppWall, a Web application firewall; Radware Kubernetes WAF, a Web application firewall solution for CI/CD environments orchestrated by Kubernetes; and DefenseFlow, a cyber-command and control application. It also provides Alteon, an application delivery controller/load balancer for web, cloud, and mobile based applications; and LinkProof NG, a multi-homing and enterprise gateway solution for connectivity of enterprise and cloud-based applications. In addition, the company offers Security Updates Subscription, which provides protection from network elements, hosts and applications against the latest security vulnerabilities and threats; ERT Active Attackers Feed that provides customers with information pertaining to attack sources recently involved in DDoS attacks and web attacks; Alteon Global Elastic License that enables a high level of flexibility for ADC services across datacenters, private and public clouds; APSolute Vision, a network monitoring tool for cyber security and application delivery solutions; and MSSP Portal, a DDoS detection and mitigation service portal. Further, it provides Cloud DDoS Protection Service, which offers a range of enterprise-grade DDoS protection services in the cloud, as well as technical support, professional, managed, and training and certification services to its customers. The company sells its products primarily to independent distributors, including value added resellers, original equipment manufacturers, and system integrators. Radware Ltd. was founded in 1996 and is headquartered in Tel Aviv, Israel.

How the Company Makes Money

Radware generates revenue primarily through the sale of its cybersecurity and application delivery solutions. The company's revenue model is based on a combination of product sales, subscription services, and maintenance and support contracts. Key revenue streams include the sale of hardware and software products, as well as cloud-based security services. Radware also earns from professional services such as consulting, implementation, and training. Significant partnerships with technology vendors and service providers enhance its market reach and contribute to its earnings by facilitating the deployment and integration of its solutions in diverse IT environments.

Radware Financial Statement Overview

Summary

Radware's financials exhibit strengths in revenue growth and cash flow improvements, with a solid balance sheet featuring low leverage. However, persistent challenges in profitability and operational efficiency, as indicated by negative EBIT and fluctuating net income margins, present ongoing concerns.

Income Statement

Radware shows a moderate gross profit margin of 80.6% for 2024, indicating efficient cost management. However, the negative EBIT and fluctuating net income margins highlight profitability challenges. The revenue growth rate of 5.19% from 2023 to 2024 suggests a positive trend in sales, but persistent losses in EBIT indicate underlying operational inefficiencies.

Balance Sheet

The company maintains a solid equity position with an equity ratio of 51.1% in 2024. The debt-to-equity ratio is low at 0.06, suggesting minimal leverage and financial stability. ROE improved to 1.91% in 2024, reflecting a slight return to profitability, though the overall return remains modest.

Cash Flow

Radware demonstrates significant improvement in free cash flow from negative in 2023 to $66.33 million in 2024, reflecting better cash management. The operating cash flow to net income ratio is robust at 11.86, indicating strong cash generation relative to net income. However, historical volatility in cash flows suggests potential risks in sustaining this performance.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
274.88M	261.29M	293.43M	286.50M	250.03M
	Gross Profit
221.63M	209.58M	239.54M	234.05M	204.94M
	EBIT
-3.19M	-31.68M	-3.34M	18.23M	6.17M
	EBITDA
24.50M	-19.44M	8.35M	28.42M	16.73M
	Net Income Common Stockholders
6.04M	-21.59M	-166.00K	7.81M	9.64M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
275.78M	330.59M	298.04M	287.89M	310.49M
	Total Assets
618.68M	571.92M	647.40M	634.87M	623.44M
	Total Debt
18.27M	20.70M	24.15M	27.45M	30.07M
	Net Debt
-80.44M	-49.83M	-22.04M	-65.06M	-24.70M
	Total Liabilities
261.60M	248.64M	278.96M	264.87M	234.98M
	Stockholders Equity
316.27M	284.09M	332.16M	369.99M	388.46M
Cash Flow		Free Cash Flow
66.33M	-8.93M	23.33M	66.17M	53.14M
	Operating Cash Flow
71.61M	-3.50M	32.15M	71.77M	61.81M
	Investing Cash Flow
-39.52M	92.78M	-56.02M	7.85M	-14.37M
	Financing Cash Flow
-3.91M	-64.93M	-22.46M	-41.88M	-33.42M

Radware Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 23.19
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RDWR, the sentiment is Positive. The current price of 23.19 is above the 20-day moving average (MA) of 21.15, above the 50-day MA of 21.98, and above the 200-day MA of 21.95, indicating a bullish trend. The MACD of 0.12 indicates Negative momentum. The RSI at 62.89 is Neutral, neither overbought nor oversold. The STOCH value of 93.13 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for RDWR.

Radware Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ATEN	77 Outperform	$1.22B	24.52	22.81%	1.45%	3.97%	25.83%
AKAM	70 Outperform	$11.66B	24.45	10.66%	―	4.70%	-7.33%
VRNT	67 Neutral	$1.13B	18.70	6.35%	―	-0.13%	263.78%
RDWR	64 Neutral	$989.90M	168.65	2.01%	―	5.20%	―
Sector *	59 Neutral	$10.72B	10.22	-6.67%	3.02%	7.42%	-11.38%
CGNT	57 Neutral	$697.97M	―	-6.09%	―	―	―
NTCT	55 Neutral	$1.51B	―	-24.41%	―	-1.55%	-250.10%